http://www.sajesbm.co.za open access page 1 of 1 reviewer acknowledgement acknowledgement to reviewers in an effort to facilitate the selection of appropriate peer reviewers for the southern african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on https:// sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at https://sajesbm. co.za 2. in your ‘user home’ [https://sajesbm.co.za/ index.php/sajesbm/user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest(s). 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the southern african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 tel: 086 1000 381 the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of peer reviewers in the overall publication process – not only in shaping individual manuscripts, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank the following reviewers who participated in shaping this volume of the southern african journal of entrepreneurship and small business management. we appreciate the time taken to perform your review(s) successfully. adolph c. neethling alex bignotti anèa burke arno meyer chantal rootman chris friedrich chukuakadibia e. eresia-eke darma mahadea dawie bornman elda du toit goosain solomon janine kruger japie kroon joash mageto john h. hall jurie van vuuren kerrin myres kerryn a.m. krige khathutshelo m. makhitha liezel alsemgeest marius pretorius melodi botha menisha n. moos paul kariuki pieter conradie radoslaw wolniak renier steyn salome van coller-peter stephanus j.h. van der spuy tabea mabase teboho pitso thea van der westhuizen tony matchaba-hove watson m. ladzani wendy van schalkwyk wesley niemann http://www.sajesbm.co.za� https://sajesbm.co.za� https://sajesbm.co.za� https://sajesbm.co.za� https://sajesbm.co.za� https://sajesbm.co.za/index.php/sajesbm/user https://sajesbm.co.za/index.php/sajesbm/user mailto:publishing@aosis.co.za http://www.sajesbm.co.za open access page 1 of 1 reviewer acknowledgement acknowledgement to reviewers in an effort to facilitate the selection of appropriate peer reviewers for the southern african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on https://sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at https://sajesbm. co.za 2. in your ‘user home’ [https://sajesbm.co.za/ index.php/sajesbm/user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest(s). 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the southern african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 tel: 086 1000 381 the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of peer reviewers in the overall publication process – not only in shaping individual manuscripts, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank the following reviewers who participated in shaping this volume of the southern african journal of entrepreneurship and small business management. we appreciate the time taken to perform your review(s) successfully. ad oosthuizen adolph c. neethling althea e. mvula andani thakhathi bernard l. ngota chengedzai mafini chukuakadibia e. eresia-eke daniel twesige edmund t. mazwai elriza esterhuyzen filip de beule geoff goldman hafiz i. ahmad iniobong w. akpan ishmael o. iwara jabulile msimango-galawe janine kruger jean pierre cronje joash mageto jonathan marks jurie van vuuren kajal ramnanun leonie b. louw mapeto bomani margaret mashizha marina bornman marius ungerer mercy m. adeyeye mfazo c. madondo nozipho ndimande oliver kapepa paul kariuki sibongiseni s. myeni tabea mabase teboho pitso teresa carmichael thea tselepis wendy van schalkwyk http://www.sajesbm.co.za� https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za/index.php/sajesbm/user https://sajesbm.co.za/index.php/sajesbm/user mailto:publishing@aosis.co.za http://www.sajesbm.co.za open access page 1 of 1 reviewer acknowledgement acknowledgement to reviewers in an effort to facilitate the selection of appropriate peer reviewers for the southern african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on https:// sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a user. in order to be considered, please email submissions@ sajesbm.co.za indicating your intention to register as a reviewer for the journal. to access your details on the website, you will need to follow these steps: 1. log into the online journal at https://sajesbm.co.za 2. in your ‘user home’ [https://sajesbm.co.za/ index.php/sajesbm/user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest(s). 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the southern african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of peer reviewers in the overall publication process – not only in shaping individual manuscripts, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank and recognise the following reviewers for their precious time and dedication, regardless of whether the papers they reviewed were finally published. we apologise for any names that have been inadvertently left out. these individuals provided their services to the journal as a reviewer from 01 october 2021 to 30 september 2022. adolph c. neethling adri du toit agripah kandiero ahmed i. kato althea e. mvula amany elbanna bernard l. ngota binyam z. alemayehu chinaza uleanya chris schachtebeck chukuakadibia e. eresia-eke cobus oosthuizen david pooe edmund t. mazwai hamilton t. gape herman boikanyo iniobong w. akpan jabulile msimango-galawe janine kruger japie kroon joash mageto khathutshelo m. makhitha leonie b. louw lerato e. mdaka lia m. hewitt liiza gie lorna christie mapeto bomani margaret mashizha mariette strydom mfazo c. madondo mugove mashingaidze natanya meyer obainuju e. okeke-uzodike oliver kapepa orthodox tefera paul kariuki reward utete salome van coller-peter samuel n. ampah shelley m. farrington takawira m. ndofirepi teboho pitso teck c. teo thandukwazi r. ncube thea tselepis tshilidzi e. nenzhelele wesley niemann willie t. chinyamurindi http://www.sajesbm.co.za� https://sajesbm.co.za https://sajesbm.co.za mailto:submissions@sajesbm.co.za mailto:submissions@sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za/index.php/sajesbm/user https://sajesbm.co.za/index.php/sajesbm/user mailto:publishing@aosis.co.za acknowledgement to reviewers sajesbm 12-1_2020_contents.indd http://www.sajesbm.co.za open access table of contents original research an information and communication technology adoption framework for small, medium and micro-enterprises operating in townships south africa stella bvuma, carl marnewick the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a318 | 20 august 2020 original research the role of business incubators in creating sustainable small and medium enterprises lia m.m. hewitt, lodewikus j. janse van rensburg the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a295 | 25 august 2020 original research examining the influence of supplier integration on supply chain performance in south african small and medium enterprises jeremiah madzimure the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a312 | 21 september 2020 original research impact of venture capital financing on smalland medium-sized enterprises’ performance in uganda ahmed i. kato, germinah e. tsoka the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a320 | 23 september 2020 original research psychological contract breach and innovative work behaviour: systematic literature review larysa botha, renier steyn the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a333 | 11 december 2020 original research factors affecting researcher participation in technology commercialisation: a south african university case study margaret d.m. cullen, andre p. calitz, mary-ann chetty the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a329 | 14 december 2020 reviewer acknowledgement the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a388 | 22 december 2020 62 74 83 90 101 109 121 page i of i table of contents original research exploring migrant micro-entrepreneurs’ use of social capital to create opportunity in south africa’s informal market: a qualitative approach andré g. van der walt, louise whittaker the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a261 | 20 january 2020 original research challenges facing small business retailers in selected south african townships maphelo malgas, wellington b. zondi the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a202 | 25 february 2020 original research the risk of overvaluing networking on small and medium enterprises performance in gauteng province, south africa semukele h. mlotshwa, jabulile msimango-galawe the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a294 | 03 march 2020 original research entrepreneurship gaps framework model: an early-stage business diagnostic tool daniel s. nheta, richard shambare, caston sigauke, ndivhuwo tshipala the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a297 | 24 march 2020 original research enhancing supplier integration through e-design and e-negotiation in small and medium enterprises jeremiah madzimure the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a300 | 23 april 2020 original research compliance or management: the benefits that small business owners gain from frequently sourcing accounting services adele oosthuizen, jurie van vuuren, melodi botha the southern african journal of entrepreneurship and small business management | vol 12, no 1 | a330 | 30 june 2020 1 13 22 35 42 50 vol 12, no 1 (2020) issn: 2522-7343 (print) | issn: 2071-3185 (online)the southern african journal of entrepreneurship and small business management sajesbm 13-1_2021_contents.indd http://www.sajesbm.co.za open access table of contents original research unravelling the makings for entrepreneurial success: a case study of the maponya business in south africa patrick ssekitoleko, yvonne du plessis the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a424 | 27 july 2021 original research determinants of innovation and its impact on financial performance in south african family and non-family small and medium-sized enterprises elmarie venter, haydn hayidakis the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a414 | 24 august 2021 original research managerial conceptual competencies and the performance of small and medium-sized enterprises in zimbabwe nhamo mashavira, crispen chipunza the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a386 | 31 august 2021 original research contextual factors influencing entrepreneurship education at a south african university of technology kariema price, linda ronnie the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a394 | 30 september 2021 original research business skills development for a successful fashion business in peri-urban communities, south africa keshni nana, hanlie van staden, nicolene coetzee the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a401 | 03 december 2021 original research spurring entrepreneurial intensity through social capital and relationship quality watson munyanyi, shallone munongo, david pooe the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a425 | 17 december 2021 original research east-african women’s thoughts on stimulating the growth of their mid-scale enterprises patricia isabirye, lia m. hewitt the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a435 | 20 december 2021 73 83 97 111 122 135 145 page i of ii table of contents original research innovation capacity: a perspective on innovation capabilities of consulting engineering firms mahlatse m. mogashoa, olebogeng selebi the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a372 | 03 march 2021 original research exploring supply chain business bullying of small and medium-sized business suppliers by dominant buyers in the apparel retail sector in gauteng sumayah goolam nabee, elana swanepoel the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a367 | 31 march 2021 original research guidelines and criteria used by formal financial institutions to assess credit applications from small and medium enterprises in south africa francis t. asah, lynette louw the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a373 | 26 april 2021 original research the influence of strategy formulation practices on the perceived financial performance of small and medium enterprises: the zimbabwean experience mugove mashingaidze, maxwell phiri, mapeto bomani the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a343 | 05 may 2021 original research entrepreneurs’ endogenous attributes necessary for small enterprise success in vhembe rural areas, south africa ishmael o. iwara, beata m. kilonzo, jethro zuwarimwe, vhonani o. netshandama the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a331 | 20 may 2021 original research business response to covid-19 impact: effectiveness analysis in south africa godfred anakpo, syden mishi the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a397 | 31 may 2021 original research the perceived impact of agency control on the performance of zimbabwean small-to-medium enterprises nhamo mashavira the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a356 | 28 june 2021 1 11 22 31 42 54 61 vol 13, no 1 (2021) issn: 2522-7343 (print) | issn: 2071-3185 (online)the southern african journal of entrepreneurship and small business management http://www.sajesbm.co.za open access table of contents reviewer acknowledgement the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a502 | 22 december 2021 156correction corrigendum: challenges facing small business retailers in selected south african townships maphelo malgas, wellington b. zondi the southern african journal of entrepreneurship and small business management | vol 13, no 1 | a457 | 29 november 2021 155 page ii of ii sajesbm 11-1_2019_contents.indd http://www.sajesbm.co.za open access table of contents i original research the importance of tolerance for failure and risk-taking among insurance firms in hyperinflationary zimbabwe oliver kapepa, jurie van vuuren the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a142 | 16 april 2019 original research creating and maintaining a commercially viable executive coaching practice in south africa nicky h.d. terblanche, rajesh j. jock, marius ungerer the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a192 | 17 april 2019 original research the relationship between entrepreneurial competencies and the recurring entrepreneurial intention and action of existing entrepreneurs melodi botha, tom j. carruthers, marc w. venter the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a191 | 23 may 2019 original research a tax compliance risk profile of guesthouse owners in soweto, south africa marina bornman, pusheletso ramutumbu the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a181 | 27 may 2019 original research towards customer satisfaction and loyalty: what cuts it in a hair salon? chukuakadibia e. eresia-eke, caitlin jammine, callon locke the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a215 | 06 june 2019 original research small business barriers to occupational health and safety compliance elriza esterhuyzen the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a233 | 01 august 2019 original research the perceived adequacy and effectiveness of internal control activities in south african small, medium and micro enterprises juan-pierré bruwer, philna coetzee, jacolize meiring the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a148 | 22 august 2019 original research the influence of economic motivation, desire for independence and self-efficacy on willingness to become an entrepreneur herring shava, willie t. chinyamurindi the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a234 | 12 september 2019 90 105 115 130 144 151 159 170 page i of ii table of contents i original research a generic balanced scorecard for small and medium manufacturing enterprises in south africa arthur reynolds, houdini fourie, lourens erasmus the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a193 | 23 january 2019 original research small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility andria c. du toit, marius pretorius, wesley rosslyn-smith the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a149 | 24 january 2019 original research the influence of the business environment on the growth of informal businesses in uganda fredrika w. struwig, janine krüger, geoffrey nuwagaba the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a200 | 14 february 2019 original research boundaries within boundaries: identifying the boundaries facing private firms that are in financial distress keith j. fairhurst, marius pretorius the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a147 | 21 february 2019 original research evaluating mentoring outcomes from the perspective of entrepreneurs and small business owners cordelia kunaka, menisha n. moos the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a214 | 12 march 2019 original research the impact of corporate entrepreneurship on service innovation: a case of a south african banking institution bhavesh ravjee, m. anastacia mamabolo the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a155 | 27 march 2019 original research internal constraints to business performance in black-owned small to medium enterprises in the construction industry robert h. mafundu, chengedzai mafini the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a165 | 27 march 2019 original research invigorating innovation and entrepreneurship: insights from selected south african and scandinavian universities teboho pitso the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a187 | 28 march 2019 1 16 26 36 48 59 71 81 vol 11, no 1 (2019) issn: 2522-7343 (print) | issn: 2071-3185 (online)the southern african journal of entrepreneurship and small business management http://www.sajesbm.co.za open access table of contents ii original research the influence of absorptive capacity and networking capabilities on small and medium enterprises watson munyanyi, david pooe the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a231 | 07 october 2019 original research the state of business incubation in the northern cape: a service spectrum perspective stephanus j.h. van der spuy the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a271 | 31 october 2019 original research financial literacy among small and medium enterprises in zimbabwe margaret mashizha, mabutho sibanda, blessing maumbe the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a241 | 12 november 2019 182 192 208 original research the structural validity of the innovative work behaviour questionnaire: comparing competing factorial models renier steyn, gideon de bruin the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a291 | 11 december 2019 original research the influence of strategic networks and logistics integration on firm performance among small and medium enterprises jeremiah madzimure the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a282 | 12 december 2019 reviewer acknowledgement the southern african journal of entrepreneurship and small business management | vol 11, no 1 | a301 | 12 december 2019 218 229 236 page ii of ii microsoft word p139 making small retail outlets entrepreneurial and competitive lebusa.doc sajesbm volume 6, (2013) www.sajesbm.com article no 139 75 www.sajesbm.com the prospects of making small retail outlets in the townships aggressively competitive malefane johannes lebusa centre for innovation and entrepreneurship vaal university of technology johannesl@vut.ac.za abstract historically, township small retail outlets were mostly established for survival and operated under a generally closed market system where the competition was not very strong. however, with the advent of democracy many people lost their formal income through retrenchments and out of desperation, many of these people opened small retail outlets thus most of the existing and new entrants into the township market were unskilled or semiskilled labourers with little or no formal skills in business or entrepreneurship. such efforts were rarely guided by any specific and informed strategy of identifying and exploiting a gap in the market. with the consolidation of the free market system under democracy, big brand businesses such as shoprite checkers and small retail outlets of foreign nationals with different strategies entered and competed in this township market. with fewer formal skills in business and entrepreneurship, the owners of the small retail outlets struggled to compete and thrive under these relatively new economic conditions. given this situation, i conducted semi-structured interviews with fifteen of these traditional small retail outlets to find out and better understand the challenges they face and the skills that might be needed to aggressively compete in this space. based on these findings and understandings, i further examined these issues and suggest infusions of specific entrepreneurship skills that could develop their aggressive competitiveness. keywords: entrepreneurship, competitiveness, small retail outlets, shopping complexes, innovation sajesbm volume 6, (2013) www.sajesbm.com article no 139 76 problem statement governments worldwide have acknowledged the impact of small, micro and medium enterprises (smme) on job creation, improvement of the standards of living and hence an overall impact on the economy. in south africa up to 50% of new small businesses including small retail outlets fail within the first 3-5 years of their creation (ladzani & van vuuren, 2002:154). the global entrepreneurship monitor (gem 2011) further revealed that south africa has reported the lowest entrepreneurial activity rate of all developing countries included in the survey. the country at large is faced with the challenge of developing more entrepreneurs and, more importantly, to make owners of small retail outlets to run these entities more efficiently (krueger, 2007:132), to expand the participation of the black population in the entrepreneurial formal sector, and to increase the proportion of economic activity in the small business sector (grundling & steynberg, 2008:12). it is not surprising, therefore, that it is now widely held that an alternative for south africa is to make small retail outlets to be aggressively competitive in order to address unemployment and revitalise the economy (co & mitchell,2006:348). small retail outlets (shops, tuck-shops, spaza-shops, informal and formal traders) defined as stores that purchase goods from manufacturers or wholesalers and sell (generally in small quantities) directly to consumers, including formal traders have historically been established out of desperation rather than through identification and exploitation of a gap in the market (chetty & campell-hunt, 2003:8). as the result of their genesis, most of the owners of the small retail outlets lacked the requisite business and entrepreneurship skills on which to depend as the economic conditions of the country changed. with the new democratic dispensation came the consolidation of the free market system which posed new challenges to existing small retail outlets (traditional) especially in the townships which were used to claiming such a market as almost a birth right. when big brand businesses such as shoprite checkers and small retail outlets of foreign nationals mushroomed across the townships to claim the slice of the market, traditional small retail outlets struggled to compete and survive. given the general lack of business and entrepreneurship skills from these owners, it is not unreasonable to suggest that their lack of a competitive edge can be attributed to lack of these skills. however, if these traditional small retail outlets go under because of lack of competitiveness then the rate of unemployment would substantially increase and the risk of violence against other business brands in the townships would be real. it is, in light of this situation, that i undertook a qualitative study of traditional small retail outlets. in the study, fifteen owners of traditional small retail outlets were interviewed through semi-structured research questions. state of small retail outlets in south africa small retail outlets businesses in township areas show relatively high attrition rates. in a study conducted among the small business sample (business panel) in one township in 2007 and 2008, only just more than half the small businesses were still operating from the same premises. business growth was particularly low among street vendors (hawkers) and homebased businesses (ligthelm, 2009). ligthelm (2009) further suggests that the rapid increase in consumer expenditure by residents in township areas during the past decade, together with the fact that the overwhelming majority of township dwellers (83 % in the case of soweto, for example), expressed no intention of moving out of their townships, creates substantial market potential in these areas. this has resulted in a drastic change in township retail structures. large shopping malls have been developed, or are under construction or in the planning phase in almost all township areas with sizeable population numbers. this development has resulted in heightened competition for small township businesses with a potential risk of considerable sajesbm volume 6, (2013) www.sajesbm.com article no 139 77 consumer expenditure displacement away from them to national chains and franchise businesses in the new shopping complexes. these small retail outlets are facing a strong challenge to innovate and create an entrepreneurial competitive advantage in the face of the escalating number of shopping complexes. according to industrial development corporation (2008), in south africa, it is estimated that there are approximately 2 million small businesses, in the country, representing 98% of the total number of firms here. small enterprises employ approximately 55% of the country’s labour force and contribute approximately 42% to the country’ wage bill. however, a problem for the country and its entrepreneurs is that 87% of these small businesses are survivalist. fortunately the government has long recognized the vital contribution that entrepreneurs can play in economic development and the social up-liftment of its people. consequently, a pivotal part of the government’s ten year vision of the accelerated and shared growth initiative of south africa (asgisa) is for south africa to become an entrepreneurial nation that rewards and recognizes those who see business opportunity and pursue it, a country with a vibrant and competitive small enterprise sector with enterprises that grow in both turnover and employment opportunities. those who were once excluded from full participation in the economy including these small retail shop-owners in the townships will have access to support and development services, and be fully integrated into the different sectors of the south african economy, with access to local, national, african and other international markets (liedholm, 2002:160). decline in the traditional steel making sector in many parts of the country calls for a serious enhancement of smme’s in these areas. in this regard, lucas and cooper (2004) point out that if the broader south african economy is to benefit from restructuring and the emergence of new business models like shopping complexes with renowned retail brands, it requires entrepreneurial individuals and teams of shop-owners to be able to recognise and effectively exploit the opportunities created. both established and newly created enterprises require individuals with knowledge, skills and attitudes that will enable them to develop innovative, leading edge products and services that underpin venture creation, growth and sustainable development in the face of increasing competition with these bourgeoning large retail outlets in townships. challenges of small retail outlets the major challenge for these small retail outlets is to be competitive with these large retail outlets; otherwise they will face extinction. these small retail outlets cannot be staticthey must continually adjust, adapt, or redefine themselves. this is a fundamental principle in a free market economy. however, in this entrepreneurial age, the rate of at which organizations including these retail outlets must transform themselves is accelerating and calls for them to be innovative, take risk and be proactive (co & mitchell, 2006:348). many of those who have been part of the evolution (and revolution) of corporations in recent years have an amazing story to tell. the past quarter century has produced immense transformation in the functions, patterns, and cycles of organizations. many of the conventional rules of business no longer apply. fundamental assumptions about employees, products, control of resources, technologies, and markets have been challenged and in some cases discarded altogether. for many firms, turbulence in their external environments has become a way of life (morris, kuratko & covin, 2008:1). one editorial draws an analogy of fire regarding the impact of entrepreneurship innovation, stating that it is potentially destructive to existing norms and clears the way for innovation (rogoff & heck, 2003:561). stated differently, a considerable amount of what occurs in these small retail enterprises may not be especially entrepreneurial, but rather, they appear to constitute basic survivalist activity, which creates little in the way of employment or wealth and is not a source of economic dynamism. survivalist activities in business refer to businesses that are based on subsistence and have little prospects of growth. the challenge is to shift this personal sajesbm volume 6, (2013) www.sajesbm.com article no 139 78 survivalist mentality to return on investment by concentrating on basic entrepreneurial education and training in the small retail sector where historical, political, economic and social discrimination has created an undereducated black majority (morris, pitt & berthon,1996:73). these small retail outlets had to constitute entrepreneurial organisations that are innovative, pro-active, risk-taking or harness the ability to combine resources in a unique manner in order to create new products, services, processes, organisational forms, sources of supply and markets. they should be in the position to create value by bringing together unique combinations of resources to exploit an opportunity in order to grow (lambing & kuehl, 200:14). liberating the entrepreneurial instincts of these small retail outlets’ should be the focus of the leadership of the shop-owners’ in order to ensure competitiveness, because by fostering entrepreneurship, they will be in the position to marshal and allocate their resources into a unique and viable posture based on its relative internal competencies and shortcomings. embracing entrepreneurship is intended to make it the ‘raison d’être’ of their leadership and their ethos to face the rapid change of environment and also to be in the position to anticipate changes in the environment and contingent moves by intelligent opponents in the form of large retail outlets (lebusa, 2007:5). another challenge that these small retail outlets face is for them to become entrepreneurial organizations. kotelnikov (2003) posits that an entrepreneurial organization is one that promotes entrepreneurial activity by adapting structure, management and processes accordingly, in order to gain the required agility, speed, creativity and drive to act profitably upon specific opportunities. according to lumpkin and dess (1996:141), an entrepreneurial organisation is in the position to employ its ability to use resources in a novel manner, leading to the creation of new products and services in its environment, so that it essentially represents organizational willingness and/or capabilities to act free of the existing constraints of the environment. in this regard, according to lambing and kuehl (2001:11), the one factor that distinguishes the entrepreneurial organisation from any other, is its ability to innovate, that is, the ability to innovate quickly and adapt to customers’ changing demands, the aspects of which are viewed as comprising the major characteristics of entrepreneurial organisations. therefore, it can be asserted that entrepreneurial organisations per definition focus on being pro-active and risk-taking with regards to the recognition of new opportunities, which enables them to develop new products and markets through a process of managed innovation. theoretical framing of the study this study departs from the premise that small retail outlets are most likely to benefit from infusions of some specific type of entrepreneurship. while there are different understandings and perspectives on the meaning of entrepreneurship, there is a general consensus that an entrepreneur is one who exhibits some behaviours that are associated with taking initiative, being able to cope with affordable loss, pursuing calculated risks, effectively dealing with uncertainty and possible failure. in this sense, entrepreneurship can be understood as the process of developing some human conveniences by means of creating a new or improved benefit through practices of enterprising behaviour and receiving, in turn, some monetary and personal satisfaction (wiklund and shepherd 2005; mcmullen and shepherd 2006; sarasvathy 2001; coulter 2001; lambing and kuehl 2000; lumpkin and dess 1996; sitkin 1992; timmons and spinelli 2004). three basic aspects stand out from this definition in respect of an entrepreneur. first, the entrepreneur has to create something of value for both the entrepreneur and other human beings. second, whatever is created needs to either be new or an improved version of an existing set of benefits. this is an aspect that creates a competitive edge for an entrepreneur. sajesbm volume 6, (2013) www.sajesbm.com article no 139 79 aggressive competitiveness for an entrepreneur thus would mean constant creation of something new or improved which requires the devotion of considerable time, effort, resources and exhibition of enterprising behaviour. third, these efforts of creating newness or improved something have to be driven by the strong motive of wanting to make a difference and deriving personal satisfaction from it with monetary considerations playing a secondary role. these three aspects derived from the definition formed the basis of analysing the views of the traditional small retail outlets and guided the recommendation that i propose for developing small retail outlets from subsistence towards sustainable businesses. research methodology the study employed qualitative methodology to data collection, analysis, organising and interpretation. qualitative research, according to gay and airasian (2003:13), seeks to probe deeply into the research setting in order to obtain a deep understanding of the way things are and how participants perceive them. it also provides insights into what people believe and feel about the way they are, it allows the researcher to maintain a physical presence in the research setting, and it involves texts of written words and the analysis of collected data. participants the population of this study consisted of owners of small retail outlets at townships in one district municipality (sedibeng district municipality) in south africa. the said townships include sharpeville, boipatong, bophelong, sebokeng and evaton. these shop-owners were selected for the study because of the development of shopping complexes in the majority of the townships where these shop-owners believed that they control the market share. they found themselves in a changing and unstable environment in addition to the many challenges with which they were faced. some of the challenges include, the relatively low growth rates of the small retail outlets sector in townships in general. the majority of entrepreneurs in these areas choose to operate in the informal sector precisely to avoid official business registration. despite this, these small retail outlets fall under the south african national small business act (act no. 102 of 1996) and the national small business amendment bill (bill no. 26926 of 2004: 2), which classify micro, very small, small and medium-sized businesses as those that employ less than 200 full-time equivalent paid employees. the focus of this study fell on very small businesses, as defined earlier. data collection information gathered from the literature review was used to develop and design an interview schedule to gather information from small retail owners at the townships. the interviews were semi-structured, informal and conversational and were conducted during site visit observations so as to allow for as much flexibility as possible in order to gain in-depth data (greef, 2002:302). in all instances, field notes were taken and the impressions gained were jotted down after each interview (greef, 2002:304). coding and analysis were performed each day after the site visit to the shops. in this manner, data saturation and informational considerations became clear. data analysis according to merriam (1998:178), data analysis involves the process of making sense out of data collected by consolidating, reducing and interpreting what participants have said and what the researcher observed. the interview focused on the entrepreneurship dimensions, that is, innovation, pro-activity and risk-taking. the shop owners were interrogated in terms of these dimensions in order to sajesbm volume 6, (2013) www.sajesbm.com article no 139 80 determine the extent to which they create new opportunities for innovative, pro-active and risk taking efforts in these retail outlets. these interviews also lay the ground for suggesting a slightly different approach to dealing with the challenges posed by the mushrooming shopping complexes. population and sampling the study population stemmed from one district municipality (sedibeng district municipality) in south africa and comprised only small retail outlets owners in the aforementioned townships. a purposive and convenient sample (n=15) of owners of these small retail outlets from the townships of sharpeville, sebokeng, bophelong, evaton and boipatong were selected. according to strydom and venter (2002:334), in qualitative research, sampling occurs subsequent to clearly establishing the circumstances of the study and the directive, so that sampling is undertaken after the actual investigation has commenced. in this regard, sampling is relatively limited, is based on saturation, and is not representative, the size is not statistically determined and thus the sampling is non probable. findings innovation this refers to the process of implementing and using new ideas. it is, a willingness to emphasise novel ways of delivering products and services in a more effective, efficient and responsive manner, and appears to be minimal in these retail outlets (maas & fox, 1997:64). in the context of the study and deriving from this definition, innovation involves identification of constraints and efforts of reducing and minimizing the constraints in order to create a new or improved benefit for human conveniences. in the interviews, the following views were elicited in relation to innovation: mr a, the owner of a retail outlet in boipatong attributed his shop’s underperformance to lack of innovation. he explained: my challenge and that of many shops, i believe is that we are not employing novel ideas to run our businesses. we don’t come up with new ways to better our services and delivering products to our customers. we are prone to imitating other people without actually being creative and innovative, that’s why most of our offerings are the same. risk-taking taking a chance or embarking on a process even though there is no certainty of a positive or intended result, appear to constitute a major challenge for these retail outlets. there is a lack of willingness to commit significant resources to opportunities which stand a reasonable chance of costly failure and where the risks are typically calculated and yet manageable. shop owners seem to be attempting totake advantage of opportunities presented by developmentstaking place in theirtownships. mr b, a shop owner from sebokeng stated: since there is a lot of development around here, how many of us ever thought of expanding their businesses to cater for the emerging market? i am aware of a few businesses that have taken the risk of expanding their shops, the rest of us are afraid to take those risks as we come with all sort of excuses not to do so. we are definitely not serving our community to their satisfaction hence they will go to malls and we had to blame ourselves for not acting promptly. pro-activity sajesbm volume 6, (2013) www.sajesbm.com article no 139 81 a willingness to be the first to respond to needs for new or better products and services appears to be insufficient in these retail outlets. the owners appear to be lacking the ability to take the initiative whenever the situation demands. it is apparent that they do not seek opportunities, nor act quickly and decisively to make the most of the opportunity before somebody else does so. mrs c, a successful shop owner from evaton observes: we are very slow in coming up with and introducing new products and services to our people. we wait for someone to come up with something first and imitate her/him with a hope of making a killing. this is not how we are supposed to be doing things. i am of the view that, if i am serious of making money, i should always be the first to introduce something in the market so that by the time other people become aware, i have taken my share and becomes difficult for them to catch up with me. in addition to the above mentioned entrepreneurial dimensions, the following dimensions emerged from the respondents: competitive aggressiveness there is an overwhelming indication that these retail outlets do not display an aggressive competitiveness when dealing with other competitors within their market. strongly challenging the competition in order to achieve entry into the market or to strengthen their market position appears to be insufficient. mr d, from boipatong had this to say: instead of us competing constructively to grow our businesses, we are locked on jealous behaviour and pulling down attitudes. we are inclined to always pointing out at others perceived weaknesses and planning how can we bring them down. we are quick in judging our competitors as crooks. we do not wishes (sic) others success, it is really endemic. enterprising behaviour findings in this regard demonstrated a lack of enterprising behaviour on the part of most shop owners. it became clear thatflexibility in responding to challenges, coping with and enjoying uncertainty, taking risky actions, solving risky actions, solving problems creatively, opportunity seeking, commitment to making things happen and persuading others appears to be not well conceived. shop owner e, butchery owner from bophelong commented: we are not organised as businesses people here, we do not have a proper organised business structure or local association that we belong too here in the township. how do we then hope to grow and network if we cannot meet and discuss our challenges? really, if we are serious about growing and becoming true entrepreneurs, a business organization is needed here and westop operating in silos as this is not helping us. we had to be bold enough to deal with our respective egos and unite so as to deal with the challenge posed by both shopping malls and influx of foreigners’ businesses that are all over the our areas. entrepreneurial strategy an overwhelming number of responses from the respondents indicated lack of entrepreneurial strategy in their businesses. strategic entrepreneurship, which according to ireland, hitt and sirmon (2003:963), involves simultaneous opportunity-seeking and advantage-seeking behaviours and which results in superior organizational performance, appears to be inadequate. these small retail ventures are ineffective in indentifying sajesbm volume 6, (2013) www.sajesbm.com article no 139 82 opportunities while also not being very successful in developing a competitive advantage which is needed to appropriate value from their current environmental challenges. mrs f, small retail outlet owner from sebokeng explained: honestly, i am having a dream of expanding my business; i am envisaging that one day i own a big retail outlet here in the township and expanding to affluent areas in the suburb. as to how i will get there is a challenge, i am not having a clear operational plan or vision to achieve that. since i am aware now that i am not having a clear vision, i think i would have to embark on developing one. it also became apparent from the respondents that, when they were urged to address the bigger picture of their business future, beyond the immediate and the short-term, they responded in a dismissive manner such as: “oh, the vision thing”. this translated into the unspoken words“we don’t do the vision thing”. they had never anticipated that so many malls would appear within their economic territory where this is currently working against them. entrepreneurial training needs the author of this paper advances that the major objectives of enterprise education should be to develop enterprising people and inculcate an attitude of self-reliance by employing appropriate learning processes.the focus of teaching had to fall not on entrepreneurship (i.e., on the process of creating and developing individual businesses), but rather on developing people who express enterprising behaviour ( i.e., people who may want to run their own business, as well as those whose enterprising behaviour may take forms other than starting a business).the majority of the respondents alluded to the need for them capacitated with entrepreneurship skills and competencies as they believe that is the way to face the current situation of both big retail big brands and foreign shopowners in their own back-yards and became competitive. mr g, one the shop owner, testified: i have been to a couple of courses or programmes of business management, where we were taught about business plans, financial accounting, marketing and any other subjects of running your business efficiently, i haven’t been exposed to a course where i am taught to be competitive and become entrepreneurially savvy. i am not undermining the previous courses one has attended, they did brought about some visible changes on how i run my business, but i am saying, we need something that will equip us with knowledge that will makes us survive and triumph on this onslaught, otherwise we are finished. just check how many shops has closed here in the township, really something needs to be done as of yesterday. support from the local municipality enterprise development unit the national framework for local economic development makes it clear that local government does not create jobs. it goes on to point out that local economic development is about creating an environment in which to engage stakeholders to implementing strategies and programmes. the majority of the owners of these small retail outlets is of the view that the local municipality development unit is not visible, is not supportive, and is nonexistent. they strongly believe that the unit is not doing what is supposed to be doing as they are alone in the maze of creating a vibrant economic milieu. mr h, a successful retail owner from boipatong declared: sajesbm volume 6, (2013) www.sajesbm.com article no 139 83 i have never in my entire years of running this business being invited to a local economic development unit meeting here. the only time i got visitors from the municipality was when they came here to ascertain as to whether i am the rightful occupant of this premise. since then i will be lying. i am not even aware of the role of that unit as communication with them is non-existence. mr i, a shop owner from evaton lamented: maybe the reason these guys are not coming to us is the view that they think that we will need some financial assistance from them. why are they so afraid of at least communicating with us? we are aware that there is such a unit, but we don’t see it on the ground. discussion this study investigated the prospects of making small retail outlets aggressively competitive. on the basis of the literature review and the findings of this study it is not unreasonable to suggest that infusions of innovation into small retail outlets would go a long way towards developing their competitiveness. this would most likely allow them to consider big brands and small retail outlets of foreign nationals as healthy competition and move away from blame game and the false belief that local municipality has a responsibility to protect them. the unique design features of a small retail outlet that could make these entities aggressively competitive would include, based on literature and gleaned the perspectives of the interviewed small retail outlet owners, the following: 1. develop a system of constantly scanning, analysing and understanding the business location and market opportunities that avail themselves at various stages of the market evolution and economic development even beyond the known business location to cater for business expansion and growth. 2. develop mechanisms and strategies to leverage the emerging and new opportunities that avail themselves through ideas and prototypes that the owner developed or that the business location has made available as a result of new developments in order to either grow or diversify their existing business 3. generate and deploy resources to iteratively test and develop new business opportunities within the framework of affordable losses. 4. determine the team size, structure, internal systems, leadership style and key success variables to cater for the expanded business enterprise. in this sense, small retail outlets outlets owners are most likely to develop the necessary skills to identify and exploit an opportunity, marshal resources such that investment in new or improved aspects of the business is conducted within the framework of affordable losses and finally, the owners would gain skills of assembling a winning team that function within well-established and constantly improved internal systems that innovative and entrepreneurial practices. notes 1. south african residential areas are divided into two i.e. suburb and townships which includes squatter camps. suburb denotes an affluent settlement. thus, white-only settlements were known as suburb while blacks-only settlements were known as townships. 2. a small retail outlet refers to enterprise operating from a township residential stand or home and engage in trading of consumer goods. sajesbm volume 6, (2013) www.sajesbm.com article no 139 84 references buvik, a. 2001. the industrial purchasing research framework: a comparison of theoretical perspective from micro economies, marketing and organizational science. journal of business and industrial marketing, 6: 439-450. chetty, s. & campbell-hunt, c. 2003. explosive international growth and problems of success amongst small to medium sized firms,international small business journal, 21 (1):5-27. co, m.j. & mitchell, b. 2006 entrepreneurship education in south africa: a nationwide survey,journal of education & training,48(5): 348-359. coulter, m. 2001. entrepreneurship in action. upper saddle river, n.j: prentice-hall creswell, j.c. 2005.educational research: planning, conducting & evaluating quantitative & qualitative research. pearson merrill prentice hall: new jersey. davies, t.a. 2001.entrepreneurship development in south africa: redefining the role of tertiary institutions in a reconfigured higher education system. south african journal of higher education,15 (1): 32-39. detienne, d.r. & chandler, g.n. 2004.opportunity identification and its role in the entrepreneurial classroom: a pedagogical approach and empirical test. academy of management learning and education, 3 (3): 242-257. eyal, o. & inbar, d.e. 2003.developing a public school entrepreneurship inventory: theoretical conceptualization and empirical examination.international journal of entrepreneurship behaviour& research.9 (6):221-244. gay, l.r. & airasian p. 2003. educational research: competencies for analysis and application. upper saddle river, n.j.: merrill/prentice-hall. gem, (global entrepreneurship monitor). 2005. global entrepreneurship monitor: south african report 2005. [online] available at: www.gsb.uct.ac.za/gsbwebb/userfiles/gem2005.pdf. accessed: 06 february 2011. greef, m. 2002. information collection: interviewing. (in de vos, (ed). research at grass roots for social sciences and human service professions. pretoria: van schaik. grundling, j.p. & steynberg, l. 2008. academic entrepreneurship in south african higher education.industry &higher education. 22(1):9-17. hisrich, r.d. 2000.entrepreneurial dimensions: the relationship of individual, venture, and environmental factors to success. entrepreneurship theory and practice. 24(4):79-80. industrial development corporation. 2008. the importance of entrepreneurship for south africa’s economic development. [web]www.info.gov.za/aboutsa/economy.htm. access date: 2008/12/01. ireland, r.d, hitt, m.a and sirmon, d.g. 2003. a model of strategic entrepreneurship: the construct and its dimensions. journal of management.29 (6): 963-989. johnson,jr. & bob, l. 1998. resource dependency theory: a political economy model of organizations. international encyclopedia of public policy and administration.4:1969-1974. katz, c.m., macquire,e.r. & ronceck, d.w. 2000. the creation of specialized police gang units: a macro-level analysis of contingency, social threat and resource dependency explanations. international journal of police strategies and management,25(3):472-506. kotelnikov, v. 2003. entrepreneurial organization: promoting entrepreneurial activity inside established organizations. [web] www.1000ventures.com. access date: 13/12/2008. sajesbm volume 6, (2013) www.sajesbm.com article no 139 85 krueger, n.f. 2007. what lies beneath? the experiential essence of entrepreneurial thinking.entrepreneurship theory & practice.31 (1):123-138 ladzani, w.m& van vuuren, j.j. 2002.entrepreneurship training for emerging smes in south africa. journal of small business management.40(2): 154-161 lambing, p. & kuehl, c.r. 2000.entrepreneurship. new york: prentice-hall inc. lebusa, m.j. 2007.the prospects of fostering entrepreneurial praxes by school leadership at historically disadvantaged schools in sedibeng area.vanderbijlpark: north-west university publishing. liedholm, c. 2002. small firm dynamics: evidence from africa and latin america. small business economics, 18(1): 227-242. ligthelm, a. 2009 .small business success and failure in soweto: a longitudinal analysis (2007-2008),research report no 377. lucas, w.a. & cooper, s.y. 2004. enhancing self-efficacy to enable entrepreneurship: the case of cmi connections.[web]http:ssrn.com/abstract=568383. access date 2008/11/25. lumpkin, g.t. & dess, g.g. 1996. clarifying the entrepreneurial orientation construct and linking it to performance. academy of management review, 21: 135-171. maas, g.j.p. & fox, w. 1997.entrepreneurship and public management. cape town: juta publishers. merriam, s.b. 1998. qualitative research and case study applications in education. san francisco: jossey-bass. province of the eastern cape economic development & environmental affairs. 2007. local economic development information booklet. indwe house: bisho south africa. morris, m.h., pitt, l.f & berthon, p. 1996. entrepreneurial activity in the third world informal sector: the view from khayelitsha. international journal of entrepreneurial behaviour & research, 8 (1) : 5976. morris, m.h, kuratko, d.f. & covin, j.g. 2008. corporate entrepreneurship and innovation. (2 nd ed). mason, ohio: thomson south-western publishing. orfordo, j., herrington, m. & wood, e. (eds). 2004. global entrepreneurship monitor: south african report. cape town: centre for innovation and entrepreneurship, graduateschool of business, university of cape town. rogoff, e.g & heck, r.k.z. 2003. evolving research in entrepreneurship and family business: recognizing family as the oxygen that feeds the fire of entrepreneurship. journal of business venturing,18(5): 559-566. shane, s. 2006. a general theory of entrepreneurship.the individualopportunity nexus. cheltenham: edward eldgar publishing limited. strydom, h. & venter, l. 2002. sampling and sampling methods (in de vos, a.s. (ed).2002. research at grass roots for social sciences and human service professions. pretoria: van schaik. suchan, j & dulek, r. 1998. from text to context: an open systems approach to research in written business communication. journal of business communication. 35(1): 87110. swanepoel, e, strydom, j.w. & nieuwenhuizen, c.2010. an empirical analysis of a private company’s corporate social investment in smme development in south africa .southern african business review, 14(1): 58-78. sajesbm volume 6, (2013) www.sajesbm.com article no 139 86 timmons, a.t. & spinelli, s. 2004. new venture creation, entrepreneurship for 21 st century. boston: mcgraw-hill. wiklund, j. and shepherd, d. 2005. entrepreneurial orientation and small business performance: a configurational approach, journal of business venturing, 20: 71-91. p144 role of strategic information systems planning lubbe sajesbm volume 6, (2013) 192 www.sajesbm.com article no 144 www.sajesbm.com the role of strategic information systems planning in a typical small or medium-sized enterprise nicky meyer school of computing university of south africa sam lubbe * dept of information systems north west university theuns pelser director: graduate school north west university *corresponding author email: sam.lubbe@nwu.ac.za phone: +27 (0)18 389 2441 abstract little is known about how strategic information systems planning (sisp) and small and medium-sized enterprises (smes) are linked in a developing country. sisp has also been a concern for many in the information technology (it) industry and it based businesses as a whole. this research seeks to address this shortcoming by exploring what constitutes a typical sme, what role information systems (iss) play in smes and what role sisp plays in smes. consequently, a delphi panel comprising a questionnaire in the first phase and an interview in the second phase was employed. some correlation was found to exist with the literature, with the exception of the role of is in smes, whether sisp is an on-going activity, and the fact that sisp can be outsourced. some new facts were discovered, especially on the topic of outsourcing. keywords: company strategy; strategic information systems planning; small and mediumsized enterprises; sme sustainability; stakeholders and management; viewpoint training and consulting introduction according to newkirk, lederer and johnson (2008), strategic information systems planning (sisp) can be defined as a method to decide what the information system’s (is) goals, resources and organisational structures of the computing system of a company are and sajesbm volume 6, (2013) 193 www.sajesbm.com article no 144 subsequently to identify the potential applications that the company should implement. consequently, it is the planning involved in deciding which is should be employed in the organisation; this is carried out in a strategic manner so that it offers a competitive advantage to the organisation. it is an issue that has been investigated by researchers for decades and it remains an is management issue all over the world (basahel & irani, 2010). the research was initiated by investigating what some of the current and most prominent authors (e.g., levy, powell & yetton, 2001a; lubbe, 2000; etc.) reported on with regard to isp, is, strategy and smes. subsequently, policy documents from an sme were analysed and from which conclusions were drawn. finally, a survey was conducted so that the deductions could be confirmed and updated. problem statement the lack of well-documented and well-formulated sisp in sme enterprises is an issue that needs to be addressed. although sisp has been discussed by various authors in the past, this was related to large enterprises only. moreover, discussions on strategy and smes were not attributed to sisp. the researchers therefore explore the fact that sisp could be used to attain a sustainable competitive advantage in smes. before analysing how sisp is used in smes it is important to define exactly what an sme is. it is also vital to determine what role iss play in smes. another sub-problem to be investigated is how closely strategy is linked to sisp and how it can be of advantage to smes. the theoretical framework of the project a literature review was conducted on topics that include the different aspects of strategy, iss, planning and sisp, and smes. this was followed by a description of the conclusions that resulted from reviewing the literature. a discussion on the analysis of the strategy documents was then completed, after which the research conclusions were detailed. definitions to gain a perspective on the definitions, it is useful to view a timeline of when these topics were first conceived. according to cheong, pita and corbitt (2008), the first incident on the timeline was data processing, then management information systems and strategic iss, and finally, sisp. basahel and irani (2010) state that planning entails the distribution of resources and infrastructure planning, which includes looking at the developing technologies and information needs of a company. strategic planning is defined concisely by newkirk et al. (2008) as a long-term planning process through which the company can create objectives, and means by which to achieve those objectives. newkirk et al. (2008) assert that strategic information systems (sis) are defined as systems that change the approach of a company to competition. these are more specific than being merely information systems but less specific than sisp. sme characteristics according to garg, goyal and lather (2008), even though it has been conventionally assumed that smes use the same management techniques and methodologies as larger companies do, there are several researchers who have demonstrated the opposite. blili and raymond (1993) insist that smaller firms are in fact different to their larger counterparts and so involve different approaches to management. they propose that the methodologies that are on offer were designed with large companies in mind. these authors also insist that because of the many internal and external factors, the mortality rate of an sme is higher than that of a larger company. sajesbm volume 6, (2013) 194 www.sajesbm.com article no 144 levy et al. (2001b) aver that the age and experience of the owner are often the most important factors when it comes to the success of an is. another characteristic of smes reported by blili and raymond (1993) is that their strategic decision cycle (also known as a temporal horizon) is frequently a short one, which occurs when an sme focuses on reaction instead of anticipation. brown and roode (2004) maintain that uncertainty generally exists in the external environment, which could lead to swift it related transformations and companywide turmoil, decentralisation, geographic diffusion and globalisation. garg et al. (2008) declare that strategic thinking in smes is therefore based on intuition instead of analysis. it is far more irregular, unstructured, incremental, unintelligible and reactive in nature. levy et al. (2001a) also state that many factors inhibit growth such as the management team, a risk adverse owner, market uncertainty, and an intensity in competition. current strategy and planning in smes hicks, culley and mcmahon (2006) declare that information, its use, and the strategies for its management are important issues for any company. they further state that information is vital to strategic planning. hence, companies use a wide variety of processes, standards, tools, techniques, methods and languages to manage information. however, hicks et al. (2006) found that is strategy was one of the least significant concerns. in reality, results from a study conducted by newkirk et al. (2008) reported that most companies accord a low precedence to their is function. moreover, levy and powell (1998) assert that there is a lack of strategic planning in smes, and very little it investment or consideration is accorded to the link between them. these authors claim that the main is systems employed in smes are word processing and information management systems. newkirk et al. (2008) maintain that at present smes have little understanding of the extent to which is planning can influence competitiveness. therefore, companies need assistance in becoming more hands-on in connecting is plans with competitive strategies. garg et al. (2008) maintains that the owners understand how to manage the business domain, but simply do not possess the knowledge to exploit is opportunities. it is thus evident that planning an is is problematic, especially in smes. the sme environment is changing rapidly and unpredictably, but traditional is developers need a stable and predictable environment in order to develop an is. lubbe (2000) asserts that the goalposts of it investment are also changing in this turbulent environment and affirms that any long-term project in it is almost out of date before it has even begun. is success factors in smes several elements lead to success when dealing with is strategy. it is important to bear this in mind because, as garg et al. (2008) infer, there is a thin line between failure and success where iss in smes are concerned. newkirk et al. (2008) found that a main factor for the success of ist innovation is having a large amount of ist application experience in the existing company. this is because planning is more significant to firms that are at the leading edge of ist innovation. garg et al. (2008) further state that an innovative organisational culture, upper management support and vision for is development are key factors to is growth. levy et al. (2001a), on the other hand, aver that an older, more educated and is knowledgeable owner is a key characteristic for success. remenyi, lubbe and van heerden (2000) point out that an is can provide benefits for the company. these can include improved efficiency and effectiveness in addition to a competitive advantage. garg et al. (2008) highlight that small businesses need to manage their iss for strategic advantage, and need to provide the correct data to the right people, at the correct time and in the right form. levy, powell and yetton (2001b) insist that there is a link between competitiveness and iss. solutions to the problem of sisp implementation in smes sajesbm volume 6, (2013) 195 www.sajesbm.com article no 144 newkirk et al. (2008) suggest a solution to the problem of sisp in smes by way of providing flexible and adaptable planning models and methodologies to companies so that they can use their is as a competitive weapon. blili and raymond (1993) conclude that smes need a development methodology or approach that is as simple and as flexible as they are and one that is very different from those used by large firms. this flexible approach also needs to be cheaper and adapted to the difficulties and specificity of small firms. remenyi et al. (2000) claim that where iss are concerned, competency is an issue. they point out that having all the is requirements in-house is not as efficient and effective as having them in an in-house and outsourced combination. outsourcing can be used as a corporate strategy, which allows the spotlight to be positioned on core competencies. research questions the following research questions guided this study: 1. what role does an is play in smes? 2. what role does sisp play in smes? methodology the primary data used by the researchers were drawn from the results of the questionnaire and the delphi technique. the strategy, planning, policy and procedure documents of viewpoint training were used as a secondary source. first, a list of possible experts was compiled. subsequently, a questionnaire was drawn up by considering the conclusions had been drawn and thereby identifying what information needed to be confirmed. questions regarding each of the anomalies and the potential results were conceived and the interviews were subsequently conducted. the transcripts from the interviews were finally analysed and the delphi results were updated. the researchers believed that the questionnaires constituted an appropriate method of data collection for the first phase because of their ease of use, and the geographical dispersion and time limitation of the panellists. the respondents indicated their level of agreement with the statements according to the likert scale. interviews open-ended questions were used to encourage the panellists to converse freely about what is important to them and to describe the reasons for their feelings. demographics were employed to determine how well the survey panellists represent the known population. this measurement also involved whether the spread of panellists was sufficiently diverse to represent a good sample. the interview was divided into six main stages. the first stage identified the purpose of the interview so as to ensure that the panellists understood this clearly. the next section discussed the conclusions that were reached on what constitutes a typical sme. the panellists were then queried on whether they agreed with these conclusions and what in their opinion constitutes a typical sme. the next question enquired whether viewpoint was a typical sme. thereafter, the panellists were questioned on whether they understood the terms is and sisp so as to resolve any misunderstandings on this issue. the following section dealt with the role that is plays in smes and enquired whether the conclusions were correct. this question returned inconsistent answers and therefore needed to be clarified. the same applied to the question on why viewpoint did not adopt an is for its cost reduction but did so for its value gain. the fourth section summarised the conclusions regarding the role that sisp plays in smes and specifically in response to the third research question. the fifth section queried whether the panellists had any further comments. sajesbm volume 6, (2013) 196 www.sajesbm.com article no 144 company profile viewpoint training and consulting (also known as viewpoint), which specialises in training and consulting, was used as the case study for this research. the focus of this company falls on the business process management field and its related topics. viewpoint is a closed corporation owned by winton and cathy myers. it is a small company with a total of 12 employees, including two managers, three lecturers, one marketer, one online course developer and five office and conference venue staff. their products include a range of three to five day short courses such as mapping and modelling, business process redesign, advanced automation. in addition, they offer courses on systems analysis, presentation skills and jad sessions as well as distance learning courses. another major service they offer is consulting. their specialty is the creation of a business architecture framework followed by idef0 or bpmn mapping of all the processes of the client company. the result is an end-to-end model of the company process and recommendations for improvement and implementation. their clients vary from individuals to large corporate companies (de beers marine, ernst and young, unilever, south african airways), banks (reserve bank of malawi, nedbank, absa), smalland medium-sized companies, and government institutions (south african army, gauteng department of transport, department of labour). sample size the group that the researchers chose contained two managers, one online course developer and one head of office staff. there are two main reasons for choosing four panellists; firstly, according to brockhoff (1975), under ideal circumstances a group as small as four panellists can perform well and secondly, although the company only has 12 employees, the entire decision making process resides with these four people. results the data analysis was accomplished by applying likert values to the results and producing a likert score. however, if the expected value was 1, then the score value was the opposite. in other words, if the expected value was 1, then a result value of 1 obtained a score of 5, a result value of 2 obtained a score of 4 and so forth. once these scores had been calculated the total of the scores for the four panellists was combined to create a likert score out of 20 for every question. this likert score was then converted to an agreement percentage in order to calculate the extent to which the panellists agreed with the statement. in some cases, there was a 100 % agreement with the statement for a number of questions. some questions resulted in an average of 80 % and above agreement, which means that on average, panellists agreed with the statement. the next range pertaining to agreement was that of 60 % to 80 % for panellists who on average did not agree or disagree with the statements. only three questions fell into this category. finally, in the category of disagreement the percentage values ranges from 0 % to 60 %. sajesbm volume 6, (2013) 197 www.sajesbm.com article no 144 table 1 agreement percentage agreement range average agreement level number of questions percentage total of questions 100% strongly agree 14 46.67% 80% 99% agree 8 26.67% 60% 79% neither agree nor disagree 3 10.00% 40% 59% disagree 2 6.67% 0% 39% strongly disagree 1 3.33% n/a 2 6.67% 30 100.00% based on table 1, it is evident that 46.67 % of the questions were rated as strongly agreed and 26.67 % were rated as agreed. this allows for the conclusion that 73.34 % of the questions were agreed to (more strongly agreed to by the panellists. table 1 also indicates that the panellists revealed neutral feelings towards 10 % of the questions. the last conclusion that can be drawn is that the panellists disagreed or strongly disagreed with 10 % of the questions, bearing in mind that two questions were considered not to be applicable to be placed in a range. all the totals of these findings add up to 100%. there are three anomalies that occurred in the form of questions that were rated as disagree and strongly disagreed. figure 1 indicates that the ages of the panellists vary greatly. one panellist falls into the 18̶– 30 years category, one, in the 40–50 years category, and the other two, in the above 60 years category. none of the panellists fall into the categories of 30–40 years or 50–60 years. figure 1 age distribution of panellists sajesbm volume 6, (2013) 198 www.sajesbm.com article no 144 figure 2 illustrates the gender distribution of the panellists, and demonstrates that two panellists are female and two are male, resulting in an equal distribution of gender figure 2 gender distribution of panellists concerning the race or ethnicity distribution of panellists as depicted in figure 3, it is noted that there are both white and black panellists. one panellist is black and three panellists are white. there were no indians or coloureds. figure 3 race/ethnicity distribution of panellists it is evident from figure 4 that the length of employment ranges from a few years to more than 15 years. two panellists have been employed for between one and five years while the other two panellists have been employed for more than 15 years. the conclusion is that the panellists have either worked at the company for a reasonable amount of time or for as long as the company has been in business. sajesbm volume 6, (2013) 199 www.sajesbm.com article no 144 figure 4 education completed distribution of panellists figure 5 illustrates the levels of education completed by the panellists. one panellist has completed matric while another has a post-school certificate. the third panellist has obtained an undergraduate degree and the last panellist has received a masters degree. figure 5 therefore indicates the extent to which the level of education of the panellists varies, from having completed matric to receiving a masters degree. this result can be explained by the fact that the company is a continuing education company and thus it can be expected that the employees do have some form of formal further education. figure 5 employment length distribution of panellists figure 6 indicates that there is very little variation in the amount of contact that the panellists have with the is. one panellist seldom has any contact with the is while another often uses it. sajesbm volume 6, (2013) 200 www.sajesbm.com article no 144 figure 6 information systems contact of panellists finally, figure 7 reveals a large variance in the contribution that the panellists make towards the strategy of the company. one panellist contributes very rarely while another rarely contributes. two panellists, however, very often contribute to the creation of the strategy of the company. it can thus be concluded that all the panellists play some part in contributing to the creation of strategy, whether it be small or large. figure 7 strategy creating of panellists no clear relationship could be established between the results for age distribution, gender, length of employment, and strategy creation distribution. however, race and ethnicity distribution, level of education, and the level of is contact distribution did play a role in guiding the opinions of the panellists. interpretation of the results the first section of the questionnaire, which was linked to the literature, was designed to establish whether the company employs between 10 and 99 employees. this supports the view of levy et al. (2001b) that a small company has 10 to 99 employees. the interview session further explored this topic, resulting in a consensus that a typical sme is one that is small, privately owned and with a turnover of less than r50 million. moreover, during the interview, all panellists concurred that viewpoint is a typical sme. the next two questions determined whether the panellists understood the terms sisp and is. the responses were rated as strongly agree or agree by all except for one panellist. the sajesbm volume 6, (2013) 201 www.sajesbm.com article no 144 demographic details indicated that this panellist had a matric certificate; therefore, it is understandable that this panellist would not be familiar with such subject specific terms, hence the exception. remenyi et al. (2000) and doherty et al. (1999) define sisp extensively. based on these definitions, of all the panellists just one did not know what it meant. the next section posed questions about the sme and related questions. one question queried whether the company differs greatly from large companies. this question was rated as strongly agreed and supports the assertions of garg et al. (2008) as well as statements by blili and raymond (1993) that small companies are not like larger counterparts. the panellists strongly agreed to a question relating to whether the owner-manager plays an important role in creating strategic direction or not. these findings are in accordance with those of blili and raymond (1993), levy et al. (2001b) and roper (1996) who state that the owner-manager has a large part in managerial decisions and the is of the company. another statementregarding whether the is in the company was defined, was either rated as disagree, neither disagree nor agree or even agree. these findings reasonably concurred with what was expected since, as expected, the response was strongly disagree. they also concur with the findings of hicks et al. (2006), levy et al. (1998), garg et al. (2008) and newkirk et al. (2008) who found that an is is not a focus point in a company and its purpose is often not clear. brown and roode (2004) assert that a stakeholder commitment, an established is function, and optimistic, committed and supportive management will have an encouraging result for iss and sisp. question 7 queries whether the company stakeholders are committed to is planning. this question, however, poses an inconsistency. the expected rating was disagree or strongly disagree. while this pattern was followed closely by three of the four panellists, the fourth panellist rated this question as strongly agree. after analysing the demographics, it was found that this variance could be related to the fact that one panellist seldom engages with the is. it is therefore evident from the results that the views of this panellist about the is system are different from the norm. question 8 queries whether the company has an established is function. the findings of newkirk et al. (2008) indicate that most small companies accord a low priority to their is function; in fact they do not have a well-established is function at all. this response is in line with academic findings. question 9 seeks to establish whether the company has supportive management; this question was rated as strongly agree. the conclusion can thus be reached that viewpoint does have stakeholder commitment, an established is function and supportive management; therefore, it should be successful in sisp and in employing an is. however, during the interview, some interesting comments were made on the issue of stakeholder commitment to is planning. certain panellists stated that they were interested in is, but since it was not part of the core business it was a low priority. they wanted to focus on gaining customers and delivering services and they could not see how is planning would directly aid them in this. other panellists asserted that it was too expensive to be a priority. a panellist also stated that it was too time-consuming and did not have the support of management. none of these views were addressed in the literature. question 10 queries whether the is in the sme is used for tactical and operational needs. this question was rated as strongly agree by all the panellists. garg et al. (2008) claim that iss are used for tactical and operational requirements rather than as a strategic weapon. question 15 further questions whether a strong link exists between the is and the competitiveness of the company. all the panellists rated this statement as strongly agree. therefore, it is evident that although the panellists concurred with the findings of garg et al. (2008) in that it is used for tactical and operational needs, they disagreed with them on the issue of an is not being used as a strategic weapon. this relates strongly to the second sajesbm volume 6, (2013) 202 www.sajesbm.com article no 144 research question about what role an is plays in smes. no exceptions were found in the interview with relation to these two questions. question 11 enquires whether the internet can be used by the company to improve its competitiveness; this statement was rated as strongly agree. this result concurs with that of nieto and fernandez (2006) who stated that the internet could be used as a tool for furthering competitive boundaries and providing the company with an opportunity to discover fresh possibilities. question 12 queries whether iss are developed over time on a necessity basis. this statement was rated as strongly agree by all the panellists. this concurs with the findings of hicks et al. (2006) who maintain that iss are generally developed over time and motivated by necessity. question 13 is designed to determine opinions as to whether an sme-oriented planning model, which is flexible, inexpensive and adaptive, would be useful to the company. this statement was rated as strongly agree by half of the panellists. this response is in accordance with the findings of newkirk et al. (2008) who suggest that the planning model should be flexible and adaptive. the viewpoint of blili et al. (1993) also correlates with this viewpoint that the model should be flexible, inexpensive and adaptable to the difficulties and specificity of small firms. section c commences with question 14 which questions whether the company possesses a vast amount of knowledge about is strategy. the panellists, who rated this statement either as disagree or not applicable (n/a), were neutral towards the statement. the expected rating, however, was strongly disagree, since garg et al. (2008) assert that owners do have management capabilities but little knowledge when it comes to exploiting is opportunities. on the other hand, levy et al. (2001b) state that smes have limited knowledge with regard to an is and therefore cannot take advantage of the system’s strategic information. blili and raymond (1993), however, infer that uncertainty is a consequence of having no knowledge of an is in terms of its competitive advantage. question 16 enquires whether uncertainty affects the implementation of an is. this statement was rated as strongly agree by all the panellists. this confirms the point made by lubbe (2000) that the it investment goalposts are forever changing in the turbulent environment. this statement is also supported by blili et al. (1993) who discuss the changing times and altering environment. they aver that uncertainty is prevalent in both the technological environment and the competition in the environment. question 17 questions whether the formulation of an is strategy is a rare occurrence. this statement was rated as strongly agree by all the panellists. the expected rating, however, was strongly agree since levy et al. (1998) state that smes infrequently have formalised corporate plans or strategies. hicks et al. (2006), levy et al. (1998), garg et al. (2008) and newkirk et al. (2008) all found the implementation of an is strategy to be rare. this question links with question 21, that is, whether sisp is a common occurrence or not, and which was rated as strongly disagree by all the panellists. in the literature various authors make similar statements about sisp being a rare occurrence. question 18 enquires whether iss are adopted by a company for the sake of cost reduction. the panellists offered a variety of opinions rating from strongly disagree to agree. the expected rating, according to levy et al. (2001a), should have been to agree that iss are employed for the sake of cost reduction and value gain. therefore, smes tend to adopt a reactive approach to investing in iss and so view them as a means to improving effectiveness and efficiency. the next question that posed an irregularity was question 19, which queried whether iss are adopted for value gain. three panellists rated this question as strongly agree, but the fourth panellist rated it as disagree. this inconsistency with the academic text could be explained by the demographics which depicted that one panellist was of non-white race. this panellist sajesbm volume 6, (2013) 203 www.sajesbm.com article no 144 is the one that disagreed with the statement. cultural perceptions of what constitutes value could have played a role here. when questioned during the interview on why viewpoint does not adopt an is as a cost reduction, the unanimous verdict was that they currently enjoy high profit margins. another point that was raised was that the company uses process development for cost reductions. these aspects were not mentioned or emphasised in this study. viewpoint does, however, try to use their is for value gain, mostly to avoid employing extra people and to extend their marketing means. question 20 related to whether the fact that is planning requires a long-term commitment hinders it from being implemented or not. the panellists strongly agreed with this statement. this is in accordance with the viewpoint of blili and raymond (1993) who further argue that considerable investment is required and strategic objectives need to be kept in mind. question 22 enquires whether sisp is initiated by management. the panellists strongly agreed with this statement which is not surprising since basahel and irani (2010) state that management plays a part in initiating sisp. brown and roode (2004) found that the principal drivers in sisp are the people in the form of stakeholders and management. question 24 queries whether sisp can be used to align an is with the company’s strategy. all the panellists strongly agreed with this statement. this is in harmony with the literature given that remenyi et al. (2000) assert that sisp is one of the most successful means of aligning an is with corporate strategy. doherty et al. (1999) aver that applications are selected for their alignment with company objectives. brown and roode (2004) insist that sisp is a way of dealing with the concerns surrounding the lack of alignment between company goals and investments in is. question 25 enquires whether sisp is an ongoing activity. the statement was rated as strongly disagree by three of the four panellists and strongly agree by the fourth one. this inconsistency mimics the response to question 15. the expected rating was strongly agree, since sisp is defined by doherty et al. (1999) as an activity that is ongoing and allows companies to set priorities for is development. this response also resulted in one of the lowest likert scores. the question may have been misinterpreted by the panellists, but it is more likely that culture played a significant role in the decision making. in the interview, sisp was considered to be an ongoing activity because the company environment is subject to change and the company needs to remain competitive. this response is very different to that of the first round of questions in which the panellists disagreed with this statement as. question 26 probes whether sisp encourages the development of new systems. all the panellists strongly agreed with this account. this is in accordance with the literature as newkirk et al. (2008) point out that improved sisp can help decision makers with the core business needs that stimulate the emergence of new systems. question 27 enquires whether sisp guarantees that resources are provided for important applications. the panellists strongly agreed with this sentiment. this is in line with the literature. newkirk et al. (2008) infer that sisp can be defined as the method of deciding what the resources of the company’s computing system should be. remenyi et al. (2000) define sisp as the activity of instituting a program for the use and implementation of an is so that optimisation of the company’s information resources takes place. doherty et al. (1999) claim that a reason for using sisp is that it makes sure that enough resources are allotted to vital applications. question 28 queries whether sisp should be more incremental than comprehensive. all the panellists strongly agreed with this statement. this is consistent with the literature. levy et al. (2001a) confirm that companies seek an incremental solution rather than a huge push forward. newkirk and lederer (2006) discuss incremental versus comprehensive sisp and infer that an incremental approach would be better for smes because they exist in a changing and unpredictable environment. brown and roode (2004) advise that the sajesbm volume 6, (2013) 204 www.sajesbm.com article no 144 companies that prefer an adaptive and incremental sisp process will need to be rational about it. the lowest likert score was obtained for question 29. this question related to whether sisp could be outsourced. the results indicated that the panellists either strongly disagreed or disagreed with the statement. one reason for this anomaly could be that the company’s core knowledge area lies in the strategy domain. this aspect is addressed in greater depth in the section regarding limitations. however, this fact could have strongly influenced the opinions of the panellists. this differs significantly from the literature. remenyi et al. (2000) assert that is requirements managed in-house are not as proficient and useful as those in an in-house and outsourced combination. they further state that outsourcing can be used as a corporate strategy which allows the spotlight to be positioned on core competencies. when questioned during the interview on why sisp cannot be outsourced, several good points were raised. firstly, sisp is considered to be a critical issue since it concerns strategy and strategy is central to the company. another point that was raised was that the actual planning should be carried out by the company but all the implementation of the plan should be outsourced to supportive suppliers. none of these points were raised in the literature. question 30 queries whether the panellist had personally participated in formal sisp actions in the company. this relates back to question 21 which questions whether sisp is a common occurrence in the company. the panellists responded that they had participated in sisp actions, which was surprising because the literature states that sisp and any strategy creation in smes is a rare occurrence, as mentioned above. when questioned during the interview on whether the panellists had any further comments, they became quite animated. one panellist stated that the sisp planning made by viewpoint occurred on an informal basis only and that the plans were kept in the forefront of the minds of the members as a competitive advantage. this notion was not mentioned in the literature and is an interesting point that had not been raised earlier. another issue that was not raised throughout this research was that the stakeholders found it crucial to be aware of what was happening in their is and to plan for any changes. such knowledge should also be specifically oriented around how to improve the job. these changes were key to the flexibility of the company. the panellists agreed that sisp should be kept simple and flexible for smes to use and highlighted that no bureaucracy should limit it. this emphasis on bureaucracy was also not a focus point in the literature. the panellists also highlighted how important it was to align sisp with the business goals of the company; this was often emphasised in this study. guidelines following on from the discussion above some guidelines can be explored. the first guideline is that smes should definitely be treated differently from their larger counterparts. they are in fact very diverse in many ways and should be respected as being such, including with regard to their planning models. the latter should be more flexible, inexpensive and adaptive, for example. the second guideline of note is that the owner-manager does play an important role in strategy planning; this should be kept in mind when dealing with smes. it is evident from the findings above that not only does an is play a tactical and operational role, but it also plays a strategic advantage role in smes. the fourth guideline is that the internet is widely considered to constitute a strategic weapon which can improve the competitiveness of a company, especially in small businesses. the fifth guideline is that the nature of iss in smes is such that they are developed over time and on a necessity basis. trying to break this pattern could be considered to be naïve. the sixth guideline is that there is a strong relationship between is and competitiveness as well as between sisp and competitiveness. a seventh notable guideline is that iss are generally prevalent in an environment that is filled with uncertainty and change. this makes creating iss far more complicated. the eighth guideline to consider is that even though the sajesbm volume 6, (2013) 205 www.sajesbm.com article no 144 usefulness of strategy and sisp has been demonstrated, this is still a rare occurrence for many reasons. a ninth guideline is a reminder that long-term commitment hinders is planning from being implemented. the tenth guideline that should be remembered is that sisp is an effective way of aligning an is with the company’s strategy. the eleventh guideline to bear in mind is that sisp can encourage the development of new systems and it is widely considered to be capable of doing so. a twelfth guideline proposes that sisp should be implemented incrementally rather than comprehensively in order for implementation to be completed successfully. another guideline (thirteenth) worth mentioning is that sisp should not be fully outsourced. it is considered to be central to the company and so it is widely accepted that the majority of the work needs to be conducted by the management. finally, the last guideline (fourteenth) declares that sisp is an important activity because it ensures that important applications in the company receive sufficient resources. limitations even though viewpoint training and consulting is an example of an sme, it does possess certain characteristics that set it apart from other smes. these characteristics include the fact that some of their core expertise lies within the field of strategy and that one panellist has experience on this subject matter. in fact, one of the products offered is a course on strategy. this means that the company possesses superior knowledge on the subject of strategy, which is greater than that of a typical sme. this knowledge could therefore have guided the panellists in offering opinions that are not typical of most smes. although viewpoint training is the correct size to fit an sme category, it falls on the smaller side of the definition. with only 12 employees, it is definitely a very small sme. this could have influenced the results by providing more of a micro-company perspective than that of an sme. conclusion it is recommended that more extensive research be conducted on the subject of sisp in smes. examining one case study has led to some interesting results but there are limitations and these need to be dealt with so that an incontrovertible knowledge is gained. a full survey of a large number of smes would assist in this regard. further research should also be undertaken in order to solve the problem regarding sisp in smes. in conclusion, this study has a particular organisational focus and this type of study should be expanded to a broader level in order to assist in the sustainability of smes. references armstrong, s. j. 1978. long-range forecasting from crystal ball to computer. new york, wiley. basahel, a. and irani, z. 2010. examining the strategic benefits of information systems: a global case study. proceedings of the european and mediterranean conference on information systems, abu dhabi, uae, 12-13 april 2010. blili, s. and raymond, l. 1993. information technology: threats and opportunities for smes. international journal of information management, 13: 439 – 448. brockhoff, k. 1975. the performance of forecasting groups in face to face discussions. (in linstone, h. & turoff, m. (eds.). the delphi method: techniques and then one is essentially studying a different technique. addison-wesley, london. brown, i. and roode, d. 2004. using grounded theory in the analysis of literature: the case of strategic information systems planning. acis 2004 proceedings. cheong, f., pita, z. and corbitt, b. 2008. 'approaches and methodologies for strategic information systems planning: an empirical study in australia', in proceedings of 19th sajesbm volume 6, (2013) 206 www.sajesbm.com article no 144 australasian conference on information systems 2008, christchurch, new zealand, 3-5 december 2008. doherty, n.f, marples, c.g. and suhaimi, a. 1999. the relative success of alternative approaches to strategic information systems planning: an empirical analysis. journal of strategic information systems, 8: 263-283. garg, a., goyal, d.p. and lather, a.s. 2008. information systems planning in small business: a stages of growth analysis. international journal of business information systems, 3(4): 410-430. hicks, b.j., culley, s.j. and mcmahon, c.a. 2006. a study of issues relating to information management across engineering smes. international journal of information management, 26: 267-289. levy, m. and powell, p. 1998. sme flexibility and the role of information systems. small business economis,11:183-196. levy, m., powell, p. and yetton, p. 2001b. smes: aligning is and the strategic context. journal of information technology, 16, 133-144. levy, m., powell, p. and yetton, p. 2001a. the dynamics of sme information systems. small business economics, 19: 341-354. lubbe, s. 2000. information technology investment approaches in namibia: six case studies. information technology for development, 9: 3-12. newkirk, h.e., lederer, a.l. and johnson, a.m. 2008. rapid business and it change: drivers for strategic information systems planning? european journal of information systems 17, 198-218 (june). newkirk, h.e. and lederer, a.l. 2006. incremental and comprehensive strategic information systems planning in an uncertain environment. ieee transactions on engineering management, 53: 380 – 394. nieto, m.j. and fernandez, z. 2006. the role of information technology in corporate strategy of small and medium enterprises. journal of international entrepreneurship, 3:251-262. remenyi, d., lubbe, s. and van heerden, j. 2000. some ad hoc information system issues in south africa for the new millennium and suggestions as to how to deal with them. information technology for development, 9:163-174. roper, s. 1996. entrepreneurial characteristics, strategic choice and small business performance. small business economics, 11:11-24. viewpoint training and consulting cc. 2004. general information. [company document]. viewpoint training and consulting cc. 2006. company strategy guidelines. 1st ed. [company document]. viewpoint training and consulting cc. 2007. viewpoint strategic plan 2007. 1st ed. [company document]. viewpoint training and consulting cc. 2007. quality management manual. 1st ed. [company document]. viewpoint training and consulting cc. 2008. viewpoint strategic plan 2008. 1st ed. [company document]. abstract introduction literature review research design, approach and method research findings discussion conclusion and recommendations acknowledgements references about the author(s) francis t. asah department of management, faculty of commerce, rhodes university, grahamstown, south africa lynette louw department of management, faculty of commerce, rhodes university, grahamstown, south africa citation asah, f.t. & louw, l., 2021, ‘guidelines and criteria used by formal financial institutions to assess credit applications from small and medium enterprises in south africa’, southern african journal of entrepreneurship and small business management 13(1), a373. https://doi.org/10.4102/sajesbm.v13i1.373 original research guidelines and criteria used by formal financial institutions to assess credit applications from small and medium enterprises in south africa francis t. asah, lynette louw received: 14 sept. 2020; accepted: 21 jan. 2021; published: 26 apr. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the involvement of formal financial institutions (ffis) in financing small and medium enterprises (smes) is and always has been a fundamental issue of concern amongst policymakers and practitioners in developing countries such as south africa, which experience very low or no economic growth. aim: this study analysed the guidelines and criteria used by ffis to assess credit applications from smes. setting: this study investigated the guidelines and criteria instituted by the head office of ffis when assessing and evaluating credit applications from smes in johannesburg, south africa. methods: this study used an interpretivistic research paradigm to achieve the research objectives. semi-structured in-depth interviews were used to collect data from participants and analysed using the terre blanche, durrheim and kelly five-step process of content analysis. results: the findings revealed that assessing the amount of risk, scrutinising financial records, performing thorough background checks and requesting all relevant documentation constitute ways used by ffis to measure the amount of risk associated with a particular credit application. additionally, collateral, audited financial statements, annual business turnover, relationship with the bank and credit profile of the owners and/or business are the most important criteria used by ffis when assessing credit applications. conclusion: this study provides insights into the guidelines used by ffis in assessing credit applications and the criteria used by ffis when assessing and granting credit. this study revealed that some ffis do not finance foreign-owned businesses as part of their institutional policy. keywords: credit assessment; supply-side perspective; formal financial institutions; developing economies; access to credit; smes. introduction small and medium enterprises (smes) dominate both developed and developing economies and are globally recognised as the prime vehicle for economic development (organisation of economic cooperation and development [oecd] 2017). they are a major source of employment (world bank 2019), revenue generation (oecd 2017), innovation (furawo & scheepers 2018) and technological advancement (saunila 2016). therefore, governments throughout the world are paying much attention to the development of smes to promote economic growth. for instance, in the united states of america, smes are the source of about one-third of both domestic employment and sales value (oecd 2017). in the european union, smes account for about half of the total value added and two-thirds of the domestic workforce (european commission 2019; katua 2014). in most developing economies, smes contribute more than 50% of the total employment and gross domestic product (gdp). for instance, smes in ghana contribute 70% of gdp and 85% of all private sector employment (quaye et al. 2014). in kenya, smes contribute 53% of gdp and 60% of the total employment (peprah, mensah & akosah 2016), and approximately 51% of gdp and 60% of the total employment in nigeria (onakoya, fasanya & abdulrahman 2013). in china, smes contribute about 60% of gdp, and generate more than 82% of the total employment (motilewa, ogbary & aka 2015). since the advent of the economic reform programmes in 1996, there has been a remarkable change in the south african government’s attitude towards the sme sector. this sector has been identified by the government as a priority for increasing jobs so as to resolve the high unemployment rate, which is currently estimated at 29.1% of the economically active population (statistics south africa 2019). in south africa, smes contribute 40% of gdp compared to the 1% of large businesses that contribute about 60% of gdp and 46% of total employment (national planning commission [npc]) 2015). additionally, the npc (2015) maintains that the contributions of smes to the socioeconomic development of south africa can play an important role in achieving vision 2030 of the national development plan, which is to reduce the unemployment rate to less than 10%. however, despite the noted contribution of smes in both developed and developing economies, smes in south africa have one of the lowest established business rates and the highest failure rate of all the countries sampled by the global entrepreneurship monitor (gem) (daniels, herrington & kew 2017) report on entrepreneurship. this report revealed a 26% decline in south africa’s established business rate since 2014, stating that of all the economies that participated in gem (daniels et al. 2017), south africa ranked 61st out of 65 economies. in addition, the report noted that only 25% of smes in south africa survive after the first 5 years of operation (implying a failure rate of 75%). consistently, contemporary literature reveals that the non-availability and non-accessibility of formal sector financing is the main constraint affecting smes in developing countries such as south africa (daniels et al. 2017; herrington & kew 2014; oecd 2017; world bank 2019). in addition, gem (daniels et al. 2017) and oecd (2017) highlighted that only 25% of smes in south africa have access to finance from formal financial institutions (ffis). consistent with these findings, the small enterprise development agency (seda) (2017) maintains that the majority of credit applications (about 75%) by smes to ffis are rejected. from the noted statistics, the unanswered question is ‘why such a high credit rejection rate’. finance being the life-blood of any enterprise, the world investment report (2017) and world bank (2019) advocate that scholars do more research to improve smes’ access to credit from ffis. whilst research (fatoki 2014; herrington & kew 2014; peprah et al. 2016) on smes’ financing in developing economies like south africa focused on the challenges and factors affecting smes’ access to credit from ffis, chowdhury and alam (2017) warned that the stringent credit assessment guidelines and criteria put in place by ffis might be the brain behind the high credit rejection rate. research on the credit assessment guidelines and criteria from a supply-side perspective in developing economies, such as south africa, is lacking and thus necessary. in south africa, because the majority of sme owners raise their start-up and running capital from personal or family savings, which are often inadequate for survival and growth, smes have to rely on financial support from ffis (akinboade 2015; fatoki 2014; herrington & kew 2014). contemporary literature reveals that no single study in south africa has investigated the credit assessment guidelines used by ffis in assessing credit applications received from smes or the criteria used by ffis in assessing and granting credit to smes (chowdhury & alam 2017; world bank 2019; world investment report 2017). therefore, the aim of this study is to analyse the guidelines and criteria used by ffis in assessing and granting credit to smes in johannesburg, south africa. from this research aim, the research objectives for this study are to investigate the: guidelines used by ffis in accessing credit applications from smes in johannesburg, south africa. criteria used by ffis in assessing and granting credit to smes in johannesburg, south africa. literature review according to daniels et al. (2017), oecd (2017) and the world bank (2019), the inability of smes to access formal sector finance is primarily a supply-side problem. supply side refers to providers or suppliers of credit (lenders), which, in this case, are the ffis. from the supply-side perspective, various scholars (adzido & azila-gbettor 2014; ramlee & berma 2013; richard & mori 2012) argue that some of the reasons why ffis do not lend to smes in developing nations are cost-effectiveness of credits to smes, imperfections involved in sme lending, opaqueness of borrowers, high transaction costs, information economics arising from imperfections involved in sme lending and lending technologies and guidelines used by ffis to assess credit applications. theoretical arguments advanced by arena (2011) and la rocca, la rocca and cariola (2011) reveal that information asymmetry, resulting from imperfect market conditions leading to credit rationing, low levels of accountability for credits, poor bookkeeping, lack of credible collateral, lack of transparency and market risks, are some of the reasons why ffis adopt credit rationing behaviour. in addition, la rocca et al. (2011) state that most smes are not sufficiently financially stable to access credit from ffis, as smes cannot afford market interest rates. whilst chowdhury and alam (2017) argue that inadequate financing of smes in developing nations is influenced mainly by supply-side credit guidelines and criteria, smes contend that they do not know why their credit applications are rejected, because ffis seldom provide feedback (ramlee & berma 2013). akinboade (2015) and fatoki (2014) find that ffis in developing nations seem to be uninterested in financing smes; this phenomenon is referred to as the ‘discrimination hypothesis’. makomeke, makomeke and chitura (2016) explain that the discrimination hypothesis stems from the credit guidelines and criteria used by ffis in assessing and evaluating credit applications from smes. additionally, makomeke et al. (2016) point out that ffis over the years have experienced problems with non-performing credit as a result of weak credit analysis, resulting in the high rejection rate of applications for credit. with such high rejection rates, most sme owners are confronted with questions such as: ‘what are ffis looking for from me and my business?’ various authors (liang et al. 2017; makomeke et al. 2016) argue that most ffis have set up standard risk assessment guidelines and evaluation criteria in screening credit applications, which is a major hindrance to most smes. the primary purpose of any credit assessment and evaluation procedure is to measure or ascertain the amount of risk involved and to help ffis make good credit decisions. according to liang et al. (2017) and chowdhury and alam (2017), most ffis follow certain principles in evaluating credit applications and making credit decisions. these principles are summarised in the ‘five cs of credit’ (character, capacity, capital, conditions and collateral) which have been applied as a rule of thumb in the lending market. chowdhury and alam (2017) state that no single c is more important than any other c, and all five cs together help to form a complete picture of the project and client. the principle of the five cs of credit is to establish the creditworthiness of a borrower. the concept, if correctly applied, seeks to evaluate the key criteria of repayment ability, by analysing the stream of cash flows, the character of financial discipline, the financial health of the borrower and other qualitative measures. fatoki (2014) categorises the five cs of credit evaluation into objective and subjective criteria. objective criteria are those that could be measured in terms of ratios and values (such as capital and collateral as measured by owner’s cash contribution and business plan). subjective criteria (such as the usefulness of the business plan and whether the owner understands the content of the business plan, competent management structure, feasibility of the business in terms of competition and viability) are those where the opinion of the credit manager (making credit decisions for ffis) is of prime importance in making the decision. irrespective of the credit evaluation criteria (objective or subjective), present-day credit guidelines, assessment and evaluation criteria are a combination of the traditional method (the five cs) and the modern method of risk management. technological advances have enabled financial engineers to construct new methods of model building and analysis for credit risk measurement. factors such as increase in competition in the credit market, which necessitate the development of methods that are faster, more accurate and more cost-effective, have also contributed significantly to the recent surge in technology-based analysis methods. increasing consumer expectations have led more customers to expect a more efficient credit approval from ffis. in circumstances where certain ffis have made credit access tardy and hardy, customers have shifted their attention to other institutions. confidence and loyalty are highly questioned amongst consumers. as a result of the increase in bankruptcies and global competition in recent times, ffis are calling on their business and credit managers to be more prudent in adhering to the credit guidelines and criteria in assessing and evaluating credit. research design, approach and method in order to address the objectives of this study, a qualitative research design located within the interpretivistic research paradigm, grounded in the epistemological tradition of constructivism and pragmatism, was used (collis & hussey 2014). as such, human subjectivity is part of the research process, which means that the researcher applied a self-reflexive attitude to achieve qualitative, in-depth interpretations of the text of lived experiences (bambale 2014). this research focused on the eight largest ffis in south africa, responsible for about 91% of all assets and about 85% of all liabilities in the commercial banking sector (banking association of south africa 2018), which employ about 106 credit and business managers in the gauteng province. purposive sampling was used in selecting the participants from the eight selected ffis in gauteng, often referred to as ‘the head office banks’. the head office banks have all the policies and guideline documents in place to guide the lending decisions of credit and business managers at branch level. the head office banks also have more knowledge and experience in making lending decisions. the purposive sampling focused on credit and business managers at head office level, because interviewing these managers would yield more insights than interviews with branch office managers. taking into consideration regulations and guidelines governing credit lending in each ffi, interviewing more than one credit manager and one business manager from a single institution would normally lead to data saturation. therefore, a credit manager and a business manager were interviewed from each institution, giving a total of eight credit managers and eight business managers who voluntarily accepted being interviewed. with respect to research ethical clearance, permission was obtained from the selected institutions and consent form was signed by each participant. the participants were assured of anonymity, confidentiality and the option to withdraw from participating at any time. of the participants, seven (44%) were women (three credit managers and four business managers), whilst nine (56%) were men (five credit managers and four business managers). all were south africans. data collection face-to-face in-depth interviews (conducted in english) that ranged between 45 and 60 min, were used to collect data for this research by the researcher between may and august 2019. the interview guide was divided into four sections. the first section was the demographical characteristics of participants. the second and third sections focused, respectively, on the guidelines and the criteria used by ffis in assessing credit applications from smes, and the fourth section on improving access to credit by smes. examples of the interview questions follow: ‘given your experience as a credit/business manager over the years, what are the guidelines used by the institution in assessing credit applications?’ ‘with respect to the major investment areas you have highlighted, what decision-making criteria do you consider when lending to start-up, established and expanding smes?’ ‘given the lending criteria put in place by your institution, to what extent do smes comply with these criteria?’ the collected qualitative data were transcribed and then stored according to the ethical guidelines. data were also resubmitted to the participants to enhance credibility and legitimacy of the findings. data analysis the five-step process of content analysis described by terre blanche, durrheim and kelly (2006), namely familiarisation and immersion, inducing themes, coding, elaboration and, finally, interpretation and checking, was used to analyse the qualitative data. qualitative research criteria and limitations the qualitative data analysis was evaluated against the qualitative ‘quality research criteria’ (collis & hussey 2014) of confirmability (objectivity), transferability (external validity), credibility (internal validity) and dependability (reliability). a transparent description of the analysis, supported by a sound research design and data analysis and a detailed description of the research process, contributed to the quality of the research findings (collis & hussey 2014). the researcher’s immense knowledge of the subject and the participants’ expertise also contributed to the credibility and dependability of the research findings. with regard to transferability of the research findings, this study was conducted at the head offices of the eight selected ffis located in gauteng. consequently, the findings are not generalisable to other ffis operating in south africa. nevertheless, the findings could be useful to other ffis which were not part of this research. research findings the biographical characteristics shown in table 1 list the participants’ gender, age range, ethnic group, current position (cp), duration of current position (dcp), previous position (pp), duration of previous position (dpp), highest qualification (hq) and previous employer (pe). interviews were conducted with eight credit managers (c1–c8) and eight business managers (m1–m8), as shown in table 1. table 1: biographical data of participants. the research findings, aligned with addressing the research questions stated above, are presented in the following sections. assessment of credit applications from small and medium enterprises by the formal financial sector table 2 provides a tabular summary of the perspectives of participants on the assessment guidelines used by ffis to assess credit applications from smes. table 2: participants’ perspectives on assessment guidelines used by the formal financial institutions to grant credit. in table 2, the participants are listed in the first column and the frequency of citations of a particular factor (second column) is given in the third column. this means that, for example, in terms of risk assessment, whilst all the credit and business managers regarded this factor as being important, the importance was further enhanced by the frequency (n = 16) of mention by these participants. the level of importance of each factor is thus determined by the frequency of mention rather than the number of participants. risk assessment (as shown in table 2) in a credit application is considered the most critical aspect (n = 16) which ffis have to deal with. the credit risk level of every enterprise is often evaluated by the institution’s internal credit scoring models. credit scoring is a technique that assists ffis to determine if the enterprise is creditworthy. hasan (2016) states that assessing the risk of a business is an important aspect in determining access to finance from ffis. considering the fact that ffis are out to make profit, it is important for them to carefully assess the profile of smes applying for credit, as indicated by participant c3: ‘we use financial information of the business, debt history of the business, payment history of the business and personal information, like checking the itc records of the owners and your track records with other financial institutions and so forth. all these will help us to evaluate the risk level of the business and the owners. we are tired of losing millions in the form of bad debts because the business is nowhere to be found anymore after collecting our money.’ it also emerged from the interviews that ffis sometimes work with small businesses to enhance their cash flow as a measure to reduce the risk of the credit application. this view is contrary to literature asserting that ffis are not interested in lending to smes – as noted by akinboade (2015) and fatoki (2014) – as indicated in the excerpt by one of the participants (m8): ‘most small businesses do not understand how to work with a working capital. so that is the biggest thing i focus on to try to help them manage their cash flow effectively, investing in assets the proper way if i can help finance the different assets, the proper way.’ a thorough scrutiny of the financial records of smes is the second most important (n = 14) aspect usually considered by ffis when scrutinising an application for credit. participants revealed that ‘financial statement lending’ focuses more on evaluating information from the financial statements of smes. information obtained from financial statements acts as an indicator of borrower’s future prospects and ability to service the credits, as participant m5 explained: ‘you look at their financials and you can just grant the funding looking at their financial records because they are already in the business. so, we will just refer to their financials, how they have been doing in the past years and what is the funding for, you know? is it to really expand the business? then, you need to give us the proof that you are really expanding the business or is it just to maintain the current one maybe, or you just need capital for running the expenses of the business?’ another participant (c8) concurred with m5 and maintained that: ‘the audited financials of the business and the owners are the most important. if not available, then a management account; if not available, then bank statements. i think they are good enough, even though a lot of credit managers do not really like them. bank statements are also evidence to show that the client can pay back the loan or not.’ proper business registration documentation (n = 10) is also important in securing credit from ffis as one of the participants (m5) pointed out: ‘mine is to collect information and do a motivation. for me to do those things, i will need a business plan. i will need your cash flow projection projected for twelve months. i will also need your personal balance sheet and income statement. i will also need your id, company registration documents and then, once i have that information, i can try and see is it possible for us to put in credit information. i will obviously look at your credit record whether you can be able to do that application.’ finally, background checks (n = 10) are performed to establish the trustworthiness of sme owners. they generally involve checking for criminal records or whether any individuals involved in the business have been sequestrated in the past. participant c2 indicated the following: ‘we use credit checks, the itc and then also, we will require if maybe the client, how many directors are there and then we require each and every id of the director of the company and then we also check the company on itc. we also check all the individuals involved in the company through itc. remember, sometimes, if let us say we cannot be lending money to people who were maybe sequestrated or maybe people who had criminal offence, and then if maybe we cannot also be providing money to people who cannot look after their finances.’ another participant (m1) stated: ‘you should have books, your bookkeeping, if you do not have an account. you should have records, you should have invoices, we would actually look at such things. so, we make sure that if we are lending to this person, we have an idea of who they are and where they want to be because any business would not lend to a company that is not profitable.’ however, for businesses owned by immigrants, it is particularly difficult to conduct background checks because of the difficulties involved in verifying information from outside the country. for such reasons, some ffis do not give credit to immigrant-owned businesses. world bank (2019) noted that the lack of trust in foreigner-owned businesses makes financing more complicated and difficult, even though immigrants are requested to pledge a collateral that must be of more value than the credit. of the few that do grant credit to immigrant-owned businesses, participant m6 noted that: ‘when it comes to immigrants, what we normally do is check if their passport is up-to-date, is not expiring and then also, we look if they have working permits into south africa and a first class collateral to support the credit application. remember, when it comes to itc, it goes hand in hand with south africans and then also it is really difficult dealing with immigrant smes because there is lot of fraud happening.’ criteria used by formal financial institutions in assessing and granting credit to small and medium enterprises table 3 provides a tabular summary of the perspectives of participants on the criteria used by ffis in assessing and granting credit to smes. table 3: perspective of participants on the criteria used by formal financial institutions in assessing and granting credit to small and medium enterprises. as shown in table 3, the ability and willingness to offer collateral (n = 32) as a security is the most important criterion considered by ffis when considering granting credit to smes. pledging a collateral signals the confidence of owners or managers of smes about the likelihood of the success of a business. the participants indicated that ffis usually consider collateral in the form of an investment account, land and/or property, investment policy, surety and contract agreement, as affirmed by participant c4: ‘since i started working with this bank, i can say almost all the credit applications that is backed by a valuable collateral has been approved. when i say valuable collateral, i mean collateral that is valuable to the amount of the credit the customer is asking from us. so, we accept collateral like a property (a house or productive land infrastructure) or an investment account opened with us. we also accept life policy but we must do a serious background check to see that the customer has not default payment of his life insurance in the past and also to know the condition under which the insurance is not valid.’ from this excerpt, it can be deduced that holding a collateral is a way of protecting the institution’s interest as the borrower (sme) will be forced to pay the credit. the audited financial statements (n = 26) are the second most important criterion considered by ffis when assessing credit because they reveal information regarding the financial performance of the business, as one of the participants (c3) pointed out: ‘basically, if a client comes to you, they would give us the amount they want us to lend to them or that they want to apply for. so, the main process or the first thing that we basically ask for is their latest audited financials. so, the business has to be trading for two years or more, at least, have sound financials. but if the business is a new business that is less than two years, we would need the business audited financials for six months before we can make a decision.’ small and medium enterprises with favourable annual business turnover (n = 24) are most likely to break even and generate sufficient revenue for the owners. if the business can generate sufficient revenue, then the owner of the business stands a good chance of paying back any debt that the business might incur, as stated by participant m4: ‘most of our lending are systematic as we take into consideration the annual turnover. the annual turnover is very important to us because the annual turnover helps us to determine whether if we give you the loan, you will be able to pay back on time. you know, the annual turnover of your business tells us if your business is doing well or your business is not doing well.’ small and medium enterprise owners that have a relationship with the bank (n = 22) can help to reduce information asymmetry between the two parties and also build trust. participant c6 spoke of the importance of such relationships: ‘if the financials have declined, then, financial restitution would do. some other lending are based on the relationship that you have with the bank, meaning it is not systematic. it would be a relationship that you have. so your credit or business manager would be able to put in a motivation for your credit application.’ credit profiles of the sme and its owners (n = 22), as the credit history and records may reveal, is used to evaluate the creditworthiness of the owners and the business, as mentioned by participant c7: ‘if you have been in the business, let’s say for five years, we would look at your personal credit record and your business credit record because obviously, after five years, you would have a credit record. we would look if you will be able to pay your debt on time or if your business in the past failed to pay its debt on time. when we check the credit record of the owners, we want to know if they have not failed to pay their debt in the past. if any of the owners once failed to pay their debt in the past, then we will carefully look at the collateral they have offered for this credit.’ equity contribution of the owner(s) (n = 18) signals that the sme owners are investment-ready and most ffis are very willing to support such businesses. participant m5 explained: ‘as a business manager, i am very motivated when i see that the owners of the business are investing their personal money in running the business. that tells you that the owners are very serious in running the business and they will do everything to make sure that the business does not fail. let me tell you this: it is a standard practice that we only give 50% of what the equity of a business is. so, in other words, if you put r50 000, we look at r50 000. however, we have got some instances with the dti [department of trade and industry] that they will also give some guarantee from their side to be able to take it up to 80% … it becomes very difficult to just give out loans when the clients themselves do not have anything to motivate that they are serious in their business.’ business registration documents (n = 16) are also important as ffis only give business credit to businesses in the formal sector (businesses registered with department of trade and industry agencies such as seda). completed credit application forms (n = 16) provided by the ffis help the credit and business managers to evaluate if the credit application meets the minimum credit requirements. a comprehensive business plan (n = 16) will provide insights into the sme owners’ ability to articulate a good business plan that meets the requirements of investors such as ffis, as clarified by participant c1: ‘you will find someone who will give you a business plan that is not detailed and you will sit and read this business plan and think, not really understanding what the client wants to do. that one, i have seen it most often and is a major one. also, the way some others write their business plan, you will see someone also giving you a business plan of about 50 pages which can be scaled down to about 10 pages, which makes it easier for me to read the entire document. but if you give me 50 pages business plan, obviously, i will end up reading only about 10 to 20 pages and not really understand your business plan. so, the issue of writing business plans is a major problem with small business owners. we even advise them to look at our website and they will find a sample of a business plan. they do not listen because they want to give you what they have.’ nationality (n = 10) and valid identification document (id) and/or permit document (n = 10) also play a fundamental role for ffis that grant credit to smes, as one of the participants (m7) noted: ‘as i explained to you earlier, we do not fund smes that are owned by foreign nationals. you must have at least a permanent residence permit for us to even look at your credit application. that is the decision we got from top management when i was promoted to this office.’ for sme owners who want to purchase business asset(s), some ffis will require quotations from suppliers (n = 7). formal financial institutions use the quotation to assert the value of the asset(s). participant c5 stated: ‘we usually ask our clients to bring us at least two quotations from different suppliers for things they want to buy. we then use the quotations to compare and affirm the value of the loan they have applied for. most often, the bank would prefer to choose which supplier to buy from and pay the supplier directly if we approve the loan.’ ethical considerations this article followed all ethical standards for carrying out research involving humans, with ethical clearance provided by rhodes university: man 01.03. discussion based on the findings in the section ‘assessment of credit applications from small and medium enterprises by the formal financial sector’, the main guidelines used by ffis in assessing credit applications from smes are risk assessment, scrutiny of financial records, background checks and proper documentation in order of merit. the fact that ffis do lend to smes is an indication that they are willing to accept a certain amount of risk. what they are willing to accept depends on the amount of credit they are willing to provide. therefore, assessing the amount of risk, scrutinising financial records, performing thorough background checks and requesting all relevant documents constitute ways to measure the amount of risk associated with a particular sme credit application. first of all, risk assessment in a credit application is associated with the amount of credit requested by the borrower and the criteria put in place by the ffis. without any expectation, ffis assess the riskiness of an application by using the institution credit scoring model to determine if the application is creditworthy. if the risk is tolerable, then financial records of the borrower (sme) will be further scrutinised to confirm whether they are legitimate. if the risk is not tolerable based on the institution’s credit scoring model, then the credit application is most often rejected upfront or the applicant is asked to revise the application. this finding confirms that ffis are risk-averse; however, they admit that investing in smes is profitable to their business. the risk-averse attitude of ffis in south africa has resulted in credit rationing between large corporations and smes. as a result, only 25% of smes have access to credit because of the high risk in the sme sector, as is evident from gem (daniels et al. 2017). another research by weber (2018) points out that ffis are not interested in lending to particular businesses because of the high-risk profile of the business and its owners. after scrutinising the financial records (by assessing the present and predicting the future performance in terms of sales and profit margins), a decision can be reached whether the credit application should continue to the next stage. this involves background checks on personal and business levels to ensure that the sme and its owners have not defaulted on paying credit in the past. if there has been any past default in payment, then the credit application will definitely be denied. a situation may arise where the sme or its owners are paying another credit with another bank. under such circumstances, the bank will do a follow-up with the other bank to find out the state of the payment of the credit before making a decision. if the sme or its owners have been honouring the repayments, then they stand a good chance of obtaining more credit from other banks. the final stage in the credit assessment process is to validate the credit application by ensuring that all the relevant documents were submitted. any credit application that reaches this stage has a good chance of being approved, as most credit applications are rejected before reaching this stage. it is at this stage that participants (credit and business managers) write their motivation letter and submit the credit application to the credit committee for further review before approval. in cases where the credit committee rejects the credit application because the risk might be high, the committee might want to reduce the original amount requested by the borrower before approving the credit or, better still, consult the participant who processed the credit application for further deliberation on the outcome of the credit application. these findings are supported by liang et al. (2017) and makomeke et al. (2016) who agree that credit assessment and evaluation remain at the heart of the decision-making process, and that ffis over the years have experienced problems with non-performing credit as a result of weak credit analysis leading to the high credit application rejection rate. as highlighted in the section ‘criteria used by formal financial institutions in assessing and granting credit to small and medium enterprises’, pledged collateral, audited financial statements, annual business turnover, relationship with the bank and credit profile of the business and owners were the most important criteria used by ffis to provide credit to smes. quartey et al. (2017) note that collateral plays a disciplinary role in the behaviour of the borrower. according to quartey et al. (2017), holding collateral is attractive to ffis for two reasons. the first is that willingness to offer collateral signals confidence of the sme owners about the likelihood of success of the project, and second, holding collateral can align the interests of the borrower with those of the lender. in this case, both the adverse selection problem of credit origination, and the moral hazard problem after the credit has been granted are addressed. on the other hand, audited financial statements and annual business turnover are used to analyse the smes’ present and future performances and ability to service credits (amadhila & ikhide 2016). formal financial institutions wish to invest in smes, provided the owners can contribute a significant portion of the starting capital as stipulated in the south africa national credit amendment act 7 of 2019. this implies that ffis always want to mitigate the risk of granting credit to smes. therefore, the stringent risk-assessment guidelines and evaluation criteria in screening credit applications is a major hindrance to most smes. equity contribution to a business signals that sme owners are investment-ready. this implies that the greater the owner’s contribution to a business, the greater the lender’s confidence in the business and the less likely that the owners or managers of the business will make risky investments, thus reducing moral hazard, as supported by quartey et al. (2017). business registration documents signal the legality of the business; the completed credit application form provided by ffis evaluates whether the credit application meets the minimum credit requirements. a comprehensive business plan provides both the financial and business information used by business and credit managers to assess the enterprise’s strategies and model to determine the viability and growth prospect of the enterprise. nationality and valid id and/or permit documents provide pertinent personal information about the legal status of the applicant in the country. formal financial institutions use validity of the permit to determine the duration of the credit they are willing to offer to the applicant. immigrant applicants with criminal records will see their loan application rejected immediately without recourse. conclusion and recommendations this study calls on ffis to adopt more flexible but rigorous standards, so that more smes can access credit from them if they are truly willing to lend to smes. in addition, this study further recommends that ffis develop different lending technologies that combine different sources of information about a borrower, screening and underwriting procedures, structure of a loan contract and monitoring mechanisms so as to improve credit access by smes. formal financial institutions in south africa could adopt other screening and risk evaluation approaches such as those developed by the entrepreneurial finance laboratory (hereafter efl) of the centre for international development of harvard university. the efl approach uses exclusive psychometric testing (a 30 min – 60 min automated test) that incorporates an sme owners’ attitude and outlook, aptitude, business acumen and mentality to measure risk and future entrepreneurial potential. as such, the measure of future entrepreneurial potential using the efl approach does not depend on business plans, credit history or collateral of sme owners and has very low transaction costs. using the efl approach could go a long way to benefit all sme owners (including new and immigrant sme owners) who most often find it very difficult to secure collateralised credit from ffis. however, proposing the use of the efl approach in south africa should not discourage sme owners from investing in assets that will add value to their business, such as buildings (fixed assets), investment accounts and business insurance, and keeping good relationship with ffis (business and credit managers). formal financial institutions could also help improve smes’ access to credit by providing business services such as workshop to educate sme owners on the credit assessment guidelines and criteria, and how to write an attractive business plan. creating a special unit with a mandate to assess the business plan and collateral pledged by sme owners would also help increase smes’ access to credit. nonetheless, sme owners’ ability to invest in collateral assets and belong to professional associations will significantly increase their legitimacy and make credit access from ffis easier. acknowledgements the authors wish to acknowledge and thank mrs. ruth for editing the article. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions f.t.a. and l.l. contributed equally to this article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data for this article were extracted from f.t.a.’s phd thesis. the data that support the findings of this study are available from the corresponding author, f.t.a., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adzido, r.y.n. & azila-gbettor, e.m., 2014, ‘assessment of supply-side financing of lower-end market smes by rural banks in ghana’, research journal of finance and accounting 5(18), 196–206. akinboade, o.a., 2015, ‘determinants of smes growth and performance in cameroon’s central and littoral provinces’ manufacturing and retail sectors’, african journal of economic and management studies 6(2), 183–196. https://doi.org/10.1108/ajems-03-2013-0033 amadhila, e. & ikhide, s., 2016, ‘unfulfilled loan demand among agro smes in namibia’, south african journal of economics and management sciences 19(2), 282–301. arena, m.p., 2011, ‘the corporate choice between public debt, bank loans, traditional private debt placements, and a debt issues’, review of quantitative finance and accounting 36(3), 391–416. https://doi.org/10.1007/s11156-010-0182-3 bambale, a.j., 2014, ‘research methodological techniques as a model for quantitative studies in social sciences’, british journal of economics, management & trade 4(1), 862–879. https://doi.org/10.9734/bjemt/2014/7665 banking association of south africa, 2018, our industry, viewed 10 november 2019, from www.banking.org.za/our_industry/member_banks/member_banks.aspx. chowdhury, m. & alam, z., 2017, ‘factors affecting access to finance of smes in bangladesh’, usv annals of economics and public administration 2(26), 55–68. collis, j. & hussey, r., 2014, business research: a practical guide for undergraduate and postgraduate students, 4th edn., palgrave macmillan, basingstoke. daniels, c., herrington, m. & kew, p., 2017, special topic report 2015–2016: entrepreneurial finance, viewed 21 february 2017, from www.gem-spain.com/wp-content/uploads/2015/03/gem-2015-2016-report-on-entrepreneurial-financing.pdf. european commission, 2019, smes performance review, viewed 13 march 2020, from www.ec.europa.eu/growth/smes/business-friendly-environment/performance-review. fatoki, o., 2014, ‘the financing preferences of immigrant small business owners in south africa’, mediterranean journal of social sciences 5(20), 184–189. https://doi.org/10.5901/mjss.2014.v5n20p184 furawo, t. & scheepers, c.a., 2018, ‘factors impacting innovative capability of sme in cape town’, journal of management and administration 2(2), 31–59. hasan, k.r., 2016, ‘development of a credit scoring model for retail loan granting financial institutions from frontier markets’, international journal of business and economics research 5(5), 135–142. https://doi.org/10.11648/j.ijber.20160505.11 herrington, m. & kew, j., 2014, gem south africa 2013 report, viewed 05 may 2016, from www.gemconsortium.org/docs/3336/gemsouth-africa-2013. katua, n.t., 2014, ‘the role of smes in employment creation and economic growth in selected countries’, international journal of education and research 2(12), 461–472. la rocca, m., la rocca, t. & cariola, a., 2011, ‘capital structure decisions during a firm’s life cycle’, small business economics 37(1), 107–130. https://doi.org/10.1007/s11187-009-9229-z liang, l.w., huang, y., liao, c.f. & gao, y.t., 2017, ‘the impact of smes’ lending and credit guarantee on bank efficiency in south korea’, review of development finance 7(3), 134–141. makomeke, p.c., makomeke, c. & chitura, m., 2016, ‘the effectiveness of commercial banks’ credit appraisal techniques in improving asset quality’, journal of economics and finance 7(5), 63–78. https://doi.org/10.9790/5933-0705016378 motilewa, b.d., ogbary, m. & aka, d.o., 2015, ‘a review of the impacts of smes as social agents of economic liberations in developing economies’, international review of management and business research 4(3), 903–914. national planning commission (npc), 2015, our future-make it work. national development plan 2030, viewed 16 april 2019, from www.poa.gov.za. onakoya, a.b.o., fasanya, i.o. & abdulrahman, h.d., 2013, ‘smes financing and economic growth in nigeria’, european journal of business and management 5(4), 130–136. organisation of economic cooperation and development (oecd), 2017, african economic outlook 2017: regional development and spatial inclusion, oecd publishing, paris, viewed 14 november 2018, from www.oecd.org/eco/surveys/2017-oecd-economic-survey-south-africa-overview-2017.pdf. peprah, j.a., mensah, a.o. & akosah, n.b., 2016, ‘accessibility to public procurement: smes entity perspective in ghana’, european journal of business and social sciences 4(9), 25–40. quartey, p., turkson, e., abor, j.a. & iddrisu, a.m., 2017, ‘financing the growth of smes in africa: what are the constraints to sme financing within ecowas?’, review of development finance 7(3), 8–28. https://doi.org/10.1016/j.rdf.2017.03.001 quaye, i., abrokwah, e., sarbah, a. & osei, j.y., 2014, ‘bridging the sme financing gap in ghana: the role of microfinance institutions’, journal of business and management 2(7), 339–353. https://doi.org/10.4236/ojbm.2014.24040 ramlee, s. & berma, b., 2013, ‘financing gap in malaysian smes: a supply-side perspective’, south african journal of economic and management sciences 1(16), 115–126. https://doi.org/10.4102/sajems.v16i5.641 republic of south africa, 2019, south africa national credit amendment act 7, 2019, viewed 13 october 2020, from https://www.gov.za/sites/default/files/gcis_document/201908/42649gon1081.pdf. richard, e.m. & mori, n.g., 2012, ‘smes access to financial services: bankers’ eye’, chinese business review 11(2), 217–223. https://doi.org/10.17265/1537-1506/2012.02.008 saunila, m., 2016, ‘performance measurement approach for innovation capability in smes’, international journal of productivity and performance management 65(2), 162–176. https://doi.org/10.1108/ijppm-08-2014-0123 small enterprise development agency (seda), 2017, the small, medium and micro enterprise sector of south africa, viewed 02 may 2019, from www.seda.org.za/publications. statistics south africa, 2019, quarterly labour force survey, viewed 08 november 2019, from www.statssa.gov.za/?p=12948. terre blanche, m., durrheim, k. & kelly, k., 2006, ‘first steps in qualitative data analysis’, in m. terre blanche, k. durrheim & d. painter (eds.). research in practice. applied methods for the social sciences, pp. 321–344, university of cape town press, cape town. weber, c.s., 2018, ‘central bank transparency and inflation (volatility) – new evidence’, international economic policy 15(7), 21–67. https://doi.org/10.1007/s10368-016-0365-z world bank, 2019. jobs and development, viewed 18 march 2020, from www.worldbank.org/en/topic/jobsanddevelopment/overview. world investment report, 2017, investment and the digital economy, viewed 27 march 2019, from www.unctad.org/en/publicationslibrary/wir2017en.pdf. abstract introduction literature review entrepreneurship self-efficacy research methodology and design results discussion of the results conclusion limitations future research acknowledgements references about the author(s) mondli h. phetha department of entrepreneurial studies and management, faculty of management sciences, durban university of technology, durban, south africa akinlawon amoo department of business administration, faculty of management sciences, durban university of technology, durban, south africa jamila k. adam department of research and postgraduate support, durban university of technology, durban, south africa citation phetha, m.h., amoo, a. & adam, j.k., 2022, ‘entrepreneurial intention of matric commerce students: an empirical study’, southern african journal of entrepreneurship and small business management 14(1), a526. https://doi.org/10.4102/sajesbm.v14i1.526 original research entrepreneurial intention of matric commerce students: an empirical study mondli h. phetha, akinlawon amoo, jamila k. adam received: 03 feb. 2022; accepted: 29 june 2022; published: 14 sept. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: in the first quarter of 2021, the official unemployment rate in south africa was 32.6%. among young persons between the ages of 15 and 34, the figure was 46.3%. one in two young people in the labour market are unemployed, entrepreneurship is widely recognised as an effective mechanism to address the tripartite challenges of unemployment, inequality, and poverty. aim: the study’s aim was to look into the factors that influence matric commerce students’ entrepreneurial intentions in rural kwazulu-natal, south africa. setting: a survey was conducted among commerce students in 11 districts of kwazulu-natal. methods: the study was based on a sample of 433 commerce students from the matric commerce students, south africa. data were gathered through a self-administered questionnaire using a five-point likert scale. descriptive statistics, confirmatory factor analysis and structural equation modelling were performed on the data. results: the results of the study show that attitude towards entrepreneurship, entrepreneurial self-efficacy and entrepreneurial education are key drivers of entrepreneurial intention. the study found no evidence of innovativeness as a driver of entrepreneurial intention. conclusion: the study recommends that the department of basic education should develop strategies that will help innovative and creative students to embrace entrepreneurship. this is because entrepreneurs typically operate in perfect market conditions, with homogeneous products and freedom of entry and exit, so innovativeness is critical. keywords: entrepreneurial intentions; entrepreneurship self-efficacy; innovativeness; attitude to entrepreneurship; matric commerce students; entrepreneurship education; rural areas; kwazulu-natal; entrepreneurship; south africa. introduction the crucial role of entrepreneurship in driving modern civilisation can be found throughout human history (sesen 2013:624). entrepreneurship has received significant attention in recent years because of its integral role in generating economic growth, reducing unemployment and accelerating social development (thabethe 2019:1). moreover, entrepreneurship remains at the core of capitalism, hence the upward trend in economists’ attention to entrepreneurship (priyanka & prabhu 2020:18). in addition, entrepreneurship has played an integral role in the conceptualisation of globalisation (sesen 2013:624). since gaining democracy in 1994, south africa has been plagued by the intransigence of distorted income distribution, high unemployment and high poverty (barnard 2012:1). the social problems of high crime, dwindling morale, corruption and low per capita income can best be resolved through a high level of entrepreneurship among young people (beeka & rimmington 2011:146). the persistently high unemployment rate in the south african context has the potential to increase social tensions (barnard 2012:1). south africa ranks first among the group of countries with high youth unemployment, that is, a 32.6% overall unemployment rate (maskaeva & msafiri 2021:10; stats [sa] 2021). it is believed that entrepreneurship is important for social and economic development and innovativeness (barnard 2012:1). given the alarmingly high level of youth unemployment in south africa, there is a need to put in place a mechanism to stimulate the creation of new jobs, including skills development (du toit 2003:7). the relatively low level of entrepreneurship among young people in south africa is worrying and requires government policy initiatives to encourage entrepreneurship (muofhe & du toit 2011:2). combating poverty, unemployment and inequality, particularly among south africa’s young people, necessitates bold policy changes aimed at encouraging young people to become entrepreneurs (barnard 2012:2). hence, this article aimed to examine the entrepreneurial intentions of matric commerce students with a focus on the rural areas of kwazulu-natal, south africa. the aim of the study was to examine the entrepreneurial intentions of matric commerce students in rural areas in the province of kwazulu-natal, south africa. to answer the primary research question, four secondary questions and hypotheses were considered: what influence does attitude towards entrepreneurship have on entrepreneurial intention? what influence does entrepreneurship self-efficacy have on entrepreneurial intention? what influence does innovativeness have on entrepreneurial intention? what influence does entrepreneurship education have on entrepreneurial intention? h1: attitude towards entrepreneurship will be positively related to entrepreneurial intention. h2: entrepreneurship self-efficacy will be positively related to entrepreneurial intention. h3: innovativeness will be positively related to entrepreneurial intention. h4: entrepreneurship education will be positively related to entrepreneurial intention. literature review entrepreneurial intention model entrepreneurial intention is a catalyst for entrepreneurial behaviour (kautonen, van gelderen & fink 2015:655–647). malebana (2012:35) argues that entrepreneurial behaviour, which includes identifying gaps in the market and starting businesses, is intentional and a planned behaviour that can be predicted by intention. the current study used the theory of planned behaviour (tpb) model to discuss the phenomenon of entrepreneurial intention among commerce matric students. according to jain, khan and mishra (2017:6) and oni and mavuyangwa (2019:7), the tpb model illustrates the dependence of intention on attitudes, subjective norms and perceived behavioural control. in addition, the intention predicts the willingness to update behaviour, which in turn is influenced by the individual disposition regarding behaviour, subjective norms and perceived behavioural control (alonso & krajsic 2015:97; phau et al. 2014:248). previous studies that tested and subsequently validated the tpb model include otuya et al. (2013:132), muofhe and du toit (2011:9), mueller (2011:55–74), iakovleva, kolvereid and stephan (2011:353–370), engle et al. (2010:35–57), gird and bagraim (2008:711–724) and wiklund and shepherd (2003:1919–1941). the tpb model is therefore suitable for the current study, because attitudes, subjective norms and perceived behavioural control are connected with entrepreneurial intentions and behaviours of matric commerce students. entrepreneurial intention of matric commerce students many definitions of entrepreneurial intention have been suggested by various researchers since the 17th century. for example, thompson (2009:669) defined entrepreneurial intention as the self-declared beliefs of individuals that they intend to start new business ventures in the future. this definition is supported by davey, plewa and struwig (2011:337), who defined entrepreneurial intention as the intention to start a business at some point in life with no specific time constraints, and by adam (2016:24), who defined entrepreneurial intention as the desire to strive for entrepreneurial action in the future. for bird (1988:442–453) and lin et al. (2013:1), entrepreneurial intention is defined as the key element in understanding the process of starting a new company. entrepreneurial intentions are influenced by factors such as scarce employment opportunities, entrepreneurial education, mindset and skills, according to oni and mavuyangwa (2019:7). malebana and swanepoel (2015:1–26) discovered that demographic factors such as gender, work experience, previous business start-up experience and entrepreneurial family background all influenced entrepreneurial intention. sesen (2013:624) discovered that locus of control and entrepreneurial self-efficacy influence entrepreneurial intention. according to nasip et al. (2017:825), entrepreneurial intention is positively influenced by innovativeness, self-confidence, willingness to take risks and ambiguity. entrepreneurship education seth (2020:38) observed that there is a lack of a precise definition of entrepreneurship education. jones and english (2004), cited in gautam (2015:22), defined entrepreneurship education as a process by which a person with commercial opportunities is empowered to recognise the know-how and the insights and skills to use them. hood and young (1993), cited in seth (2020:38), defined entrepreneurship education as an educational process for profitable business start-ups that contributes to economic development. fayolle et al. (2006:702) defined entrepreneurship education as any educational process or pedagogical course that aims to impart entrepreneurial attitudes and know-how. in the early research work of lüthje and franke (2003:135–147), a positive relationship was found between entrepreneurship education and entrepreneurial intention. wu et al. (2022:1) discovered a statistically significant relationship between entrepreneurship education and entrepreneurial intention in their recent study. further evidence can be found in the study of mahlaole and malebana (2021:10), which found that entrepreneurship education is positively related to increased entrepreneurial intention. nabi et al. (2018:452–467) discovered that students who are exposed to entrepreneurship education are more inspired to pursue entrepreneurship than their counterparts who are not exposed to entrepreneurship education. despite this evidence, there is a scarcity of literature on the status of matric commerce students in rural areas. because of a number of important circumstances unique to this group, the current study identifies this as a gap. rural schools are distinguished by a slew of negative factors that undermine educational quality (du plessis 2014:1109). the negative factors range from a lack of basic infrastructure to poor socio-economic conditions and information and communications technology (du plessis 2014:1109). rural schools also lack proper governance structures as well as technologically advanced learning and teaching tools. as a result, the study aims to investigate students’ entrepreneurial intentions in rural areas. historical entrepreneurship research development to understand the evolution of historical entrepreneurship research, a look at economists’ and behaviourists’ point of view is important, because the two points of views have rich literature that can be used as the basis for entrepreneurship studies (filion 1997:3; rusu et al. 2012:5371). the economists’ point of view includes the work of vérin (1982), who examined the origin of the term ‘entrepreneur’ and found that the term ‘entrepreneur’ can be traced back to the late 17th and early 18th centuries, where it was initially used to refer to a person doing civil engineering work (rusu et al. 2012:5371). filion (1997:3) believes that the work of cantillon (1755) pioneered a clear conceptualisation of entrepreneurship, although the term preceded him. jean-baptiste say, an economist of the 18th century, is said to be the second person to use the term ‘entrepreneurship’ to promote competition, free trade and the lifting of business restrictions (malebana 2012:98). say (1815) suggested that the antecedent of economic development is entrepreneurship (filion 1997:3). say (1815) viewed the entrepreneur as a risk-taker, premising this view on the notion that entrepreneurs invest money without certainty of recouping the money (filion 1997:3). this view supports the earlier proposition of cantillon (1755), according to which the entrepreneur process is outlined from its founding stage of securing raw material at a certain price with a view of processing it and reselling it at an uncertain price (iversen, jørgensen & malchow-moeller 2010:4). say [1815] (1816) suggested that entrepreneurship should not be seen as synonymous with capitalism but rather as an impetus for socio-economic development (filion 1997:3). the economists’ contribution to entrepreneurship research is not without criticism. one of the criticisms of their point of view is their inability to make economics evolutionary (filion 1997:4). this is because economists have been reluctant to accept nonquantifiable models, therefore limiting the science of entrepreneurship (filion 1997:4). furthermore, filion (1997:5) observed that the business community is now seeking the help of behaviourists in order to gain extensive knowledge of business behaviour. on the other hand, the behaviourist paradigm claims that behaviour is an organism’s response to stimuli in a situation (byrne & toutain 2012:6). the behaviourist perspective on entrepreneurship education is one of the two most dominant learning paradigms because of its ability to clearly define behaviour, and to objectively and independently measure changes in behaviour (kozlinska 2016:9). in addition, the behaviourist paradigm is relevant to this study, as this study examines, among other things, the influence of objectivist knowledge that is passively imparted by the teacher to entrepreneurial intention of matric commerce students (bell & bell 2020:4). significance of entrepreneurship education in secondary school curriculum entrepreneurship education, according to udu and amadi (2013:69), provides students with important skills that prepare them to face the challenges of later life. for example, when entrepreneurial skills are introduced at a young age, young people believe that they will not only be able to work for others but will also be able to start their own businesses. the general conviction of udu and amadi (2013:69) is that entrepreneurship education should, if possible, be introduced in the earliest learning phase, preferably in elementary school, in order to create a basis for the development of further training. over time, entrepreneurship research has been updated by focusing on competencies (venesaar et al. 2022:1). entrepreneurship competencies are a set of knowledge, skills, beliefs and motivators that assist people in dealing more effectively with the world’s increasing globalisation, uncertainty and complexity. according to łopatka (2021:5123), entrepreneurial competencies determine creativity, motivation to act, confidence, accountability for the outcomes of their ventures, and awareness of success and failure. according to venesaar et al. (2022:1), incorporating entrepreneurship competence into the curriculum, study programmes of various subjects and overall learning processes leads to the development of entrepreneurship competence in students at all levels of education. some literature has also identified the ideal conditions in which entrepreneurship can thrive. this includes a modern and dynamic economy that creates jobs and offers enough opportunities that young people can take advantage of on their way to becoming entrepreneurs (eurydice network 2016:7–10). a dynamic economy, according to udu and amadi (2013:69), produces intrapreneurial employees who can develop innovative ideas for their organisations that can lead to new entrepreneurial ventures without becoming self-employed. entrepreneurship self-efficacy from the perspective of entrepreneurs as individuals, entrepreneurial self-efficacy represents how people believe they can fulfil the roles and responsibilities of an entrepreneur and their expectations of what their skills can achieve (brinkley & ingrid 2018:4). the higher the level of self-efficacy, the higher the level of performance (gielnik, bledow & stark 2019:4). according to social cognitive theory, self-efficacy promotes goal development by strengthening the connection between goals and goal attainment (gielnik et al. 2019:4). the ability to identify and discover new opportunities is critical to the entrepreneur’s ability to flawlessly plan, run and manage the business (brinkley & ingrid 2018:4). the entrepreneur’s ability to oversee, direct and manage the business is enhanced through the development of self-efficacy (bullough & renko 2013:343–350). learning can help individuals increase their self-efficacy and increase their belief in their ability to succeed by imparting knowledge and empowering them (brinkley & ingrid 2018:4). research methodology and design research design in this study, a deductive, positivistic research design was chosen because the deductive approach makes it possible to explain causal relationships between concepts and variables, to measure concepts quantitatively and to generalise research results to a certain extent (van wyk 2012:15). regarding the survey design, a cross-sectional design was used in this study in order to investigate possible relationships between the study variables without experimental manipulation (munyanyi, munongo & pooe 2021:10). in addition, a deductive, positivistic research design was found to be appropriate for this study because this study examines the influence of independent variables on a dependent variable and is quantitative in nature. the study examined factors influencing the entrepreneurial intentions of business math students in rural areas of kwazulu-natal, south africa. study population and sampling strategy the population for this study included matric commerce students from rural schools in 11 districts of the kwazulu-natal province of south africa. the target population constituted 11 200 people on average. the sample size was calculated using the raosoft online sample calculator with a 5% error rate, a 95% confidence level and a 50% response distribution. a sample size of 372 students was recommended as the bare minimum. table 1 shows the demographic characteristics of the participants. table 1: questions from the measuring instrument. questionnaire construction the instrument for data collection was a questionnaire. the questionnaire consisted of 29 questions divided into six sections: section a, biographical and company data (three questions); section b, entrepreneurial intention (eight questions); section c, attitude towards entrepreneurship (six questions); section d, solicited information on innovativeness (four questions); section e, solicited information on entrepreneurial self-efficacy (15 questions); and section f, entrepreneurship education (three questions). sections a and b used a nominal scale (‘yes or no’ answer types), whereas sections b–f used a five-point likert scale (1 = strongly disagree to 5 = strongly agree). all questions in sections b, c, e and f were adapted from the lin and chen (2006, 2009) entrepreneurial intention questionnaire, which malebana (2012) used, with minor changes. the questions in section d were adopted with minor changes from the entrepreneurial intention questionnaire developed by mcmillan and schumacher (2001). the use of these questions is justified because they have been validated in other studies, increasing the reliability of the designed questionnaire. furthermore, pilot testing was conducted at kwapata secondary school, where seven students were randomly selected to participate in the pilot testing. all seven participants returned the questionnaire. data obtained from the pilot testing revealed that respondents understood the questions and the questions were free of ambiguity. table 2 depicts the characteristics of the sample. table 2: characteristics of the sample. a total of 433 matric commerce students registered for the 2021 academic year were the respondents. of those polled, 52.9% were women, while 47.1% were men. the majority of respondents (55.9%) were 18 years old, 25.9% were 19 years old, 17.1% were 17 years old and just over 1% were 20 years old. the majority of respondents (98.4%) were black students, with mixed race and white students accounting for the remaining 1.4%. one per cent of respondents did not disclose their ethnicity. data collection the main method of collecting data was face to face. this method was adopted because it guarantees the greatest response rate to the researcher. in addition, literature offers several advantages associated with face-to-face administration of the questionnaire. for example, when in doubt about a question, participants could seek explanation or clarity from the researcher. as mentioned in the data collection process, the researchers explained the purpose of the research to the respondents and ensured they understood the research and signed the informed consent form before completing the questionnaire. the researchers applied to the department of education for permission to carry out this study at the selected schools. the researchers asked the school principals of the respective schools for permission to distribute the questionnaires. after permission was given, the researchers made appointments to administer the questionnaire. this was done to ensure that school authorities were aware of the data collection days so that classes were disrupted as little as possible. in addition, it was also necessary to set dates, as the researchers sometimes also had to rely on physical and logistical support from the school authorities, for example, distribution of the questionnaires to the learners and collection from them once completed. before the research participants started completing the questionnaire, the researchers went through the questionnaire with them to clarify each question on the questionnaire so that in the end everyone had the same understanding of the questions. data analysis the collected data were cleaned and coded using the statistical package for the social sciences (spss) version 22, and structural equations were performed using the analysis of moment structures (amos) version 22. the data were subjected to descriptive statistics, confirmatory factor analysis (cfa) and structural equation modelling, with the results used to answer the research questions. pearson’s correlation coefficient was used to determine the strength of the relationships between the study variables. ethical considerations ethical approval for the study and distribution of the research questionnaire was granted by the durban university of technology’s ethics committee (reference number: irec 136/18). reliability and validity to establish the reliability and validity of the research instruments, cronbach’s alpha, composite reliability (cr) and average variance extracted (ave) were assessed (fornell & larcker 1981; hair et al. 2010). instrument reliability indicates the internal consistency of a set of questions designed to measure a specific variable. good reliability is assured with alpha and cr values of 0.7 and above and an ave of 0.5 or higher (hair et al. 2010). the reliability results of this study are in line with hair et al.’s (2010) recommendations as shown in table 3. convergent validity measures how well a set of designed questions measures or reflects the specific variable that it was meant to measure (hair et al. 2010). factor loadings of 0.5 or higher, cr of 0.7 or higher and ave of 0.5 or higher depict adequate convergent validity and internal consistency (fornell & larcker 1981). table 3: reliability and validity results. discriminant validity distinguishes a study variable from other related variables using statistical information (such as the square root of the ave) to depict the unique nature of such a latent variable. discriminant validity is achieved if the value of the square root of the ave for every latent variable in a study exceeds the value of the correlations with other constructs (hair et al. 2010). table 4 shows the values obtained for this study, thus establishing convergent validity and discriminant validity. table 4: correlation coefficient and average variance extracted. model evaluation the following indices were used to assess the model’s goodness of fit: a statistically nonsignificant chi-square–degree of freedom (χ²/[df]) value ≤ 3, the comparative fit index (cfi) value ≥ 0.9, the tucker–lewis index (tli) value ≥ 0.9, the incremental index of fit (ifi) value ≥ 0.9 and the root mean square error of approximation (rmsea) value ≤ 0.08 (hair et al. 2010). table 5 with initial results of the cfa shows some of the indices were adequate. to ensure all the indices meet the threshold values, modification indices (mi) as suggested by amos were applied. three error terms were correlated on the entrepreneurship intention variable, and five error terms were correlated on the entrepreneurship self-esteem variable. subsequent evaluation (table 5) revealed a good model fit based on the values of all indices. table 5: goodness-of-fit indices for the measurement model. structural model assessment and path analysis a structural model path analysis was conducted to evaluate the hypothesised relationships among the constructs of interest. the goodness-of-fit of the structural model (table 6) was assessed with the following indices: chi-square goodness-of-fit, rmsea), cfi, tli and srmr. table 6: goodness-of-fit indices for the structural model. results according to the results stated in table 7, attitude towards entrepreneurship had a positive and significant relationship with entrepreneurship intention (β = 0.725, p < 0.001), and so did entrepreneurship self-efficacy (β = 0.157, p < 0.001), as well as entrepreneurship education (β = 0.110, p < 0.05). however, the relationship between innovativeness and entrepreneurship intention was not significant. from the results, hypotheses 1, 3 and 4 were fully supported, but hypothesis 2 was not. table 7: results of path analysis and hypotheses tests. according to table 8, the respondents agreed on all aspects of entrepreneurial intention, indicating that they intended to start their own business. the curriculum received the highest rating for positively contributing to their interest in starting a business (mean (m) score = 3.96; standard deviation (sd) = 0.98), followed by those who had a strong intention of starting a business in the future (m = 3.91; sd = 0.98). the lowest mean scores were satisfaction with their professional goal of becoming an entrepreneur (m = 3.7; sd = 1.1) and their willingness to start a business after finishing their studies (m = 3.7; sd = 1.1). table 8: entrepreneurial intention. discussion of the results entrepreneurial intention at least three-quarters of those polled felt that the curriculum had influenced their desire to start a business positively. furthermore, 70% were ready to start a business after finishing their studies and believed that their professional goal was to be an entrepreneur. the highest rated mean score indicated that the curriculum had positively contributed to their interest in starting a business, which was followed by a strong intention to start a business in the future. attitude towards entrepreneurship attitude towards entrepreneurship has predictive power with regard to the likelihood of entrepreneurial behaviour (karali 2013). the results of this study are consistent with other studies, which provide evidence that attitude is a much stronger predictor of entrepreneurial intention. the results indicate that the attitude towards entrepreneurship had a positive and significant relationship with entrepreneurship intention (β = 0.725, p < 0.001). the more positive an attitude one has towards entrepreneurship, the more likely one is to have the intention to engage in a small-scale business. these results are supported by other researchers, for instance, ayalew and zeleke (2018) and bilgiseven (2019), who argued that staying positive, even when setbacks arise, is key to moving forward and pushing through especially in entrepreneurship. however, business disruptions because of coronavirus disease 2019 (covid-19) are signalling a strong decline in revenue and profitability of small businesses (mckinsey 2020), probably reducing the entrepreneur’s confidence and creating a negative attitude towards entrepreneurship. entrepreneurship self-efficacy many small businesses do not have the financial, operational or strategic structures that larger corporations do. research results suggest that if an individual has a high sense of self-efficacy, he or she will have higher entrepreneurial success (al-ghazali & afsar 2021). furthermore, individuals with higher entrepreneurial self-efficacy are more confident in their ability to run their own business with high performance (santos & liguori 2019). the results of this study are consistent with the literature and indicate that entrepreneurship self-efficacy has a positive and significant relationship with entrepreneurship intention (β = 0.157, p < 0.001). an increase in self-efficacy is likely to lead to more people intending to engage in small-scale businesses. according to the mckinsey (2020) report, breaking free from a restrictive owner mindset and assuming a more strategic role is important. however, because of pessimism about the economy and future outlook, there could be some hesitancy to invest in small-scale business unless there are mitigating factors that would cushion the finances if their revenues fell. entrepreneurship education entrepreneurship education has a positive and significant relationship with entrepreneurship intention (β = 0.110, p < 0.05). these results suggest that increasing entrepreneurship education was catalytic to increase the intention to engage in small-scale business. because of a lack of knowledge of available funding options as well as knowledge in managing cash flows and earnings, insufficient or lack of knowledge regarding entrepreneurship can lead to small-scale businesspeople failing to secure small-scale funding. even when funding is available, small medium enterprises (smes) face significant barriers to accessing the necessary support (mckinsey 2020), emphasising the importance of entrepreneurship education. other than not qualifying, the top two reasons for not receiving financial assistance were that entrepreneurs were unaware of the opportunities or did not know where to find the information needed to apply, emphasising the importance of entrepreneurship education in entrepreneurship intention. innovativeness in the aftermath of the covid-19 pandemic’s market competition, small-scale entrepreneurs with a better understanding of shifting demand, potential new client bases and local substitutes for products can shift their focus to new target markets in order to sustain demand (zizile & tendai 2018). this necessitates being inventive and making use of available technology. this study’s findings contradict this evidence, as respondents’ innovativeness had nothing to do with their intention to start a business. these findings are concerning in light of the covid-19 pandemic, which highlights the importance of creativity in order for the company to grow. accessing the right markets to sell products can be difficult if entrepreneurs are not sufficiently creative. to connect with potential buyers during the lockdown, they could sell their products through whatsapp groups or through other social networking sites. conclusion the informal sector is an important economic engine that must be supported. real gross domestic product (gdp) (measured by production) fell by a record 51% in the second quarter of 2021 as a result of the covid-19 lockdown restrictions that went into effect at the end of march 2020. the manufacturing, trade and transportation industries were the largest negative contributors to gdp growth in the second quarter, affecting the majority of informal traders. the covid-19 pandemic had a negative impact on the informal sector in 2020, reaching 17.2% in 2021 (statssa q2: 2021). in conclusion, despite the fact that three-quarters of respondents said the curriculum influenced their desire to start a business, government officials should channel the curriculum even more positively in order to entice these matric students to start a business after they graduate. this will not only increase these school leavers’ entrepreneurial intentions and business start-ups, but it will also reduce social evils caused by idleness in society. the results of this study have highlighted the individual factors for successful entrepreneurship – self-efficacy, positive attitude and entrepreneurship education – and the vast majority of small-scale entrepreneurs are going to need broader support if they are to emerge stronger from the ongoing covid-19 crisis. the study also highlights the lack of innovativeness among matric students. innovativeness means introducing something new into one’s business. furthermore, because there are no operating rules in an entrepreneurial business, entrepreneurs are encouraged to be innovative and creative. this is because of the fact that the study discovered no statistical relationship between innovativeness and entrepreneurial intention, and entrepreneurs typically operate in ideal market conditions characterised by homogeneous products as well as freedom of entry and exit, making innovation critical. apart from the individual factors investigated in this study, there is evidence that limited access to lowand medium-cost funding is constraining small-scale business growth (fatoki 2018). it is therefore recommended that government, through the department of trade, should support entrepreneurs in improving or replacing business processes to increase efficiency and productivity or to enable the business to extend the range of quality of existing products and/or services that have been affected by the covid-19 pandemic. alternatively, the government should incentivise institutions of learning involved in training and developing youth entrepreneurs to reduce youth unemployment. this study contributes to the entrepreneurship literature on the south africa scale or beyond. limitations although the study was properly conducted to investigate entrepreneurial intentions of matric commerce students in the rural areas of kwazulu-natal in south africa, it cannot be ignored that every study can be accompanied by its own limitations. the study presented a sample size that constituted a list of all the matric students who were studying commercial subjects in all the 11 districts predominantly rural in kwazulu-natal province. this was academically justified, but in the real world it is very small against the actual south african population and its provinces. this implies that the study results cannot be generalised to the entire south african population. future research in future, other researchers may consider the same scope and area of study but use a different methodological approach. future studies may use an approach that will be able to rank the level of entrepreneurship intention of these matric students. alternatively, the same research can be conducted but in the form of a comparative study across african countries, which will enrich a wider and better understanding at continental level. a study on entrepreneurial intention of commerce matric students can also be examined in the context of both urban and rural areas of south africa in order to ascertain the net effect, as entrepreneurship cuts across both in the rural and urban areas. acknowledgements the authors acknowledge the participation of various school principals and students in data collection. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions m.h.p. made conceptual contributions, conducted all the interviews and was largely responsible for the preparation and write-up of the research. a.a. contributed substantially to the research design, conducted the data analysis and reviewed the contents of the article for correctness. j.k.a. was the research supervisor and provided guidance throughout the process of preparing the article. funding information financial support was provided by durban university of technology for the research, authorship and publication of this article. data availability the data supporting the results of this study are available from the corresponding author, m.h.p., upon reasonable request. the data are not publicly available because of limitations, such as containing information that could compromise the privacy of research participants. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the institution or the funder. references adam, a.f., 2016, from entrepreneurial intention to behavior: to what extend commitment and implementation intention could facilitate action?, viewed 23 may 2017, from https://tel.archives-ouvertes.fr/tel-01412416/document. al-ghazali, b.m. & afsar, b., 2021, ‘narcissism and entrepreneurial intentions: the roles of entrepreneurial self-efficacy and environmental complexity’, the journal of high technology management research 32(1), 100395. https://doi.org/10.1016/j.hitech.2020.100395 alonso, a.d. & krajsic, v., 2015, ‘the theory of planned behaviour, micro-growers and diversification: an exploratory study’, journal of enterprising communities: people and places in the global economy 9(2), 94–113. https://doi.org/10.1108/jec-09-2014-0018 ayalew, m.m. & zeleke, s.a., 2018, ‘modeling the impact of entrepreneurial attitude on self-employment intention among engineering students in ethiopia’, journal of innovation and entrepreneursh 7, 8. https://doi.org/10.1186/s13731-018-0088-1 barnard, j.m., 2012, ‘an assessment of entrepreneurial intentions of secondary school learners in selected areas’, mba, north-west university, viewed 28 may 2017, from https://dspace.nwu.ac.za/bitstream/handle/10394/8781/barnard_jm.pdf?sequence=1. beeka, b. & rimmington, m., 2011, ‘entrepreneurship as a career option for african youths’, journal of developmental entrepreneurship 16(1), 145–164. https://doi.org/10.1142/s1084946711001707 bell, r. & bell, h., 2020, ‘applying educational theory to develop a framework to support the delivery of experiential entrepreneurship education’. journal of small business and enterprise development 27(6), 2–33. https://doi.org/10.1108/jsbed-01-2020-0012 bilgiseven, e.b., 2019, ‘analysis of factors leading to entrepreneurial intention’, procedia computer science 158, 885–890. bird, b., 1988, ‘implementing entrepreneurial ideas: the case for intention’, the academy of management review 13(3), 442–453. https://doi.org/10.5465/amr.1988.4306970 brinkley, m. & le roux, i., 2018, ‘coaching as a support function for potential entrepreneurs’, the southern african journal of entrepreneurship and small business management 10(1), 1–12. https://doi.org/10.4102/sajesbm.v10i1.99 bullough, a. & renko, m., 2013, ‘entrepreneurial resilience during challenging times’, business horizons 56(3), 343–350. https://doi.org/10.1016/j.bushor.2013.01.001 byrne, j. & toutain, o., 2012, learning theories in entrepreneurship: new perspectives, viewed 14 february 2021, from https://www.researchgate.net/publication/265087921. cantillon, r., 1755, essai sur la nature du commerce en general, fetcher gyler, london. davey, t., plewa, c. & struwig, m., 2011, ‘entrepreneurship perceptions and career intention of international students’, education and training 53(5), 335–352. https://doi.org/10.1108/00400911111147677 du plessis, p., 2014, ‘problems and complexities in rural schools: challenges of education and social development’, mediterranean journal of social sciences 5, 1109–1117. https://doi.org/10.5901/mjss.2014.v5n20p1109 du toit, r., 2003, unemployed youth in south africa: the distressed generation?, viewed 19 july 2021, from http://www.hsrc.ac.za/en/research-outputs/ktree-doc/986. engle, r.l., dimitriadi, n., gavidia, j.e., schlaegel, c., delanoe, s., alvarado, i. et al., 2010, ‘entrepreneurial intent: a twelve-country evaluation of ajzen’s model of planned behaviour’, international journal of entrepreneurial behaviour and research 16(1), 35–57. https://doi.org/10.1108/13552551011020063 european commission/eacea/eurydice, 2016, entrepreneurship education at school in europe: eurydice report, publications office of the european union, luxembourg. fatoki, o., 2018, ‘the impact of entrepreneurial resilience on the success of small and medium enterprises in south africa’, sustainability 10(7), 2527. https://doi.org/10.3390/su10072527 fayolle, a., benoît, g., clerc, l. & arabic, p., 2006, ‘assessing the impact of entrepreneurship education programmes: a new methodology’, journal of european industrial training 30(9), 701–720. https://doi.org/10.1108/03090590610715022 filion, l.j., 1997, ‘from entrepreneurship to entreprenology’, in 42nd world conference, san francisco, ca, june 21–24, 1997, pp. 176–192. forbes, d., 2005, ‘the effects of strategic decision making on entrepreneurial self-efficacy’, entrepreneurship theor y and practice 29, 599–626. https://doi.org/10.1111/j.1540-6520.2005.00100.x fornell, c. & larcker, d.f., 1981, ‘evaluating structural equation models with unobservable variables and measurement error’, journal of marketing research 18(1), 39–50. https://doi.org/10.1177/002224378101800104 gautam, m., 2015, ‘entrepreneurship education: concept, characteristics and implications for teacher education’, shaikshik parisamvad 5, 21–35. gielnik, m., bledow, r. & stark, m., 2019, ‘a dynamic account of self-efficacy in entrepreneurship’, journal of applied psychology 105(5), 1–35. https://doi.org/10.1037/apl0000451 gird, a. & bagraim, j.j., 2008, ‘the theory of planned behaviour as predictor of entrepreneurial intent amongst final-year university students’, south african journal of psychology 38(4), 711–724. https://doi.org/10.1177/008124630803800410 hair, j.f. jr., black, w.c., babin, b.j. & anderson, r.e., 2010, multivariate data analysis: a global perspective, 7th edn., pearson education, upper saddle river. hood, j.n. & young, j.e., 1993, ‘entrepreneurship’s requisite areas of development: a survey of top executives in successful entrepreneurial firms’, journal of business venturing 8, 115–135. https://doi.org/10.1016/0883-9026(93)90015-w iakovleva, t., kolvereid, l. & stephan, u., 2011, ‘entrepreneurial intentions in developing and developed countries’, education and training 53(5), 353–370. https://doi.org/10.1108/00400911111147686 iversen, j., jørgensen, r. & malchow-moeller, n., 2010, ‘defining and measuring entrepreneurship’, foundations and trends in entrepreneurship 4(1), 1–63. https://doi.org/10.1561/0300000020 jackson, d.n., 1994, jackson personality inventory revised manual, sigma assessment systems, port heron, mi. jain, s., khan, m.n. & mishra, s., 2017, ‘understanding consumer behavior regarding luxury fashion goods in india based on the theory of planned behavior’, journal of asia business studies 11(1), 4–21. https://doi.org/10.1108/jabs-08-2015-0118 jones, c. & english, j., 2004, ‘a contemporary approach to entrepreneurship education’, education + training 46(8/9), 416–423. https://doi.org/10.1108/00400910410569533. karali, s., 2013, ‘the impact of entrepreneurship education programs on entrepreneurial intentions: an application of the theory of planned behavior’, unpublished master’s thesis, erasmus centre for entrepreneurship, erasmus university of rotterdam, viewed 15 january 2022, from https://www.researchgate.net/publication/335820643_effect_of_individual_entrepreneurial_orientation_between_education_and_student_intention. kautonen, t., van gelderen, m. & fink m., 2015, ‘robustness of the theory of planned behavior in predicting entrepreneurial intentions and actions’, entrepreneurship theory and practice 39(3), 655–647. https://doi.org/10.1111/etap.12056 kozlinska, i., 2016, ‘evaluation of the outcomes of entrepreneurship education revisited: evidence from estonia and latvia’, publications of the university of turku – annales universitatis turkuensis sub-series e – oeconomica, viewed 02 january 2021, from https://www.researchgate.net/publication/311899974. lin, l. & chen, c.s., 2006, ‘the influence of the country – of – origin image, product knowledge & product involvement on consumer purchase decisions: an emoirical study of insurance & catering services in taiwan’, journal of consumer marketing 23(5), 248–265. https://doi.org/10.1108/07363760610681655 lin, l. & chen, c.s., 2009, ‘a study on the influence of purchase intention on repurchase decisions, the moderating effects of reference groups & perceived risks’, tourism review 64(3), 28–48. https://doi.org/10.1108/16605370910988818 lin, x., carsrud, a., jagoda, k., & shen, w., 2013, ‘determinants of entrepreneurial intentions: applying western model to the sri lanka context’, journal of enterprising culture 21(2), 153–174. https://doi.org/10.1142/s0218495813500076 łopatka, a., 2021, ‘entrepreneurial competencies of women ict start-up’, procedia computer science 192, 5122–5129. https://doi.org/10.1016/j.procs.2021.09.290 lüthje, c. & franke, n., 2003, ‘the “making” of an entrepreneur: testing a model of entrepreneurial intent among engineering students at mit’, r&d management 33(2), 135–147. https://doi.org/10.1111/1467-9310.00288 mahlaole, s.t. & malebana, m.j., 2021, ‘the effects of entrepreneurship education on students’ entrepreneurial intentions at a south african university of technology’, journal of entrepreneurship education 24, 1–16. malebana, m.j. & swanepoel, e., 2015, ‘graduate entrepreneurial intentions in the rural provinces of south africa’, southern african business review 19(1), 89–111. https://doi.org/10.25159/1998-8125/5835 malebana, m.j., 2012, ‘entrepreneurial intent of final-year commerce students in the rural provinces of south africa’, phd., university of south africa, viewed 23 june 2017, from http://uir.unisa.ac.za/handle/10500/8588. maskaeva, a. & msafiri, m., 2021, youth unemployment hysteresis in south africa: macro-micro analysis, wider working paper series no. 20, world institute for development economic research (unu-wider), helsinki, viewed 02 february 2022, from https://doi.org/10.35188/unu-wider/2021/954-9. mckinsey, 2020, company’s covid-19 south africa sme financial pulse survey, viewed 15 december 2021, from https://www.mckinsey.com/featured-insights/middle-east-and-africa/how-south-african-smes-can-survive-and-thrive-post-covid-19. mcmillan, j.h. & schumacher, s., 2001, research in education: a conceptual introduction, 5th ed., longman, new york. mueller, s., 2011, ‘increasing entrepreneurial intention: effective entrepreneurship course characteristics’, international journal of entrepreneurship and small business 13(1), 55–74. https://doi.org/10.1504/ijesb.2011.040416 munyanyi, w., munongo, s. & pooe, d., 2021, ‘spurring entrepreneurial intensity through social capital and relationship quality’, the southern african journal of entrepreneurship and small business management 13(1), a425. https://doi.org/10.4102/sajesbm.v13i1.425 muofhe, j. & du toit, w., 2011, ‘entrepreneurial education’s and entrepreneurial role models’ influence on career choice’, sa journal of human resource management 9(1), a345. https://doi.org/10.4102/sajhrm.v9i1.345 nabi, g., walmsley, a., linan, f., akhtar, i. & neame, c., 2018, ‘does entrepreneurship education in the first year of higher education develop entrepreneurial intentions? the role of learning and inspiration’, studies in higher education 43(3), 452–467. https://doi.org/10.1080/03075079.2016.1177716 nasip, s., amirul, s.r., sondoh, s.l. jr. & tanakinjal, g.h., 2017, ‘psychological characteristics and entrepreneurial intention: a study among university students in north borneo, malaysia’, education and training 59(7/8), 825–840. https://doi.org/10.1108/et-10-2015-0092 oni, o. & mavuyangwa, v., 2019, ‘entrepreneurial intentions of students in a historically disadvantaged university in south africa’, acta commercii 19(2), a667. https://doi.org/10.4102/ac.v19i2.667 opoku-antwi, g.l., amofah, k., nyamaah-koffuor, k. & yakubu, a., 2012, ‘entrepreneurial intention among senior high school students in the sunyani municipality’, international review of management and marketing 2(4), 210–219. otuya, r., kibas, p., gichira, r. & martin, w., 2013, ‘“entrepreneurship education: influencing students” entrepreneurial intentions’, international journal of innovative research and studies 2(4), 132–148. phau, i., lim, a., liang, j. & lwin, m., 2014, ‘engaging in digital piracy of movies: a theory of planned behaviour approach’, internet research 24(2), 246–266. https://doi.org/10.1108/intr-11-2012-0243 priyanka, b. & prasad, p.p., 2020, ‘impact of globalization on entrepreneurship article info’, open access full text article 12, 18–22. rusu, s., csorba, l., isac, f.l. & cureteanu, r., 2012, ‘entrepreneurship and entrepreneur: a review of literature concepts’, african journal of business management 6(10), 3570–3575. https://doi.org/10.5897/ajbm11.2785 santos, s.c. & liguori, e.w., 2019, ‘entrepreneurial self-efficacy and intentions: outcome expectations as mediator and subjective norms as moderator’, international journal of entrepreneurial behavior & research 26(3), 400–415. https://doi.org/10.1108/ijebr-07-2019-0436 say, j.b., [1815] 1816, catechism of political economy, transl. j. richter, sherwood, neely, and jones, london. sesen, h., 2013, ‘personality or environment? a comprehensive study on the entrepreneurial intentions of university students’, education and training 55(7), 624–640. https://doi.org/10.1108/et-05-2012-0059 seth, k.p., 2020, ‘the impact of entrepreneurship education on entrepreneurial intention: an empirical study of entrepreneurship education’s four key characteristics’, college of business, arts and social sciences, brunel university london, viewed 15 december 2020, from http://bura.brunel.ac.uk/handle/2438/20368. statistics south africa, 2021, quarterly labour force survey: quarter 2, viewed 02 february 2022, from http://www.statssa.gov.za. thabethe, m.m., 2019, ‘corporate entrepreneurship and organisational performance in the department of basic education, kwazulu-natal, south africa’, phd., durban university of technology, viewed 14 june 2022, from https://hdl.handle.net/10321/3302. thompson, e.r., 2009, ‘individual entrepreneurial intent: construct clarification and development of an internationally reliable metric’, entrepreneurship theory and practice 33(3), 669–694. https://doi.org/10.1111/j.1540-6520.2009.00321.x udu, c.s. & amadi, u.p., 2013, ‘integrating basic entrepreneurship studies into primary education curriculum: platform for sustainable national development’, academic journal of interdisciplinary studies 2(5), 69. van wyk, b., 2012, research design and methods part i, university of western cape. venesaar, u., malleus, e., arro, g. & toding, m., 2021, ‘entrepreneurship competence model for supporting learners development at all educational levels’, administrative sciences 12(1), 1–29. https://doi.org/10.3390/admsci12010002 vérin, h., 1982, entrepreneurs, entreprises, histoire d’une idée, presses universitaires de france, paris. wiklund, j. & shepherd, d., 2003, ‘aspiring for and achieving growth: the moderating role of resources and opportunities’, journal of management studies 40(8), 1919–1941. https://doi.org/10.1046/j.1467-6486.2003.00406.x wu, l., jiang, s., wang, x, yu, l., wang, y. & pan, h., 2022, ‘entrepreneurship education and entrepreneurial intentions of college students: the mediating role of entrepreneurial self-efficacy and the moderating role of entrepreneurial competition experience’, frontiers in psychology 12, 1–9. https://doi.org/10.3389/fpsyg.2021.727826 zizile, t. & tendai, c., 2018, ‘the importance of entrepreneurial competencies on the performance of women entrepreneurs in south africa’, journal of applied business research 34(2), 223–236. https://doi.org/10.19030/jabr.v34i2.10122 microsoft word p147 use of marketing strategies by smmes lekhanya mason.doc sajesbm volume 6, (2013) www.sajesbm.com article no 147 39 the use of marketing strategies by small, medium and micro enterprises in rural kwazulu-natal lawrence mpele lekhanya faculty of accounting & informatics, durban university of technology, south africa roger b. mason department of marketing & retail management, durban university of technology, south africa, and institute of systems science, durban, south africa. corresponding author: lawrence lekhanya lawrencel@dut.ac.za lekhanyam@yahoo.com abstract this paper examines the use of marketing strategies by small, micro and medium enterprises (smmes) in rural areas and identifies how they are limited by various internal and external factors. the study aimed to determine whether rural smmes have formal marketing strategies, the factors that constrain their marketing activities, their understanding of what marketing entails and the marketing communications techniques that they use. the study was conducted in rural kwazulu-natal (kzn), using a survey method. the sample consisted of 374 smme owners/managers, selected using quota sampling, with respondents completing a questionnaire with the assistance of an interviewer. the results of the research revealed that marketing knowledge and expertise is lacking, with limited use of marketing strategies by the rural smmes. the paper will benefit smme marketers by assisting them to better understand the marketing tactics to use, dependent on the nature of their environment. most work on smme marketing has concentrated on urban entrepreneurial marketing, with little emphasis on marketing strategies used in rural areas. findings were limited by the study’s exploratory nature and the small sample. further research with larger samples and the consideration of other provinces is recommended. keywords – marketing strategy, rural, marketing tactics, south africa, smme, kzn introduction small, medium and micro enterprises (smmes) play a vital role in stimulating economic activity, job creation, and poverty alleviation, as well as in the general improvement of living standards in south africa (nieman, hough and nieuwenhuizen, 2003:4). owing to low economic growth, a high unemployment rate and an unsatisfactory level of poverty, particularly in rural areas, smmes are critical for improving the standard of living in south sajesbm volume 6, (2013) www.sajesbm.com article no 147 40 african rural areas and for the development of the country (badi and badi, 2006:60). rural entrepreneurs need to be skilled in many different areas, including that of marketing, since rural marketing strategies differ significantly from marketing strategies aimed at urban or industrial consumers (spake, joseph and finney, 2009: 21-28). the incidence of failure among new businesses is high during their first three to five years of operation. buthelezi (2005:74) states that as smmes start to grow, spending on marketing and advertising becomes a challenge as they try to ensure a good return on their spend. in an analysis of small enterprises, literature indicates that the impact of marketing activities during this growth stage are not well understood (fuller-love, midmore, thomas and henley, 2006). research into factors such as the limited scope of local demand, poor access to extra-regional markets and low population density with a lack of opportunities for networking is needed (fuller-love et al, 2006:191), as are support programmes (berry, 2008:2). thus, there is an apparent lack of knowledge about marketing and the marketing environment of rural smmes. therefore, the overall aim of this study was to investigate and describe the use of marketing by smmes, in order to suggest ways to improve rural smme marketing, and thus contribute to reducing smme failure. this overall aim is guided by the following research objectives: • to identify the respondents’ marketing knowledge • identify the extent to which smme owners/managers perceived marketing to be important to their businesses literature review smme growth and constraints in rural areas several factors hamper the growth of rural firms, including the limited scope of local demand, poor access to extra-regional markets, low population density with a consequent lack of opportunities for networking, as well as inadequate access to capital (fuller-love et al, 2006:191). the key to future growth and expansion requires a basic change in the attitudes and thinking of rural smme owners/managers; a veritable cultural shift (butler, 2001:14). the high incidence of failure among new businesses during their first three to five years of operation is concomitant with growth rates being highest during this same period. literature indicates that the impact of marketing activities during the growth stage is not well understood (fuller-love et al, 2006). it is also apparent that growth appears to be an important element for the demonstration of the entrepreneurial orientation of small firms (greene and brown, 1997), while other studies have emphasized the role of alliances and network strategies for smme market expansions (beamish, 1999). this growth in the importance of the smme sector can be attributed to a number of factors, including people who have been retrenched because of the economic downturn turning to self-employment to earn a living. danson and whittam (1999:1) further stress that the main reason for the growth of smmes in ‘mature’ economies is due to changes in the organisation of production. the process of growth in a small firm results from a combination of three basic components, namely the characteristics of the entrepreneur; the characteristics of the firm; and the development strategies implemented (story, 2004:112-130). these three components are not mutually exclusive. they influence the growth of small firms in a combined way. when studying the business strategy of small firms and particularly their marketing strategy it is very important to consider all three dimensions. sajesbm volume 6, (2013) www.sajesbm.com article no 147 41 the major challenges and constraints facing the smme sector in south africa are the same in all the provinces (rogerson, 2007:62). smmes are hamstrung by many problems, both external and internal, because of their size (egan, 2009). these problems include the economic environment, deregulation and the political environment, demographic changes, buildings and physical facilities, incompetence of management, a continuous shortage of capital, as well as marketing and personnel problems. critical issues for the success of south african smmes are comprised of interest rates, access to finance, funding agencies, marketing, management skills, financial control, cash flow (working capital), costing and trade skills (department of trade and industry, 1998). driver, wood, segal and herrington (2001) further indicate that education, cultural and social norms, financial support and government policy are also critical for entrepreneurial success. marketing as a strategy the use of information regarding marketing mix decisions, especially the promotion and place elements, positively affect smmes and partially mediate the relationship between entrepreneurial orientation and firm performance (keh, nguyen and ping, 2007:591). however, according to pelbani (2000), the personal values of owners/managers influence the marketing strategies they adopt, and, ultimately, the performance of their businesses. as stated by smith (2008:16): “being small doesn’t mean you can’t dream big”. the main point is that small businesses need to be willing to grow; however, in order to grow, they need to have good marketing strategies (woldelul, 2004). rock (1999:137) stresses that developing a strategy is easy, but implementation is difficult which is why focusing on the entrepreneur is important. a marketing strategy is the means by which a firm sets out to achieve its marketing objectives (brassington and pettitt, 2007:438). on the other hand, robert (2007) argues that a combination of strategies and tactics add to the competitive positioning sought by the smme. in reality, a firm will be presented with a range of strategic options, relating to its defined objectives. some of these options will relate to increasing sales volume while others will relate to improving profitability and holding on to what the firm already has (e.g., by reducing costs, increasing prices, changing the product mix, and/or streamlining operations). the strategic goal of marketing is to bring the right product to the right place, at the right price, with the right promotion (mariotti, 2007:87). effective marketing requires that decisions regarding the four marketing mix, product, price, distribution and promotion, are carefully aligned to ensure resource optimisation. marketing is an integral part of any business (kroon, 1998). most entrepreneurs have skills in technical fields but lack marketing skills. as a result, marketing is often neglected by smmes because the owners/managers are involved in dealing with everyday problems. in the process, sufficient funds are not allocated for adequate marketing communications. few smmes have formal marketing strategies and those that have, often use ineffective strategies. the smmes desk of the durban chamber of commerce (2009) reports that 90% of businesses do not survive beyond the first five years. this is not due to their products being inferior, but because they fail to establish themselves in the marketplace. however, this report does not specifically refer to the marketing strategies of smmes, particularly those in rural kzn. the reality is that the of smme in the marketplace marketing mix a marketing strategy is typically implemented by developing a full marketing programme, made up of product, price, place and promotion (or marketing communications). an effective sajesbm volume 6, (2013) www.sajesbm.com article no 147 42 and efficient mix of these four elements is necessary to achieve success in the market at an acceptable profit. regardless of whether a product is a totally new innovation, an update of a familiar product or an imitation of a competitor’s offering, it needs careful planning and development to ensure that the product meets customers’ needs and wants, that it has a significant competitive advantage and is accepted in the marketplace (brassington and pettitt, 2007:191). as reported by bala (2009), overseas transfer of basic technologies by digitalization reduces the dependence of manufacturers on skilled workers. this makes it difficult for smmes to specialize in developing new products and technologies that incorporate inventions and intellectual expertise. it also makes it difficult for smmes to be aware of what other countries can provide or manufacture, so as to develop new products as demanded by customers. van auken, madrid-guijarro and garcia-perez-de-lema (2008) point out that innovation facilitates how smmes respond to market changes and maintain their competitive advantage. with regard to distribution, makgoe (2008:7) highlights that the location of smmes can have an impact on their costs. this means that the quality of the local transportation system is vital, as an smme must be able to deliver the products or service as agreed. transport costs and poor road conditions are primarily a problem for smmes located in rural areas that have to transport and sell their products in local urban or in international markets. laljit (2006:22) stresses that price has become increasingly important as the basis for competition among south african smmes. however, using pricing as a strategy may have a negative impact, reducing smmes ability to be competitive and profitable. however, businesses that lack a market orientation are more likely to price their products by simply copying the competition or marking up their costs to achieve a desired profit margin (best, 2000:151). these businesses may damage their customer value, market share and profit margins. diale (2008) also points out that south africa’s historical past made the situation worse, particularly for entrepreneurs in rural areas. having developed a product, agreed on its price and selected the most appropriate distribution channel, a business must promote the product to potential buyers (o’connor and galvin, 1997:209). such marketing communications are a major aid for smmes to differentiate themselves from competitors (van scheers and radipere, 2008). small businesses are often not aware of how to communicate effectively and affordably with consumers in their target markets (clow and baack, 2004:474). a common constraint experienced by smaller firms is their inability to develop promotional activities on a scale sufficient to achieve parity with other, often larger, competitors (chaston, 1999:162). one way of overcoming this obstacle is to form an alliance with other firms through the formation of a business network. small firms often come together in such a network to achieve greater promotional impact in a domestic market. epstein (2006:35) points out that to stimulate positive word-of-mouth communications, a small firm has to provide service that consistently exceeds the quality of service provided by its competitors in the same market. smmes and external environment marketing is important in the early, vulnerable years of smmes as it provides a vital interface between the firm and its external environment (stokes, 2000). the most important adjustments for both the survival and growth of smmes are active market development, continuous search for new market opportunities and a broadening of the customer base. local business support centres need to have a much better understanding of local business trends and should provide information to help businesses open up markets beyond their immediate environment (lotz and marais 2007). a study by salo, sinisalo and karjaluoto sajesbm volume 6, (2013) www.sajesbm.com article no 147 43 (2008:497) shows that marketing involves several distinct phases that have to be completed successfully. different resources and capabilities are required in each phase. the coordination of these phases is crucial for the success of any business, including smmes. external factors within the rapidly changing global environment, the firm must monitor six major forces: demographic, economic, social-cultural, natural, technological, and political-legal. marketers must pay attention to the interactions between these six environmental forces because these interactions will lead to new opportunities and threats (mezher, el-saouda, nasrallah and alajam, 2008:34-52). according to baron (2006:2), the performance of a firm, and of its management, also depends on its activities in its non-market environment. the non-market environment has grown in importance and complexity over time and commands increased managerial attention. non-market issues that are high on firms’ agendas include environmental protection, health and safety, regulation and deregulation, intellectual property protection, human rights, international trade policy, regulation and antitrust, activist pressures, media coverage of business, corporate social responsibility and ethics (baron, 2006: 2). politics and law government policies and agencies clearly direct and implement the laws of the country. small businesses need to understand the direction of government policy in terms of various legal areas, for example, planning, employment law, health and safety, and consumer law. saffu, walker and hinson (2008: 395-404) argue that marketing decisions are strongly affected by developments in the political and legal environment, which is composed of laws, government agencies, and pressure groups. many countries have introduced reforms to make the registration procedures for small businesses simpler, although this seems not to be true in south africa. start-up businesses often find the process of registration in south africa time-consuming and burdensome, and small businesses have limited administrative resources to deal with these procedures (jansson and sedaga, 2000). economics rural smmes and the markets in which they function are characterized by ease of entry; small-scale activity; use of labour-intensive technologies; high levels of self-employment with a high proportion of family workers; lack of capital and equipment; limited technical skills; lack of access to large and profitable markets, formal credit support services; and dependence on local supplies for their material inputs (ndabeni, 2005). smmes have been identified for employment creation, enhancement of rural incomes, reduction of poverty and building a skills base. however, smmes in rural areas, where the service infrastructure and business environment have not yet been well developed, face problems such as a lack of financial institutions, government agencies, consultants, marketing channels and marketing promotions (hallberg, 2003). kwazulu-natal-top business portfolio (2008/9:68) indicates that kzn has the potential to create sustainable smmes and co-operatives. however, there is no clear strategy of assistance for rural smmes. sajesbm volume 6, (2013) www.sajesbm.com article no 147 44 technology while technology drives the development of many new products and markets, it is also a major reason why some products decline (boyd, walker and larreche, 1995:62). technology can also substantially influence an industry’s performance. in addition to creating new products, technological developments affect all marketing activities, including communications (making available new media or new selling tools), distribution (opening new channels or modifying the operations and performance of existing ones), packaging (using new materials), and marketing research (using new data collection and analysis methods). villee and curran (1999:162) point out that new trends and technologies continue to affect how business is conducted, which markets are served, and how services are provided. however, chiware and dick (2008:154-157) have shown that there is a very low level of technology use among smmes. the costs and effort involved with the subsequent implementation of technology are key factors that influence the success of small businesses (yeh and jung-ting chang, 2007). on the other hand, sun and wang (2005:247-258) recognise that rural enterprises still face many other technological challenges, such as limited or no access to broadband internet and a lack of capabilities/skills and services to use new information and communication technologies (icts). they state that the internet is often used for information search and communication instead of electronic transactions, due to the lack of broadband connections and issues related to trust. smmes find it difficult to adapt to technological change, especially since such developments are happening faster and are increasingly changing the way in which smmes do business and approach marketing. it is still not clear whether technological change will pose threats or provide opportunities for smmes, but it will undoubtedly influence the way in which smmes market their products or services. research methodology the primary data were collected using a qualitative method, namely a survey. primary data was collected from 374 owners/managers of smmes in rural kzn with a questionnaire containing both closed-ended and open-ended questions. the research design was exploratory and cross-sectional in nature. target population the target population of the study was smmes located in rural areas of the kzn province. in kzn it is estimated that there are about 800 smmes in the province as a whole (kzn youthbiz database, nd), but the number of smmes specifically located in rural areas of the province is not known. sampling since a suitable sampling frame was not available from which to draw a probability sample, a quota sampling approach was used to select respondents from five areas in rural kzn, namely from empangeni, ulundi, nquthu, escourt and kwa-nongoma. the main reason for selection of these areas was that they have relatively large rural populations, which allowed for the identification of more smme owners/managers in these areas. sajesbm volume 6, (2013) www.sajesbm.com article no 147 45 the sample quotas were based on area and on the department of trade and industry’s definition of smmes in terms of number of employees. size in terms of number of employees was important as it allows for a comparison with dti statistics (simpson and padmore, 2005:9). the specific sample elements in each quota group were selected because of convenience. a final usable sample of 374 respondents was obtained. this final usable sample is shown in table 1 in terms of the quota control characteristics. although it was attempted to get equal numbers of respondents in each of the quota control cells, this was not possible for the size categories as the vast majority of firms approached fell into the same category. thus, the profile of the final usable sample was as shown in table 1. table 1: profile of usable sample as per quota characteristics geographic area business size area frequency percent turnover pa frequency percent empangeni 76 20.3 r0-5000 24 6.4 ulundi 96 25.7 r5001-10000 67 17.9 nquthu 68 18.2 r10001-15000 51 13.6 escourt 74 19.8 over r15000 209 55.9 kwa60 16.0 don’t know 23 6.0 total 374 100.0 questionnaire design the measuring instrument used was a questionnaire, consisting mainly of closed-ended questions. the literature was used as the source of information to formulate the questionnaire for this study. each question also allowed for comment via an open-ended response alternative. the main questions are summarised in table 2. table 2: summary of key questions research area question understanding of marketing who performs the marketing roles in your business? response alternatives: owner; manager; marketing manager/person; salesman; no-one what is your understanding of marketing? response alternatives: advertising; selling; having products available for people to buy; understanding what customer wants; none or all of above marketing communications methods used which of these methods of promotion have you used during the last 12 months? response alternatives: local advertising; national advertising; sponsorship; brochures; personal selling; competitions; special offers; public relations; other printed materials factors influencing marketing ability what affects your marketing ability? response alternatives: lack of knowledge and experience; limited funds; never thought about marketing; do not know why i should do marketing do you get training on marketing skills? response alternatives: yes/no. in which of the following field(s) have you received training? response alternatives: marketing; human resources; business management sajesbm volume 6, (2013) www.sajesbm.com article no 147 46 environmental factors influencing marketing which one of the following factors affects your marketing activities? response alternatives: political and legal; socio-demographics; economics; technology; competition; natural environment importance of marketing to success marketing is very important to the success of my business marketing is used as a source of information about business response alternatives: 5 point likert scale importance of marketing/marketing communications to marketing success marketing tools assist us in getting more referrals marketing tools assist us in getting more customer loyalty marketing tools assist us in getting more sales response alternatives: 5 point likert scale data collection the questionnaires were administered during personal interviews with respondents at their respective business sites. in order to standardize the conditions under which the questionnaires were completed, teachers at primary schools in the selected areas were recruited and trained as fieldworkers. they distributed and collected self-completion questionnaires according to the quota plan. they conducted the survey with respondents during the period 1 december 2008 to 28 april 2009 on weekdays and over weekends. to increase the respondents’ ability to answer the questionnaires and thus improve the response rate, a number of instructions were provided throughout the questionnaire and the interviewer was on hand to explain any uncertainties where necessary. inconsistency in coding of the closed-ended questions was avoided by having all questionnaires pre-coded. data analysis once data processing had been done (checking of the completed questionnaires and checking for missing information), data were entered into the computer according to the question codes and analysed using spss version 16.0. the first type of analysis involved frequencies, which was also used to check the coding of data. variables were then screened, identifying those that were highly influential on the dependent variables of the study. finally, a number of analytical procedures were used. descriptive statistics were used to help describe and compare the main features of the collected data. in order to test relationships, bivariate analysis was used in the form of cross-tabulations. appropriate inferential statistics were used to test relationships and data were presented by means of bar graphs and tables to show the association between variables. the statistical findings of the survey are integrated and presented with the discussion of the findings that follow. validity and reliability content and construct validity were assessed via the assessing of the questionnaire by research and statistical experts and by pre-testing it with a small sample similar to the population. no significant changes were required. reliability was tested using cronbach’s coefficient alpha, achieving a coefficient of 0.773, thus concluding that the reliability of the study were acceptable. discussion of findings the profile of the smme firms that participated in the survey will first be displayed and then the results will be presented for each of the questions related to the issues or variables being sajesbm volume 6, (2013) www.sajesbm.com article no 147 47 investigated, as identified in the research objectives. the profile of the participating firms is presented in table 3. table 3: profile of participating smmes (n = 374) variable categories no % of sample type of business jointly owned manager of the business and sole ownership manager of the business and jointly owned 112 195 67 30.0 52.1 17.9 nature of business agriculture mining and quarrying manufacturing construction retail, motor trade & repair services wholesale trade, commercial agent catering, accommodation and other trade transport, storage and communications finance and business services community, social and personal services 26 12 26 15 104 52 60 33 21 25 7.0 3.2 7.0 4.0 27.8 13.9 16.0 8.8 5.6 6.7 number of years of business existence less than 1 year 1-2 years 3-5 years 6-8 years more than 8 years 36 104 93 71 70 9.6 27.8 24.9 19.0 18.7 annual turnover of the business r0-5000 r5001-10000 r10001-15000 more than r15000 don’t know 24 67 51 209 23 6.4 17.9 13.6 55.9 6.2 as table 3 indicates, the sample is well dispersed across types of industry and numbers of years in existence. however, more than half the sample was managed by sole owners (52.1%) and had a sales turnover of more than r15 000. nevertheless, this profile shows that the sample is suitably heterogeneous and is not biased only to certain types of firms. respondents’ understanding of, and ability to use, marketing the first objective of the study was to identify the respondents’ marketing knowledge, specifically with regard to understanding what marketing is and what factors influence their ability to conduct marketing activities or that constrain marketing activities. findings with regard to this issue are shown in figure 1. sajesbm volume 6, (2013) www.sajesbm.com article no 147 48 figure 1: the understanding of the respondents about what marketing is understanding what customers want and selling of products (92.5% and 84.2% respectively) was seen to be what marketing is. fewer respondents understood that marketing also includes advertising and having products available for people to buy (37.7% and 29.9% respectively). the implication is that smme owners/managers tend to see marketing as selling what the customer wants. a chi-square goodness of fit test showed this finding to be significant (χ 2 = 22.631, df = 1, p = .000). despite this, figure 2 shows that smmes do use a variety of different forms of marketing tactics and communication methods, with local advertising (57.5%) and special offers (42%) being the most popular. personal selling unsurprisingly is also popular (third at 39.6%). a chi–square goodness of fit test indicated this finding to be statistically significant (χ 2 = 7.797, df = 4, p = .005). sajesbm volume 6, (2013) www.sajesbm.com article no 147 49 figure 2: marketing communications methods used by respondents although smme owners/managers have some understanding of marketing and use some of the tools of marketing, full adoption does not seem widespread. figure 3 indicates some reasons for smmes limited use of the marketing tools. figure 3: factors influencing respondents’ marketing use clearly, marketing is not top of mind awareness for smme owners/managers with over 90% not really thinking about marketing or understanding why they should do marketing. furthermore, respondents are of the opinion that marketing needed special skills and was very expensive. a chi–square goodness of fit test showed this finding to be statistically significant (χ 2 = 7.797, df = 4, p = .005). respondents also felt that there are various external factors that influence their ability to conduct marketing activities. these are given in figure 4. the competitive environment is seen as the most influential factor, being felt by 56.7% of respondents to influence their sajesbm volume 6, (2013) www.sajesbm.com article no 147 50 marketing activities, forcing them to adopt marketing activities despite their lack of marketing knowledge or expertise. a chi–square goodness of fit test showed this finding to be statistically significant (χ 2 = 218.706, df = 4, p = .000). figure 4: external factors influencing respondents’ marketing activities perceived importance of marketing the second objective was to identify the extent to which smme owners/managers perceived marketing to be important to their businesses. although respondents felt that they lacked marketing expertise and their marketing activities were constrained by various factors as discussed above, many still perceived marketing as important and advantageous to their businesses, which is shown in figure 5, with 74.6% agreeing or strongly agreeing that marketing is important to the success of their businesses. a chi–square goodness of fit test showed this finding to be statistically significant (χ 2 = 216.989, df = 4, p = .000). marketing marketing communications figure 5: importance of marketing and marketing communication to business success sajesbm volume 6, (2013) www.sajesbm.com article no 147 51 slightly over half (50.5%) of the respondents agreed or strongly agreed that marketing communications are important to their business popularity, but it is interesting to note that the largest proportion (36.1%) responded neutrally to this, which is consistent with the finding in figures 2 and 3 regarding the limited use of marketing communications tools. a chi–square goodness of fit test showed this finding to be statistically significant (χ 2 = 136.214, df = 4, p = .000). the importance of marketing to respondents is also indicated by its contribution to increasing referrals, loyalty and sales. figure 6 indicates how marketing is perceived by the respondents in this regard. referrals loyalty sales figure 6: importance of marketing to referrals, loyalty and sales 69% (31.3 + 37.7) of respondents agree that marketing tools assist them in getting more referrals for their businesses, with 22.5% being neutral. close to a third of respondents might not be doing any marketing to promote their businesses, but that potentially over 90% could be encouraged to use marketing more effectively. a chi–square goodness of fit test showed this finding to be statistically significant (χ 2 = 177.684, df = 4, p = .000). similarly, 74.3% (38.2 + 36.1) of respondents agree that marketing tools assist them in gaining customer loyalty and 76.8% (46.3 + 30.5) of respondents agree that marketing tools assist them in getting more sales. chi–square goodness of fit tests showed both the loyalty finding (χ 2 = 203.059, df = 4, p = .000) and the sales finding (χ 2 = 246.107, df = 4, p = .000) to be statistically significant. these findings show that respondents generally had a good idea of what marketing could do for their businesses. implications the implications of this study include issues related to both marketing theory and marketing practice. sajesbm volume 6, (2013) www.sajesbm.com article no 147 52 implications for marketing theory in order to identify a better rural development intervention strategy, with specific reference to south african smmes in rural kzn, policy makers need to obtain a clear understanding of the relevant theories that can help to solve complex problems faced by rural communities and business stakeholders. new concepts and theories in marketing management and strategies for rural smmes should be proposed and implemented. the important components for business practices in the rural areas should be further emphasized. this means that rural smme owners/managers need to implement marketing. this is essentially an applied marketing study, related more to the vocation of marketing, limiting the contribution to marketing theory. the main contribution of the study is therefore to marketing practice. implications for marketing practice on the practical side, the results of this study clearly indicate that, due largely to a lack of marketing knowledge and expertise, smme owners/managers do not utilise marketing strategies as effectively in their businesses as they could. due to this lack of marketing skills, they might not provide a suitable range of products or product designs, or use an appropriate mix of marketing communications methods, pricing tactics, distribution methods or customer relationship building approaches. the practical implications of this study will therefore benefit smme marketers by emphasizing a new way to consider the future marketing activities of their businesses, especially those in rural kzn. marketing tactics suggested by this study, such as networking and word-of-mouth, would provide more effective and appropriate marketing tools that will fit the rural geographical profile. most smme owners/managers use few marketing communications tools, with little emphasis on other marketing tactics. many people in rural areas are functionally illiterate, which would make it difficult for them to obtain marketing communications messages from newspapers and other print media. although many of the larger and more marketing astute companies have adopted innovative approaches to communicating with their functionally illiterate customers, this is probably not true of most of the rural smmes who lack both marketing knowledge and sufficient funds for sophisticated marketing activities. it is thus very important for rural smmes to use personal selling as their most reliable marketing tool. for marketing practice to be more effective, this next section recommends various strategies that could be used to overcome these difficulties. recommendations for smmes in order to enable smmes to improve their marketing activities, it is recommended that more needs to be done to promote the culture of enterprise in rural kzn. apart from difficulties in accessing finance, rural smmes in kzn also face barriers such as poor or insufficient entrepreneurial knowledge, as well as a lack of marketing skills and competencies in enterprise management. education and training it is recommended that government strengthen the human resource base of smmes by ensuring strategic co-ordination in policy development and programme delivery in the rural areas, particularly in kzn, as well as re-visit the current variety of government programmes and services designed to improve knowledge and skills in the rural areas, especially those sajesbm volume 6, (2013) www.sajesbm.com article no 147 53 relating to marketing. by breaking down the different levels and components of government education and training into a programme of action, the effectiveness and efficiency of development programmes in rural communities can be ensured, and needless policy duplication and inconsistencies eliminated through increased co-operation and co-ordination. further recommendations include that of government establishing a steering agency responsible for championing and co-ordinating a skills agenda for rural training and skills building capacity. this would include formulating policies on financing technology and promotion of knowledge and skills, especially in the field of marketing. finance and technology government needs to form a development fund in rural areas, to be supervised by all stakeholders, including community leaders. tax concessions on imported manufacturing machinery could lead to the use of appropriate technology or machinery that could improve the quality of goods that small entrepreneurs can produce in their areas. such funding support would make it feasible for smme owners/managers to devote more expenditure on marketing. such expenditure could be on hiring a marketing or selling specialist, use of marketing consultants or agents, or provision of training in marketing and selling. conclusion though understanding of marketing is not a major problem among the smmes, it is not fully utilized by the business owners/managers, with only a few making use of marketing strategies such as national advertising, brochures and personal selling. the lack of marketing, therefore, may be linked to the lack of marketing specialisation, expertise and training. while it was established that marketing is done mostly by individual owners/managers, it was found that a few corporate smmes in rural kzn also use marketing in their business. therefore, the lack of marketing use by rural smmes in kzn might be linked to a lack of cooperation among smmes, as co-operation could counteract the lack of resources that may be used for marketing activities. aspects or tools of marketing that are mostly used by smmes in rural kzn were shown to be local advertising, brochures, special offers and personal selling. most of the businesses in rural kzn are solely owned and most sole owners seem not to have good marketing knowledge and experience. the lack of awareness of knowledge about marketing strategies and marketing activities by smmes in rural kzn manifests in their limited use of marketing tools and can be attributed to the deficiency of formal training regarding marketing. smmes are positive about the importance of marketing in their business, with smme owners/managers who have been in business for one to two years feeling that promotional activities were effective in creating business awareness and that marketing created customer loyalty, more referrals and more sales. they also were of the opinion that marketing was the source of information for their business. recommendations for further research this study set out to establish a basis for knowledge and professionalism within the smmes in the rural kzn area. further studies on the benefits of proper marketing strategies in the rural areas should be encouraged as this has the potential of increasing profits and ensuring the long-term sustainability of smmes. based on the findings of this study, further research could include similar studies in other rural areas of south africa to assess if these findings are typical of all rural areas. in depth qualitative research would help to better understand the nature of the marketing problems experienced by smme and their attitudes to marketing and the expenditure of funds on marketing activities. a study into the attitudes towards, and sajesbm volume 6, (2013) www.sajesbm.com article no 147 54 knowledge of, marketing by the various government and ngo funding and support agencies would be helpful with regard to identifying ways to improve smme marketing activities. acknowledgements we would like to thank the durban university of technology for the financing of this study without which it could not have happened. we would also like to thank helen de beer for her excellent editing support. references badi, r.v. & badi, n.n. 2006. entrepreneurship, new delhi: vrinda publication. bala, s.m.h. 2009. nuture and strategy of product innovations smes: a case study-based comparative perspective of japan and india. journal of innovation, management, policy & practice, 11(1):104. baron, d.p. 2006. business and its environment, 5 th ed. upper saddle river nj: pearson education. beamish, p.w. 1999. the role of alliances in international entrepreneurship. in r. wright (ed.) research in global strategic management. greenwich: jai press: 43-61 berry, a. 2008. the role of the small and medium enterprise sector in latin america and similar developing countries. [online] available at: http://diplomacy.shu.edu/journal/new/pdf/viiiino1/berry.pdf [accessed: 25/07/2008]. best, r.j. 2000. market-based management: strategies for growing customer value and profitability, 2 nd ed. upper saddle river nj: prentice hall. boyd, h.w.jr., walker, o.c. jr. & larreche, j. 1995. marketing management: a strategic approach with a global orientation, 2 nd ed. chicago: irwin. brassington, f. and pettitt, s. 2007. essentials of marketing, 2 nd ed. harlow: prentice hall. buthelezi, p. 2005. smes’ ad spends versus a good return. enterprise, november: 74. butler, d. 2001. business development: a guide to small business strategy. oxford: butterworth-heinemann. chaston, i. 1999. new marketing strategies. london: sage chiware, e. r. & dick, a. 2008. the use of icts in namibia’s sme sector to access business information services. the electronic library, 28(2): 145-157. clow, k.e. & baack, d. 2004. integrated advertising, promotion and marketing communications, 2 nd ed. upper saddle river nj: pearson education. danson, m. & whitam, g. 1999. smes networking and learning. bristol business school teaching and research review, 3, summer. diale, a. j. 2008. government support for small, micro and medium enterprises (smme’s) as a venture for business and economic development in south africa. [on line] available at: http://www.iaabd.org/2009_iaabd_proceedings/track7m.pdf. [accessed: 30/06/2009]. department of trade and industry. 1998. financial access for smmes: towards a comprehensive strategy, pretoria. driver, a., wood, e., segal, n. & herrington, m. 2001. global entrepreneurship monitor. the graduate school of business. university of cape town, cape town. sajesbm volume 6, (2013) www.sajesbm.com article no 147 55 durban chamber of commerce smme desk. 2009. chamber batsa relationship, [online] available at: http://www.durbanchamber.co.za/site/smme-desk [accessed; 11/02/2009]. egan, v. 2009. environmental constraints on small enterprises in tanzania: a case study of the retail electrical, retail clothing and travel industries in dar es salam. [on line]. available at: http://www.iaabd.org/2009_iaabd_proceedings/track7b.pdf. [accessed: 6/07/2009]. epstein, k.a. 2006. marketing made easy. madison: entrepreneur press. fuller-love, n., midmore, p., thomas, d. & henley, a. 2006. entrepreneurship and rural economic development: a scenario analysis approach. international journal of entrepreneurial behaviour and research, 12 (5): 289-305. greene, p. & brown, t.e. 1997. resources needs and the dynamic capitalism typology. journal of business venturing, 8(2): 25-40. hallberg, k. 2003. a market-oriented strategy for small and medium enterprises, discussion paper no. 40. international finance corporation. washington: the world bank. jansson, t. & sedaga, s. 2000. formalizing small businesses the case of colombia. small enterprise development: an international journal of microfinance and business development, 11(3): 4-15. keh, h.t., nguyen, t.t.m & ping, h. 2007. the effects of entrepreneurial orientation and marketing information on the performance of smes. journal of business venturing, 22 (4): 592-611 kroon, j. 1998. entrepreneurship: start your own business. cape town: kagiso education. kwazulu-natal: top business portfolio. 2008/9. agriculture and environmental affairs. 10th edition. kzn youthbiz database. nd. [on line]. available at: http://www.kznyouthbiz.co.za. (accessed: 12/02/2007). laljit, c.r. 2006. the business strategy development among smmes in the kwazulu natal clothing manufacturing sector. unpublished mba dissertation. business studies unit, faculty of commerce, durban university of technology. lotz, o. & marais, l. 2007. manufacturing enterprises and marketing planning in a mining area of the north west province, south africa: lessons for local business support centres. development southern africa, 24(5): 693-706. makgoe, p. 2008. government procurement policy and smme development successes and challenges. [on line] available at: http://www.treasury.fs.gov.za/downloads/ documents/mec%20lecture%20ufs%20mba%20government%20procurement%2 0towards%20smmel%20final.pdf. [accessed; 12/07/2009]. mariotti, s. 2007. entrepreneurship: starting and operating a small business. upper saddle river nj: pearson education. mezher, t., el-saouda, r., nasrallah, w. & al-ajam, m. 2008. entrepreneurship in lebanon: a model for successes and failure. international journal of arab culture, management and sustainable development, 1(1): 34-52. ndabeni, l. 2005. strategies for growth: the supportive role of technology incubators in small enterprise development. [online] available at: http://www.globelics2005africa.org.za/papers/p0034/globelics2005 ndabeni.pdf [accessed: 30/10/2008]. nieman, g., hough, j. & nieuwenhuizen, c. 2003. entrepreneurship: a south africa perspective. pretoria: van schaik. sajesbm volume 6, (2013) www.sajesbm.com article no 147 56 o’ connor, j. and galvin, e. 1997. marketing & information technology: the strategy, application and implementation of it in marketing. london: pitman. pelbani, a.m. 2000. market orientation and other potential influences on performance in small and medium-sized manufacturing firms. journal of small business management, 38(1): 48. robert, l.h. 2007. operational management and operations strategies: an sme perspective. international journal of procurement management, 1(1), 180-209. rock, a. 1999. strategy vs tactics from a venture capitalist. in harvard business review on entrepreneurship, boston: harvard business school press, 137. rogerson, c.m. 2007. small enterprise development in south africa lagging regions: the case of mpumalanga province. urban forum, 18(1): 62-3. saffu., k. walker, j. h. & hinson, r. 2008. strategic value and electronic commerce adoption among small and medium-sized enterprises in a transitional economy. journal of business & industrial marketing, 23(6): 395-404. salo, j., sinisalo, j. & karjaluoto, h. 2008. intentionally developed business network for mobile marketing: a case study from finland. journal of business & industrial marketing, 23(7): 497-506. simpson, m. & padmore, j. 2005. marketing in smes. [on line] available at: http://www.shef.ac.uk/management/research/2005-08.pdf [accessed: 25/06/2007]. smith, t. 2008. being small doesn’t mean you can’t dream big. the star, wednesday, december 31. spake, d.f., joseph, m. & finney, r. z. 2009. urban senior citizens’ and versus rural consumers’ view of dic advertising: a preliminary investigation. journal of medical marketing, 9(1): 21-28. stokes, d. 2000. small business management: a case study approach. 3 rd ed. london: ashford colour press. storey, d.j. 2004. exploring the link amongst small firms, between management training and firm performance: a comparison between the uk and other oecd countries. international journal of human resource management, 15(1): 112-130. sun, y. 7 wang, h. 2005. does internet access matter for rural industry? a case study of jiangsu, china. journal of rural studies, 21(2): 247-258. van auken, h.e., madrid-guijarro, a. & garcia-perez-de-lema, d. 2008. innovation and performance in spanish manufacturing smes. international journal of entrepreneurship and innovation management, 8(1): 36-56. van scheers, l. & radipere, s. 2008. gathering perceptions of soweto small business owners on advertising in black townships in south africa. journal for global business advancement, 1(4): 445-458. villee, p.a.g. & curran, m.g. 1999. the 21 st century: meeting the challenges to business education. reston, va: national business education association. woldelul, a. 2004. marketing strategies: for micro and small enterprises in ethiopia. [online] available at: http://www.bds-ethiopia.net/marketing.html [accessed: 06/02/2009]. yeh, q. & jung-ting chang, a. 2007. proliferation of computers among taiwanese smes. international journal of entrepreneurship and innovation management, 7(1): 51-73. p143 indian entrepreneurs antoinites sajesbm volume 6, (2013) www.sajesbm.com article no 143 115 www.sajesbm.com critical success factors of indian entrepreneurs alex antonites* department of business management university of pretoria; thiloshini govindasamy gordon institute of business sciences (gibs) university of pretoria. *corresponding author email: alex1@up.ac.za; tel. +27 12 420 3119. postal address: dept business management, university of pretoria pretoria 0002 abstract this research seeks to explore the critical success factors that influence the success of indian small business owners in the largest metropolitan area in south africa. to achieve this, the objective of the study was to confirm whether there are significant differences between a successful and less successful group of business owners in terms of general management skills, personal characteristics, and entrepreneurial orientation and financing of the business. through analysing secondary evidence and empirical results it was possible to facilitate a better understanding of how indian entrepreneurs operating in small and medium enterprises sustain success, thus contributing to the body of knowledge relating to entrepreneurship development in the domain of entrepreneurship. from the literature it became clear that cultural dimensions have an impact on the entrepreneurial process. the arrival of indians in south africa has contributed to a unique indian culture. the characteristics that describe ethnic entrepreneurs and success factors attributed to their success are described. small and medium enterprises (smes) are crucial for the development of any country as they offer benefits of economic growth and employment generation. the success factors to sustain smes are also described. the findings of the study indicate that there are no significant differences between the comparable groups in relation to management skills and finance factors. there are, however, significant differences relating to personal factors, such as the level of education, family support and experience. finally, an important learning is that the indian entrepreneurs in this study are similar to ethnic entrepreneurs reviewed in literature. the study was conducted in tshwane, the largest metropolitan area in south africa, and amongst the largest in the world. sajesbm volume 6, (2013) www.sajesbm.com article no 143 116 keywords: culture, ethnic entrepreneurship, indian entrepreneurship, critical success factors, small and medium enterprises (smes), successful smes. introduction entrepreneurs are a unique group of people as they assume risk, manage the business’ operations, reap the rewards of their success and bear the consequences of their failure (henderson 2002). the author typifies two kinds of entrepreneurs, in reference to lifestyle and growth. “lifestyle entrepreneurs” start business ventures to provide a family income or support a desired lifestyle, while “high-growth entrepreneurs” are motivated to start and develop larger, highly visible, and more valuable ventures. these entrepreneurs are focused on obtaining the resources necessary to fuel growth. wickham (2006) depicts the growth-orientated entrepreneur as having high levels of innovation and specific growth orientated strategic objectives. ucbasaran, wright, and westhead (2003), distinguish between the “habitual starter” and the “habitual acquirer” entrepreneur. in their longitudinal study on entrepreneur starters and acquirers, the authors conveyed that the “habitual starter entrepreneur” was found to consider enhanced reputation as a key asset resulting from prior ownership experience and was likely to use the increased legitimacy to gain resources to address the hurdles in the formation of subsequent ventures. the “habitual acquirer entrepreneur” was more likely to report that their business networks had been enhanced by prior business ownership because they belong to more networks by virtue of their previous experience in established organisations. minniti and lévesque (2010) describe two types of entrepreneurs – “research-based entrepreneurs” who incur research and development costs and commercialize technological discoveries, and “imitative entrepreneurs” who increase product availability and competition by replicating technologies developed elsewhere. the authors conclude that the presence of either type of entrepreneurship has a positive effect on the growth pattern of an economy. the relative distribution of entrepreneurs across the two categories does not influence the growth rate; what matters is that a country has a relatively high absolute number of at least one type of entrepreneur. the 2005 global entrepreneurial monitor report on south africa (von broembsen, wood, and herrington 2005) concluded that indians and whites are more likely to start a business than blacks or coloureds (in a cultural categorisation context). the report indicated that indian and white businesses are more likely to survive the incubation period and employ more people. the report indicates that about 3.7 percent of white owner-managed businesses create over 20 jobs while 7 percent of indian owner-managers are responsible for the same number of jobs. this implies that indian entrepreneurs create more jobs than other racial groups in south africa (von broembsen et al. 2005). the 2008 global entrepreneurial monitor report on south africa concluded that businesses started by indians and whites were more likely to mature into new firms than any other racial group (herrington, kew, and kew 2008). ethnic entrepreneurs are united by a set of socio-cultural connections and regular patterns of interaction among people sharing a common national background or migration experiences (waldinger, aldrich, and ward 1990). the indian entrepreneur in south africa can be described as an “ethnic entrepreneur”. ethnic enclave theory sees an ethnic enterprise as a self-generating process, whereby the ethnic enterprise can act as a training system for new entrepreneurs through employment in existing enterprises, generating network linkages, thus generating a basis for informal communication, market opportunities and providing community role models (aldrich, zimmer, and mcevoy 1989; waldinger 1989, cited by sajesbm volume 6, (2013) www.sajesbm.com article no 143 117 chaudhry and crick 2008). chaudhry and crick (2008), in their study of leading practices of asian entrepreneurs in the united kingdom, found that entrepreneurs took advantage of niche market opportunities and with hard work and talent were able to take their businesses into the mainstream market and professionalize their businesses. research has also stereotyped asian entrepreneurs as being reliant on family support to finance and to help run their businesses. the rationale for undertaking this study is to explore the factors that successful indian entrepreneurs attribute to their success as well as to evaluate how these factors compare with less successful indian entrepreneurs. based on this understanding, there are learning knowledge and insights for entrepreneurship training and development. the study aims to contribute to the growing body of knowledge that attempts to profile entrepreneurs of different cultural backgrounds. literature review in the 1870s anthropologist edward tylor defined culture as “that complex whole which includes knowledge, belief, art, morals, law, customs and other capabilities acquired by man” (hill, 1997:67). hofstede (2001:9) broadens this construct and defines it “as the collective programming of the mind that distinguishes the members of one group or category from another” (chrisma, chua, and steier 2002, 114). granato, inglehart, and leblang (1996) refer to “culture” as a system of basic common values that help shape the behaviour of the people in a given society. hill (1997, 67) views culture “as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.” the author elaborates by defining values as the abstract ideas about what a group believes to be good, right and desirable; norms as the social rules and guidelines that prescribe appropriate behaviour, and society as the group of people who share a common set of values and norms. hofstede (1998) defines “values” as a broad tendency to prefer a certain state of affairs over others with the belief that values are determined early in life. hill (1997) states that the values and norms of culture do not emerge from nowhere fully formed but are rather an evolutionary product of a number of factors at work in society. baskerville in osoba (2009) suggests that culture can be evaluated by observing and noting values, beliefs, behaviours and symbols over a period of time. hofstede likewise sought to understand differences in cultural patterns and to understand the mechanisms that enabled those patterns to be stable over time (mcgrath macmillan and scheinberg. 1992). the initial four value dimensions are initial value dimensions are: large versus small; power distance; strong versus weak; uncertainty avoidance; individualism versus collectivism, and masculinity versus femininity (hofstede 1998). a fifth dimension was later added following the findings of bond (1988) from a chinese value survey, namely longversus short-term orientation. according to urban (2006) the five dimensions can be described as: (i) power distance relates to the different solutions to the basic problem of human inequality. (ii) uncertainty avoidance relates to the level of stress in a society in the face of an unknown future. (iii) individualism versus collectivism relates to the integration of individuals into primary groups. (iv) masculinity versus femininity relates to the division of emotional roles between men and women. sajesbm volume 6, (2013) www.sajesbm.com article no 143 118 (v) long-term versus short-term orientation relates to the choice of focus for peoples efforts, the future or the present. in addition to the work by hofstede (1998), trompenaars and hampden-turner (1993) as well as urban (2007) analysed culture by the following dimensions: according to yeganeh, su, and sauers (2008) and williams (2009) trompenaars and hampden-turner’s dimensions are described as: (i) achievement versus ascription (ii) universalism versus particularism (iii) individualism versus collectivism (iv) neutral versus affective (v) specific versus diffuse hill (1997) illustrates the six determinants of culture: religion, political philosophy, economic philosophy, education, language and social structure. schwartz (2006) expands “culture” into six features of values: (i) values are linked inextricably to effect; (ii) “values” refer to desirable goals that motivate action; (iii) values transcend specific actions and situations (this feature distinguishes values from narrower concepts like norms and attitudes that usually refer to specific actions, objects or situations); (iv) values serve as standards or criteria that guide the selection or evaluation of actions, policies, people and events; (v) values are ordered by importance relative to one another to form a system of priorities; and (vi) the relative importance of values guides action (the trade-offs among relevant competing values is what guides attitudes and behaviours). cultural values and practices are the result of a long history of social development (russell 2005). the study of ethnic entrepreneurship and the importance of social embeddedness can be traced back to the works of max weber (1958) and schumpeter (1934), both of whom argued that the source of entrepreneurial behaviour lay in the social structure of the societies and the value structures they produce (urban, 2006). turan and kara (2007) indicate that entrepreneurship behaviour might be linked to cultural values and suggests that values and beliefs are factors that encourage entrepreneurship within certain cultural groups predisposing their members to entrepreneurship. because individuals’ personalities and behaviours, firms, political/legal systems, economic conditions, and social background are all intertwined with the national culture from which they originate, the study of entrepreneurship under a cultural umbrella seems appropriate (lee and peterson 2000). in a study relating to ethnic entrepreneurship of indian and chinese immigrants in the united states of america, li (2007) concluded that one of the barriers experienced by the chinese immigrants was the vast differences in culture. the american culture was so different from chinese culture in many ways which resulted in a challenge for entrepreneurs to become accepted or trusted by native people. in cases of failure the chinese immigrants felt that their opportunities were limited due to their not having much social and family support in the united states of america. the chinese entrepreneurs did find advantages in the united states of america in that business failure is not ill thought of in american culture whereas, in chinese culture, failure is hard to deal with sajesbm volume 6, (2013) www.sajesbm.com article no 143 119 since the culture does not encourage risk-taking and failure is looked down upon. the study concluded that culture was less of a perceived barrier among indians. in a study relating to cultural values, market institutions and entrepreneurial potential comparing the united states of america, taiwan and vietnam, nguyen, bryant, rose, tseng, and kapasuwan (2009) concluded that cultural factors appear to have a significant impact on people’s desires to create new ventures and that people in a western culture seem to have higher desires to create new ventures than those of eastern cultures. the characteristics and sociological attributes that influence asian entrepreneurs have been widely researched. thomas and mueller (2000) suggests that unlike the idealised american entrepreneur characterised by rugged individualism, there is growing evidence that the asian entrepreneur relies on familial ties in developing their business. morris and schindehutte (2005) – in a study that explored the entrepreneurial values and ethnic enterprise – an examination of six subcultures pointed out that family and clan, hard work, loyalty, duty and relationships tend to be strong values in the asian cultural context. tsui-auch (2005) points out that chinese and indian cultures are characterised by patrilineality, patriarchy and familialism. it is further suggested, given the roots of strong kinship and communal networks, one would expect that ethnic businesses would maintain family management and avoid diversification into areas in which the family members did not have expertise. abbey (2002) proposed that the cultural background of the entrepreneur plays a significant role in defining the motivation for entrepreneurship. according to basu and altinay (2001) differences in financing a business influences entrepreneurial activity; for example, islam prohibits usury; therefore one would expect muslims not to borrow money from banks and would instead rely on savings or family funds. they also suggest that muslims would not enter businesses that involved alcohol. additionally, these authors found that indians who went to east africa from gujarat were mainly traders and hence it was not surprising that they engaged in trade enterprises in east africa. the list of characteristics and attributes as described in the literature includes: (i) network of family and friends that are self-employed (ii) choice of trade influenced by parents’ background and family tradition (iii) type of business influenced by cultural background (iv) sources of start-up finance (personal savings, bank loans or family funds) (v) longevity of ethnic indian traders in their specialisations (vi) values such as family clan, hard work, loyalty, duty and relationships tend to be strong. cultural factors are just one aspect that influences the entrepreneurial process. another aspect is entrepreneurial orientation, which is defined by swierczek and ha (2003) as a state of mind directing a person’s attention towards a goal in order to achieve it. lumpkin, cogliser, and schneider (2009) that successful firms attribute their success to having an “entrepreneurial orientation” approach to decision-making that draws on entrepreneurial skills and capabilities. this is achieved by keeping firms alert by making them aware of marketplace trends, new technologies and helping them evaluate new possibilities. lee and peterson (2000) outline five dimensions of entrepreneurial orientation as consisting of autonomy, innovativeness, risk-taking, proactiveness and competitive aggressiveness, as conveyed by lumpkin and dess (1996), and described as: sajesbm volume 6, (2013) www.sajesbm.com article no 143 120 (i) autonomy – the catalyst driving entrepreneurial activity is the independent spirit and freedom necessary to create a new venture. in order for the autonomy dimension to be strong, entrepreneurs must operate within cultures that promote entrepreneurs to act independently, to maintain personal control and to seek opportunities in the absence of societal constraints. (ii) innovation – the creative processes of entrepreneurs will determine the strength of the innovativeness dimension of entrepreneurial orientation. (iii) risk-taking – the willingness of entrepreneurs to assume risk. individuals who are willing to accept the uncertainty and riskiness associated with being self-employed as opposed to settling for the refuge of jobs within organisations are often considered entrepreneurs. (iv) proactiveness – is crucial to entrepreneurial orientation because it is concerned with the implementation stage of entrepreneurship. proactive individuals do what is necessary to bring their concepts to fruition and gain an advantage by being the first to capitalise on new opportunities. (v) competitiveness aggressiveness – an important component of entrepreneurial orientation because new ventures are more likely to fail than established businesses. an aggressive stance and intense competition are critical to the survival and success of new start-ups. having reviewed the dimensions of culture and its impact on the entrepreneurial process relating to the skills and capabilities of the entrepreneur, the next aspect reviewed is the fit with smes and specifically linked to the success factors contributing to entrepreneurial performance in this context. there are several ways in which the success of smes can be defined. lussier and pfeifer (2001) suggest that small business success can be defined in the simplest terms as the ability to survive or to remain in business. chivukula, raman and ramachandra (2009) suggest that entrepreneurial success be defined using financial and non -financial measures. financial measures are more widely used to measure success. in a study on the influence of socio demographic factors on entrepreneurial attributes chivukula et al. (2009) used growth in total sales and growth in employment as the financial measures in their study and non -financial measures of support received by the entrepreneur, work experience of the entrepreneur and involvement of the entrepreneur in the running of the business. walker and brown (2004) suggest that possible non-financial measures could be related to job satisfaction, greater independence, creating opportunities, encouraging new challenges and pursuing one’s own interests are more difficult to quantify. coy, shipley and omer (2007) posits its findings on small business owners in pakistan revealing that pakistani business owners believed several factors contributed to their success and listed the following: working hard for long hours; product quality; attention to customer needs; communication skills and interpersonal skills; business connections (networking) proposition 1: there are no significant differences in managerial functions and business skills between successful and less successful entrepreneurs. this was evaluated by determining that there are no significant differences between successful and less successful entrepreneurs on the following variables: (i) hours worked per day (ii) time spent on financial, marketing, people management and operational issues (iii) importance of the following skills in the business: sajesbm volume 6, (2013) www.sajesbm.com article no 143 121 (i) business linkages, industry clusters and networking (ii) computer literacy (iii) financial management, cash flow, pricing and costing (iv) human resource management (v) quality management (vi) role models (learning from others) (vii) good networks with suppliers and understanding customer requirements. proposition 2: there are no significant differences in personal factors between successful and less successful entrepreneurs. this was evaluated by determining that there are no significant differences between successful and less successful entrepreneurs on the following variables: (i) education (ii) experience (number of years business existed and number of prior businesses started) (iii) entrepreneurial orientation (iv) motivational factors (v) network of family and friends self-employed (vi) involvement of family members in managing the business (vii) reliance on family members to help run business (viii) following in family tradition in the nature of the business. proposition 3: there are no significant differences in financing and ownership of a start-up between successful and less successful entrepreneurs. this proposition was evaluated by determining that there are no significant differences between successful and less successful entrepreneurs on the following variables: (i) how ownership came about (ii) how the business was financed (iii) future plans for business. a secondary aim of this study is to put forward any key insights from the exploratory study of indian entrepreneurs that could possibly contribute to entrepreneurial development in south africa. methodology the intention of this research is to explore how the success factors for successful entrepreneurs compare to less successful entrepreneurs of indian origin. the study sought to answer the following research objectives: (i) the degree of general management skills employed in the business. sajesbm volume 6, (2013) www.sajesbm.com article no 143 122 (ii) the role personal factors such as education, family support, experience, role models, motivation, entrepreneurial characteristics and networking play in start-up and sustaining the business. (iii) understand how the business was financed. the target population for this study is the indian business community in the sme sector of the tshwane metropolitan area of south africa. the research will focus on evaluating indian entrepreneurs on the following three categories: the degree of general management skills employed in the business; the role personal factors such as education, family support, experience, role models, motivation, entrepreneurial characteristics and networking play in start-up and sustaining the business; understand how the business was financed.
 the unit of analysis was the indian entrepreneur in the indian business community involved in the sme sector in the tshwane metropolitan area. the population of relevance consisted of indian entrepreneurs in the sme sector. due to the nature of these populations a specific size cannot be attributed to the population. the research was limited to businesses that complied with the definition of small and medium enterprise as defined by south african legislation in the small business act of 1996, as amended in 2003 (rsa 2006). two criteria variables were used to classify the data set of respondents into successful and less successful entrepreneurs : namely , growth and turnover. chivukula, raman and ramachandra (2009) used growth in employment as a measure of success; hence growth in the number of employees from when the business was started to the current number of employees was taken to represent growth in the business. the second criterion used was a measure of the annual turnover. it was initially thought that the questionnaire should specifically ask respondents to indicate the business profitability; however, it was decided not to ask this directly. this was because it was anticipated that most respondents would choose not to answer such a question. therefore respondents were asked to indicate their annual turnover in the form of a range beginning with less than r500,000 to greater than r5 million. for the purpose of this research, the annual turnover of more than r1 million was considered. a non-probability approach in terms of convenience sampling was used due to the fact that the size of the population was difficult to determine. the research design was quantitative, explorative in nature and a self-administered survey questionnaire was used to gather primary data from respondents. results and discussion proposition 1: there are no significant differences in managerial functions and business skills between successful and less successful entrepreneurs. the statistical significance of the sub-propositions is: hours worked per day there were no significant differences in the successful and less successful group of entrepreneurs in terms of the number of hours worked per day. a fisher’s exact test indicated a p-value of 0.5408 which is greater than 0.05. of the respondents 68 percent indicated that they work between 5 and 10 hours a day, while 28 percent of respondents indicated that they work longer than 10 hours per day. based on a 6-day working week, respondents of both groups could average about 60 work hours per week. this is in line with pena (2002) who concluded that entrepreneurs of growing firms are those that spend a large number of hours (that is, 50 to 60 hours) per week on business activities. the result also sajesbm volume 6, (2013) www.sajesbm.com article no 143 123 supports the findings by coy, shipley and omer . (2007) who concluded that working hard for long hours was a success factor for pakistani small business owners. time spent on managerial functions the time spent on four managerial functions was found to have no significant differences in the successful and less successful group of entrepreneurs in terms of time spent per day on financial issues, marketing, people management and operational issues with a p-value greater than 0.05. the fisher’s exact test p-value is provided in table 1. table 1: significant differences relating to managerial functions managerial function variables fisher’s exact test p-value financial issues 0.1186 marketing 0.6561 managing people 0.4377 operational issues 0.6900 the managerial functions of managing a business are seen as important by both groups of entrepreneurs. of the respondents, 69 percent indicated that they spent more than 3 hours on financial issues in the business, while 82 percent of respondents indicated that they spent more than 3 hours managing operational issues within the business. of the respondents, 92 percent indicated that they spent more than 3 hours on marketing issues in the business. this is in line with hill (2001) who cited marketing as a focus area for entrepreneurs. of the four categories of managerial functions the least time was spent on managing human resources in the business, both groups indicated that they spent 61 percent on this function. this could be related to the low average of the number of employees within the business. the successful group average is about nine employees while the less successful group is on average three to four employees. importance of business skills there were no significant differences between the successful and less successful group of entrepreneurs in terms of rating the importance of business skills with the p-value greater than 0.05. the fisher’s exact test p-value is provided in table 2. table 2: significant differences relating to business skills skills variables fisher’s exact test p-value business linkages, industry and networking 0.3680 computer literacy 0.9261 financial management, cash flow, pricing and costing 0.3810 human resource management 0.3051 quality management 0.2733 role models (learning from others) 0.2227 good networks with suppliers 0.1582 sajesbm volume 6, (2013) www.sajesbm.com article no 143 124 over 90 percent of respondents from the successful and less successful group of entrepreneurs rated the above business skills as very or extremely important. this supports the findings of attahir (1995) who found management skills to be highly ranked by south pacific small business owners. described market parameters in which the business operated there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing the market in which the business operated. a fisher’s exact test indicated a p-value of 0.5249 which is greater than 0.05. all respondents could identify the market in which the business operated. however, this does not determine whether respondents had correctly identified or understood the market parameters as described by attahir (1995) in which the business operated. know what customers want there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing how entrepreneurs stay informed about what customers required. a group t-test using the satterthwaite method indicated a p-value greater than 0.05. the p-value is provided in table 3. table 3: significant differences relating to know what customers want variable method variance degrees of freedom t-value p-value know what customers want satterthwaite unequal 68 -0.38 0.7055 both groups of respondents indicated that they strongly agreed with following techniques to understand the customers’ needs: continuously ask them; put one’s self in the customers’ shoes; know what they want; look at what sales show. this further supports the notion of marketing being a focus area of entrepreneurs. acceptance of proposition 1 the results of the above significant tests relating to managerial functions and skills are summarised below: (i) hours worked per day – accepted (ii) time spent on managerial functions per day – accepted (iii) importance of business skills – accepted (iv) describe the market parameters in which the business operated – accepted (v) know what customers want – accepted. all sub-propositions were accepted, hence proposition 1 is accepted. proposition 2: there are no significant differences in personal factors between successful and less successful entrepreneurs. the statistical significance of the sub propositions is: sajesbm volume 6, (2013) www.sajesbm.com article no 143 125 education there were significant differences in the successful and less successful group of entrepreneurs in terms of education. a chi-square test indicated a p-value that is less than 0.05. the chi-square p-value is provided in table 4. table 4: significant differences relating to education variable method degrees of freedom value p-value highest level of academic qualification chi-square 68 8.1991 0.0421 education levels among the successful group were found to indicate a higher level of formal education (degree and higher) compared with the less successful group, which had a higher level of informal education (matriculation and lower). this finding does not seem to influence the importance of business skills between the two groups which were highly rated. the successful group on average employs more people when compared with the less successful group. this is in line with the 2005 global monitor report on south africa (von broemsen et al. 2005) which concludes that the more educated a person, the more likely they are to start a business and the more people they are likely to employ. experience there were two variables used to describe the entrepreneur’s level of experience. the first was the number of years the business existed, and the second was had the entrepreneur started other businesses prior to the current business. there were significant differences in the successful and less successful group of entrepreneurs in terms of the number of years the business has existed. a group t-test using the satterthwaite method indicated a p-value less than 0.05. the p-value is provided in table 5. table 5: significant differences relating to number of years business existed variable method variance degrees of freedom t-value p-value number of years the business existed satterthwaite unequal 82.7 2.02 0.0470 the successful group was found to have more experience in terms of running the business due to the fact its business has existed, on average, longer than the less successful group. there were significant differences in the successful and less successful group of entrepreneurs in terms of other businesses started prior to current business. a chi-square test indicated a p-value that is less than 0.05. the chi-square p-value is provided in table 6. table 6: significant differences relating to number of business start-ups variable method degrees of freedom value p-value is this the first business started? chi-square 1 4.6650 0.0308 sajesbm volume 6, (2013) www.sajesbm.com article no 143 126 the successful group indicated that 31 percent of respondents had started a business prior to the current business, compared with 13 percent from the less successful group. this indicates that the successful group had more experience in business start-ups. entrepreneurial orientation there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing the entrepreneurial orientation of respondents. a group t-test using the satterthwaite method indicated a p-value greater than 0.05. the p-value is provided in table 7. table 7: significant differences relating to entrepreneurial orientation variable method variance degrees of freedom t-value p-value personal characteristics satterthwaite unequal 76.7 1.99 0.0502 the findings on entrepreneurial orientation in this study tend to agree with the literature review. motivation there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing the motivation for starting the business. a group t-test using the satterthwaite method indicated a p-value greater than 0.05. the p-value is provided in table 8. table 8: significant differences relating to motivation variable method variance degrees of freedom tvalue p-value motivational factors satterthwaite unequal 76 1.74 0.0857 the findings on motivational factors for starting a business in this study tend to correlate closely with the defined “pull factors” that cause individuals to become entrepreneurs. network of family and friends self-employed there were no significant differences in the successful and less successful group of entrepreneurs in terms of having a network of family and friends that are self-employed. a fisher’s exact test indicated a p-value of 0.2560 which is greater than 0.05. of the respondents, 97 percent indicated that they have a network of family and friends that are self-employed. this points to a possible extension of the entrepreneurial capacity as well as provides a supply of potential role models to the entrepreneurs of the two groups. involvement of family members in managing business there were significant differences in the successful and less successful group of entrepreneurs in terms of the family involvement in the business. a chi-square test indicated a p-value that is less than 0.05. the chi-square p-value is provided in table 9. sajesbm volume 6, (2013) www.sajesbm.com article no 143 127 table 9: significant differences relating to family involvement in business variable method degrees of freedom value p-value family involvement in business chi-square 1 8.2053 0.0042 the higher tendency of successful entrepreneurs to have family members involved in managing the business may point to the extended family system as defined by arkin magyar, k.p. & pillay (1989), whereby decision-making is conducted on a joint basis. reliance on family to run business there were significant differences in the successful and less successful group of entrepreneurs in terms of reliance on family members to help run the business. a chi-square test indicated a p-value that is less than 0.05. the chi-square p-value is provided in table 10. table 10: significant differences relating to reliance on family variable method degrees of freedom value p-value reliance on family members to run business chi-square 2 7.9941 0.0184 this finding correlates with thomas and mueller (2000) who conclude there is growing evidence that the asian entrepreneur relies on familial ties in developing their business. following family tradition in the nature of business there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing the extent to which the current business is similar to the respondents’ parent’s business. a chi-square test indicated a p-value that is greater than 0.05. the chi-square p-value is provided in table 11. table 11: significant differences relating to family tradition of business variable method degrees of freedom value p-value extent to which business is similar to parents’ business chi-square 2 0.9070 0.6354 a higher percentage (66 percent) of the successful group indicated that their parents owned businesses compared with the less successful group (37 percent). this indicates a tendency among the successful group to “follow in their parents’ footsteps” when starting a business. however, the majority of both groups indicated that their business was not similar to their parents. therefore, the findings do not correlate with tsui-auch (2005) who concluded that ethnic businesses would maintain family management and avoid diversification into areas in which the family members did not have expertise. rejection of proposition 2 the results of the above significant tests relating to personal factors are summarised below: sajesbm volume 6, (2013) www.sajesbm.com article no 143 128 (i) education – rejected (ii) number of years business existed – rejected (iii) number of prior businesses started – rejected (iv) entrepreneurial orientation – accepted (v) motivational factors – accepted (vi) network of family and friends self-employed – accepted (vii) involvement of family members in managing business – rejected (viii) reliance on family members to help run business – rejected (ix) following in family tradition in nature of business – accepted. not all sub-propositions were accepted, therefore proposition 2 is rejected. proposition 3: there are no significant differences in financing and ownership of a start-up between successful and less successful entrepreneurs. the statistical significance of the sub-propositions is: how ownership of business came about there were no significant differences in the successful and less successful group of entrepreneurs in terms of how ownership of the current business came about. a chi-square test indicated a p-value that is greater than 0.05. the chi-square p-value is provided in table 12. table 12: significant differences relating to how ownership came about variable method degrees of freedom value p-value how did ownership of business come about chi-square 2 2.1054 0.3490 in terms of ownership, the successful group indicated the majority founded the business followed by equal representation of inheritance and purchase of the business. the less successful group indicated the majority founded the business followed by purchase and then inheritance. inheritance in the less successful group was 9 percent lower than the successful group. the higher incidence of inheritance of business in the successful group could be a direct consequence of the extended family concept described in the literature. sourcing of capital to finance business there were no significant differences in the successful and less successful group of entrepreneurs in terms of the sources of capital used to fund the start-up of the business. a fisher’s exact test indicated a p-value of 0.3058 which is greater than 0.05. the sources of finance are in line with the literature; both groups of entrepreneurs favoured own capital, followed by commercial capital and lastly family capital. none of the respondents looked to friends to help finance the business. future plans for the business there were no significant differences in the successful and less successful group of entrepreneurs in terms of describing the future plans for the business. a group t-test using sajesbm volume 6, (2013) www.sajesbm.com article no 143 129 the satterthwaite method indicated a p-value greater than 0.05. the p-value is provided in table 13. table 13: significant differences relating to motivation variable method variance degrees of freedom t-valu e p-valu e future plans for the business satterthwaite unequal 775.2 0.66 0.5104 respondents from both groups indicated a growth-orientated strategy towards their vision for the business. this is in line with the six dimensions of entrepreneurial orientation cited by hills and la forge (1992). acceptance of proposition 3 the results of the above significant tests relating to financing and ownership of business are summarised below: (i) how ownership of business came about – accepted (ii) sourcing of capital to finance business – accepted (iii) future vision for the business – accepted. all the sub-propositions were accepted, therefore proposition 3 is accepted. conclusion this study was undertaken to explore the factors that differentiate successful and less successful indian entrepreneurs in a south african context. it outlined a process of how to go about comparing the success factors of successful and less successful ethnic entrepreneurs. the objectives of this study were achieved. the aim of this research was to explore the degree to which the sample group could identify and relate to general management and personal factors and their approach to financing the start-up. further the objective was to explore how the factors and approach differed across successful and less successful entrepreneurs. inferential analysis was used to compare the two groups. the research concluded that there are not significant differences in terms of managerial functions and the importance of these skills in operating a business. both groups of entrepreneurs, the successful and less successful, deemed these factors equally important. there were some significant differences between the comparable groups relating to personal factors that characterise the entrepreneurial approach. these differences relate to the variables of education, length of time the business existed, the number of previous businesses started and the involvement and reliance of family members in managing and running the business. this relates to the literature, which concludes that the asian entrepreneur is characterised by the extended family concept, and family affairs are concluded on a joint basis. this suggests a bigger involvement of family which aids entrepreneurs to be more successful. the variables that indicated no significant difference relate to entrepreneurial orientation, motivational factors, network of family and friends that are self-employed, and following in family tradition in terms of type of business. there were also no differences in the way business was financed if the owner founded the business. neither of the groups seems to have an advantage in terms of financing the business. this sajesbm volume 6, (2013) www.sajesbm.com article no 143 130 study contributes to the domain of entrepreneurship within the selected research frame as follows: family support in running the business, as well as in managing the business, is more important to the respondents of the successful group. the findings of this study align to the characteristics and attributes of asian entrepreneurs as found in literature; customer awareness is critical to both successful and less successful entrepreneurs in this frame; respondents favourably rated that they would consider acquiring other businesses in the industry, thus indicating an element of organic growth; the length of time the businesses in this study have existed points to a success rate in excess of the typical seven years and thus indicates most of the businesses in this study are sustainable. further research objectives that should be considered are: draw comparisons across cultural groups within south africa in terms of greek or portuguese business communities as well as other emerging markets; understand how skills transfer in relation to running a business takes place within the indian community; draw comparisons between indian business owners across different geographical hubs within south africa as well as internationally such as in india; understand the business models employed by indian entrepreneurs on a global level; understand what formal education indian entrepreneurs undertake and determine whether this is used in a business context. references abbey, a., 2002. “cross cultural comparision of the motivation for entrepreneurship.” journal of business and entrepreneurship 14(1):69-81. aldrich, h., c. zimmer, and e. mcevoy, 1989. “continuities in the study of ecological succession: asian businesses in three english cities.” social forces 67:920-944. attahir, y. (1995). critical success factors for small business perceptions of south pacific enterprises. journal of small business management, 68-73. arkin, a.j., magyar, k.p. & pillay, g.j. (eds.) (1989). the indian south african: a contemporary profile. owen burgess: pinetown, south africa baskerville, r. f., 2003. “hofstede never studied culture.” accounting, organisations and society 28(1):1-14. basu, a., and e. altinay, 2001. “the interaction between culture and entrpreneurship in london’s immigrant businesses.” international small business journal 20(4):371393. doi: 10.1177/0266242602204001. bond, m.h., 1988. “finding universal dimensions of individual variation in multicultural studies of values: the rokeach and chinese value surveys”. journal of personality and social psychology, vol 55(6), dec 1988, 1009-1015 chaudhry, s., and d. crick, 2008. “an exploratory investigation into the practices of leading asian entrepreneurs in the uk.” journal of small business and entrepreneurship 21(3):309-324. chivukula, v.r., raman, k.j. & ramachandra, a. a. (2009). influence of socio demographic factors on entrepreneurial attributes and success. south asian journal of management, 16(4), 111-126. chrisma, j. j., j. h. chua, and l. p. steier, 2002. “the influence of national culture and family involvement on entrepreneurial perceptions and performance at the state level.” entrepreneurship theory and practice 26(3):67-80. sajesbm volume 6, (2013) www.sajesbm.com article no 143 131 coy, p.s., shipley, m.f. & omer, k. (2007). factors contributory to success: a study of pakistan's small business owners. journal of development entrepreneurship, 12(2) 181-198. granato, j., r. ingehart, and d. leblang, 1996. “the effect of cultural values on economic development: theory, hypotheses and some emprical tests. american journal of political science (40):607-631. henderson, j. r., 2002. “building the rural economy with high-growth entrepreneurs.” economic review federal reserve bank of kansas, second quarter. kansas city. (on-line). available: http://www.kansascityfed.org/publicat/econrev/pdf/3q02hend.pdf. herrington, m., j. kew, and p. kew, 2008. “global entrepreneurship monitor :the south african report 2008”. cape town: the uct centre for innovation and entrepreneurship, university of cape town. hill, c. w. l., 1997. international business: competing in the global marketplace. chicago: irwin. hill, j. (2001). a multidimensional study of the key determinants of effective sme marketing activity: part 1. international journal of entrepreneurial behaviour and research, 5(7) 171-204. hills, g.e. & la forge, r.w. (1992). research at the marketing interface to advance theory. entrepreneurship theory and practice, 14(1), 7-26. hofstede, g., 1998. “attitudes, values and organisational culture: disentangling the concepts.” organisational studies 19(3):477-493. hofstede, g. h. (2001). culture's consequences, (2nd ed.) thousand oaks, ca: sage . li, w., 2007. “ethnic entrepreneurship: studying chinese and indian students in the united states.” journal of developmental entrepreneurship 12(4):449-466. lumpkin, g. t., and g. g. dess, 1996. “clarifying the entrepreneurial orientation construct and linking it to performance.” academy of management review 21:135-172. lumpkin, g. t., c. c. cogliser, and d. r. schneider, 2009. “understanding and measuring autonomy: an entrepreneurial orientation perspective.” entrepreneurship theory and practice 33(1):47-69. doi: 10.1111/j.1540-6520.2008.00280-x. lussier, r. & pfeifer, s. (2001). a cross-national prediction model for business success. journal of small business management, 39(3) 228-237. masurel, e., and p. nijkamp, 2003. “differences between first-generation and secondgeneration ethnic start-ups: implication for a new support policy.” faculty of economics and business administration. amsterdam: free university. mcgrath, r. g., i. c. macmillan, and s. scheinberg, 1992. “elitists, risk takers and rugged individualists? an exploratory analysis of cultural differences between entrepreneurs and non entrepreneurs.” journal of business venturing 7(2):115-135. minniti, m., and m. lévesque, 2010. “entrepreneurial types and economic growth.” journal of business venturing 25(3):305-314. morris, m., and m. schindehutte, 2005. “entrepreneurial values and the ethinic enterprise: an examination of six subcultures.” journal of small business management 43(4):453-479. sajesbm volume 6, (2013) www.sajesbm.com article no 143 132 nguyen, t. v., s. e. bryant, j. rose, c. h. tseng, and s. kapasuwan, 2009. “cultural values, market institutions and entrepreneurship potential. a comparative study of the united states, taiwan and vietnam.” journal of developmental entrepreneurship 14(1):21-37. osoba, b. j., 2009. “cultural and entrepreneurial activity in the united states: a quantitative analysis.” the european journal of social science research 22(3):341-370. pena, i. (2002). intellectual capital and business start-up success. journal of intellectual capital, 3(2), 180-198. rsa (republic of south africa). (2003). “national small business amendment act. act 26 of 2003.” government gazette 19 (25763). pretoria: government printer. russell, r., 2005. “cultural influences on entrepreneurship: implications for the emergence of new ventures in latin america.” journal of transnational management 10(1):3759. schumpeter, j. a., 1934. the theory of economic development. cambridge: harvard press. schwartz, s., 2006. “a theory of cultural value orientations: explication and applications.” comparative sociology 5(3):137-182. swierczek, f. w., and t. t. ha, 2003. “motivation, entrepreneurship and the performance of smes in vietnam.” journal of enterprising culture 11(3):47-68. thomas, a. s., and s. l. mueller, 2000. “a case for comparative entrepreneurship: accessing the relevance of culture.” journal of international business studies 31(2):287-301. trompenaar f. 1993. riding the waves of culture: understanding culture and diversity in business. london: economist books. trompenaars, f., and c. hampden-turner, 1998. riding the waves of culture: understanding diversity in global business. second edition. new york: mcgraw-hill. tsui-auch, l., 2005. “unpacking regional ethnicity and the strength of ties in shaping ethnic entrepreneurship.” organisation studies 26(8):1189-1216. turan, m., and a. kara, 2007. “an exploratory study of characteristics and attributes of turkish entrepreneurs: a cross-country comparision to irish entrepreneurs.” international journal of entrepreneurship 5:25-46. ucbasaran, d., w. wright, and p. westhead, 2003. “a longitudinal study of habitual entrepreneurs: starters and acquirers.” entrepreneurship and regional development 15(3):207-228. urban, b., 2006. “entrepreneurship in the rainbow nation: effect of cultural values and ese on intentions.” journal of developmental entrepreneurship 11(3):171-186. urban, b., 2007. “a framework for understanding the role of culture in entrepreneurship.” acta commercii 7:82-95. von broembsen, m., e. wood, and m. herrington, 2005. “global entrepreneurship monitor: south african report 2005”. cape town: the uct centre for innovation and entrepreneurship, university of cape town. waldinger r, aldrich h, and ward b. 1990. ethic entrepreneurs: immigrant business in industrial societies. sage series on ethnic relations, volume 1. sage publications, london sajesbm volume 6, (2013) www.sajesbm.com article no 143 133 waldinger, r., 1989. “structural opportunity or ethnic advantage? immigrant business development in new york.” international migration review 23:48-72. waldinger, r., h. aldrich, and r. ward, 1990. “ethnic entrepreneurs: immigrant business in industrial societies”. sage series on race and ethnic relations, vol. 1. london: sage. walker, e. and brown, a. (2004). what success factors are important to small business owners? international small business journal, 22 (6) 577-594. weber, m., 1956. the protestant ethic and the spirit of capitalism. london: allen & unwin. wickham p. 2006. strategic entrepreneurship. fourth edition. pearson education, harlow england. williams, c., 2009. cultural differences between south africa, onshore indian and offshore indian it teams. unpublished master of business administration dissertation. johannesburg: gordon institute of business science. yeganeh, h., z. su, and d. sauers, 2008. “the applicability of widely employed frameworks in cross-cultural management research.” proceedings of the 2008 academy of international business conference, milan. zikmund, w. g., 2003. business research methods (7th edition). ohio: cengage learning south-western publishers. abstract introduction literature review innovative products or processes to yield a competitive advantage research methodology research findings and discussion conclusions and implications for local clothing design small businesses acknowledgements references about the author(s) thea j. tselepis department of fashion design, university of johannesburg, south africa anne mastamet-mason department of fashion design, tshwane university of technology, south africa alex j. antonites department of business management, university of pretoria, south africa citation tselepis, t.j., mastamet-mason, a. & antonites, a.j., 2016, ‘collaborating to compete: the role of collective creativity in a south african clothing design small business’, southern african journal of entrepreneurship and small business management 8(1), a58. http://dx.doi.org/10.4102/sajesbm.v8i1.58 original research collaborating to compete: the role of collective creativity in a south african clothing design small business thea j. tselepis, anne mastamet-mason, alex j. antonites received: 14 mar. 2016; accepted: 20 apr. 2016; published: 31 aug. 2016 copyright: © 2016. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the number of apparel manufacturers in the south african clothing and textile industry is diminishing due to competition with importing apparel manufacturers. nevertheless, south african small and micro-businesses still manufacture clothing products to meet the needs of the local markets. aim: this study set out to explore and describe the role of collective creativity in the design process of a south african clothing small business that provides innovative clothing to local niche markets. setting: the small and micro-businesses are typically owned by designers who can be viewed as artisan entrepreneurs. however, the competition for the local market is very competitive, and innovative designs and design processes can promote the competitiveness of the clothing small and micro-businesses. method: a case study research design was implemented in the study, which included qualitative research methods. semi-structured interviews, participant observation and analysis of the products against an innovation design framework were done. results: the findings suggest that a collaborative design process supports the collective creativity of the particular owner-designers. collective creativity enables innovative clothing products that result from the design process and it also reduced the perceived risk that the owner-designers experienced with regard to launching a ready-to-wear range. conclusion: it is argued that collective creativity contributes to sustaining innovative design and enhances abductive reasoning for problem solving. abductive reasoning, which is typically associated with design thinking, could be important for entrepreneurial thinking and recommendations in this regard are made. introduction background the decline of the south african clothing manufacturing sector is viewed as a crisis, because the local textile industry cannot keep up with the competition from chinese imported apparel. this is due to local issues such as high labour costs, low productivity, slow turnaround time and a weak value chain (dhliwayo 2012). as a result, it was determined in 2013 that the clothing and textile industry in south africa shed approximately 50% of its jobs (nattrass & seekings 2014). this has created a situation where skilled machinists and pattern-makers have been forced to either work for small and micro-businesses that provide clothing to local clientele or to alternatively start microor small business enterprises. many of these clothing small and micro-businesses are less sophisticated cut, measure and trim businesses (vlok 2006) that manufacture clothing by means of designing and constructing garments from concept to customer. although no specific statistical evidence was available to indicate how many south african small and micro-businesses manufacture clothing for customers, it is apparent that at least 129 active apparel design small and micro-businesses were operating in the tshwane region of the gauteng province between 2011 and 2013 (tselepis 2013). most of these businesses manufacture customised clothing for their individual customers and refer to themselves as clothing designers, irrespective of whether they have formal training in clothing design. business owner-designers of this nature can be viewed as artisan entrepreneurs (cyr, meier & pacitto 2011). many of the local artisan clothing entrepreneurs create individual and exclusive apparel for the local market, and therefore apply a business-to-customer trade model (lemke, clark & wilson 2011). this model includes the trading of custom-designed clothing for private clients from a design studio or trading designer’s clothing lines from exclusive retail stores to the target consumer. clothing designers commonly implement this model to manufacture the so-called ‘couture’ wear, which implies that it is made-to-measure high-end clothing (bickle 2011:57). although these clothing small and micro-business owner-designers may survive by producing for local niche markets, a potential problem these owner-designers might face in the long run is competition with other local clothing designers who offer similar products – in addition to the competition with clothing imports. the importance of business differentiation strategies through producing innovative clothing or applying innovative processes can potentially enhance the competitiveness of businesses. the prolonged production of innovative designs as an individual can present challenges to designers who do not embrace the creative contributions of others during the design process (gong et al. 2013). collaboration may enhance opportunities to be innovative in a business (hartley, sørensen &torfing 2013). the inquiry presented in this study investigates the role that collective creativity plays in creating and sustaining a competitive advantage in the context of clothing product design of a specific clothing design small business that implements a collaborative design process. firstly, this study presents a review of the literature that supports the concepts relevant to the inquiry. a description of the research methodology follows, and the qualitative empirical findings are presented. after a discussion on the findings, this work concludes with implications for owner-designers of local clothing design small or micro-businesses. literature review design practice and thinking in general, design (as a practice) is defined as a process that requires thinking and actions to combine elements or components into a cohesive whole, in a creative manner, to change an existing situation into a preferred one (boztepe 2007:62). rath et al. (2008:5) state that design entails a great deal of pre-production planning before implementation (production) takes place. design is often viewed only as a conceptual process (chan et al. 2011). aspelund’s (2010:5) definition is applicable to apparel design in particular: ‘design is about ideas: needing and finding ideas, examining and identifying their nature, and, most important, illustrating and explaining them so they can be realised’. therefore, design entails that a plan of action is implemented during a design process to solve a design problem (goldschmidt & sever 2011). from an entrepreneurial perspective, designing a product should not only involve the conceptual thinking related to the design process but also involve thinking that aims to add value to an intended market so that the business can thrive in the long run (hobday, boddington & grantham 2012). a conceptual or cognitive process (thinking) that designers implement relates to entrepreneurial thinking (neck & greene 2011). more specifically, creativity and innovation applied to value creation and solving complex problems are two skills that designers and entrepreneurs share (schmidt, soper and bernaciak 2012). olsen (2015:182) signifies the latter through a perspective on the scientific origin of design thinking from a reflection on the work of john dewey (1934) on art experience where the process commences with inquiry into an existing problem or problem situation. goel and shu (2015) add to the body of knowledge by encapsulating analogy as a cognitively embedded requirement for creative design thinking. included in analogical design is domain-based design. in the context of this study, it involves the overlapping and integrated role of the designer in the entrepreneurial domain. the analogy of designing for a market reflects accordingly. menon (2015) posits the structured nature of design and design thinking and refers to the entrepreneurial opportunity-finding process as an amalgamated element of the structured view. therefore, it can be argued that one of the parallels between pure designers and entrepreneurs is solving problems through the application of design thinking and adding value as a result of the application of creativity. creativity olim, mota and silva (2015:205) quote the seminal work of the rise of the creative class (2002) by richard florida in emphasising the appreciation and significance of ‘creative people, creative industries and creative economies’. the authors found that creativity in entrepreneurial new business formation was critical in modern business environments. for the purpose of this study, creativity is defined from a cognitive perspective and specifically with reference to problem solving. creativity is at the heart of the entrepreneurial thought processes (puhakka 2012). the scope of creativity in this study is thus associated with the design process, as well as the owner-designer’s ability to create value for markets within an entrepreneurial context. creativity and the designer from a design perspective, creativity is especially important to analyse and synthesise several ideas (cennamo et al. 2012). brannon (2007:68) argues that synthesis is a ‘creative reintegration’ of several ideas or elements. an evaluation of each idea can be done to refine new emerging ideas, while reflecting on other ideas to redefine them until the ultimate product-concept is finally defined (regan, kincade & sheldon 1998). the designer’s creativity should be applied to come up with feasible ideas that can provide solutions to the design problem (tumasjan & braun 2012). creative thinking skills enable the designer to evaluate ideas regarding the design problem against possible constraints (mumford et al. 2010). therefore, evaluation can be viewed as a designer’s ability to critically think about potential solutions to design problems. critical thinking skills associated with creativity include problem definition, conceptual combination and idea generation (mumford et al. 2010). not all the ideas on the components or materials are necessarily suitable for a specific clothing product (regan et al. 1998), which is why a synthesis of several ideas takes place during the design process (aspelund 2010:79; lamb & kallal 1992; regan et al. 1998). one can argue that these ideas can revolve around the synthesis of client needs and input materials, or the synthesis of client preferences and materials, but the synthesis of ideas should be done in a creative manner so that the product that is eventually created is innovative. nagai and junaidy (2015:53) conclude with reference to the sense of design (csikszentmihalyi & robinson 1990; taura & nagai 2013) within a broader entrepreneurial context: a sense of design is a crucial point in considering the rationale of design, particularly creative design, which epitomizes the higher values of society and defines the direction for future generations. creativity and the entrepreneur the creativity trait serves as an entrepreneurial facilitator in primarily the problem identification and solution-finding process towards exploiting opportunities in the market (moroz & hindle 2012). blauth, mauer and brettel (2014:496) add, contextually, that creativity per definition derived from the related body of knowledge suggests firstly the newness of the solution to an aligned problem, and secondly, the ‘appropriateness’ of the solution, given market need. the authors further explain that creativity is directly linked to the creation of opportunities, rather than the ‘observation’ thereof, in quoting read and sarasvathy (2005). scholars in the domain adopted a cognitive perspective with regard to creativity and problem solving (mitchell et al. 2007; tumasjan & braun 2012). accordingly, creativity in the entrepreneurial sense also involves the cognitive constructivism of ideas (puhakka 2012). chell (2007) views cognitive constructivism as the process where, for example, an entrepreneur not only applies existing knowledge structures but also mentally constructs his/her world using categories. puhakka (2012) describes this process as a conceptualisation process, enabling the entrepreneur to restructure his/her knowledge. with regard to problem solving, the main application of these cognitive processes (problem solving and cognitive constructivism) in a business environment is to find or even create business opportunities (matthews 2010). business opportunities can be identified or created to grow existing businesses (casson & wadeson 2007). in this study, the authors embrace the idea that the owner-designers of the small and micro-businesses who offer clothing to local niche markets might be able to identify new and/or grow existing business opportunities through clothing product design. therefore, thinking like a designer on a cognitive level may enhance the owner’s ability to capitalise on product design. thinking like a designer can involve three types of logic when problems are solved or solutions are discovered: deductive logics, inductive logics and abductive logics (kimbell 2011; kolko 2010). deductive logics involves a process of reasoning from general principles and facts to new facts with certainty, whereas inductive logics involves reasoning from specific facts to general facts. abduction is the act of process reasoning from general principles and facts to new facts under uncertainty (kimbell 2011). mirza et al. (2014:1981) exemplify the role of abductive reasoning in enhanced to complex problem situations to be solved through high levels of creative endeavour, experience and knowledge. the integration with the entrepreneurial domain serves relevance in this regard. abduction can be associated with entrepreneurial thinking, because entrepreneurs often do not have certainty about proposed innovative solutions to problems. rennemo and åsvoll (2014:167) accurately accentuate the role of creativity in entrepreneurial opportunity-finding by echoing the seminal work of peirce (1960) on abduction: ‘ … it is the idea of putting together what we had never before dreamed of putting together which flashes the new suggestion before our contemplation’. in this regard, the owner-designer’s creativity, as well as employees’ creativity, can potentially relate to entrepreneurial actions and is considered important for gaining a competitive, advantage especially with regard to innovation. nevertheless, the specific dimension of the collaborative design that can possibly clarify the reason for innovation is referred to as collective creativity (tadmor et al. 2012). collective creativity collective creativity is a phenomenon that has been researched with regard to ideation and has proven to be beneficial (tadmor et al. 2012). it mainly manifests itself during creative problem solving (shiu, chien & chang 2011; steiner 2009). hargadon and bechky (2006:489) summarise this phenomenon by stating that ‘collective creativity happens when social interactions between individuals trigger new interpretations and new discoveries of distant analogies that the individuals involved, thinking alone, could not have generated’. to summarise the core construct, table 1 adapted from parjanen (2012:113) is added that provides the key theoretical flow in research towards deeper understanding. table 1: literature on collective creativity. further to the table, collective thinking involves the thinking pattern of several designers, but the condition for creativity is that all the group members of this process should be fully engaged (mindful) and that all the members of the group participate (hargadon & bechky 2006). in an empirical attempt and from an organisational perspective, bissola and imperatori (2011:77) frame collective creativity as a combination of ‘individual traits, interpersonal relationships and organisational practices, which lead to a collective creative performance’. from another angle, cultural diversity in groups was found as a positive ingredient in collective creativity application, proposed by tadmor et al. (2012). given the context, collective thinking can also take place between entrepreneurs and is often applied in incubation environments (bruneel et al. 2012). the advantages of collective creativity relate to the innovative ideas on processes and products as outputs of processes (jennings 2011:115; oddane 2015; steiner 2009). in their study on collective creativity, tadmor et al. (2012) asserted that creative minds that collaborate enhance novelty, fluency and flexibility, especially as outcomes of an ideation phase. hargadon and bechky (2006) emphasise the importance of a qualitative approach to the creative process and identify four interrelating activities that take place during the collective creativity process when innovative products are created: (1) help seeking, (2) help giving, (3) reflective reframing and (4) reinforcing. according to these scholars, help seeking involves an individual in a group seeking help from others, help giving entails that there is a willing devotion of time and attention to assist a group member, reflective reframing involves the mindful behaviour of all participants in a group interaction and finally reinforcing involves any interesting solutions the group might find. in view of these actions, interaction is all about pooling resources, ideas and people. with this in mind, the theory of hargadon and bechky (2006) can be applicable to collaborative design as applied to create innovative products and/or offerings or processes that could, in turn, enhance the business’s competitiveness. innovative products or processes to yield a competitive advantage innovative products (including services) can be defined as products that are novel or improved (tung 2012), and innovative processes in a business can improve productivity or even the efficiency of business activities (sawhney, wolcott & arroniz 2011). the outcome of innovative product creation should be reviewed within the entrepreneurial context. autio et al. (2014:1103) highlight the importance of ‘contextual interactions’ within the entrepreneurial ecosystem that drives innovation. they suggest that research should support the deeper understanding of entrepreneurial innovation in different contextual settings. garud, gehman and giuliani (2014:1179) support the latter by affirming that contexts ‘shape not only the opportunities that are available, but also the dynamics that unfold’. hence, the lens of design in this study. berends et al. (2014) integrate causal and effectuation as key drivers of product innovation. this signifies that the contextual differences in a small business as compared to the big, are relevant to the frame of this study. given the process context, when the purpose of innovation through the design process is to add value to a specific market, the design process that yields the innovation is usually user-centred (schreier, fuchs & dahl 2012). a user-centred approach to innovative products is applicable to the context of this study, which implies that the products that are innovative are designed to meet the needs of specific clients (balka, raasch & herstatt 2014; chandra & leenders 2014; gambardella, raasch & von hippel 2014; shearmur & doloreux 2015; theodorakopoulos et al. 2014). in this regard, the theoretical framework of rampino (2011) on product innovation was used to underpin the inquiry in this study. the author upholds that product innovation through design has three possible starting points, namely form, mode of use and technology. the innovation framework supports the notion that innovative products can result from the design process with different dimensions, which are an aesthetic dimension, a use dimension, a meaning dimension or a typological dimension. figure 1 schematically illustrates this innovation framework. figure 1: design innovation framework. from figure 1, it is apparent that creativity is applied to a product design process. the product (in this study a clothing product) may have undergone aesthetic innovation (e.g. having a different or unique appearance), can be used for a purpose less traditional (e.g. having multiple purposes or being used in an unconventional manner) and carry a meaning that is creative (e.g. portraying a specific image that is unconventional). due to the fact that typological innovation usually requires high technology and is associated with radical innovation rather than a user-centred approach (verganti 2013:10), it is excluded from this literature review. it is important to note that the application of creativity during a design process yields an innovative product, but in addition, it is argued that the actual design process may also be innovative. in this regard, collective creativity applied to designing a clothing product to enhance novelty, fluency and flexibility of designers might be viewed as process innovation. research methodology the research question addressed in this study is: how does collective creativity contribute to a south african clothing design small business’s competitiveness? the specific objectives addressed in this study to answer the research question are as follows: to explore and describe the role of collective creativity in the collaborative design process of a south african clothing design small business (in order to determine the relevance for the business’s competitiveness). to explore and describe the role of collective creativity in the product that results from the design process (in order to determine the relevance for possible product innovation as a competitive business strategy). research design the research design adopted in this study was a case study. the researchers were interested in understanding events, actions and processes in their context, which is referred to as contextual interest (babbie & mouton 2001:272; denscombe 2008:35). a list of various cases was compiled, from which the particular case was selected. the list contained information on the names and operations of 129 clothing design businesses in pretoria, which were acquired through research on the internet (websites, social media pages, blogs) and through telephone books and popular magazines (which are available to the public and in which the small businesses advertise), as well as information from fabric stores in the geographical area (recommendations and business cards). the case selected for this study was a clothing design small business in pretoria, which was identified as an extreme case when compared to other clothing design small businesses in this region. an extreme case is a case selected to represent exceptional aspects not observable in the typical cases (denscombe 2008:35). the extreme case discussed in this study was regarded as competitive in the marketplace and had the following attributes: has been operating for more than 5 years provides designer clothing to local niche markets owner is also the main designer employs 10 people is prominent in the media, especially with regard to differentiation has more than one branch (pretoria and johannesburg) research methods multiple research methods were implemented to acquire rigorous data. the methods applied were semi-structured interviews, participant observations and an analysis of garments designed and manufactured in the business. multiple methods are commonly implemented in a case study research design and can be applied in order to validate findings (babbie & mouton 2001:282; de vos et al. 2011:321; leedy & ormrod 2005:135). unit of analysis the unit of analysis in a study can be the object, phenomenon, entity or process of events that the researcher is investigating (babbie & mouton 2001:84). merriam (2009:41–42) points out that it is especially the unit of analysis of a case study that needs special consideration when cases are selected. in this particular study, the phenomenon ‘collective creativity’ was investigated, which included the design process (including the behaviour of the owner-designers) and the clothing products resulting from the design process. data processing interviews were recorded and transcribed. transcriptions of the interviews were completed after each interview, so that the researcher could start to organise the data before conducting the next interview. transcriptions were done in the naturalised manner, which entails that the respondent’s words are transcribed verbatim, as well as other details (including voice tone, laughter and other aspects) (oliver, serovich & mason 2005). a product analysis was done of the garments that were designed. this analysis was based on the criteria and questions recommended by rampino (2011) to explore possible innovation. the specific dimensions were aesthetics, use of the product and meaning of the product. participant observation was also undertaken. records of designer–client interactions, as well as events, behaviour or gestures that were significant to the researcher at that particular time, were documented throughout the study. other raw reflective notes made in the field were later converted to detailed filed notes, as advised by babbie and mouton (2001:107). data analysis content analysis is seen as the analysis and interpretation of the content and follows the process of establishing categories (schreier 2012:1). the researcher’s practical strategy to analyse data within the framework of the relevant guidelines for qualitative data analysis proposed by leedy and ormrod (2005:136) involved the following steps: all information from transcriptions, observation notes and field notes on the case was processed in tables (phrase by phrase). the interview schedule was used to create initial categories in tables. all the data sources were read repeatedly in order to make sense of the patterns and themes that emerged (merriam 2009:175). categories, subcategories and units of meaning were created as they emerged from the data. all constructs and/or concepts were verified by literature. a conceptual framework for the case was compiled to show the relationships between possible constructs that emerged from categories, subcategories and units of meaning. assuring the quality of the data the quality of the data in this study was assured through the application of strategies that combated errors pertaining to credibility, transferability and dependability. credibility credibility was important in this study, as the data had to ‘ring true’. therefore, techniques suggested by babbie and mouton (2001:277) were implemented to acquire credible data. prolonged engagement was one technique used to assure credibility (the researcher stayed in the field until data saturation occurred), as well as persistent observation (looking for multiple influences), peer debriefing (with experts outside the context of the study) and member checks. transferability transferability can be viewed as the extent to which data can be transferred to other similar situations (babbie & mouton 2001:277). for this study, data were reported in the context that they were collected, with details about the case being recorded and documented. furthermore, transcriptions and field notes on the observations were reported to put all the data in context. dependability dependability pertains to the similarity of results that will be found if the research should be repeated with similar participants (babbie & mouton 2001:278). strategies to ensure dependability suggested by de vos et al. (2011:420–421) were thus implemented. one strategy to ensure dependability is sufficient record-keeping (e.g. taking notes during interviews, observation and informal discussions). transcriptions of all interviews, field notes and the evidence of the data analysis were kept. limitations of the study this study was underpinned by the logics of validation, as opposed to generalisation. this implies that the study offers a contextual view of how collective creativity contributes to the competitiveness of the business through a collaborative design process. the role of collective creativity in other business functions are not presented in this study. therefore, further investigation is needed to test how the findings in this study can be generalised to other similar artisan entrepreneurial contexts and how collective creativity enhances business functions other than operations. research findings and discussion this section presents the findings of the study, organised according to the research objectives. the research findings are discussed throughout this section as they relate to the empirical evidence that is presented. objective 1 the role of collective creativity in a collaborative design process. the collaborative design process of this case is described from the perspective of the empirical observations. the plain garments with a-line silhouettes referred to as ‘canvasses’ are displayed on fit mannequins and all the designers comment on what the dress ‘needs’ or what is working or not ‘working’. music is playing in the large open design area where the clients also try on the garments. a clear design concept is not finalised when the designers complete the garments (implementation phase of the design process). instead, all the designers work in the open studio, simultaneously, commenting on each other’s work as basic garments are transformed into more exclusive and creative garments. the clients who walk in also get to see the creative process in action. with the dress on a figure form, owner-designer 2 starts to add draping and lace detail until the look he wants and the look the other two designers approve is obtained. he sews the added pieces by hand and often recreates his initial idea. he is working at creating a dress and drapes fabric in an artistic manner over the dress. he frequently steps back to appraise the garment from a distance. owner-designer 1 also steps back and comments on the length of the fabric that is different on the one side and owner-designer 2 fixes this. he works with precision to please designer 1, but also talks about what the client would like with regard to her personality. she is apparently less dramatic and more romantic. owner-designer 3 adds some advice on colour combinations to enhance a part of the garment. the garment is transformed from an a-line plain garment to an exclusive gown with a different silhouette and different theme than the initial garment. the above observations confirm that help seeking, help giving as well as reflective reframing, as hargadon and bechky (2006) suggest, take place during the collaborative design process in a creative environment, and therefore the collective creativity of the designers is observable in their behaviour. moreover, the inputs from clients confirm the user-centred design process and could be viewed as strategies to enhance the collective creativity of the designers. it is important to note that the creativity of all three the owner-designers are applied to solve a design problem, and this has specific advantages from a designer’s point of view. advantages of collective creativity during the design process from the designers’ point of view during interviews with the designers, the advantages of collective creativity from the designer’s point of view are confirmed. the advantages seem to link to the problem solving process of the designers in order to evaluate (‘see’) their ideas and work so that complex design problems can be solved: ‘i don’t understand how designers can work on their own. it is really important that they [pointing to other designers] also see.’ [participant 2, male, designer, 30 years] ‘… the designs evolve as we go on. you’ll have the fabric and then add something here and we add other stuff. it is done on the dress. it is different than what we started with, but it is always an improvement.’ [participant 1, male, designer, 49 years] the above statement also points to the advantages of collective creativity with regard to problem solving through design thinking, and more specifically, with regard to solving complex design problems. solving complex problems from a design perspective, as explained by kimbell (2011), can involve different forms of reasoning: deductive reasoning (solving a problem by deducting information from a lot of information to apply to the specific), inductive reasoning (solving a problem with specific information and trying to apply it to a more general context) and finally abductive reasoning (which involves not having all the information at hand and still making design decisions to solve a design problem at hand). abductive reasoning, in particular, seems to be applicable in this case, where the designers have the technical skills (know-how), they know for who they design (the client), but they do not know what exactly the product should be. in this regard, drawing from each other’s experiences and creativity can help the designer to solve the complex problem. abductive reasoning relates to calculated risk-taking, which is typically associated with entrepreneurial thinking (kolko 2010) and may enhance the business’s competitiveness if the risk turns out to be worthwhile in monetary terms. the following statement of the main designer confirms how the collective creativity of the design team impacts positively on the business’s competitiveness: ‘i think we have accomplished what we have because we are a team. because the entire time we have a dress on a doll we walk past and this one will comment. i feel comfortable to ask designer 3 and designer 2 what they think of this. they also know what will sell and what is a bit too way-out.’ [participant 1, male, designer, 49 years] participant 3, who is the most inexperienced business owner of this small business, confirms from her point of view how the skills of the other designers contribute to her designs and ability to apply abductive reasoning: ‘designer 2 and designer 1 are both very creative people. designer 2 is more a creative person. designer 1 is technically good and he helps me to cost my stuff so that we make the profit without pricing ourselves out of the market’. [participant 3, female, designer, 25 years] more advantages of collective creativity from a business owner’s perspective could be derived from the interviews. advantages of collective creativity from a business owner’s point of view statements from the participants in this study illustrate how the collective creativity employed during the design process can have advantages for the business’s overall competiveness in the sense that it aids as a process that can be used to overcome challenges of productivity, and consequently could save money: ‘i think our biggest restriction also, after time, is money … when we think up the designs and not necessarily the drawing of the pattern, all three of us would sit together, brainstorm and decide where we are going … it saves me time and money to get advice from designer 1 and designer 2.’ [participant 3, female, designer, 25 years] in addition to overcoming challenges relating to time and money, the collective creativity seems to lower the perceived risk of launching a ready-to-wear clothing line (in addition to producing clothing on order). the particular case launched a ready-to-wear range that is distributed through local boutiques. participant 3 explains the reasoning behind starting a ready-to-wear range as a strategy to be more sustainable: ‘… so it is quite hectic because for six months you struggle to survive with regard to finances and then for the next six months you struggle to survive with regard to time and sleep and getting work done. it is a lot of hours and that is the main reason why we are trying to bring the ready-to-wear range in … so that we can take in a limited amount of couture, live out our creativity in that and then survive on the ready-to-wear range. the other two help me with this, because they know what will work for the customers of the boutiques.’ [participant 3, female, designer, 25 years] objective 2 the role of collective creativity with regard to product, resulting from the design process. the product innovation framework of rampino (2011) was used to guide the categories of the clothing product analysis, as well as categories of the participants’ viewpoints on the role of collective creativity when creating innovative products. table 2 includes the statements of participants, as well as the researcher’s analysis of the clothing products designed by the owner-designers of the particular case. table 2: product innovation resulting from collective creativity. products were also perceived as competitive from the perspective of the designers as business owners. the following statement by participant 1 confirms that innovative products are a strategy to stay competitive in the marketplace: ‘and you can have a look if we [this business] does this, this year they do that the next year. this year we have to get to something totally new. i will tell you now others will do it the year after. it is difficult and it is hard work to get to something that no one thought of. a dress has to be redesigned so that it is different.’ [participant 1, male, designer, 49 years] conclusions and implications for local clothing design small businesses from the findings presented in this study, it is apparent that design strategy and thinking – specifically with regard to solving complex design problems and the competitiveness of the small business – are interrelated in the context of artisan entrepreneurship. collaboration enhances the collective creativity of the designers and can also lower the risks that designers take as owners of their businesses. collective creativity simply implies that a few designers can each bring their own ideas, experience and skills into a collaborative design process. if all the designers are mindfully engaged in the process, one designer can literally influence the next designer’s ideas by contributing during the interaction. new meanings to an individual’s actions are ascribed to the contribution of another. it seems that the unified ideas of the designers in this study enable them to produce clothing products that also satisfy the needs of a particular niche market. in this regard, designers as owners of businesses can draw from each other’s business owner experiences. furthermore, collective creativity seems to contribute to the innovation of products, as well as the actual design process. the collective creativity enhances novelty, fluency and flexibility during the design process, as tadmor et al. (2012) suggest. moreover, the sustainability of the innovative ideas is more probable when designers collaborate during the design process. in this regard, it is important to note that collective creativity applied to the design process cannot be viewed separately from the design business’s competitiveness. therefore, collective creativity has several benefits for designers as owners of a business in a highly competitive clothing industry. the designers inspire each other by making contributions during the design process. moreover, help seeking, help giving, reflective reframing and reinforcing can motivate designers to be open to possibilities, accept responsibility for their own evaluation and be conducive to their ability to toy with ideas. from the findings, it is evident that collective creativity can especially be beneficial to inexperienced owner-designers who collaborate with more experienced owner-designers. not only does collective creativity enhance ideation but it also seems to enhance the motivation of the designers and business owners to solve complex problems that are often related to external factors like the marketplace. this implies that design thinking can enhance entrepreneurial thinking, but that the design thinking can also be enhanced by collective creativity. in view of the above conclusions, collective creativity during a design process is recommended for owner-designers who find themselves working more hours in the business rather than on the business, as the collective creativity can provide access to business opportunities. in this way, the owner-designer’s role as designer and the role of the business owner can be one and the same thing, which implies that every design is strategically executed to enhance the competitiveness of the business through innovative products. therefore, artisan entrepreneurs are encouraged to share their creativity with other designers on a regular basis. collective creativity can be highly beneficial to entrepreneurial support platforms such as thinkubators, business incubators or even business accelerators and is therefore recommended as a strategy that such platforms could embrace to enhance the competitiveness and sustainability of businesses. moreover, collective creativity can be applied by artisan entrepreneurs who aim to be proactive and produce innovative, trend-setting products. it is recommended that experienced artisan entrepreneurs contribute their creativity not only to enhance the creativity of inexperienced artisan entrepreneurs in solving design problems but also to identify new business opportunities. in this regard, the authors of this study conclude that creativity shared is creativity gained. acknowledgements competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions t.t. was the project leader in conducting the research. a.j.a. contributed as scientific and conceptual contributor on the fields of entrepreneurship and creativity. m.-m.a. served as a subject and scientific contributor on the apparel industry. all authors contributed equally in compiling the final paper. references aspelund, k., 2010, the design process, 2nd edn., fairchild, new york. autio, e., kenney, m., mustar, p., siegel, d. & wright, m., 2014, ‘entrepreneurial innovation: the importance of context’, research policy 43(7), 1097–1108. http://dx.doi.org/10.1016/j.respol.2014.01.015 babbie, e. & mouton, j., 2001, the practice of social research (south african ed.), oxford university press southern africa, cape town. balka, k., raasch, c. & herstatt, c., 2014, ‘the effect of selective openness on value creation in user innovation communities’, journal of product innovation management 31(2), 392–407. http://dx.doi.org/10.1111/jpim.12102 berends, h., jelinek, m., reymen, i. & stultiëns, r., 2014, ‘product innovation processes in small firms: combining entrepreneurial effectuation and managerial causation’, journal of product innovation management 31(3), 616–635. http://dx.doi.org/10.1111/jpim.12117 bickle, m.c., 2011, fashion marketing: theory, principles and practice, fairchild, new york. bissola, r. & imperatori, b., 2011, ‘organising individual and collective creativity: flying in the face of creativity clichés’, creativity and innovation management 20(2), 77–89. http://dx.doi.org/10.1111/j.1467-8691.2011.00597.x blauth, m., mauer, r. & brettel, m., 2014, ‘fostering creativity in new product development through entrepreneurial decision making’, creativity and innovation management 23, 495–509. http://dx.doi.org/10.1111/caim.12094 boztepe, s., 2007, ‘user value: competing theories and models’, international journal of design 1(2), 55–63. brannon, e.l., 2007, fashion forecasting, 2nd edn., fairchild, new york. bruneel, j., ratinho, t., clarysse, b. & groen, a., 2012, ‘the evolution of business incubators: comparing demand and supply of business incubation services across different incubator generations’, technovation 32(2), 110–121. http://dx.doi.org/10.1016/j.technovation.2011.11.003 casson, m. & wadeson, n., 2007, ‘the discovery of opportunities: extending the economic theory of the entrepreneur’, small business economics 28(4), 285–300. http://dx.doi.org/10.1007/s11187-006-9037-7 cennamo, k., baum, l., newbill, p. & finn, t., 2012, ‘teaching to develop critical and creative thinking skills’, in p. resta (ed.), proceedings of society for information technology and teacher education international conference, austin, tx, march 5, pp. 3553–3557, aace, chesapeake, va, viewed 20 august 2013, from http://www.editlib.org/p/40144 chan, j., fu, k., schunn, c., cagan, j., wood, k. & kotovsky, k., 2011, ‘on the benefits and pitfalls of analogies for innovative design: ideation performance based on analogical distance, commonness, and modality of examples’, journal of mechanical design 133(8), 081004-081011. http://dx.doi.org/10.1115/1.4004396 chandra, y. & leenders, m.a., 2014, ‘user innovation and entrepreneurship in the virtual worlds’, technovation 32, 464-476. chell, e., 2007, ‘social enterprise and entrepreneurship: towards a convergent theory of the entrepreneurial process’, international small business journal 25(1), 5–26. http://dx.doi.org/10.1177/0266242607071779 cyr, a., meier, o. & pacitto, j.c., 2011, ‘method in their madness: understanding the behaviour of vse owner-managers’, journal of small business and enterprise development 18(2), 331–351. http://dx.doi.org/10.1108/14626001111127106 denscombe, m. 2008. the good research guide: for small-scale social research projects, 3rd edn., mcgraw-hill, new york. de vos, a.s., strydom, h., fouche, c.g. & delport, c.s.l., 2011, research at grass roots: for the social sciences and human service professions, 4th edn., van schaik, cape town. dhliwayo, r., 2012, ‘a continent vs. a country: china putting strain on africa’s clothing and textile industries’, africa conflict monthly monitor, viewed 17 december 2012, from http://www.consultancyafrica.com. an introduction in the context of design’, artificial intelligence for engineering design, analysis and manufacturing 29(2), 133–134. http://dx.doi.org/10.1017/s0890060415000013 goldschmidt, g. & sever, a.l., 2011, ‘inspiring design ideas with texts’, design studies 32(2), 39–155. http://dx.doi.org/10.1016/j.destud.2010.09.006 gong, y., kim, t.y., lee, d.r. & zhu, j., 2013, ‘a multilevel model of team goal orientation, information exchange, and creativity’, academy of management journal 56(3), 827–851. http://dx.doi.org/10.5465/amj.2011.0177 hargadon, a.b. & bechky, b.a., 2006, ‘when creations of creatives become creative collectives: a field study of problem solving at work’, organization science 17(4), 484–525. http://dx.doi.org/10.1287/orsc.1060.0200 hartley, j., sørensen, e. & torfing, j., 2013, ‘collaborative innovation: a viable alternative to market competition and organizational entrepreneurship’, public administration review 73(6), 821–830. http://dx.doi.org/10.1111/puar.12136 hobday, m., boddington, a. & grantham, a., 2012, ‘an innovation perspective on design: part 2’, design issues, 28(1), 18–29. http://dx.doi.org/10.1162/desi_a_00137 jennings, b.j., 2011, factors that contribute to knowledge sharing within research based companies, doctoral thesis in organisational learning and instructional technology, university of new mexico, albuquerque, usa. kimbell, l., 2011, ‘rethinking design thinking: part i’, design and culture 3(3), 285–306. http://dx.doi.org/10.2752/175470811x13071166525216 kolko, j., 2010, ‘abductive thinking and sensemaking: the drivers of design synthesis’, design issues 26(1), 15–28. http://dx.doi.org/10.1162/desi.2010.26.1.15 lamb, j.m. & kallal, m.j., 1992, ‘a conceptual framework for apparel design’, clothing and textiles research journal 10(2), 42–47. http://dx.doi.org/10.1177/0887302x9201000207 leedy, p.d. & ormrod, j.e., 2005, practical research: planning and design, 8th edn., prentice hall, new jersey. lemke, f., clark, m. & wilson, h., 2011, ‘customer experience quality: an exploration in business and consumer contexts using repertory grid technique’, journal of the academy of marketing science, 39(6), 846–869. http://dx.doi.org/10.1007/s11747-010-0219-0 matthews, j.h., 2010, investigating design, creativity and entrepreneurial processes, in annual meeting of the academy of management dare to care: passion and compassion in management practice & research, montreal, qc, canada, 6–10th august, 31 p. menon g., 2015, ‘the need for design approach in opportunity identification stage of product innovation’, voice of research 3(4), 49–53. merriam, s.b., 2009, qualitative research: a guide to design and implementation, 2nd edn., john wiley and sons, san francisco, ca. mirza n.a., akhtar-danesh n., noesgaard c., martin l. & staples e., 2014, ‘a concept analysis of abductive reasoning’, journal of advanced nursing 70(9), 1980–1994. http://dx.doi.org/10.1111/jan.12379. mitchell, r.k., busenitz, l.w., bird, b., gaglio, c.m., mcmullen, j.s., morse, e.a. & smith, j.b., 2007, the central question in entrepreneurial cognition research, entrepreneurship theory and practice 31, 1–27. http://dx.doi.org/10.1111/j.1540-6520.2007.00161.x moroz, p.w. and hindle, k., 2012. entrepreneurship as a process: toward harmonizing multiple perspectives. entrepreneurship theory and practice 36(4), 781–818. mumford, m.d., antes, a.l., caughron, j.j., connelly, s. & beeler, c., 2010, ‘cross-field differences in creative problem-solving skills: a comparison of health, biological, and social sciences’, creativity research journal 22(1), 14–26. http://dx.doi.org/10.1080/10400410903579510 nagai, y. & junaidy, d.w., 2015, ‘meta-contents of design creativity: extraction of the key concepts that form the sense of design’, the third international conference on design creativity (3rd icdc), bangalore, india, 12th january. nattrass, n. & seekings, j., 2014, ‘job destruction in newcastle: minimum wage-setting and low-wage employment in the south african clothing industry, transformation: critical perspectives on southern africa 84(1), 1–30. http://dx.doi.org/10.1353/trn.2014.0009 neck, h.m. & greene, p.g., 2011, ‘entrepreneurship education: known worlds and new frontiers’, journal of small business management 49(1), 55–70. http://dx.doi.org/10.1111/j.1540-627x.2010.00314.x oddane, t.a.w., 2015, ‘the collective creativity of academics and practitioners in innovation projects’, international journal of managing projects in business 8(1), 33–57. http://dx.doi.org/10.1108/ijmpb-10-2013-0060 olim, a., mota, i. & silva, s.t., 2015, the influence of creativity on entrepreneurship: the portuguese case, entrepreneurship, human capital, and regional development, pp. 205–235, springer international publishing. switzerland. oliver, d.g., serovich, j.m. & mason, t.l., 2005, ‘constraints and opportunities with interview transcription: towards reflection in qualitative research’, soc forces 84(2), 1273–1289. http://dx.doi.org/10.1353/sof.2006.0023 olsen, n.v., 2015, ‘design thinking and food innovation’, trends in food science & technology 41, 18–187. http://dx.doi.org/10.1016/j.tifs.2014.10.001 parjanen, s., 2012, ‘experiencing creativity in the organization: from individual creativity to collective creativity’, interdisciplinary journal of information, knowledge, and management 7, 109–128. puhakka, v., 2012, ‘entrepreneurial creativity as discovery and exploitation of business opportunities’, in t. burger-helmchen, (ed.), entrepreneurship – creativity and innovative business models, pp. 3–24, intech, rijeka, croatia. rampino, l., 2011, ‘the innovation pyramid: a categorization of the innovation phenomenon in the product-design field’, international journal of design 5(1), 3–16. rath, p.m., bay, s., petrizzi, r. & gill, p., 2008, the why of the buy: consumer behavior and fashion marketing, fairchild, new york. regan, c.l., kincade, d.h. & sheldon, g., 1998, ‘applicability of the engineering design process theory in apparel design process’, clothing and research textile journal 16(1), 36–46. http://dx.doi.org/10.1177/0887302x9801600105 rennemo, ø. & åsvoll, h., 2014, ‘abduction, deduction and induction as concepts for understanding entrepreneurial opportunities: a metaperspective based on three views of the market process’, academy of entrepreneurship journal 20(2), 164. sawhney, m., wolcott, r.c. & arroniz, i., 2011, ‘the 12 different ways for companies to innovate’, sloan management review 47(3), 28–34. schmidt, j.j., soper, j.c. & bernaciak, j., 2012, ‘creativity in the entrepreneurship program: a survey of directors of award winning programs’, academy of entrepreneurship 18(1), 51. schreier, m., 2012, qualitative content analysis in practice, sage publications, california. schreier, m., fuchs, c. & dahl, d.w., 2012, ‘the innovation effect of user design: exploring consumers’ innovation perceptions of firms selling products designed by users’, journal of marketing 76(5), 18–32. http://dx.doi.org/10.1509/jm.10.0462 shearmur, r. & doloreux, d., 2015, ‘knowledge-intensive business services (kibs) use and user innovation: high-order services, geographic hierarchies and internet use in quebec’s manufacturing sector’, regional studies 49(10), 1654–1671. shiu, s., chien, h. & chung, r., 2011, ‘a study of learning process to promote the ability of creativity and creative problem solving in the technological university student’, international journal of arts and sciences 4(8), 31–36. steiner, g., 2009, ‘collaborative creative problem solving for innovation generation: a systems approach’, journal of business and management 15(1), 5–33. tadmor, c.t., statterstorm, p., lang, s. & polzer, j.t., 2012, ‘beyond individual creativity: the superadditive benefits of multicultural experience for collective creativity in culturally diverse teams’, journal of cross-cultural psychology 43(3), 384–392. http://dx.doi.org/10.1177/0022022111435259 theodorakopoulos, n., bennett, d. & sánchez preciado, d.j., 2014, ‘intermediation for technology diffusion and user innovation in a developing rural economy: a social learning perspective’, entrepreneurship & regional development 26(7–8), 645–662. http://dx.doi.org/10.1080/08985626.2014.971077 tselepis, t.j., 2013, ‘the development of an entrepreneurially orientated design model for the south african small business that offers custom-made apparel’, doctoral thesis, university of pretoria, pretoria, south africa. tumasjan, a. & braun, r., 2012, ‘in the eye of the beholder: how regulatory focus and self-efficacy interact in influencing opportunity recognition’, journal of business venturing 27(6), 622–636. http://dx.doi.org/101016/j.jbusvent.2001.08.001 tung, j., 2012, ‘a study of product innovation on firm performance’, the international journal of organizational innovation 4(3), 84–97. verganti, r., 2013, design driven innovation: changing the rules of competition by radically innovating what things mean, harvard business press, boston, ma. vlok, e., 2006, ‘the textile and clothing industry in south africa’, in h. jauch, & r. traub-merz, (eds.), the future of the textile and clothing industry in sub-saharan africa, friedrich-ebert-stiftung, bonn, germany, viewed 02 june 2012, from http://library.fes.de/pdf-files/iez/03796/16suedafrika.pdf abstract introduction method findings and discussion managerial implication conclusion acknowledgements references appendix 1 about the author(s) tebogo sethibe graduate school of business leadership, university of south africa, south africa renier steyn graduate school of business leadership, university of south africa, south africa citation sethibe, t. & steyn, r., 2016, ‘innovation and organisational performance: a critical review of the instruments used to measure organisational performance’, southern african journal of entrepreneurship and small business management 8(1), a50. http://dx.doi.org/10.4102/sajesbm.v8i1.50 original research innovation and organisational performance: a critical review of the instruments used to measure organisational performance tebogo sethibe, renier steyn received: 14 mar. 2016; accepted: 15 aug. 2016; published: 28 oct. 2016 copyright: © 2016. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: innovation is recognised as one of the most important determinant of organisational performance. yet, the results of studies that investigate the relationship between innovation and organisational performance are inconclusive. the inconsistency has been attributed to a number of factors, which include, among others, the measures used to evaluate organisational performance. aim: this study was set out to identify, categorise and critically analyse the instruments used to assess organisational performance when investigating the relationship between innovation and organisational performance. setting: the study focuses on all scientific publications reporting on organisational performance, inclusive of both financial and non-financial indicators of performance, and are not limited to any specific country or industry. methods: the systematic literature review methodology was used to identify studies which investigated the relationship between innovation and organisational performance. once identified, articles were analysed on the way organisational performance was measured. classification was done with reference to financial and non-financial indicators, accounting and market-based, as well as objective and subjective measures. results: the findings show that profitability, sales growth and return on assets (roa) are the most preferred accounting-based financial measures of organisation performance. in addition, tobin’s q was found to be the most favoured market-based financial measure of organisational performance. the study further reveals that market share, customer satisfaction and productivity are the most popular non-financial-based measures of organisational performance. conclusion: the use of measures of organisational performance is often left to the discussion of the researcher, which is not implicitly wrong, but does little to contribute to the body of knowledge on this important topic. researchers are firstly urged to clearly define which aspects of organisational performance they intend to study, secondly to use established instruments or often used indicators of organisational performance, and thirdly to combine both objective and subjective measures of organisational performance. this would allow for researchers to build on the work of other and strengthen the body of knowledge in this area. introduction organisational performance is an important indicator of organisational success (stegerean & gavrea 2010). apart from organisational performance, organisational success also relates to employee skills levels, personnel development, quality of strategic planning and the ability to understand and adapt to the nature and dynamics of the business environment (carvalho et al. 2016). however, organisational performance is arguably the most important indicator of organisational success and one of the most important variables in management research (stegerean & gavrea 2010). research indicates that organisational performance is influenced by innovation (durán-vázquez, lorenzo-valdés & moreno-quezada 2012; likar, kopa & fatur 2014; nybakk & jenssen 2012; oke, walumbwa & myers 2012; yen 2013). undertaking research on these constructs is important to organisations as managers should be aware of the impact of different variables on organisational performance in order to manage them in an effective manner (bigliardi 2013; ndregjoni & elmazi 2012). yen (2013), for example, states that the facilitation of innovation is an important management function that can be directly linked to organisational performance. an important aspect to consider when evaluating innovation efforts and organisational performance is the time factor, given that there is a time lag between innovation initiatives and the outcome that follows (likar et al. 2014). in fact, o’connor et al. (2008) state that the time lag between innovation and its impact on organisational performance ranges from 3 to 6 years. it is important to note this, as a focus on short term indicators (e.g. return on investment [roi], sales growth and operating income) may be inappropriate and may indicate that innovation strategies are not working, while the effect may only be visible in the longer term (ndregjoni & elmazi 2012). although the study of organisational performance has been at the core of management research, very little has been done with regard to appropriate measures to assess the effectiveness of innovation initiatives. in addition, a cursory review of the literature shows that researchers focus on the discussion around typologies of organisational performance on financial and non-financial aspects, with very little attention to other dimensions, such as objective and subjective measures. the present study, therefore, aims primarily to investigate the most frequently used instruments. the results of this investigation will then be used as a lens through which to investigate which typologies (financial vs. non-financial; objective vs. subjective) of organisational performance were adopted and further to investigate whether the instruments selected played a role in the outcome of the study. this will result in the compilation of a more comprehensive and updated literature review that can form the basis for future research when selecting measures of organisational performance. problem statement and objective the results of studies that investigate the relationship between innovation and organisational performance are inconclusive, with some studies (carvalho et al. 2016; cortez et al. 2015; mafini 2015) showing a positive relationship, while others showed mixed results or no relationship with no definite conclusion (hervas-oliver, sempere-ripoll & boronat-moll 2014; simachev, kuzyk & feygina 2015). this inconsistency has been attributed to a number of factors, including, among others, the measures used to evaluate organisational performance. in an attempt to understand these inconsistences, rubera and kirca (2012) conducted a meta-analysis in a quest to better understand a firm-innovativeness-performance relationship, drawing on the chain-of-effects model as a unifying framework. the study revealed that the size of the firm, the sector in which the firm operates and the nature of innovation (radical innovation, for example) adopted can influence the relationship between innovation and organisational performance. however, although rubera and kirca’s study is significant in many ways, the study did not investigate whether the type of instruments used to measure organisational performance can also influence the relationship between these constructs. this reveals a gap in the literature and shows the need for a critical review of the influence of the type of instruments used to measure organisational performance on the reported relationship between innovation and organisational performance. therefore, the objective of this study is twofold: firstly, the study seeks to investigate the most frequently used instruments and, secondly, the study will investigate whether the type of instruments used does influence the nature of the relationship between these constructs. measures of organisational performance the construct of organisational performance is central to the understanding of organisational success and the factors responsible for that variation (hoopes, hadsen & walker 2003). in order to get an accurate and comparative gauge of the variation mentioned, valid and reliable measures are necessary (saunders 2012). although several methods for measuring organisational performance exist, these methods can be classified into two main categories, namely financial and non-financial performance measurement (maltz, shenhar & reilly 2003; shin et al. 2015). financial performance measurement despite the general consensus among scholars that a firm’s performance is a multidimensional construct, one of the most extensively used measures is the financial component – the fulfilment of the economic goal of the organisation (gentry & shen 2010). this is in line with davidson’s (2003) argument that the primary goal (aim) of management is to generate profit and to maximise shareholder value. important to note is that scholars who embark on empirical studies employ a number of different measures to evaluate financial performance (berger & bonaccorsi di patti 2003; davidson 2003). the literature research reveals that to assess the financial aspects of organisational performance, researchers generally use either accounting-based measures, such as profitability, sales growth, return on assets (roa), return on sales (ros), return on equity (roe) and/or roi, or stock market measures, such as tobin’s q and price earning (p/e) ratio (hult et al. 2008; likar et al. 2014; nawaz, hassan & shaukat 2014; tsao & lien 2013). in the 1980s, researchers primarily used accounting-based measures of financial performance (hoskisson et al. 1999). however, with the rise of shareholder activism in the late 1980s and early 1990s, organisations started adopting shareholder value maximisation as a measure of financial performance (useem 1993). this paradigm shift promoted the adoption of market-based performance measures in management research (hoskisson et al. 1999). despite its limitations, profit maximisation remains one of the key measures of organisational performance (garg, joubert & pellissier 2004). various researchers use growth as a sole measure of performance, while others choose to combine growth and profitability (likar et al. 2014). however, most researchers prefer to combine ros, roa, roe and roi because they complement one another. the use of a single ratio generally does not provide sufficient information to allow investors to judge the overall performance of the firm (marx 2004). for instance, roa allows analysts to evaluate the effectiveness and efficiency of the firm’s management and employees in generating profit by productively using assets (firer et al. 2008). on the contrary, ros allows analysts to evaluate the effectiveness and efficiency of the firm’s management and employees in generating profit by means of sales (karanja 2011; marx 2004). for the sake of clarity, a short explanation of the aforementioned measures has been provided in table 1. table 1: financial instruments. according to campbell and mínguez-vera (2008), accounting-based measures are useful because they provide useful objective measures of organisational performance. however, various authors (fernandez 2001; frigo 2003; smith 2007) argue that accounting measures only reflect the history, both in terms of income statements, which explain what happened in a certain year, and those of the balance sheet, which reflects the state of the firm’s assets and liabilities at a certain point in time. as such, it is impossible for accounting-based measures to measure value creation. the challenge of uncovering the true financial value of innovation is a result of practices such as international financial reporting standards (ifrs) not adequately reflecting innovation expenditure (frigo 2003; smith 2007). ifrs forces the recording of the immediate expense of investment and thus creates a challenge owing to the time lag between innovation expenditure and the effect it has on financial performance. this leads to a situation in which researchers will need to correlate initial expenditure with a product that will only emerge a few years later (selby 2010). despite the need to measure the effects of innovation, morris (2008) convincingly argues that measuring innovation presents a problem in itself, because innovation involves venturing into the unknown. therefore, if one tries to pin down these unknowns too quickly, they may become harder to recognise. in addition, when measuring the impact of innovation, the innovation lifespan should also be put into perspective (eggink 2011). for instance, sustaining innovation is continuous in nature and as such there is no beginning and no end to the innovation process (oecd/eurostat 2005). moreover, different types of innovation will have different lifespans. for example, some innovations will last for a very long time while others may have a short lifespan. several market-related measures are proposed in order to account for the long-tern benefits of innovation in an organisation. these include tobin’s q and price earning (p/e): advocates of tobin’s q argue that stock market measures incorporate all relevant information and thus, unlike accounting-based measures, are not limited to a single aspect of financial performance (lubatkin & shrieves 1986). tobin’s q is a ratio that indicates the market value of the firm in relation to the replacement cost of the tangible assets (tobin 1969). tobin’s q is computed by dividing market capitalisation by the replacement cost of the firm’s assets (cho & pucik 2005). tobin’s q is based on the idea that stock markets, if the takeover market for companies was efficient, would operate at a tobin’s q of 1 (karanja 2011). in other words, the value of 1 for tobin’s q indicates that the market value of the firm is greater than the value of the recorded assets in the book of accounts. high tobin’s q value is an indication of higher capital investment. in contrast, a tobin’s q value of less than 1 indicates that the market value of the firm is less than the recorded assets in the book of accounts. price earning (p/e), on the contrary, is calculated by dividing share price by earnings per share (eps). in this method, the relationship between the market share price of a share of stock and the stock’s current eps is often stated in terms of p/e ratio (garrison et al. 2008). the strength of the p/e ratio is its ability to use current and historical data to predict the future. consequently, investors widely use the p/e ratio as an indicator of future prospects. a high p/e ratio means that investors are willing to pay a premium for a company stock, mainly because the company is expected to have higher than average future earnings growth. according to selby (2010), when the company’s outlook holds the likelihood of future profit, a generic investor will be more inclined to buy that stock. despite the intuitive appeal of the above-mentioned measures of the stock market (lubatkin & shrieves 1986), the assumption of market-efficiency has been questioned by prominent scholars in finance (tobin 1969). bettis (1983) argues that, even if the market-efficiency theory holds, stock price does not necessarily reflect its fundamental value because it is influenced by what management chooses to disclose to the investors. acknowledging that neither accounting nor market-based measures are perfect, management researchers have accepted measures based on both accounting and stock market as valid for assessing organisational performance (hoskisson et al. 1999). in support of this view, shook et al. (2004) agree and argue that in order to improve the quality of construct measurement, a stream of management researchers prefer using multiple indicators to measure key constructs and then use the structural equation modelling technique (sem) to do the analysis. for instance, tsao and lien (2013) used both roa and tobin’s q whereas talke, salomo and kock (2011) and padgett and moura-leite (2012) decided to use tobin’s q exclusively, mainly because of its ability to capture the value of long-term investment such as innovation. non-financial performance measurement according to ndregjoni and elmazi (2012), non-financial measures must also be assessed in order to evaluate overall performance, for two main reasons. firstly, several interest groups are involved in the business and they all have particular goals and expectations related to the organisation. secondly, the strategic business areas are not necessarily financial in nature. as a result, several approaches to non-financial indicators exist, such as customer satisfaction and retention, market share, productivity, operational effectiveness and efficiency, reputation, branding and quality (battor & battor 2010; tsai & tsai 2010; oke et al. 2012; ul hassan et al. 2013). alam (2003), after examining the literature on new product performance measures, proposes three performance dimensions for determining the success of new products, namely financial criteria, customer criteria and opportunity criteria. as indicated by other scholars, financial criteria include financial indicators of new products such as profitability, sales, cost, roi and market share. the second dimension (customer criteria) refers to customer satisfaction and how new products attract new customers and create new market opportunities. the third dimension (opportunity criteria) is much broader in scope as it relates to overall opportunity that can be created by new products. these include, among others, unlocking opportunities for existing products, providing a platform for developing other new products and acquiring skills and experience, as a result of new product development projects. more recently, gentry and shen (2010) conducted an extensive literature review on organisational performance with the aim of contributing to the debate concerning appropriate measures of organisational performance. they concluded that the use of both financial and non-financial measures is the most appropriate and sound approach to measure organisational performance. however, the authors further argue that the use of financial aspects of performance as a sole measure is not necessarily wrong, but they emphasise that researchers should always clearly define which aspects of organisational performance they intend to study, and then develop and test the hypotheses around that. all of the above should be viewed against the background research against which organisational performance is measured, namely objectively and subjectively. objective versus subjective measures objective measures are the absolute values of a firm’s actual performance (battor & battor 2010) and subjective measures generally ask respondents to assess their company’s performance relative to that of their competitors (greenley 1995). for instance, objective financial measures are audited financial data such as sales, profit or asset values (rajan & reichelstein 2009). by contrast, the term ‘subjective measure’ is used to mean that the company’s performance is derived from direct observations by management, financial analysts or employee perceptions about organisational performance (dawes 1999). by virtue of its nature, objective measures are verifiable whereas subjective measures cannot be verified (rajan & reichelstein 2009). method this study adopted two generic steps central to the systematic review methodology (nightingale 2009), namely defining the search strategy, and then selecting relevant studies by applying the inclusion and exclusion criteria. originating in medical science, a systematic review differs from conversional reviews in that it aims at synthesising research in a systematic, transparent and reproducible manner (tranfield, denyer & smart 2003). a systematic literature review uses explicit, thorough methods to identify, select, appraise and synthesise a set of research studies on a well-defined topic (robson et al. 2007). the primary aim of this review was to identify and report on the instruments used in prior studies that investigated the relationship between innovation and organisational performance, and to identify the most frequently used instruments as well as the rationale behind choosing those instruments. the keywords ‘innovation’ (innov*) and ‘performance’ (perform*) were used in the search. the options (criteria) selected for the search were full text, peer-reviewed and scholarly journals. target articles needed to match both keywords in a title. fifty-eight databases on the major database (presented in box 1-a1), ebscohost, were searched for articles and 120 articles were retrieved. articles whose abstract indicated that either financial or non-financial performance was used as a measure of organisational performance, which were published in english in the last 5 years and where the full text was available were included in the study. only 71 articles (table 1-a1) met these criteria. findings and discussion in the sample of 71 studies, five studies (articles 10; 17; 19; 40 and 46) focused exclusively on non-financial measures, 29 studies (articles 2; 6; 7; 9; 11; 12; 15; 20; 25; 26; 27; 30; 32; 34; 36; 39; 43; 45; 47; 51; 52; 55; 56; 60; 61; 65; 69; 70 and 71) focused exclusively on the financial component and 37 studies (articles 1; 3; 4; 5; 8; 13; 14; 16; 18; 21; 22; 23; 24; 28; 29; 31; 33; 35; 37; 38; 41; 42; 44; 48; 49; 50; 53; 54; 57; 58; 59; 62; 63; 64; 66; 67 and 68) combined both the financial and non-financial instruments to measure organisational performance. the financial (accounting and market) measures are discussed first, followed immediately by the non-financial measures. financial measures the different instruments used to measure financial performance in the sample of 71 studies are presented in table 2. from the sample of 71, a total of 16 financial instruments (profit, sales growth, roa, roi, turnover, roe, ros, tobin’s q, operating costs, market to book, income, cash flow, basic earning power, long-term debt, inventory turnover and eps) were used to measure financial performance. table 2: financial instruments used to measure organisational performance. in support of the argument by cho and pucik (2005), table 2 shows that profitability, despite its weaknesses in measuring long-term investment, is by far the most preferred financial indicator used to measure financial performance, with a staggering 29 studies opting to use this measure, followed by sales growth with 28 studies. the most cited reason for using profitability and sales growth to measure organisational performance is twofold. firstly, authors argue that innovative behaviour leads to improved operational performance such as cost efficiency, quality improvement and speed to market, which ultimately results in higher profitability and sales growth (cambra-fierro et al. 2011; ul hassan et al. 2013). secondly, authors (basterretxea & martinez 2012; cortez & cudia 2010; forsman & temel 2011) argue that both profitability and sales growth are the most common indicators used in prior studies to measure organisational performance and, as such, enable a comparison between the output of prior studies and the study in question. in agreement with literature, roa completes the top three most commonly used instruments to measure financial performance. consistent with the rationale for using profitability and sales growth instruments, roa, ros, roi and roe are generally selected for their popularity in prior studies that investigated innovation and organisational performance (postruznik & moretti 2012; rubera & kirca 2012). similarly, revenue is preferred because it can be directly linked to innovation activities and it is also a commonly used indicator in prior studies (eris & ozmen 2012; likar et al. 2014). tobin’s q is the most preferred market-based measure of financial performance, with five studies opting to use this measure. in contrast to the reasons provided for using accounting-based measures, tobin’s q is used mainly because of its ability to capture the value of long-term investment, such as innovation investment (padgett & moura-leite 2012; sivakumar et al. 2011; talke et al. 2011). furthermore, table 2 illustrates that financial instruments, such as operating cost, market to book, income, cash flow, basic earning power, inventory turnover and eps are not so popular among innovation scholars, despite selby (2010) presenting a good argument for the use of eps as a measure of organisational performance, owing to its strength in capturing future expected earnings. non-financial measures table 3 presents the instruments used to measure non-financial aspects of organisational performance when investigating the relationship between innovation and organisational performance. from the sample of 71 studies, a total of 10 instruments (market share, customer satisfaction, productivity, operational efficiency, employment growth, quality, competitiveness, reputation or branding, product attractiveness and quick to market) were used to measure non-financial aspects of organisational performance. table 3 reveals that market share (14 studies), customer satisfaction and retention (12 studies) and productivity (10 studies) are the most popular instruments used to measure non-financial components of organisational performance. interesting to note is that there are no reasons provided for why the measures were selected. however, one can infer that market dominance, customer satisfaction and productivity were chosen because they are easy to measure and they provide useful information to gauge whether a company is doing well or not. table 3: non-financial instruments used to measure organisational performance. other studies used competitiveness, branding, product attractiveness and quick to market as instruments to measure organisational performance. studies that focused exclusively on non-financial aspects of organisational performance prefer to use the top three frequently used measures, namely customer satisfaction (modi 2012; oke et al. 2012; walker, damanpour & devece 2011), market share (adner & kapoor 2010) and productivity (ito & lechevalier 2010). subjective versus objective only three studies (articles 50, 53 and 54) used both objective and subjective measures. in two studies (articles 50 and 53), the results of the study revealed mixed results and in one study (article 54), the results showed that innovation leads to superior organisational performance. despite the importance of using both objective and subjective measures, a considerable number of studies adopted either subjective or objective measures of organisational performance. subjective measures table 4 presents the article reference number of studies (see table 1-a1) that used the subjective measures of organisational performance and the findings of the studies that investigated the relationship between innovation and organisational performance. table 4: subjective measures of organisational performance. as stated in the literature, subjective measures are perceived organisational performance, where respondents are requested to assess their company’s performance relative to that of their competitors. of the 71 studies that investigated the relationship between innovation and organisational performance, 43 studies used the subjective measures of organisational performance. the findings provide overwhelming evidence (41 studies) indicating innovation is positively and significantly related to organisational performance. in contrast, two studies found mixed results. objective measures table 5 depicts authors and hypothesis results of studies that used objective measures of organisational performance on the relationship between innovation and organisational performance. objective measures, the absolute values of a firm’s actual performance, are generally sourced from an independent body such as a stock exchange. table 5: objective measures of organisational performance. table 5 shows that when objective measures of organisational performance are used, the higher number of studies reveals mixed results. this suggests that the type of instrument used might also influence the results in studies that investigate the relationship between innovation and organisational performance. for example, the study conducted by likar et al. (2014) showed innovation is significantly and positively related to performance when measured using roe, whereas the same study revealed no relationship when ros and roa were used. table 5 shows that, of the 25 studies that investigated the relationship between innovation and organisational performance, 13 found a positive relationship and 12 found mixed results. managerial implication the primary purpose of this study is to report on the instruments used to measure organisational performance and investigate whether the type of instrument used influences the results of those studies that investigated the relationship between innovation and organisational performance. using the systematic review methodology, this study finds that combining both financial and non-financial measures is touted as the most effective measure of organisational performance. in total, 37 studies use both financial and non-financial measures, which constitute 50.7% of the overall sample of articles. however, a substantial number of authors still prefer to use financial measures as the sole measure of organisational performance, with 29 studies focusing exclusively on the financial measures, which constitute 40.8% of the overall sample. the sole use of financial indicators as a proxy for organisational performance may be informed by the popular notion that ultimately the goal of the organisation is to maximise profit in the short term and to maximise shareholder value in the long-term. in addition, the study provides evidence that profitability, sales growth, roa, ros, roi, roe and turnover are the most preferred accounting measures for financial performance. similarly, the study further reveals that tobin’s q is the most favoured market-related measure used by innovation scholars to measure financial aspects of organisational performance. on the contrary, market share, customer satisfaction and productivity measures are reported as the most preferred non-financial measures of organisational performance. this study provides clear evidence that the use of non-financial measures as a sole measure is not a common trend, with only 5 (7%) of 71 studies opting to exclusively use non-financial measures to measure organisational performance. the use of any specific measure of organisational performance is not implicitly wrong, but gentry and shen (2010) urge that researchers should always be cautious in their approach and clearly define which aspects of organisational performance they intend to study, and then develop and test hypotheses around that defined area. when findings were studied, this study showed that organisations that practise innovative behaviour generally exhibit superior organisational performance relative to organisations with less innovative behaviour. the study showed that 54 studies, which constitute 76% of the overall sample, supported the hypothesis that innovation leads to superior organisational performance. in addition, the findings also showed that 60.6% of the overall sample used the subjective measures of organisational performance, relative to only 35.2% which used objective measures of organisational performance. when objective measures were used, the findings reveal that a higher number of studies (48%) showed mixed results, no relationship or negative relationship, relative to 0.05% which showed mixed results, no relationship or negative relationship when subjective measures are used. this finding suggests that the selection of the instruments to measure organisational performance does influence the outcome of the results, as shown in studies that investigate the relationship between innovation and organisational performance. thus, the implications of the research for both researchers and practitioners can be divided into two main areas: firstly, the study revealed the measurement instrument favoured by researchers. but of significance is that the reasons for selecting the instruments are generally based on the popularity of the instrument in this domain, and not necessarily based on the objective of the study. this observation suggests that researchers should be more cautious when selecting the instrument to measure organisational performance because the instrument has a direct impact on the outcome of the study. secondly, the finding shows that the method in which the instruments is used can affect the outcome of the research. in other words, when subjective measures of organisational performance are used, the outcome of the results is easily predictable. in contrast, when objective measures are used, the extent of variability of the results increases. in other words, the outcome of the results is not easily predictable when objective measures are used. as such, researchers and practitioners should be more alert to the possible false inferences that may be the result of using a specific method to measure organisational performance, particularly the use of subjective measures. conclusion in conclusion, this finding supports the argument put forward by gentry and shen (2010), which states that a thorough literature study should be central to decision-making when selecting measures of organisational performance, as the types of measures seemingly influence the outcome of the enquiry. recommendation for future research this study should serve as stimulus for future studies to explore all the possible factors that influence findings related to the relationship between innovation and organisational performance. future studies that investigate the relationship between innovation and organisational performance should try to isolate the role of innovation on organisations, and eliminate the cloud created by factors such as measurement tools, by selecting the instrument(s) based on the objective of the study. acknowledgements competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions t.s. was responsible for all aspects of the research, including matters such as identifying the research problem, formulating the research objective, the research design, execution of the research and drafting the article. r.s. played a mentoring role and assisted with the critical comments and provided guidance in drafting the article. references aas, t.h. & pedersen, p.e., 2011, ‘the impact of service innovation on firm-level financial performance’, service industries journal 31(13), 2071–2090. http://dx.doi.org/10.1080/02642069.2010.503883 adner, r. & kapoor, r., 2010, ‘value creation in innovation ecosystems: how the structure of technological interdependence affects firm performance in new technology generations’, strategic management journal 31(3), 306–333. http://dx.doi.org/10.1002/smj.821 alam, i., 2003, ‘innovation strategy, process and performance in the commercial banking industry’, journal of marketing management 19(9/10), 793–999. alexander, d. & nobes, c., 2010, financial accounting: an international introduction, 4th edn., pearson education limited, harlow. alpay, g., bodur, m., yilmaz, c. & büyükbalci, p., 2012, ‘how does innovativeness yield superior firm performance? the role of marketing effectiveness’, innovation: management, policy & practice 14(1), 107–128. http://dx.doi.org/10.5172/impp.2012.14.1.107 artz, k.w., norman, p.m., hatfield, d.e. & cardinal, l.b., 2010, ‘a longitudinal study of the impact of r&d, patents, and product innovation on firm performance’, journal of product innovation management 27(5), 725–740. http://dx.doi.org/10.1111/j.1540-5885.2010.00747.x aspara, j., hietanen, j. & tikkanen, h., 2010, ‘business model innovation vs. replication: financial performance implications of strategic emphases’, journal of strategic marketing 18(1), 39–56. http://dx.doi.org/10.1080/09652540903511290 basterretxea, i. & martinez, r., 2012, ‘impact of management and innovation capabilities on performance: are cooperatives different?’, annals of public and cooperative economics 83(3), 357–381. http://dx.doi.org/10.1111/j.1467-8292.2012.00467.x battor, m. & battor, m., 2010, ‘the impact of customer relationship management capability on innovation and performance advantages: testing a mediated model’, journal of marketing management 26(9/10), 842–857. http://dx.doi.org/10.1080/02672570903498843 berger, a.n. & bonaccorsi di patti, e., 2003, ‘capital structure and firm performance: a new approach to testing agency theory and an application to the banking industry’, journal of banking and finance 30(4), 1065–1102. http://dx.doi.org/10.1016/j.jbankfin.2005.05.015 bettis, r.a., 1983, ‘modern financial theory, corporate strategy, and public policy: three conundrums’, academy of management review 8(3), 406–415. http://dx.doi.org/10.2307/257829 bigliardi, b., 2013, ‘the effect of innovation on financial performance: a research study involving smes innovation’, management, policy & practice 15(2), 245–256. http://dx.doi.org/10.5172/impp.2013.15.2.245 bodlaj, m., 2010, ‘the impact of a responsive and proactive market orientation on innovation and business performance’, economic and business review 12(4), 241–261. brockman, b.k., jones, m.a. & becherer, r.c., 2012, ‘customer orientation and performance in small firms: examining the moderating influence of risk-taking, innovativeness, and opportunity focus’, journal of small business management 50(3), 429–446. http://dx.doi.org/10.1111/j.1540-627x.2012.00361.x cainelli, g., mazzanti, m. & zoboli, r., 2011, ‘environmentally oriented innovative strategies and firm performance in services. micro-evidence from italy’, international review of applied economics 25(1), 61–85. http://dx.doi.org/10.1080/02692170903426146 carvalho, a.o., ribeiro, i., cirani, c.b.s. & cintra, r.f., 2016, ‘organisational resilience: a comparative study between innovative and non-innovative companies based on the financial performance analysis’, international review of applied economics 25(1), 61–85. camarero, c., garrido, m.j. & vicente, e., 2011, ‘how cultural organizations’ size and funding influence innovation and performance: the case of museums’, journal of cultural economics 35(4), 247–266. http://dx.doi.org/10.1007/s10824-011-9144-4 cambra-fierro, j.j., hart, s., fuster mur, a. & polo redondo, y., 2011, ‘looking for performance: how innovation and strategy may affect market orientation models’, innovation: management, policy & practice 13(2), 154–172. http://dx.doi.org/10.5172/impp.2011.13.2.154 campbell, k. & mínguez-vera, a., 2008, ‘gender diversity in the boardroom and firm financial performance’, journal of business ethics 83(3), 435–451. http://dx.doi.org/10.1007/s10551-007-9630-y cho, h. & pucik, v., 2005, ‘relationship between innovativeness, quality, growth, profitability, and market value’, strategic management journal 26(6), 555–575. http://dx.doi.org/10.1002/smj.461 clifton, n., keast, r., pickernell, d. & senior, m., 2010, ‘network structure, knowledge governance, and firm performance: evidence from innovation networks and smes in the uk’, growth and change 41(3), 337–373. http://dx.doi.org/10.1111/j.1468-2257.2010.00529.x cortez, m.a.a. & cudia, c.p., 2010, ‘the impact of environmental innovations on financial performance: the case of japanese automotive and electronics companies’, journal of international business research 9(1), 33–46. cortez, m.a.a. & cudia, c.p., 2011, ‘the virtuous cycles between environmental innovations and financial performance: case study of japanese automotive and electronics companies’, academy of accounting & financial studies journal 15(2), 31–44. cortez, m.a.a., ikram, m.i.n., nyuyen, t.t. & pravini, w.p., 2015, ‘innovation and financial performance of electronic companies: a cross-country comparison’, journal of international business research 14(1), 166–179. dawes, j., 1999, ‘the relationship between subjective and objective company performance measures in market orientation research: further empirical evidence’, marketing bulletin 10(3), 65–75. davidson, g.m., 2003, the relationship between organizational culture and financial performance in south african investment bank, unpublished master’s dissertation, university of south africa, pretoria. durán-vázquez, r., lorenzo-valdés, a. & moreno-quezada, g.e., 2012, ‘innovation and csr impact on financial performance of selected companies in mexico’, journal of entrepreneurship, management and innovation 8(3), 5–20. eggink, m.e., 2011, the role of innovation in economic development, unpublished doctoral thesis, university of south africa, pretoria. eris, e.d. & ozmen, o.n.t., 2012, ‘the effect of market orientation, learning orientation and innovativeness on firm performance: a research from turkish logistics sector’, international journal of economic sciences and applied research 5(1), 77–108. faems, d., de visser, m., andries, p. & van looy, b., 2010, ‘technology alliance portfolios and financial performance: value-enhancing and cost-increasing effects of open innovation’, journal of product innovation management 27(6), 785–796. http://dx.doi.org/10.1111/j.1540-5885.2010.00752.x fang, e., palmatier, r.w. & grewal, r., 2011, ‘effects of customer and innovation asset configuration strategies on firm performance’, journal of marketing research 48(3), 587–602. http://dx.doi.org/10.1509/jmkr.48.3.587 fernandez, p., 2001, eva, economic profit and cash value added do not measure shareholder value creation, working paper, iese business school, university of navarra, spain. firer, c., ross, s.a., westerfield, r.w. & jordan, b.d., 2008, fundamentals of corporate finance, 4th edn., mcgraw-hill education, london. forsman, h. & temel, s., 2011, ‘innovation and business performance in small enterprises: an enterprise-level analysis’, international journal of innovation management 15(3), 641–665. http://dx.doi.org/10.1142/s1363919611003258 frigo, m.l., 2003, ‘guidelines for strategic financial analysis’, strategic finance 85(5), 1–9. garcía-zamora, e., gonzález-benito, o. & muñoz-gallego, p.a., 2013, ‘organizational and environmental factors as moderators of the relationship between multidimensional innovation and performance’, innovation: management, policy & practice 15(2), 224–244. http://dx.doi.org/10.5172/impp.2013.15.2.224 garg, a.k., joubert, r.j.o. & pellissier, r., 2004, ‘measuring business performance: a case study’, southern african business review 8(1), 7–21. garrison, r.h., noreen, e.r. & brewer, p.c., 2008, managerial accounting, 4th edn., mcgrew-hill/irwin, new york. gentry, r.j.p. & shen, w.p., 2010, ‘the relationship between accounting and market measures of firm financial performance: how strong is it?’, journal of managerial issues 22(4), 514–530, 434–435. gibb, j. & haar, j.m., 2010, ‘risk taking, innovativeness and competitive rivalry: a three-way interaction towards firm performance’, international journal of innovation management 14(5), 871–891. http://dx.doi.org/10.1142/s136391961000291x gökmen, a. & hamşioğlu, a.b., 2011, ‘the effect of knowledge management, technological capability and innovation on the enterprise performance: a comprehensive empirical study of the turkish textile sector’, journal of information & knowledge management 10(1), 1–10. http://dx.doi.org/10.1142/s021964921100278x grawe, s.j., daugherty, p.j. & roath, a.s., 2011, ‘knowledge synthesis and innovative logistics processes: enhancing operational flexibility and performance’, journal of business logistics 32(1), 69–80. http://dx.doi.org/10.1111/j.2158-1592.2011.01006.x greenley, g.e., 1995, ‘market orientation and company performance: empirical evidence from uk companies’, british journal of management 6(1), 1–13. http://dx.doi.org/10.1111/j.1467-8551.1995.tb00082.x gronum, s., verreynne, m.l. & kastelle, t., 2012, ‘the role of networks in small and medium-sized enterprise innovation and firm performance’, journal of small business management 50(2), 257–282. http://dx.doi.org/10.1111/j.1540-627x.2012.00353.x guiral, a., 2012, ‘corporate social performance, innovation intensity, and financial performance: evidence from lending decisions’, behavioral research in accounting 24(2), 65–85. http://dx.doi.org/10.2308/bria-50096 hemert, p., nijkamp, p. & masurel, e., 2013, ‘from innovation to commercialization through networks and agglomerations: analysis of sources of innovation, innovation capabilities and performance of dutch smes’, annals of regional science 50(2), 425–452. http://dx.doi.org/10.1007/s00168-012-0509-1 hervas-oliver, j., sempere-ripoll, f. & boronat-moll, c., 2014, ‘process innovation strategy in smes, organisational innovation and performance: a misleading debate?’, small business economics 43, 873–886. http://dx.doi.org/10.1007/s11187-014-9567-3 hoopes, d.g., hadsen, t.l. & walker, g., 2003, ‘guest editors’ introduction to the special issue: why is there a resource-based view? toward a theory of competitive heterogeneity’, strategic management journal 24(10), 889–902. http://dx.doi.org/10.1002/smj.356 hoskisson, r.e., hitt, m.a., wan, w.p. & yiu, d., 1999, ‘theory and research in strategic management: swings of a pendulum’, journal of management 25(3), 417–456. http://dx.doi.org/10.1177/014920639902500307 huang, h., lai, m., kao, m. & chen, y., 2012, ‘target costing, business model innovation, and firm performance: an empirical analysis of chinese firms’, canadian journal of administrative sciences 29(4), 322–335. http://dx.doi.org/10.1002/cjas.1229 huang, l., chen, s.k. & han, s.b., 2011, ‘the effect of business reorganization and technical innovation on firm performance’, journal of business and economic studies 17(1), 29–36. huffman, f.a. & skaggs, b.c., 2010, ‘the effects of customer-firm interaction on innovation and performance in service firms’, journal of business strategies 27(2), 151–175. hult, g.t.m., ketchen, d.j., griffith, d.a., chabowski, b.r., hamman, m.k., dykes, b.j. et al., 2008, ‘an assessment of the measurement of performance in international business research’, journal of international business studies 39(6), 1064–1080. http://dx.doi.org/10.1057/palgrave.jibs.8400398 iona, a., leonida, l. & navarra, p., 2013, ‘business group affiliation, innovation, internationalization, and performance: a semiparametric analysis’, global strategy journal 3(3), 244–261. http://dx.doi.org/10.1111/j.2042-5805.2013.01060.x ito, k. & lechevalier, s., 2010, ‘why some firms persistently out-perform others: investigating the interactions between innovation and exporting strategies’, industrial and corporate change 19(6), 1997–2039. http://dx.doi.org/10.1093/icc/dtq056 karanja, e., 2011, the mediating effect of innovation on the relationship between information technology investment and firm performance: an empirical study, unpublished doctoral thesis, morgan state university, baltimore, md. kreiser, p.m. & davis, j., 2010, ‘entrepreneurial orientation and firm performance: the unique impact of innovativeness, proactiveness, and risk-taking’, journal of small business and entrepreneurship 23(1), 39–51. http://dx.doi.org/10.1080/08276331.2010.10593472 lau, a.k.w., tang, e. & yam, r.c.m., 2010, ‘effects of supplier and customer integration on product innovation and performance: empirical evidence in hong kong manufacturers’, journal of product innovation management 27(5), 761–777. http://dx.doi.org/10.1111/j.1540-5885.2010.00749.x likar, b., kopa, j. & fatur, p., 2014, ‘innovation investment and economic performance in transition economies: evidence from slovenia’, innovation: management, policy & practice 16(1), 53–66. http://dx.doi.org/10.5172/impp.2014.16.1.53 liu, x. & wu, x., 2011, ‘technology embeddedness, innovation differentiation strategies and firm performance: evidence from chinese manufacturing firms’, innovation: management, policy & practice 13(1), 20–35. http://dx.doi.org/10.5172/impp.2011.13.1.20 lubatkin, m. & shrieves, r.e., 1986, ‘towards reconciliation of market performance measures to strategic management research’, academy of management review 11(3), 497–512. mafini, c., 2015, ‘predicting organisational performance through innovation, quality and inter-organisational systems: a public sector perspective’, journal of applied business research 31(3), 939–952. http://dx.doi.org/10.19030/jabr.v31i3.9227 maltz, a., shenhar, a. & reilly, r., 2003, ‘beyond the balanced scorecard: refining the search for organizational success measures’, long range planning 36(2), 187–204. http://dx.doi.org/10.1016/s0024-6301(02)00165-6 marx, j., 2004, finance for non-financial managers, 2nd edn., abc press, cape town. mat rabi, n., zulkafli, a.h. & che haat, m.h., 2010, ‘corporate governance, innovation investment and firm performance: evidence from malaysian public listed companies’, economia: seria management 13(2), 225–239. mazzola, e., bruccoleri, m. & perrone, p., 2012, ‘the effect of inbound, outbound and coupled innovation on performance’, international journal of innovation management 16(6), 27. http://dx.doi.org/10.1142/s1363919612400087 mcnally, r.c., cavusgil, e. & calantone, r.j., 2010, ‘product innovativeness dimensions and their relationships with product advantage, product financial performance, and project protocol’, journal of product innovation management 27(7), 991–1006. http://dx.doi.org/10.1111/j.1540-5885.2010.00766.x modi, p., 2012, ‘market orientation in nonprofit organizations: innovativeness, resource scarcity, and performance’, journal of strategic marketing 20(1), 55–67. http://dx.doi.org/10.1080/0965254x.2011.628405 mollick, e., 2012, ‘people and process, suits and innovators: the role of individuals in firm performance’, strategic management journal 33(9), 1001–1015. http://dx.doi.org/10.1002/smj.1958 morris, l., 2008, innovation metrics: an innovation labs, viewed 26 february 2015, from http://www.innovationlabs.com/measuring_innovation.pdf nawaz, m.s., hassan, m. & shaukat, s., 2014, ‘impact of knowledge management practices on firm performance: testing the mediation role of innovation in the manufacturing sector of pakistan’, pakistan journal of commerce & social sciences 8(1), 99–111. ndregjoni, z. & elmazi, l., 2012, ‘the effects of relationship between information technology and firm innovation on firm performance: the case of albania’, international journal of management cases 14(1), 235–246. http://dx.doi.org/10.5848/apbj.2012.00023 nightingale, a., 2009, ‘a guide to systematic literature review’, surgery 27(9), 381–384. http://dx.doi.org/10.1016/j.mpsur.2009.07.005 noruzy, a., dalfard, v., azhdari, b., nazari-shirkouhi, s. & rezazadeh, a., 2013, ‘relations between transformational leadership, organizational learning, knowledge management, organizational innovation, and organizational performance: an empirical investigation of manufacturing firms’, international journal of advanced manufacturing technology 64(5–8), 1073–1085. http://dx.doi.org/10.1007/s00170-012-4038-y nybakk, e., 2012, ‘learning orientation, innovativeness and financial performance in traditional manufacturing firms: a higher-order structural equation model’, international journal of innovation management 16(5), 28. http://dx.doi.org/10.1142/s1363919612003873 nybakk, e. & jenssen, j.i., 2012, ‘innovation strategy, working climate, and financial performance in traditional manufacturing firms: an empirical analysis’, international journal of innovation management 16(2), 1–26. http://dx.doi.org/10.1142/s1363919611003374 o’connor, g.c., leifer, r., paulson, a.s. & peters, l.s., 2008, grabbing lightning: building a capability for breakthrough innovation, jossey-bass, san francisco, ca. oecd/eurostat, 2005, islo manual: guidelines for collecting and interpreting innovation data, 2nd edn., oecd publishing, paris. oke, a., walumbwa, f.o. & myers, a., 2012, ‘innovation strategy, human resource policy, and firms’ revenue growth: the roles of environmental uncertainty and innovation performance’, decision sciences 43(2), 273–302. http://dx.doi.org/10.1111/j.1540-5915.2011.00350.x padgett, r.c. & moura-leite, r.c., 2012, ‘innovation with high social benefits and corporate financial performance’, journal of technology management & innovation 7(4), 59–69. http://dx.doi.org/10.4067/s0718-27242012000400005 postružnik, n. & moretti, m., 2012, ‘innovation and communication as dimensions of the marketing culture: their influence on financial performance in slovenia’s insurance and construction industries’, our economy 58(1/2), 35–47. rajan, m.v. & reichelstein, s., 2009, ‘objective versus subjective indicators of managerial performance’, the accounting review 84(1), 209–327. http://dx.doi.org/10.2308/accr.2009.84.1.209 ritala, p., 2012, ‘coopetition strategy – when is it successful? empirical evidence on innovation and market performance’, british journal of management 23(3), 307–324. robeson, d. & o’connor, g.c., 2013, ‘boards of directors, innovation, and performance: an exploration at multiple levels’, journal of product innovation management 30(4), 608–625. http://dx.doi.org/10.1111/jpim.12018 robson, l.s., clarke, j.a., cullen, k., bielecky, a., severin, c., bigelow, p.l. et al., 2007, ‘the effectiveness of occupational health and safety management system interventions: a systematic review’, safety science 45, 329–353. http://dx.doi.org/10.1016/j.ssci.2006.07.003 rubera, g. & kirca, a.h., 2012, ‘firm innovativeness and its performance outcomes: a meta-analytic review and theoretical integration’, journal of marketing 76(3), 130–147. http://dx.doi.org/10.1509/jm.10.0494. ruiz-arroyo, m., fuentes-fuentes, m.d.m., bojica, a.m. & rodriguez-ariza, l., 2012, ‘innovativeness and performance in women-owned small firms: the role of knowledge acquisition’, journal of small business and entrepreneurship 25(3), 307–326. http://dx.doi.org/10.1080/08276331.2012.10593575 saunders, p., 2012, research methods for business students, 6th edn., pearson education limited, harlow. selby, j., 2010, a quantitative study describing the impact of innovation-related investment and management performance on corporate financial returns, unpublished doctoral thesis, walden university, minneapolis, mn. shin, y., sung, s.y., choi, j.n. & kim, m.s., 2015, ‘top management ethical leadership and firm performance: mediating role of ethical and procedural justice climate’, journal of business ethics 129, 43–57. http://dx.doi.org/10.1007/s10551-014-2144-5 shook, c.l., ketchen, d.j., jr, hult, g.t.m. & kacmar, k.m., 2004, ‘an assessment of the use of structural equation modeling in strategic management research’, strategic management journal 25(4), 397–404. http://dx.doi.org/10.1002/smj.385 simachev, y., kuzyk, m. & feygina, v., 2015, ‘public support for innovation in russia firms: looking for improvements in corporate performance quality’, international atlantic economic conference 21, 13–31. sivakumar, k., roy, s., zhu, j. & hanvanich, s., 2011, ‘global innovation generation and financial performance in business-to-business relationships: the case of cross-border alliances in the pharmaceutical industry’, journal of the academy of marketing science 39(5), 757–776. http://dx.doi.org/10.1007/s11747-010-0229-y slavković, m. & babić, v., 2013, ‘knowledge management, innovativeness, and organizational performance: evidence from serbia’, economic annals 58(199), 85–107. http://dx.doi.org/10.2298/eka1399085s smith, m.j., 2007, ‘accounting conservatism and real options’, journal of accounting, auditing & finance 22(3), 449–467. song, m., im, s., bij, h. & song, l.z., 2011, ‘does strategic planning enhance or impede innovation and firm performance?’, journal of product innovation management 28(4), 503–520. http://dx.doi.org/10.1111/j.1540-5885.2011.00822.x stegerean, r. & gavrea, c., 2010, ‘innovation and development: criteria for organizational performance’, managerial challenges of the contemporary society (1), 202–205. stock, r.m., six, b. & zacharias, n.a., 2013, ‘linking multiple layers of innovation-oriented corporate culture, product program innovativeness, and business performance: a contingency approach’, journal of the academy of marketing science 41(3), 283–299. http://dx.doi.org/10.1007/s11747-012-0306-5 stock, r.m. & zacharias, n.a., 2011, ‘patterns and performance outcomes of innovation orientation’, journal of the academy of marketing science 39(6), 870–888. http://dx.doi.org/10.1007/s11747-010-0225-2 subrahmanya, m.h.b., 2011, ‘technological innovations and firm performance of manufacturing smes: determinants and outcomes’, asci journal of management 41(1), 109–122. talke, k., salomo, s. & kock, a., 2011, ‘top management team diversity and strategic innovation orientation: the relationship and consequences for innovativeness and performance’, journal of product innovation management 28(6), 819–832. http://dx.doi.org/10.1111/j.1540-5885.2011.00851.x terziovski, m., 2010, ‘innovation practice and its performance implications in small and medium enterprises (smes) in the manufacturing sector: a resource-based view’, strategic management journal 31(8), 892–902. http://dx.doi.org/10.1002/smj.841 tobin, j., 1969, ‘a general equilibrium approach to monetary theory’, journal of money credit and banking 1(1), 15–29. http://dx.doi.org/10.2307/1991374 tranfield, d., denyer, d. & smart, p., 2003, ‘towards a methodology for developing evidence-informed management knowledge by means of systematic review’, british journal of managemen 14, 207–222. http://dx.doi.org/10.1111/1467-8551.00375 tsao, s.m. & lien, w.h., 2013, ‘family management and internationalization: the impact on firm performance and innovation’, management international review 53(2), 189–213. http://dx.doi.org/10.1007/s11575-011-0125-9 tsai, m. & tsai, c., 2010, ‘innovation capability and performance in taiwanese science parks: exploring the moderating effects of industrial clusters fabric’, international journal of organizational innovation 2(4), 80–103. ul hassan, m., shaukat, s., nawaz, m.s. & naz, s., 2013, ‘effects of innovation types on firm performance: an empirical study on pakistan’s manufacturing sector’, pakistan journal of commerce and social sciences 7(2), 243–262. useem, m., 1993, executive defence: shareholder power and corporate reorganization, harvard university press, cambridge, ma. walker, r.m., damanpour, f. & devece, c.a., 2011, ‘management innovation and organizational performance: the mediating effect of performance management’, journal of public administration research and theory 21(2), 367–386. http://dx.doi.org/10.1093/jopart/muq043 wheatley, k.k. & doty, d.h., 2010, ‘executive compensation as a moderator of the innovation-performance relationship’, journal of business and management 16(1), 89–102. wu, s. & lin, m.c., 2011, ‘the influence of innovation strategy and organizational innovation on innovation quality and performance’, international journal of organizational innovation 3(4), 45–81. yang, y.f., yang, l. & chen, y.s., 2014, ‘effects of service innovation on financial performance of small audit firms in taiwan’, international journal of business and finance research 8(2), 87–99, viewed n.d., from http://www.theibfr.com/ijbfrsample.htm yen, y., 2013, ‘the impact of bank’s human capital on organizational performance: how innovation influences performance’, innovation: management, policy & practice 15(1), 112–128. http://dx.doi.org/10.5172/impp.2013.15.1.112 zhou, y., hong, y. & liu, j., 2013, ‘internal commitment or external collaboration? the impact of human resource management systems on firm innovation and performance’, human resource management 52(2), 263–288. http://dx.doi.org/10.1002/hrm.21527 appendix 1 box 1-a1: ebscohost databases. table 1-a1: chronological list of articles selected for the research. abstract introduction literature review methodology research findings conclusion acknowledgements references about the author(s) michael nyoni department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa menisha moos department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa citation nyoni, m. & moos, m., 2022, ‘the relationship between small business owners’ practice of effectuation and business growth in gauteng townships’, southern african journal of entrepreneurship and small business management 14(1), a453. https://doi.org/10.4102/sajesbm.v14i1.453 original research the relationship between small business owners’ practice of effectuation and business growth in gauteng townships michael nyoni, menisha moos received: 19 july 2021; accepted: 12 apr. 2022; published: 30 may 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: with the high unemployment and increasing levels of poverty in south africa (sa), especially in the townships, the start-up and growth of township-owned small businesses have been proposed as the solution to address this phenomenon. the extant causation approach has had its challenges to develop township-owned small businesses because of resource constraints. consequently, the emergent effectuation approach is worth investigating. aim: this study aimed to determine if the practice of effectuation and the effectuation constructs (experimentation, affordable loss, flexibility and pre-commitments) by a non-expert township small business owner (ntsbo) would result in business growth (assets, sales and employment growth) and if the industries the businesses are operating in are a moderating variable. setting: primary research was conducted in the three gauteng townships of alexandra, honeydew and soweto in sa because townships contribute more than 38% towards south africa’s gross domestic product (gdp). methods: a quantitative study of 728 ntsbos was conducted using an interview-administered structured questionnaire. non-probability sampling methods were used, and the data were analysed using structural equation modelling (sem). results: the study found that effectuation and its components of experimentation and flexibility had statistically significant relationships with financial business growth (fbg). industry did not moderate these relationships that were found. experimentation and flexibility probably empowered the ntsbo to adapt to the ever-changing and unpredictable township business environment they operate in. neither effectuation nor its components demonstrated statistically significant relationships with nonfinancial business growth. conclusion: the findings of this study may inform policymakers, government and financial institutions that the effectuation approach can be an option incorporated for the training, funding and/or support of township small business owners. keywords: effectuation; business growth; township; experimentation; affordable loss; flexibility; pre-commitments. introduction emerging economies, such as that of south africa (sa), have high resource or means constraints with respect to attributes, knowledge, networks and financial resources (ślusarczyk & grondys 2019:2) leveraged by entrepreneurs to start and grow their businesses. these resource constraints faced by entrepreneurs are even higher amongst black people as compared with other races such as white people, indians and mixed race in sa because of increased poverty amongst black people (burger et al. 2017:13). these poverty-stricken black people predominantly populate the townships (boachie & ross 2020:2), including the non-expert township small business owner (ntsbos). the extant or traditional approach for entrepreneurial development and support is based on the causation approach (roach, ryman & makani 2016:215) of drawing up a business plan and then seeking funding (means) to implement the business plan. this approach is plagued, amongst others, by access to finance amongst small business owners (lloyd 2018:276). an inclination towards the alternative approach of effectuation may prove a worthy remedy, given sarasvathy’s (2001:245) position that it starts with the means at hand to determine the business that can be created. this emergent decision logic of effectuation was originally found amongst 27 united states of america (usa) based expert entrepreneurs with resource constraints. subsequently, the effectuation theory has been tested on nascent entrepreneurs (non-expert), although they were entrepreneurship university students pursuing undergraduate and post-graduate studies in a simulated business environment (agogué, lundqvist & middleton 2015:7). in the specific south african context, an effectuation qualitative study found that township-based small business owners in the gauteng and vaal areas who were funded by a sponsor and practised effectual decision-making were more successful than their counterparts who did not practise effectuation (le roux & pretorius 2015:101). the knowledge gap this study addressed was whether effectuation practised by non-experts based in the townships, particularly with low education levels, could result in business growth. another gap was whether the industries they operated in (retail, services and manufacturing) moderated the relationships between effectuation or its component constructs and business growth. therefore, to guide the study, the following research objectives were investigated to determine: the nature of the relationship, if any, between the practice of effectuation by ntsbos and business growth. the relationships, if any, between each of the four effectuation constructs (experimentation, affordable loss, flexibility and pre-commitments) and business growth. if industry moderates the relationships that effectuation or individual effectuation constructs may have with business growth. literature review entrepreneur and entrepreneurship entrepreneurs have been classified as those individuals who innovate (planko et al. 2017:615) and also those who do not innovate in starting their business ventures (welter et al. 2017:7). schumpeter in the 1930s also defined the entrepreneur as being innovative as opposed to ‘following the crowd’, and this concept has coined the term ‘schumpeterian entrepreneur’ (cantner, goethner & silbereisen 2017:9). the schumpeterian and similar definitions of an entrepreneur would probably disqualify an ntsbo who imitates another business as an entrepreneur. for purposes of the study, the investigation was based on the ntsbos to prevent excluding other business owners in the township who may not be innovative. entrepreneurship is the creation of a new business, and business is defined as an activity that generates a profit, hence entrepreneurship is about having a profitable business venture (utomo et al. 2019:235). township entrepreneurship activity is limited in the township economy compared with the formal economy (van rensburg, telukdarie & dhamija 2019:4), but higher activities of entrepreneurship are therefore one of the tools that can be used to create jobs (zwane & nyide 2017:347). there has been a declined total early-stage entrepreneurial activity (tea) rate in sa whilst using the extant approaches, including causation (herrington, kew & mwanga 2017:6). for purposes of this article, the focus was on the emergent effectuation approach. township environment the average south african township is described as being affected by severe poverty, crime, overcrowding, unemployment, backyard shacks, illegal electrical connections and poor sanitation (booyens & rogerson 2019:258; preisendoerfer, bitz & bezuidenhout 2014:167). lack of good infrastructure, presence of informal settlements, high school dropout rates and high levels of substance abuse (manyaka-boshielo 2017:3) are challenges that face the ntsbo. despite existing government support initiatives for entrepreneurs (financial and non-financial), most township entrepreneurs are not aware of and cannot access these initiatives (gwija, eresia-eke & iwu 2014:66). another challenge is that of township businesses stocking the same products with other stores to sell to the same customers, resulting in lack of differentiation to gain a competitive advantage (anderson, chandy & zia 2016:10). non-expert township small business owner the ntsbos have limited or no experience in entrepreneurship (st-jean, radu-lefebvre & mathieu 2018:13). these ntsbos tend to be necessity-based as they start their business purely out of the need to survive or generate an income to sustain a living (block et al. 2015:38). non-expert entrepreneurs also include nascent entrepreneurs and established business owners with less than 15 years’ experience (dew et al. 2009:288). most ntsbos have low levels of education (urban & ndou 2019:6) and cannot draw up a business plan (makhitha 2016:259) in line with the extant causation approach to start and grow businesses. they face challenges of accessing resources they need to start and grow their businesses such as finance (mogashoa & selebi 2021:9), business licences or permits and an adequately educated workforce, amongst others (madi 2017:41). in comparison, the urban small business owners (usbos) on the other hand are at an advantage, overall. their customers include white middle class, with higher skills and easier access to internet to read up on the small business owner’s offering online via their website or other online technologies (hikido 2018:2592). the usbos are more highly skilled, have a better education level and access to finance and other resources required to run a business (lloyd 2018). in addition, they also have access to qualified workers, good transport network and good communication infrastructure (njoroge & bett 2018:125). the usbos nevertheless also have their own challenges, such as protests because of forced evictions of people in vacant city buildings and removal of street traders from the designated business districts (tengeh 2016:208–209). effectuation the effectuation theory by sarasvathy (2001) explicates how resource-poor expert entrepreneurs behave to create a market using their limited means (arend, sarooghi & burkemper 2015:2). welter, mauer and wuebker (2016:6) contend that the emergence of the effectuation theory is linked to the realisation that the behaviours of some entrepreneurs in the real world could not be explained by causation. the four principles or constructs of effectuation are experimentation, affordable loss, flexibility and pre-commitments (urban & heydenrych 2015:127). experimentation is when a business continuously tries out different business models until a viable business model is found (reymen et al. 2016:597) to cope with changes in the market and competition (guo, suo & ahlstrom 2016:534). affordable loss relates to what the business can afford to lose as opposed to trying to calculate the expected return (causation) in an uncertain environment (futterer, schmidt & heidenreich 2018:67). flexibility is where the business accepts surprises and leverages contingencies in their business venture (eyana, masurel & paas 2017) as opposed to seeing contingencies negatively or trying to prevent contingencies (stroe, parida & wincent 2018:266). pre-commitments are when self-selected stakeholders such as customers, suppliers and other organisations commit and contribute towards the success of the business venture (smolka et al. 2016:7), thereby increasing the means available to make the business venture worth pursuing (mansoori & lackéus 2020:805). research on the use of effectuation in sa by nascent or ntsbos has been carried out (de villiers scheepers, boshoff & oostenbrink 2018:26; urban 2018), but the sample was mostly made up of respondents with a post-secondary qualification such as a diploma or a degree. effectuation starts with the means at hand to determine the business that can be created, such as when a chef prepares a meal based on the available ingredients (sarasvathy 2001:245). causation, nonetheless, is predictive, linear, prescriptive and planned by following the linear process of identifying the opportunity, concept development, evaluation and refinement of the opportunity, acquisition of resources and then commencement of the business (qureshi, sheikh & israr 2016:622). the business is determined first (the meal) and then the means (the ingredients) are sourced in causation. the differences between causation and effectuation are shown in detail in table 1. table 1: characteristics that define effectuation vs causation approach. business growth organic business growth is internal growth, which can happen through the development of new or existing markets or development of new or existing products resulting in increased sales (achtenhagen, brunninge & melin 2017:459), assets and employee numbers. use of financial indicators to measure business growth is more objective and eliminates respondent bias as compared with the use of non-financial indicators (gerschewski & xiao 2015:11). the two strongest determinants of business growth or performance are increases in sales and employees (yeboah 2015:6). eshima and anderson (2017:771) used sales (revenue) growth and assets growth as financial indicators of measuring business growth. in essence, the business growth can be topologised as financial business growth (fbg) or non-financial business growth (nfbg). for purposes of the study, fbg was measured on the basis assets and sales whilst an nfbg was measured by employment growth. hypotheses development from the literature, the study formulated hypotheses and depicted these in figure 1. literature has proposed that effectuation allows the business to manage the uncertainty of predicting the future into an opportunity by exploiting contingencies (deligianni, voudouris & lioukas 2017:3). this advantage of exploiting contingencies when effectuation is practised should give the ntsbo the opportunity to grow their business. having discussed the challenges of resources that the township small business owner has in starting and growing their business, effectuation could be the solution to this because they work with the means at hand. the study hence posited that: h1a: effectuation positively affects fbg of the ntsbo’s business venture. h1b: effectuation positively affects nfbg of the ntsbo’s business venture. figure 1: conceptual model of the relationship between effectuation and business growth. experimentation by ntsbos may result in their businesses growing, especially if it is difficult to predict the future (welter & kim 2018:24). a number of township street traders tend to sell the same or similar products as their competitors. experimentation by the township small business owner may create new products and services, which will lead to business growth (altinay et al. 2016:9). experimentation allows the township business to cope with changes in the market and competition, thereby improving business growth (guo et al. 2016:534). the study hypothesised that: h2a: experimentation positively affects fbg of the ntsbo’s business venture. h2b: experimentation positively affects the nfbg of the ntsbo’s business venture. entrepreneurs who focus on survival (ntsbos) are risk-averse and focus on affordable loss as opposed to business growth or gains (wennberg, delmar & mckelvie 2016:9). according to roach et al. (2016:229), affordable loss contributes positively towards the performance (business growth) of the small business. nevertheless, in a resource-constrained country such as sa, affordable loss may lead to survival and growth of the business (eyana et al. 2017) and so it is hypothesised that: h3a: affordable loss negatively affects the business growth (assets and sales) of the ntsbo’s business venture. h3b: affordable loss negatively affects the business growth (employment growth) of the ntsbo’s business venture. flexibility creates competitiveness because of the ability to assess and adapt to these changes through the flexible use of resources (vedanthachari & baldock 2015:2) by the ntsbo. a business ventures’ success in the ever-changing business environment will be facilitated by its ability to adapt to the changes as they occur (ivanov 2017:6). kodak’s demise was partly because of its failure to adapt to the changing needs of its customers and the disruptive innovation that was happening around it, as opposed to fujifilm (ho & chen 2018:14). the study hypothesised that: h4a: flexibility contributes positively towards fbg of the ntsbo’s business venture. h4b: flexibility contributes positively towards nfbg of the ntsbo’s business venture. palmié et al. (2019:99) stated that the pre-commitments could be a disadvantage by limiting the resources that the ntsbo commits, because there will be other partners also contributing, therefore resulting in a less bold approach. pre-commitments were found to have a strong positive relationship with the financial performance of an organisation (rizvi, querishi & saeed 2018:16). hence the study posited that: h5a: there is a positive relationship between the adoption of the pre-commitments and fbg of the ntsbo’s business venture. h5b: there is a positive relationship between the adoption of the pre-commitments and nfbg of the ntsbo’s business venture. methodology the primary research objective was to determine the nature of the relationship, if any, between effectuation and business growth. the secondary research objective was to investigate the relationships between the four effectuation constructs, which are experimentation, affordable loss, flexibility and pre-commitments with business growth. the study also investigated if the service, retail and manufacturing industries were moderating variables to the relationships between effectuation and effectuation constructs with business growth, if any. research design the research philosophy selected was positivism, as the research was quantitative and empirical. research strategy used was the survey, because a structured questionnaire that was interviewer-administered was used to collect data from 800 small business owners in a standardised manner in the township. mono method of a quantitative study was the chosen research choice as only the quantitative method was sufficient to investigate the set research objectives. the time horizon of the data collection was cross-sectional as data were collected once at a specific point in time. the questionnaire by chandler et al. (2011:382) that tested effectuation practice was adapted by adding two screening questions to exclude expert respondents from participating. the two questions asked (1) if the respondents had 15 years’ experience or more of running a business and (2) if they had run two or more businesses. if both questions had been answered with a ‘yes’, these respondents would be excluded from the study as they would be deemed to be experts. the study also added business growth indicators (adams et al. 2014:4; yeboah 2015:6) and industry type. after the design of the research was completed, the implementation of the study commenced with non-probability sampling (purposive and snowball sampling). the choice for non-probability sampling was because there was no reliable database of township small business owners to apply simple random sampling to infer findings to the population. research method after completing the pilot study with 30 respondents, data were collected in the field using interviewer-administered questionnaires from ntsbo. the following characterised the data collected: a total of 728 questionnaires were accurately and completely collected from the 800 respondents who were planned for the interview. completion rate was 91%. the questionnaire used a five-point likert scale that ranged from ‘strongly disagree’ (1) to ‘strongly agree’ (5) to measure the four effectuation constructs and the business growth indicators of assets and sales growth. business growth indicator of employment was based on an interval scale and the responds stated the number of employees at start-up and currently. this was used to determine if nfbg had occurred in that period. research questionnaire effectuation practice by ntsbo was measured by splitting effectuation into its four effectuation constructs, and business growth was also measured as per table 2. table 2: statements and questions used with respondents. data analysis the questionnaire was first tested in the field through a pilot study with only 30 respondents to verify if it would reliably be appropriate for the objectives of the study. data validity and reliability relates to trustworthiness and accuracy of the findings, instrument and data (bernard 2017:53). this study verified that the instrument used ensured validity by using an existing questionnaire that had passed tests for validity in previous studies. the measurement model (questionnaire) was further evaluated for validity and reliability using factor analysis (confirmatory factor analysis, or cfa). the cfa verifies the number of underlying latent variables (lewis 2017:239) and observed variables in an instrument. standardised factor loadings are statistically significant for loadings > 0.3 for sample sizes > 350 (sonita, jomnonkwao, champahom, beeharry & ratanavaraha 2020:53). this was the case in the study where standardised factor loadings between the construct and their indicators (variables) were all loading above 0.3 except for one loading at 0.3. the cfa was used in the study to confirm the pre-defined factor structure (çokluk & koçak 2016:539), and it confirmed that the predicted or hypothesised structure was a good fit to the data collected only after excluding flexibility statement 11 (flexibility construct) and pre-commitments statement 16 (pre-commitments construct). the pearson correlation coefficient is a commonly used coefficient that measures the direction (positive or negative) and strength (-1 to 1) of a correlation between two variables that are measured on the same scale (akoglu 2018:91–92). according to schober, boer and schwarte (2018:1765), the correlation coefficient from 0.00 to 0.10 indicates a negligible correlation, 0.10 to 0.39 reflects a weak correlation, 0.40 to 0.69 signals a moderate correlation, 0.70 to 0.89 implies a strong correlation and 0.90 to 1.00 is a very strong correlation. the study investigated the strengths between the independent variables (effectuation and effectuation constructs) and the dependent variable of business growth. structural equation modelling (sem) (including first and second order) was used in this study to evaluate the conceptual model proposed and tested causal hypotheses between effectuation as a second order construct and effectuation constructs (first order) with business growth. an advantage of sem is that the individual items can be grouped under a construct and the relationships with other constructs (also grouped items) can be investigated, making sem time-effective. incorrect inferences by measurement errors are fully accounted for by sem compared with regression and path analysis (savalei 2019:352). ethical considerations approval to conduct the study was granted by the research ethics committee of the university of pretoria, reference number: ems107/19. research findings descriptive and inferential statistics of data collected from the 728 respondents are presented in this section. descriptive statistics of non-expert township small business owners demographics of the ntsbo are presented by gender, age, level of education and the industry in table 3. table 3: demographics of research sample. the expectation was that there would have been more women in the sample because according to statistics south africa (ssa), (2019:8) 30.1 million (51%) of the population in sa is made up of women. although there are only 316 (43.4%) female respondents, the plausible reason for the lower representation may be that women do not have the same access to start business ventures, as owning businesses is perceived to be for men (aneke, derera & bomani 2017:38), hence there are more men in the sample. the highest numbers within the sample of ntsbos are the youth with 262 (36%), and this may be because of high unemployment amongst the youth (osabohien et al. 2018:52). this high unemployment may probably leave the youth with no option but to become necessity-based township small business owners in order to survive (kontolaimou, giotopoulos & tsakanikas 2016:11). literature pointed to the low educational levels of township small business owners (mashau & houghton 2015:599). the study confirmed these low educational levels in literature as 555 (76.2%) respondents in the sample did not complete or pass their high school (matric) whilst 99 (13.6%) respondents had only a high school qualification. only 74 (9.2%) respondents had a qualification higher than a high school education. the majority of businesses in the sample fall under the retail sector with 605 (83.1%) respondents buying and selling goods to customers in the township. descriptive statistics for the study’s constructs experimentation had a mean score of 2.71, meaning overall for the four questionnaire statements, most respondents were leaning towards a neutral response of neither agree nor disagree. this strong leaning towards a neutral response of three is probably because with the first two questionnaire statements (q3 & q4 in table 3), most respondents showed an experimentation decision logic whilst, with the last two questionnaire statements (q5 & q6 in table 3), they did not. affordable loss had a mean score of 2.38, implying that most respondents disagreed with using this decision logic. flexibility had a mean score of 3.14, the implication being that most respondents were slightly leaning towards agreeing that flexibility is practised in making decisions in the business by the ntsbo. this was because most respondents had a flexibility decision logic in the two questionnaire statements (q10 & q12 in table 3) and in the other two questionnaire statements (q11 & q13 in table 3), no flexibility decision logic existed. pre-commitments had a mean score of 1.3, meaning most respondents strongly disagreed with the practice of pre-commitments in their decision-making logic. financial business growth measured by sales and assets in the business had a mean score of 4.14, implying an agreement that there is business growth with most respondents in this regard. the nfbg measured by increase in employees (current – start) had a mean score of 0.25. this implied that most respondents did not agree that there was business growth when increase in employees’ numbers was used as a business growth indicator. ten hypotheses that were proposed in the study were tested using both pearson’s correlation coefficient and sem (inferential statistics). it was justifiable to combine the business growth indicators of assets and sales into a single variable because the cronbach’s alpha for the two questionnaire items linked to assets and sales were highly correlated with a score of 0.9. experimentation had a statistically significant positive weak correlation (r = 0.23, p < 0.0001) with fbg and a statistically insignificant correlation (r = 0.03, p = 0.48) with nfbg, which was measured by employment growth. flexibility had a statistically significant positive weak correlation (r = 0.23, p < 0.001) with fbg and a negligible correlation (r = 0.04, p = 0.29) with nfbg. pre-commitments had a negligible correlation (r = 0.03, p = 0.45) with fbg and weak correlation (r = 0.05, p = 0.2) with nfbg. affordable loss, however, had a moderate inverse correlation (r = -0.05, p = 0.15) with fbg and a negligible correlation (r = 0.07, p = 0.07) with nfbg. no relationship between any of the four effectuation constructs and nfbg was statistically significant. only experimentation (h2a) and flexibility (h4a) had a weak statistically significant relationship with fbg. effects of variables on each other are measured via sem (warrington et al. 2018:1229) and the study investigated the effect of effectuation, experimentation, affordable loss, flexibility and pre-commitments variables (first order representation of effectuation) on the financial and non-financial aspects of business growth. in figure 2, experimentation, affordable loss, flexibility and pre-commitments have a standardised effect of 0.125, -0.052, 0.198 and 0.012, respectively, with fbg in the ntsbo’s business. the sem model fit summary indicates that the indices of cmin/df (3.67), df (45), cfi (0.978) and tli (0.97), to mention a few, meet the goodness-of-fit and as such the data fits the model in figure 3 adequately. when considering for statistical significance where the p < 0.05, the only two hypothesised relationships (h2a and h4a) that linked is experimentation and flexibility with fbg were statistically supported. figure 2: structural equation modelling – relationship between effectuation constructs and financial business growth. figure 3: effectuation second-order measurement model. testing the same model as given for nfbg (based on employment growth), the structural paths of experimentation, affordable loss, flexibility and pre-commitments have standardised regression coefficients of 0.042, 0.071, 0.008 and 0.044, respectively, with nfbg in the township small business investigated in the study. the sem model fit indices of cmin/df (4.08), df (56), cfi (0.98) and tli (0.97), to mention a few, met the goodness-of-fit and as such the data fits the model adequately. nevertheless, when considering for statistical significance where the p < 0.05, none of the hypothesised relationships between the effectuation variables and nfbg were statistically supported. this was probably because small business owners are necessity driven and focus on their survival (block et al. 2015:38) rather than on creating employment for others. the relationships between the four effectuation constructs as first-order constructs with financial and non-financial aspects of business growth has been established by this study amongst the businesses studied, but the study now needed to investigate the relationship between effectuation as a second order construct with business growth (h1a and h1b). second-order construct test was explored to determine if the direct relationship between effectuation and fbg can be investigated. for the effectuation second-order measuring model to be statistically acceptable over the first-order model that postulates effectuation as a first-order model (multidimensional constructs) versus effectuation as represented by the four constructs, the target coefficient was calculated. target coefficient was calculated by effectuation first-order measurement model divided by effectuation second-order measurement model, and the value should have been above 0.9 (hong & thong 2013:287). in this study, the target coefficient was 0.91 (215/237), which means the second order was an appropriate (statistically) representation of effectuation. in order to test the primary objective, namely if there was a statistically significant relationship between effectuation and business growth, a sem as depicted in figure 3 was tested. effectuation was represented by the second-order model rather than perceived as a multidimensional construct with co-variants between them (first order). indices that met the goodness-of-fit test for the sem relating to the relationship between effectuation and business growth (assets and sales) in figure 3 included cmin/df (4.217), df (66), cfi (0.971), tli (0.966) and rmsea (0.077), to mention a few. most of these indices were all within the acceptable values and hence the model was accepted. the standardised regression coefficient of 0.3 indicated a weak level of statistical significance (p < 0.001). the relationship between effectuation and nfbg was a positive negligible one (standardised regression of 0.031), even with a p-value of 0.492, it was not statistically significant. in order to test the primary objective, namely if there was a statistically significant relationship between effectuation and business growth, a sem as depicted in figure 4 was tested. effectuation was represented by the second-order model rather than perceived as a multidimensional construct with covariants between them (first order). figure 4: structural equation model. in line with the stated primary research objective, there was a weak relationship between effectuation and fbg. the relationship with fbg is weak, probably because of the low levels of education (urban & ndou 2019:6) of the ntsbo that further limits their ability to incorporate political, economic, social, technological, environmental and legal (pestel) factors and strengths, weaknesses, opportunities and strengths (swot) analysis of their business. (nnamseh & akpan 2015:100) as some of the strategic business tools. the study also investigated the moderating effect of the industry variable on the statistically significant relationships of experimentation and flexibility with business growth (assets and sales). table 4 presents all the indices for effectuation first-order and second-order models. table 4: effectuation first-order and second-order model indices. as experimentation and flexibility have a statistically significant relationship with fbg, this study investigated the moderating effect of the industries. distribution of respondents by industry are 605 (83.1%) in retail, 115 (15.8%) in service and 8 (1.1%) in manufacturing. only the retail and service industries were investigated as a moderator, but the manufacturing industry was not investigated as the number of eight respondents was too low for a valid test. there was an interaction (int_1) p-value for experimentation (0.3594) and flexibility (0.8404) that was > 0.05, meaning it was not statistically significant. in addition to this, the confidence interval (llci to ulci) for the retail and service industries should not include zero in the range to have a moderating effect. experimentation (-0.1991–0.0723) and flexibility (-0.1638–0.2012) interval both have a zero. therefore, the retail and service industries did not have a moderating effect on the respective relationships between experimentation and flexibility with fbg. the study further tested to determine if industry was a moderator in the relationship between effectuation and business growth. as stated earlier on, the confidence interval (llci to ulci) for the retail and service industries should not include zero in the range to have a moderating effect. effectuation ( -0.2613–0.2640) interval had a zero in the range. therefore, the retail and service industries did not have a moderating effect on the relationship between effectuation and fbg. contrary to the study’s projections, the industry in which the small business was operating in did not moderate the hypothesised relationships that effectuation or its components have with business growth. the reason may probably be that ntsbos’ decision making was not to be affected as they did not differentiate their approach based on the industry, because no industry knowledge was gathered because of lack of strategic planning. conclusion the hypotheses that effectuation (h1a), experimentation (h2a) and flexibility (h4a) by ntsbo has a relationship with fbg was supported as it was statistically significant (p < 0.05). theoretical contribution of the study was that township small business owners with low educational levels in the sample who practised effectuation had a weak positive relationship with fbg. past studies have indicated that the practice of experimentation will result in business growth (shirokova et al. 2020:478; welter & kim 2018:24). in this study, where the experimentation decision logic was practised by the ntsbo, it had a statistically significant and positive relationship with fbg (p < 0.05). flexibility in previous studies contributed towards business growth (prommarat, pratoom & muenthaisong 2017:74; vedanthachari & baldock 2015:2). when flexibility was used as a decision logic by the township small business owner in this study, it had a statistically significant and positive relationship with business growth (p < 0.05). affordable loss and pre-commitments relationship with business growth was not statistically significant as the p-values were > 0.05. furthermore, experimentation and flexibility have a weak positive relationship with fbg when these decision logics are separately practised by township small business owners. the relationship between affordable loss and pre-commitments was of interest to this study and the relationship each has with fbg or nfbg was also of significance. the lack of a statistically significant relationship between affordable loss and pre-commitments may be the reason why this relationship was negligible as opposed to the weak relationships with experimentation and flexibility with fbg. another theoretical contribution made was that the retail and services do not moderate the relationships that effectuation, experimentation and flexibility have with fbg. the study makes practical contribution by canvassing the idea that the effectual approach could be beneficial as an entrepreneurial approach for ntsbos in emerging economies such as sa with scarce resources. with the use of effectuation, township small business owners would stop focusing on the challenge of not having resources they need for the chosen business venture but would rather pay attention to what business venture to start and grow based on the resources (means) at hand. limitations of the study it is instructive to highlight some of the limitations of the study as these may engender a better understanding and interpretation of its findings. as purposive and snowball sampling (non-probability sampling) was used in the study, this does not allow the findings to be inferred to the population of all township small business owners (yang & banamah 2014:57). the study was based in townships in gauteng province and justifiably so, as this was the province with the highest concentration of small businesses within sa (kalitanyi 2019:54). this may nonetheless limit the study in understanding how township small business owners in other provinces may have responded as the challenges and opportunities may differ in the different provinces. the time horizon used in the study was cross-sectional thereby the study could not track the changes in decision logic, if any, across a time range by the township small business owner. recommendations for future study this study utilised a sample of township small business owners. future research could also be conducted for rural small business owners’ practice of effectuation and its effect on business growth, if any. the study found no relationship between the practice of effectuation or any of the effectuation constructs by and nfbg, which was measured by employment growth. it would be worthwhile to investigate in future why this was the case. industry did not moderate the relationships that the independent variables of effectuation, experimentation and flexibility had with fbg. future research could investigate why this was the case and if there are other moderating variables such as education and gender that might interfere with the relationships. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions m.n. is the first author who conceptualised the research article, conducted literature review, handled data collection and analysis and wrote the article and completed it under the guidance of m.n.m. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references achtenhagen, l., brunninge, o. & melin, l., 2017, ‘patterns of dynamic growth in medium-sized companies: beyond the dichotomy of organic versus acquired growth’, long range planning 50(4), 457–471. https://doi.org/10.1016/j.lrp.2016.08.003 adams, m., andersson, l.f., hardwick, p. & lindmark, m., 2014, ‘firm size and growth in sweden’s life insurance market between 1855 and 1947: a test of gibrat’s law’, business history 56(6), 1–23. https://doi.org/10.1080/00076791.2013.848341 agogué, m., lundqvist, m. & middleton, k.w., 2015, ‘mindful deviation through combining causation and effectuation: a design theory-based study of technology entrepreneurship’, creativity and innovation management 24(4), 1–16. https://doi.org/10.1111/caim.12134 akoglu, h., 2018, ‘user’s guide to correlation coefficients’, turkish journal of emergency medicine 18(3), 91–93. https://doi.org/10.1016/j.tjem.2018.08.001 altinay, l., madanoglu, m., de vita, g., arasli, h. & ekinci, y., 2016, ‘the interface between organizational learning capability, entrepreneurial orientation, and sme growth’, journal of small business management 54(3), 1–8. https://doi.org/10.1111/jsbm.12219 anderson, s.j., chandy, r. & zia, b., 2016, pathways to profits: identifying separate channels of small firm growth through business training, the world bank, washington, dc. aneke, e., derera, e. & bomani, m., 2017, ‘an exploratory study of challenges faced by women entrepreneurs in the construction industry in south africa’, the international journal of business and management 9, 35–51. arend, r.j., sarooghi, h. & burkemper, a.c., 2015, ‘effectuation as ineffectual? applying the 3e theory-assessment framework to a proposed new theory of entrepreneurship’, academy of management review 40(4), 630–651. https://doi.org/10.5465/amr.2014.0455 bernard, h.r., 2017, research methods in anthropology: qualitative and quantitative approaches, 4th edn., rowman & littlefield, lanham, md. block, j.h., kohn, k., miller, d. & ullrich, k., 2015, ‘necessity entrepreneurship and competitive strategy’, small business economics 44(1), 37–54. https://doi.org/10.1007/s11187-014-9589-x boachie, m.k. & ross, h., 2020, ‘determinants of smoking intensity in south africa: evidence from township communities’, preventive medicine reports 19, 1–8. https://doi.org/10.1016/j.pmedr.2020.101099 booyens, i. & rogerson, c.m., 2019, ‘creative tourism: south african township explorations’, tourism review 74(2), 256–267. https://doi.org/10.1108/tr-12-2017-0200 bouwstra, h., smit, e.b., wattel, e.m., van der wouden, j.c., hertogh, c.m., terluin, b. et al., 2019, ‘measurement properties of the barthel index in geriatric rehabilitation’, journal of the american medical directors association 20(4), 420–425. https://doi.org/10.1016/j.jamda.2018.09.033 burger, r., van der berg, s., van der walt, s. & yu, d., 2017, ‘the long walk: considering the enduring spatial and racial dimensions of deprivation two decades after the fall of apartheid’, social indicators research 130(3), 1–19. https://doi.org/10.1007/s11205-016-1237-1 cantner, u., goethner, m. & silbereisen, r.k., 2017, ‘schumpeter’s entrepreneur – a rare case’, journal of evolutionary economics 27(1), 1–33. https://doi.org/10.1007/s00191-005-0241-4 chandler, g.n., de tienne, d.r., mckelvie, a. & mumford, t.v., 2011, ‘causation and effectuation processes: a validation study’, journal of business venturing 26(3), 375–390. https://doi.org/10.1016/j.jbusvent.2009.10.006 chang, h.y., lo, c.l. & hung, y.y., 2019, ‘development and validation of traditional & complementary medicine (tcm) scales for nurses: using structural equation modelling (sem)’, bmc complementary and alternative medicine 19(1), 3–10. https://doi.org/10.1186/s12906-019-2733-z çokluk, ö. & koçak, d., 2016, ‘using horn’s parallel analysis method in exploratory factor analysis for determining the number of factors’, educational sciences: theory and practice 16(2), 537–551. cortina, j.m., green, j.p., keeler, k.r. & vandenberg, r.j., 2017, ‘degrees of freedom in sem: are we testing the models that we claim to test?’, organizational research methods 20(3), 350–378. https://doi.org/10.1177/1094428116676345 deligianni, i., voudouris, i. & lioukas, s., 2017, ‘do effectuation processes shape the relationship between product diversification and performance in new ventures?’, entrepreneurship theory & practice 41(3), 1–29. https://doi.org/10.1111/etap.12210 de villiers scheepers, m.j., boshoff, c. & oostenbrink, m., 2018, ‘entrepreneurial women’s cognitive ambidexterity: career and cultural influences’, south african journal of business management 48(4), 21–33. https://doi.org/10.4102/sajbm.v48i4.40 dew, n., read, s., sarasvathy, s.d. & wiltbank, r., 2009, ‘effectual versus predictive logics in entrepreneurial decision-making: differences between experts and novices’, journal of business venturing 24(4), 287–309. https://doi.org/10.1016/j.jbusvent.2008.02.002 elrehail, h., 2018, ‘the relationship among leadership, innovation and knowledge sharing: a guidance for analysis’, data in brief 19, 128–33. eshima, y. & anderson, b.s., 2017, ‘firm growth, adaptive capability, and entrepreneurial orientation’, strategic management journal 38, 770–779. https://doi.org/10.1002/smj.2532 eyana, s.m., masurel, e. & paas, l.j., 2017, ‘causation and effectuation behaviour of ethiopian entrepreneurs: implications on performance of small tourism firms’, journal of small business and enterprise development 25(5), 791–817. https://doi.org/10.1108/jsbed-02-2017-0079 fonseca-pedrero, e., debbané, m., ortuño-sierra, j., chan, r.c.k., cicero, d.c., zhang, l.c. et al., 2018, ‘the structure of schizotypal personality traits: a cross-national study’, psychological medicine 48(3), 1–12. https://doi.org/10.1017/s0033291717001829 futterer, f., schmidt, j. & heidenreich, s., 2018, ‘effectuation or causation as the key to corporate venture success? investigating effects of entrepreneurial behaviors on business model innovation and venture performance’, long range planning 51(1), 64–81. https://doi.org/10.1016/j.lrp.2017.06.008 gerschewski, s. & xiao, s.s., 2015, ‘beyond financial indicators: an assessment of the measurement of performance for international new ventures’, international business review 24(4), 1–50. https://doi.org/10.1016/j.ibusrev.2014.11.003 guo, h., suo, z. & ahlstrom, d., 2016, ‘business model innovation: the effects of exploratory orientation, opportunity recognition, and entrepreneurial bricolage in an emerging economy’, asia pacific journal of management 33(2), 533–554. https://doi.org/10.1007/s10490-015-9428-x gwija, s.a., eresia-eke, c. & iwu, c.g., 2014, ‘assessing the impact of support structures and initiatives to youth entrepreneurship development in a selected township in the western cape province of south africa’, mediterranean journal of social sciences 5(1), 61–68. https://doi.org/10.5901/mjss.2014.v5n1p61 herrington, m., kew, p. & mwanga, a., 2017, south africa report 2016/2017: can small businesses survive in south africa?, global entrepreneurship research association. hikido, a., 2018, ‘entrepreneurship in south african township tourism: the impact of interracial social capital’, ethnic and racial studies 41(14), 2580–2598. https://doi.org/10.1080/01419870.2017.1392026 ho, j.c. & chen, h., 2018, ‘managing the disruptive and sustaining the disrupted: the case of kodak and fujifilm in the face of digital disruption’, review of policy research 35(3), 1–20. https://doi.org/10.1111/ropr.12278 hong, w. & thong, j.y., 2013, ‘internet privacy concerns: an integrated conceptualization and four empirical studies’, mis quarterly 37(1), 275–298. https://doi.org/10.25300/misq/2013/37.1.12 ivanov, v., 2017, meeting the need for flexibility in business processes. unpublished bachelor’s thesis. jyväskylä: university of jyväskylä, viewed 01 october 2018, from https://jyx.jyu.fi/bitstream/handle/123456789/56283/urn%3anbn%3afi%3ajyu-201712124650.pdf?sequence=1. jiang, y. & rüling, c., 2017, ‘opening the black box of effectuation processes: characteristics and dominant types’, entrepreneurship theory and practice 43(1), 1–32. https://doi.org/10.1177/1042258717744204 kalitanyi, v., 2019, ‘enterprise propellers and identity of smmes, informal businesses and cooperatives in gauteng province of south africa’, acta universitatis danubius. œconomica 15(1), 53–80. kontolaimou, a., giotopoulos, i. & tsakanikas, a., 2016, ‘a typology of european countries based on innovation efficiency and technology gaps: the role of early-stage entrepreneurship’, economic modelling 52(part b), 1–25. https://doi.org/10.1016/j.econmod.2015.09.028 le roux, i. & pretorius, m., 2015, ‘venture success attribution: directives for sponsor funding’, journal of contemporary management 12(1), 85–103. lewis, t.f., 2017, ‘evidence regarding the internal structure: confirmatory factor analysis’, measurement and evaluation in counseling and development 50(4), 239–247. https://doi.org/10.1080/07481756.2017.1336929 lloyd, w., 2018, ‘south africa’s white entrepreneurs: an evolution from opportunity to necessity’, in l.p. dana, v. ratten & b.q. honyenuga (eds.), african entrepreneurship: challenges and opportunities for doing business, pp. 275–287, palgrave macmillan, cham. madi, m.a.c., 2017, ‘entrepreneurial finance in developing countries: the experience of the brics after the global crisis’, open journal of economics and finance 1(2017), 37–45. makhitha, k.m., 2016, ‘challenges impacting on small independent retailer’s performance in soweto, johannesburg in south africa’, investment management and financial innovation 13(3), 258–266. https://doi.org/10.21511/imfi.13(3-1).2016.12 mansoori, y. & lackéus, m., 2020, ‘comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean startup, and design thinking’, small business economics 54(3), 791–818. https://doi.org/10.1007/s11187-019-00153-w manyaka-boshielo, s.j., 2017, ‘social entrepreneurship as a way of developing sustainable township economies’, hts theological studies 73(4), 1–10. https://doi.org/10.4102/hts.v73i4.3830 mashau, p. & houghton, j., 2015, ‘the potential for reducing youth unemployment through informal business development in the ethekwini municipality, kwazulu-natal province, south africa’, journal of governance and regulation 4(4), 596–604. https://doi.org/10.22495/jgr_v4_i4_c5_p4 mogashoa, m. & selebi, o., 2021, ‘innovation capacity: a perspective on innovation capabilities of consulting engineering firms’, the southern african journal of entrepreneurship and small business management 13(1), 1–10. https://doi.org/10.4102/sajesbm.v13i1.372 njoroge, a.n. & bett, s., 2018, ‘environment variables and performance of start up enterprises in urban townships in west pokot county, kenya’, international academic journal of human resource and business administration 3(3), 120–136. https://doi.org/10.35942/ijcab.v3iiv.46 nnamseh, m. & akpan, s.s., 2015, ‘revitalising small business growth strategies: exploring the risk-benefit of strategic management approaches’, international business research 8(7), 87–101. https://doi.org/10.5539/ibr.v8n7p87 osabohien, r., osuma, g., ndigwe, c. & ozordi, e., 2018, ‘social protection and agricultural production in ecowas: the youth unemployment question’, journal of social economics research 5(2), 51–62. https://doi.org/10.18488/journal.35.2018.52.51.62 palmié, m., huerzeler, p., grichnik, d., keupp, m.m. & gassmann, o., 2019, ‘some principles are more equal than others: promotion-versus prevention-focused effectuation principles and their disparate relationships with entrepreneurial orientation’, strategic entrepreneurship journal 13(1), 93–117. https://doi.org/10.1002/sej.1305 planko, j., cramer, j., hekkert, m.p. & chappin, m.m., 2017, ‘combining the technological innovation systems framework with the entrepreneurs’ perspective on innovation’, technology analysis & strategic management 29(6), 614–625. https://doi.org/10.1080/09537325.2016.1220515 preisendoerfer, p., bitz, a. & bezuidenhout, f.j., 2014, ‘black entrepreneurship: a case study on entrepreneurial activities and ambitions in a south african township’, journal of enterprising communities: people and places in the global economy 8(3), 162–179. https://doi.org/10.1108/jec-02-2012-0020 prommarat, p., pratoom, k. & muenthaisong, k., 2017, ‘strategic organizational flexibility capability and business survival: an empirical investigation of tour businesses in thailand’, au‑gsb e‑journal 9(1), 61–82. qureshi, m.s., sheikh, s. & israr, r., 2016, ‘application of effectual principles to promote agriculture entrepreneurship: qualitative study of successful agriculture-based ventures in sind, pakistan’, pakistan journal of social sciences 36(2), 621–634. reymen, i.m., berends, h., oudehand, r. & stultiëns, r., 2016, ‘decision making for business model development: a process study of effectuation and causation in new technology-based ventures’, research & development management 47(4), 595–606. https://doi.org/10.1111/radm.12249 rizvi, s., querishi, s. & saeed, m.a., 2018, ‘the entrepreneurial decision making: use of effectuation and relation with perceived financial performance and innovation in the firm’, ibt journal of business studies (jbs) 14(1), 10–22. https://doi.org/10.46745/ilma.jbs.2018.14.01.02 roach, d.c., ryman, j.a. & makani, j., 2016, ‘effectuation, innovation and performance in smes: an empirical study’, european journal of innovation management 19(2), 214–238. https://doi.org/10.1108/ejim-12-2014-0119 rose, s.a., markman, b. & sawilowsky, s., 2017, ‘limitations in the systematic analysis of structural equation model fit indices’, journal of modern applied statistical methods 16(1), 69–85. https://doi.org/10.22237/jmasm/1493597040 sarasvathy, s.d., 2001, ‘causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency’, academy of management review 26(2), 243–263. https://doi.org/10.5465/amr.2001.4378020 savalei, v., 2019, ‘a comparison of several approaches for controlling measurement error in small samples’, psychological methods 24(3), 352–370. https://doi.org/10.1037/met0000181 schober, p., boer, c. & schwarte, l.a., 2018, ‘correlation coefficients: appropriate use and interpretation’, anesthesia & analgesia 126(5), 1763–1768. https://doi.org/10.1213/ane.0000000000002864 shi, d., maydeu-olivares, a. & di stefano, c., 2018, ‘the relationship between the standardized root mean square residual and model mis-specification in factor analysis models’, multivariate behavioral research 53(5), 1–19. https://doi.org/10.1080/00273171.2018.1476221 shirokova, g., osiyevskyy, o., laskovaia, a. & mahdavi mazdeh, h., 2020, ‘navigating the emerging market context: performance implications of effectuation and causation for small and medium enterprises during adverse economic conditions in russia’, strategic entrepreneurship journal 14(3), 470–500. https://doi.org/10.1002/sej.1353 ślusarczyk, b. & grondys, k., 2019, ‘parametric conditions of high financial risk in the sme sector’, risks 7(3), 1–17. https://doi.org/10.3390/risks7030084 smolka, k.m., verheul, i., burmeister-lamp, k. & heugens, p.p.m.a.r., 2016, ‘get it together! synergistic effects of causal and effectual decision-making logics on venture performance’, entrepreneurship theory and practice 42(4), 1–32. https://doi.org/10.1177/1042258718783429 sonita, s.u.m., jomnonkwao, s., champahom, t., beeharry, r. & ratanavaraha, v., 2020, ‘measuring the city bus service quality based on users’ perceptions: city bus service in phnom penh, cambodia’, engineering and applied science research 47(1), 47–55. statistics south africa (ssa), 2019, mid-year population estimates. statistical release p0302, statistics south africa, pretoria. st-jean, e., radu-lefebvre, m. & mathieu, c., 2018, ‘can less be more? mentoring functions, learning goal orientation, and novice entrepreneurs’ self-efficacy’, international journal of entrepreneurial behavior & research 24(1), 2–21. https://doi.org/10.1108/ijebr-09-2016-0299 stroe, s., parida, v. & wincent, j., 2018, ‘effectuation or causation: an fsqca analysis of entrepreneurial passion, risk perception, and self-efficacy’, journal of business research 89, 265–272. https://doi.org/10.1016/j.jbusres.2018.01.035 tengeh, r., 2016, ‘entrepreneurial resilience: the case of somali grocery shop owners in a south african township’, problems and perspectives in management 14(4), 203–211. https://doi.org/10.21511/ppm.14(4-1).2016.09 urban, b., 2018, ‘effectuation and opportunity recognition in the renewable energy sector in south africa: a focus on environmental dynamism and hostility’, journal of developmental entrepreneurship 23(2), 18500103. https://doi.org/10.1142/s1084946718500103 urban, b. & heydenrych, j., 2015, ‘technology orientation and effectuation – links to firm performance in the renewable energy sector of south africa’, south african journal of industrial engineering 26(3), 125–136. https://doi.org/10.7166/26-3-1039 urban, b. & ndou, b., 2019, ‘informal entrepreneurship: a focus on south african township entrepreneurs’, journal of developmental entrepreneurship 24(4), 1–19. https://doi.org/10.1177/0971355719851907 utomo, h., priyanto, s.h., suharti, l. & sasongko, g., 2019, ‘developing social entrepreneurship: a study of community perception in indonesia’, entrepreneurship and sustainability issues 7(1), 233–246. https://doi.org/10.9770/jesi.2019.7.1(18) van rensburg, n.j., telukdarie, a. & dhamija, p., 2019, ‘society 4.0 applied in africa: advancing the social impact of technology’, technology in society 59, 1–12. https://doi.org/10.1016/j.techsoc.2019.04.001 vedanthachari, l. & baldock, r., 2015, ‘investigating the relationship between formal time management practices and business performance of uk smes’, paper presented at 38th institute for small business and entrepreneurship conference, november 11–12, 2015, glasgow, pp. 1–21, viewed 17 july 2018, from https://eprints.mdx.ac.uk/19528/1/vedanthachari.pdf. warrington, n.m., freathy, r.m., neale, m.c. & evans, d.m., 2018, ‘using structural equation modelling to jointly estimate maternal and fetal effects on birthweight in the uk biobank’, international journal of epidemiology 47(4), 1229–1241. https://doi.org/10.1093/ije/dyy015 welter, c. & kim, s., 2018, ‘effectuation under risk and uncertainty: a simulation model’, journal of business venturing 33(1), 1–47. https://doi.org/10.1016/j.jbusvent.2017.11.005 welter, c., mauer, r. & wuebker, r.j., 2016, ‘bridging behavioral models and theoretical concepts: effectuation and bricolage in the opportunity creation framework’, strategic entrepreneurship journal 10(1), 5–20. https://doi.org/10.1002/sej.1215 welter, f., baker, t., audretsch, d.b. & gartner, w.b., 2017, ‘everyday entrepreneurship – a call for entrepreneurship research to embrace entrepreneurial diversity’, entrepreneurship theory and practice 41(3), 1–11. wennberg, k., delmar, f. & mckelvie, a., 2016, ‘variable risk preferences in new firm growth and survival’, journal of business venturing 31(4), 1–50. https://doi.org/10.1016/j.jbusvent.2016.05.001 yang, k. & banamah, a., 2014, ‘quota sampling as an alternative to probability sampling? an experimental study’, sociological research 19(1), 56–66. https://doi.org/10.5153/sro.3199 yeboah, m.a., 2015, ‘determinants of sme growth: an empirical perspective of smes in the cape coast metropolis, ghana’, the journal of business in developing nations 14, 1–31. zwane, b.k. & nyide, c.j., 2017, ‘smme attitudes towards financial bootstrapping: a perspective from a developing economy’, business and economic horizons 13(3), 347–356. https://doi.org/10.15208/beh.2017.25 abstract introduction literature review of venture capital performance summary and conclusion acknowledgements references about the author(s) ahmed i. kato department of applied management, college of economic management sciences, university of south africa, pretoria, south africa germinah e. tsoka department of applied management, college of economic management sciences, university of south africa, pretoria, south africa citation kato, a.i. & tsoka, g.e., 2020, ‘impact of venture capital financing on smalland medium-sized enterprises’ performance in uganda’, southern african journal of entrepreneurship and small business management 12(1), a320. https://doi.org/10.4102/sajesbm.v12i1.320 original research impact of venture capital financing on smalland medium-sized enterprises’ performance in uganda ahmed i. kato, germinah e. tsoka received: 17 feb. 2020; accepted: 04 june 2020; published: 23 sept. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: smalland medium-sized enterprises (smes) in africa and uganda suffer from lack of finance for their survival and growth. this liquidity emergency motivated start-ups struggling to find alternative financing sources different from conventional bank lending. venture capital financing evolved as viable financial mechanisms to revive smes’ performance. aim: this article analysed the impact of venture capital financing on smes’ performance in uganda. this is the first empirical study that related and brought together the understanding of business entrepreneurs with those of venture capitalists. setting: the rate of start-up business failure in africa remains high, triggering an enormous threat to policy-makers and international development partners. besides, the literature is diminutive, intermittent and fragmented to document venture capital performance. methods: the study adopted a mixed-method and used survey questionnaires administered to 90 smes and complemented with data from semi-structured interviews. we used multiple regression analysis and correlation coefficient for data analysis generated from the statistical package for the social sciences. results: empirical evidence exhibited tremendous growth of venture-capital-backed companies in sales turnover, profitability and return on assets matched to the non-venture-capital-backed firms. conclusion: this article presented the first extensive empirical study confirming evidence of venture capital financing for the enhancement of smes’ performance and development in uganda regarding revenue growth, profitability and return on assets. this study recommended to policy-makers and the business fraternity to develop policy frameworks tailored to the enhancement of the venture capital landscape growth. keywords: venture capital; alternative financing; small and medium enterprises; performance of portfolio companies; uganda. introduction in the last two decades, venture capital (vc) financing has subjugated debates on global financial markets for the perceived momentous influence to inspire smalland medium-sized enterprises’ (smes) performance. empirical evidence, essentially from developed countries such as the united states of america, canada, europe and china, recognises vc as a viable financing model with the proficiency to escalate access to finance for smes’ growth (agyeman 2010; gompers & learner 2004; muriithi 2017; oecd 2018; shanthi & schneider 2018). it is well documented that smes are the teamsters of economic growth, they attested to stimulate the national gross domestic product (gdp) development and they are the principal employment sector in both industrialised and emerging economies (beck & cull 2014; mason 2009; shanthi & schneider 2018). in uganda, the sme sector fundamentally accounts for 2.5 million jobs, provides 90% of the private sector jobs, produces 80% of the manufactured output and endorses 70% of the national gdp (muriithi 2017; uganda investment authority 2016; uganda ministry of trade, industry and cooperatives [umtic] 2015). despite the economic importance of the sme sector to uganda’s national economy and similar emerging economies, the rate of start-up business failure remains a general concern to policy-makers and international development partners. the contemporary literature suggests that the mortality rate of smes among african countries is alarming, with five out of seven (5/7) new businesses failing in their first year (world bank 2016). in uganda, 33.3% of new business formations do not survive beyond 1 year of their start-up (mbabazi 2012; muriithi 2017). similarly, the results of yeboah and koffie (2016) exhibited that 75% of start-up firms in south africa close business in less than 3 years after their formation, one of the highest smes mortality rates in the world. the failure rate of smes is attributable to lack of finance, the topmost stumbling block for start-up survival and development, as equated to the rest of the world (world bank 2010). although smes struggle to search for external debt capital to bridge the financing gap, financial intermediaries consider them as high-risk investment ventures and are, therefore, reluctant to provide them with bank loans or financial credit (fatoki 2014). in this context, vc financing emerged as an alternative source to conventional funding to fill the equity gap and benefit the missing middle. the new finance mechanisms uphold the legitimacy in augmenting the growth of smes. fund managers provide patient capital to start-up firms and congruently provide technical skills and add value to the portfolio companies, expecting good returns on investments (gompers, kaplan & mukharylamov 2015; colombo & murtinu 2017). furthermore, venture capitalists typically secure minority seats on the board of directors (bod) from the vc-backed firms to boost their financial performance to achieve high returns on equity (roe) shares (arundale 2018; hain, johan & wang 2016; oecd 2018; ryan & hankook 2013; shanthi & schneider 2018). given this, for the vc market to flourish in uganda and developing economies at large, it is incumbent upon both the public and private sector structures to increase vc investment into the early stage entrepreneur ventures with growth potential. this approach was confirmed in the developed economies for extenuating the financing gap impeding sme development. this article resonates from the empirical evidence from the industrialised markets that have demonstrated success in spurring sme growth through vc financing, such as the united states of america, europe and china. this article presents recent knowledge to the policy-makers and researchers to assist in the design of appropriate policies for vc industrial growth in uganda. because of conferring a concrete evidence base, the article supports the government’s efforts in their engagements to foster smes’ access to finance and inspires a philosophy of policy assessment. this article empirically analyses the impact of vc financing on smes’ performance in uganda. literature review of venture capital performance theoretical perspective venture capital is a high-risk equity capital consisting of seed, start-up and expansion financing in start-up firms already demonstrating business potential but not listed on public securities markets or underprivileged to access traditional funding sources (gompers & lerner 1999; oecd 2018). venture capital financing is a momentous financial innovative asset in the 21st century, raising the attention of academics and practitioners. several scholars have recognised it as a precursor for smes’ growth, global technological development and employment generation (arundale 2018; muriithi 2017; ning, wang & yu 2015). resonating on the agency theory, this study offers a theoretical model reflecting on the hypothetical and practical implications of the theory regarding the vc ecosystem. venture capital provides patient capital to young firms financially incapacitated and continues to oversee their operations as principals. the interactions of venture capitalists with the funded companies set in motion noticeable principal–agent conflict, emanating from information asymmetries and fear of the business owner or managers to lose control over their investments (amit, brander & zott 1998). the vc firms (principals) enter vc contracts with the business entrepreneurs (agents) to promote early or middle-level firms in exchange for equity shares and to protect the interests of both parties to the contract. similarly, venture capitalists secure minority seats on the bod to maintain a sound business and add value to portfolio companies to recuperate worthy roe shares (cumming & johan 2009; lerner 1995; kaplan & lerner 2016). the practical implications of the agency theory postulate interrelated conflict of interest, which could emerge at the execution of the contract when venture capitalists choose to exit from the company through initial public offerings (ipos) or a trade sale. that said, the vc contract is vital to guard against eventual disputes between the portfolio managers and venture capitalists accordingly, resonating with the agency theory (hellmann & puri 2002). it, therefore, is extremely valuable for the business entrepreneurs to appreciate the unique nature of venture financing before signing any vc contracts to avoid any conflict that might arise in the execution of the contract. altogether, entrepreneurs repeatedly face the problem of lack of access to finance, consequently compelled to accept patient capital from fund managers specialising in financing high-risk firms. this certainly demands smes to agree with venture capitalists to access the financing needed for their growth and expansion, enforcing vc contracts. overview of global venture capital performance in the last two decades, vc has dominated debates on the global financial markets for its perceived momentous influence in inspiring the performance of smes. a colossal body of empirical literature from developed countries recognises vc as a suitable financing model, with proficiency to ease the barrier of lack of access to finance for smes growth (gompers & learner 2004; muriithi 2017; oecd 2018; shanthi & schneider 2018). it is well documented that most global companies such as youtube, yahoo, apple, microsoft and compaq have their roots from vc financing. most authors paint an intriguing picture of vc financing. given the high-risk nature of the early stage firms, some vc-funded companies do not blossom to their expectations, but there is inadequate evidence that exposes failed vc-backed companies. shedding more light on the recent successful firms in the past decade stemming from vc financing is necessary to enrich the extant works with recent knowledge. from the global vc performance perspective, vc investment hit its highest at us$171 billion in 2019, with the united states of america alone raising us$88.3 b, approximately 50% of the global total vc investment, upholding its first position as world vc leader for decades. china progressed to the second position with us$52.6 b of the global vc market (pitchbook 2019; weetracker 2019). notably, vc investment to europe is also silently increasing (evca 2015), and africa is mentioned as the next favoured destination for vc investment. even though some countries have a much smaller vc portfolio, they are worth mentioning for their remarkable growth 2019, for instance, canada, the united kingdom, india, brazil, israel, malaysia and africa on the frontline presenting nigeria, kenya and south africa, the champions in the continent. other countries such as ghana, egypt, uganda and tunisia are trailing (kpmg & eavca 2019; weetracker 2018; deloitte 2015). conscious of vc financing’s significant influence, voluminous emerging economies in africa, including uganda, are increasingly stepping up to participate in the vc industry. it is undeniable that vc is viewed as a real-world answer to rejuvenate the growth of smes to avert the emergent youth unemployment, poverty eradication and economic development. given this, weetracker (2019) reported a gigantic growth in the vc investment from us$725.6 million to 1.34 b in 2019, a monumental year in the history of africa. remarkably, us$1.09 b (approximately 81.5%) was raised from nigeria and kenya, pushing south africa to the third position compared to 2018 when the latter was the leader in the vc industry. this clear testimony of vc growth in africa has seen new entrants such as uganda, tunisia, ghana and egypt as the next favoured investor destination. accordingly, vc development has delivered a novel ground for academic research to explore its influence on the performance of early-stage entrepreneurial ventures. nevertheless, it should not be overlooked why vc investment, particularly in africa, is concentrated in nigeria, kenya and south africa, while the rest of the countries, including uganda, are struggling (vc4africa 2015). these are key issues demanding further exploration into the vc industry. empirical evidence of venture capital financing this section critically documents empirical data stressing vc performance specifically in developed economies and a handful of studies from emerging economies. several scholars from technologically advanced economies have long established that vc finance is a reality in augmenting the growth of smes. unlike the debt-funding model, vc provides patient capital to start-up firms showing growth potential and without collaterals to offer in exchange for lucrative equity shares that attract roe (arundale 2018; bertoni & tykovova 2015; gompers & learner 2004; mason, botelho & harrison 2013; oecd 2018). puri and zarutskie (2011) disclosed that vc-backed firms outperformed the non-vc-backed firms across every level of investment both before and after receiving vc. on the same line, paglia and harjoto (2014) launched a cross-sectional study in the united states of america from 1995 to 2009 to examine the effects of pe/vc on the growth of sales and employment for smes. the results demonstrated a slow growth of the pe/vc baked firms, and the benefits of pe were higher than vc financing. similarly, chemmanur, krishnan and nandy (2011) studied a panel of data analysis matching vc-backed companies with non-vc-backed companies. the results affirmed increasing total productivity from sales revenue after vc financing. however, the profits were lower compared to the significant market expansion of the vc-backed firms, implying that even though funded companies increased their market shares, they did not translate into profitability growth. there is a lack of literature consensus among the scholars that vehemently explain how vc financing affects the portfolio companies. likewise, jain and kini (1995) matched 136 sampled us-listed companies receiving vc funding before ipo with a matched sample of non-vc-funded ipo companies in the same comparable size. the authors identified growth in sales from the year before and after the ipo and the subsequent 3 years. venture capital-backed companies significantly surpassed the non-vc-funded matched group. nevertheless, this study was done in the united states of america blessed with sophisticated technological development. moreover, the world model for vc financing might not deliver the same results, given that the vc landscape in uganda is small and underdeveloped. consequently, augmenting it with new data sets adds more value to the literature in the public domain. although previous authors presented compelling results to support vc financing, hirukawa and ueda (2008) found no significant relationship between using vc and an industry’s growth. venture capital-backed companies did not generate more sales and employment compared to non-vc-backed companies. they exposed that only vc-backed companies performing r&d realise higher sales turnover than non-vc-backed companies. these inconsistencies in empirical studies stimulate supporting research in the academic domain. furthermore, hain, johan and wang (2016) explored vc financing and its subsequent effect on smes’ growth in the united states of america. they used panel data from the major commercial databases for the first quarter of 2011 and updated data from the second quarter of 2015. their empirical evidence suggests that vc-backed companies outperform public markets. despite the appealing results, the commercial databases on which the authors relied could provide conflicting results attributable to data protection and privacy of private equity firms. further research conducted in an emerging economy, such as uganda, is desirable, where little or no empirical research is done to provide empirical data to benchmark future research. carvalho, netto and sampaio (2013) investigated the influence of pe/vc on smes’ performance in brazil. the results confirmed that pe/vc-backed firms registered higher profitability and sales growth compared to non-pe/vc-backed firms in the first 3 years after the ipo. several empirical studies have explored vc financing, focusing largely on sales turnover and profitability for measuring their growth. however, little is documented about roa and roe, the core interest of the fund managers. this article includes new proxies such as roe and roa used in the measurement of smes’ performance. kaplan and lerner (2009) disclosed that although only 0.2% received vc financing, surprisingly, 50% of the entrepreneurial ipos in recent years were vc-backed companies. nevertheless, notwithstanding the growing attention given vc financing, several studies concentrate on vc after ipos. this study explores the impact of vc financing on early stage firms in a developing country. groh, liechtenstein and lieser (2010) alluded that non-financial factors, such as the tax regimes, negatively affect vc capital. in contrast, hain et al. (2016) found the conclusion of the previous author not substantive because the design of a favourable policy framework eases access to vc financing promoting growth. kamunge, njeru and tirimba (2014) shed more light on the government regulatory frameworks, expounding that they can either encourage or subdue the growth of the sme sector. effective government regulations, such as content law policy, tax regimes, wages framework, licensing, investment opportunities, technological support and infrastructure, if well-managed, pave the way to smes’ success. memba, gakure and karanja (2012) analysed the impact of vc on the performance of smes from the major cities in kenya, involving 100 respondents. they measured the before and after approach using both financial and non-financial variables. the results exposed a significant positive relationship between vc financing and sme growth. venture capital-backed companies demonstrated growth in sales revenue, profitability and the number of employees. their study involved only entrepreneurs and managers for primary data collection. this study covers a broad continuum of key players in the vc market, such as business entrepreneurs and managers, fund managers, government agencies and sme associations, offering a deeper insight into the operation of the vc industry. kwame (2017) conducted a study from ghana’s capital accra using data collected from 40 smes to examine the impact of vc financing on smes’ growth. the outcomes confirmed an expansion of the market share, increased asset growth and profitability of vc-backed firms. biney (2018) studied the impact of vc financing on smes’ growth and development in ghana. the results indicated that vc-backed firms outperformed non-vc-backed firms by a mild increase of 1.5% in sales revenue, profitability, and a 3.7% growth in the number of employees. boadu (2014), in his study, venture capital financing: an opportunity for smes in ghana, found a positive impact of vc financing on smes’ growth. they manifested this in the remarkable growth and expansion of vc-backed companies that recorded 16.7% overall growth. jobs increased by 33.3%, consistent with the economic indicators of the business sector. suweiba and haibo (2019) examined 100 vc-backed companies in ghana to determine if they registered growth post-vc investment. the findings confirmed a positive and significant relationship between the growth of vc-backed firms and vc instruments. these studies show varied results, yet they were conducted in the same country, ghana. therefore, it is challenging to conclude that the findings from uganda might be the same as ghana’s because of the countries’ economic differences and regulatory policies. mboto, amenawo and udoka (2018) used non-probability sampling by the yamane formula, and a sample of 40 smes from the cross-river state in nigeria was selected. they found that firms receiving vc funding increased their opportunity to access other sources of funding, and there were positive sales growth and an increase in net assets. however, the method used for non-probability sampling could lead to biased results because it creates an equal opportunity for each sme in the region to be selected. such drawbacks in the available literature necessitate more research in the field of vc finance to provide a clear understanding of its impact on sme performance, specifically in uganda. venture capital performance in uganda in a larger context of east africa, the vc market is progressively developing. nevertheless, most of the vc deals are concentrated in nairobi, kenya, enhanced by the manifestation of silicon savannah and the east african private equity & venture capital association (eavca) headquartered in nairobi. current literature suggests that the growth of the vc industry in developed and transitional economies is attributable to the private equity investors’ efforts to add value to the portfolio companies, with a greater focus on sme growth (gompers et al. 2015; rusu & toderascu 2016). however, uganda’s vc industry is new and underdeveloped equated to kenya, the vc market leader in the east african block. relatively few empirical studies exist to underpin the influence of vc financing on smes’ growth. even though the vc market is small, it has attracted the attention of the international vc firms to exploit the untapped sme sector. the recent study of avca (2019) points out that uganda, egypt, ghana and tunisia are the next destinations for private equity financing in africa. the fund managers are mostly headquartered in kenya, and a few foreign international limited partners have revamped the vc industry in uganda. these include ascent capital, pearl capital partners, xsml partners, savannah capital partners, norfund, iungo capital partners and xsml partners. notably, the cost of running vc funding in africa is high compared with that of other markets. the vc market in uganda represents an infinitesimal fraction of the overall quantity of fund investment in the east african block. in an effort to assist smes gain more knowledge, widen their networks with the vc firms and enhance their success for raising patient capital needed to propel their business growth, uganda investment authority organised the first ever alterative annual finance conference. the annual conference brings together all the stakeholders in the vc market with the intent to accelerate the growth of smes through pe/vc alternative funding. it is important to highlight that access to patient capital by the small firms remains a national concern. fund managers and business angels available on the market target large and reputable enterprises that can absorb tickets above us$5 m (shanthi & shariff 2014). in isolation, vc tickets in uganda range from us$250 000 to us$1 000 000 (ernst and young 2016). this explains why uganda’s vc market is grappling. this is because government programmes to fill the financing gap have realised minor success. in conclusion, vc financing stimulates the growth of start-up firms and is a sustainable solution to their equity gap. access to vc finance remains challenging, particularly for fast-growing firms, with antagonistic repercussions on economic growth (oecd 2018). there is little evidence documenting the effect of vc financing on the growth of smes. the existing literature offers mixed results. this article, therefore, provides a new data set illuminating the impact of vc financing on the growth of smes. research methodology the article adopted an exploratory research method to obtain a deeper insight into the vc industry, given the limited data available to underpin vc performance in uganda. earlier scholars, such as numally and bernstein (1994) illuminated that exploratory research is suitable for investigating a problem having limited knowledge of previous scholarships or in the absence of any literature on which to benchmark. we applied a mixed-method technique for primary data collection, incorporating both quantitative and qualitative research methods. the mixed-method has strengths of engaging the interpretivism and positivism paradigms that complement each other either proportionately or disproportionately (creswell 2003; saunders, lewis & thornhill 2012). previous researchers have also used the mixed-method research approach (kwame 2017; memba et al. 2012; mabhungu 2017) and commended it for yielding reliable and valid data sets. sample and data collection the study used a 5-point likert scale survey questionnaire administered to 90 key respondents in the vc market, complemented with face-to-face interviews held with the portfolio company managers, vcs, government agencies and smes associations. the quantitative research method is more dominant because firms’ performance is measured by financial indicators. the researchers opted for survey questionnaires because it is ostensibly easier for managers to provide financial data to safeguard confidential information (song et al. 2005). besides, it has the benefit of saving time and the hustle of recording the questions and answers, managing many topics and analysis of data (collis & hussey 2009; saunders, lewis & thornhill 2009). the researchers found the survey questionnaires comfortable for the respondents, as it permits them to complete the questions at their convenience, given that the target respondents comprised a customarily busy class. the respondents provided their scores ranging from strongly disagree (1) to strongly agree (5). the average score for agreeing was 3.5 and above. stratified random sampling was used to select 90 respondents from a total population of 300 smes from the manufacturing and agribusiness sectors. the study targeted the districts with the highest concentration of smes situated in the kampala, wakiso, mukono and jinja districts. the researchers categorised the smes into vc-backed and non-vc-backed firms. smalland medium-sized enterprises from the manufacturing sector were chosen because they contributed 21.62% to the total national revenue collections, then to the fast-moving consumer goods sector (ura 2018), while agribusiness makes up 67% of uganda’s economy. the primary source of data was the uia database and uganda small scale industries association (ussia). smalland medium-sized enterprises included in the study were those classified by uia as the top-performing smes in 2018 and 2019. because there was no segregated database for vc-backed firms, the researchers also used the profiles of active vc firms in uganda. these were extracted from the uia catalogue for the annual pe/vc conference organised for 2015 and 2016 and the eavca online published membership database. the vc firms included pearl capital partner, norfund, sigma capital, mango fund, syndicate africa, ascent capital, fincon africa, xsml capital, catalyst principal partners, actis capital, fanisi vc, iungo capital and kibo capital partner. the researchers engaged these categories because they compose the highest decision-making body of smes inclined with a wealth of knowledge and custody of the data required for the study. the researchers interacted with all the key players in the vc industry and compiled their understanding of vc performance, best practices and challenges. data analysis the first step was to organise the survey questionnaires to ensure that they were completed and suitable for data analysis. questionnaires with many gaps for data analysis were eliminated. the researchers analysed quantitative data using descriptive statistics, inferences, financial ratio analysis and excel. the multiple regression model statistically measured the relationship between vc financing and smes’ performance. face-to-face interviews were recorded and transcribed, and data were transferred to atlas-ti for analysis. face-to-face interviews allowed the researchers to interact with the respondents, request clarity of any discrepancies in statistical data and received access to audited accounts that added value to the research. in measuring the smes’ performance, the researchers considered sales turnover, roa and profitability to determine the extent to which the independent variable influences the dependent variables. the multiple regression model is illustrated as: where: y = vc βx1 = annual sales βx2 = profitability βx3 =roa α = intercept ϵ = residual (error) vc-backed and non-vc-backed are binary variables allocated 1 if smes received vc financing and 0 if they did not receive vc financing. measurement of the study variables business performance is a mirror habitually used by business entrepreneurs and researchers to assess the survival and growth of firms. scholars in business finance define performance as a parameter used by enterprises to measure the capacity of total assets to generate revenue. the researchers hypothesise that vc financing enhances the growth of smes, regarding an increase in sales turnover, profitability growth and roa as the performance variables to be evaluated. financial ratios were also used to analyse business financial performance, such as sales turnover, profitability and roa. they facilitate a realistic way to compare companies of different industries and assist to match business enterprises across different sectors, be it big or small, to recognise their strengths and weaknesses. the researchers extracted data from the survey questionnaires and financial reports and analysed it to compare both vc-backed and non-vc-backed firms’ performance. scholars of corporate finance acknowledge financial ratio analysis as the most essential financial evidence used by firm management and other stakeholders to assess the financial stability and growth potential of a firm. validity and reliability of data validity is the extent to which the research findings reflect the phenomena under investigation (collis & hussey 2009). we can evaluate the validity of research under face validity, construct validity, content validity or discriminant validity (collis & hussey 2009; sekaran 2005). the researchers conducted a pilot study to evaluate the reliability and content validity of the research instruments used in the study. the questionnaire was evaluated for reliability using cronbach’s alpha coefficient with a 95% significant confidence level and 5% allowable margin of error (table 1). this approach was also in the previous studies of vc (biney 2018). table 1: testing results for cronbach’s alpha reliability statistics. the researchers processed the results using spss version 25. cronbach’s alpha coefficient is more suitable because it can measure reliability and content validity, as recommended by numally and bernstein (1994). the results showed a 98.4% confidence level of the survey questionnaire and a margin error of 1.6%, which was much lower than the estimated 5%. empirical analysis and discussion of results to measure the impact of vc financing on smes’ growth, the researchers extracted data from 68 hand-collected survey questionnaires out of the 90 distributed, thus accounting for a 76% response rate. previous authors confirm that a response rate of 50% is sufficient for numerical data analysis and 70% is good (mugenda 2011). furthermore, 16 face-to-face interview sessions were conducted out of 30 targeted interviews. these targeted business owners and managers, vcs and government agencies had vast knowledge and approval authority for access to financial data required for the study. the researchers extracted the data from audited accounts, management financial reports, narrative reports and open-ended questionnaires. the annual revenue, roa growth and profitability for 3 years (2016–2018) were also computed using ratio analysis. the financial ratios can minimise the subjectivity associated with other data collection methods and help to supplement data collected by using the likert scale survey questionnaires (dess & robinson 1984). several tests from spss were conducted, such as descriptive statistics, multiple linear regression, pearson’s correlation coefficient and analysis of variance (anova), to determine any relationship between vc financing and smes’ performance. the researchers explained any ambiguities of numerical data from the face-to-face interview discourse (figure 1). figure 1: sales revenue growth for the vc-backed and non-vc-backed firms from 2016 to 2018. figure 1 shows that vc-backed firms had a higher revenue growth rate across all years from 2016 to 2018. the researchers used 2015 as the base year denoted as zero. in 2016, vc-backed firms recorded a growth rate of 15% as compared to 7% for non-vc-backed firms. in 2017, the growth rate increased to 22%, whereas non-vc-backed firms registered 14%, and in the third year, the vc-backed firms indicated 18% versus 10% for the non-vc-backed firms. the analysis of the revenue trends exposed that vc-backed firms outperformed non-vc-backed firms for all the 3 years. notably, in 2018, there was a decline of 4% and 6% in revenue growth for both vc-funded and non-vc-funded companies, respectively. while the variation in revenue growth appears insignificant regarding revenue figures, there is an enormous difference. the maximum revenue turnover for vc-backed smes was ugx 18 billion against ugx 4 billion for the non-vc-backed firms for 2016–2018. therefore, the growth rate method was employed because it can offset hiccups of only comparing maximum and minimum sales, given the reason that it considers the total average annual revenue for all firms under review. this proves that sales revenue increased significantly. the researchers conclude that vc financing leads to increased sales revenue growth, which was consistent with previous studies (adongo 2012; kwame 2017; memba et al. 2012). the researchers also performed pearson’s correlation coefficient tests to determine the relationship between vc financing and sales turnover. table 2 displays the correlation coefficient results for sales revenue at 0.000. the correlation is significant when p < 0.01 and p < 0.05. the results are below p < 0.01, demonstrating a significantly strong relationship between vc financing and the sales revenue growth for vc-backed firms. these results are similar to the findings of memba et al. (2012) and biney (2018). the researchers, therefore, conclude that the changes in the sales revenue growth for the vc-backed companies are explained by vc financing, implying that after receiving vc, sales revenue went up. table 2: the level of significance between venture capital financing (independent variable) and its influence of the sales revenue growth of venture capital-backed firms (dependent variables). in the approach to measuring the growth in assets, the researchers computed roa growth for both the vc-backed and non-vc-backed firms to adequately compare whether vc financing influences asset growth. figure 2 shows the computed results for roa growth. the year 2015 was the base year denoted as x0, 2016 as x1, 2017 as x2 and 2018 as x3. for 2016, the results show an increase in roa by 62% for the vc-funded firms as compared to 38% for the non-vc-funded firms. in the second year of vc financing, roa increased to 71% compared to 50% for the non-vc-backed firms. however, in 2018, both vc-backed and non-vc-backed firms had a decline in roa growth. the results indicate that vc-backed firms generated more sales revenue as alluded by other scholars. the rise in roa growth in 2016 and 2017 was attributed to the expansion of firms to meet the increased demand for their goods and services. although holding a top asset base might not explain a firm’s performance, the critical issue is the capacity of the company’s assets to generate sales revenue to meet roe for the shareholders. figure 2: asset growth for vc-backed and non-vc-backed firms for 3 years, from 2016 to 2018. a pearson’s correlation coefficient test was also conducted to examine if there is any relationship between vc financing and returns on assets (roa). table 3 shows the correlation coefficient r for roa at 0.05. the correlation coefficient is significant when the p-values are p < 0.01 and p < 0.05. the results show a p < 0.05. these results confirm there is a strong positive relationship between vc financing and changes in roa. the higher the roa, the more effective is the use of assets to the advantage of shareholders. these results imply that vc financing is positively correlated to roa, implying that the asset for the vc-backed firms produced higher sales following receipt of vc financing. descriptive statistics measured profitability growth. table 3: the pearson’s correlation test for venture capital financing and roa. likert scale measure: 1 – strongly disagree and 5 – strongly agree, and accepted a mean score of 3.5 (agree). table 4 shows a mean score of 3.7 and 0.68279 above the acceptable score for agreeing of 3.5. the findings indicate that 68% of the respondents confirmed the growth of their companies’ profits being attributable to vc financing. besides, the results also indicated a mean score of 3.8 and a standard deviation (sd) of 0.87836 for the vcs’ direct involvement in sme management, while the market share recorded a mean score of 3.7 and an sd of 0.74549. these results show a profitability growth after vc financing, vcs’ direct involvement in smes’ management contributed to the increase in the profitability growth, and vc-funded companies improved their market share and expansion. the market share and expansion move along with increased productivity to meet the outrageous demand in the market for goods and services. the researchers, therefore, conclude that vc financing contributes to the growth of profitability, market share and expansion and, finally, that the vcs involvement in the portfolio companies is critical to improving their performance. the researchers conducted multiple regression tests for the statistical relationship between vc financing and profitability growth (table 5). table 4: spss descriptive statistics measurement of smalland medium-sized enterprises’ growth using profitability growth. table 5: tests between venture capital financing and profitability growth effects. the results in table 5 show profitability growth at 0.000, a significant positive relationship between vc financing and profitability. this, therefore, shows that a change in vc financing positively affects profitability growth. furthermore, the least-squares is r2 = 0.342 and adjusted r2 = 0.289, showing that the variations in the dependent variable (profitability growth) of 34.2% are illuminated with vc financing into the portfolio companies. the researchers, therefore, can conclude that vc financing contributed to profitability growth by 34.2%. some scholars criticise the profitability method in measuring business performance because they restrict it to past performance and unrealistic approach of treating depreciation and amortisation as part of the annual expenses; however, they do not involve any direct cash flows. these findings were consistent with the study (biney 2018; carvalho et al. 2013; kwame 2017; paglia & harjoto 2014). ethical consideration the study was approved by the research ethics committee under the information removed to ensure blind peer review before commencing with the fieldwork. besides, the researcher received authorisation from the uia and uganda small scale industries association before commencing the research for access to the smes database. summary and conclusion this article presented one of the first extensive empirical studies confirming evidence of the impact of vc financing on smes’ performance in uganda. the findings disclose exciting empirical results. venture capital financing affects the performance of vc-backed firms. the researchers observed that sales revenue increased fourfold for vc-backed firms, higher than non-vc-backed firms. venture capital-backed firms disclosed a maximum sales revenue of ugx 18 billion (us$4.90 m) as compared to ugx 4.6 billion (us$1.25m) for non-vc-backed firms. furthermore, the profitability for vc-backed firms increased by 28.9%, while the roa increased by 71% because of the increased demand for local exports in the east african community. previous studies have used the before and after the matching method, implying that firms are assessed at different time intervals. this study investigated the definite performance of vc-backed and non-vc-backed firms from 2016 to 2018, in consideration of the same timeframe and investment environment. this suggests that the microeconomic factors influence both variables, thus providing a reasonable evaluation, which helped to produce reliable results. this study contributes to new knowledge on the under-explored studies completed about the impact of vc financing on smes’ performance in developed economies. the study offers the first empirical study conducted that relates and brings together the understandings of business entrepreneurs, government agencies and vcs. the researchers also unveil a comprehensive account underlining the success of vc financing from both developed and emerging markets to assist policy-makers and specialists in designing appropriate policies that inspire the growth of the vc ecosystem. previous studies lacked a literature consensus on vc financing’s influences on the performance of vc-backed firms and interesting imminent research to offer novel understanding in the public domain. this study further discloses existing gaps in the current literature and offers recommendations for the future research agenda. previous studies in the emerging markets have focused on the early stage firms, neglecting the ipos or trade sales that the vcs strive to achieve at their exit stage from the funded companies. out of the sample of 68 respondents, there were no ipos or trade sale companies. this concludes the limited accessible literature for studies exploring the impact of vc on ipos or trade sale. supplementary results from the face-to-face interviews revealed that business entrepreneurs have less interest to list on the stock exchange market because of the distress of loss of control of their industries. the researchers suggest extra research in this sector to assess how vc influences ipos or trade sales in the emerging markets. furthermore, the researchers discovered that most of the vc-funded companies were in their third year following receipt of vc financing. impact measurement at this level can be associated with survivorship bias. at this stage, they might invest more expenditure in r&d, acquisition of assets and product development to promote the company reputation, which could affect the profitability growth of the firm. previous scholars have disclosed that the profitability growth for the portfolio companies diminishes in the later stage of funding. therefore, the need for future exploration is necessary to determine if profitability growth is lower in the later stage of vc investment, as explained by other scholars. several studies used only portfolio managers as key respondents to measure vc performance on the growth of vc-backed firms. this approach neglects the critical insight of the key players in the vc market. this study brings together a comprehensive understanding of all key players in the vc industry, such as portfolio managers, government agencies, fund managers and smes’ associations. the researchers discovered that only 50% of the vc-backed companies were operating as expected, 30% were struggling and 20% failed. this shows that not all vc-backed companies make it to the top, as most literature displays, but that vc firms only present successful ventures. previous studies present only successful vc-backed companies; however, they revealed that 20% of the funded companies failed and 30% were trailing. uganda’s vc industry is minor, underdeveloped and fragmented. the researchers encountered some difficulty in collecting the required information for the study. the business entrepreneurs exhibited little knowledge about the importance of empirical research to the sme sector; hence, some declined to provide reports supporting their financial performance. the researchers also noted that whereas the vc market is picking up, the available smes in uganda have little capability to absorb the vc deals of us$5 m, hindering the growth of the sme sector. these findings were similar to (rusu & toderascu 2016), who conducted studies in the emerging markets in europe. the researchers suggest that researchers explore why uganda’s vc industry has attracted little attention from the business entrepreneurs amidst the entry of foreign vc firms in the financing of high-risk entrepreneurial ventures. more precisely, numerous authors have proved that vc financing is a sustainable financing model propelling smes’ growth. acknowledgements our special thanks go to department of applied management, university of south africa for the invaluable support that contributed to the success of this manuscript. competing interests the authors have declared that no competing interests exist. authors’ contributions all authors contributed equally to this work. funding information this research did not receive any funding from the public or not-for-profit sectors. data availability statement although this is an original article, data sharing is not applicable for this article for purposes of data protection and privacy from third-party persons. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency or the authors. references adongo, j., 2012, ‘the impact of the legal environment on venture capital and private equity in africa empirical evidence’, journal of public economics 90(8–9), 1699–1723. african private equity and venture capital association (avca), 2019, african pe & vc performance benchmark q4 2018 report 2019, viewed from https://www.avca-africa.org/research-publications/data-reports/. agyeman, s.k., 2010, ‘challenges facing venture capitalists in developing countries: an empirical study about venture capital industry in ghana’, master’s thesis, umeå school of business, umeå. amit, r., brander, j. & zott, c., 1998, ‘why do venture capital firm exist? theory and canadian evidence’, journal of business venturing 13(6), 441–466. https://doi.org/10.1016/s0883-9026(97)00061-x arundale, k., 2018, ‘exploring the difference in performance between uk/european venture capital funds and us venture capital funds’, ph.d thesis ‘submitted in fulfilment of the requirements of the degree of doctor of philosophy, adam smith business school, college of social sciences university of glasgow, viewed from http://theses.gla.ac.uk/30827/1/2018arundalephd.pdf. beck, t. & cull, r., 2014, small and medium-sized enterprise finance in africa. african growth initiative (working paper 16), brookings, washington, dc. bertoni, f. & tykhova, t., 2015, ‘does governmental venture capital spur invention and innovation? evidence from young european biotech companies’, research policy 44(4), 925–935. https://doi.org/10.1016/j.respol.2015.02.002 bertoni, f., colombo, m. & quas, a., 2015, ‘the patterns of venture capital investment in europe’, small business economics 45(3), 543–560. biney, c., 2018, ‘the impact of venture capital financing on smes growth and development in ghana’, business and economics journal 2018, 9(3). https://doi.org/10.4172/2151-6219.1000370 boadu, f., 2014, ‘venture capital financing: an opportunity for small and medium-scale enterprises in ghana’, journal of entrepreneurship and business innovation 2014, 1(1). https://doi.org/10.5296/jebi.v1i1.5187 carvalho, a., netto, h. & sampaio, j., 2013, conducted as research on private equity and venture capital in brazil analysing its recent evolution, viewed 15 april 2018, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1996729. chemmanur, t., krishnan, k. & nandy, d., 2011, ‘how does venture capital financing improve efficiency in private firms? a look beneath the surface’, review of financial studies viewed 15 april 2018, from http://ssrn.com/abstract=1025322. collis, j. & hussey, r., 2009, business research: a practical guide for undergraduate and postgraduate students, 3rd edn., palgrave macmillan, basingstoke. colombo, m. & murtinu, s., 2017, ‘venture capital investments in europe and portfolio firms’ economic 1136 performance: independent versus corporate investors’, journal of economics management & strategy 26(1), 35–66. https://doi.org/10.1111/jems.12170 creswell, j.w., 2003, research design: qualitative, quantitative, and mixed methods approaches, 2nd edn., sage, thousand oaks, ca. cumming, d.j. & johan, s.a., 2009, venture capital and private equity contracting: an international perspective, elsevier science academic press, amsterdam. deloitte, 2015, africa private equity confidence survey: 2015, deloitte financing avenues through commercial lenders, johannesburg. dess, g. & robinson, r.b., 1984, ‘measuring organisational performance in the absence of objective measures: the case of the privately held firm and conglomerate business unit’, strategic management journal 5(3), 265–273. https://doi.org/10.1002/smj.4250050306 dzeletovic, m., milosevic, m. & cicic, s., 2017, ‘venture capital: generator of growth of sme investment activities’, industrija 45(3), 7–22. https://doi.org/10.5937/industrija45-11210 ernst and young, 2016, back to reality, ey global venture capital trends 2015, viewed 30 july 2019, from www.ey.com/publication/vwluassets/ey-global-venture-capital-trends2015/ey-globalventure-capital-trends-2015.pdf. evca, 2015, european private equity venture capital association–annual report for 2015 and the report on private equity impact on economic growth in europe. fatoki, o., 2014, ‘the financing options for new small and medium enterprises in south africa’, mediterranean journal of social sciences 5, 748–755. https://doi.org/10.5901/mjss.2014.v5n20p748 gompers, p. & lerner, j., 2004, the venture capital cycle, mit press, cambridge, ma. gompers, p., kaplan, s. & mukharylamov, v., 2015, what do private equity firms say they do? harvard working paper series, 15-081, harvard business school, boston. gompers, p.a. & lerner, j., 1999, ‘conflict of interest in the issuance of public securities: evidence from venture capital’, journal of law & economics 42(1), 1–28. groh, a., von liechtenstein, h. & lieser, k., 2010, ‘the european venture capital and private equity country attractiveness indices’, journal of corporate finance 16(2), 205–224. https://doi.org/10.1016/j.jcorpfin.2009.09.003 hain, d., johan, s. & wang, d., 2016, ‘determinants of cross-border venture capital investments in emerging and developed economies: the effects of relational and institutional trust’, journal of business ethics 138(4), 743–764. https://doi.org/10.1007/s10551-015-2772-4 hellmann, t. & puri, m., 2002, ‘venture capital and the professionalization of start-up firms: empirical evidence’, the journal of finance 57(1), 169–197. hirukawa, m. & ueda, m., 2008, venture capital and innovation: which is first?, working paper, viewed 17 june 2018, from http://ssrn.com/abstract=1242698 jain, b. & kini, o., 1995, ‘venture capitalist participation and the post-issue operation performance of ipo firms’, journal of managerial and decision economics 16(6), 593–606. https://doi.org/10.1002/mde.4090160603 kamunge, m., njeru, a. & tirimba, o., 2014, ‘factors affecting the performance of small and macro enterprises in limuru town market of kiambu county’, international journal of scientific and research publications 4(12), 1–20. kaplan, s. & lerner, j., 2016, venture capital data: opportunities and challenges, working paper 17-012, university of chicago press for national bureau of economic research, chicago, il. kpmg & eavca, 2019, private equity sector survey of east africa for the period 2017 to 2018, june, p. 44, eavca, nairobi, viewed 10 september 2019, from https://assets.kpmg/content/dam/kpmg/ke/pdf/deal/pe%20survey%20booklet%202019.pdf. kwame, b., 2017, ‘assessing the impact of venture capital financing on growth of smes’, texila international journal of management 3(2), 2017. https://doi.org/10.21522/tijmg.2015.03.02.art004 lerner, j., 1995, ‘venture capitalists and the oversight of private firms’, the journal of finance 50(1), 301–318. mabhungu, s., 2017, ‘a performance measurement framework to enhance the success and survival of retail micro, small and medium enterprises’, doctor of philosophy in the subject management accounting at the university of south africa. mason c., botelho, t. & harrison, r., 2013, the transformation of the business angel market: evidence from scotland, report by the university of glasgow business school and university of edinburgh business school, viewed 15 april 2018, from https://www.research.ed.ac.uk/portal/files/12536283/harrison_transformations_paper.pdf. mason, c.m., 2009, ‘public policy support for the informal venture capital market in europe: a critical review’, international small business journal 27(5), 536–556. https://doi.org/10.1177/0266242609338754 mason, c.m. & harrison, r., 2015, ‘business angel investment activity in the financial crisis: uk evidence and policy implications’, environment and planning c: government and policy 33(1), 43–60. https://doi.org/10.1068/c12324b mbabazi, a., 2012, the speech read at the uganda top 100 mid-size companies–gala dinner at serena hotel, unpublished, kampala on 23 november 2012. mboto, h., amenawo, i. & udoka, c., 2018, ‘venture capital financing and the growth of small and medium-scale enterprises in cross river state, nigeria’, global journal of management and business research: c finance 18(3), 2018. memba, f., gakure, w. & karanja, k., 2012, ‘venture capital (vc): its impact on growth of small and medium enterprises in kenya’, international journal of business and social science 3(6), 32–38. ministry of finance planning & economic development, 2018, accountability sector annual report 2018/2019, viewed 31 july 2019, from https://www.finance.go.ug/publication/accountability-sector-annual-report-fy-2018-19. motavaseli, m., shojaei, s., bitaab, a., chitsazan, h. & ghanbar, m., 2018, ‘institutional barriers to financing technology-based small firms through venture capital mechanism: a study to explore the incentives for investment in iran’, international journal of economics and financial issues 10(3), 409–427. https://doi.org/10.1108/jeee-01-2018-0001 mugenda, a.g., 2011, social science research methods: theory and practice, nairobi, arts press. muriithi, s., 2017, ‘african small medium enterprises, contributions, challenges, and solutions’, european journal of research and reflection in management sciences 5(1), 2017. ning, y., wang, w. & yu, b., 2015, ‘the driving forces of venture capital investments’, small business economics 44(2), 315–344. https://doi.org/10.1007/s11187-014-9591-3 numally, j. & bernstein, i., 1994, psychometric theory, 3rd edn., mcgraw-hill, new york, ny. organisation of economic cooperation development (oecd), 2018, enhancing sme access to diversified financing instruments, discussion paper 22–23 february 2018, mexico city. paglia, j. & harjoto, m., 2014, ‘the effects of private equity and venture capital on sales and employment growth in small and medium-sized businesses’, journal of banking & finance 47(2014), 177–197. https://doi.org/10.1016/j.jbankfin.2014.06.023 pitchbook, 2019, global pe & vc fund. performance report as q2 2018, viewed from https://files.pitchbook.com/website/files/pdf/pitchbook_global_pe_vc_fund_performance_report_as_of_2q_2018.pdf. puri, m. & zarutskie, r., 2012, ‘the life cycle dynamics of venture capital and non-venture capital financed firms’, journal of finance 67(6), 2247–2293. https://doi.org/10.1111/j.1540-6261.2012.01786.x rusu, v. & toderascu, c., 2016, ‘venture capital financing in emerging economies’, ces working papers viii(1), 148–162, viewed from https://www.researchgate.net/publication/303283032. ryan, k. & hankook, k., 2013, venture capital as a catalyst for high growth: working paper 2013-01. economic research and policy analysis branch industry canada, viewed 21 july 2019, from http://www.ic.gc.ca/eic/site/eas-aes.nsf/eng/h_ra02218.html. sanders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., pearson education, harlow. saunders, m., lewis, p. & thornhill, a., 2012, research methods for business students, pearson education, harlow. sekaran, u., 2005, research methods for business: a skill-building approach, 4th edn, wiley & johns, new york. shanthi, d. & schneider, s., 2018, ghana private equity and venture capital ecosystem study, policy research working paper 8617, viewed viewed 13 march 2018, from https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-8617. shanthi, d. & shariff, m., 2014, private equity and venture capital in smes in developing countries. the role for technical assistance, policy research working paper 6827, the world bank capital markets practice non-bank financial institutions unit, world bank group, washington, dc. song, m., droge, c., hanvanich, s. & calantone, r., 2005, ‘marketing and technology resource complementarity: an analysis of their interaction effect in two environmental contexts’, strategic management journal 26(3), 259–276. https://doi.org/10.1002/smj.450 suweiba, s. & haibo, c., 2019, ‘exploring the effect of venture capital instruments and control mechanisms on growth of venture capital fund: empirical evidence from ghana’, open journal of business and management 7(1), 180–193, viewed 21 march 2020, from http://www.scirp.org/journal/ojbm. uganda investment authority, 2016 second private equity, and venture capital conference 2016, kampla’serena 24th–25th june 2015, viewed 15 april 2018, from https://www.ugandainvest.go.ug/wp-content/uploads/2016/04/pevc-report-2.pdf uganda ministry of trade, industry, and cooperatives, 2015, uganda micro, small and medium enterprise (msmes) policy, final draft 2015, viewed 25 march 2018, https://www.ugandainvest.go.ug/wp-content/uploads/2016/02/final-msme-policy-july-2015.pdf uganda revenue authority, 2018, annual revenue performance report fy 207/2018, viewed 31july 2018, from https://www.ura.go.ug/resources/webuploads/gnrart/annual%20revenue%20report_2017_18.pdf. vc4africa, 2015, venture finance in africa: ‘the progress of early-stage high potential growth companies’, vc4africa, viewed 15 april 2018, https://vc4a.com/blog/2014/12/17/vc4africa-2015-report-venture-finance-in-africa/. weetracker, 2018, african venture capital report 2018, viewed 18 august 2019, from https://weetracker.com/2019/01/04/what-a-year-the-state-of-venture-capital-in-africa-2018. weetracker, 2019, decoding venture capital investment in africa, viewed 15 april 2020, from https://weetracker.com/venture-capital-africa-2019-report/ world bank report, 2016, doing business 2016: measuring regulatory quality and efficiency, world bank group, washington, dc. world bank, 2010, world bank enterprise survey 2010, world bank, washington, dc. yeboah, a. & koffie, f., 2016, ‘does the legal form of small and medium enterprises determine their access to capital?’, international journal of management, accounting, and economics 3, 520–533, viewed 09 july 2018, from http://www.ijmae.com/. microsoft word p167 naked truth 2 le roux.doc sajesbm volume 6, (2013) www.sajesbm.com article no 167 57 www.sajesbm.com the naked truth: creditor understanding of business rescue: a small business perspective ingrid le roux* kelly duncan department of business management university of pretoria south africa *corresponding author email: ingrid.leroux@up.ac.za phone: +2712 420 4773 postal address: dept business management, up. 0002 abstract purpose: to study the level of knowledge and awareness of business rescue of entrepreneurs who are potential creditors of businesses filing for rescue, and to identify the major issues and concerns from the creditors’ point of view. methodology: the design of the study was a survey to examine the level of knowledge, awareness and experience of chapter 6 of the south african companies act no. 71 of 2008 and to seek to describe the status from a creditor’s perspective. findings: the literature revealed the role that creditors have to play in the business rescue process. it indicated the potential for creditors to emerge with a better return than the one that liquidation would offer. the primary data demonstrated that the respondents’ level of knowledge and awareness of and about rescue and the roles and powers associated with the companies act is extremely low and of grave concern to the industry. practical implications: there is a large gap between the level of knowledge available and what is actually known. the result is entrepreneurs who do not comprehend the significance of this legislation and its potential consequences for their business. originality: this paper addresses the limited research available on business rescue issues. due to the newness of the act, sparse case law exists and little scientific research data is available. key words: companies act, business rescue, creditors, knowledge, awareness sajesbm volume 6, (2013) www.sajesbm.com article no 167 58 introduction “the penalty for declaring bankruptcy in ancient rome was slavery or being cut into pieces; the choice was left to the creditors” (author unknown) today, creditors in south africa also have powers in decision making according to chapter 6 of the new companies act (71 of 2008). the final vote lies with the creditors. but what is the value of such powers if you do not know the rules of the game? south africa’s insolvency industry was experiencing a crisis prior to the companies act 2008. not only was the industry perceived as being corrupt, but the opinion was raised that insolvency should not be the only solution when businesses are in financial distress (alberts, 2004). the new business rescue model emerged at a time when the south african business environment found itself in a recession, with liquidation statistics increasing every month. some industries and labour unions had approached the government for bail-outs of struggling companies. the president of south africa stated that the productive capacity of our economy should be kept intact, to be able to respond to the revival in demand as the global economy recovers; he further mirrored the spirit of chapter 6 by stating that we must do our absolute best to retain skills and labour (sapa, 2009). after the companies act no 71 of 2008 came into effect in may 2011, the companies and intellectual properties commission (cipc) had 175 filings from companies seeking rescue during the first five months of its implementation (makholwa, 2011). comparing statistics of liquidations since the companies act was implemented; the following are of interest. an increase of 151.4%, from 107 liquidations in may 2011 to 269 in may 2012, was reported. according to statistics south africa (2012) the reason for this high increase is the implementation of the business rescue process, hence the low base in may 2011. surprisingly, the voluntary liquidations increased by 189%, while compulsory liquidations (liquidations arising from financial distress) decreased by 27 in year-on-year data (crs business rescue, 2011). to date (end january 2013), 807 filings have been registered. the reason for the decrease in compulsory liquidations may be the fact that businesses are pursuing the new business rescue option. the total number of business rescues for the first year of its regulation totalled 438 (pelser, 2012). in addition, eliot, in visser (2012) states that of the 169 cases where there had been a result in the business rescue process, only 56% had been successful. from the 25 court judgements for business rescue, only two had been associated with successful rescues. entrepreneurs and small business owners are potential creditors of businesses in rescue. when these businesses are under a moratorium because of filing for rescue (companies act, 2008), creditors are at risk of potential “knock-on effects” when it comes to their own business liabilities pertaining to debtor businesses facing a turnaround. the purpose of this article is therefore to describe the level of knowledge and awareness that entrepreneurs have with regard to the companies act and whether they are acquainted with their liabilities as creditors and the potential consequences. to achieve the above outcome, a comprehensive literature review was done, utilising a synthesis review process and content analysis supported by primary research. this article closes with conclusions and recommendations. the business rescue process and the involvement of creditors the “new” rescue model for south african businesses, as outlined in the companies act no 71 of 2008 (section 128), states that if a business faces financial distress, and there is a sajesbm volume 6, (2013) www.sajesbm.com article no 167 59 reasonable prospect of saving the company, it may proceed to facilitate rehabilitation through filing for rescue. the stipulation is that the management of the company is placed under temporary supervision of a business rescue practitioner; there is a temporary moratorium on the rights of claimants (creditors, employees) against the company; and a plan/proposal to rescue the company must be developed and implemented. the following are “key infliction points” that have direct bearing on the relevance of creditors regarding the filing process. within five business days (section 5 of the companies act defines business days) after filing the resolution with the cipc (delport, 2011:142), the creditors (and every other affected person) must be notified of the distressed company’s filing for business rescue, the date on which it became effective and the grounds upon which the decision was taken (davis, cassim & greach, 2011:230). bradstreet (2011:366) believes that the primary reason for notifying the persons involved is to protect the ‘affected parties’. this is followed by the appointment of a business rescue practitioner, also within these five days, to oversee the rescue proceedings. this is followed by the filing of a notice of the appointment with cipc within two days. a copy of the appointment must be made available to every affected person within five days after notice has been filed (davis et al, 2011:230; delport, 2011:142). during ‘investigation of the affairs’, the next step is to convene a creditors’ meeting within ten days of the business rescue practitioner’s appointment, to inform the affected persons of the future of the company and allow them to prove their claims against the company (davis et al, 2011:243). two meetings are to be held, the first an employees’ meeting (s148), and the second a creditors’ meeting (s147). business rescue and the rights of creditors creditors have the right to appoint other independent creditors as members of a creditors’ committee, who may collaborate with the rescue practitioner about matters relating to business rescue. they also have the right to receive and consider reports relating to the business rescue and act independently of the rescue practitioner to ensure fair representation of the creditors’ interests (delport, 2011:146). a creditors’ committee cannot, however, dictate to the practitioner. each creditor has a voting strength equal to the value of its claim on any decision regarding the rescue proceedings. the business rescue plan must be published within 25 business days after the appointment of the business rescue practitioner. the business rescue practitioner then has ten days after publication of the plan to convene a meeting with the creditors, when the creditors then vote for or against the plan. the affected persons must be notified of this meeting at least five days before it is due to take place (davis et al, 2011:245). a majority vote for the business rescue plan will be binding on the company, creditors and shareholders (delport, 2011:149), whether they were present at the meeting or not and proved a claim or not. the business rescue plan must be approved by 75% of the votes, and 50% of those votes must be derived from independent creditors (levenstein, 2012:30). the business rescue plan may call for the company to restructure its affairs, business, property, debt and any other liabilities and equity in a way that would optimise the continuation of the company’s existence on a solvent basis. if this is not possible, the second alternative is to seek a better return for the creditors or shareholders than they would earn if an immediate liquidation of the company took place (bradstreet 2011:356). if the business rescue plan is not approved, the affected person/s may buy the opposing votes at liquidation value (levenstein, 2012:30). if creditors feel that they have been disadvantaged with regard to the process (or any steps thereof) or even the liquidation value offered for their votes, an application to court to set aside the result of that vote is acceptable (davis et al, 2011). creditors have the responsibility to make sure their rights will not be unfairly affected by the business rescue plan (bonnet for devries attorneys, 2011). sajesbm volume 6, (2013) www.sajesbm.com article no 167 60 section 128 of the companies act defines a company in financial distress as one that is unable to pay all of its debts as they fall due and payable, or appears to be unable to do so within the immediately ensuing six months, thus is currently insolvent or may be potentially insolvent within the next six months. a key component of a successful rescue endeavour is whether the company is still economically viable. this decision falls within the rescue practitioner’s domain (pretorius & holtzhauzen, 2008:90), and may influence the creditors to a large extent when it comes to extended terms of payment and the like. given the above information, it is safe to postulate that the creditors, which often include small businesses and entrepreneurs, have several functions, contributions and decisionmaking powers. these include applying for rescue through the court procedure, opposing the appointment of the brp, forming or joining the creditor committee, cooperating with the rescue practitioner; proposing an alternative plan and/or ultimately voting for the plan. the potential benefits of this new regime include the fact that the affected parties (creditors) may intervene by application to the court. this is an interaction between the company, rescue practitioner and any affected parties planning the business rescue (lamprecht, 2010). pretorius and holtzhauzen (2008:89) state that the spirit of the legislation seeks the best possible outcome for all stakeholders involved. what is important to note is that close corporations are entitled to have access to the new legislation, which they did not have under the old companies act of 1973 (bradstreet, 2011:360). if the process becomes inclusive of the parties involved and lends itself to a consultative procedure, the affected parties may participate in the business rescue (moosa, 2009). this suggests that the moratorium against legal proceedings may provide breathing space for the company and result in a fruitful turnaround (davis et al, 2011:227). when the company is unable to exist on a solvent basis, the aim of business rescue is to return the company to a solvent position, or alternatively pursue better returns for the creditors and shareholders. with the change in legislation, fewer creditors are affected by the process in a normal liquidation case (moosa, 2009; loubser, 2010a). authors such as levenstein (2011), braadtveld (2010) and bradstreet (2011:353) support the view that the rescue process satisfies the claims of the creditors more effectively than an ordinary liquidation process. the new business rescue legislation does raise some concerns. even though the business rescue process, according to section 133 of the act, does not free the company from its obligations to satisfy the claims of the creditors, it does nevertheless delay payment (coertser, 2012). delaying of the process to avoid the claims of the creditors for as long as possible may result in a higher number of ‘business rescues’ than expected (harris, as quoted in pelser 2012). it is therefore imperative that the company file for the right reasons – if not, creditors can and should intervene. the competing interests of the different affected parties can have a negative effect on the business rescue. mckenzie-skene (2011:31) notes that in south africa, with the new legislation in place, the creditors now have the choice as to how they will participate within the guidelines of the act. davis et al (2011:235) state that one of the consequences of business rescue proceedings is that the disposal of the company’s property is restricted. rajak (2011:5), for example, warns of fraudulent collusion between the debtor and a creditor to strip the debtor of his estate when the interests of other creditors are at stake. this could put at risk the ‘just and equitable’ treatment of all creditors involved. sajesbm volume 6, (2013) www.sajesbm.com article no 167 61 business rescue and the preferences of creditors jacobs (2012:95) stated that post commencement financing in essence seems to be a necessity but its biggest drawback is the adverse impact thereof on the company’s unsecured creditors. however, post commencement funding is a banking issue and not the concern of this paper. the ranking order with regard to creditor pay-outs is of importance (elliot, 2012). this portion should be divided into the effect of pre-commencement debt and then the priority of postcommencement debt. employees who render services after the commencement of the business rescue are ranked before post-commencement finance. payment to staff post commencement should be on a current basis and not on credit. (if the company cannot afford post-commencement salaries, there is no reasonable prospect of saving the company and it should be liquidated.) next in line are secured creditors “in the order in which they were incurred” (companies act sec 135). a secured creditor is ranked on the same level and will benefit from its security depending on the extent of its realisation of the underlying asset/s (eliot, 2012). the next-ranked claims are those of unsecured creditors who provided finance to the company after the commencement of business rescue, in the order in which claims were incurred (eliot, 2012), thus ranking below rescue costs and secured creditors but above all other creditors, including ‘preferent’ creditors. the ranking of unsecured postcommencement finance is therefore of vital importance to the prospective financiers, as the feasibility of recovering these claims could determine whether it is feasible or not to rescue the business. the next-ranking claims are ordinary preferent claims in terms of sec 97–102 of the insolvency act of 1936. the final ranked claims are those of the concurrent creditors. by the time the final claims are reviewed, the final liquidation account is probably exhausted and it is therefore unlikely that these claims could be satisfied. the best remedy for these creditors would be the hope that the business rescue proceedings do not fail, or that the assets can be realised before liquidation, in order to perhaps yield a better dividend (eliot, 2012). while creditors have confirmation inputs towards the appointment of the practitioner at the first creditors’ meeting, the act does not state what the prescribed minimum qualifications must be in order for a turnaround manager to take on this role (pretorius & holtzhauzen, 2008:90). the effect of the above is summarised by holtzhauzen (2013 pers. com.) as follows: “due to the priority of the business rescue practitioner’s fees, secured creditors will closely monitor the practitioner’s fees, as these will ‘reduce’ their dividend in liquidation. secured creditors will not bother about the post-commencement funder’s position, as it does not affect them at all. the preferred creditors will obviously monitor the post-commencement funding, as this will reduce their dividend in liquidation. overall, the concurrent creditors stand to lose all in liquidation. as such, they will have serious concerns about additional post-commencement debt acquired by the practitioner”. there are several potential concerns of creditors. based on the liabilities approach proposed by pretorius and holtzhauzen (2008), these concerns and effects are shown in table 1. sajesbm volume 6, (2013) www.sajesbm.com article no 167 62 table 1: creditor concerns based on the liabilities of turnaround situations liability concern effect on creditors legitimacy does the business rescue practitioner have the necessary capacity to turn the business around? does the business rescue practitioner have the relevant skills to protect their interests? resource scarcity as creditors are ranked, are there enough assets for claims? depending on the creditors’ rank, their claim might not be processed or ranked too low. strategy options the reason for the decline could have been affected by either internal or external strategies – the core problem needs to be defined will the business rescue practitioner’s ‘strategic’ options be viable with regard to the business recovering in order to ensure continued business with said creditors? new leadership leadership’s inability and resistance to change creditors require a business rescue practitioner to be able to influence the leadership of the debtor business and make decisions in the interest of all parties involved data integrity top management is a key source of information and the quality thereof top management could deliver biased information to act in the best interest of the debtor business and not the stakeholders / creditors integration holistic integration of all strategies, activities, information, people and overcoming the above liabilities envisioning a successful rescue, the creditors might not be fully satisfied with the outcomes with regard to distribution source: adapted from pretorius & holtzhauzen (2008) business rescue and the creditors’ influence on the rescue practitioner creditors are entitled to interrogate every step the practitioner takes – and most of them do. thus they are well informed with regard to the status of the company and the rescue processes. often banks are the largest creditors and dominate during the vote, while small business as concurrent creditors may stand last in line. a major concern from the creditors’ point of view is that they are not always informed in time of the company’s being in distress; effective communication would be a key factor when encountering this problem. if the creditors vote in favour of releasing whole or part of the debt owed to them, they will be prohibited from enforcing that debt recovery against the debtor (cipc, 2012). thus, as stated in section 154 (1), the creditor will lose the right and to enforce the relevant debt. it is very important that the creditor understands his or her options under section 154 and insists on this “protection”. despite the new legislation’s shift towards a debtor-friendly environment, several more benefits for the creditor exist than with the previous companies act of 1973. although the claim settlement of the creditors is no longer the core reason for rescue (alberts, 2004, braadtveld, 2010 and bradstreet, 2011:354). rose (2011) agrees that creditors are no longer deprived of their rights and in actual fact are influencing the process indirectly by their eventual vote in support or not. sajesbm volume 6, (2013) www.sajesbm.com article no 167 63 though the literature on rescue practices is limited, it does show the importance of being knowledgeable about the new legislation. all business rescue costs are shared among the shareholders, creditors and the employees indirectly. business rescue is a costly procedure. lamprecht (2010) points out that this new legislation is not the answer to south africa’s unemployment and liquidation problems, but that it has the potential to be a successful mechanism for economically viable businesses in financial distress. this is true only if all affected parties are knowledgeable about the complexities associated with business rescue. research methodology as at february 2013, the companies act no 71 of 2008 has only been in effect for about 22 months. there is limited information available, and sparse though growing case law to interpret and analyse. there is also insufficient feedback regarding business rescues, and at the same time limited formal data on successful business rescues. over 800 business rescue filings have occurred, and many of those companies have at least one entrepreneur/small business as a creditor. given this fact, the research question driving this study originated from the scenarios predicted for the industry, where creditor knowledge was identified as a key factor (pretorius, 2013). it will be of crucial importance to understand just how much entrepreneurs know of their rights, roles, liabilities and consequences regarding their place in the process of business rescue. table 2: research design components component description research question or problem how aware are entrepreneurs (creditors) of their rights, roles and liabilities regarding business rescue with regard to the new companies act legislation? context business rescue legislation after the business rescue becomes effective propositions* 1: entrepreneurs are not aware of chapter 6 in the companies act no. 71 of 2008. 2: entrepreneurs are not aware of the relevant creditor issues regarding chapter 6 of the companies act no. 71 of 2008. 3: entrepreneurs and small business owners who are potential creditors of a company in business rescue are not aware of their liabilities regarding business rescue. 4: entrepreneurs and small business owners who are potential creditors of a company in business rescue are not aware of their fiduciary duties with regard to business rescue. unit of investigation knowledge and awareness about business rescue unit of analysis entrepreneurs who are potential creditors to a business rescue or a future business rescue logic linking the data to the propositions respondents were asked about their awareness and knowledge of issues which the act entails, as well as processes and procedures around the implementation thereof. their responses should give a meaningful indication of their knowledge status. sajesbm volume 6, (2013) www.sajesbm.com article no 167 64 component description criteria for interpreting the findings agreement with statements evaluating their self-evaluated knowledge and understanding * = propositions are set to structure the research process in support of the research question. research questions are converted to proposition statements, for which support (or otherwise) is sought source: based on the design description of yin (2003, p. 21) methodology this study was exploratory in nature in that it was seeking to understand the status quo. a literature search was done and databases such as ebscohost, emerald, sabinet and proquest were searched. the search terms used were ‘effects on creditors’, business rescue consequences’, ‘creditors’ benefits of business rescue’, ‘creditors’ rights’, ‘advice for creditors in business rescue’, ‘creditors’ knowledge of companies act’. google scholar was also used to find popular articles in an attempt to discover these effects on creditors, and not only management. due to the lack of academic research in the first year of the new legislation, the following inclusion criteria for ’non-academic’ works sourced were used:’ • the work reported on the content of the new legislation. • the work reported on the advice for creditors involved in business rescue. • the work reported on the process of business rescue. • the work reported on the creditors’ rights with regard to business rescue. • the work reported on the benefits/consequences affecting creditors. • the work reported on the comparative analysis of the new legislation against the old companies act and international legislation. research design a convenience sample of 76 smmes (small, medium and micro enterprises) in various business sectors was identified and surveyed. the aim of the research was to explore their knowledge and awareness of the companies act and also to explain the issues relevant to this exploratory study. responses to survey questionnaires were collected by both telephonic interviews and personal interviews, focusing on the unit of investigation, which was the awareness and knowledge of creditors. the unit of analysis was entrepreneurs and small-business owners. many business owners were asked to complete the questionnaire but were not available for either telephonic or personal interviews. questionnaires were sent via email to the respondents and sent back after completion to the interviewer. both closed and open-ended questions were used. a four-point likert scale to measure entrepreneurs’ knowledge and awareness of different aspects of the new legislation was used in order to ‘force’ a decision away from the ‘unsure’ option, as it was expected that an option for ‘unsure’ would realise no information. findings the sample of the purposive sample of 76 businesses surveyed for exploratory purposes, 94% were entrepreneurs or small business owners and 15% acted as directors within their companies. the respondents interviewed were placed within various business sectors, namely: services sajesbm volume 6, (2013) www.sajesbm.com article no 167 65 sector: 35%; retail and e-commerce (online retail): 27%; construction and manufacturing: 14%; arts and crafts: 3% and unspecified: 21%. of the businesses that respondents represented, 70% reported having creditors, and 62% reported themselves as being debtors to other businesses/suppliers. the respondents’ experience within their relevant businesses ranged from six months to 35 years. forty percent of the respondents had less than four years’ experience within their stated positions. the ages ranged from 19 to 66 years of age and the gender classification was 60% male and 40% female. of the respondents, 49% had a matric qualification or less, whereas 51% held post-secondary qualifications including diplomas, certificates, degrees and postgraduate degrees. linking this demographic information to the awareness and knowledge about the companies act, fewer than 3% of the respondents had been involved in a ‘formal’ rescue within their own businesses. however, 16% of respondents reported that they had been involved in an ‘informal’ turnaround within their own businesses. table 3 shows the respondents’ awareness of the act. with regard to the awareness of the companies act, nearly 60% of the respondents reported very low knowledge and were not very aware of this legislation; that being said, not even 6% of the respondents had extensive knowledge about the act. of the respondents, 37% reported they had some knowledge about the act. table 3: respondents’ awareness of the act awareness of companies act chapter 6 frequency percent cumulative frequency cumulative percent know nothing about it 11 14.47 11 14.47 have heard about it 24 31.58 35 46.05 have read about it 9 11.84 44 57.89 have some knowledge 28 36.84 72 94.74 extensive knowledge 4 5.26 76 100.00 table 4 shows that 93% of the respondents had not attended any information session on business rescue where the act was discussed, and 96% of the respondents had not attended a seminar on business rescue lasting a day or longer. sajesbm volume 6, (2013) www.sajesbm.com article no 167 66 table 4: attendance of information and training sessions on rescue by respondents i have attended an information session on business rescue. frequency percent cumulative frequency cumulative percent yes 5 6.58 5 6.58 no 71 93.42 76 100.00 i attended a seminar on business rescue lasting a day or more. frequency percent cumulative frequency cumulative percent yes 3 4.00 3 4.00 no 72 96.00 75* 100.00 * missing value table 5 shows the awareness of respondents about who may initiate a rescue. table 5: awareness about creditor initiation of business rescue i am aware that a creditor can file for business rescue in my business without my consent. frequency percent cumulative frequency cumulative percent yes 24 32.00 24 32.00 no 51 68.00 75 100.00 sixty-eight percent of the respondents were not aware that creditors could file for business rescue without their consent. very few were aware of rescues going on in their working environment (see table 6). table 6: awareness of current rescues in other businesses i am aware of current rescues in other businesses. frequency percent cumulative frequency cumulative percent yes 31 40.79 31 40.79 no 45 59.21 76 100.00 table 6 shows that almost 60% of the respondents were not aware of current rescues in other businesses. in addition, 97% of the respondents had not been involved in a formal rescue and only 16% had been involved in an informal rescue in their own businesses. sajesbm volume 6, (2013) www.sajesbm.com article no 167 67 most of the respondents had no specific formal knowledge when referred to the act and chapter 6. to investigate awareness of core issues that might influence them directly as potential creditors, specific elements were explored. table 7: knowledge about relevant elements in the companies act no 71 of 2008 knowledge component none at all low medium high cumulative % the fact that the act allows for voluntary rescue 42.11% (42.11%) 22.37% (64.47%) 17.11% (81.58%) 18.42% (100%) from the responses above we can state that 64% of the respondents had little or no knowledge of the fact that one may file for voluntary rescue. the fact that someone else can ask the court to file for rescue in your business 43.42% (43.42%) 21.05% (64.47%) 14.47% (78.95%) 21.05% (100%) 64% of the respondents had little or no knowledge of the fact that someone else may ask the court to file for rescue in your business. that there is a prescribed filing process 56.58% (56.58%) 19.74% (76.32%) 10.53% (86.84%) 13.16% (100%) 76% of the respondents had little or no knowledge about the exact prescribed filing process. what the moratorium means in the business rescue 59.21% (59.21%) 21.05% (80.26%) 11.84% (92.11%) 7.89% (100%) 80% of the respondents had little or no knowledge about the meaning of the moratorium in business rescue. facts about the exact timing guidelines prescribed 65.79% (65.79%) 23.89% (89.47%) 5.26% (94.74%) 5.26% (100%) almost 90% of the respondents had little or no knowledge of the exact timing guidelines prescribed in the business rescue process. the role that creditors play in the vote on the plan 55.26% (55.26%) 21.05% (76.32%) 15.79% (92.11%) 7.89% (100%) 76% of the respondents had little or no knowledge of the creditor’s role in voting for or against the business rescue plan when it comes to the business rescue process. the fact that the business rescue practitioner takes over total supervision and decision making of the business 50% (50%) 15.79 (65.79%) 13.16% (78.95%) 21.05% (100%) 65% of the respondents had little or no knowledge of the fact that the business rescue practitioner takes over full supervision and decision making of the business undergoing rescue. the required skills that a business rescue practitioner must have 56.58% (56.58%) 26.32% (82.89%) 10.53% (93.42%) 6.58% (100%) 82% of the respondents had little or no knowledge of the skills and expertise that a business rescue practitioner is required to possess. the ranking system with regard to creditors’ claims 59.21% (59.21%) 17.11% (76.32% 14.47% (90.79%) 9.21% (100%) 76% of the respondents had little or no knowledge with regard to the ranking system of creditors’ claims the unsecured creditors before the filing become concurrent creditors during the rescue 63.16% (63.16%) 19.74% (82.89%) 9.21% (92.11%) 7.89% (100%) 82% of the respondents had little or no knowledge of the fact that unsecured creditors before the filing process become concurrent creditors during the rescue. what professionals need to be used as advisors during business rescue (lawyer, accountant) 52.63% (52.63%) 23.68% (76.32%) 11.84% (88.16%) 11.84% (100%) 76% of the respondents had little or no knowledge about which professionals should be used as advisors during business rescue. sajesbm volume 6, (2013) www.sajesbm.com article no 167 68 of all the responses shown in the table 7, between 42 and 65% had no knowledge of chapter 6 of the companies act. moreover, 76% reported little or no knowledge about the companies act as a whole. a key observation is that the terminology used in legal documents could be a factor. a full 49% of the respondents had a matric or less, meaning they had not been exposed to this language register. as the skills that are required of a business rescue practitioner are not stated clearly in the companies act, it is not surprising that only 18% of the respondents had any knowledge on this subject. only 10% of the respondents had any knowledge regarding the exact time process involved in the business rescue process, which is crucial for creditors to know and make informed decisions on. table 8 respondents’ main concerns about the business rescue legislation my main concerns about the business rescue legislation include: frequency percent cumulative frequency cumulative percent the rescue process 15 23.08 15 23.08 clarity of ‘distress’ definition 3 4.62 18 27.69 lack of knowledge 38 58.46 56 86.15 business rescue practitioner 6 9.23 62 95.38 no concern 2 3.08 64 98.46 cost, payments and fees involved 1 1.54 65 100.00 table 8 shows that 58% of the respondents stated their major concern as being that as entrepreneurs they had limited or even no knowledge about the legislation. in addition, 23% of the respondents stated that they were most concerned about the business rescue process. table 9: most important action to be taken in a business rescue i think the most important action in business rescue is: frequency percent cumulative frequency cumulative percent process must be followed 21 32.81 21 32.81 fairness 10 15.63 31 48.44 to rescue the business 5 7.81 36 56.25 not applicable due to lack of knowledge 9 14.06 45 70.31 everything 7 10.94 52 81.25 have sufficient information 12 18.75 64 100.00 sajesbm volume 6, (2013) www.sajesbm.com article no 167 69 thirty-two percent of the respondents answered that the most important part of business rescue was that the correct process needed to be followed; 18% felt that the most important part of business rescue was that all stakeholders should be well informed, and 15% believed that the process needed to be fair above everything else. discussion of findings according to these findings, it appears that respondents have no to very little knowledge of business rescue and the related issues, or how it can potentially affect their business. the companies act includes creditors in the ‘affected parties’ category. these creditors have the option to file for business rescue on behalf of a financially distressed company (to protect their own interests) without its consent and knowledge; 68% of the respondents were not aware of this possibility. the knowledge could be of benefit to them if a business rescue awards the creditors a higher return than liquidation would. as an example, 1time airlines (pty) ltd (only the holding company is/was listed) went into provisional liquidation on 7 november 2012, after an attempted rescue. the business rescue process was in the public eye and therefore gained much public attention. holtzhauzen (2012) stated that the majority of the creditors were institutional creditors. despite being ‘large’ creditors, even they stated that the business rescue process was totally unfamiliar to them. this is in line with this study’s research findings. table 5 confirms that 59% of the respondents were not aware of current rescues in other businesses, which supports the finding that there is little knowledge about the existence and workings of the companies act. there is therefore sufficient information to support proposition 1, that entrepreneurs are not aware of the companies act no. 71 of 2008 and chapter 6 in particular. finally, table 7 supports this, concluding that from all of the responses to all of the questions, 76% of the respondents had no knowledge about the companies act as a whole. when investigating the variables associated with the rescue process, the study revealed that 90% of the respondents had little or no knowledge with regard to the exact timing guidelines that are prescribed in the legislation, which could have significant consequences for their own businesses. linked to this is the fact that only 24% of the respondents knew the prescribed filing process for business rescue, so the over 90% statistic is not surprising. knowledgeable creditors can use the process to their advantage, as they may set aside the results of these votes by applying to the court (delport, 2011). the study also showed that 64% of the respondents did not know that one can file for voluntary rescue, which shows that they are not aware that the new legislation has moved to a more debtor-friendly environment, taking into consideration the creditors’ input and involvement to do just that: rescue the business. placing the creditors in the debtor’s shoes, 64% of the respondents had little or no knowledge that someone else may ask the court to file for rescue in their businesses without their consent. keeping in mind the demographic classification of the respondents’ education, it is not surprising that 80% had little or no knowledge of the meaning of the moratorium in business rescue. the terminology used in the act could be a barrier for many entrepreneurs; 49% of the sample would probably not have been exposed to the level of linguistics used in the legal fraternity. this is supported by loubser (2010c:689), who states that the meaning of moratorium in the companies act can be quite confusing, and some businesses in the smme sector may find even the title of the legislation misleading. sajesbm volume 6, (2013) www.sajesbm.com article no 167 70 logically following from proposition 1, further support was also found for proposition 2, that entrepreneurs are not aware of the creditor-related issues associated with the act. in the case of a business requiring a rescue itself, 76% of the respondents had little or no knowledge of which profession needs to be approached for assistance with the rescue process, whether it be an accountant, lawyer or business professional. these professions can play a role in the creditors’ decisions at the voting meetings. by their not understanding the consequences of rescue in their own or debtor businesses, it can be deduced from the information above that sufficient support was found for proposition 3, namely that entrepreneurs are not aware of their liabilities with regard to the business rescue process. what would happen if a business itself needed a practitioner to start the process and file for rescue? according to the answers of respondents, 82% of them had little or no knowledge regarding the skills and expertise of the business rescue practitioner they would need. this is a critical decision in rescue, and 65% of the respondents did not know (or understand) the impact when the appointed business rescue practitioner takes over, as he or she takes on full supervision and decision making of the business undergoing rescue. not knowing this negates the powers of the businesses involved, as they have the right to vote for the appointment of the business rescue practitioner. the ranking order of creditors’ claims changes between the period before filing for business rescue and that during the rescue. the act states that unsecured creditors before the filing process become concurrent creditors during the rescue; 82% of the respondents were not aware of this change. a concurrent creditor may now be ranked last and any claims will be processed only after those of all other creditors. as not many small businesses/entrepreneurs demand security for the products they sell or services they render, they will fall into this category, not having a secured claim. regarding the ranking order of the creditors’ claims, 76% of the respondents had little or no knowledge of the fact that a ranking system even existed, and they were not aware that the ranking order was the instruction in which the creditors’ claims are processed. bradstreet (2010:203) adds that it is mandatory for creditors to respond to the court, which could be unfair, as they should not be forced to spend more on legal fees when they are only protecting their own interests. the costs of a legal process are shared among the shareholders and creditors; this again may have grave consequences. there is thus sufficient support for proposition 4, that entrepreneurs are not aware of their fiduciary duties with regard to the business rescue procedures. considering the responses, it is important to note that self-serving bias should be considered when evaluating such results. self-serving bias is defined as the tendency of individuals to make attributions (either of their ability or effort) to positive events that are more internal, but attribute negative outcomes to external factors (mezulis, abramson, hyde & hankin, 2004:712). fournier (2009) supports this statement by noting that it is human nature to deny responsibility for mistakes or problems. it could therefore be expected that respondents would overestimate their knowledge and ratings as a result of self-serving bias. it is courageous of entrepreneurs to state that they do not know the answers to the questions. libby and rennekamp (2011:222) mention that positive past performance may lead to overconfident managers overestimating their attributes to explain their knowledge. where respondents blatantly state their lack of knowledge of the companies act, or one suspects that the respondents have overestimated their knowledge, the results paint an even worse picture for the industry. completing the questionnaire assisted the respondents to realise their knowledge status and therefore raised certain concerns of relevance to the researchers. the major concern was the fact that creditors do not know the act, they do not know about it and have not been sajesbm volume 6, (2013) www.sajesbm.com article no 167 71 informed about it; in fact 58% of the respondents replied that their major concern was their own lack of knowledge. respondents knew very little about the process, guidelines, procedures and timelines. however, only 23% stated that the business rescue process as a whole was a concern, suggesting that faith in the process does exist. further research to explore this outcome is needed. table 9 shows that even though the respondents do not know the process of business rescue, it is important to them that the process be followed correctly. the importance of being informed and displaying transparency throughout the whole process was an important issue to 18% of the respondents, and 15% believed that the process should be fair and equal for all stakeholders involved. from this information, and linking to the literature study regarding the issues relevant to the companies act and chapter 6 in particular, further support was found for proposition 2, that entrepreneurs are not aware of the issues pertaining to chapter 6 of the companies act. conclusions and implications there is no doubt that creditors are crucial participants in the process of business rescue. this research exposed the low level of knowledge and awareness of entrepreneurs and small business owners who are creditors to other companies. they are mostly unaware of the legislation’s existence. their level of knowledge about the act is also low. the research verified that the extent of the problem of lack of knowledge was significant, as speculated in an article by pretorius (2013). creditors have many rights and liabilities with regard to the business rescue process. they have rights in the voting processes of the whole rescue procedure, and have certain liabilities, such as the fees and costs involved. their decisions are also binding on all stakeholders. however, this study identified many discrepancies in creditors’ knowledge of the legislation with regard to the appointment of the business rescue practitioner, what his skills and expertise should consist of and how legislation aims to rescue the debtor. the study also confirmed that the unsecured creditors (most probably small businesses and entrepreneurs) become concurrent creditors during the rescue, moving them to the bottom of the claim priority. this study has relevance for the industry, its reputation, the regulator (cipc), business rescue practitioners, management of many businesses, and educators. the lack of knowledge surrounding business rescue will not improve by itself and may aggravate the negativities associated with rescue. the key implication of this study is of the utmost relevance to industry and can be summarised in a single question: how can creditors use their powers if they are not even aware that they have any? the act gives creditors certain powers during rescue, but if they are not aware of them, how can they act upon them? from the study it is clear that, first and foremost, the majority of creditors require training and access to proper business expertise about the companies act in order to act in their own best interests. rescue practitioners have an explicitly educational obligation to inform creditors of their roles, powers and liabilities at the first and second creditor meetings. limitations and future research as regards the literature search, the newness of the topic means that limited research has been done; it was therefore necessary to include popular press material such as web pages and websites. attorneys’ web pages are not always a reliable source of information, sajesbm volume 6, (2013) www.sajesbm.com article no 167 72 representing a personal or corporate view, speculation, or even a marketing tool. the same applies to rescue practitioners’ web pages. this study was mainly exploratory in nature, and as such the findings cannot be generalised, despite confirming many suspicions in the industry. nevertheless, the strong evidence from the literature and the primary research demonstrates the need for dissemination of information on the subject and how relevant this is to the business domain. the sample size can be seen as a limitation; however, even the small sample of respondents showed that the great majority of them knew very little about the act. there is no reason to expect that a larger sample would sketch a different picture. the contribution of this article is of great importance to the smme sector on an issue that needs urgent attention. future research should look into how entrepreneurs can protect themselves against the unforeseen liabilities they may face when rescue ’happens to them’. the role of credit guarantee and insurance firms might play a part in protecting entrepreneurs. future research should also look at possible sources of information or ways to educate small business regarding their rights. references alberts, m.n. 2004. business rescue in south africa: a critical view of the regulatory environment, unpublished mba. university of pretoria bonnet, a. 2011. old vs new companies act, devries attorneys, june news [online]. available at http://www.devries.co.za [accessed: 15 may 2012] braadtveld, k. 2010. chapter 6 of the south african companies act 71 of 208 id reviewed, eversheds south africa, august, [online]. available at http://www.eversheds.com [accessed: 24 april 2012] bradstreet, r. 2010. the leak in the chapter 6 lifeboat: inadequate regulation of business rescue practitioners may adversely affect lenders’ willingness and the growth of the economy, south african mercantile law journal 195-213 [online] available at http://www.companylaw.uct.ac.za [accessed: 18 november 2012] bradstreet, r. 2011. the new business rescue: will creditors sink or swim? the south african law journal 352-380 [online] available at http://www.sabinet.co.za [accessed: 10 september 2012] coertser, n. 2012. business rescue, the companies act and the impact on the construction industry, legal brief, march [online]. available at http://www.polity.org.za [accessed: 15 may 2012] companies act no 71, 2008. chapter 6. cape town: government gazette. companies and intellectual properties commission, 2011. pretoria: south africa [online] available at http://www.cipc.co.za [accessed: 18 june 2012] cooper, d.r. & schindler, p.s. 2008. business research methods. 10 th edition. new york: mcgraw-hill sajesbm volume 6, (2013) www.sajesbm.com article no 167 73 crs business rescue, 2011. south africa [online] available at http://www.businessrescue.co.za [accessed: 15 may 2012] davis, d., cassim, f. & greach, w. 2011. eds. companies and other business structures in south africa, 2 nd edition. cape town: oxford university press delport, p. 2011. the new companies act manual: including close corporations and partnerships, 2 nd edition. south africa: lexis nexis eliot, a. 2012. administration costs of and claims against a company in liquidation post business rescue, insolvency and business rescue news, march [online]. available at http://www.eversheds.co.za [accessed: 13 march 2012] fournier, g. 2009. self-serving bias [online] available at http://www.psychcentral.com [accessed: 16 november 2012] holtzhauzen, g. 2012. business rescue plan for 1time airlines pty (ltd) [online] available at http://www.sturns.co.za [accessed 16 november 2012] holtzhauzen, g. 2013. interview with business rescue practitioner for 1time airlines jacobs, l. 2012. post-commencefinancing and creditors; a south african perspective. the company lawyer. issue 3. lamprecht, c. 2010. the case for business rescue, asa, june [online] 26-28. available at http://www.accountancysa.co.za [accessed: 19 april 2012] levenstein, e, 2011. business rescue: a guide for the south african banking sector, legal brief, march [online]. available at http://www.werksmans.com [accessed: 15 may 2012] levenstein, e. 2012. getting clever with business rescue, legal brief, august [online]. available at http://werksmans.co.za [accessed: 26 august 2012] libby, r. & rennekamp, k. 2011. self-serving attribution bias, overconfidence and the issuance of management forecasts, journal of accounting research, vol: 50(1):197-231 loubser, a. 2010a. some comparative aspects of corporate rescue in south african company law. unpublished doctor of laws dissertation. university of south africa loubser, a. 2010b. the business rescue proceedings in the companies act of 2008: concerns and questions (part 1), tydskrif vir die suid-afrikaanse reg, issue 3:501514[online]. available at http://www.sabinet.co.za [accessed: 18 november 2012] loubser, a. 2010c. the business rescue proceedings in the companies act of 2008: concerns and questions (part 2), tydskrif vir die suid-afrikaanse reg, issue 4:689701[online]. available at http://www.sabinet.co.za [accessed: 18 november 2012] makholwa, a. 2011. business rescue. finweek, 27 october 2011[online]. available at http://www.finweek.co.za [accessed: 19 april 2012] mckenzie skene, d. 2011. the composition of the debtor’s estate on insolvency: a comparative study of exemptions, insol international insolvency review, vol 20:29-55 mezulis, a.h., abramson, l.y., hyde, j.s. & hankin, b.l. 2004. is there a universal positivity bias in attributions? a meta-analytic review of individual, developmental and sajesbm volume 6, (2013) www.sajesbm.com article no 167 74 cultural differences in the self-serving attribution bias, psychological bulletin, vol: 130(5):711-747 moosa, r. 2009. business rescue: the challenges, october [online]. available at http://www.nortonrose.com [accessed: 22 march 2012] pelser, h. 2012. sa’s business rescue track record. the citizen, september 5, [online] available at http://www.citizen.co.za [accessed: 12 september 2012] pretorius, m. 2013. second-generation scenarios for business rescue in south africa. [online] available at http://www.brportal.co.za/forum [accessed: 16 april 2013] pretorius, m. & holtzhauzen, g.t.d. 2008. critical variables of venture turnarounds: a liabilities approach, southern african business review, 12(2):87-107 rajak, h. 2011. determining the insolvent estatea comparative analysis international insolvency review, vol 20: 1-28 rose, a. 2011. avoiding insolvency, february [online]. available at http://www,taxtalkblog.com [accessed: 15 may 2012] sapa, 2009. sa macro-economic environment will not change – zuma, june 9 [online] available at http://www.polity.org.za [accessed: 22 april 2012] statistics south africa. 2012. statistics of liquidations and insolvencies (preliminary) pretoria: government printer visser, a. 2012. business rescue ‘a boat without a paddle’, november 5, business day [online] available at http://www.bd.co.za [accessed: 18 november 2012] yin, r.k. 2003. case study research: design and methods. 3rd edition. california: sage. abstract introduction research problem and question research design and methods results, findings and discussion discussion of key findings study limitations and strengths future research conclusion acknowledgements references about the author(s) patrick ssekitoleko business school, faculty of economics and management sciences, north-west university, mahikeng, south africa yvonne du plessis business school, faculty of economics and management sciences, north-west university, mahikeng, south africa citation ssekitoleko, p. & du plessis, y., 2021, ‘unravelling the makings for entrepreneurial success: a case study of the maponya business in south africa’, southern african journal of entrepreneurship and small business management 13(1), a424. https://doi.org/10.4102/sajesbm.v13i1.424 original research unravelling the makings for entrepreneurial success: a case study of the maponya business in south africa patrick ssekitoleko, yvonne du plessis received: 30 mar. 2021; accepted: 14 june 2021; published: 27 july 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the achievement of local entrepreneurial success in south africa is projected to reduce widespread unemployment in the townships, enhance the general buying power and upraise the overall productivity and living standards of poor south africans. however, most entrepreneurial ventures do not survive for long, and remarkably the number of self-established, privately owned and long-standing businesses amongst black south africans is very few. aim: to investigate the factors that have led to the success and longevity of the maponya business case. setting: this research focused on a privately owned, self-initiated black south african successful business, which has been in existence for at least six decades. methods: a qualitative research approach of a descriptive and explanatory single case study design was utilised using data from a semi-structured interview guide. thematic and content analysis were used in the data analysis process. results and findings: it was found that the maponya business case is a family-controlled type of business. the success and longevity of the maponya business case are attributable to the closeness of members within the maponya family or clan. access to membership is well controlled and requires adherence to a set of values based on one another to prosper in business. conclusion: the documented findings can serve as a template for understanding the operationalisation of management techniques and leadership principles for entrepreneurial success and longevity in business for black south africans and illuminate business prowess for the southern african region and the entire african continent. keywords: black entrepreneurial success; entrepreneurship; family entrenchment; family business; maponya business; south africa. introduction the sustained success of black-owned businesses, especially in south africa, has been eagerly anticipated because of the unique history of the country. it is presumed that the prosperity of local businesses in the country is expected to benefit the community areas in which they operate by offering improved goods and services, adding to employment and contributing to uplift the overall standards of living systemically. privately owned businesses play a significant role in adding to the national gross domestic product (gdp) and increasing the tax base and revenue as well as the levels of employment, which in turn boost the economic growth of a country. according to the banking association south africa (tbasa 2019), south africa’s private sector comprises 91% of formal businesses, contributes about 34% to the country’s gdp and about 60% employment of the total labour force. the companies and intellectual property commissions’ (cipc 2019) report from the department of trade and industry (dti) discloses that 378 435 private companies were registered in the 2016–2017 financial year. for the year 2017–2018, 386 373 companies were registered whereas 395 320 private companies in the 2018–2019 financial year. despite this reported constant year-on-year increment in the growth of the number of privately owned businesses, the recent annual global entrepreneurship monitor (gem 2017, 2018, 2019) reports on south africa paint a disturbing picture particularly on sustained business ownership. using the established business ownership rate (a percentage of adult population of between 18 and 64 years owning and managing a business that has paid salaries and other expenses to the owner for more than three and half years), the gem reports estimate south africa’s established business ownership rate in 2017 at 2.5%, 2.2% for 2018 and 3.5% for 2019. such dismal figures could be construed as over 90% of adult south africans are engaged in short-term business activities that cannot sustainably contribute to both the country’s employment and gdp. still, in the south african context, the findings from the gem reports are inconclusive on the categories such businesses belong to and the percentage share of black ownership. annual data released by the commission on black economic empowerment (b-bbeec 2020) reports that average company ownership by black people throughout the economy was just 27.83% in 2017, 25.2% in 2018 and 29.4% in 2019. delving further into the same report reveals that black representation on the johannesburg stock exchange-listed company boards stood at only 38% in both 2017 and 2018, whilst for 2019, it was at 43.63%. such revelations reflect the discordance with the recent population estimates from stats sa (2020) that depict south africa’s population to be 80.8% black, 8.8% coloured, 7.8% white and 2.6% indian and/or asian. this study should add to the debate and efforts in the promotion of equality in south africa amongst all citizens towards level pegged sharing of control, ownership and wealth in the economy. this is because the increased presence of private enterprises amongst people is deemed pivotal to overall poverty level weakening (hewitt & janse van rensburg 2020), justice and participation, wealth and observance of laws in the country (nieman & pretorius 2004) as well as diminishing the inequalities between the rich and the poor in south africa (mogashoa & selebi 2021). the dti (2014) promotes the establishment of smalland medium-sized enterprises (smes) by mainly black south africans to increase business ownership. this is because self-established, privately owned businesses by black south africans seem to be scarce and in the hands of a few. it is possible that many of these businesses were nudged into inception with the help of the black economic empowerment (bee) programme after the abolition of apartheid in 1994. the questions that arise are why self-established, privately owned businesses amongst black south africans are so few and how the few businesses that survived apartheid could grow despite difficult times to become successful and sustained to the present day. research problem and question there is a view that most black-owned businesses in south africa lack the necessary strength to last and be competitive locally and internationally, for instance, in terms of overall turnover, the total number of employees, stock exchange presence and continuation of this presence. in their account of the prosperity projections of south african new business ventures, preisendorfer, bitz and bezuidenhout (2012:5) argue that many of the businesses owned by black people in the country are ‘informal survivalists’. in other words, these are merely petite-sized and erratically managed businesses only meant to provide for the needs of owner individuals and their relatives. as many of south africa’s black population dwell dominantly in townships (mcfarlane & silver 2017; preisendorfer, boitz & bezuidenhout 2014), they are largely engaged in informal entrepreneurship (beresford 2020; maliehe 2017; spiegel 2018). this may be construed that the operating environment and informal nature of most businesses run by black people in south africa complicate their prosperity and sustainability outlook. this is defended by beresford (2020) stating that in many instances township enterprises in south africa continue to be informal and or in survival mode. south africa’s black entrepreneurial situation is compounded by the findings of yeboah and koffie (2016) who put the country’s failure rate of newly started businesses to be the highest in the world at 75%. this high level of failure is supported by nheta et al. (2020) who indicate that only one in four businesses survive within 3 years of their formation in south africa. against this background of mainly entrepreneurship failure, very few success stories have been told, which this study aims to surface. this study, therefore, sets off with the recognition of the scantiness of self-established, privately owned businesses amongst black south africans who have survived the oppression of apartheid and succeeded despite difficult circumstances. thomas (2020) maintains that the number of large, successful black-owned businesses in south africa is few and those that have been in existence for over six decades are limited. in exploring the problem, as to why and how only some succeed, the success factors (enablers) of an iconic black-owned business are put forward as a business case. this is the south african maponya business case, a black-initiated and family-owned business that has been in existence for over six decades. the research question this study seeks to answers is: ‘why and how the maponya family as entrepreneurs have been able to succeed at all odds to survive, sustain and grow a distinguished business empire’ listed on the johannesburg stock exchange? research design and methods a qualitative research approach following a single case study design was employed as encouraged by dul and hak (2012) as this study aims to explore and distinguish a certain reality, giving insight into an intricate experience (yin 2014), the unique success and longevity of the maponya business case were chosen. a descriptive and explanatory case study strategy was utilised as espoused by eriksson and kovalainen (2008). yin (2014:4) also supports the use of a case study design when ‘the questions require an extensive and in-depth description of some social phenomenon’. case selection and data collection the researchers identified the maponya business case as a non-probability and purposively selected single case study, as endorsed by dul and hak (2012). voluntary participation was sought, and permission was granted by the company executive to conduct the study and allow a selected member to participate in the study. company documents were available as secondary data and primary data were collected from the company representative who participated as respondent is a maponya family member. he had the means and experience to provide real evidence about the inner workings of the maponya business case, thereby functioning as a case within the bigger business case (yin 2014). a semi-structured interview guide was developed and employed by the researcher for a deeper understanding and insight when conducting the interview (creswell 2014). a lengthy time period was taken to collect data using direct and personal contact with the participant. creswell (2014) and fontana et al. (2005) promote the use of more time to deviate from the interview guide’s prior arrangement of questions, which enables further probing during data collection. the result is richer and much more meaningful data. however, this was only after carrying out a pilot interview to test the interview guide as data collection instrument for validity (ilker, sulaiman & rukayya 2015; van teijlingen & hundley 2002) and to check for expected meaningful replies to questions in the interview guide (rubin & babbie 2010). the interview process was conducted in a setting where the respondent had the opportunity to engage fully (yin 2014) and discuss the maponya business history and manner of doing business. the interview, conducted in the english language, was audio-recorded after the participant’s full consent. company document reviews were carried out that provided more background against which the interview could be guided as supported by creswell (2014), eriksson and kovalainen (2008) and yin (2014). data analysis the interview was transcribed verbatim, followed by close reading to get accustomed to the data and in aiding a clear understanding of the study context, as well as to observe gaps in the data where follow-up interviewing is necessary for clarity and completeness (henning, van rensburg & smit 2004). thereafter, the interview transcripts were coded following the steps of content analysis (creswell 2014; krippendorff 2013), using open coding, axial coding and selective coding (maree 2007). open-coded texts were clearly indicated on the transcript by hand to condense the interview data (kaplan & maxwell 2005). this was followed by compiling a code list (creswell 2014; gibbs 2010) on a separate page, capturing all the codes and grouping them into axial codes by searching for relationships, comparisons, differences and repetitions (ryan & bernard 2003). the axial codes on the list were finally pared down to a manageable number (gibbs 2010; henning et al. 2004) for more insightful interpretation. a classification tree of the emerging themes based on selective coding was drawn up to show the relationships amongst the main themes and the sub-themes in the data set, after reassessing themes and subthemes for inclusion (braun & clarke 2006). field notes jotted down (babbie 2005) on critical subjects that arose throughout the interview process were valuable as vital reminders to stress important revelations from the key participant. as the study used only one respondent, to ensure the reliability of data (creswell 2014; shenton 2004), the identified themes were triangulated with themes in the existing literature and also with member checking (castro et al. 2011) to confirm the findings about the inner workings attributed to the success and longevity of the maponya business case (i.e. researchers obtained verification from one senior member of the maponya clan, who read the transcripts and data findings, that the identified themes and its descriptions were true representations of the maponya business case). results, findings and discussion from the data analysis, it was clear that the maponya business success was based on continued family entrenchment. it must be emphasised that the researchers only discovered during the interview process that the maponya business started and continued as a family-controlled type of business. chua, chrisman and sharma (1999) classify a family business as one managed with the purpose to create and follow a dream that is endorsed by a principal union of family members or part of a family, a dream that is likely to be continued through the generations of the family or families. though longenecker et al. (2006) agree on the existence of a divide between the dynamics of family and business systems, with each having its own participants, aims and guiding principles, they concur that the constructs of family and business end up overlapping in a family type of business. important to note also is that the words ‘clan’ and ‘family’ are used interchangeably in this study to refer to the family-ingrained nature of the maponya business case, which could be equated to the ‘familiness approach’ referred to by danes, stafford and amarapurkar (2009) where behavioural and social phenomena guide the business. therefore, to make sense of this overarching finding of familiness, the six main themes that make up a unique and consistent behavioural pattern of the maponya clan members and contributing to the success and longevity of this family business will be elaborated on. the six themes are family solidity, family members’ support of one another, work-for-self nurturing, intense drive to succeed, strict disciplinary mechanisms and brand name significance. family solidity it was found that the maponyas are a closely interlaced clan of individuals who have, through the various lineages, always been in constant contact with one another. keeping in touch with the goings-on of each member is a key differentiator of this family. the clan is bound together by means of an organisation called the maponya unity movement, as explained by the respondent: ‘the purpose of [such things] is to keep the link, closeness and power to influence within the maponyas. this organisation has a president, a vice-president, treasury general, youth league, women’s league, deputy treasury … [all in the family].’ (a maponya family member, male, entrepreneur and lawyer, date unknown). this family closeness is evidenced by an event, called a re tsebaneng (a sepedi phrase for a form of mutual unselfishness according to which a person’s happiness and the happiness of others are determined through a person’s helpfulness), the annual compulsory clan gathering where maponya families over generations get to know each other and also deal with issues amongst them. keyt (2015) contends that this could be extant in a family business. family closeness in a business set-up is also confirmed by corbetta and salvato (2004) as a pertinent detail resource favouring constructive family business performance. likewise, family members closely identify with the business and remain loyal to it, albeit with no reward anticipated. similarly, keyt (2015) agrees that the same concept of unselfishness underpins family interconnectedness that persuades members to put business goals above their own. family members’ support of one another the maponya clan members render assistance to each other in more ways than one. the respondent explained this support as follows: ‘the question is that you can’t divorce yourself from the family because the stakes are high, it is a support base, it defines who you are; the network defines who you are.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). this closeness in a family business denotes a survival strategy (brewton et al. 2010), whereas jang and danes (2013) opine that this is a form of a cushion trait when family members intermingle closely to ensure, amongst other things, the existence of a family business particularly in challenging periods. it connotes a dependence logic and sincerity, which galvanises the wholeness of both dimensions of family and business (danes & lee 2004). this family approach gives a great competitive edge to their business, for by virtue belonging to this particular clan, the members of this family business share in the benefits as expounded on below. this support of one another is further divided into the following: sharing of business knowledge and experiences the clan cohesion amongst the maponyas ensures that family members have each other’s backs through sharing their business knowledge. family members often work together in various sectors (even though members at times operate dissimilar businesses). the respondent had the following to say about the family’s teamwork: ‘my father was in the taxi business but because my uncles were in the meat business; they worked with him and helped him establish his own meat business. richard maponya, who owned the first black most successful butchery, trained and helped my dad to be able to establish his own meat business … there was sharing of information and experiences from back then that ordinary people would not share if they operated independently.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). business knowledge in a family firm is categorised by chirico (2008) in terms of the good judgement and proficiency of members that is achieved through nurturing, tutoring and sharing experiences both internal and external to the business. this transmission of business knowledge within the family signifies an advantage for the family business, hence ensuring enormous achievement in business. chirico (2008) and trevinyo-rodríguez and tápies (2010) partly blame the collapse of family-owned companies to the reluctance to pass on information from one generation to another or even an unawareness of family members of the need to share. information ought to reach all within a family business so that they can try out and introduce ways to tap into the know-how acquired by others in the family (barroso, sanguino & banegil 2013). however, information-sharing is found by stanely, stephenson and monteith (1995) to be hindered by envy amongst family members, which usually occurs when one member wishes to reach another’s success level or one member or a small number of members may withhold important knowledge, which amplifies the centralisation of authority and stifles entrepreneurial actions and success within the family business (zahra, neubaum & larranetta 2007). nonetheless, knowledge-sharing in family firms is made easier because of the existence of an across-the-board ‘language’ that enables the resourceful exchange of information (hoffman, hoelscher & sorenson 2006) fostered by dependence, loyalty and identity (cabrera-suàrez, saá-pérez & garcía-almeida 2001; zahra et al. 2007). this unselfishness in sharing of industry information and experiences has been a vital component in ensuring the expansion and success of the maponya business empire. vast family network of business connections given that many members of the maponya clan are involved in various business fields, this hugely benefits many of them in bringing business to each other. this is facilitated by the above-mentioned sharing and close connection amongst all family members, enabling easier penetration of the market, branching out into scores of different business ventures and achieving market success. the following remark of the respondent can be noted here: ‘the earlier members of the clan came up with this concept to use the clan power when they realised that as they grow, and they have children, and children have their grandchildren, there’s a big network and the kids had to know each other.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). the shared ideals, dependence and customs amongst the families in a business give them social capital, which they utilise to deal or interact with other family members, thereby resolving issues amongst members, all of which adds to the competitive advantage of their businesses (lester & cannella 2006). importantly, members are obligated to share their contacts and connections with the clan, and this further broadens the network of business connections. this is emphasised by the respondent: ‘we believe that my contacts do not belong to me, they belong to the clan; it is the clan that owns everything. whatever i own, [i] am duty-bound to share it with other members of the clan. one of my nephews owning the mugg & bean downstairs [at the mega city shopping complex] came to me and asked for my help. he wanted to be a businessman, he’s a lecturer. but i couldn’t turn him away, i had to share everything with him. i had to, you are compelled to.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). pool of resources and internal opportunities as could be gathered from the respondent’s observation, the intermingling of the dimensions of both family and business and the support that members give one another create an abundance of resources that help buoy the business prospects of all in the maponya clan. when referring to this, the respondent asserted: ‘the way our family network works is similar to that of other ethnic or family types of business … helping out each other in business. if there’s a maponya who does not have capital to bankroll a business venture, which you think is viable, you go to the president of the unity movement … but if you don’t have a close network with someone and we know someone is successful in that particular area, the president will ask that person to help you or a maponya will accompany you to the bankers and be the guarantor to your loan, so you won’t fail. also, from the “a re tsebaneng” gatherings, some maponyas who did not have jobs will meet successful entrepreneurs who will take them up.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). through the sphere of family influence, there is an assortment of resources that contributes to entrepreneurial achievement in family businesses (powell & eddleston 2013) and also to increased levels of business performance, continued existence and accomplishment (aldrich & cliff 2003). family business research has identified a number of resources that a family can offer a business, and these incorporate social, human and financial capital (danes et al. 2009). it is the cross-dynamic nature of family firms and the indissolubleness of resources and ties amongst family members that give a family business a competitive edge (habbershon, williams & macmillan 2003). such resources are used in either a domain or a system in response to a need in an opposite system (muske & fitzgerald 2006), and entrepreneurs can without any trouble move these resources amongst the different domains (aldrich & cliff 2003). bursary fund also clan members enjoy entitlement to the richard maponya education fund, named after the maponya movement’s president, established to ensure the higher education of current and future generations to give them educational opportunities that earlier clan generations might not have had. through this fund, members are assisted in acquiring skills in any field to improve their chances and to perform better. the respondent referred to this fund as follows: ‘the bursary fund has a lot of money and was created to encourage all the maponyas to attain a minimum matric level. if you do not have it, then we see [it] as if we are failing ourselves. but some people do not want to do academic work, but we think it is an important skill for you to get an education … so there are funds that we donate every month, every year, that goes into the kitty.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). it may be construed that this readily available funding to further the skills of any maponya family members helps them to venture into an assortment of businesses thereby expanding the maponya businesses’ footprint, apart from obviously reinforcing loyalty to the clan for the continued support of another. work-for-self nurturing in their junior stages, the attitudes and practices of business management and entrepreneurship are inculcated by the elder maponya generations, rather than encouraging them to seek employment. this approach differs from the most common path many ordinary families take, which is for adults to encourage their children to get employment and aim for career achievement. and this again speaks to a culture of mentorship within this family in which children gain invaluable hands-on business management experience early on, thus enabling the expansion, transformation of their parents’ business entities later on. the respondent admitted: ‘as a kid when i was raised, our parents never said we needed to go to school in order to get the best job. my dad always said that he was raising a family of kids that were going to contribute towards the fiscus [purse] of the country and people who are going to create jobs. i knew how to talk to the customer by the age of nine. i was behind the counter, i was working in the shop, i never played with other kids. i worked in a supermarket, i knew how to greet a customer, i knew how to pack bread, i knew how to treat a customer, i knew that you had to humble yourself.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). allen et al. (2009) consider mentorship as a valuable human resource management component that is viewed to advance the vocation of the mentored person and is also advantageous to the firm. additionally, ragins and verbos (2007) aver that business management mentors are able to capacitate their protégés and allow them to imbibe pertinent behaviours that facilitate proper business management. intense drive to succeed there is immense pressure on the members of the maponya families not to fail in the businesses they get into. still, overcoming the heavy burden of expectation on one to succeed in a business venture is made easier owing to the already existing pool of contacts, connections and skills-upgrading opportunities that all the members have access to. all the same, as the respondent pointed out, members experience a lot of pressure: ‘the best motivating factor, in my view, is none other than someone you live in the same house with, or, put it differently, the stress levels within the maponya clan are very high … in terms of success are so high. so if you are a maponya and you are an underperformer, you automatically become an outcast. i am not saying it is necessarily the right thing, but all the maponyas are driven to succeed.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). such intense drive to succeed resonates with the entrepreneurial inclination, a major trait of the maponya families and is described by hnátek (2015) to constitute a number of qualities ranging from being innovative, inventive, self-motivated, adaptable and opportunity-driven to possess the drive to create value whilst taking family and work colleagues into consideration. strict disciplinary mechanisms instrumental in maintaining the family-embedded nature for success and longevity of this business is the active penalising machinery that ensures adherence to the clan’s respected ways of life. this, therefore, explains the family’s unique behavioural trends and the near unrivalled calibre of its business achievement, which is shown below: ‘if someone says a negative thing about me here, my president or somebody hears about it, it gets reported and i get to be asked why, reminded that it doesn’t build our name, we think it is wrong … then i may have to write a report to explain and account … you have to toe the line, i am saying it, like, there are “police people” within that structure that report. for example, i haven’t seen the president of our movement in, like, a month, but people will tell him, mr maponya is doing well, we like what he’s doing … and equally, if something was wrong, he will call to confirm and ask if the complaints are true.’ (a maponya family member, male, entrepreneur and lawyer, date unknown, [author’s own emphasis]) research on the control structures used in family businesses indicates the commonness of an influential eldest male or female who sets the tone of conduct (zellweger & kammerlander 2015). this powerful leader in the family business directs all matters related to communication, administration, incentives and chastisement (chandler 2015). again, le breton-miller and miller (2015) acknowledge the importance of family councils as an authority apparatus to create rules of behaviour for family, business and social matters. in incidences where the maponya members do not conform to acceptable family behaviour, the following measures are turned to deter, to punish and rehabilitate members, thereby ensuring uniformity to the set rules of behaviour. withdrawal of clan assistance and entitlements clan members risk losing such privileges, and this compels them to go along with the expected code of conduct for the mopanyas. this is attested to by the respondent: ‘if you do not cooperate, you don’t work with us, if you do not help others within the clan, then you will never get the help from the clan. meaning, you are a maponya and another kid requested help from you and it is within your field of specialisation or business or profession, and you refuse, and you get reported, and you’re called but you still remain stubborn and don’t help, then you automatically lose the benefits of being a clan member. you will not get the benefits and help that come to the clan members. and you might actually find yourself taking your kids out of the clan and from all the benefits because of your behaviours. so you’re compelled to help any clan member that asks for help from you’. (a maponya family member, male, entrepreneur and lawyer, date unknown). therefore culprits literally risk forfeiting their individual family’s inheritance and all entitlements and birth-rights of being a maponya and will suffer the consequences for the rest of their lives. desertion apart from scrapping non-conformists off the list of members designated to receive benefits and assistance, such members may also be banished from the clan. the respondent described the clan’s approach as follows: ‘anything that puts the maponya name out there in a bad light, the clan does not support it. or anything considered wrong – may not necessarily be illegal, but ethically wrong – boycott is applied … even if you are a rogue character, you can’t be an open rogue in that family. it is ensured because we have got a structure.’ (a maponya family member, male, entrepreneur and lawyer, date unknown, [author’s own emphasis]) accordingly, the disciplinary structures within the maponya clan ensure adherence to the set codes and principles so that members play it by the book, thus enabling the inner workings of the family components to stay glued together and facilitate the transfer of the practices and behaviours that make this family business to succeed and stay this long in operation. brand name significance the maponya clan associates themselves with the elephant (called tlou in the sepedi language) and uses it as a symbol of identity and consolidation. an elephant, as the emblem, is used by all the companies owned by the clan members, as evidenced in one of the businesses’ subdivisions website below in figure 1. figure 1: a website of a maponya company. an elephant is regarded as the ultimate symbol of success and portrayed as revered insignia by the maponya clan members, through which identification and closeness are fostered. it is stated as such: ‘so if you want anything from me, or any maponya, and you call him by name or surname, it is nothing, but if you really want to twist their arms, you just say “tlou”, which is an elephant.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). as all the members of the clan act in accordance with the family’s honoured values, they are a mirror of their brand and they strengthen the image the public and their customers have of their business. this explains why there is a strict code of behaviour that all members have to follow, as revealed here: ‘we were told and consistently reminded that as a maponya, and i tell my kids too, we do not want to read any funny stories about the maponyas in the newspapers … we should just do the right thing … whatever we do, touch, we know the stress levels. and it is because it adds to the brand, it enhances the brand.’ (a maponya family member, male, entrepreneur and lawyer, date unknown [author’s own emphasis]). this is countersigned by dyer and whetten (2006) that in relation to corporate imaging, family businesses should endeavour to steer clear of social troubles and business mistakes. in other words, a family owning a business with its name on it is inclined to guard the family’s reputation. more research from craig, dibrell and davis (2008) and sundaramurthy and kreiner (2008) establishes that family-embedded brand uniqueness is associated with company performance and that these two factors have a role to play in attracting customers and increasing sales. the inseparability of family and business in a family type of business serves as a critical foundation for a unique advantage in personifying the family firm. sundaramurthy and kreiner (2008) argue that this renders duplication of such an entity almost unworkable. therefore, through the sharing of the family’s heritage, the shared image of the business and the clan members is enhanced. the corollaries from the maponya brand name are. external opportunities people who hail from the maponya clan, carrying the family name, have an edge already to prosper in business. owing to the involvement of past generations of the family in business, members have benefitted from important business connections built up over time, which still is viewed as an accrual with the family brand name: ‘if i go to the bank today, and i say i want to build a shopping centre … a hotel, usually the tendency is that the maponyas are known to have what it takes. they know how to drive business. because you are from this clan, your father, your grandfather, everybody from this line being perceived to be from a family of winners. so there is willingness from partners, bankers … as they have worked with the entrepreneurs of the maponyas and all their businesses are very successful. so you get to jump that first hurdle as a maponya, that most people are not gonna make it.’ (a maponya family member, male, entrepreneur and lawyer, date unknown). reputation management this issue of protecting the maponya brand was observed in most of the themes that emerged from the interview. the maponyas have strong values and are value driven. loyalty to the clan is not negotiable, and disloyalty is viewed as desertion (as seen above). gotsi and wilson (2001) discuss the importance of ‘living’ the brand if one wants to ensure a good reputation, and this is what is evidenced and is still continuing in the case of this black south african business. the study, nevertheless, points out that the high expectations of the clan, especially with members being forced to strictly adhere to the entrenched clan values, are repressive and pose challenges to all in the clan in some way or another. discussion of key findings this study uncovered the factors responsible for the entrepreneurial success and longevity of the maponya business case, as a black south african initiated and owned entity. it was found that the maponya group of businesses is under a family-controlled organisation. this research has particularised the extent of the family embeddedness, which is the cardinal factor responsible for the success of the maponya business empire or dynasty. therefore, such a profound finding directed the review of the literature towards family business management to aid in corroborating most of the research findings, as shown above. based on the key findings, the study constructs figure 2 to illustrate the deep-rooted nature of family as justification for the success and longevity of the maponya business. figure 2: an illustration of the entanglement of family within the maponya business case. the pervasiveness of the maponya family in business is directly and indirectly ascribed to its success, as members benefit from the family brand name to further their entrepreneurial endeavours. by using the family name (maponya) as their business ventures’ names, the maponyas easily secure the buy-in of various stakeholders to enhance their business pursuits into prosperity. important to note is that this brand name advantage has been built up over many years owing to the enforcement of strict adherence to family values (the maponya way) by a disciplinary apparatus that keeps all clan members in line. the willingness of the family members to support one another in the form of readily-available mentoring of young family members, sharing of business knowledge and experiences and contributions to the education fund for members’ skills development are key amongst the jealously guarded values of the maponyas. this unique interdependence amongst clan members as an age-old family system has nurtured cohesion, harmony and general oneness. this has allowed the members to create and strengthen a huge network of business connections and vital resource pools (both internal and external to the family) to further the success of the maponya businesses. there is also an entrepreneurial mindset and intense drive to succeed, traits instilled in young maponyas during mentorship, to work for themselves and not seek jobs outside the clan. such early-implanted business mindedness and skills have transformed the calibre of the maponya business operations from mere merchandising in the early days, to much more sophisticated and modernised ventures. in retrospect, these research findings showing the inner workings of the maponya business empire tie in closely with the communal value systems characteristic of african cultural practices and are allegorical particularly to the practice of ubuntu. mangaliso (2001) describes ubuntu as the enveloping will of love, neighbourliness and receptiveness within and amongst african people; it is based on their shared beliefs about the way they conduct themselves and treat those they come across. central to ubuntu are the concepts of the mutual dependence of people, preference for collectivism over individualism and exercising restraint from self-regarding. study limitations and strengths there could be uneasiness about the ability to draw conclusions from results of a single case study, as the information was obtained from only one clan member of the maponyas. however, the findings were approved by a senior maponya family member (member checking) to allay validity concerns. creswell (2014) announces that sometimes it may be the case that research findings cannot be interpreted to represent the entire population. yet again, bricki and green (2007) regard a small sample size to be adequate especially in qualitative research as it allows a deeper understanding of the case selected. the findings, albeit from a single business case, offer hope for black south africans with an aim for entrepreneurial success. the inner workings of the maponya business dynasty revealed in this study may be used as a template to conduct and excel in business, particularly in an african context. future research further research, using either qualitative or quantitative methods may be conducted to supplement existing knowledge about black african business leadership and success. in the current study, only one entrepreneur (a member of the maponya family) was interviewed; therefore this study could be expanded to include interviews with more members of the maponya family to bear witness to the findings from this one case within the maponya case, thereby making possible the generalisation of the maponya business model. there is need to investigate succession planning and transitional processes used by older maponya generations to facilitate the continued running of businesses by the younger generations. this is a crucial strategic management process that needs further probing to reveal how the right family members are chosen to lead and to account for the sustainability of this business empire. maponya’s business reputation management could be probed on how their businesses expand to involve business partners and employees outside the maponya clan. the study established that the maponya business empire is a family-controlled type of business, with family members expected to stick to a particular behavioural pattern emblematic of their reputation and upbringing, key to doing business. it would thus be worthy research to learn how their brand is still upheld when in partnership with non-maponyas, who are of different values and backgrounds. further research may include other businesses to possibly allow for more generalisable results. for instance, a comparative analysis between the maponya business and other similar businesses might also be considered. conclusion this case study brought to the fore the factors for the immense success and longevity of a previously disadvantaged group, the maponya entrepreneurial business in south africa. the results provide deeper insights into and understanding of the application of business management and leadership principles within a true african business context. the findings unpack the business case employed in the maponya business. accordingly, this research believes that the findings could give black african entrepreneurs, with aspirations to achieve business success, more insight into business management operations and methods by virtue of the example set by the maponya family business. the findings explain a distinctiveness of a black african business dynasty, provide scholarly facts, broadening the knowledge base on african business management techniques and accomplishments in a southern african and african context and, also, on the topic of family business studies in a general african sense. acknowledgements a huge chunk of this work emanates from p. ssekitoleko’s mini-dissertation, entitled ‘sustainable entrepreneurial success: a case study of the maponya business in south africa’, submitted in partial fulfilment for the degree, masters of business administration in 2017. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions both authors planned the research, but p.s. conducted the research, reviewed the literature, formulated the research design, collected and analysed the data, made interpretations and finalised the report. y.p. supervised the research project. ethical considerations this article followed all ethical standards for research. funding information the north-west university sponsored this research. data availability the data that support the findings of this study are available upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references aldrich, h.e. & cliff, j.e., 2003, ‘the pervasive effects of family on entrepreneurship: toward a family embeddedness perspective’, journal of business venturing 18(5), 573–596. https://doi.org/10.1016/s0883-9026(03)00011-9 allen, t.d., smith, m.a., mael, f.a., o’shea, p.g. & eby, l.t., 2009, ‘organizational-level mentoring and organizational performance within substance abuse centres’, journal of management 35(5), 1113–1128. https://doi.org/10.1177/0149206308329969 babbie, e., 2005, the basics of social research, 3rd edn., thomson wadsworth, belmont, ca. barroso, a.m., sanguino, r.g. & banegil, t.p., 2013, ‘study of factors influencing knowledge transfer in family firm’, intangible capital 9(4), 1216–1238. https://doi.org/10.3926/ic.405 broad-based black economic empowerment commission (b-bbeec), 2020, national status and trends on broad-based black economic empowerment, 10 june 2020. v04.00, department of trade & industry (dti), pretoria. beresford, m., 2020, ‘entrepreneurship as legacy building: reimagining the economy in post-apartheid south africa’, economic anthropology 7(1), 65–79. https://doi.org/10.1002/sea2.12170 braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa brewton, k.e., danes, s.m., stafford, k. & haynes, g.w., 2010, ‘determinants of rural and urban family firm resilience’, journal of family business strategy 1(3), 155–166. https://doi.org/10.1016/j.jfbs.2010.08.003 bricki, n. & green, j., 2007, a guide to using qualitative research methodology, viewed 01 march 2020, from https://fieldresearch.msf.org/handle/10144/84230. cabrera-suàrez, k., saá-pérez, p. & garcía-almeida, d., 2001, ‘the succession process from a resourceand knowledge-based view of the family firm’, family business review 14(1), 37–38. https://doi.org/10.1111/j.1741-6248.2001.00037.x castro, v., garcia, e.e., cavazos, j., jr. & castro, a.y., 2011, ‘the road to doctoral success and beyond’, international journal of doctoral studies 6, 51–77. https://doi.org/10.28945/1428 chandler, g.n., 2015, ‘control structures used in family business to manage wealth: operationalisation of antecedent and outcome variables’, entrepreneurship theory and practice 39(6), 1305–1312. https://doi.org/10.1111/etap.12175 chirico, f., 2008, ‘knowledge accumulation in family firms: evidence from four case studies’, international small business journal 26(4), 433–462. https://doi.org/10.1177/0266242608091173 chua, j.h., chrisman, j.j. & sharma, p., 1999, ‘defining the family business by behaviour’, entrepreneurship theory and practice 23(4), 19–39. https://doi.org/10.1177/104225879902300402 companies and intellectual property commission (cipc), 2019, cipc annual report 2018/2019, department of trade & industry (dti), pretoria. corbetta, g. & salvato, c., 2004, ‘self-serving or self-actualising? models of man and agency costs in different types of family firms: a commentary on “comparing the agency costs of family and non-family firms: conceptual issues and exploratory evidence”’, entrepreneurship theory and practice 28(4), 355–362. https://doi.org/10.1111/j.1540-6520.2004.00050.x craig, j.b., dibrell, c. & davis, p.s., 2008, ‘leveraging family-based brand identity to enhance firm competitiveness and performance in family business’, journal of small business management 46(3), 351–371. https://doi.org/10.1111/j.1540-6520.2004.00050.x creswell, j.w., 2014, research design: qualitative, quantitative, and mixed methods approaches, 3rd edn., sage, los angeles, ca. danes, s.m. & lee, y.g., 2004, ‘tensions generated by business issues in farm business-owning couples’, family relations 53(4), 357–366. https://doi.org/10.1111/j.0197-6664.2004.00042.x danes, s.m., stafford, k.h.g. & amarapurkar, s.s., 2009, ‘family capital of family firms: bridging human, social and financial capital’, family business review 22(3), 199–216. https://doi.org/10.1177/0894486509333424 department of trade and industry (dti), 2014, proclamation by the president of the republic of south africa. dul, j. & hak, t., 2012, case study methodology in business research, routledge, new york, ny. dyer, jr., g. & whetten, d.a., 2006, ‘family firms and social responsibility: preliminary evidence from the s&p 500’, entrepreneurship theory and practice 30(6), 785–802. eriksson, p. & kovalainen, a., 2008, qualitative methods in business research, sage, london. fontana, a., frey, j.h., denzin, n.k. & lincoln, y.s., 2005, the sage handbook of qualitative research, sage, thousand oaks, ca. gibbs, g.r., 2010, coding part 1: alan bryman’s 4 stages of qualitative analysis (web video), viewed 24 january 2020, from http://www.youtube.com/watch?v=7x7vuqxpfpk&feature=list_other&playnext=1&list=sp14e49edf20613008. global entrepreneurship monitor (gem), 2017, global report 2016/2017, global entrepreneurship research association (gera), london. global entrepreneurship monitor (gem), 2018, global report 2017/2018, global entrepreneurship research association (gera), london. global entrepreneurship monitor (gem), 2019, global report 2018/2019, global entrepreneurship research association (gera), london. gotsi, m. & wilson, a., 2001, ‘corporate reputation management: “living the brand”’, management decision 39(2), 99–104. https://doi.org/10.1108/eum0000000005415 habbershon, t.g., williams, m.l. & macmillan, i.c., 2003, ‘a unified systems perspective of family firm performance’, journal of business venturing 18(4), 451–465. https://doi.org/10.1016/s0883-9026(03)00053-3 henning, e., van rensburg, w. & smit, b., 2004, finding your way in qualitative research, van schaik, pretoria. hewitt, l.m.m. & janse can rensburg, l.j., 2020, ‘the role of business incubators in creating sustainable small and medium enterprises’, southern african journal of entrepreneurship and small business management 12(1), a295. https://doi.org/10.4102/sajesbm.v12i1.295 hnátek, m., 2015, ‘entrepreneurial thinking as a key factor of family business success’, procedia – social and behavioral sciences 181, 342–348. https://doi.org/10.1016/j.sbspro.2015.04.896 hoffman, j., hoelscher, m. & sorenson, r., 2006, ‘achieving sustained competitive advantage: a family capital theory’, family business review 19(2), 135–145. https://doi.org/10.1111/j.1741-6248.2006.00065.x ilker, e., sulaiman, a.m. & rukayya, s.a., 2015, ‘comparison of convenience sampling and purposive sampling’, american journal of theoretical and applied statistics 5(1), 1–4. https://doi.org/10.11648/j.ajtas.20160501.11 jang, j. & danes, s.m., 2013, ‘role interference in family businesses’, entrepreneurship research journal 3(3), 367–390. https://doi.org/10.1515/erj-2012-0020 kaplan, b. & maxwell, j.a., 2005, ‘qualitative research methods for evaluating computer information systems’, in j.g. anderson & c.e. aydin (eds.), evaluating the organizational impact of healthcare information systems, pp. 30–55 springer, new york, ny. keyt, a., 2015, the 4 forces that drive family business success, viewed 09 november 2019, from https://www.entrepreneur.com/article/250416. krippendorff, k., 2013, content analysis: an introduction to its methodology, 3rd edn., sage, los angeles, ca. le breton-miller, i. & miller, d., 2015, ‘learning stewardship in family firms: for family, by family, across the life cycle’, academy of management learning and education 14(3), 386–399. https://doi.org/10.5465/amle.2014.0131 lester, r.h. & cannella, a.a., jr., 2006, ‘interorganisational familiness: how family firms use interlocking directorates to build community-level social capital’, entrepreneurship theory and practice 30(6), 756–775. https://doi.org/10.1111/j.1540-6520.2006.00149.x longenecker, j.g., moore, c.w., petty, j.w. & palich, l.e., 2006, small business management: an entrepreneurial emphasis, thomson south-western, mason, oh. maliehe, s., 2017, ‘the rise and fall of african indigenous entrepreneurs’ economic solidarity in lesotho, 1966–1975’, african economic history 45(1), 110–137. https://doi.org/10.1353/aeh.2017.0003 mangaliso, m.p., 2001, ‘building competitive advantage from “ubuntu”: management lessons from south africa’, the academy of management executive 15(3), 23–34. https://doi.org/10.5465/ame.2001.5229453 maponya africa group, n.d., maponya africa group: home, viewed 31 october 2019, from http://www.maponyaafrica.co.za/. maree, k., 2007, first steps in research, van schaik, pretoria. mcfarlane, c. & silver, j., 2017, ‘the poolitical city: ‘seeing sanitation’ and making the urban political in cape town’, antipode 49(1), 125–148. https://doi.org/10.1111/anti.12264 mogashoa, m.m. & selebi, o., 2021, ‘innovation capacity: a perspective on innovation capabilities of consulting engineering firms’, southern african journal of entrepreneurship and small business management 13(1), a372. https://doi.org/10.4102/sajesbm.v13i1.372 muske, g. & fitzgerald, m.a., 2006, ‘a panel study of copreneurs in business: who enters, continues and exits?’, family business review 19(3), 192–205. https://doi.org/10.1111/j.1741-6248.2006.00070.x nheta, d.s., shambare, r., sigauke, c. & tshipala, n., 2020, ‘entrepreneurship gaps framework model: an early-stage business diagnostic tool’, southern african journal of entrepreneurship and small business management 12(1), a297. https://doi.org/10.4102/sajesbm.v12i1.297 nieman, g. & pretorius, m., 2004, managing growth: a guide for entrepreneurs, juta, cape town. powell, g.n. & eddleston, k.a., 2013, ‘linking family-to-business enrichment and support to entrepreneurial success: do female and male entrepreneurs experience different outcomes?’, journal of business venturing 28(2), 261–280. https://doi.org/10.1016/j.jbusvent.2012.02.007 preisendorfer, p., bitz, a. & bezuidenhout, f.j., 2012, ‘business start-ups and their prospects of success in south african townships’, south african review of sociology 43(3), 3–23. https://doi.org/10.1080/21528586.2012.727542 preisendorfer, p., boitz, a. & bezuidenhout, f.j., 2014, ‘black entrepreneurship: a case study on entrepreneurial activities and ambitions in a south african township’, journal of enterprising communities: people and places in the global economy 8(3), 162–179. https://doi.org/10.1108/jec-02-2012-0020 ragins, b.r. & verbos, a.k., 2007, ‘positive relationships in action: relational mentoring and mentoring schemas in the workplace’, in j. dutton & b.r. ragins (eds.), exploring positive relationships at work: building a theoretical and research foundation, pp. 91–116, lawrence erlbaum, mahwah, nj. rubin, a. & babbie, e., 2010, essential research methods for social work, thomson brookes/cole, belmont, ca. ryan, g.w. & bernard, h.r., 2003, ‘techniques to identify themes’, field methods 15(1), 85–109. https://doi.org/10.1177/1525822x02239569 shenton, a.k., 2004, ‘strategies for ensuring trustworthiness in qualitative research projects’, education for informtion 22(2), 63–75. https://doi.org/10.3233/efi-2004-22201 spiegel, a.d., 2018, ‘reconfiguring the culture of kinship: poor people’s tactics during south africa’s transition from apartheid’, africa 88(1), 90–116. https://doi.org/10.1017/s0001972017001164 stanely, c., stephenson, b. & monteith, d., 1995, ‘the management of family firms: an empirical investigation’, international small business journal 13(4), 11–34. https://doi.org/10.1177/0266242695134001 statistics south africa (stats sa), 2020, mid-year population estimates. statistical release p0302, department of statistics south africa, pretoria. sundaramurthy, c. & kreiner, g.e., 2008, ‘governing by managing identity boundaries: the case of family businesses’, entrepreneurship theory and practice 32(3), 415–436. https://doi.org/10.1111/j.1540-6520.2008.00234.x the banking association south africa (tbasa), 2019, small & medium enterprise, viewed 01 march 2021, from https://www.banking.org.za/what-we-do/sme/. thomas, d., 2020, black economic power matters: is south african transformation dead?, viewed 04 march 2021, from https://african.business/2020/09/economy/black-economic-power-matters-is-south-african-transformation-dead/. trevinyo-rodríguez, r.n. & tàpies, j., 2010, effective knowledge transfer in family business, working paper 865, iese business school, university of navarra, barcelona. van teijlingen, e. & hundley, v., 2002, ‘the importance of pilot studies’, nursing standard 16(40), 33–36. https://doi.org/10.7748/ns.16.40.33.s1 yeboah, a.m. & koffie, f., 2016, ‘does the legal form of small and medium enterprises determine their access to capital’, international journal of management, accounting, and economics 3, 520–533. yin, r.k., 2014, case study research. design and methods, 5th edn., sage, los angeles, ca. zahra, s., neubaum, d. & larranetta, b., 2007, ‘knowledge sharing and technological capabilities: the moderation role of family involvement’, journal of business research 60(10), 1070–1079. https://doi.org/10.1016/j.jbusres.2006.12.014 zellweger, t. & kammerlander, n., 2015, ‘family, wealth and governance: an agency account’, entrepreneurship theory and practice 39(6), 1281–1303. https://doi.org/10.1111/etap.12182 abstract introduction literature review research methodology presentation of results research findings conclusions recommendations future research acknowledgements references about the author(s) vukile m. mkhonza business school, milpark education, johannesburg, south africa portia p. sifolo department of tourism management, faculty of management sciences, tshwane university of technology, pretoria, south africa citation mkhonza, v.m. & sifolo, p.p., 2022, ‘investigating small, medium and micro-scale enterprises strategic planning techniques in johannesburg central business district post-covid-19 lockdown’, southern african journal of entrepreneurship and small business management 14(1), a483. https://doi.org/10.4102/sajesbm.v14i1.483 original research investigating small, medium and micro-scale enterprises strategic planning techniques in johannesburg central business district post-covid-19 lockdown vukile m. mkhonza, portia p. sifolo received: 21 oct. 2021; accepted: 21 feb. 2022; published: 29 apr. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: strategic planning assists organisations to capitalise on opportunities that arise and to minimise the threats posed by unstable market environments. apart from the track record of poor performance amongst some small, medium and micro-scale enterprises (smmes) in south africa, covid-19 pandemic severely affected more than 55 000 south african smmes in march 2020 after the lockdown imposed by the government. aim: this research study sought to investigate strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg central business district (cbd). setting: the study was conducted at small, medium and micro-enterprises in johannesburg central business district. methods: a quantitative study was conducted by using an online e-survey hero which was distributed to the sample of 169 respondents who were smme owners and managers in johannesburg cbd. results: the results revealed that most smmes owners had knowledge on the strategic planning techniques such as the strengths, weaknesses, opportunities and threats (swot) analysis, the political, economic, social and technological (pest) analysis, financial analysis of the competitors and financial analysis of their own business. conclusion: small, medium and micro-scale enterprises should take advantage of technology and invest in key skills needed for more effective strategic planning. keywords: strategic planning techniques; smme performance; covid-19 lockdown, business performance; cbd. introduction strategic planning is ‘the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives’ (david & david 2017:33). it is also referred to as a process that creates consistency between an establishment’s goals, possessions and its shifting prospects (grant 2014:55), regardless of the geographic location. hence, small, medium and micro-enterprises (smmes) play a critical role to the economy of the country. therefore, enhancing smmes development remains at the top of the agenda for the south african government and the entrepreneurs. shaping entrepreneurship and monitoring development thereof is critical in south african economic landscape, especially because strategic planning amongst smmes is a rare phenomenon (wang, walker & redmond 2009:4). the year 2020, presented challenges, not only to the economy of the country but several countries were affected, so as the entrepreneurs. according to the global entrepreneurship monitor (2021:26), there was minimal contribution by entrepreneurs and smmes to gross domestic product (gdp) growth in south africa, which already saw downgraded forecasts for 2020 of less than 1.0%. moreover, south africa continues to face economic development challenges. the disruptive context we live in demands that the entrepreneurs and the smmes adopt agile adaptive strategies for the success and prosperity of their businesses. the aim of the study is to investigate strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg central business district (cbd) with an intention to identify the adaptive strategies adopted post a long-term crises. literature review importance of strategic planning in an organisation strategic planning is critical when it comes to the performance of any organisation. strategic planning creates a viable link between a business’s mission, vision, goals, objectives, strategic choices and resources (sandada, pooe & dhurup 2014:661). it helps the managers to identify the cause of the problems and devise solutions to the problems, source resources of the business, understand the operating environment and define the purpose of the business (anyieni 2013:4; nkulu 2012:14). it helps the organisation to prioritise its use of resources to fit its goals in a bid to guide the direction and development over a period (grant 2014:56). however, there is overwhelming evidence from the literature indicating that formalisation of strategic planning techniques amongst smmes is a rare phenomenon (hmc 2012; wang et al. 2009:4). smit, botha and vrba (2016:140) concurred that there are many barriers to strategic planning such as reluctance to planning, resistance to change, expenses and lack of confidence. zou et al. (2021) affirmed that some smmes do not engage in formal strategic planning because they have no desire for their businesses to grow to the next level. murimbika (2011:11) also echoed these views and argued that there is a dearth of information about the formalisation of strategic planning techniques or tools of smmes in south africa. a lot of studies have been conducted on factors that contribute to the survival of smmes such as financing and neglecting the techniques that helps the smmes to grow and gain a competitive advantage. although nkulu (2012) provided a very informative study about strategic planning of smmes, the research was found lacking over the strategic planning techniques implemented by smmes as it focused on the relationship between entrepreneurship and smmes. in a bid to try to breach the research gap, sandada et al. (2014:659) conducted research on the techniques that are employed by smmes and found that strategic planning makes significant contributions to the business performance of smes, followed by strategy implementation incentives and evaluation and control. alves et al. (2020) emphasised that little is known about how small businesses cope during and post the long-term crises such as covid-19 pandemic. one of the coping strategies adopted by smes in macao included the flexible human resource strategies such as product diversification, exploration of markets and increased learning (alves et al. 2020). in a quest to investigate the strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg cbd, general strategies adopted by small businesses during the crises are critical to discuss. strategic planning techniques or tools implemented by small businesses during crises the literature revealed that there were studies conducted prior to the covid-19 pandemic that focused mainly on small businesses and dealing with crisis (cordeiro 2013; vargo & seville 2011). according to cordeiro (2013:22), only large organisations use a formal strategic planning process, small business owners and managers often plan poorly, even though the benefits from effective strategic planning are evident to most small businesses. although the generic strategic planning techniques are the focus in this study, there is limited literature capturing the techniques used by the smmes post-covid-19 lockdown in south africa. the strategic approach adapted by a businesses during and post-covid-19 crises could be disruptive or positive. john-eke and eke (2020:36) purported that for any organisation to succeed during and post any crises with minimal loss, training employees to manage crises within the shortest period of time to adapt to the changing circumstances is critical. alves et al. (2020:2) concurred that deploying various responses associated with resilience to turn crisis-induced adversity into opportunity for small businesses is important, even though small businesses may consider long-term strategies focusing on financial and non-financial factors. almudallal, ashary and muktar (2016) found that one of the key factors in a long-term survival is the ability of the managers or leaders of the businesses to think strategically and develop strategies in a practical approach to prevent crises or minimising the negative impact. vargo and seville (2011) commented that aligning capabilities and resources with threats and opportunities remain a critical element in monitoring the business environment. hence, developing diagnostic tools to assist organisations in applying resilience concepts to the continuous improvement of the organisation is critical to support collaboration within sectors of the economy (vargo & seville 2011:5632). perhaps looking at the effect of covid-19 crises on businesses could be beneficial. effects of covid-19 on businesses in south africa the department of small businesses and development (dsbd) (2019:14) in south africa reported that the smmes were already facing challenges in access to markets with limited abilities to participate in upstream and downstream activities in large commercial value chains. covid-19 just worsened this situation. one may argue that covid-19 affected smmes to better position themselves from the african continental free trade area (afcfta). the covid-19 pandemic created profound disruptions to the global economy. mene (2020:13) reported that because of a lack of safety nets 21% of smmes were not able to reopen. in addition to this, mene (2020:127) reported that the most affected areas in south africa in the supply chain export loss are precious metals, ferrous metals, chemicals and motor vehicles parts. these sectors altogether, lost approximately r588 million in exports with a breakdown of export loss to china (r117 m), to the european union (r306 m) and to the united states of america (r164 m). on the same note, mene (2020:127) reported that in terms of import loss, the most affected areas are the motor and vehicle industry, machinery, chemicals, plastics and rubber, precious metals with their combined loss estimated at r980 m. the breakdown for import loss included r351 m from china, r532 m from the eu and r98 m from the united states of america. considering the smmes in export segments, it is very limited especially in exports of metals, but their combined presence was projected to be 72%. the same applies to the import segment where the presence was 72% with machinery, motor vehicles and parts and chemicals having the lowest figures. in support of this, kunene (2020) argued that covid-19 affected progress of many smmes with sectors such as alcoholic beverages and tobacco, accommodation and metals recording huge losses. in addition, mene (2020:4) posited that travel and tourism were amongst the most affected sectors by the covid-19 lockdown. in response to the crisis, the south african government (from 27 march 2020) placed the country under a national lockdown to reduce the spread of the virus, resulting in the closure of many businesses (kunene 2020:3). this affected many businesses including smmes as the lockdown resulted in lack of revenue, travel bans, training/bookings/projects and meetings were cancelled, projects were put on hold, employees had to work from home, events or projects were postponed and some people were exposed to covid-19. in response to this, gen (2020:8) stated that 92% of small businesses had been affected by covid-19 in south africa. gen (2020:2) made some estimates that over 55 000 small businesses will not survive the pandemic and at least 42 350 workers in the smmes will lose their jobs. in support of this, kunene (2020:1) highlighted that the government responded late to the challenges of smmes and for that reason many of the smmes will not survive the pandemic. nearly 1000 businesses closed in south africa in the first half of 2021 (writer 2021). the following section highlights some of the effects of the hard lockdown in south africa on smmes. effect of covid-19 on smmes business processes the outbreak of covid-19 led to unprecedented restrictions to mobility (mene 2020:22). travelling through the highways, railroads and flights in the country were banned and the people were asked to stay at home as much as possible. there was total closure of borders, flight suspension to and from south africa, and entry or exits bans that restricted travelling due to limited face-to-face interaction or services. services such as cleaning, training, tutoring and installations, meeting the clients were not possible (gen 2020:10). this was an indication that strategic planning techniques or tools to deal with such crises were not catered for in the decision making. mobility restrictions, tight budgets and few resources hampered smmes to quickly adapt to change (mene 2020:25). these restrictions led many of the smmes to work from home. however, not all smmes could work virtually as it is costly and sometimes impossible (because of the limited resources available). the ban of public gatherings as a result of restricted movements in south africa affected the meetings incentives conferences and exhibitions (mice) in the events industry led to travel cancellations that fell by 35% in 2020 because of the loss of revenue from international business arrivals. however, this created the introduction of online meetings which minimised the revenues from the mice sector. as a result of the contract and meeting cancellations, some of the investors pulled out of the deals whilst other businesses lost their contracts (gen 2020:14). some entrepreneurs had no income, families were affected and businesses were struggling (kunene 2020:2). there were calls that businesses needed to practice remote working (gen 2020:15), such practice affected human resources in general and this affected most of the communication patterns of smmes and the ability to create employment (kunene 2020:6). the gen (2020:9) reported that some entrepreneurs could not meet their clients’ requirement such as delivering orders. mass gatherings such as sports were postponed until further notice. photography was also affected as many of the events that were lined up in april, may and june were cancelled (gen 2020:18). in addition to this, some of these business activities could not be conducted online such as wedding video shooting. special projects such as animal rescue dogs, which specialise in entertaining crowds with animals were negatively affected as there were no public gatherings. lack of revenue bouey (2020:13) stated that smmes were financially more fragile in 2020 and are normally cash-strapped when market demand is down. the gen (2020:17) warned that 71% of the business will run out of cash because of shortage of income caused by the preventative measures put in place to curb the pandemic. the sources of cash of many smmes are loans, reserves and family amongst others, the continued lockdown measures led to the losses of jobs because of the limited support of the business (kunene 2020:3). the dsbd (2020:13) highlighted that many small businesses were unable to increase their revenue and maintain their profitability because of the covid-19 lockdown. in a survey of 233 smmes conducted in gauteng province by masadi (2020:3), 95% of the smmes stated that they were not able to pay their workers during the hard lockdown period. masadi (2020:3) also observed that 93% of the smmes did not have other sources of income. this indicates that many of the factors were affected by the pandemic such as rentals, wages and salaries, investors, debts and assets amongst others. fabeil, pazim and langgat (2020:838) confirm that many of the smmes were not in a business where they could use online modes as their selling platforms. this reveals limited online participation by the smmes. magwentshu, kalidaa and rajagopaul (2020:2) argued that smmes in south africa are not very structured as they rely substantially on their clients to pay their invoices on time, thus covid-19 disruptions affected their growth, revenue and profitability. masadi (2020:5) found that of the 233 smmes, 87% reported that they were not able to conduct business from home and 63% mentioned that they tried to use internet platforms such as facebook but the responses were very low for survival. bouey (2020:13) concurred that covid-19 affected the global market trends and business growth. these views are in line with mene (2020:3) who reported that covid-19 came when the trade was already in turmoil with the world declining in all quarters of 2019 that has been fuelled by trade disputes between united states of america and china. covid-19 worsened the growth and profitability of businesses worldwide. moreover, the state of the economy in the country was not good. high unemployment and the degrading of the south african state to junk status affected the economy of the country. moreover, the lack of employment and retirement led to many owners of small business to establish smmes and some of the entrepreneurs lacked the required skills in their businesses (makwara 2019:8). inability to access relief funds the government of south africa tried to provide the rescue schemes of the smmes, namely the debt relief finance scheme, resilience facility and covid-19 agricultural disaster support fund amongst several others. many of the small businesses did not perform as expected before covid-19 hit in south africa. according to kunene (2020:5), poor performance was caused by lack of infrastructure and lack of maturity required to make a formidable business. however, because of many requirements, masadi (2020:9) reported that some smmes were not able to access the funds. research methodology this research study adopted a positivist approach to find out the strategic planning techniques or tools implemented by some smmes in johannesburg cbd, which is based in gauteng. although, there are 2.4 million smmes in south africa (3q2020), gauteng is home to 783 410 (33.1%) smmes (statistics south africa 2020). johannesburg cbd is the largest single metropolitan contributor to the national economic product with a gdp of 1.8% over the past 10 years. descriptive study was chosen to establish an accurate profile of the smmes in johannesburg cbd as they occur in the social setting. the case study strategy was regarded as the most appropriate research strategy as it allows for a deeper and more contextual exploration. the target population included smme owners and management in johannesburg cbd made up of 300 smmes (seda 2019). stratified random sampling stratified random sampling approach is used in cases where the population does not have similar characteristics such that it can be grouped into specific categories or ‘stratum’ (van zyl 2014:96). the stratum was from different industries in which the smmes are operating (figure 2) whereby 169 smmes owners and managers were sampled (based on a confidence level of 95% and an alpha level of 5%). figure 1: small, medium and micro-scale enterprises (smmes) in south africa and their contribution to the gross domestic product by province. figure 2: composition of small, medium and micro-scale enterprise’s sampled. the self-administered online questionnaire was regarded as the most appropriate research instrument to administer whilst observing covid-19 rules and regulation. the focus was on the strategic planning techniques or tools implemented by smmes post-covid-19 hard lockdown period in johannesburg cbd, south africa. the e-survey hero internet-based programme was used to distribute the link that was emailed to the respondents. a pop-up message was used to remind respondents about the completion of the questionnaire. the responses were captured online and results were presented in excel sheets for cleaning and verification. ten questionnaires were piloted 7 days before the actual study amongst 10 smmes in johannesburg cbd to test validity and accuracy of the questionnaire. reliability of the research study the cronbach’s alpha was calculated on the three sections of the questionnaire to measure internal consistency of the questionnaire. the cronbach’s alpha value on strategic planning techniques or tools used by smmes designated an alpha value of 0.81; importance of strategic planning shows an alpha value of 0.87 and the effects of covid-19 pandemic designated an alpha value of 0.89. therefore, the questionnaire constructs had a cronbach’s alpha above 0.80, which is well above the minimum acceptable reliability of 0.70. this indicates all the variables are acceptable for investigation purposes. data analysis data were analysed by using spss version 25 wherein the inferential statistics such as anova and chi-square were completed to measure relationships between variables (selvamuthu & das 2018:24). aberson (2019:69) highlighted that the aim of conducting an anova is to find out which of the relationships between the different variables were most significant. chi-square tests were carried out to find out the strength of the relationships between the variables. limitation of the study the limitation of the study was that the research is based on the findings that were obtained using the online questionnaires. in addition to this, the questionnaire was distributed online and thus restricting access to those with internet access. in this regard, the results are only based on the responses from those who have access to the internet. this research was conducted post the hard lockdown period (between march and april 2020). it was important to make sure that the respondents are not harmed during research (van zyl 2014:85). ethical considerations an informed consent was written using simple english. the respondents were informed about their contribution to the research study and were assured that taking part in the research was voluntary, anonymous and the research will not bring them any harm or compromise. they had the right and privilege to decline to participate. whilst the emails of all targeted smmes were known, the completion of the questionnaire itself did not include submission of the email address, meaning that no individual response could be specifically linked to any participant. in addition to this, the researcher maintained anonymity by using a digital password where the responses were stored. presentation of results this study sought to investigate the strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg cbd, gauteng. the target population consisted of 300 smmes found in the johannesburg cbd, however, only 173 invitations were sent out by mail of which four questionnaires were unusable. this indicates that the response rate was 97.68%, which is an acceptable response. statistical tests such as anova, spearman’s rho and chi-square were performed to determine the relationships and differences of variables. the mean, standard deviation, skewness and kurtosis of the results on strategic planning techniques will be presented. demographic information the gender composition of the respondents show that of the 169 respondents, 33% of them were male and 114 (67%) were female. the high response rate of males is not a common factor in the businesses of south africa and these results indicates that females are actively taking part in business. these results also indicate that smmes present more self-employment for individuals with limited opportunities such as females and young workers (sandada et al. 2014:662). age grouping of respondents the respondents were asked to indicate their age group. the age groups of the respondents are presented in figure 3. figure 3: age grouping of the respondents. of the 169 respondents, 54% belonged to 20–29 years age group, 23% belonged to 30–39 years age group, 20% belonged to the 40–49 years age group, whilst 1% belonged to the 50–59 years age group, the 60 years and above age group and those below the age of 20. many of the respondents (54%) were in the 20–29 years age group. these results show that smmes in johannesburg cbd are dominated by economically active people. this is in line with gen (2018) that smmes helps in the country to solve the employment crisis and smmes are a means of survival for many young people in south africa. highest academic qualifications of respondents the respondents were asked to indicate their highest academic qualifications. these results are presented in figure 4. figure 4: highest education qualifications of respondents. figure 4 shows that 83% of the total respondents that own smmes in johannesburg cbd had either a matric certificate or a diploma and undergraduate degrees. these results are in line with bhorat et al. (2018:19) who reported that many smme owners in south africa are educated with a few of them just having a post-secondary education. total number of employees the respondents were asked to indicate how many employees they have in their businesses. these results are presented in figure 5, which indicates that 56% of the respondents have 1–9 employees, 18% of the respondents have 10–19 employees, 9% of the respondents have 20–29 employees, 8% of the respondents have 30–39 employees, 4% of the respondents have 40–49 employees and 5% have 50 and above employees. figure 5: total number of employees in the business. most of the respondents who participated in the study have 1–9 employees. this indicates that most of the smmes in the johannesburg cbd fall in the category of small businesses. small business employs less than 50 employees (ildp 2014:10). total number of years of operation the respondents were asked to indicate how long they have been operating in the business. the results are illustrated in figure 6. figure 6: total number of years of operation. figure 7: designation in the organization. figure 6 shows that 25% of the respondents have been in the business for less than a year, 31% of the respondents indicated that they have been operating for 2–5 years, 18% of the respondents indicated that they have been in the business for 6–10 years, 8% of the respondents have been in the business for 11–15 years and lastly, 19% of the respondents indicated that they have been in the business for 16 or more years. these results indicate that many of the businesses have been in operation for 2–5 years and the fact that 19% of the smmes have been in operation for 16 or more years. designation of the respondents in the organisation the respondents were asked to indicate which position they hold in their organisations. of all the respondents, 50% were founders/owners, 22% were in the management level, and 28% were in supervisory level as indicated in figure 6. this indicates that many of the respondents were owners of the businesses. in the following section, the strategic planning techniques which are implemented by smmes are discussed. presentation of results: strategic planning techniques/tools the purpose of this study was to investigate the strategic planning techniques implemented by smmes in johannesburg cbd post-covid-19 lockdown. the literature revealed that although the smmes implement generic strategic planning techniques or tools, they don’t consider them as formal. the respondents were asked to identify the strategic planning techniques/tools they implemented in their businesses in general. these strategic planning techniques/tools are presented in table 1. table 1: strategic planning techniques/tools. swot analysis the results indicate that 78% of the respondents implemented the swot analysis technique in their business operations, whilst 28% indicated that they do not. based on the results, the swot and financial analysis of business were commonly used as they rated high. these views were echoed by herliana, lawiyah and aina (2018:5) who outlined that many smmes owners in bandung used swot analysis for market penetration, networking, market development and horizontal integration. financial analysis of business the respondents were asked if they use the financial analysis of business technique in their business. in response to this question, 89% of the respondents indicated that they use the financial analysis of business technique whereas 11% of the respondents indicated that they do not use the financial analysis of business in their operations. these results are in agreement with wolmarans and meintjes (2015:111) who outlined that smmes managers in south africa used financial analysis in conjunction with management practices concerned with profitability and working capital. in addition, brijlal, enow and isaacs (2014:9) reported that 54% of the smmes owners in cape town prepared documents such as balance sheets, income statements and cash flow statements for financial reporting and analysis. pest analysis when the respondents were asked if they use the pest analysis in their business, 56% of the respondents indicated that they use pest analysis and 44% of the respondents indicated they do not use pest analysis in their business. these results are in agreement with rakesh (2014:18) who reported that the many smmes in india implemented pest analysis as it helped them to understand their business environment, which continues to change. these results are also in agreement with sandada et al. (2014:665) who highlighted that smmes in south africa scanned their operating environment using pest analysis and it helped them to understand their competitors, strategies and substitute products. benchmarking the respondents were also asked if they use benchmarking technique in their business. in their responses, 61% of the respondents indicated they use benchmarking technique in their business and 39% of the respondents indicated that they do not use benchmarking technique in their businesses. these results concurred with elaswad (2015:2044) that several smmes in malaysia implemented benchmarking techniques such as total quality management and they performed better than their closest rivals who did not implement benchmarking technique. in support of this, de rose and yusof (2008:419) reported that although many smmes in automotive industry implemented benchmarking techniques, they were not successful as there are no correct and proved models and tools for benchmarking for smmes. however, these results do not support the views of sandada et al. (2015:666) that smmes in south africa do not implement benchmarking techniques in their businesses. porter’s five forces the respondents were also asked if they use porter’s five forces technique in their business. on this question, 51% of respondents indicated that they use porter’s five forces technique in their business whereas 49% of the respondents stated that they do not use porter’s five forces technique in their business. these results concur with lumbanraja, dalimunthe and hasibuan (2018:8) that many smmes in medan implemented porter’s five forces such as maintaining relationships with the buyers and suppliers. the results further concur with sandada et al. (2014:665) who reported that many smmes in south africa rarely implement porter’s five forces approach in their businesses. on the same note, lumbanraja et al. (2018:8) highlighted that a number of smmes in medan implemented porter’s five forces unknowingly, especially on rivalry and substitute goods. core capabilities or competence analysis when the respondents were asked if they use the core capabilities analysis in their business, 72% of the respondents indicated that they use the core capabilities or competence analysis technique in their business, whereas 28% indicated that they do not use the competence analysis technique in their business. these findings are in agreement with dumbu and chadamoyo (2012:11) who reported that smme owners in zimbabwe used their competencies to prepare for resistance, prepare financial statements, appreciate change, decision making and talent management. these results are also in agreement with adendorff, appels and botha (2011:59) who highlighted that many of the smmes in south africa rely on their own competencies as they own their equipment especially in construction and this helps them to save on their costs for hiring. financial analysis of competitors the respondents were asked if they use the financial analysis of competitor’s technique in their business. on this question, 59% of the respondents indicated that they use the financial analysis of competitors in their business, whereas 41% of the respondents indicated that they do not use the financial analysis of competitor’s technique in their business. these results substantiate previous findings of adendorff et al. (2011:47) who outlined that smmes in the construction industry analysed the financial status of their competitors for a specific tender. in addition to this, smmes analyse the competitors’ human resources capabilities and resources and determine which strategy they could adopt to fight competition (wolmarans & meintjes 2015:110). scenario planning or ‘what if’ planning when the respondents were asked if they use the scenario planning or ‘what if’ planning technique in their business, 65% of the respondents indicated that they use the scenario planning or the ‘what if’ planning, whereas the 35% of the respondents indicated that they do not use the scenario planning or what if planning in their business. these results agree with jannek and burmeister (2008:15) that smmes employ scenario planning but in simple ways such as brainstorming and through the use of networks to identify, interpret and understand key signals in the external environment in order to rehearse possible futures. however, these results are contrary to previous findings by amer, daim and jetter (2013:34) who stated that scenario planning is much common and can only be implemented by big organisations such as aerospace and petroleum and many smmes do not have enough capital required to operate in those industries. the findings presented by amer et al. (2013:34) concurred with nyuur (2015:20) that there are many hindering factors for smmes adoption of scenario planning such as the capital required and unhealthy degree of group thinking and lack of awareness. value chain analysis when the respondents were asked whether they use the value chain analysis technique in their business, 67% of the respondents indicated that they use the value chain analysis in their business; whereas, 33% of the respondents indicated that they do not use the value chain analysis technique in their business. these results concurred with anggadwita et al. (2019:5) who indicated that smmes in indonesia in the coffee industry implemented value chain analysis technique to develop and maintain relationships with coffee farmers, coffee traders, processing industries and coffee shops. in support of this, spencely and ryland (2015:72) highlighted that smmes in the tourism sector of botswana implemented value chain analysis as ways of strengthening their entry in the market and maintaining their relationships with intermediaries in the service delivery chain. portfolio matrices (e.g. bcg: growth-share matrix) the respondents were also asked if they use the portfolio matrices techniques in their business. on this question, 47% of the respondents stated that they use portfolio matrices in their business, whereas 53% of the respondents stated they do not use the portfolio matrices techniques in their business. these results indicate that many of the respondents do not use the portfolio matrix technique. furthermore, these findings are in agreement with mohajan (2019:1) that bcg matrices are complex to conduct and as a result many companies do not conduct them as some do not have enough knowledge of the cash cows, dogs, stars and question marks of the bcg matrices. the findings of this study revealed that, smmes implemented strategic planning techniques and financial analysis was the technique mainly used by the respondents. in addition, the environmental scanning techniques such as the swot analysis and pest analysis were also used by the respondents during the covid-19 lockdown. this can be attributed to the changing environments as many smmes tried to understand their internal and external environments. however, portfolio matrix was the only technique that was not implemented by most of the respondents. this could be attributed to its complexity. the following section discusses descriptive statistics of the data. descriptive statistics of strategic planning techniques or tools table 2 shows the descriptive statistics of strategic planning tools with reference to the mean, standard deviation, skewness and kurtosis. table 2: descriptive statistics of strategic planning techniques/tools. from table 2, most of the standard deviation values are close to 1. this indicates that data were close to the mean. table 2 also shows that all the skewness values were negative (indicating that most of the respondents agreed to the questions posed). lastly, many of the kurtosis values indicated on the table were positive with swot analysis having the highest kurtosis (2.242), which is less than 3. this indicates that the data have a sharper peak as compared with the normal distribution indicating that most of the respondents agreed to use the swot analysis strategic planning technique or tool in their business. importance of strategic planning techniques or tools on business performance table 3 shows the descriptive statistics of the importance of strategic planning techniques or tools postcovid-19 lockdown in johannesburg cbd. the table shows the mean, standard deviation, skewness and kurtosis of data. table 3: descriptive statistics of importance of strategic planning techniques or tools. table 3 shows that standard deviation values were close to 1, thus many of the responses were on the agreeable side. the skewness values are negative and this indicates that many of the respondents agreed to the questions posed (statements are indicated in table 3). this indicates that many respondents agreed that strategic planning techniques or tools have an influence on business performance post-covid-19 lockdown. all kurtosis values were positive and this indicates that the data have heavier tails. high kurtosis values indicate that the data have sharper peaks than the normal distribution. chi-square test in this study, the chi-square test was done to test the independence of variables and to test whether there was statistically significant relationship that exists between the variables. the chi-square test was done to determine the relationships between strategic planning techniques/tools implemented during the covid-19 lockdown in johannesburg and business performance during the same period. strategic planning allows the business to have a better understanding of the environment in which they operate, as well as clearly defines the purpose of the business, its values and the resources that are available (gomera, chinyamurindi & mishi 2018:7). from the chi-square test only three strategic tools, namely pest analysis (p-value = 9.915), financial analysis of own business (p-value = 11.543) and financial analysis of competitors (p-value = 11.610) indicated a complete significant chi-square set. table 4 indicates that there exists a statistically significant relationship between pest analysis and making better decisions during the crises. these results are in agreement with murimbika and urban (2014:16) who argued that environmental scanning helps the business to know about information regarding the trends, events, external environment and other knowledge that can assist the business in planning and managing the business. table 4: the pest analysis of own business. table 5 indicates that there exists a statistically significant relationship between financial analysis of business and amount of revenue generated. in support of these findings, sandada et al. (2014:667) argued that analysing the internal environment helps the business to solve many hindrances and gain considerable profits. table 5: financial analysis of own business and amount of revenue. table 6 indicates that there exists a statistically significant relationship between financial analysis of competitors and improved service delivery. these results are in line with murimbika and urban (2014:17) who outlined that strategic planning improves the business processes thereby enhancing quick product and service delivery. table 6: financial analysis of competitors and improved speed of product and service delivery. spearman’s rho correlation analysis: strategic planning techniques or tools and business performance during covid-19 lockdown a spearman’s rho correlation analysis was performed to determine the relation between strategic planning techniques/tools and business performance. the pearson’s chi-square indicated earlier that there exists a weak positive relationship between strategic planning techniques and business performance. thus, the spearman’s rho was conducted to test further the relationships between strategic planning techniques and business performance. the spearman’s rho correlation results are presented in table 7. table 7: strategic planning techniques or tools affecting business performance during covid-19. table 7 illustrates the correlations between strategic planning techniques/tools and business performance. the results indicate that there exists a weak positive relationship between the two variables in the smmes sector. these results are in agreement with sandada et al. (2014:667) that there is a weak relationship between strategic planning techniques/tools and business performance in smmes as many of them do not implement strategic planning techniques/tools. one of the most significant correlations is between: pest analysis and strategic planning improve customer retention and loyalty (r = 0.258, p < 0.000). these results show that there is a weak positive relationship between environmental scanning tools and business performance, these results are in agreement with tseka (2018:47) who found that there was a weak positive relationship (r = 0.24) between environmental scanning and business performance of smmes in south africa. research findings the purpose of this study was to investigate strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg cbd. the covid-19 lockdown period presented an opportunity and the threat for businesses in general, hence, numerous businesses faced significant risks pertaining the business processes and systems. hence, effective management of the crises and adoption of strategic planning techniques or tools must not be overlooked. the representation of 114 (67%) females indicated that many women are taking part in the business activities in the country. this indicates that the country is moving away from a patriarchal society. one may argue that placing women in managerial, leadership or ownership position could be interpreted as part of strategic planning in an organisation. about 131 (77%) respondents were between 20 and 39 years, which this indicates that the smme industry is primarily occupied by economically active people. this reflects the character of the country as a whole (smit et al. 2016:280). the findings reveal that smmes used their core capabilities in their businesses during the covid-19 lockdown period. the results show that many smmes are implementing strategic planning techniques or tools in their business such as swot and pest analysis, value chain analysis and financial analysis of business and competitors. this finding is in agreement with adendorff et al. (2011:59) who reported that smme owners in the south african construction industry used core capabilities in their business to assess the strength and direction of competition. during the covid-19 lockdown period, some strategic planning techniques such as portfolio matrices, specifically, the porter’s five forces approach was indicated as too complex and difficult to implement. the results revealed that 90% of the respondents (alcoholic beverages and tobacco, transport, tourism, wood and wood products, construction and metal products being the severely affected) indicated that the covid-19 pandemic negatively affected the market share growth of their businesses. moreover, the literature indicated that the smmes in south africa are not very structured as they rely on their clients to pay their invoices on time, thus the covid-19 lockdown negatively affected their growth, revenue, profitability and employee skills development of smmes in the johannesburg cbd. the findings revealed that there exists a statistically significant relationship between financial analysis of business and amount of revenue generated during the covid-19 lockdown. this finding is in agreement with karel, adam and radomir (2018:59). in addition, the findings also showed that there was a positive relationship between financial analysis of competitors and improved speed on product and service delivery. the study conducted by mkhonza and sifolo (2021), showed that managing both the environments and mitigating against the risks that are posed by factors outside the smmes’ control, taking advantage of technology, monitoring the business structure and investing on the skills focusing on future of work is beneficial. from the study, the findings showed that there was a positive relationship between pest analysis and making better decisions. lastly, the results showed there exist a weak positive relationship between strategic planning techniques and business performance in smmes. all the p-values were more than 0.05 indicating that covid-19 negatively affected their businesses irrespective of their gender.there was weak positive relationship between strategic planning techniques and business performance during covid-19 lockdown. in addition to this, the findings from the study also showed that there was a weak positive relationship between environmental scanning tools and business performance. conclusions planned adaptive strategic planning techniques or tools are critical for the survival of the smmes as a source of job creation in the community. the strategic planning techniques or tools implemented by smmes post-covid-19 lockdown in johannesburg cbd were common strategic planning techniques such as financial analysis of their own businesses (89%), swot analysis (78%), core capabilities (72%), value chain analysis (67%), scenario planning (65%), benchmarking (61%), financial analysis of competitors (59%), pest analysis (56%), porter’s five forces (51%) and bcg matrix (47%). these results indicate that financial analysis was the most common strategic planning technique or tool during the covid-19 lockdown in johannesburg cbd. one can argue that financial management is the survival of the business that enables the business to plan and track its history, especially during the times of the crises. however, it must be observed that financial management alone does not guarantee smmes success, however some factors such as human resources contribute to the success of the smmes. financial management must be employed together with other strategic planning techniques so that an smme can achieve its intended objectives during the crisis period. one can argue that the covid-19 lockdown affected the global market trends including entry to the african market as many smmes failed to open because of lack of revenue. the quality reputation was the least affected as it was not seen as a problem by smmes during the lockdown but surviving post-lockdown was identified as a challenge. there is a weak positive relationship (r = 0.26) between strategic planning techniques or tools implemented during covid-19 lockdown and business performance, this was attributed to the fact that the smmes do not implement strategic planning techniques formally. although smmes implement almost all the strategic planning techniques or tools, others do not because of their complexity. small, medium and micro-scale enterprises implemented strategic planning techniques or tools using simple methods which did not yield the desired results during the covid-19 hard lockdown period. these findings will help in the provision of recommendations to the owners and managers of smmes in johannesburg cbd as to how they can improve their business performance during the crises. recommendations there is a need to adopt digital technologies to enhance productivity and performance of the smmes to deal with the repercussion of covid-19 pandemic whilst securing business continuity. digital technology can assist owners, managers and supervisors of smmes to secure business continuity whilst improving business performance or formalising strategic planning techniques or tools. financial management enables the business to plan and track its history. it is also helpful to promote awareness and improve service delivery through greater collaboration and cooperation. therefore, formalising strategic planning techniques or tools in order to apply each strategic plan to improve business performance during the crises is paramount. practical implications could include investing in digitisation as one of the strategies to improve business processes and business continuity (such as digital payments where possible). although smmes understand the environmental scanning techniques such as swot, pest, benchmarking and financial analysis of competitors because of increasing level of competition, an ability to deal with turbulence and uncertainty in the business environment, developing a scenario-based planning is critical to better prepare for the crisis. documenting strategic planning enables businesses to communicate their intentions to their employees, check their progress and evaluate and control the strategic planning process. this has an impact to resources allocation and information sharing. documented business visions, mission statements and competent managers who possess conceptual, technical and interpersonal skills. in other words, investing in skills that consider the future of work is necessary to develop new business strategies and ensuring business continuity. investing in capacity building can help smmes to have leaders who understand their growth, market access and sustainability. in addition to this, there is need for smmes to train and develop their employees so that they develop skills and abilities that are necessary to carry out the plans provided by their owners and managers. even though covid-19 negatively affected smmes they must take advantage of improved technology to improve their business performance. future research developing a benchmarking model for smmes as one of the adaptive strategies for strategic planning techniques or tools during any crisis is essential to measure resilience. moreover, financial analysis of competitors and improved speed on product and service delivery as a focus area for smmes could be beneficial towards improving digitalisation as a coping strategy. further studies could focus on the demographic profiles of the smme managers, leaders and owners with a deeper focus on racial classification to identify whether demographics have an impact on strategic planning techniques, considering that government contributed a lot towards funding during the covd-19 lockdown period. acknowledgements the authors would like to express their gratitude to the milpark business school and the smmes in the johannesburg cbd who participated in the study. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions v.m.m. and p.p.s. contributed equally to this work. funding information this specific research received no funding from any agency in the public, commercial or not-for-profit sectors. data availability data presented was derived from the study conducted by mkhonza, v.m., 2020, ‘the role of strategic planning in smme’s post covid-19 lockdown in johannesburg cbd’, unpublished masters thesis, milpark business school. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy of any affiliated agency of the authors. references aberson, c.l., 2019, applied power analysis for the behavioural sciences, 2nd edn., routledge: taylor and francis group, new york, ny. adendorff, c., appels, g. & botha, b., 2011, ‘strategic management: an eastern cape construction sme case study’, acta structilia 18(2), 20–65. almudallal, m.w., ashary, h. & muktar, s.n., 2016, ‘influence of strategic planning on crisis management in the service sector firms in palestine’, journal of business and social review in emerging economies 2(1), 13–20. https://doi.org/10.26710/jbsee.v2i1.14 alves, j.c., lok, t.c., luo, y. & hao, w., 2020, ‘crisis challenges of small firms in macao during the covid-19 pandemic’, frontiers of business research in china 14(1), 1–23. https://doi.org/10.1186/s11782-020-00094-2 amer, m., daim, t.u. & jetter, a., 2013, ‘a review of scenario planning’, futures 46, 23–40. https://doi.org/10.1016/j.futures.2012.10.003 anggadwita, g., profityo, w.b., permatasari, a., alamanda, d.t. & hasfie, m., 2019, ‘analysis of value chain model on small and medium enterprises (smes): a case study of coffee shops in bandung’, materials science and engineering 505, 1–9. https://doi.org/10.1088/1757-899x/505/1/012098 anyieni, g., 2013, ‘effect of strategic planning on the performance of small and medium enterprises in kenya: a summary review of the literature’, international journal of professional management 8(6), 1–10. bhorat, h., asmal, z., lilenstein, k. & van der, k., 2018, smmes in south africa: understanding the constraints on growth and performance, development policy research unit working paper 201802. dpru, university of cape town, cape town. bouey, j., 2020, assessment of covid-19’s impact on small and medium-sized enterprises implications from china, rand corporation, santa monica, ca. brijlal, p., enow, s. & isaacs, e.h.b., 2014, ‘the use of financial management practices by small, medium and micro enterprises: a perspective from south africa’, industry and higher education 28(5), 341–350. https://doi.org/10.5367/ihe.2014.0223 cordeiro, w., 2013, ‘small businesses ignore strategic planning at their peril’, academy of business research journal 3, 22–30. david, f. & david, f.r., 2016, strategic management: a competitive advantage approach, concepts and cases, pearson–prentice hall, florence. department of small business development, 2019, 2020–2025 strategic plan (revised), dsbd, pretoria. department of small business development (dsbd), 2020, guidelines for participation in the spazashops and general dealers support scheme in partnership with nedbank, viewed 22 april 2020, from https://www.dsbd.gov.za/wp-content/uploads/2020/04/guidelines-for-participation-in-the-spazashops-and-general-dealers-support-scheme.pdf. de rose, b. & yusof, s., 2008, ‘a benchmarking implementation framework for automotive manufacturing smes’, international journal 13(4), 396–430. https://doi.org/10.1108/14635770610676272 dumbu, e. & chadamoyo, p., 2012, ‘managerial deficiencies in the small and medium enterprises (smes) in the craft industry: an empirical evidence of smes at great zimbabwe in chief mugabe’s area’, european journal of business and management 4(10), 79–85. elaswad, h., islam, s., tarmizi, s., yassin, a., lee, m.d. & ting, c.h., 2015, ‘benchmarking of growth manufacturing smes: a review’, science international (lahore) 27(3), 2039–2048. fabeil, f.n., pazim, k.h. & langgat, j., 2020, ‘the impact of covid-19 pandemic crisis on micro enterprises: entrepreneurs’ perspective on business continuity and recovery strategy’, journal of economics and business 3(2), 837–844. https://doi.org/10.31014/aior.1992.03.02.241 gen, 2018, global report 2017/18. global entrepreneurship research association. gen, 2020, impact of covid-19 on south africa smmes, global entrepreneurship research association, south africa. global entrepreneurship monitor (gem), 2022, global entrepreneurship monitor 2021/2022 global report: opportunity amid disruption, gem, london. gomera, s., chinyamurindi, w.t. & mishi, s., 2018, ‘relationship between strategic planning and financial performance: the case of small, microand medium-scale businesses in the buffalo city metropolitan’, south african journal of economic and management sciences 21(1), 1634. https://doi.org/10.4102/sajems.v21i1.1634 grant, m.r., 2014, contemporary strategic management, 6th edn., wiley, west sussex. hathway management consulting (hmc), 2012, strategic planning: 5 essential considerations for sme owners: many small & mid-sized businesses in bc are missing the advantages of strategic planning, hathway management, north vancouver. herliana, s., lawiyah, n. & aina, q., 2018, ‘swot analysis approach on sme’s entrepreneurial competency’, academy of entrepreneurship journal 24(2), 1–6. ildp, 2014, informal and small medium and micro enterprises (smme) retailers in south africa, informal and smme retailers in south africa, ildp, south africa. jannek, k. & burmeister, k., 2007, corporate foresight in small and medium-sized enterprises, foresight brief, 101. john-eke, e.c. & eke, j.k., 2020, ‘strategic planning and crisis management styles in organizations: a review of related literature’, journal of strategic management 5(1), 36–46. https://doi.org/10.47672/jsm.501 karel, s., adam, p. & radomir, p., 2018, ‘strategic planning and business performance of micro, small and medium sized enterprises’, journal of competitiveness 5(4), 57–72. https://doi.org/10.7441/joc.2013.04.04 kunene, n.l., 2020, the dimensions of the impact of covid-19 on small and micro businesses in south africa, university of kwazulu-natal. https://ndabaonline.ukzn.ac.za/ukzndabastory/vol8-issue14/dimensions%20of%20the%20impact%20of%20covid19%20on%20small%20and%20micro%20businesses%20in%20sa/ accessed: 22 march 2022 lumbanraja, p., dalimunthe, r.f. & hasibuan, k.b., 2018, application of porter’s five forces to improve competitiveness: case of featured smes in medan, icebam, indonesia. makwara, t., 2019, ‘taking on the challenge: small, micro and medium enterprises (smmes) and socioeconomic development in south africa’, african journal of hospitality, tourism and leisure 8, 1–14. magwentshu, n., kalidaa, s. & rajagopaul, a., 2020, how south african smmes can survive and thrive post covid-19. masadi, p., 2020, covid-19: the impact on small businesses and gaps in current solutions the case for better solutions to support entrepreneurs in townships. mene, c., 2020, sme competitiveness outlook 2020: covid-19: the great lockdown and its impact on small business, itc, geneva. mohajan, k.h., 2019, ‘an analysis on bcg growth sharing matrix’, noble international journal of business and management research 2(1), 1–5. mkhonza, v.m., 2020, ‘the role of strategic planning in smme’s post covid-19 lockdown in johannesburg cbd’, unpublished masters thesis, milpark business school. mkhonza, v.m. & sifolo, s.p.p., 2021, ‘covid-19 effect on business performance smmes perspectives in a south african context’, international journal of entrepreneurship and business development 4(5), 727–743. murimbika, m., 2011, ‘influence of strategic management practices on the entrepreneurial orientation of south african firms in the financial and business services sectors’, master’s dissertation, university of witwatersrand. murimbika, m. & urban, b., 2014, ‘strategic innovation at the firm level: the impact of strategic management practices on entrepreneurial orientation’, international journal of innovation management 18(2), 14–16. https://doi.org/10.1142/s1363919614500169 nkulu, m., 2012, ‘the use of strategic planning for small, medium and micro enterprises in the retail industry’, master of commerce dissertation, university of johannesburg. nyuur, r., 2015, ‘unlocking the potential barriers on smes’ uptake of scenario planning’, journal of strategy and management 8(2), 139–154. https://doi.org/10.1108/jsma-01-2014-0007 rakesh, c., 2014, ‘pest analysis for micro small medium enterprises sustainability’, journal of management and communications 1(1), 18–22. sandada, m., pooe, d. & dhurup, m., 2014, ‘strategic planning and its relationship with business performance among small and medium enterprises in south africa’, international business & economics research journal (iber) 13(3), 659–670. https://doi.org/10.19030/iber.v13i3.8602 selvamuthu, d. & das, d., 2018, introduction to statistical methods, design of statistical experiments and statistical control, springer nature pty ltd., singapore. small enterprise development agency (seda), 2019, smme quarterly update: 3rd quarter 2018, small enterprise development agency, johannesburg. smit, p.j., botha, t. & vrba, m.j., 2016, management principles: a contemporary edition for africa, 6th edn., juta, cape town. spencely, a. & ryland, a., 2015, improving competitiveness of smmes through the private sector development programme botswana, private sector development programme, pp. 1–85, botswana. statistics south africa, 2020, business impact survey of the covid-19 pandemic in south africa statistics south africa, viewed 04 august 2020, from http://www.statssa.gov.za/publications/report-00-80-01/report-00-80-01april2020.pdf. tseka, m.c., 2018, ‘strategic management practices as a catalyst for smme performance in the gauteng province’, unpublished thesis, wits business school. van zyl, l.e., 2014, research methodology for the economics and management sciences, 8th edn., pearson education, cape town. vargo, j. & seville, e., 2011, ‘crisis strategic planning for smes: finding the silver lining’, international journal of production research 49(18), 5619–5635. https://doi.org/10.1080/00207543.2011.563902 wang, c., walker, e., redmond, j. & breen, j., 2009, ‘contributions of home-based businesses to regional economic development’, in proceedings of 23rd anzam conference, melbourne, victoria. wolmarans, h. & meintjes, q., 2015, ‘financial management practices in successful small and medium enterprises (smes)’, the southern african journal of entrepreneurship and small business management 7(1), 88–116. https://doi.org/10.4102/sajesbm.v7i1.8 writer, s., 2021, nearly 1,000 businesses closures in south africa in the first half of 2021 – these are the industries most affected, viewed 16 february 2022, from https://businesstech.co.za/news/business/509410/nearly-1000-businesses-closures-in-south-africa-in-the-first-half-of-2021-these-are-the-industries-most-affected/. zou, z., liu, y., ahmad, n., sial, m.s., badulescu, a., zia-ud-din, m. et al., 2021, ‘what prompts small and medium enterprises to implement csr? a qualitative insight from an emerging economy’, sustainability 13(2), 952. https://doi.org/10.3390/su13020952 abstract introduction literature review research method results outline of results discussion of results conclusion limitations acknowledgements references about the author(s) werner h. otto department of commercial accounting, college of business and economics, university of johannesburg, johannesburg, south africa ilse botha department of accounting, college of business and economics, university of johannesburg, johannesburg, south africa gideon els department of accounting, college of business and economics, university of johannesburg, johannesburg, south africa citation otto, w.h., botha, i. & els, g., 2022, ‘the impact of the south african business environment on smes trade credit management effectiveness’, southern african journal of entrepreneurship and small business management 14(1), a563. https://doi.org/10.4102/sajesbm.v14i1.563 note: additional supporting information may be found in the online version of this article as online appendix 1. original research the impact of the south african business environment on smes trade credit management effectiveness werner h. otto, ilse botha, gideon els received: 04 apr. 2022; accepted: 29 june 2022; published: 20 oct. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: given that the impact of the south african business environment on small and medium-sized enterprises’ (smes) management of trade credit is largely unknown, this article argues that certain internal or external business environment variables could significantly impact smes’ management of trade credit effectiveness, making it necessary to ask the impact of business environment in south africa on smes’ trade credit management effectiveness. aim: to determine the impact of internal (managerial competencies, collateral, financial and business information and networking) and external (legal system, ethics, macroeconomy and corruption) business environment variables on smes’ management of trade credit effectiveness. setting: this study was conducted by administering an online questionnaire. method: quantitative research design with purposive sampling as the sampling method, administrated to 10 450 smes within south africa. results: the results reveal several internal (5) and external (4) business environment factors significantly impacting smes’ effectiveness in managing trade credit. conclusion: the article reveals how internal and external business environment factors contribute to increased sme effectiveness in managing trade credit and, in so doing, helps mitigate financial problems associated with smes’ trade credit as a result of asymmetric information such as adverse selection, moral hazard and credit rationing, while also understanding the significance of corruption on smes’ effectiveness in managing trade credit. keywords: trade credit; effectiveness; internal business environment; external business environment; management; small and medium-sized enterprises. introduction south africa suffers from high unemployment with an official unemployment rate of 35.3% (statistics south africa 2021). the sustainable development of small and medium-sized enterprises (smes) is widely regarded as a significant instrument to address the surging challenge of unemployment alongside other development challenges which are of pivotal importance to south africa (herrington & kew 2018). the african union development agency – new partnership for africa’s development (auda-nepad) supports this viewpoint (nepad 2008). employment data for african countries provided in the 2017–2018 global entrepreneurship monitor (gem) report alongside the 2017–2018 gem south african report reveal the critical importance of entrepreneurship in creating future employment, economic development and economic growth throughout africa (herrington & kew 2018; singer, herrington & menipaz 2018). these authors report that growing attention has focused on entrepreneurship as a solution in contributing towards africa’s economic growth and job creation, as the need for a sustainable sme sector is evident. on a global scale, smes are praised for contributing to approximately 80% of the global economic growth, while locally contributing close to 80% of gross domestic product in south africa (baker, kumar & singh 2019; herrington & kew 2018). despite the valuable contribution by smes in being instrumental in addressing key development challenges, the creation rate of new smes in south africa is one of the lowest in the world, while the failure rate of smes is as concerning. the 2019–2020 gem report observed that south africa had a fear of failure rate of 49.8%, ranking 9th out of 50 countries, positioning south africa within the top 10 highest fear of failure rates for a participating country as part of the gem survey (bosma et al. 2020). in addition, the gem report, in which south africa has participated since 2001, illustrates useful data in revealing the nature and extent of entrepreneurial activity in south africa. south africa’s total early-stage entrepreneurial activity provided in the 2019–2020 gem report totalled 10.8%, a decrease from 11.0% as reported in the 2017–2018 gem report, positioning the county 25th out of 50 participating countries (bosma et al. 2020; herrington & kew 2018). therefore, from an entrepreneurial activity perspective, south africa’s performance is revealed to be mediocre yet alarming. furthermore, as far as can be established, limited research exists in relation to determining the impact of the south african business environment (internal and external variables) on smes’ management of trade credit. trade credit consists of both the time differential between the delivery of products and payment, including the cash discount allowed for earlier payment before due date (mcguinness, hogan & powell 2017). trade credit is important to smes, as it regularly acts as the best and only available source of external funding for working capital needs, as smes’ access to external debt from financial institutions is limited (andrieu, staglianò & van der zwan 2018). this phenomenon is termed the ‘finance gap’ and is a major constraint to south african smes (pretorius & shaw 2004). therefore, trade credit could be an important solution to smes becoming credit-rationed, emphasising the importance of applying effective trade credit management practices, particularly to those smes becoming credit-rationed (stiglitz & weiss 1981). the importance of managing trade creditors is essential in deciding upon a suitable credit provider, as smes should be responsible when deciding upon a suitable credit lender, because in the event of default, creditors can opt to siege the supply of products and inflate the trade credit contractual terms, disrupting operations until the default risk is mitigated (cunat 2006). because trade credit embodies a ‘two-way transaction’ in nature, apart from trade creditor financing, the importance of trade debtors should also be recognised (martinez-sola, garcia-teruel & martinez-solano 2013). trade debtors, resulting an outstanding cash payment from credit sales, carry an element of default risk and should be carefully assessed when evaluating credit requests (barad 2010). therefore, the mismanagement of trade credit, creditor and debtor can lead to cash flow constraints impairing smes’ ability to develop into sustainable enterprises, emphasising smes’ responsibility to accomplish effective trade credit management because, if neglected, it could result in severe cash flow problems that contribute to sme failure rates (padachi et al. 2008). according to the 2019–2020 gem report, unprofitability and financial problems are among the primary contributing reasons contributing to sme business failure (bosma et al. 2020). furthermore, bosma et al. (2020) reveal that entrepreneurs are subjected to several challenges while operating within the south african business environment. the volatility of the business environment raises smes’ perceived risk according to the organisation of economic cooperation and development (oecd) (2020). fluctuations within the business environment have a negative or positive effect on the growth or failure for majority-african smes (world bank 2020), while the business environment places a direct influence on smes trade credit management implicating business sustainability. smalland medium-sized enterprises do, however, operate within a business environment whereby trade credit management practices affect the availability of cash flow, as a positive cash flow cycle is instrumental to maintain survival and future enterprise growth (garcía-teruel & martinez-solano 2007). suggesting that effective trade credit management is paramount to smes, although the business environment in which these smes operate affects their sustainability, could also affect their working capital, specifically trade credit management. a need exists to determine the impact of the south african business environment on smes’ management of trade credit. the research aim and objective of this article is to determine the impact of selected factors of the south african business environment on smes’ trade credit management. literature review literature reveals certain theories of trade credit use among businesses, as these theories form the basis for any enterprise to partake in trade credit financing (huyghebaert 2006). these are asymmetric information, price discrimination, transaction costs, financing advantage, liquidity and private benefits of control. asymmetric information theory occurs when a situation of uncertainty arises concerning the financial health and creditworthiness of the buyer (smith 1987). according to smith (1987), the acceptance of high trade credit interest rates, defined by generally accepted trade credit terms, acts as a displaying mechanism portraying credit borrowers’ default risk information asymmetrically. in case of trade credit, such information is highly valuable to creditors in protecting their investment in trade debtors or to forecast the possibility of default by debtors making the original investment nonsalvageable (smith 1987). trade credit regularly acts as an effective price cut mechanism (price discrimination theory), as a creditor, exploiting their market power, can manipulate product prices through credit terms variations offered to a debtor. in doing so, in an attempt to maximise sales when operating in a competitive environment, through effective price discrimination, trade credit is more likely to be offered the greater returns obtained from the offering through variation in the credit terms as a benefit to be exploited by creditors (brennan, maksimovic & zechner 1988). ferris (1981) indicated that trade credit can be effortlessly conceptualised as an instrument to facilitating the exchange of products given that trade credit can be used as a contractual alternative to immediate money utilisation. therefore, trade credit becomes an alternative funding source to cash by alleviating transaction cost (transaction cost theory); however, trade credit does impose increased enforcement and information costs that must be reconciled against transactional cost savings achieved in the exchange of products and/or services (ferris 1981). due to the financing motive, smes are poised to extend credit to credit-restricted sme by providing a favourable environment to credit rationed or non-financially viable smes, enabling creditors to benefit from a cost advantage over standard financiers (schwartz 1974). the liquidity theory suggests that credit-constrained smes are far more likely to utilise trade credit compared to larger businesses normally better positioned to acquire credit from financiers (bhattacharya 2008). small and medium-sized enterprises that are credit-rationed require even more trade credit from larger businesses and contribute increasingly more to the ‘finance gap’ that becomes a major obstacle to entrepreneurial development and growth (herrington & kew 2018). private benefits of control advocate that creditors adopt a more lenient liquidation policy towards distressed smes by expanding the amount of credit offered to debtors during distress periods, thereby benefitting creditors by exploiting their private control benefits (huyghebaert, van de gucht & van hulle 2001). the business environment variables reviewed and examined in this article as identified by exploratory factor analysis (efa) are managerial competencies (mc), collateral, financial and business information and networking (internal), including legal system, ethics, macroeconomy and corruption (external). internal business environment a management team consisting of innovative capabilities is strongly associated with expanding organisational growth (malinao & ebi 2022). the study by veliu and manxhari (2017) supports this viewpoint, observing the lack of managerial capabilities as the main contributing reasons why businesses fail. the importance of education and training to new venture success is critical and especially relevant in the case of south africa suffering from educational system inequalities (bosma et al. 2020). furthermore, the study by malinao and ebi (2022) observed a positive correlation between relative new venture profits and greater levels of education and experience possessed by the business. therefore, it could become essential for credit managers to possess the needed managerial capabilities to manage trade credit effectively. in addition, should smes fail to meet stipulated lending criteria, it becomes mandatory to provide security as collateral during credit evaluation by trade creditors (gassiah & kikula 2022). creditors portray a higher level of commitment and assurance with the extension of credit when collateral is available. collateral solves problems derived from information asymmetric in valuation of projects, uncertainties pertaining to project sustainability and debtors’ credit risk (blumberg & letterie 2008). should debtors not commit to credit repayment, it is only when collateral requirements are enforced that such inducements are eliminated (barbosa & moraes 2004). therefore, imposed collateral requirements, such as the frequency with which creditors guarantee collateral, including the stipulation of collateral requirements by creditors, could influence smes’ trade credit management. in addition, inadequate financial and business information results in information asymmetry for smes, while on the contrary, availability of concrete financial and business information helps in reducing information asymmetry (nguyen, tran & truong 2022). vander bauwhede, de meyere and van cauwenberge (2015) found a direct link between the perceptions of the credit manager related to accounting information quality yielding an increase in lending volumes for audited firms. therefore, the provision of concrete financial and business information leads to a reduction in asymmetric information problems as creditors feel more secure while simultaneously resulting in lessoning the effect of credit rationing mitigating the effects of a growing sme ‘finance gap’ (vander bauwhede et al. 2015). small and medium-sized enterprises also need to account for networking while managing trade credit given that, due to the absence of efficient market institutions, networking plays an important role in transcending institutional knowledge detailing business practices (ngoc, le & nguyen 2009). networking can benefit smes in learning appropriate behaviour by acquiring needed support from specialised stakeholders towards effective trade credit management (amoako & matlay 2015). networking brings about numerous entrepreneurial opportunities by allowing the creditor access to vital resources benefitting the credit lenders screening ability by sourcing valuable information pertaining to debtors’ reputation disclosing their business legitimacy in alerting the creditor to possible default risks (el ghoul & zheng 2016). external business environment from a legal system perspective, the majority of business insolvencies results in liquidations amplifying the importance of creditor protection, especially given the relevance thereof to smes’ trade credit management within the south african business environment (atradius 2021). trade creditors need to have their rights protected, as failure to do so would impair the creditors’ operational capability, given that without properly enforced creditor rights, debtors would have little to no reason to commit to overdue payments. therefore, the importance of an effective legal system in protecting creditor rights towards effective smes’ trade credit management must be emphasised (palacin-sánchez, canto-cuevas & di-pietro 2019). the recovery of uncollected debt from insolvent business estates remains challenging for secured creditors due to procedural delays including relatively high enforcement process legal fees. the incapability of the south african legal system contributes to creditors being unprotected in resolving outstanding debt in the event of business insolvency, as the efficiency of contract enforcement in south africa is utterly low (fatoki 2010). given the dependency of smes on trade credit while exposed to several internal and external variables in the south african business environment, as explained earlier, it is no surprise that smes fail on such a large scale, which requires investigation. the 2017–2018 gem south african report lists unprofitability and financial problems as major reasons for sme failure (singer et al. 2018). in addition, from an ethical perspective, the viability of a credit agreement set out between creditor and debtor amplifies ethical business practices to mitigate possibilities of dishonesty among smes. small and medium-sized enterprises’ single most unethical practice is dishonesty in developing a credit agreement and not keeping to the policies stipulated in such credit agreement (amoako, akwei & damoah 2020). late payment results because of a lapse in business ethics, complemented by the actions of dishonesty, while the most effective procedure to mitigate late payments realities because of a lapse in business ethics is the reduction of financial advantages applicable to granting trade credit (chittenden & bragg 2012). however, given that smes’ credit interdependency as trade credit embodies a ‘two-way transaction’, the implementation of such sanctions often impedes the sustainability of the credit lending sme. therefore, smes’ unethical behaviour influences the risk perception of the creditor in the extent to which the debtor can be trusted, thereby constraining the operational viability of smes. because of this, smes’ trade credit management should be directly affected because of the late payment risks associated with a lapse in ethics, implicating business sustainability. furthermore, smes should also consider macroeconomic fluctuations such an economic downturns because of coronavirus disease 2019 (covid-19), whereby business operations are severely impaired, leaving smes exposed to negative debt leverage (lui 2020). according to barbosa and moraes (2004), a positive association exists between inflation and business financial leverage, as corporate debt positions of businesses were highest in high inflationary periods and lowest in low inflationary periods. favourable macroeconomic conditions (mecs) or positive leverage is beneficial to smes’ financial viability and may contribute to effective trade credit management. conversely, negative leverage is a result from a depressed economy, exposing smes to difficult mecs, resulting in unfavourable business conditions such as sales and profit margin decreases. adding to this, the effect of an economic downturn usually brings about an increase in smes’ financial risk, as the enterprise becomes more vulnerable to severe cash flow constraints, thereby constraining the repayment ability from debtor to creditor (coleman & cohn 2000). small and medium-sized enterprises are surrounded by numerous business environmental constraints, although because of corruption, smes are more exposed to economic policy adaptations (rashid & saeed 2017). existing literature distinguishes between two stands regarding the presence of corruption in smes, namely ‘grease in the wheels’ and ‘sand in the wheels’ as a result of sme corruption, imposing several implications to smes’ financial fragility (le & doan 2020; ullah 2020). the latter strand mentioned resembles the devastation caused by corruption, as it affects the operational capacity of business because of a surge in financing constraints, undermining the practice of good corporate governance, and it hinders the possibility of securing investment for innovative business proposals (le & doan 2020; ullah 2020). therefore, the article is aligned to the ‘sand-in-the-wheels’ strand when considering the numerous negative implications of corruptions on smes’ business operations that include trade credit management. corruption creates uncertainty among credit lenders to enforce their claims against defaulting debtors, as it ultimately obstructs the preparedness of the creditor and will of creditor to grant loans or extend credit. however unfortunate, smes are subjected to corruption as the decision not to partake in corrupt activities could severely constrain smes’ cash flow, affecting their management of trade credit. therefore, it seems necessary to determine the impact of corruption and related variables on smes’ management of trade credit. research method the article applied a quantitative research design. the researcher focused on smes (trade debtors and creditors) that operate within the following industries: distribution, engineering, financial services, government, information and communication technology (ict), manufacturing, mining, professional services and retail. the population frame of smes was obtained from interactive direct through the services of ifeedback consulting (pty) ltd. the population of smes operating within the aforementioned industries totalled 10 450. all sme names were crosschecked to eliminate double counting. using the zikmund sample size calculator at 5% margin of error and 95% confidence interval (zikmund et al. 2010), the actual sample size for smes totalled 450 with 10 450 questionnaires (please refer to online appendix 1) distributed to smes and 434 completed questionnaires returned, making the response rate 4.15% of the total population. from the 434 questionnaires, 422 respondents completed between 70.41% and 100% of the questionnaire, and the remaining 12 respondents answered between 0% and 69.39%. the researcher decided to accept the 422 questionnaires presenting a completion rate between 70.41% and 100% and reject the remaining 12 questionnaires falling within the category of 0% – 69.39% rate of completion. in commencement with the research results, missing values presented a small challenge given that the low number of item nonresponse cases was evident. in total, the sample size for the purpose of statistical analysis equalled 422 responses; however, from the 422 responses, the number of item nonresponse cases might still vary because of missing data evident within the sample. the following steps were followed to reduce nonresponse cases – firstly, sensibly applying the needed care in designing and reworking the questionnaire from that used in a previous study; secondly, extensively checking the questionnaire, including the e-mail text and letter to respondents, for any sensitive text or questions and removing such items where applicable; and lastly, sending reminder e-mails to all respondents. the survey research method was employed and data were collected through an online questionnaire (please refer to online appendix 1) via e-mail. fiveand six-point likert scale questions were used across all questionnaire questions, excluding demographic questions. given that no business is identical, for some question sets, the option of not applicable (n/a) was relevant and justified the use of six-point likert-scale questions aimed to test smes’ management of trade credit. the measuring instrument was designed to measure the internal and external business environment variables’ impact on smes’ management of trade credit effectiveness. for this purpose, a 49-item questionnaire (testing smes’ business environment) and a 35-item questionnaire (testing smes’ trade credit management) were designed, which constitute the two main questionnaire sections apart from the initial demographic section (please refer to online appendix 1). between 4 and 8 items (statements) per variable were used to test smes’ business environment, and between 4 and 20 items (statements) were used to test smes’ trade credit management, with each variable not having an exact similar number of items. items were obtained from a combination of studying the literature for theoretical constructs and empirical conclusions, reworking the questionnaire based on a questionnaire used in a previous study and help from experienced statisticians who set out to peer debrief the questionnaire statements. exploratory factor analysis was applied for computing the underlying structure for large data sets. in case of efa, the following steps were applied as supported by pallant (2016). all variables were subjected to efa. eigenvalues greater than 1.00 were retained, and variables with factor loadings less than 0.300 were removed. in order to measure sampling adequacy, bartlett’s test of sphericity (bts) and the kaiser–meyer–olkin (kmo) are tests that can be applied to measure sampling adequacy (pallant 2016). section a of the questionnaire collected the demographical response data. summary statistics to justify factor analysis table 1 indicates the relevant validity statistics for the two main sections of the questionnaire (please refer to online appendix 1, section b and section c) namely, smes’ business environment variables and smes’ trade credit management variables before efa. table 1: validity statistics for sections b and c of the questionnaire before exploratory factor analysis (efa). reliability statistics for factors derived after exploratory factor analysis table 2 provides the cronbach’s alpha for smes’ internal and external business environmental factors after efa. table 3 does the same for smes’ trade credit management factors after efa. table 2: reliability statistics for small and medium-sized enterprises’ business environment factors after exploratory factor analysis (efa). table 3: reliability statistics for small and medium-sized enterprises’ trade credit management factors after exploratory factor analysis (efa). data were analysed using spss 26, employing statistical techniques such as descriptive statistics, frequency distribution, mean, standard deviation, internal consistency, factor analyses, correlations and comparisons and regression analyses. a p-value of 0.05 is considered significant for statistical tests unless otherwise stated. ethical considerations all participating respondents gave their consent to complete the questionnaire. all respondents were properly informed as to the completion of the questionnaire being completely voluntary, while any and all information supplied by respondents alongside the identity of each respondent were treated as strictly confidential. the summary of all data collected will be reported on as a whole, as the researcher was restrained from reporting particulars for any individual respondent response. the researcher also encouraged sharing a summary of the research results with any respondent wishing to obtain such report. required information relating to the study title and the purpose of the study was disclosed, along with the needed credentials for both the researcher and the supervisor that included the researcher’s contact details. the researcher followed and completed the required ethical clearance process stipulated by the university of johannesburg. ethical clearance was obtained from the school of accountancy research ethics committee (reference number: sarec20180502-02). results the empirical results provided set out to determine the impact of the internal and external business environment on smes’ effectiveness in managing trade credit. correlation and regression analysis table 4 tabulates the correlation analysis result between smes’ internal and external business environment factors and smes’ trade credit management factors, followed by the results of the five multiple regression models (table 5). table 4: correlation analysis results between smes’ internal and external business environment and smes’ trade credit management. table 5: multiple linear regression results between smes’ internal and external business environment and smes’ trade credit management. outline of results the article sought to determine the impact of smes’ internal and external business environment on smes’ effectiveness in managing trade credit. all necessary contact information was obtained from the representative sample (number of distributed questionnaires) (please refer to online appendix 1) via e-mail totalled 10 450, although the number of completed questionnaires (actual sample size) totalled n = 434 based on the database population received from ifeedback consulting (pty) ltd. in continuing from the previous point, a letter was sent out to each sme detailing the title of the research project, a short introduction of the researcher, the time required to complete the questionnaire and the assurance that the completion of the questionnaire was voluntary, alongside the needed ethical practices disclosure. the electronic link to the completion of the online questionnaire was also available on the letter sent to respondents who opened the electronic link to the online questionnaire and completed the questionnaire. repeated reminder e-mails, restricted to a maximum of three per respondent, were sent to respondents to attain questionnaire completion. software used in administering the questionnaire were typeform.com, as administered by the services of ifeedback consulting (pty) ltd. after completion, the data for each questionnaire were saved for analysis. the researcher followed and completed the required ethical clearance process stipulated by a public university in the north-eastern region of south africa. validity and reliability statistics for sections b and c of the questionnaire table 1 depicts the results obtained after performing the kmo and bts tests. for section b, bts was at 1176 (p = 0.000), and for section c, bts was at 595 (p = 0.000); therefore, the data were appropriate to perform a factor analysis. the result of the kmo measure of sampling adequacy was 0.860 (section b) and 0.934 (section c), indicating sufficient items for each factor. although a pilot study was not conducted prior to main data collection, both tests support the appropriateness of the factor analysis technique given that the results from the kmo was very high and statistically significant indicating high validity for both questionnaire sections (please refer to online appendix 1, section b and section c). table 2 indicates that cronbach’s alpha is very close to 1 for all 11 smes’ business environmental factors after efa, indicating that most of the factors are highly reliable, due to the very high internal consistency, ranging between 0.80 and 0.90 for six out of the 11 factors in total. table 3 indicates that cronbach’s alpha is very close to 1 for all five smes’ trade credit management factors after efa, indicating that most of the factors are highly reliable, due to the very high internal consistency, ranging between 0.80 and 0.90 for three out of the five factors in total. factor analysis and total variance explained exploratory factor analysis was performed on the final 422 questionnaires (please refer to online appendix 1) returned by smes in the main survey to test the homogeneity of the underlying constructs. exploratory factor analysis of the responses allowed for construct validity using cronbach’s alpha in order to analyse the 49 section b and 35 section c questionnaire components (please refer to online appendix 1, section b and section c). a principal component analysis extraction method was used with oblimin rotation to reduce the data to a manageable number of factors for further analysis, amounting to 38 components (section b: 11 items with loadings < 0.300 that were excluded) and 25 components (section c: 10 items with loadings < 0.300 that were excluded). section b’s extracted components confirmed 11 smes’ business environment factors, as labelled next: financial information (fi), mc, sme and debtor corruption through approving unviable loans (dcul), efficiency of the legal system (els), debtor’s ethical disclosure of accurate and transparent financial and business information (ded), networking (net), mec, corrupt debtor payment practices through forcefully delaying payments due to the sme (cdpp), collateral (col), corrupt sme payment practices through forcefully delaying payments due to creditors of the sme (ccpp) and sme and debtor ethical performance (dep). section c’s extracted components were labelled according to the following five factors: smes’ effectiveness in providing trade credit management activities (mtc1), mechanism and insurance to assist with the collection of or protection against the risk of outstanding debt (mtc2), smes’ effectiveness in managing trade credit management principles (mtc3), smes’ effectiveness in managing trade credit management aspects (mtc4) and smes’ effectiveness in applying credit policy components when granting credit (mtc5). for a detailed description of the efa, refer to author. according to the rules of factor analysis, only factors that have eigenvalues greater than one should be retained. the initial eigenvalues for questionnaire sections b and c cumulative percentage were 70.374% and 65.824%, respectively. correlation analysis results the main study objective was to analyse the impact of smes’ internal and external business environment factors on smes’ trade credit management factors. therefore, correlation analysis and multiple regression analysis were applied. the pearson correlation (table 4) was used to test for the direction and strength of the relationship between smes’ internal and external business environmental variables and smes’ trade credit management variables. the p-values for each variable were compared against a significance level of 0.05. if the p-value is < 0.05, a significant relationship exists between the particular variable and smes’ management of trade credit. in table 4, internal variables discussed first, fi displays a weak to moderate significant positive correlation with all smes’ trade credit management factors, followed by mc displaying a weak to moderate significant positive correlation with all smes’ trade credit management factors. similarly, results from table 4 show that ded shows a significant positive correlation, ranging between weak and moderate, with all smes’ trade credit management factors. in addition, results from table 4 show that net obtained a weak to moderate significant positive correlation with all smes’ trade credit management factors. similarly, col shows a weak to moderate significant positive correlation with all smes’ trade credit management factors. related to the external variables (table 4), dcul displays a weak significant positive correlation with three computed smes’ trade credit management factors. in addition, els display a significant positive correlation, ranging between weak and moderate, with all smes’ trade credit management factors. also provided in table 4, mec obtained a weak significant positive correlation with two computed smes’ trade credit management factors; for the remaining two corruption factors (cdpp and ccpp), both factors display significant weak positive correlations with all smes’ trade credit management factors. lastly, a weak to moderate significant positive correlation was found between dep and all smes’ trade credit management factors. multiple regression analysis results regression analysis (table 5) is used to test the significant effect of one variable on another variable (scott 1997). the linear regression equation denotes that one variable(s) is a dependent variable (y), with the other variable(s) being an independent (x) variable. linear regression analyses were used to determine the significant impact between smes’ internal and external business environment factors with corresponding smes’ trade credit management factors. table 5 results indicate that the following internal variables significantly impact on mtc1, mc (β = 0.242, sig. 0.000) followed by ded (β = 0.184, sig. 0.000) and fi (β = 0.083, sig. 0.061). the following external variables significantly impact on mtc1, dep (β = 0.252, sig. 0.000), els (β = 0.149, sig. 0.001), ccpp (β = 0.142, sig. 0.001) and dcul (β = −0.100, sig. 0.019). the results indicate that one internal and two external variables significantly impact on mtc2, provided from highest to the lowest significant impact, els (β = 0.340, sig. 0.000), dcul (β = 0.144, sig. 0.005) and ded (β = 0.135, sig. 0.020). in addition, table 5 results show that mc (β = 0.208, sig. 0.000), net (β = 0.153, sig. 0.005) and fi (β = 0.109, sig. 0.033), all internal variables and dep (β = 0.271, sig. 0.000), external variable, significantly impact on mtc3. furthermore, three internal variables and one external variable significantly impact on mtc4, namely mc (β = 0.285, sig. 0.000), col (β = 0.148, sig. 0.002), fi (β = 0.118, sig. 0.016) and dep (β = 0.237, sig. 0.000), respectively. lastly, three internal variables and one external variable significantly impact on mtc5, namely mc (β = 0.169, sig. 0.001), col (β = 0.100, sig. 0.055), ded (β = 0.098, sig. 0.086) and dep (β = 0.283, sig. 0.000), respectively (table 5). discussion of results internal business environment factors significantly impacting small and medium-sized enterprises’ effectiveness in managing trade credit the results reveal the importance of fi to smes’ management of trade credit effectiveness, which helps to mitigate smes’ fi supply gap (palazuelos, crespo & del corte 2018; vander bauwhede et al. 2015). information asymmetry is the cause of financial problems for smes, while the availability of concrete fi reduces information asymmetry (nguyen et al. 2022). therefore, the article results reveal that for creditors, a decrease in asymmetric information received from debtors is of pivotal importance towards increasing smes’ effectiveness in managing trade credit, as fi provision would equip creditors to make informed trade credit supply decisions, positively impacting smes’ management of trade credit. in addition, this mitigation of information asymmetry can positively affect trade credit availability, alleviating sme constraints related to credit rationing (padachi et al. 2008). moreover, because of this decrease in asymmetric information received from sme debtors, smes should benefit from the formation of a credit agreement by which the creditor can exploit the undeserved cash discount related to the market power theory of trade credit (frank & maksimovic 2003). in relation to mc significantly impacting smes’ management of trade credit effectiveness, the results illustrate the importance of having managerial competent trade credit managers improving education and experience improving problem solving, communication and business skills in order to improve smes’ effectiveness in managing trade credit. the results are in line with literature observing the importance of mc for business performance in order to mitigate business failure (malinao & ebi 2022; veliu & manxhari 2017). in support of this, the 2017–2018 gem south africa report observes that the increase in entrepreneurial activity is stifled due to the country’s poor school educational system (herrington & kew 2018). furthermore, the results reveal the significance of ded on smes’ effectiveness in managing trade credit, which are in line with the findings by vander bauwhede et al. (2015) and palazuelos et al. (2018), observing the importance of providing accurate and transparent financial and business information in mitigating information asymmetries and increasing lending volumes (credit rationing theory). in relation to net significantly impacting smes’ management of trade credit, several authors point out that it is because of the formation of networks that resources become more accessible between credit lender and borrower. in view hereof, the results are consistent with the findings by song, yang and yu (2020), given that networking contributes to a more secure climate for trade credit supply, as because of increased information, through reduced information asymmetries, accessibility is improved. to this end, smes’ access to trade credit should become less restricted, improving the redistribution of trade credit as a result of networking between credit lender and borrower. also, petersen and rajan (1997) indicated the importance of networking in diminishing creditor–debtor costs as a mutual benefit comes into existence should smes do business in closely linked networks to lower combined trade credit transaction costs (transaction cost theory), thereby in line with the study results as lowered transaction costs contribute to smes’ effectiveness in managing trade credit. in case of col, the results are in line with the findings by gassiah and kikula (2022) related to the asymmetric information theory, including the findings by voordeckers and steijvers (2006) and cole, cowling and liu (2022) related to the redistribution theory of trade credit. this holds true as an increase in col could lower the debtors’ default risk (asymmetric information theory), as smes would be more effective in managing trade credit management aspects and applying credit policy components, which, once attained, could reduce the likelihood of having to provide additional security as collateral. those smes once labelled as probable to default risk can now utilise col as a signalling mechanism to minimise information asymmetries, including mitigating adverse selection risks. this in turn would improve sme management of trade credit while expanding smes’ potential for trade credit redistribution as a spinoff benefit from supplying adequate col. external business environment factors significantly impacting small and medium-sized enterprises’ effectiveness in managing trade credit the results reveal that dep significantly positively impacts sme management of trade credit effectiveness, thereby revealing the importance of implementing an ethical business practice of nondefault to payments payable in respect to sme to creditor and debtor to sme. therefore, it can be observed that the relationship between creditor and debtor is delicate and largely dependent on ethics, given that ethical performance, supported by an ethical code of conduct which includes honesty and trust, is instrumental to smes’ management of trade credit effectiveness. the findings of ibeh, wilson and chizema (2012) and amoako et al. (2020) support this result. the result is of further value for smes to attain effective trade credit management, as ethics play a pivotal role in any business environment in order to reduce agency problems such as asymmetric information, as supported by stiglitz and weiss (1981) and howorth and moro (2006). in addition, these authors observed that asymmetric information, adverse selection and moral hazard problems can affect the availability of credit (credit rationing theory), while ethics is important to reduce monitoring and screening costs (transaction cost theory), making dep, as observed from the results, profoundly important towards smes’ effectiveness in managing trade credit. the results show that corruption (see dcul and ccpp in table 5) significantly positively impacts smes’ management of trade credit effectiveness, which is consistent with the findings by wellalage and thrikawala (2021), resembling that businesses do in fact benefit from corrupt practices in developing countries weakened by a defective government, such as south africa. although the article result is of great value in revealing the act of corruption on both smes and sme debtor’s trade credit management, it is unfortunate that the article results align with the ‘grease-in-the-wheels’ perspective, as supported by wellalage, locke and samujh (2019a) and wellalage, locke and samujh (2019b). in rationalising this finding, smes and sme debtors are therefore willing to partake in corruption as they benefit from a form of joint alliance resulting in mutual benefit, which therefore becomes acts of corruption whereby sme and sme debtors’ trade credit management improves because of their willingness to partake in corruption. however, results from model 1 reveal that dcul significantly negatively impacts smes’ effectiveness in managing trade credit specific to mtc1. compared to the previous finding, this result is more expected and aligns with the ‘sand-in-the-wheels’ perspective by gbetnkom (2012) and le and doan (2020), who proclaim that corrupt practices such as bribery are detrimental to all businesses, especially to smes, as they hamper sme development, resulting in corporate financial fragility. furthermore, the results reveal that a more efficient legal system (see els in table 5) will enable smes to be better protected against cash flow shortages associated with the risks of outstanding debt while becoming more effective in providing trade credit management activities, improving smes’ trade credit management effectiveness and financial viability. the findings of palacin-sánchez et al. (2019) support the results. this study finding is of further value to smes’ effectiveness in managing trade credit, as, firstly, information asymmetric costs incurred in relation to product quality will increase for those smes operating in countries categorised by less efficient legal systems and vice versa (quality guarantee theory). secondly, debtors are prone to exercise market power to mitigate asymmetric information problems, especially in countries categorised by less efficient legal systems and vice versa (van horen 2007), which holds a credit risk for smes, as a surge debtor surplus (as a result of exploiting market power) expands the degree of asymmetric information between credit and debtor (market power theory). results from the multiple regression analysis indicated that several sme business environment factors have a direct, positive, statistically significant relationship with smes’ effectiveness in managing trade credit, while one external (dep) and one internal (mc) factor repeatedly ranked either as having the biggest or second-biggest significant impact on smes’ effectiveness in managing trade credit. however, dcul obtained a direct negative statistically significant relationship with smes’ management of trade credit. recommendation given that several internal and external business environment factors significantly impact on smes’ effectiveness in managing trade credit, it is recommended that the south african government approve legislation detailing the provision of standardised financial information for smes that enforce all sme debtors to provide transparent, accurate and truthful financial information. in view of this, the south african institute of charted accountants (saica) should work closely with government in providing knowledge to develop the required fi standard. in addition, public and private sector institutions should contribute to upskill smes’ managerial capabilities by funding regular training sessions. to attain this, local government should institute policy for government-funded tertiary level educational institutions to redevelop curricula to teach managerial competency disciplines. it is also recommended that local government should change smes’ tax legislation, thereby providing a tax rebate to all smes involved in building networking relations. furthermore, local government must construct and implement a legal framework policy, creating courts specialising in sme insolvencies that would decrease the time to obtain judgement against defaulting smes, including the employment of more judges. it is also recommended that the nonprofit and public sector organisations create awareness around the devastation caused by acts of sme corruption, including the seriousness of corruption from a prosecution perspective. channels to report corruption must be accessible for smes, and nonprofit organisations must take charge by directing awareness to this end to smes on a national level. all anticorruption organisations must uphold their mandate to eradicate public and private sector corruption by broadening existing policies to include the investigation of smes and sme debtor corruption relating to improving effectiveness in managing trade credit. lastly, local government should sanction a policy necessitating all sme funding applications to include proof of documentation pertaining to smes’ ethical business practices. conclusion for the purpose of this article, the impact of the south african business environment on smes’ management of trade credit was attained. the results indicate that all five internal business environment factors significantly impact smes’ trade credit management. the results indicate significant positive beta coefficients between mc and mtc1, mtc3, mtc4 and mtc5. in addition, the results indicate significant positive beta coefficients between fi and mtc1, mtc3 and mtc4. debtor’s ethical disclosure significantly impacts mtc1, mtc2 and mtc5. networking significantly impacts mtc3. lastly, col significantly impacts mtc4 and mtc5. furthermore, the results indicate that four external business environment factors significantly impact smes’ trade credit management. the results indicate significant positive beta coefficients between dep and mtc1, mtc3, mtc4 and mtc5. therefore, els significantly impacts mtc1 and mtc2. for corruption, firstly, dcul significantly impacts mtc1 and mtc2. secondly, ccpp significantly impacts mtc1. the practical value of the article is in the understanding that specific internal and external business environment factors contribute to increased sme effectiveness in managing trade credit. by determining the impact between the relevant independent and dependent variables, the article broadens the understanding of the association between internal and external business environment factors and smes’ management of trade credit. in doing so, the research can contribute to the mitigation of financial problems associated with smes’ trade credit as a result of asymmetric information such as adverse selection, moral hazard and credit rationing while also understanding the significance of corruption on smes’ management of trade credit. limitations the article focuses only on trade credit management as a funding source. a dynamic survey to examine the impact of the business environment on the management of debt and equity (total capital) as perceived by smes could help to further confirm the findings of this article. acknowledgements the authors acknowledge all anonymous reviewers for comments that greatly improved the manuscript. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions w.h.o. is the main author of this study. i.b. is the main supervisor, providing supervising guidance to the study. g.e. is the co-supervisor, providing additional supervising guidance to the study. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the authors confirm that the data supporting the findings of this research project are available within the article. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references amoako, i.o., akwei, c. & damoah, i., 2020, ‘we know their house, family and workplace: trust in entrepreneurs’ trade credit relationships in weak institutions’, journal of small business management 59(6), 1–30. https://doi.org/10.1111/jsbm.12488 amoako, i.o. & matlay, h., 2015, ‘norms and trust-shaping relationships among food-exporting smes in ghana’, international journal of entrepreneurship & innovation 16(2), 123–124. https://doi.org/10.5367/ijei.2015.0182 andrieu, g., staglianò, r. & van der zwan, p., 2018, ‘bank debt and trade credit for smes in europe: firm-, industry-, and country-level determinates’, small business economics 51, 245–264. https://doi.org/10.1007/s11187-017-9926-y atradius, 2021, international debt collections handbook: atradius debt collection report, october 2021, viewed 23 november 2021, from https://group.atradius.com/publications/global-international-debt-collections-handbook.html baker, h.k., kumar, s. & singh, h.p., 2019, ‘working capital management: evidence from indian smes’, small enterprise research 26(2), 143–163. https://doi.org/10.1080/13215906.2019.1624386 barad, m.m., 2010, ‘a study on liquidity management of indian steel industry’, phd thesis, saurashtra university, rajkot, viewed 27 september 2016, from http://etheses.saurashtrauniversity.edu/id/eprint/77. barbosa, e.g. & moraes, c.c., 2004, determinants of the firm’s capital structure: the case of the very small enterprises, viewed 08 april 2015, from http://econpa.wustl.edu.8089/eps/fin/papers0302/0302001.pdf. bhattacharya, h., 2008, theories of trade credit: limitations and applications, viewed 11 june 2018, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1286443. blumberg, b.f. & letterie, w.a., 2008, ‘business starters and credit rationing in small business’, small business economics 3(1), 187–200. https://doi.org/10.1007/s11187-006-9030-1 bosma, n., hill, s., ionescu-somers, a., kelley, d., levie, j. & tarnawa, a., 2020, global entrepreneurship monitor report, viewed 28 march 2020, from https://www.gemconsortium.org/file/open?fileid=50443. brennan, m., maksimovic, v. & zechner, j., 1988, ‘vendor financing’, journal of finance 43(5), 1127–1141. https://doi.org/10.1111/j.1540-6261.1988.tb03960.x chittenden, f. & bragg, r., 2012, ‘trade credit, cash flow and smes in the uk, germany and france’, international small business journal 16(1), 22–35. https://doi.org/10.1177/0266242697161002 cole, r., cowling, m. & liu, w., 2022, the effect of collateral on small business rationing of term loans and lines of credit, efma, norfolk, virginia. coleman, s. & cohn, r., 2000, ‘small firm use of financial leverage: evidence from 1993 national survey of small business finance’, journal of business entrepreneurship 12(3), 81–98. cunat, v., 2006, ‘trade credit: suppliers as debt collectors and insurance providers’, the review of financial studies 20(2), 491–527. https://doi.org/10.1093/rfs/hhl015 el ghoul, s. & zheng, x., 2016, ‘trade credit provision and national culture’, journal of corporate finance 4(1), 475–501. https://doi.org/10.1016/j.jcorpfin.2016.07.002 fatoki, o., 2010, ‘the impact of the south african business environment on the availability of debt finance to new small and medium enterprises in south africa’, phd thesis, business management, university of the free state. ferris, j.s., 1981, ‘a transactions theory of trade credit use’, quarterly journal of economics 96(2), 243–270. https://doi.org/10.2307/1882390 frank, m.z. & maksimovic, v., 2003, trade credit, collateral and adverse selection, university of maryland working paper, ssrn, rochester, new york. garcia-teruel, p.j. & martinez-solano, p., 2007, ‘effects of working capital management on sme profitability’, international journal of managerial finance 3(2), 164–177. https://doi.org/10.1108/17439130710738718 gassiah, n. & kikula, j., 2022, ‘challenges small and medium enterprises (smes) face in acquiring loans from commercial banks in tanzania’, african journal of business management 16(4), 74–81. https://doi.org/10.5897/ajbm2021.9295 gbetnkom, d., 2012, ‘corruption and small and medium-sized enterprise growth in cameroon’, in s. kayizzi-mugerwa, a. shimiles, a. lusigi & a. moummi (eds.), inclusive growth in africa: policies, practice and lessons learnt, pp. 37–58, routledge, new york, ny. herrington, m. & kew, p., 2018, global entrepreneurship monitor south african report, viewed 10 july 2020, from https://www.gemconsortium.org/economy-profiles/south-africa. howorth, c. & moro, a., 2006, ‘trust within entrepreneur bank relationship: insight from italy’, entrepreneurship theory and practice 5(2), 26–40. huyghebaert, n., 2006, ‘on the determinant and dynamics of trade credit use: empirical evidence from business start-ups’, journal of business finance and accounting 33(1–2), 305–328. https://doi.org/10.1111/j.1468-5957.2006.001364.x huyghebaert, n., van de gucht, l. & van hulle, c., 2001, the demand for debt finance by entrepreneurial firms, efa 2001 barcelona meetings, katholieke universiteit, belgium, department of applied economics working paper no. 0110, ssrn, rochester, new york. ibeh, k., wilson, j. & chizema, a., 2012, ‘the internationalization of african firms 1995–2011: review and implications’, thunderbird international business review 54(4), 411–427. https://doi.org/10.1002/tie.21473 le, a. & doan, a., 2020, ‘corruption and financial fragility of small and medium enterprises: international evidence’, journal of multinational financial management 57–58, 1–22. https://doi.org/10.1016/j.mulfin.2020.100660 lui, a., 2020, ‘understanding the shift in trade credit in the covid-19 pandemic’, s & p global: market intelligence, viewed 06 may 2020, from https://www.spglobal.com/marketintelligence/en/news-insights/blog/understanding-the-shift-in-trade-credit-in-the-covid-19-pandemic. malinao, c.w.m. & ebi, r.g., 2022, ‘business management competencies as the driver of small-medium enterprises’ survival during covid-19 pandemic’, puissant 3, 296–315. martinez-sola, c., garcia-teruel, p.j. & martinez-solano, p., 2013, ‘trade credit and sme profitability’, small business economics 42(3), 561–577. https://doi.org/10.1007/s11187-013-9491-y mcguinness, g., hogan, t. & powell, r., 2017, ‘european trade credit use and sme survival’, journal of corporate finance 49, 81–103. https://doi.org/10.1016/j.jcorpfin.2017.12.005 new partnership for africa’s development (nepa), 2008, market access initiative, viewed 10 february 2016, from http://www.unido.org.hleadmin/import/11340. ngoc, t.b., le, t. & nguyen, t.b., 2009, ‘the impact of networking on bank financing: the case of small and medium enterprises in vietnam’, entrepreneurship theory and practise 33(4), 867–887. https://doi.org/10.1111/j.1540-6520.2009.00330.x nguyen, d.n., tran, q.n. & truong, q.t., 2022, ‘the ownership concentration – innovation nexus: evidence from smes around the world’, emerging markets finance and trade 58(5), 1288–1307. organisation of economic cooperation and development (oecd), 2020, economic surveys: south africa, viewed 06 august 2020, from http://www.treasury.gov.za/comm_media/press/2020/20200731%20oecd%20economic%20survey%20sa%202020.pdf. padachi, k., narasimhan, m.s., durbarry, r. & howorth, c., 2008, ‘an analysis of working capital structure and financing pattern of mauritian small manufacturing firms’, journal of applied finance 14(7), 41–62. palacin-sánchez, m.j., canto-cuevas, f.j. & di-pietro, f., 2019, ‘trade credit versus bank credit: a simultaneous analysis in european smes’, small business economic 58, 1079–1096. https://doi.org/10.1007/s11187-018-0101-x palazuelos, e., crespo, a.h. & del corte, j.m., 2018, ‘accounting information quality and trust as determinants of credit granting to smes: the role of external audit’, small business economics 51, 861–877. https://doi.org/10.1007/s11187-017-9966-3 pallant, j., 2016, spss survival manual: a step-by-step guide to data analysis using ibm spss, allen & unwin, sydney. petersen, m.a. & rajan, r.g., 1997, ‘trade credit: theories and evidence’, review of financial studies 10(4), 661–691. https://doi.org/10.1093/rfs/10.3.661 pretorius, m. & shaw, g., 2004, ‘business plan in bank-decision making when financing new ventures in south africa’, south african journal of economics and management science 7(2), 221–242. https://doi.org/10.4102/sajems.v7i2.1377 rashid, a. & saeed, m., 2017, ‘firms’ investment decisions – explaining the role of uncertainty’, journal of economic studies 44(5), 833–860. https://doi.org/10.1108/jes-02-2016-0041 schwartz, r.a., 1974, ‘an economic model of trade credit’, journal of financial and quantitative analysis 9(4), 643–657. https://doi.org/10.2307/2329765 scott, l.j., 1997, regression models for categorical and limited dependent variables: advanced quantitative techniques in the social sciences, sage, newbury park, california. singer, s., herrington, m. & menipaz, e., 2018, global entrepreneurship monitor report, viewed 02 september 2019, from http://www.gemconsortium.org/report. smith, j.k., 1987, ‘trade credit and informational asymmetry’, journal of finance 42(4), 863–872. https://doi.org/10.1111/j.1540-6261.1987.tb03916.x song, h., yang, x. & yu, k., 2020, ‘how do supply chain networks and smes’ operational capabilities enhance working capital financing? an integrative signalling view’, international journal of production economics 220, 107447. https://doi.org/10.1016/j.ijpe.2019.07.020 statistics south africa, 2021, quarterly labour force survey (qlfs), 4th quarter 2021, viewed 30 may 2022, from https://www.statssa.gov.za/?page_id=1854&ppn=p0211&sch=73254. stiglitz, j. & weiss, a., 1981, ‘credit rationing in markets with imperfect information’, american economic review 71(3), 393–410. ullah, b., 2020, ‘financial constraints, corruption, and sme growth in transition economies’, the quarterly review of economics and finance 75, 120–132. https://doi.org/10.1016/j.qref.2019.05.009 vander bauwhede, h., de meyere, m. & van cauwenberge, p., 2015, ‘financial reporting quality and the cost of debt of smes’, small business economics 45, 149–164. https://doi.org/10.1007/s11187-015-9645-1 van horen, n., 2007, customer market power and the provision of trade credit: evidence from eastern europe and central asia, vol. 4284, world bank publications, washington, dc. veliu, l. & manxhari, m., 2017, ‘the impact of managerial competencies on business performances: sme’s in kosovo’, vadyba journal of management 30(1), 59–65. voordeckers, w. & steijvers, t., 2006, ‘business collateral and personal commitments in smes lending’, journal of banking and finance 30(11), 3067–3086. https://doi.org/10.1016/j.jbankfin.2006.05.003 wellalage, n. & thrikawala, s., 2021, ‘does bribery sand or grease the wheels of firm level innovation: evidence from latin american countries’, journal of evolutionary economics 31(3), 891–929. https://doi.org/10.1007/s00191-020-00717-0 wellalage, n.h., locke, s. & samujh, h., 2019a, ‘corruption, gender and credit constraints: evidence from south asian smes’, journal of business ethics 159(1), 267–280. https://doi.org/10.1007/s10551-018-3793-6 wellalage, n.h., locke, s. & samujh, h., 2019b, ‘firm bribery and credit access: evidence from indian smes’, small business economics: an entrepreneurial journal 55(1), 1–22. https://doi.org/10.1007/s11187-019-00161-w world bank, 2020, overview, viewed 13 july 2020, from https://www.worldbank.org/en/country/southafrica/overview. zikmund, w.g., babin, b.j., carr, j.c. & griffin, m., 2010, business research methods, 8th edn., cengage learning south-western cengage, mason, ohio. abstract introduction literature review research methodology findings conclusion acknowledgements references about the author(s) chenai muhwati discipline of marketing and supply chain management, school of management, it and governance, university of kwazulu-natal, pietermaritzburg, south africa roger h. salisbury discipline of marketing and supply chain management, school of management, it and governance, university of kwazulu-natal, pietermaritzburg, south africa citation muhwati, c. & salisbury, r.h., 2022, ‘a framework for closed-loop supply chain adoption by small, medium and micro enterprise fashion retailers in south africa’, southern african journal of entrepreneurship and small business management 14(1), a463. https://doi.org/10.4102/sajesbm.v14i1.463 original research a framework for closed-loop supply chain adoption by small, medium and micro enterprise fashion retailers in south africa chenai muhwati, roger h. salisbury received: 23 aug. 2021; accepted: 29 mar. 2022; published: 17 aug. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the implementation of closed-loop supply chain strategies is increasing as the focus grows on the sustainability challenges of the fashion industry. however, their implementation is more widely adopted and researched from the perspectives of larger retailers in developed economies outside of africa, limiting the widespread applicability of their findings to stakeholders in developing countries such as south africa. aim: the study explored and proposed a decision support framework for the potential coordination of closed-loop supply chain strategies by small, medium and micro enterprise (smme) fashion retailers in south africa. setting: this research study was conducted in south africa with stakeholders in the western cape, kwazulu-natal, gauteng and limpopo provinces. methods: this descriptive, qualitative research approach used purposive sampling, in the form of judgment sampling, to select 14 participants. the interviews were then transcribed and transferred to nvivo™ software to identify and analyse themes within the data. results: the findings revealed that while some smmes would consider or were already considering adopting closed-loop strategies, various challenges and limitations existed related to the sizes of their businesses, their restricted relationships with supply chain stakeholders and their operation in an african developing country. a decision support framework was established, which considers this context and could aid in the implementation of circular strategies by such retailers. conclusion: despite resource limitations, opportunities exist for smme retailers to adopt closed-loop supply chains and become globally competitive, following international focus on accountability and sustainable consumption. the decision support framework is suitable for such stakeholders to facilitate collaborative efforts towards achieving end-to-end sustainability. keywords: closed-loop supply chain management; sustainability; smmes; developing economies; fashion. introduction in recent years, the social and environmental sustainability of the global fashion industry has been under scrutiny. this is largely because of the emergence of fast fashion in the production and supply of apparel, accessories and footwear (aftab et al. 2018:217). these strategies have allowed stakeholders to maximise profits by promptly and consistently providing consumers with affordable and trendy fashion products that meet their temporary requirements (joy & peña 2017:35), and hence, have short life cycles (seifert et al. 2015:9). excessive purchasing of these products results in an increase in post-consumption waste disposal, and in a significant amount of used fashion redirected to developing countries, where local industries cannot compete with their low prices (bick, halsey & ekenga 2018:2). products that are not sold may lead to an increase in waste disposed into local landfill (bick et al. 2018:2; brooks & simon 2012:1268). to alleviate some of the consequences of the fashion industry’s modern business models, the concept of closed-loop supply chain management (clscm) has emerged (ashby 2018:2). this system, which can contribute to economic, social and environmental sustainability, involves extending the forward-driven supply chain to include the activities of reverse logistics. these are employed to collect unwanted used products from consumers for value recovery through reprocessing and redistribution. romero and rossi (2017:14) suggest a selection of reprocessing options, including repairing, refurbishing, re-manufacturing and recycling. hvass and pedersen (2019:348) propose that used products of the focal retailer’s own brand can be redistributed to its customers. alternatively, a used product’s life cycle can be extended through being donated or sold to secondary reuse or recycling markets, which helps to manage the waste generated after consumption (kumar & kumar 2013:156–157). the formal and informal activities of small, medium and micro-sized enterprises (smmes) in the fashion industries of developing countries in africa have considerable social and economic importance. they offer skilled and unskilled employment to vulnerable groups, particularly women, and help to develop and expand industries and economies (african development bank group 2018:1–14). however, studies that examine the use of clscm strategies frequently overlook smmes in these developing countries (e.g. hvass & pedersen 2019:348). in addition, while the fashion industry has unique features that have inspired studies in a wide range of disciplines, the literature on clscm tends to focus on implementation in the electronic and automobile industries (e.g. hong et al. 2015:12). research problem south africa’s fashion industry contributes significantly to its economic activity. in 2020, the retail clothing, textile, footwear and leather supply chain made an estimated r74 billion contribution to gross domestic product (south african government news 2020:7). small, medium and micro enterprises have emerged as recognisable contributors to this. however, the recent local presence of global brands such as h&m and zara, has compromised this position (crotty 2017:1). the implementation of agile practices by these brands has made them international leaders (gabrielli, baghi & codeluppi 2013:206; ndlendele 2017:3), with some pioneering the adoption of retailer-facilitated clscm in the industry (hvass 2013:111). closed-loop supply chain management strategies offer innovative opportunities for smmes to establish a globally recognisable competitive advantage through creating opportunities for additional supply chain stakeholders to participate in their reverse logistics activities and establishing additional markets for recovered products (bhatia et al. 2020:2; chow & li 2018:235). this can provide jobs, improve lives and ultimately reduce poverty levels. in addition, following the south african revenue service’s (sars) attempts to eliminate illegal imports of used products (tswanya 2017:5–8), reprocessing can create an alternative to the used products directed to the country from developed countries. with potential future increases in the cost of sourcing scarce natural resources appearing inevitable (matthews 2015:6), this system could also be essential for smmes to develop more robust supply chain systems through reclaiming resources that already exist on the market. the implementation of clscm strategies by smmes in south africa could also have practical contributions to the government’s agenda to achieve sustainable economic development. south africa aspires to achieve this through its national strategy for sustainable development and action plan (department of environmental affairs 2019:4) and its national development plan (ndp) (south african government 2021:1–3). through its ndp, the objective of the south african government was to eliminate poverty and decrease inequality by 2030. as smmes contribute approximately 39% to the earnings of the formal business market, a subsidiary aim is to ensure that smmes provide 90% of the 11 million jobs needed to achieve this (bhorat et al. 2018:2; small enterprise development agency 2016:33). this makes it essential to examine how smme retailers can extend their traditional roles to achieve economic, social and environmental sustainability. research purpose and objectives through an evaluation of three recovery strategies, this study explores the possible collection, reprocessing and redistribution of used fashion by smme fashion retailers in south africa. this would merge the activities of primary and secondary markets and create a localised and integrated system for recovering and circulating the used fashion products. this study also considers the limitations experienced by the smmes, which can impact their adoption of sustainable practices. kumar et al. (2019:7), for example, argue that smmes may appreciate the importance of sustainable practices but often do not have the resources or expertise to implement them. in view of this, this study further provides insights into the opportunities for adoption and offers a decision support framework that can assist in their implementation of clscm. following the above, the objectives of this research are as follows: to evaluate the opportunities for clscm adoption and coordination by smme fashion retailers in south africa to assess the risks associated with clscm adoption and coordination by smme fashion retailers in south africa to develop a decision support framework for clscm adoption by smmes in south africa. literature review an smme, in south africa, was formally recognised by the national small business act, (102 of 1996) as follows: [a] separate and distinct business entity, together with its branches or subsidiaries, if any, including cooperative enterprises, managed by one owner or more predominantly carried on in any sector or sub-sector of the economy. (department of small business development 2019:1) under this act, smmes are categorised based on their size, number of full-time staff and the total turnover for the year (bruwer & coetzee 2016:201). small, medium and micro enterprises perform an important function in the economy, offering employment, and thereby decreasing poverty and supporting south africa’s economic growth (cant & rabie 2018:231). although many countries rely on the economic activities of smmes, few studies explore the contributions made by these enterprises towards the sustainability of various industries. kumar et al. (2019:15) argue that these businesses are more influenced by sourcing based on price and quality, rather than on the sustainability contributions of their purchases. despite this, ashby and smith (2014:3) reveal that their strategies are often closely connected to what the owner values and is interested in, especially in the absence of shareholder pressure. the authors further explain that smmes are more flexible and able to establish strategic relationships with their supply chain partners. fetter (2019:154) proposes that the participation of smmes in sustainability is essential because of new regulations that can result in pressure from supply chain partners. several studies have evaluated the challenges that smmes experience when adopting new strategies. these are likely to hinder the successful implementation of clscm. bvuma and marnewick (2020:5), for example, recognise the inability to access financial support as a challenge that can potentially restrict their operations. donga, ngirande and shumba (2016:61) add that a lack of skills can hinder owners, with an estimated 70% of founders not receiving training before establishing their businesses. kumar et al. (2019:7) conclude that the resulting lack of expertise can limit the adoption of sustainable practices. macro-economic factors that include legislation and the crime rate in the country can also present a challenge to smmes (rusu & roman 2016:143). closed-loop supply chain management the concept of clscm has evolved to challenge the primary objectives of traditional supply chain management: efficiency and profit. this system involves the strategic integration of additional activities into the traditional supply chain. hvass (2016:41) describes these as: collection: in order to sustain clscm systems, the constant acquisition of used products from consumers is essential (huang et al. 2013:511). o’reilly and kumar (2015:498) claim that there are several recovery channels for this front-end activity, including door-to-door collections and in-store drop-off points. savaskan, bhattacharya and van wassenhove (2004:245) and chow and li (2018:233) suggest that retailers could facilitate the collection of used products more successfully because of their proximity to consumers and the convenience they offer. however, chen et al. (2020:2) explain that there is limited research on retailer facilitated clscm systems, despite their increasing popularity in practice. arguments such as this motivated this study. reverse logistics: govindan and soleimani (2017:371) explain that upon collection, used products are taken to a recovery facility where they are tested and sorted to determine the most suitable and efficient method for each product’s recovery. researchers, such as wu and kao (2018:538), acknowledge the need for enhancing technologies to improve product recovery. this is essential as hedegård, paras and gustafsson (2016:5) reveal that reprocessing can impact the value of a used product. re-marketing: marketing has been thoroughly explored in forward-driven supply chains. however, research is limited for the redistribution of recovered products, a gap identified by researchers such as abbey et al. (2015:489) and wang et al. (2013:867). shekarian (2020:7) highlights the use of promotional and advertising activities to encourage consumption of recovered products. however, reimann, xiong and zhou (2019:512) acknowledge that this should be strategic to prevent cannibalisation of new product sales where both product types are sold in the same location. studies present different motivations for stakeholder interest in establishing clscm. hvass (2016:81) proposes that some stakeholders may want to encourage loyalty and unique engagement with their consumers. hvass (2016:85) adds motivation connected to the desire to incorporate more environmentally sustainable practices, while govindan, soleimani and kannan (2015:604) argue that the adoption of clscm is fundamental for economic purposes. few proponents report on the social benefits of these systems, which may improve lives and reduce poverty through the creation of employment (ahi & searcy 2015:2885). closed-loop supply chain management in the fashion industry as public interest in more sustainable practices in the fashion industry’s supply chain has increased, so has the academic literature on the subject. most focuses on improving the internal operations of forward-driven supply chains (e.g. bottani et al. 2019:361–362). this has resulted in a dearth of literature that examines the post-consumption involvement of stakeholders, with many of the scholarly conversations on clscm focusing on implementation by the electronic and automobile industries (hong et al. 2015:12). studies (e.g. hvass & pedersen 2019:348) reveal that clscm facilitates the merging of both primary and secondary markets of the fashion industry. recovered products may be redistributed to secondary markets to expand their life cycles. small, medium and micro enterprise stakeholders in south africa’s fashion industry frequently operate in either of these markets, with secondary markets especially common in sub-saharan africa. this trade of used fashion has traditionally catered for price-sensitive consumers in this region (hoang 2015:42; tóta 2015:24), but is commonly disconnected from primary retailers and does not require their direct participation or contribution. reprocessing options for the fashion industry are similar to those in other industries. however, only three recovery methods were considered in this study: reuse: products in a condition for reuse are prepared for redistribution. this would be challenging in uncertain circumstances, such as those discussed by dissanayake and sinha (2015:6), if stakeholders cannot control at what stage used products are recovered in their life cycles. however, studies on the existing operations of the secondary markets of used fashion, for example, by tóta (2015:24) reveal that this risk of obsolete designs may not be an issue in the context of emerging economies. recycling: o’reilly and kumar (2015:498) explain that recycling occurs when the value can no longer be extracted from a used product. in order to preserve natural resources, recycled materials can be used in the manufacturing of new fashion (roos et al. 2019:11–12). this study investigates the collection of used fashion for recycling by secondary industries. re-manufacturing: unlike recycling, re-manufacturing does not produce raw materials from used goods. according to dissanayake and sinha (2015:3), the value of the re-manufactured end-product may be greater than that of the initial product. sinha, muthu and dissanayake (2016:6) suggest that re-manufacturing can differ in the fashion industry when compared to other industries. a re-manufactured product’s functions, identity and design do not have to match the initial product. for example, a dress can be re-manufactured into a skirt. the reviewed literature shows that there is an increase in studies on clscm. however, a comparison of academic databases shows that implementation is relatively new in the fashion industry, and mainly focuses on european and asian markets, and excludes stakeholders in africa. a study, such as this, is essential to allow smme stakeholders to assess the opportunities that these systems provide. research methodology research design a descriptive, qualitative research design was used as the authors were seeking to describe certain characteristics of the phenomenon under investigation (grover 2015:1; tshuma & mafa 2013:115). due to the exploratory nature of the study, this design was used to seek an in-depth understanding of the various opportunities and challenges that may be experienced by smmes looking to adopt clscm strategies. sampling a comprehensive list of the smmes active in the fashion industry in south africa does not exist. hence, a non-probability, purposive sampling method was used to select enterprises to be included in the study. initially, an extensive, online search for potentially suitable, locally based retailers was conducted. small, medium and micro enterprises from all nine provinces of south africa associated with new or used clothing, bags, accessories or shoes, were considered for the study, but only stakeholders from four provinces agreed to participate: gauteng, kwazulu-natal, the western cape and limpopo. it was found that there was a greater online presence of stakeholders in gauteng, kwazulu-natal and the western cape, than those in other provinces. these provinces are also notable contributors to the country’s textile and apparel manufacturing activities (business partners 2014:2). this is reflected in the sampling. a sample of 14 stakeholders agreed to participate in the study. the sample predominantly included smme retailers, the focus of this study, with one cut, make and trim (cmt) and one non-profit organisation providing some additional insights. only those that were based in south africa, and had an awareness of the current activities of the industry were asked to participate. the cmt was selected as it provides services to smme retailers. the non-profit organisation was included as it supports sustainability in the fashion industry, including that which is conducted by smmes. saturation was reached after nine interviews, at which point it was found that no significantly new information could be gathered with the inclusion of additional participants. five more interviews were conducted to confirm saturation. using judgment sampling, possible participants were approached based on their strategic positioning to respond to the study’s questions. this resulted in a selection of business owners as the most suitable candidates who would have holistic insights into the current and future operations of their business, especially regarding their business’ sustainability efforts. while not an owner, the participant from the non-profit organisation held the highest position within the organisation as the country coordinator. the profiles of the participants and the organisations they represent are summarised in table 1. because of participants’ discomfort with disclosing their annual turnover, the size of organisation was only determined by the number of full-time employees, despite some stakeholders also relying on additional part-time employees. based on the department of small business development’s (2019) definition, stakeholders were classified as follows: micro: 0–10 full-time employees small: 11–50 full-time employees medium: 51–250 full-time employees. table 1: profile of study participants and organisations. data collection the data were collected using in-depth semi-structured interviews to allow the additional responses provided by participants to guide the interview. four types of interview guides were used based on the four types of participants: primary retailers, secondary retailers, cmt and non-profitable organisation. while the interview guides each had similar themes, it was decided that this approach would allow for more informative and relevant responses. the interview guides were divided into five sections and included a list of between 22 and 25 questions. the sections were based on the research objectives, with many of the questions established after a review of literature pertaining to the opportunities and challenges of adopting clscm. themes in the literature were identified from key authors such as hvass (2016:85), abbey et al. (2015:489) and wang et al. (2013:867). eleven of the interviews were conducted using telephonic and web-conferencing applications and recorded using a digital voice recorder with an average duration of 36 min. however, three other participants expressed a preference for providing written responses to the interview questions because of work time constraints. these participants were provided with detailed information about the study, along with definitions of key terms used in the questions. upon receiving each of the written responses, contact was made with participants to probe further where responses were unclear, or where there was opportunity for participants to elaborate on their responses. data analysis the interviews were transcribed using otter™ software, and listened to several times to edit for errors in the individual transcriptions. the transcripts were then transferred to nvivo™ software in order to conduct a thematic analysis. initially, each of the responses to the individual related questions were grouped. themes were then found in the responses, with each emerging theme coded. ethical considerations this study was approved by the humanities and social sciences research ethics committee in the university of kwazulu-natal research office (hssrec/00000711/2019). to address ethical considerations, gatekeepers’ letters were received from the organisations participating, and an ethical certificate was received from a reputable organisation. prior to data collection, participants were requested to complete an informed consent form, which explained the objectives of the study and mentioned how participant privacy would be maintained. participants were also audio recorded with their permission. the transcripts are to be locked in a safe place for a period of 5 years and will not be used for other studies. the study also acknowledges any additional secondary literature used by the researchers. findings four themes were identified in the analysis, each with their own categories. table 2 presents them according to their relationship to each of the research objectives. each of the themes is then discussed in the sections that follow. table 2: link between research objectives, themes and categories. theme 1: ethical consumption behaviours according to participants, the implementation of sustainable supply chain practices is in its infancy in developing countries. reasons included a low level of consumer demand for accountability and limited available resources. one of the participants suggested that accountability was not as important for smmes as it was for larger organisations that have a greater sustainability impact. studies by authors such as fetter (2019:154) suggest that such perceptions are common. despite this, all participants agreed that sustainability does currently play some role in their operations. this opposes arguments by kumar et al. (2019:15) that portray smmes as more motivated by price and quality, rather than sustainable sourcing. however, these findings are consistent with ashby and smith’s (2014:3) conclusions that smmes are more strategically positioned to implement sustainable practices. participant views of consumer familiarity and expertise with ethical consumption were probed and resulted in the exploration of three categories. category 1: ethical purchasing decisions responses provided insight into whether sustainability had a role in consumer purchasing decisions. this was useful in order to anticipate consumer responses to clscm systems, if adopted by the smmes. one of the participants noted that consumers were more concerned with the quality and brand of a product, rather than its social and environmental effects. however, some of the other participants explained that ethical consumption did have a role in the purchasing decisions of consumers in their markets. some participants mentioned that generations y and z were more likely to consume ethically, and to hold other stakeholders accountable. claude, malek and runnvall (2018:14) argue that this is because of these generations’ exposure to social media and other platforms that offer information about products and services: ‘…i would say it does for the majority of our consumers. we do have quite a [sic] educated consumers in terms of ethical consumption and our consumers like to support local….’ (participant 4, male, founder, lifestyle apparel) category 2: disposal of used fashion participants discussed the extent to which smmes should be held accountable for consumer disposal of their products, and the responses varied. while some participants did not believe they should have a role, others believed that this would help to alleviate the industry’s environmental impact: ‘as a retailer you can only do so much. unfortunately, once the product is with the consumer you have no power or control over it….’ (participant 2, female, owner, fashion and decor) ‘they should be held very accountable, but it also goes into how as a country or as the industry how much do you uphold your sustainability or ethical standards? so i think the bar can only be set as high as the law is willing to set it.’ (participant 3, female, owner, bespoke fashion) category 3: consumer familiarity and expertise with closed-loop supply chain systems as product knowledge comprises familiarity and expertise, participants were asked to discuss these in the context of clscm systems. according to participants, the most commonly recognised recovery method is reuse. a participant mentioned that the popularity of used fashion occurs mainly among price-sensitive consumers. this is not surprising as studies have found that this method is used extensively in sub-saharan africa (e.g. norris 2015:185; tóta 2015:24) because of its economic benefits to consumers, and its employment opportunities for informal markets. however, the environmental benefits of reusing are what attract younger consumers. similarly, another participant also identified younger consumers as having more access and more interest in the reuse market. liu and hei (2021:19) and brantemo, carlstedt and wilhelmsson (2020:39) suggest that this could be a result of the affordability of such items. another participant observed that the promotion of recovered materials by local brands is increasing consumer familiarity: ‘brands like sealand gear are educating the south african consumer on recycled products … there are amazing local brands that are using re-manufactured processes and south africans are supporting these local brands.’ (participant 11, male, country coordinator, non-profitable organisation) theme 2: perceived benefits of product recovery and redistribution the participants discussed the potential benefits they could derive from the recovery of used fashion. category 1: competitive advantage participants identified the establishment of a competitive advantage through implementation, echoing hvass’ (2016:81) perceptions that clscm systems can engage consumers in innovative and unique ways. the assumption that this approach is still in its infancy in africa can bring about this competitive advantage, especially as sustainability becomes a focus for many stakeholders, globally: ‘you save the environment and then you also position yourself to be in a place where you can compete when the systems are completely put in place, because that is where companies or industries are headed or forced to head anyway.’ (participant 3, female, owner, bespoke fashion) category 2: sustainability benefits participants identified the sustainability benefits of implementing clscm systems. one of the participants explored how the adoption of additional activities in the supply chain could result in the creation of employment and technological development as product lifecycles are extended. other participants also noted the financial benefits of re-manufacturing, and this focus is not new. govindan et al. (2015:604), for example, argue that the implementation of clscm was fundamentally financial, as stakeholders could be profitable through extracting the most value out of used products. one of the participants added that consumers could also share in these financial benefits. another participant mentioned the savings that could result from re-manufacturing used fashion, instead of sourcing new materials. such arguments of sustainable practices occur frequently in the literature (e.g. matthews 2015:6). one other participant observed that opportunities could exist to sell used products to external stakeholders that can recycle them: ‘[… w]ouldn’t it then create another branch or way for employment? “cause you have all these clothes coming in and those clothes need to be sorted…”.’ (participant 3, female, owner, bespoke fashion) participants discussed how clscm systems could improve social and environmental sustainability. according to some participants, clscm strategies can extend a product’s lifecycle. similar to arguments presented by key emerging authors in clscm in the fashion industry (e.g. hvass 2016:85), a few other participants explained that these strategies present an opportunity to have a positive effect on the environment: ‘benefits are doing our bit to lessen our carbon footprint. an ethical approach means we are happy and our staff is happy and our customers are happy.’ (participant 9, female, owner, cmt manufacturer) category 3: diverse catalogue while research on the marketing of the recovered products is sparse, studies such as abbey et al. (2015:492) and wang et al. (2013:867) have created a foundation for the assessment of consumer perceptions. although these studies focus on re-manufactured products in developed countries, with limited or no analysis of those of the fashion industry, this article adds to such literature by providing insight into the possible perceptions in an african developing country. participants discussed the benefits of providing consumers with a diversified catalogue that includes both new products and recovered (re-manufactured or secondhand) products. they observed that not only would these provide more options for profit generation but they also anticipated that they would be well received by their consumers, with one participant attributing this to consumer familiarity with vintage fashion and recycling. other participants explained that their business currently offered such a catalogue, and that such would appeal to their market’s sustainability consciousness. some participants added that a diversified catalogue provides them the opportunity to reach different markets: ‘it’s something that we are actually working on at the moment. i think consumers need to be made aware of what is available for them and make a choice … as we have a lot of people who desire one over the other.’ (participant 2, female, owner, fashion and decor) theme 3: perceived risks of product recovery and redistribution although the existing literature fails to acknowledge risks that can be experienced by smmes in the fashion industries of african developing countries, many of the risks identified in this article have appeared in international studies, such as lehr, thun and milling (2013:4106) and ramani and giovanni (2017:1010). these were arranged into three categories. category 1: providing incentives studies by dissanayake and sinha (2015:6) suggest that variability in the quality and quantities of products collected may compromise the success of the system. participants discussed the benefits of providing incentives, such as coupons and in-store discounts, to increase the quantities of products returned for recovery. these findings are consistent with those of hong et al. (2015:12) who found that lexmark, a printing company, experienced an increase of between 30% and 50% in the return rate of its optra-s toner cartridges after offering incentives to consumers. participants further identified how such financial incentives would encourage consistent participation. the recognised risks of providing financial incentives included collecting a large amount of used fashion that the smme may struggle to reprocess and a reduction of profits. these insights were new as similar findings were not found in the existing body of knowledge: ‘if you are giving coupons or discounts then obviously we will lose revenue.’ (participant 4, male, founder, lifestyle apparel) category 2: diverting business from other stakeholders one of the participants, as a cmt, discussed the potential drawbacks of recovering used fashion, particularly those that could constrain their business if they produced less garments. another participant also expressed that retailers seeking to profit from used fashion could affect stakeholders that have been benefitting from donations of used fashion. as the existing literature mostly excludes the social drawbacks of extracting value from used fashion products, this perspective was especially useful for understanding additional concerns that could limit adoption: ‘there’s so many people that are in need. so if we turn it around and say give it to us, and we resell it, we’re actually cutting off the donation … maybe it’s good in switzerland, where they have no place for it, but i don’t see why we need to make money again from our clothing….’ (participant 8, male, owner, bohemian fashion) category 3: consumer uncertainty while some of the smme retailer participants had already incorporated some sustainable strategies into their businesses, they noted how the redistribution of recovered used fashion could cause some uncertainty among their consumers. one participant discussed how a diversified product offering could cause a loss in the loyalty of the business’ consumer base. another explored how providing a diverse catalogue could either be widely accepted by their business’ consumers or rejected, which could result in an accumulation of unsold used fashion. much of the literature that covers uncertainty within consumers, for example, o’reilly and kumar (2015:503) attributes uncertainty to a lack of information. one participant also noted that it could happen that consumer uncertainty would be low and there would be a greater attraction to used fashion than the new fashion. this might result in a cannibalisation of the sales of new products, which has been of interest to some researchers. kwak and kim (2016:051701) note that if processed successfully, re-manufactured products could appear better than those that are new. as a result, the risk of reducing the market share of new products has been identified by authors such as ramani and de giovanni (2017:1010). however, a study of 3000 respondents located in the united kingdom, united states of america and china was conducted by farfetch (2020:7). the study concluded that the markets for used products and new products are often separate reducing the risk of cannibalisation. it is important to note that the study by farfetch (2020:7) did not take into account the price-sensitive nature of many consumers in africa that could influence them to prefer the more affordable product. some participants noted that the recovery and redistribution of some used fashion may be regarded ‘unsanitary’ or may evoke feelings of ‘discomfort’ among consumers. such feelings of discomfort and ‘disgust’ as referred to by abbey et al. (2015:490) are not uncommon as many consumers may have negative associations of used products, particularly due to their previous ownership: ‘although it’s not second hand off the person and while you might have washed it, but it’s that mental aspect to it….’ (participant 7, male, owner, asian streetwear) theme 4: closed-loop adoption by small, medium and micro enterprises in the south african market the participants were asked to identify the clscm strategies that would be most suitable for their businesses or for implementation in the south african market. to the researchers’ knowledge, such information is new to the body of knowledge. the responses were varied and are summarised in table 3. table 3: closed-loop supply chain strategies that are most suitable for small, medium and micro enterprises in south africa. category 1: limitations of size of business retailers identified limitations in time and resources and also acknowledged limited control of their business’ supply chain processes. some participants explained that there are restrictions with the number of staff employed in an smme and the resulting multiple roles each staff member would have in the business would initially put a strain on the successful implementation of clscm. this is consistent with bvuma and marnewick’s (2020:5) findings that a limited presence of resources can hinder the adoption of strategies. it was also established that implementing sustainable strategies would require significant financial resources that may not be readily available. retailer participants also observed that they had limited control over the supply chain processes conducted by their supply chain partners because of their businesses’ small sizes, challenging end-to-end implementation. to the researchers’ knowledge, such insight into the limitations of a lack of control over supply chain processes has not been investigated in detail by studies on smmes in south africa’s fashion industry: ‘unless we have our own cmts that work directly for us, they won’t be as accepting to the reusing or re-purposing of garments, as they can make a lot more money from doing a full production run’. (participant 4, male, founder, lifestyle apparel) category 2: recommendations for closed-loop adoption by small, medium and micro enterprises participants also made recommendations for how clscm can be more successfully adopted by smmes in south africa. participants observed the importance of maintaining the quality of the products they offered consumers, particularly regarding the reused or re-manufactured fashion to encourage more sales and reduce potential uncertainty. participants also shared a general opinion that educating and engaging consumers would encourage their participation in clscm systems. because of their sizes, participants further recommended that smmes would benefit from collaborating with other stakeholders in order to ease adoption. some participants also suggested collaborations with larger fashion brands, while another participant recommended collaborations with government and other private stakeholders: ‘so if there’s a way for the gap to be closed with the small markets, and small brands are able to work with the bigger brands….’ (participant 1, female, owner, custom-made and ready-to-wear designs) one of the participants mentioned collaborations with organisations that can donate used fashion. another participant, as a vintage clothing business owner, preferred to collaborate with small primary retailer businesses to facilitate the collection of used products as they argued that large retailers are more likely to greenwash, which could negatively impact the business’ image as a sustainable brand: ‘i’d rather collaborate with a local, small scale business….’ (participant 12, female, owner, vintage clothing) decision support framework for small, medium and micro enterprises adoption of closed-loop fashion supply chains in south africa a decision support framework (see figure 1) based on the findings of this research is proposed. the framework consists of 14 steps designed to aid smme retailers to make appropriate decisions concerning the adoption of clscm. decision-makers are advised to begin the process by establishing a reason for implementation by identifying a problem or opportunity related to their business’ economic, social or environmental impact. without a reason for adoption, motivation to implement strategies may be limited. the framework also invites decision-makers to the strategies implemented align with the business’ existing ones to allow for more seamless integration. it also identifies that some businesses may only be able to participate in product collection for redistribution by secondary markets, without distributing the re-processed products within their own outlets. this allows for flexibility, and shows that primary retailer facilitated systems can enable the growth of secondary markets, limiting concerns associated with a reduction in donations, or the preservation of secondary and even informal markets. however, it is highlighted that a suitable recovery method should be selected in conjunction with a suitable redistribution method to ensure a holistic analysis of how the system will operate. figure 1: a decision support framework for small, medium and micro enterprises’ adoption of closed-loop fashion supply chains in south africa. the framework further acknowledges that various stakeholders should be engaged, including supply chain stakeholders, consumers, and the government. without the participation of all stakeholders, the implementation of clscm practices may have temporary benefits, prove to be too costly to manage, or may not be aligned with stakeholder objectives. the framework also highlights actions that can be taken where the operating environment is not yet conducive to implementation, or where there are limited resources. this is a unique contribution as it has previously been established that no studies were identified that provide such considerations in the african context. maintenance of transparency in reporting is also recommended in recognition of consumer desire for more transparency of practices. recommendations recommendations are based on the findings and are captured in the decision support framework. it is recommended that smmes should establish the types of clscm strategies that would align with their businesses. in addition, to support the circular activities of smmes, legislation to encourage the safe disposal of used fashion should be developed that would provide an incentive for all stakeholders to be engaged and involved. it is also suggested that collaboration with similar sized supply chain stakeholders could enable more strategic and transparent endeavours towards successful adoption. finally, to decrease the pressure on their resources, gradual implementation is recommended at a rate that is manageable and sustainable. limitations and recommendations for future research there were some limitations of the study. only participants from four provinces agreed to participate. however, the study did include three major contributing regions of south africa’s fashion industry. this presents an opportunity for future research to be conducted in other provinces within south africa to establish any similarities and differences in the findings. as its focus was on retailers, the study also failed to explore the perceptions of more supply chain stakeholders that could be involved in the implementation of clscm practices. despite this, it is believed that this study presents a basis for future studies to explore the perceptions of other supply chain stakeholders. future studies can also consider giving a comparison of the implementation of clscm practices coordinated by smme retailers, with those coordinated by larger retailers, to assess the variances. although the authors believe that this study is a foundation for research on the development of clscm practices in african developing countries, the sample of participants was derived from one country, thereby limiting generalisability. this presents an opportunity for research that provides a comparison of other african fashion industries to determine perceptions across the continent. while a framework was provided in this article, its application to stakeholders across all parts of south africa needs to be tested and validated to assess its applicability to other provinces in south africa, and to other countries in africa. conclusion the study’s first research objective was as follows: ‘[t]o evaluate the opportunities for clscm adoption and coordination by smme fashion retailers in south africa’. the findings from the data show that opportunities do exist as consumers in south africa have a level of familiarity and expertise with the products and services of clscm. this could potentially make them more open to adopting re-manufactured fashion. the findings also reveal that the affordability, brand and quality of a reused or re-manufactured product would more likely influence consumer adoption than its social and environmental impact. in order to further evaluate whether opportunities for adoption exist, with reference to the first research objective, it was essential to establish any perceived benefits of the system. participants noted how the implementation of such systems could allow smme retailers to be more innovative and provide a competitive advantage because of growing demand globally for more sustainable operations. the sustainability benefits of clscm were also explored by some participants. particular reference was made to how such systems could enable the creation of employment as more partners would be required to facilitate the additional activities. under the second research objective, the risks of clscm were explored. some of the smmes, for example, identified how the provision of financial incentives for used product returns could result in an increased volume that the retailers may not be able to reprocess, affecting profits. although initial responses appeared to be favourable, some retailers were concerned that implementation could result in consumer uncertainty and divert business from other stakeholders that benefit from donations in the existing secondary market for used fashion. the third research objective was as follows: ‘[t]o develop a decision support framework for clscm adoption by smmes in south africa’. in order to achieve this, it was essential to also establish which strategies were most suitable, along with potential limitations and recommendations to consider. despite identifying limitations to implementation, the smme retailer participants suggested clscm recovery methods that would be most suitable for their businesses. the responses were mixed but all the methods studied were variously favoured. some retailer participants acknowledged that re-manufacturing would be easier to implement if their business had more control of their supply chain processes. participants anticipated that engaging consumers and providing them with more information and transparency of the system’s processes would encourage more adoption. some participants recommended that financial support and collaboration with other stakeholders could help to ease adoption. the findings were integrated into a decision support framework for the adoption of clscm by smmes in south africa. the framework, which includes 14 steps, can be used to begin the process of establishing the most feasible strategies to adopt. this tool, along with the findings of this study, consider the potential limitations and encourage the engagement of additional stakeholders to enhance the success of the system. this fills a gap in the literature, as no similar studies were identified that offer such a framework for implementation by smmes in an african developing country. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions c.m. conceived and conducted the study and wrote the original draft. r.h.s. supervised the study, and reviewed and edited the manuscript. both the authors discussed the results and contributed to the final manuscript. funding information the authors received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the data that support the findings of this study are available from the corresponding author, r.h.s., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abbey, j.d., meloy, m.g., guide, jr, v.d.r. & atalay, s., 2015, ‘re-manufactured products in closed-loop supply chains for consumer goods’, production and operations management 24(3), 488–503. https://doi.org/10.1111/poms.12238 african development bank group, 2018, textile and clothing industries can drive africa’s industrialisation, benefit women, african development bank – building today, a better africa tomorrow, viewed 14 april 2021, from afdb.org. aftab, m.a., yuanjian, q., kabir, n. & barua, z., 2018, ‘super responsive supply chain: the case of spanish fast fashion retailer inditex-zara’, international journal of business and management 13(5), 212–227. https://doi.org/10.5539/ijbm.v13n5p212 ahi, p. & searcy, c., 2015, ‘assessing sustainability in the supply chain: a triple bottom line approach’, applied mathematical modelling 39(10–11), 2882–2896. https://doi.org/10.1016/j.apm.2014.10.055 ashby, a., 2018, ‘developing closed loop supply chains for environmental sustainability’, journal of manufacturing technology management 29(4), 699–722. https://doi.org/10.1108/jmtm-12-2016-0175 ashby, a. & smith, m.h., 2014, ‘putting principles into practice-how smes manage their supply chains for sustainability’, euroma, helsinki. bhatia, m.s., jakhar, s.k., mangla, s.k. & gangwani, k.k., 2020, ‘critical factors to environment management in a closed loop supply chain’, journal of cleaner production, 255, 120239. https://doi.org/10.1016/j.jclepro.2020.120239 bhorat, h., asmal, z., lilenstein, k. & van der zee, k., 2018, smmes in south africa: understanding the constraints on growth and performance, development policy research unit, university of cape town, cape town. bick, r., halsey, e. & ekenga, c.c., 2018, ‘the global environmental injustice of fast fashion’, environmental health 17(1), 1–4. https://doi.org/10.1186/s12940-018-0433-7 bottani, e., tebaldi, l., lazzari, i. & casella, g., 2019, ‘a model for assessing economic and environmental sustainability dimensions of a fashion supply chain and a case study’, ifac papers online 52(13), 361–366. https://doi.org/10.1016/j.ifacol.2019.11.147 brantemo, e., carlstedt, h. & wilhelmsson, h., 2020, ‘sustainable conscious fashion consumption from the perspective of generation z: with a focus on motivations’, bachelor thesis, linnaeus university, kalmar, sweden. brooks, a. & simon, d., 2012, ‘unravelling the relationships between used-clothing imports and the decline of african clothing industries’, development and change 43(6), 1265–1290. https://doi.org/10.1111/j.1467-7660.2012.01797.x bruwer, j.p. & coetzee, p., 2016, ‘a literature review of the sustainability, the managerial conduct of management and the internal control systems evident in south african small, medium and micro enterprises’, problems and perspectives in management 14(2), 201–211. https://doi.org/10.21511/ppm.14(2-1).2016.09 business partners, 2014, the south african textile and clothing industry – an overview, viewed 15 july 2016, from https://www.businesspartners.co.za/en-za/entrepreneurs-growth-centre/useful-articles/manufacturing/the-south-african-textile-and-clothing-industry-%e2%80%93-an-overview. bvuma, s. & marnewick, c., 2020, ‘sustainable livelihoods of township small, medium and micro enterprises towards growth and development’, sustainability 12(8), 1–17. https://doi.org/10.3390/su12083149 cant, m.c. & rabie, c., 2018, ‘township smme sustainability: a south african perspective, acta universitatis danubius 14(7), 21. chen, x.x., xu, p., li, j.j., walker, t. & yang, g.q., 2020, ‘decision-making in a retailer-led closed-loop supply chain involving a third-party logistics provider’, journal of industrial and management optimisation 18(2), 1161–1183. chow, p.s. & li, c.k., 2018, ‘towards closed-loop fashion supply chains – reflections from retailer-facilitated used apparel collection programs’, in contemporary case studies on fashion production, marketing and operations, pp. 219–239, springer, singapore. claude, l., malek, p. & runnvall, l., 2018, ‘influencers’ impact on the decision-making among generation y & z swedish females when purchasing fast fashion’, thesis, jonkoping university, sweden. crotty, a., 2017, ‘news analysis: how h&m and zara riled sawctu’, business live, viewed 12 december 2017, from https://www.businesslive.co.za/fm/money-and-investing/2017-11-16-news-analysis-how-hampm-and-zara-have-riled-union-sactwu/. department of environmental affairs, 2019, sustainable development, viewed 11 february 2020, from https://www.environment.gov.za/strategicissues/sustainablecommunities department of small business development, 2019, revised schedule 1 of the national definition of small enterprise in south africa, government gazette, pretoria, south africa. dissanayake, g. & sinha, p., 2015, ‘an examination of the product development process for fashion re-manufacturing’, resources, conservation and recycling 104(part a), 94–102. https://doi.org/10.1016/j.resconrec.2015.09.008 donga, g., ngirande, h. & shumba, k., 2016, ‘perceived barriers to the development of small, medium and microenterprises: a case study of thulamela municipality in the limpopo province’, problems and perspectives in management 14(4), 61–66. https://doi.org/10.21511/ppm.14(4).2016.07 farfetch, 2020, farfetch publishes report and launches consumer fashion footprint tool, viewed 21 october 2020, from https://aboutfarfetch.com/news/press-releases/farfetch-publishes-report-looking-into-the-environmental-benefits-of-pre-owned-fashion-and-launches-consumer-fashion-footprint-tool/ fetter, b., 2019, ‘small and medium enterprises in the sustainable supply chain: a review’, periodica polytechnica social and management sciences 27(2), 154–163. https://doi.org/10.3311/ppso.12564 gabrielli, v., baghi, i. & codeluppi, v., 2013, ‘consumption practices of fast fashion products: a consumer-based approach’, journal of fashion marketing and management: an international journal 17(2), 206–224. https://doi.org/10.1108/jfmm-10-2011-0076 govindan, k. & soleimani, h., 2017, ‘a review of reverse logistics and closed-loop supply chains’, journal of cleaner production 142(2017), 371–384. https://doi.org/10.1016/j.jclepro.2016.03.126 govindan, k., soleimani, h. & kannan, d., 2015, ‘reverse logistics and closed-loop supply chain: a comprehensive review to explore the future’, european journal of operational research 240(3), 603–626. https://doi.org/10.1016/j.ejor.2014.07.012 grover, v.k., 2015, ‘research approach: an overview’, golden research thoughts 4(8), 1–7. hedegård, l., paras, m. & gustafsson, e., 2016, contradictions in reuse-based fashion retail – the retuna mall, global fashion, stockholm, sweden. hoang, n.l., 2015, ‘clothes minded: an analysis of the effects of donating secondhand clothing to sub-saharan africa’, scripps senior theses, claremont colleges, claremont, ca. hong, x., xu, l., du, p. & wang, w., 2015, ‘joint advertising, pricing and collection decisions in a closed-loop supply chain’, international journal of production economics 167(2015), 12–22. https://doi.org/10.1016/j.ijpe.2015.05.001 huang, m., song, m., lee, l.h. & ching, w.k., 2013, ‘analysis for strategy of closed-loop supply chain with dual recycling channel’, international journal of production economics 144(2), 510–520. https://doi.org/10.1016/j.ijpe.2013.04.002 hvass, k.k., 2013, ‘exploring business model innovation for closed loop fashion’, in proceedings of sustainable innovation, pp. 111–117, university for the creative arts, epsom, united kingdom. hvass, k.k., 2016, weaving a path from waste to value: exploring fashion industry business models and the circular economy, copenhagen business school, copenhagen. hvass, k.k. & pedersen, e.r.g., 2019, ‘toward circular economy of fashion’, journal of fashion marketing and management: an international journal 23(3), 345–365. https://doi.org/10.1108/jfmm-04-2018-0059 joy, a. & peña, c., 2017, ‘sustainability and the fashion industry: conceptualising nature and traceability’, in sustainability in fashion, pp. 31–54, palgrave macmillan, cham. kumar, n., brint, a., shi, e., upadhyay, a. & ruan, x., 2019, ‘integrating sustainable supply chain practices with operational performance: an exploratory study of chinese smes’, production planning & control 30(5–6), 464–478. https://doi.org/10.1080/09537287.2018.1501816 kumar, n.r. & kumar, r.m.s., 2013, ‘closed-loop supply chain management and reverse logistics – a literature review’, international journal of engineering research and technology 6(4), 455–468. kwak, m. & kim, h., 2016, ‘modeling the time-varying advantages of a remanufactured product: is “reman” better than “brand new”?’, journal of mechanical design 138(5), 051701. https://doi.org/10.1115/1.4032808 lehr, c.b., thun, j. & milling, p.m., 2013, ‘from waste to value – a system dynamics model for strategic decision-making in closed-loop supply chains’, international journal of production and research 51(13), 4105–4116. https://doi.org/10.1080/00207543.2013.774488 liu, y. & hei, y., 2021, ‘exploring generation z consumers’ attitudes towards sustainable fashion and marketing activities regarding sustainable fashion’, jönköping university, jönköping, sweden. matthews, b., 2015, ‘closing the loop’, mcl global, normanton, united kingdom. ndlendele, s., 2017, the state of retail in sa: h&m update and others, viewed 15 april 2021, from the state of retail in sa: handm update and others (iol.co.za). norris, l., 2015, ‘the limits of ethicality in international markets: imported second-hand clothing in india’, geoforum 67, 183–193. https://doi.org/10.1016/j.geoforum.2015.06.003 o’reilly, s. & kumar, a., 2015, ‘closing the loop’, the international journal of logistics management 27(2), 486–510. https://doi.org/10.1108/ijlm-03-2015-0050 ramani, v. & de giovanni, p., 2017, ‘a two-period model of product cannibalisation in an atypical closed-loop supply chain with endogenous returns: the case of dell reconnect’, european journal of operational research 262(3), 1009–1027. https://doi.org/10.1016/j.ejor.2017.03.080 reimann, m., xiong, y. & zhou, y., 2019, ‘managing a closed-loop supply chain with process innovation for re-manufacturing’, european journal of operational research 276(2), 510–518. https://doi.org/10.1016/j.ejor.2019.01.028 romero, d. & rossi, m., 2017, ‘towards circular lean product-service systems’, procedia cirp 64, 13–18. https://doi.org/10.1016/j.procir.2017.03.133 roos, s., sandin, g., peters, g., spak, b., bour, l.s., perzon, e. et al., 2019, white paper on textile recycling, mistra future fashion, viewed 07 july 2021, from s.-roos.-white-paper-on-textile-recycling.-mistra-future-fashion.pdf (mistrafuturefashion.com). rusu, v.d. & roman, a., 2016, ‘the impact of macroeconomic conditions on smes performance in terms of employment’, revistaeconomica 68(3), 142–159. savaskan, r.c., bhattacharya, s. & van wassenhove, l.n., 2004, ‘closed-loop supply chain models with product re-manufacturing’, management science 50(2), 239–252. https://doi.org/10.1287/mnsc.1030.0186 seifert, m., siemsen, e., hadida, a.l. & eisingerich, a. b., 2015, ‘effective judgmental forecasting in the context of fashion products’, journal of operations management 36, 33–45. https://doi.org/10.1016/j.jom.2015.02.001 shekarian, e., 2020, ‘a review of factors affecting closed-loop supply chain models’, journal of cleaner production 253, 119823. https://doi.org/10.1016/j.jclepro.2019.119823 sinha, p., muthu, s.s. & dissanayake, g., 2016, the re-manufacturing industry and fashion, remanufactured fashion, springer, singapore. small enterprise development agency, 2016, the small, medium and micro enterprise sector of south africa, bureau for economic research, stellenbosch university, stellenbosch. south african government, 2021, national development plan, national planning commission, office of the presidency, pretoria. south african government news, 2020, government commits to support clothing, textile industry, viewed 15 may 2021, from government commits to support clothing, textile industry | sanews. tóta, á., 2015, sustainable clothing consumption – case study about second hand clothes, university of porto, portugal. tshuma, r. & mafa, o., 2013, ‘research designs’, in s.m. tichapondwa (ed.), preparing your dissertation at a distance: a research guide, pp. 114–137, vancouver, virtual university for small states of the commonwealth. tswanya, y., 2017, illegal imports rip into local clothing industry, viewed 11 april 2021, from illegal imports rip into local clothing industry (iol.co.za). wang, y., wiegerinck, v., krikke, h. & zhang, h., 2013, ‘understanding the purchase intention towards re-manufactured product in closed-loop supply chains’, international journal of physical distribution and logistics management 43(10), 866–888. https://doi.org/10.1108/ijpdlm-01-2013-0011 wu, c.h. & kao, y.j., 2018, ‘cooperation regarding technology development in a closed-loop supply chain’, european journal of operational research 267(2), 523–539. https://doi.org/10.1016/j.ejor.2017.11.068 abstract introduction literature review theoretical and conceptual grounding methodology results and discussions conclusion acknowledgements references about the author(s) stella bvuma applied information systems, college of business and economics, university of johannesburg, johannesburg, south africa carl marnewick applied information systems, college of business and economics, university of johannesburg, johannesburg, south africa citation bvuma, s. & marnewick, c., 2020, ‘an information and communication technology adoption framework for small, medium and micro-enterprises operating in townships south africa’, southern african journal of entrepreneurship and small business management 12(1), a318. https://doi.org/10.4102/sajesbm.v12i1.318 original research an information and communication technology adoption framework for small, medium and micro-enterprises operating in townships south africa stella bvuma, carl marnewick received: 10 feb. 2020; accepted: 02 june 2020; published: 20 aug. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: small, medium and micro enterprises (smmes) have been regarded as one of the critical driving forces for economic growth and development in south africa (sa). in south africa, smmes operate in townships and cities. however, there have been concerns about their failure rate and their inability to gain competitive advantage especially in the current era of rapid information and communication technologies (ict) adoption. aim: this study aims to gain a deeper understanding of the factors affecting ict adoption by township smmes. to further develop an ict adoption framework for township smmes and provide guidelines to policy developers with the aim to increase growth and development. setting: the study examined the context of smmes in townships and explored ict adoption theories or models so as to understand what factors are relevant in influencing ict adoption by township smmes. a conceptual ict adoption framework for township smmes was developed using actor network theory (ant) and technology acceptance model (tam). method: a qualitative exploratory research method is adopted as it provides insight into the smme characteristics and their level of ict adoption and perceptions. the study used a sample of 21 smme owners or managers operating in soweto. data was collected using in-depth interviews and observations. results: this study revealed that ict adoption for township smmes is a complex and dynamic process which involves various factors. township smmes are not adopting icts and the current icts adopted are not fully deployed. the perception of ict adoption is equally influenced by external factors such as ict support and ict training amongst others. these actors drive the perceived benefits such as growth and sustainability which then influence the ict adoption. conclusion: township smmes requires unique interventions when encouraging them to fully adopt icts. they may adopt if correct guidelines are addressed such as ict awareness and ict training. the ict adoption framework included factors that can be used by smme owners or managers and policy makers when formulating guidelines towards ict adoption for township smmes. keywords: ict adoption; smme; sustainability; framework; technology acceptance model (tam); actor network theory (ant). introduction economies around the world have acknowledged and recognised the importance of small, medium and micro-enterprises (smmes) and the role they play towards economic growth and development in both developed and developing countries (marnewick 2014; oecd 2017; ongori, atambo & bosire 2015; rungani & potgieter 2018). however, there have been concerns about their failure rate and their inability to gain a competitive advantage, especially in the current era of adoption of rapid information and communication technology (ict). in south africa (sa), smmes operate in different environments such as cities and townships and are experiencing unique contextual challenges. township smmes are faced with challenges when considering the adoption of icts (marnewick 2014). because of the barriers that township smmes face, they tend to be reluctant to adopt icts. township smmes are not very competitive as they have income below the poverty level and relatively high attrition rates (cant 2017; mukwarami & tengeh 2017; nambiar, sutherland & scheepers 2019). according to khosla (2013) and cant, wiid and hung (2015), south african township smmes seem to be lagging behind in terms of ict adoption and they show no progress, as most are still confined to their traditional way of operating without incorporating icts. to clearly realise the study’s aim, a stepwise research process was implemented. the literature review was conducted to gain a deeper understanding of the environment of township smmes and their current status of ict adoption. it is important to gain a deeper understanding of the environment of township smmes because of their uniqueness and different attributes that are influenced by their environment and their historical background. the importance of understanding the distinct differences between smmes operating in townships as opposed to those operating in the cities is necessary to inform interventions and policies directed towards smmes. the success of township smmes can positively have an effect on the challenges that sa is currently facing by reducing unemployment, creating jobs, fighting poverty, building safe, secure and sustainable communities, driving competitiveness with larger enterprises and increasing economic growth and development (murithi 2017). this study focusses on smmes located in townships and investigates the factors that influence their adoption of icts into their different business processes and value chains. compared with smmes operating in the cities, smmes in a township can potentially positively contribute to socio-economic development, especially in the context of sa where a significant part of the economy is from the informal sector. the causes for township smmes to be lagging behind with regard to ict adoption are not obvious. various sectors have long appreciated the benefit of ict adoption and recognised that when implemented effectively, ict can contribute positively towards economic growth and social development. the adoption of ict can allow township smmes to gain a competitive advantage, improve the sector positively and contribute towards the township economy. the south african government has directed stronger attention towards township smme development and has acknowledged that smmes are the driving force of the township economy (makhura 2018). furthermore, there have been various interventions by the government to stimulate and support township smmes with various interventions such as technology hubs located in townships. however, this has not been well appreciated or achieved the objective set out by the government. township smmes are unique and they require specific guidelines to promote ict adoption compared with smmes operating in the cities. this implies that the adoption of ict for township smmes will be different from those in the city. bhorat et al. (2018) indicated that smmes in townships face greater challenges than those in the cities. small, medium and micro-enterprises operating in townships are faced with unique challenges compared with those operating in the cities, such as lack of assets, quality housing, economic and social infrastructure networks (e.g., electricity and broadband) and skills (sacn 2016). various studies have been conducted around smmes in sa, precluding the township context (cant et al. 2015; ismail, jeffrey & belle 2011; mathu & tlare 2017; pillay 2016; turpin 2018). to better determine the factors affecting ict adoption by township smmes and construct an ict adoption framework, it is necessary to broadly understand the township environment, including their historical background. therefore, there is a need to review previous studies on ict adoption by smmes in relation to township smmes’ characteristics. at the same time, it is imperative to understand the factors influencing the adoption of ict by south african township smmes and what kind of support and guidelines are required to promote ict adoption. literature shows that there is a dearth of ict adoption by township smmes (sme 2017). various studies have been conducted in sa with regard to smmes’ ict adoption, but no literature studied the township smmes’ perceptions or opinions towards ict adoption. furthermore, no framework for ict adoption by township smmes exists. studies conducted in sa related to the smme context precluded the township smme context (cant et al. 2015; ismail, jeffery & van belle 2011; mathu & tlare 2017; pillay 2016; turpin 2018). therefore, this study addresses the gap in literature and provides guidelines that are necessary to consider when promoting ict adoption within township smmes. it is important to understand the challenges that township smmes face with regard to the successful adoption of ict and what the impact thereof is. according to khosla (2013) and cant et al. (2015), south african township smmes seem to be lagging behind in terms of ict adoption and they show no progress, as most are still confined to their traditional way of operating without any icts. studies on ict adoption have been conducted with little focus on township smmes. for township smmes to fully participate in the economy, develop and grow, there is a need to have an in-depth understanding of the factors affecting ict adoption. the adoption of icts by township smmes can contribute positively towards the south african economy, address challenges such as unemployment and create platforms for township smmes to gain a competitive advantage and participate in the global economy. therefore, the identified research problem attempts to address the lack of research on the factors affecting ict adoption by township smmes and to provide an ict adoption framework for township smmes. literature review to better determine the factors affecting ict adoption by township smmes and construct an ict adoption framework, it is necessary to broadly understand the township environment, and how they are defined, including their historical background. south africa’s townships are relics of the country’s apartheid regime. the impact of past neglect, lack of investment, overpopulation and isolation from urban centres is still largely evident today. definition of small, medium and micro-enterprises arriving at a consensus regarding the definitions of smmes presents a challenge as every country applies its own definition, and there is no single internationally agreed-upon definition (gbandi & amissa 2014; gibson & van der vaart 2008). some countries attempt to use capital assets, whereas others use the skill of labour and turnover level (ayyagari, beck & demirguc-kunt 2007). there are also those who still define smmes in terms of their legal status and method of production and size (abor & quartey 2010). keskin and senturk (2010) assert that smme definitions are mostly based on the size of their economic activity within a country and their level of development. defining an smme has also recently been reviewed in the context of sa. previously, the south african national small business (nsb) act 102 of 1996 defined a small business as a separate entity that can be within any sector or sub-sector of the economy and which can be classified as a micro-enterprise, a very small enterprise, a small enterprise or a medium enterprise (republic of south africa 1996). the nsb amendment acts of 2003 and 2004 further define an smme as a distinct business entity managed by one or more persons, which must meet certain specified criteria. this study adopts the new definition as described by the south african government in 2019. according to the south africa government gazette (2019), the new definition of smmes uses two proxies (employees and annual turnover) and excludes the original third proxy (total gross asset value) (sa government gazette 2019). this study thus defines an smme as any small business regardless of its registration under law or tax, and it can be any entity or organisation which includes any person conducting small business activities in any sector. the historical overview of township small, medium and micro-enterprises the history of township smmes in sa dates back to the apartheid era – the period during which black people were prohibited from owning businesses and faced prosecution for engaging in any business activity (dti 2008; mtshali, mtapuri & shamase 2017). townships experienced segregation in terms of housing, education, health and libraries, amongst others (ramchander 2007). townships, often referred to as urban residential areas, were formed for the black population, usually beyond city limits. by contrast, the white population resided in suburbs or cities. generally, every city had at least one, and often several, township(s) associated with it. the historical background of townships has a significant impact on how smmes operate their businesses on a daily basis in contemporary business environments. even after becoming a democratic country, sa still seems to have well-structured geographical inequalities and challenges hindering the growth of township smmes. township small, medium and micro-enterprises versus those operating in the cities small business owners in townships were regarded as self-employed during the apartheid era and most operate illegally (mazwai 2017). in contrast, small business owners in cities were encouraged during this period, through legislation and other local authority ordinances, to participate freely in any form of small business activity without facing prosecution. the range of smmes operating in townships includes various sectors (charman 2017), which may be similar to the smmes operating in the cities. this study argues that township smmes are very diverse, and because of socio-economic issues they have different needs and challenges compared with smmes in the cities. according to davidsson and honig (2003) and rogoff, lee and suh (2004), some smme owners or managers and their employees have limited or lack business skills; others are experienced, complex and dynamic in nature. the characteristics of township smmes should be studied in greater detail to understand how they affect the adoption of ict. small, medium and micro-enterprises operating in townships have unique attributes, such as their location where they operate, ict infrastructure, access to ict, business classifications (that can be seen as informal businesses), personal attitudes or attributes of smme owners or managers, and levels of ict skills or knowledge. the roles of township small, medium and micro-enterprises in contributing towards the economy township smmes can play a vital role in curbing the challenges that south africa is currently facing such as unemployment, poverty and inequality. the south african national development plan (ndp) indicated the importance of creating about 11 million jobs by the year 2020. the ndp further recognised the role of smmes towards achieving the set targets and the capability of smmes to act as the backbone of economic growth and development (national development plan 2030 2012). township smmes are part of the south african economy, and they too play a vital role towards the growth of the economy. in gauteng, smmes have created about 150 000 jobs in a single year, and this was a result of government’s support to smmes (statistics south africa 2015). therefore, it is imperative that township smmes receive necessary interventions and support to address many of the challenges faced by the country (mathu & tlare 2017). challenges faced by township small, medium and micro-enterprises literature shows that smmes may face common challenges such as access to finance. the biggest challenge can also be attributed to how smmes are regulated. in sa, an smme is regarded as either a formal or informal business. formal business are monitored, protected and taxed by the government, whereas the informal smmes are not regulated by the government. formal smmes are well established, licensed, large and complex businesses that are predominantly concentrated in cities. informal smmes are unregistered with the municipality or tax authority and they have fewer employees (international labour office [ilo] 2012). they are disconnected from the mainstream economy and face structural barriers that impact negatively on their growth potential (dti 2008). township smmes are mainly informal, owned by marginalised people and have their own unique challenges. according to malefane (2013), most of the smmes in townships are informal and are used by the unemployed as a means to provide for basic needs. these informal smmes can be classified as hawkers, vendors and subsistence farmers, which usually include people unable to find paid jobs (iwu et al. 2016; seda 2018). they have minimal assets and have income below the poverty level (morris & zahra 2000). challenges that township smmes face when compared with those operating in the cities may be attributed by a lack of assets, such as quality housing, economic and social infrastructure networks (e.g. electricity, broadband) and skills (sacn 2016). drodskie (2002) indicates that smmes in townships face greater challenges than those in the cities. with regard to ict adoption, poor ict infrastructure in townships may hinder the growth of smmes and add significant pressure in terms of the cost of running a successful business. according to the global entrepreneurship monitor report (bhorat et al. 2018), infrastructure is an important factor to enable the development of smmes. poor infrastructure can also inhibit successful adoption of ict. table 1 shows some of the challenges that township smmes face. these are varied, regardless of the environment in which they operate. however, lekhanya (2016) states that the challenges that smmes face may be internal or external, and they have a huge impact on the survival and the sustainability of the business. table 1: challenges faced by township small, medium and micro-enterprises. it is true that ict cannot be seen as ‘adopt me’, and all township smme-related challenges will fade away as it is not a panacea to all problems faced by small businesses. therefore, other challenges may not necessarily be resolved through the adoption of icts. even though there is massive evidence of the importance of ict adoption and the role it can play in growing the economy, there is still much-desired attention in sa in terms of issues of good governance. literature has shown the impact of ict and the role it plays towards the growth and development of smmes (oecd 2017). given the potential for icts to jumpstart socio-economic development, both developing and developed countries placed an emphasis on adopting icts to access digital opportunities. various authors have alluded to the impact and role of icts towards economic development (liljevern & karlsson 2017; toader et al. 2018). information and communication technology adoption by township smmes is necessary because it allows smmes to access markets, procure goods at reasonable costs, effectively manage relationships with stakeholders and customers, make evidence-based decisions and improve the efficiency and effectiveness of both its internal and external business processes. by so doing, smmes are endowed with higher levels of competitive advantage. neirotti and raguseo (2017) agree that icts may create a competitive advantage in the smme environment. given that there are few insights on ict adoption frameworks for township smmes, various ict adoption frameworks will not work for township smmes because of the unique characteristics of township smmes. chibelushi and costello (2009) argue that understanding the ict adoption models is vital and the scope of ict adoption must be clearly articulated. if the scope of ict adoption is misinterpreted, it may lead to a loss of investment and not add any value to the smme. theoretical and conceptual grounding this study is anchored on the actor network theory (ant) and the technology acceptance model (tam). the conceptual grounding of the ant and the tam enabled the study to investigate the adoption of ict by township smmes. according to stone-jovicich (2015) as well as holmström and stadleder (2001), ant is a theoretical framework that describes the world as a network of hybrid (social and technological) actors. human and non-human actors exist in a network of relationships. the ant provides a framework where both social and technological factors can be studied (elbanna 2009). the ant refers to an actor as something or someone that contributes in making a change or a difference. that is, ‘something that acts, or to which activity is granted by another, an actant can literally be anything provided it is granted to be the source of action’ (latour 1996:373). actors are defined as all entities that are able to connect texts, humans and money to more or less effectively build a world that is filled with other entities having their own history, identity and relations (callon 1991). actors or actants do not exist in a vacuum. any act in the world is influenced by different factors, thus creating a network. the ant revolves around and describes ongoing processes within such a network. the key concepts from ant are adopted for this study to form an ict adoption actor network for township smmes, which consists of four major stages: (1) problematisation, (2) interessement, (3) enrolment and (4) mobilisation (callon 1987). problematisation involves actors defining the problem to be addressed by using the obligatory passage point (opp). the actors within a network use opp to exchange resolutions contributing to solving a problem (callon 1987; law 1992). interessement involves an actor performing various actions to align with other actors or draw attention to collaborate on a given proposal. enrolment involves negotiations amongst enrolled actors so that they reach an agreement on problems to be solved. mobilisation involves the organising of support of controlling actors so that the passive agents are influenced in the right direction to follow consensus already formed and acts as spokesman (law 1992). consensus can be reached with the passive agents although it is possible that there will be rebels not following the consensus prompting for advocacy by controlling agents to continue throughout the engagement process (callon 1987). conceptualised by davis in 1989, the tam explains adoption, acceptance and usage of icts (awa, ukoha & emecheta 2012). the tam is espoused upon the ‘perceived usefulness’ (pu) and ‘perceived ease of use’ (peou) as two key theoretical constructs at the centre of explaining technology adoption by individuals (davis, bargozzi & warshaw 1989). perceived usefulness and peou are generally used to articulate the degree of user acceptance of technology. pu is defined as the user’s subjective likelihood to use a particular technology that will improve his or her action, and peou refers to the degree to which the potential user expects the target technology to be effortless (davis 1989). according to davis (1989), the pu and peou are also directly influenced by other external factors that typically reflect political, cultural and social aspects. political factors are centred on the impact of using technology in politics and political crises. cultural factors encompass the set of beliefs, moral values, traditions, language and laws held in common by a nation, a community or other defined group of people. social factors may include language, skills and facilitating conditions. a consumer’s attitude to use technology is concerned with the user’s evaluation of the desirability of employing an information system application. furthermore, behavioural intention includes the measure of the likelihood of a person employing the application. davis’ tam was suitable for this study because it investigates the perception or attitude-based antecedents of township smme owners or managers towards ict adoption. motivation for the selection of actor network theory and technology acceptance model the selection of the two models is used because firstly ant allows the examination of human and non-human role players in ict adoption (latour 2005). furthermore, the ant assists in the successful analysis of the dynamic and complex ict adoption by township smmes. on the other hand, the tam complements the understanding of the factors influencing ict adoption by smmes by explaining smme owners’ attitude or perception and decision-making processes with regard to ict adoption. given the focus of this article, a combination of the ant and tam helps to identify a diverse range of actors (both internal and external) and the role they play in explaining the adoption of icts by township smmes. both ant and tam have their own strengths and weaknesses. the strength of the ant in this study is the fact that it allowed for the identification and recognition of all role players (actors) involved within the township smme context, thus allowing a deeper understanding of all factors affecting the ict adoption by township smmes. the strength of the tam is its ability to use the two main constructs that allow one to determine the intention to actual behaviour. therefore, the tam complements the ant by further providing an opportunity to understand the perception or attitude of role players (smme owners or managers) towards ict adoption. both theories focus on ict adoption and the emphasis is placed on human agency. eze, vera and eze (2018) posit that studies on ict adoption should be conducted keeping in view both the human and non-human actors and not in isolation. linking both the ant and tam allowed gaining an understanding of the true nature of the factors affecting ict adoption by township smmes. the combination of the ant and tam framework helped to identify and understand the ict adoption, actors involved, actors’ roles and interactions and the critical factors. formulating an information and communication technology adoption framework for township small, medium and micro-enterprises when formulating an actor network diagram, the fundamental understanding should be emphasised based on the relationship of the actors in their own network. the diagrams provide the efficiency in revealing the interactions in the scope of the network. the diagrams also provide an efficient way to map out all the actors or role players. for example, the township smme network diagram may include customers, suppliers, government, ict and the location of the smmes. problematisation stage firstly, key role players are identified and, in this case, the smme owner or manager as human actors because they are directly or indirectly involved in the process of ict adoption, either planning or implementation. moreover, they are seen as the driving force of whether to adopt ict. the smme owners or managers have their own characteristics such as their age, level of education and ict skills. this translates to the fact that township smmes rely heavily on the smme owner or manager to survive because decision-making is primarily at the owner’s discretion. therefore, other role players (whether human or non-human) must co-exist with the smme owner as the key role player and should not exist in segregation when formulating the ict adoption process or the implementation of ict. the identification of key role players (smme owner or manager) allowed for the use of tam because when using tam one can answer the question of the perception or attitude of township smme owners or managers towards ict adoption. this is enabled by tam’s ability to determine the intention towards an actual behaviour by using its two constructs: peou and pu. perceived ease of use and pu are variables used by the tam suggesting that when smme owners or managers are presented with ict, there are various factors that determine whether the proposed ict will be accepted or rejected. township smme owners or managers may adopt icts if they believe there is a benefit in terms of business growth or sustainability. that is, if their perception towards ict is not beneficial to their business enhancement, they will reject the adoption. the second variable of the tam (peou) refers to the fact that township smme owners or managers may adopt ict if their perception around ict to be adopted means they will be easy to use and not complex. interessement stage in this stage, various actors or a particular actor within township smmes may interact with one another or form a collaboration for a particular action. for example, the type of ict to be adopted, the cost of ict and the infrastructure may collaborate for potential full utilisation of the technology. the interessement in this case is the alignment amongst the actors. although the township smme owner or manager may have the intention to adopt ict, the cost of ict may not create a desirable intention to adopt. this study applied the interessement stage, which allows the various actors or a particular actor to perform actions and collaborate with other actors. this is achieved through defining the role of actor(s) in a township smme network. table 2 provides an illustration of actors within a township smme network with regard to ict adoption. table 2: actors within the township network and illustration of their role. enrolment stage actors within the township smme network are established to ensure that collaborations and alignment are successful. the township smme network is explored and various actors involved are discussed. at this stage, actors within the township smme network are established to ensure that collaborations and alignment are successful. the township smme network includes owner or manager characteristics such as age, ict skills and level of education. mobilisation stage this stage is concerned with producing final results of the township smme network. the framework shown in figure 1 indicates the non-human actors, such as ict infrastructure, ict stakeholders, government support and competitive pressure, and recognises that without the interaction of the human with non-human actors, the ict adoption will not be successful. therefore, even though the human actor (smme owner or manager) has the potential and readiness to adopt ict, the non-human actors may be a hindrance if they are not complementing the needs of the smme owners. figure 1: information and communication technology adoption framework for township small, medium and micro-enterprises. figure 1 shows that the role players are both external and internal within the smme network. the ant shows that there are various actors involved when considering the understanding of factors affecting ict adoption by township smmes. within an ant, there is no role player that can possibly be independent, and as previously alluded, smme owners are viewed as key role players because of the role they play as decision-makers in whether or not to adopt ict for their businesses. figure 1 shows the interaction of all actors involved in ict adoption by township smmes. if one actor fails to interact or does not act according to its role, the whole process may be unsuccessful. understanding the relationship between actors and actually indicating that all actors need to work together are two important elements of ant concepts. external or internal actors in township smmes can include various roles. some may seem to be active participants, whereas others are not active at all. in the case of the south african government, which is dedicated to playing a vital role in supporting township smmes, there is a dire need to ensure that proper support is aligned to the desired need by township smmes with regard to ict adoption. external or internal actors can be anything from human to non-human such as members of the townships, municipalities, technologies, government or even users directly or indirectly involved in smmes. methodology this study holds an epistemological view of interpretivism. this study adopted a multiple case study approach as a research strategy because the purpose was to gain an in-depth understanding of township smmes’ environments and the factors that affect ict adoption by township smme owners. this study adopted a multiple case study approach because the researcher examined the relationship between several variables such as the size of the business or the age of the business having an impact on ict adoption. for all smme categories, each one was evaluated as a single case and later compared against each case. the multiple case study strategy enabled the researcher to generate answers to questions related to how, what and why (robson 2002). researcher bias was reduced by ensuring that questions were thoughtfully posed and delivered in a way that allowed participants to reveal their true feelings without distortions. through face-to-face interviews, smme owners’ or managers’ real experiences were drawn and captured. the study further aimed to identify the actors and their roles within the smme environment when adopting icts and to develop an ict adoption framework for township smmes. the study deployed a qualitative exploratory research method focussing on the ‘why’ questions, and it was used to describe the smme characteristics and perceptions and their level of ict adoption. furthermore, the qualitative exploratory research method was also used to develop explanations about the factors that contribute to the level of the ict adoption and why some types of icts are not used when some others are used. the target sample size was 21 smme owners located in various zones within soweto township. data were collected by using interviews and observations conducted within the smme’s premises because they afforded the researcher an opportunity to determine whether icts were adopted or not. the purpose of observation in gathering data was for the researcher to understand what icts are adopted and to uncover how smme owners define ict and its meaning. observation further afforded the researcher with the opportunity to see which smme owners use ict and their level of access to ict. the participants were identified based on the classification of being an smme. the first brief observation of 37 smmes took place to determine whether an smme is classified as small, medium or micro. the purpose of this first brief observation was to allocate the distribution of seven different zones in soweto township as presented in table 3. this was done to ensure that the sample is representative of the three types of smmes in different zones. township smmes may not have the knowledge of whether they are classified as small, medium or micro. finally, a target sample size of 21 was reached and table 3 shows the various location or zones in soweto from where participants were drawn. table 3: locations or zones of respondents in soweto. the articipants were approached by the researcher either telephonically or with a visitation to the area where they operate, although this method was time-consuming. visitation was deemed necessary because most of the township smmes operate in areas where the address is not visible or clear. the other benefit was that the researcher was able to explain the purpose of the study in detail, thus building report. the interview questions were divided into five sections. section a focussed on the participants’ demographic data (owners’ or managers’ age and level of education). section b focussed on gaining more insights into the profile of the business operations and to verify the initial business classification. section c focussed on determining the perceptions or attitudes towards ict adoption and ict access by smme owners or managers. the section also investigated whether smmes are adopting or have adopted any ict and the type of ict they use. this was followed with an observation of the type of ict used and what the ict was used for. section d focussed on ict adoption, usage and support. section e aimed to capture any critical information or comments by the participants not directly measured in the previous sections. this study used thematic analysis to analyse the qualitative data. thematic analysis has been defined as ‘a method for identifying, analysing and reporting patterns (themes) within data’ (braun & clarke 2006:79). the researcher applied deductive thematic analysis because data were in line with each specific question asked in the interview by using atlas.ti version 8. this study adopted the steps set out by braun and clarke (2006) when conducting thematic analysis: familiarising yourself with your data: data were transcribed, read and reread to allow the researcher to become familiar with the data. the researcher got involved with the data through reading and listening to the recordings before coding, thus allowing her to identify meanings and patterns. generating codes: in this stage, the inductive coding involved labelling the segments of texts with codes. searching for themes: at this stage, the researcher had various codes identified and codes were sorted into potential themes. a collection of themes emerged. reviewing themes: at this stage, themes were refined. themes that needed to be collated to others were grouped accordingly. those that needed to be identified and sub-components were also refined accordingly. defining and naming themes: the researcher captured the meaning or essence of each theme and the aspect of the data with each theme. ethical consideration the ethical clearance to conduct this study was obtained from the university of johannesburg, college of business and economics (clearance number: cberec19sciis03). results and discussions the 21 township smmes participated in this study were from various sectors and included a funeral parlour, salons, construction, retail, trade and repair services, catering and accommodation, manufacturing, wholesale trade and social and community services. the smmes may be regarded as formal or informal. however, there was no evidence of whether they are regulated by the city government, pay tax and abide by the best and acceptable business practices. it is for this reason that they are classified as informal businesses. owner or manager’s characteristics participants were examined by using the criteria of level of education, age and their position (owner or manager). the results as depicted in table 4 revealed that the level of education for township smme owners or managers is very good. the findings examined the relationship between the level of education and ict adoption. furthermore, it was deduced from the findings that the level of education of township smme owners or managers is very good. table 4: level of education. the age and level of education may be seen to be directly influencing the decision to adopt ict. the ages of the 21 participants ranged from 22 to 59 (table 5). the data show that about 80% of smme owners or managers are over 30 years of age. some prior literature has shown that age is a determinant of ict adoption, indicating that younger people tend to adopt ict more readily than the older generation (harrison & rainer 1992; ongori & migiro 2010). table 5: age of owners or managers. owner’s information and communication technology skills lack of ict skills has been cited by various authors as one of the barriers towards ict adoption (jaganathan et al. 2018; mwila & ngoyi 2019; yadav, yadav, malik 2019). this study revealed that ict skills are one of the hindrances that affect the ict adoption. although the smme owners or managers seem to have some level of secondary education, they have problems in their ict skills. the findings have indicated that the reason they are not using other ict is that they have no idea which ones are best or most suitable for their type of business, and they do not have the skills necessary to become more familiar with possible ict. they also indicated that having any ict does not necessarily mean it is beneficial to them as they need a specific ict that will enable them to either operate their business effectively or encourage growth. type of information and communication technology used and reasons for usage this section aimed at answering the question regarding the perception or opinion by township smme owners or managers with regard to ict adoption and access. the type of ict used and the reasons for its usage varied amongst all 21 participants, as shown in table 6. some used ict such as mobile phones for both personal and business operations. table 6: type of information and communication technologies and reasons for using current information and communication technologies. although there are various types of icts that can be used to enhance and potentially grow the township smmes, it seemed the smmes only adopted what was familiar to them regardless of whether it adds value to the business or not. reasons for non-adoption of information and communication technologies there are various reasons cited for the non-adoption of icts. table 7 shows the reasons why township smmes do not adopt icts. table 7: reasons for non-adoption of information and communication technologies. in relation to the tam, pe and peou are the factors that influence ict adoption. the perception or opinion towards icts is seen as a major issue affecting ict adoption by township smmes. the perceptions or opinions of what is viewed as ‘complex icts’ are associated with sensitive information such as financial online business transactions resulting in these applications not being adopted, even though participants owned mobile phones capable of the functionalities of online transactions. there seemed to be a belief that the ict infrastructure in the township is poor compared to the cities, thus township smmes may be disadvantaged when it comes to ict access, specifically in terms of connectivity and access. this can be problematic especially for smmes that are relying on icts for competitive advantage and growth. factors that will influence information and communication technology adoption information and communication technology support to improve traditional business operations ict adoption is influenced by the need to effectively improve business operations, such as using ict that will enable them to operate their business transaction effectively. information and communication technology support to gain a competitive advantage competitive pressure was mentioned as a threat. participants indicated that the larger enterprises were posing a threat to their businesses because of their ability to utilise complex and expensive ict. another influence was from the competitive pressure by suppliers who are using ict for their operations. information and communication technology support to gain increase and retain customers customers make decisions with regard to which businesses to use based on the ict the smmes have, especially the ability to conduct business through the internet. therefore, township smmes experience pressure from customers on the usage of ict. improve competitive advantage participants mentioned that they had the desire to sustain their business, and the adoption of ict would grant them the ability to gain a competitive advantage over their counterparts. they believed that ict would assist them to stay competitive and grow their business. support for growth and sustainability overall, the 21 participants perceived ict adoption as a necessity towards growth and sustainability for their business. they perceived ict adoption as a necessity to grow their businesses and a medium through which their business operations could be enhanced. a total of 20 participants indicated that there were benefits associated with ict adoption. only one participant commented that they had no knowledge of any ict benefits for their business. however, interestingly, they agreed that there are benefits with regard to ict adoption for businesses, but not their type of business. information and communication technology that is affordable the participants indicated that they could adopt ict, but the cost of ict was not affordable. high cost was mostly associated with data and access to wi-fi. participants felt they only effectively used their mobile phones when they had data, and cost was a determining factor when using data. information and communication technology support towards accessibility or connectivity poor connectivity and accessibility, such as slow broadband, may have an impact on ict adoption. the poor infrastructure in townships remained a barrier for smmes to access the internet or use their ict mobile apps. government support participants’ overall view with regard to ict support was that there was currently no ict support in townships, therefore, leaving township smmes stranded when seeking ict support. although there have been ict initiatives in soweto (coj 2015), all participants indicated that they were not aware of such support. this could mean that participants had not seen the impact of the ict support or lacked information on it. this is a concern if there is no visibility of the available ict-support programmes. the overall general views from participants were directed at the government with a plea to support township smmes. participants were relaying their fears of not adopting ict as a setback towards growth and reducing the unemployment rate in sa. this study makes a significant theoretical contribution to the ict adoption body of knowledge by examining the five existing ict adoption theories that have mostly addressed the ict adoption phenomena from developed and developing countries. the literature helped to construct an ict adoption framework for township smmes by using a combination of the tam and ant. the study provides an ict adoption framework for township smmes. furthermore, it revealed that there are various role players (human and non-human) and illustrated how they interact with each other. this study filled the identified research gap by revealing that ict adoption by township smmes is not a one-size-fits-all intervention; it is dynamic and involves various factors that are either internal or external. from a practical perspective, this study makes contributions by providing factors to be considered when encouraging ict adoption by township smmes. this study also contributes to the smme owners’ or managers’ understanding of the factors that are necessary when considering ict adoption. small, medium and micro-enterprise owners or managers are the key decision-makers, which makes it essential to understand the factors to be considered when they are adopting icts. finally, the study contributes to various stakeholders that invest in interventions towards ict adoption for township smmes. this should assist the stakeholders to be visible and also to provide necessary ict interventions for township smmes. the interventions can include ict support, such as ict training and ict skills. conclusion the success of township smmes in the developing world context continues to be one of the most critical methods of moving nations forward in terms of addressing socio-economic challenges such as unemployment, economic participation and rectifying an unequal and unjust society. the findings further revealed that township smmes’ perceptions or attitude towards ict adoption vary. although there is a general consensus regarding the perceived benefits towards ict adoption, there were also varying factors revealed such as ict cost, ict awareness, ict support and ict infrastructure. the findings revealed that there is a perception that there must be interventions tailored to their needs in terms of the type of icts they should adopt. there was also a concern of adopting icts that are not relevant to them compared with larger enterprises which may rely on expert ict practitioners for adoption. this implies that smme owners perceive ict as either not easy to use or complicated, resulting in a high possibility of non-adoption. this corresponds with studies that revealed smmes are not positioned to employ skilled ict employees, which has an impact on ict adoption (agboh 2015; okundaye et al. 2019) what emerged from this study is the perception of township smmes towards ict adoption. although there has been an acknowledgment of the importance of adopting icts to grow and sustain the township smmes, it is recommended that before any interventions are made or support is implemented, all factors that affect ict adoption must be addressed, such as ict training and ict support. in conclusion, even though there have been numerous interventions put in place to support township smmes by the government and private sector, they do not seem to be successful in stimulating the township smmes. it is important to have guidelines that will encourage ict adoption by township smmes. township smmes are also the driving force of the economy in sa and they should not be left behind when it comes to the digital economy. the sustainability of township smmes is imperative and can happen if the right interventions and guidelines are carefully formulated. in summary, this study unveils the various challenges and perceptions towards ict adoption by township smmes. small, medium and micro-enterprises are complex in nature and dynamic; therefore, they require interventions through in-depth engagement to explore their needs and reasons behind ict adoption or non-adoption. acknowledgements the authors are grateful for the support and time received from the university of johannesburg. competing interests the authors declare that there are no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions both the authors have contributed equally to the work. funding information this study received no specific funding from any agency in the public, commercial or non-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the author. references abor, j. & quartey, p., 2010, ‘issues in sme development in ghana and south africa’, international research journal of finance and economics 39, 218–228. agboh, d., 2015, drivers and challenges of ict adoption by smes in accra metropolis, ghana.6-1, viewed 18 september 2017, from www.www.aabri.com/manuscripts/142044.pdf. ayyagari, m., beck, t. & demirguc-kunt, a., 2007, ‘small and medium enterprises across the globe’, small business economics 29(4), 415–434. https://doi.org/10.1007/s11187-006-9002-5 awa, h., ukoha, o. & emecheta, b., 2012, ‘integrating tam and toe frameworks and expanding their characteristic constructs for e-commerce adoption by smes’, 571–588. https://doi.org/10.28945/1676 bhorat, h., asmal, z., lilenstein, k. & van der zee, k., 2018, smmes in south africa: understanding the constraints on growth and performance, development policy research unit working paper 201802, development policy research unit, university of cape town, cape town. braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa callon, m., 1987, ‘society in the making: the study of technology as a tool for sociological analysis’, in t.p. hughes, w.e. bijker & t.j. pinch (eds.), the social construction of technological systems: newdirections in the sociology and history of technology, pp. 83–103, mit press, cambridge, ma. callon, m., 1991, ‘techno-economic networks and irreversibility’, in j. law (ed.) a sociology of monsters: essays on power, technology and domination, pp. 132–161, routledge, london. cant, m.c., 2017, ‘the availability of infrastructure in townships: is there hope for township businesses?’, international review of management and marketing 7(4), 108–115. cant, m.c., wiid, j.a. & hung, y., 2015, ‘internet-based ict usage by south african smes: are the benefits within their reach?’, problems and perspectives in management 13(2-si), 444–451. charman, a., 2017, ‘micro-enterprise predicament in township economic development: evidence from ivory park and tembisa’, south african journal of economic and management sciences 20(1), 1–14. https://doi.org/10.4102/sajems.v20i1.1617 city of johannesburg, 2015, integrated development plan: 2015/2016, viewed n.d., from https://www.joburg.org.za/documents_/pages/key%20documents/intergrated%20development%20plan/integrated-development-plan.aspx. chibelushi, c. & costello, p., 2009, ‘challenges facing the w.midlands ict-oriented sme’s’, journal of small business and enterprise development 16(2), 210–239. https://doi.org/10.1108/14626000910956029 davidsson, p. & honig, b., 2003, ‘the role of social and human capital among nascent entrepreneurs’, journal of business venturing 18(3), 301–331. https://doi.org/10.1016/s0883-9026(02)00097-6 davis, f., 1989, ‘perceived usefulness perceived ease of use and user acceptance of information technology’, mis quarterly 13(3), 319–340. https://doi.org/10.2307/249008 davis, f.d., bargozzi, r.p. & warshaw, p.r., 1989, ‘user acceptance of computer technology: a comparison of two theoretical models’, management science 35(8), 982–1003. https://doi.org/10.1287/mnsc.35.8.982 department of trade and industry (dti), 2008, business in the information age: international benchmarking report, department of trade and industry, london. drodskie, p., 2002, job creation and productivity through accessing finance. productivity, official publication of the national productivity institute of south africa, pretoria, april–may, 19–20. elbanna, s., 2009, ‘determinants of strategic planning effectiveness: extension of earlier work’, journal of strategy and management 2(2), 175–187. https://doi.org/10.1108/17554250910965326 eze, c.s., vera, c. & eze, c., 2018, ‘examining information and communication technology (ict) adoption in smes: a dynamic capability approach’, journal of enterprise information management 31(2), 338–356. https://doi.org/10.1108/jeim-12-2014-0125 gbandi, e. & amissah, g., 2014, ‘financing options for small and medium enterprises (smes) in nigeria’, european scientific journal 10(1), 324–340. gibson, t. & van der vaart, h.j., 2008, defining smes: a less imperfect way of defining small and medium enterprises in developing countries, brookings global economy and development, viewed 11 march 2015, from www.brookings.edu/~/media/research/files/papers/2008/9/development%20gibson/09_development_gibson.pdf. harrison, a.w., jr. & rainer, r.k., 1992, ‘the influence of individual differences on skill in end-user computing’, journal of management information systems 9(1), 93–111. https://doi.org/10.1080/07421222.1992.11517949 holmström, j. & stadler, f., 2001, ‘drifting technologies and multi-purpose networks: the case of the swedish cash card’, information and organization 11(3), 187–206. https://doi.org/10.1016/s1471-7727(01)00004-5 international labour office, 2012, statistical update on employment in the informal economy, international labour office, geneva. ismail, r., jeffery, r. & van belle, j.p., 2011, ‘using ict as a value adding tool in south african smes’, journal of african research in business & technology (2011), 1–12. https://doi.org/10.5171/2011.470652 iwu, c.g., gwiya, s., tengeh, r., cupido, c. & maso, r.b., 2016, ‘the unique role of survivalist retail entrepreneur in job creation and poverty reduction: implications for active stakeholder participation’, acta universitatis danubius economica 12(4), 16–37. jaganathan, m., ahmad, s., ishak, k.a., nafi, s.t.n. & uthamaputhran, l., 2018, ‘determinants for ict adoption and problems: evidence from rural based small and medium enterprises in malaysia’, international journal of entrepreneurship 22(4), n. p. keskin, h. & senturk, c., 2010, ‘the importance of small and medium-sized enterprises (sme)s in the economies. swot analyses of the sme sector in turkey and albani’, journal of faculty of economics and administrative sciences 3(1), 116–132. khosla, b., 2013, ict: smes cannot afford to be laggards, expert voice, salt lake city, ut. latour, b., 1996, ‘on actor-network theory: a few clarifications’, soziale welt 25(3) 369–381. latour, b., 2005, reassembling the social: an introduction to actor-network theory, oxford university press, new york, ny. law, j., 1992, notes on the theory of the actor-network: ordering, strategy, and heterogeneity’, systems practice 5(4), 379–393. https://doi.org/10.1007/bf01059830 lekhanya, l.m., 2016, rural entrepreneurship promotional strategy in south africa: concepts, practice and theories, virtus interpress, sumy. liljevern, j. & karlsson, e., 2017, ‘ict investment and the effect on economic growth: a comparative study across four income groups’, student thesis, jönköping university, jönköping. makhitha, k.m., 2016, ‘challenges impacting on small independent retailers performance in soweto, johannesburg in south africa’, investment management and financial innovations 13(3–1), 258–266. https://doi.org/10.21511/imfi.13(3-1).2016.12 makhura, d., 2018, state of the province address delivered. gauteng provincial legislature, johannesburg, viewed 11 may 2018, from https://mg.co.za/article/2018-02-26-read-in-full-premiermakhuras-gauteng-sopa-2018. malefane, s.r., 2013, ‘small, medium and micro enterprises and local economic-base restructuring: a south africa local government perspective’, journal of public administration 48(4), 671–690. marnewick, c., 2014, ‘information and communications technology adoption amongst township micro and small business: the case of soweto’, south african journal of information 16(1), 1–12. https://doi.org/10.4102/sajim.v16i1.618 mathu, k. & tlare, m.t., 2017, ‘the impact of it adoption in smes supply chains: a case of gauteng and free state provinces of south africa’, south african journal of business management 48(3), 63–71. https://doi.org/10.4102/sajbm.v48i3.36 mazwai, t., 2017, the great township business summit, business report, 13 june, university of johannesburg, johannesburg. mbonyane, b. & ladzani, w., 2011, ‘factors that hinder the growth of small businesses in south african townships’, european business review 23(6), 550–560. https://doi.org/10.1108/09555341111175390 moos, m. & sambo, w., 2018, ‘an exploratory study of challenges faced by small automative business in townships: the case of garankuwa, south africa’, journal of contemporary management 14, 467–494. morris, m.h. & zahra, s., 2000, ‘adaptation of the business concept over time: the case of historically disadvantaged south african owner/managers’, journal of small business management 38(1), 92–100. mrasi, a., mason, r.b. & jere, a., 2018, ‘critical skills and knowledge to succeed in the township liquor retail industry’, journal of business and retail management research 12(3), 26–35. https://doi.org/10.24052/jbrmr/v12is03/art-03 mtshali, m., mtapuri, o. & shamase, s.p., 2017, ‘experiences of black-owned small medium and micro enterprises in the accommodation tourism-sub sector in selected durban townships, kwazulu-natal’, african journal of hospitality, tourism and leisure 6(3), 130–141. mukwarami, j. & tengeh, r., 2017, ‘sustaining native entrepreneurship in south african townships: the start-up agenda’, international economics 13(14), 332–345. mukwarami, j., tengeh, r.k. & iwu, c.g., 2018, ‘success factors of immigrant-owned informal grocery shops in south african townships: native shop-owners’ account’, journal of distribution science 16(3), 49–57. https://doi.org/10.15722/jds.16.3.201803.49 murithi, s., 2017, ‘african small and medium enterprises (smes) contributions, challenges and solutions’, european journal of research and reflection in management sciences 5(1), 36–48. mwila, m. & ngoyi, l., 2019, ‘the use of ict by smes in zambia to access business information services and investments: barriers and drivers’, journal of global entrepreneurship research 9(15), 1–16. https://doi.org/10.1186/s40497-019-0145-7 myeko, z. & iwu, c.g., 2019, ‘obstacles faced by african copreneurs in black townships of the western cape, south africa’, journal of reviews on global economics 8, 1–11. https://doi.org/10.6000/1929-7092.2019.08.01 nambiar, y., sutherland, m. & scheepers, c.b., 2019, ‘the stakeholder ecosystem of women entrepreneurs in south african townships’, development southern africa 37(1), 70–86. https://doi.org/10.1080/0376835x.2019.1657001 national development plan 2030, 2012, national planning commission, the presidency, republic of south africa, pretoria. neirotti, p. & raguseo, e., 2017, ‘on the contingent value of it-based capabilities for the competitive advantage of smes: mechanisms and empirical evidence’, information & management 54(2), 139–153. https://doi.org/10.1016/j.im.2016.05.004 ntsika enterprise promotion agency annual review, 2001, state of small business development sa, ntsika, johannesburg. oecd, 2017, enhancing the contributions of smes in a global and digitalised economy, oecd publishing, viewed 03 february 2019, from http://www.oecd.org/cfe/leed/1918307.pdf. okundaye, k., fan, s. & dwyer, r., 2019, impact of information and communication technology in nigerian small-to medium-sized enterprises’, journal of economics, finance and administrative science 24(47), 29–46. https://doi.org/10.1108/jefas-08-2018-0086 ongori, h., atambo, r. & bosire, d., 2015, ‘challenges faced by small and medium enterprises in kenya: theoretical argument’, international journal of innovative research & studies 5, 1–17. ongori, h. & migiro, s.o., 2010, ‘information and communication technology adoption: a literature review’, journal of chinese entrepreneurship 2(1), 93–104. https://doi.org/10.1108/17561391011019041 phikiso, z. & tengeh, r.k., 2017, ‘challenges to inter-family succession in south african townships’, academy of entrepreneurship journal 23(2), 1–13. pillay, p., 2016, ‘barriers to information and communication technology (ict) adoption and use amongst smes: a study of the south african manufacturing sector’, master thesis, university of the witwatersrand, johannesburg. ramchander, p., 2007, ‘township tourism: blessing or blight? the case of soweto in south africa’, in g. richards (ed.), cultural tourism: global and local perspectives, pp. 39–67, haworth press, new york, ny. republic of south africa, 1996, national small business act no. 102 of 1996, government printer, pretoria, viewed 21 august 2017, from http://www.thedti.gov.za/sme_development/docs/act.pdf. robson, c., 2002, real world research: a resource for social scientists and practitioner-researchers, 2nd edn., blackwell publishers ltd., oxford. rogoff, e.g., lee, m. & suh, d., 2004, ‘“who done it?” attributions by entrepreneurs and experts of the factors that cause and impede small business success’, journal of small business management 42(4), 364–376. https://doi.org/10.1111/j.1540-627x.2004.00117.x rungani, e.c. & potgieter, m., 2018, ‘the impact of financial support on the success of small, medium and micro enterprises in the eastern cape province’, acta commercii 18(1), a591. https://doi.org/10.4102/ac.v18i1.591 small enterprise development agency (seda), 2018, 1st quarter, smme quarterly update, small enterprise development agency (seda), pretoria. sme south africa, 2017, the state of sa’s township entrepreneurship, viewed 02 july 2018, from https://www.smesouthafrica.co.za/15427/the-state-of-sas-townshipentrepreneurship/. south africa government gazette, 2019, national skills development plan 2030, department of higher education and training, no. 42290, government gazette, pretoria. state of south african cities report (sacn), 2016, state of south african cities report 2016, state of south african cities, johannesburg. statistics south africa, 2015, quarterly labour force survey, statistics south africa, pretoria. stone-jovicich, s., 2015, ‘probing the interfaces between the social sciences and social-ecological resilience: insights from integrative and hybrid perspectives in the social sciences’, ecology and society 20(2), 25. https://doi.org/10.5751/es-07347-200225 toader, e., firtescu, b.n., roman, a. & anton, s.g., 2018, ‘impact of information and communication technology infrastructure on economic growth: an empirical assessment for the eu countries’, sustainability 10(10), 1–22. https://doi.org/10.3390/su10103750 turpin, m., 2018, ‘assessing south african ict4d research outputs: a journal review’, south african computer journal 30(1), 108–127. https://doi.org/10.18489/sacj.v30i1.541 yadav, d., yadav, j. & malik, r., 2019, ‘e-hrm: a paradigm shift in hr practices and its effects on perception of employees towards accepting this new technology’, indian journal of management 12(2),23–39. https://doi.org/10.17010/pijom/2019/v12i2/141754 abstract introduction research questions literature review results discussion per research question conclusion limitations of the study future research acknowledgements references about the author(s) tatenda chidau department of applied management, college of economic and management sciences, university of south africa, pretoria, south africa risimati m. khosa department of applied management, college of economic and management sciences, university of south africa, pretoria, south africa magaret phillips department of applied management, college of economic and management sciences, university of south africa, pretoria, south africa citation chidau, t., khosa, r.m. & phillips, m., 2022, ‘effects of successful business practices on business performance: evidence from immigrant entrepreneurs in ekurhuleni, south africa’, southern african journal of entrepreneurship and small business management 14(1), a490. https://doi.org/10.4102/sajesbm.v14i1.490 original research effects of successful business practices on business performance: evidence from immigrant entrepreneurs in ekurhuleni, south africa tatenda chidau, risimati m. khosa, magaret phillips received: 16 nov. 2021; accepted: 02 feb. 2022; published: 31 mar. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the success stories of immigrant entrepreneurs are well documented worldwide. in south africa, that success created mixed feelings among the locals as immigrant entrepreneurs are often perceived as being opportunistic and cunning in business. there is not much research on the business practices that are applied and how they influence business performance. aim: this research study aimed to explore and sought an in-depth understanding of the business practices that immigrant entrepreneurs put into practice and how they affect business performance. setting: the research was carried out in germiston and kempton park in the ekurhuleni metropolitan, in gauteng province. moreover, the study focused on legally operated businesses by immigrant entrepreneurs. methods: to enable the exploration of personal experiences, a qualitative research approach was used. twelve in-depth face-to-face interviews using semi-structured questions were conducted to collect data. results: the study established that immigrant entrepreneurs in south africa indeed implemented business practices, and advertising was used by all 12 participants. word of mouth, which created loyalty, came out as the most trusted and valued business practice that all immigrant entrepreneurs relied on. conclusion: the study deduces a strong positive relationship between implementing business practices and improved business performance. this study revealed that entrepreneurs applied different business practices (such as advertising, transportation and pricing) simultaneously to promote and improve business performance. keywords: business performance; business practices; immigrant entrepreneurs; immigrant entrepreneurship; sme; south africa. introduction the success of immigrant entrepreneurs has been attributed to the growth and development of many developed and developing countries, and south africa is no exception. the contribution of immigrant entrepreneurs in the industrialisation of south africa is well documented (gastrow & amit 2013:16; kalitanyi 2007:100; ngwenya 2017:26). south africa is regarded as one of the most advanced economies on the african continent, and its cities are gateways to african immigrants (ngwenya 2017:1). this implies that immigrants have a higher prospect of having a better life in south africa. moreover, such immigrants are propelled into opening businesses due to the lack of employment opportunities and the need for survival. scholars (afewerki 2015:68; chrysostome 2010:138; dheer 2018:560) refer to these kinds of entrepreneurs as a necessity (push) immigrant entrepreneurs. for this research, necessity (push) immigrant entrepreneurs are the unit of analysis. in south africa, immigrant entrepreneurs are regarded as opportunistic and conquering certain business sectors. newspapers reported that immigrants did not add value to the economy; instead, they came to invade and exploit south african resources, thereby negatively influencing the perception of locals towards immigrant entrepreneurs (moyo 2015:30–31). this misconception created resentment among the locals, which led to the hotly debated topic of the business conduct of immigrant entrepreneurs. according to crush and tawodzera (2017:26), the debatable questions are centred on the perceived views that immigrant entrepreneurs’ success is due to the exploitation of opportunities earmarked for south africans. the perceived prominence was affiliated to the view that immigrant entrepreneurs were monopolistic (charman, petersen & piper 2012:49). various researchers such as charman et al. (2012) and radipere (2012) noted that immigrant entrepreneurs ran successful businesses. in delft township in the city of cape town, somali entrepreneurs outdid local operators and drove them out of business (charman et al. 2012:47). somali migrants tend to be the most researched immigrant entrepreneurs in south africa. this is acknowledged by ngwenya (2017), ibrahim (2016) and charman et al. (2012) who studied the transformation of the spaza shops by somalis. according to khosa and kalitanyi (2015:142), in cape town, somali immigrants were the most visible group of immigrant entrepreneurs. therefore, there is a gap in the literature when considering that south africa accommodates different immigrant entrepreneurs as substantiated by garg and phayane (2014:65) and kalitanyi and visser (2010:381). furthermore, the researchers identified another gap in the literature, which only emphasised the high success rate of immigrant entrepreneurs without clearly identifying the business tools that were applied to achieve that success. this is endorsed by khosa and kalitanyi (2015:132) and ladzani and van vuuren (2002:159) who claimed that very few studies have previously been carried out on immigrant entrepreneurs’ business practices in south africa. therefore, this research sought to identify the business practices immigrants implement and how they affected business performance. this study contributes to the literature by addressing the debatable questions linked to the reasons behind immigrant entrepreneurs’ success. research questions the study ought to answer the following questions: what business practices do immigrant entrepreneurs implement? how does the implementation of business practices affect the performance of businesses owned by immigrant entrepreneurs? literature review in south africa, the number of immigrant entrepreneurs is rapidly increasing, which could indicate the availability of a lot of unexplored opportunities and high profitability (radipere 2012:123–124). various businesses in south africa operated by immigrant entrepreneurs are classified as smalland medium-sized enterprises (smes) (olawale & garwe 2010:729). smes are noted as being a catalyst to stimulating a country’s economic growth and a way to eradicate poverty (eds. opoku & sandberg 2017:179). according to najib (2015:9) and khosa and kalitanyi (2015:134), immigrant entrepreneurs are people who leave their country of residence and settle in another country and start entrepreneurial enterprises. chrysostome (2010:138) explained that there are two types of immigrant entrepreneurs: necessity and opportunity immigrant entrepreneurs. necessity immigrant entrepreneurs are driven into entrepreneurship because of a lack of job opportunities and the need for survival (dheer 2018:560). moreover, immigrant entrepreneurs are often regarded as refugees. as previously mentioned, this study is solely based on necessity immigrant entrepreneurs. necessity immigrant entrepreneurs in south africa operate different businesses. the west african immigrants dominate the nightclubs, traditional clothing, wedding dresses and food retailing, whereas those from mozambique and zimbabwe are specialised in selling curios and repairing vehicles (kalitanyi & visser 2010:379). the researchers established that most entrepreneurs operated in the retail and service sectors, which corroborate the findings of rogerson (1997:11) about the business clusters of immigrant entrepreneurs. this could be attributed to the low capital investment and fewer barriers in the registration process. along the same theme, ngwenya (2017:4) put forward that various researches focused on spaza shops, as the sector of retail business is dominated mainly by immigrant entrepreneurs in south africa. moreover, this indicates the possibility of low capital investment influencing immigrants as spaza shops would not require a huge financial investment. the theoretical guide this research adopted a mixed embeddedness theory, which is better suited to exploration and explaining research subjects. mixed embeddedness is a combination of theories that focus on immigrant entrepreneurs’ inclusion in the socio-economic, cultural and political environment in the host country (akın, bostanci & akyol 2017:502; marchand & siegel 2015:7). embeddedness has been a significant approach in elucidating the success of entrepreneurs and specifically that of immigrant entrepreneurs (bagwell 2018:105; kloosterman, van der leun & rath 1999). furthermore, najib (2016:145) explained how the theory illuminates the correlation between immigrant entrepreneurs and business practices such as social networks. along the same conduit, bagwell (2018:105) writes that immigrant entrepreneurs are strongly socially and culturally embedded in their co-ethnic and family networks, thus affording them access to crucial forms of social capital that is not largely available to the mainstream. more so, the theory is ideal because of being collaborative as outlined in the findings. business practices implemented by immigrant entrepreneurs business practice is the method of how to achieve a competitive advantage (hesterly & barney 2019:19). more so, this definition was adopted in this study as it outlines how businesses attain a competitive advantage and implement it to outdo other competitors. businesses, which can sustain a competitive advantage and are successful, all attributed that to business practices (agwu 2018:1). a business without a business practice is prone to failure (abosede, obasan & alese 2016:328). in south africa, various researchers (such as charman et al. 2012; gastrow & amit 2013; ngwenya 2017) paid particular attention to somali immigrant entrepreneurs while rarely covering the other nationalities. therefore, the various business practices identified are biased towards the somali immigrants who were singled out as the most visible immigrant entrepreneurs (khosa & kalitanyi 2015:142). in delft, cape town and cosmo city, johannesburg, somali immigrant entrepreneurs were noted as possessing the similarity of using intermediaries to broker deals for them (charman et al. 2012:71; ngwenya 2017:80). good social relations were highlighted as one of the major business practices in running a business in townships, whereby the core was always seeking peace and avoiding conflict (ngwenya 2017:81). this contradicts previous researchers (such as crush & tawodzera 2017; field 2017), who documented somali immigrant entrepreneurs as being victims of violent xenophobia in townships; areas that have a high concentration of the poor and disempowered. immigrant entrepreneurs are famed for making use of networks in their communities as a business practice (cobbinah & chinyamurindi 2018:7). furthermore, networking is equated to a family structure that consists of the elders guiding members. this was alluded to by ngwenya (2017:52), who stated that muslim as a religion was used as a business practice by immigrant entrepreneurs. moreover, networking among members is attributed to the acquiring of business skills, start-up capital and sharing ideas on the business expansion (muchineripi, chinyamurindi & chimucheka 2019:10). gastrow and amit (2013:31) opposed the notion that somali entrepreneurs made use of a cooperative supply structure to buy goods, but instead indicated how they purchased goods individually but shared transportation costs. furthermore, somalis revealed themselves as specialists in bargain hunting, using different wholesalers with specials and low prices. this indicates that somalis invest a lot of time and resources in researching places with better pricing. the issue that is contrary to the views of somalis who do not own the shops, but are merely workers, is addressed. according to gastrow and amit (2013:25), shops are established through co-investment whereby established shop owners give employees shares in the shop; moreover, employees pull together savings to establish their own shops. immigrant entrepreneurs strategically locate their businesses in residential areas with high human traffic (ibrahim 2016:87). this assents the study by ngwenya (2017), which heeded that immigrant entrepreneurs were mainly located in townships. ngwenya (2017:88) singled out how somalis used pricing as a business practice by only adding a 5% mark up. pricing is a factor usually considered by customers when making purchasing decisions (borchardt et al. 2018:85). therefore, the price-conscious customer is likely to be drawn towards somali shops. working long operational hours and closing shops late were noted as ways to improve customer convenience and was a business practice that immigrant shop owners applied (ibrahim 2016:58). conventional shops all have restricted shopping hours usually controlled by mall regulations. the flexibility in operation and proximity to the communities’ work as an advantage. the achievement of customer loyalty is essential in a business, and immigrant entrepreneurs offered credit lines and constantly improved on local language proficiency to attain it (ngwenya 2017:89). credit was offered to customers in cosmo city, based on trust and honesty (ngwenya 2017:89). business performance according to dalrymple (2004:7), the field of researching business performance of smes can be considered young and growing – particularly in south africa. this is supported by maziriri and chivandi (2020:3) who argue that there is a lot of research on smes but very limited studies that focus on business performance. mashavira and chipunza (2021:5) acknowledged that business performance was a good indicator to reveal the success rate of an organisation. business performance is regarded as multidimensional as it can be assessed using different measures such as organisational profitability, sales growth, innovation, return on assets, customer satisfaction and growth in the number of employees (garg, joubert & pellissier 2004:13; radipere 2012:254). in this study, a definition by zulkiffli and perera (2011:1) was adapted, which focuses on assessing the profitability of a business and its ability to sustain itself. measuring business performance measuring business performance is very complex, intricate and still in the developing stages (dalrymple 2004:7; garg et al. 2004:7). according to buttenberg (2017:448) and rai, patnayakuni and patnayakuni (1997:89), there are two types of tools used to measure business performance: financial and non-financial. financial tools measure performance using the monetary results of a business, known as tangible assets, using elements such as financial ratios. non-financial tools entail evaluation of business performance using business products or services, known as intangible assets, such as human capital, goodwill and customer loyalty (buttenberg 2017:448; garg et al. 2004:7; rai et al. 1997:89). traditionally, financial ratios were used to measure business performance; however, they were prepared by experts and came at a huge cost (kirsten, vermaak & wolmarans 2015:14). furthermore, van zyl (2020:70) explained that financial measures are still regarded as popular and dominant because of the statutory requirements and credit providers. despite the popularity, kotane and kurzimina-merlino (2017:190) argued that it was impossible to make precise predictions of a business’s financial stability exclusively using financial records. in the modern era, there are various business performance measuring tools such as the balanced scorecard (bsc), which uses both financial and non-financial elements. however, in south africa, it is not applied in smes but rather by large companies (kirsten et al. 2015:15). the main reason is that large companies are regulated and use bsc to indicate to financial institutions that they can service a future debt, which could be very beneficial if adopted by smes prospecting for funding. unfortunately for smes, without proof of performance, various financial institutions tend to value the profitability of a business (kotane & kurzimina-merlino 2017:186; van zyl 2020:70). according to garg et al. (2004:7), profitability is the main indicator of business performance. however, this has drawbacks because of its inability to properly depict the non-financial parameters such as goodwill and customer loyalty, which can be essential. maziriri and chivandi (2020:3), in contrast, explain that business performance can be evaluated using the number of new employees. nonetheless, the views of maziriri and chivandi (2020) are not applicable to this study, as immigrant entrepreneurs who participated did not have many employees. furthermore, khosa and kalitanyi (2016:52) concluded that longevity and employment creation are defining factors of success to african immigrant-owned small businesses in cape town. in this study, researchers interviewed the participants on whether market share, sales, investments or income had increased or decreased to determine business performance. the approach is inclusive of both financial and non-financial measuring tools. the decision was influenced by kotane and kurzimina-merlino (2017:190) who emphasised that the future of business performance measurement will be equally inclusive of the financial and non-financial performance perspectives. challenges in determining business performance as previously stated by olawale and garwe (2010:729) that immigrant entrepreneurs operated businesses that are mainly classified as smes, these two terms (immigrant entrepreneurs and smes) are interchangeably in this research. south africa has a low sme business growth rate averaging 50% failure (sitharam & hoque 2016:277). the high failure rate could be the reason why the operations of smes tend to be shrouded in secrecy. according to zulkiffli and perera (2011:2), immigrant entrepreneurs are not willing to divulge their financial documents. pertaining to education, south africa has financial literacy challenges; as a result, financial reports might end up being prepared by unqualified people or not being prepared at all (kirsten et al. 2015:18). in view of the above, it can be argued that poorly prepared financial reports are illusory and difficult when used to interpret business performance. an example will be financial ratios that indicate a financial loss, which is misleading as that could be the result of extensive investment in machinery or business premises (zulkiffli & perera 2011:3). in contrast, mashavira and chipunza (2021:9) disputed that there was no conclusive evidence to indicate that education levels had any bearing on smes performance but alluded that smes were marred by poor record-keeping. the trend of poor recording-keeping and the unwillingness to divulge records could be associated with resistance to business evolution. according to van zyl (2020:66), sme owners are unfamiliar with the performance management systems (pms) used to measure the performance of their businesses. the findings are aligned with kirsten et al. (2015:32), who confirmed that accountants who mainly work as advisors and consultants to smes were not familiar with popular pms systems such as bsc. in conclusion, therefore, accountants could not advise sme owners on systems they do not know. clearly, pms models are not structured for smes, as they require consultants who are experts in the field for them to be implemented properly. van zyl (2020:67) reiterated that pms is costly, time-consuming and very difficult, while smes function with limited or scarce resources. it is evident that the huge cost would deter a lot of smes from preparing financial records. the assumption, however, is that smes would not invest in anything that will cost them a lot of money. on the other end, smes are mainly self-funding businesses; they rarely need to convince any institutions of their financial standing (radipere 2012:121). it is evident that the lack of huge financial reserves puts smes at risk against large corporations (muchineripi et al. 2019:7). research methodology according to kothari (2004:8), research methodology is a precise procedure that yields answers to research questions using chosen research approaches. a qualitative research method was applied in this study because of its focus on achieving an in-depth understanding of a situation. creswell (2009:193) highlighted that qualitative research is investigative and occurs in a natural setting. the researchers sought to unearth the limited personal information on immigrant entrepreneurs. therefore, researchers adopted the exploratory research method in this article as it discovers in-depth information, gains deep insights and has a thorough understanding of phenomena (cooper & schindler 2014:129). scholars, such as leedy and ormrod (2015:24) and cooper and schindler (2014:146), expound on exploratory research as appropriate when investigating a subject with limited knowledge. hence the decision on exploratory research, as the information on the experiences of immigrant entrepreneurs is meagre in south africa. according to leedy and ormrod (2015:92) and cooper and schindler (2014:124), the research design is the plenary plan that leads to the provision of answers to the research objectives. it provides a template for collecting, measuring and how to analyse data. the researchers made use of inductive reasoning, which emanates from the theoretical perspective of epistemology. epistemology is centred on the face-to-face interaction to accumulate knowledge between the participant and researcher (walliman 2011:17). population and sampling there are 687 867 smes operating in gauteng (small enterprise development agency (seda) 2018:16). furthermore, these smes are inclusive of those that are owned by immigrants and non-immigrants. the targeted population for the research was all the immigrant entrepreneurs operating in ekurhuleni, gauteng. because of the difficulty in securing participants, the researchers opted for two sampling methods. convenience sampling and snowball sampling were used in the research. this coheres with marchand and siegel (2015:5) who discovered that in south africa, data on immigrant entrepreneurs is very limited compared to the usa where data is readily available at a city level. the researchers agreed on a sample size of 15 participants. as stated by salkind (2013:235) and dworkin (2012:1320), not more than 30 participants are the ideal number when conducting in-depth interviews. in the end, 12 participants were interviewed to curb the possibility of new information emerging after the saturation point was reached during the tenth interview. those who did not meet inclusion criteria as set out were excluded from the research: the participants should be immigrant entrepreneurs operating in the ekurhuleni municipality of south africa. immigrant entrepreneurs should be documented in south africa and operating legally registered businesses. the participants should be the owners of the business. the participants must be between the ages of 18 and 65 at the time of the interview. research instrument in this study, individual in-depth interviews (conducted in english) ranging between 30 and 111 min were used to collect data by the researchers from 01 june to 03 august 2020. the researchers firstly compiled an interview guide with various questions that were adapted from previous studies such as ngwenya (2017), sami (2016), moyo (2015) and radipere (2012). the interview guide consisted of two sections of semi-structured questions, which provided guidelines during the interviews. the first part was the participant’s demographics. the last part focused on the business profile and business details. the questions were compiled using the interview protocol and 12 interview guidelines as specified by leedy and ormrod (2015:166), which are meant to improve efficiency. the researchers conducted two interviews as a pilot test prior to the actual interviews. according to leedy and ormrod (2015:388), a pilot test is a short probe that indicates weaknesses that require altering and rectification. data analysis the interview field notes and audio recordings were transcribed using microsoft word and analysed using atlas, ti version 8. thereafter, the transcribed document was coded and categorised. six categories known as classes were thereby generated from the 29 codes. measures for establishing trustworthiness in the research to ensure that the research is trustworthy, various frameworks were applied. these frameworks guaranteed the quality and ethicality of the research results. credibility was ensured as the participants were verified and described accurately with pseudonyms. these consisted of names like b1, b2, until b12 for all 12 participants. b1 represented bag 1; researchers used a different zipper bag for each interview session. dependability was achieved by ensuring that coding was accurate. the researchers repeatedly checked transcripts and stored them securely in a lockable home office for interested parties when requested. confirmability was maintained by describing the interview results verbatim and rechecking that all field notes and audio recordings were accurate. authenticity was upheld by ensuring original transcripts, and audio recordings were stored accordingly and are readily available in case requested for verification. confidentiality was maintained by guaranteeing the anonymity and assurance of participants of privacy after the research, as there are no records of participants’ names. ethical considerations an application for full ethical approval was made to the unisa department of ethics review (dam-rerc), and ethics consent was received on 18 may 2020. the ethics approval number is 2020_cems_dam_005. results this section outlines and analyses the findings of the research based on the responses of the 12 participants interviewed. the participants were answering questions on the business practices they used and whether any advantages or disadvantages were derived. this information is provided verbatim in quotes. the participants in the research all agreed that they had made use of different business practices to enhance business. the researchers, therefore, had to adopt the definition by agwu (2018:1), who noted that business practices were a prerequisite for a business to be successful and to be able to sustain a competitive advantage. various participants acknowledged having made use of more than one business practice concurrently. in the research, all the participants did use a business practice, and therefore there was no opportunity for comparison. word of mouth was the widely implemented business practice to advertise a business. newspapers were the least used because of the high cost, and online advertising emerged as very efficient and reaching a large sector of prospective customers. the findings reveal that both generic and non-generic business practices were implemented. advertising modes of advertising used in the study include print media, banners, social media and billboards. the popular and affordable means were pamphlets, social media, banners and business cards. only two of the 12 participants did not use paid advertising; they instead made use of only free modes such as word of mouth and social media. when asked if they used advertising in their businesses, participants provided the following responses: ‘no, because my shop has been here for a long time.’ (b3, 40 years old, male) ‘no, i did not do it, and then i think the people do it first, they come with another one or the send some another.’ (b4, 41 years old, female) biz 3 claimed that there was no reason to advertise as his shop has been operating for many years, and it is well known. biz 4 also shared similar sentiments but relied mainly on his customers to advertise the business. various participants acknowledge that advertising had a positive effect on the sales, profit and customer base. placing adverts in newspapers was widely regarded as very expensive by various participants. they noted that: ‘yes, why not. i make material for others to advertise their businesses. i have banners, business cards, active social media presence. we are on every popular platform. we also do newspapers once in a while.’ (b11, 48 years old, male) ‘newspapers we did a few times a few years ago. we have a website that my grandsons operate for me. it does have all our social media details. so, it is pretty easy to get hold of us. on the website, they can book a table, when and what time, the type of food.’ (b12, 61 years old, female) the participants’ b5, b7, b9, b10 and b11 all indicated how advertising positively influenced the business sales, profit and customer base continuously. this supports mishra and mahalik (2017:1935) who noted that advertising is the most important form of communication in business that promotes the products and services. word of mouth the findings revealed that word of mouth was the most widely used and popular means to spread information about a business, and it created loyalty. good customer service was emphasised as the basis for creating goodwill among customers. as customers appreciate the good service, they become loyal and attached; therefore, subconsciously, they market and advertise the business. the participants indicated that: ‘people see the signs out there, others are told by their friends.’ (b7, 39 years old, male) ‘mostly it is word of mouth.’ (b8, 44 years old, female) ‘word of mouth. i mean is the greatest form of advertising.’ (b10, 45 years old, male) ‘the most efficient is word of mouth by customers who are impressed and satisfied with our service.’ (b11, 48 years old, male) the participants outlined how word of mouth was the most valued way to disseminate information about the business, as there were no costs involved. customer and supplier relationships various participants admitted to and regarded personal relations as vital to business performance. participants highlighted how having a strong relationship was beneficial as they received information about promotions and discounts from the suppliers before most of the public. in the event of facing business challenges, suppliers are willing to assist with restocking if there are good relationships. the participants provided these responses: ‘i now have established connections, so i can order online then make the payment.’ (b4, 41 years old, female) ‘with my suppliers we are okay, you see they trust me, i trust them. i order online pay online and they deliver everything in good condition with no problems.’ (b5, 46 years old, male) the findings are aligned with sekatane (2018:107–111) and kademaunga (2017:111) who stated that relationships between a business and the customer are essential and lead to success. transportation and bulk buying various participants noted buying in bulk and were incentivised by receiving discounts and free transportation. the interaction with suppliers was essential in determining the discount and transportation. business owners revealed how collaborating was used to ensure that they get favourable prices from wholesalers. saving on transportation costs was noted as a valuable cost-saving mechanism. immigrant entrepreneurs engage in co-investment rather than the misconception of bulk buying (gastrow & amit 2013:25). however, the results reveal that various participants engaged in bulk buying, especially when importing goods. co-investment was particularly utilised by those in the retail sectors dealing with baby commodities, disposable nappies and hair products. in response to transportation and bulk buying, the participants explained: ‘everything that we order is either they charge us for delivery, or we go collect ourselves.’ (b2, 34 years old, male) ‘yeah, we share transport.’ (b3, 40 years old, male) ‘they provide free delivery if you order more than 15 boxes. if it is less, then you have to pay a small delivery fee.’ (b8, 44 years old, female) ‘the ones we import we use couriers mostly, locally sourced material usually my husband and i get them from the fresh food market. we have a few suppliers with farms around johannesburg they deliver themselves. if you buy in bulk, you most likely to get a discount.’ (b12, 61 years old, female) these findings are in line with assertions by ngwenya (2017:80), ibrahim (2016:88) and moyo (2014:263), who indicated that suppliers provided free transportation when bulk purchases were made and when fewer goods were bought customers arranged private transportation. pricing and payment methods according to ngwenya (2017:89), credit was only offered based on trust and honesty garnered over a long period of interaction between immigrant entrepreneurs and customers. offering credit was viewed as essential in increasing sales in a business. various business owners provided credit to create relationships with customers, which is deemed a catalyst in boosting business performance. those who did not offer credit had other options like offering lay-byes to the customers. there was a trend of setting a very low mark up on goods and services in various businesses. the idea behind this was to offer affordable products to customers. cash was the most widely used mode of payment. savings derived from economies of scale enabled immigrant entrepreneurs to charge lower prices and provide credit. lower prices were attributed to drawing price-conscious customers, which, in turn, increased sales and profitability. regarding pricing and payment methods, the participants pointed out the following: ‘i display my prices. so, if you afford, you just buy. if you cannot afford you just look and move on.’ (b5, 46 years old, male) ‘we really put a low margin because we have a lot of competition when it comes to that side of the business. so, prices have to be in line with our competitors or else you will not have clients.’ (b7, 39 years old, male) ‘we have very flexible prices.’ (b9, 36 years old, female) the following findings can be comparable to assertions by adendorff and halkias (2014:13) who are of the view that trust is essential for a business to operate successfully. ‘no, and yes, i have people i trust, my good customers, i give credit but if you have a new customer no.’ (b5, 46 years old, male) ‘unfortunately, we do not offer credit unless in certain special circumstances when maybe a regular customer does have an urgent matter and they are not able to pay. we make exceptions, but it is only for those people who have been doing business with us for a long time.’ (b9, 36 years old, female) ‘some of the times i have done credit, or you can do a lay-bye of at least 50% you know, you leave the product with me and when you complete it, then, you can get your product.’ (b10, 45 years old, male) ‘yes definitely, we have people whom we give credit, we prepare food for them and they pay at a later stage but, it is trustworthy people. if for example, it is a wedding, we usually offer lay-byes.’ (b12, 61 years old, female) the findings are in accordance with ngwenya (2017:89) and ibrahim (2016:88), who accentuated that credit lines are determined by trust and honesty. operational hours long operational hours and working during the weekends and public holidays are a business practice used by immigrant entrepreneurs (ibrahim 2016:58). there was an overall agreement that opening longer hours and working during public holidays gave them a competitive advantage and increased the market share. various participants noted how they were not bound by certain operational rules like closing shops at a specific time as required especially in shopping malls. various participants also outlined how they could partially operate a business after hours: ‘yeah, seven days a week.’ (b3, 40 years old, male) ‘we are very hard workers; you see even sundays we work. we open from morning until at very late.’ (b5, 46 years old, male) the participants agreed with previous studies that immigrant entrepreneurs benefitted immensely from long operational hours as customer demands are always met (gastrow & amit 2013:31; moyo 2014:263; ngwenya 2017:80). nonetheless, an early study by min (1990:440) reported that while long hours of work assist immigrant entrepreneurs to survive in labour-intensive small businesses, it deprives them of leisure activities and thus frequently causes health problems. language and business location the participants all acknowledged how essential it was to infuse communication using a local language as beneficial to the business. all immigrant entrepreneur strategically located their business in areas with high numbers of human traffic. according to khosa (2014:89), the determinant for the choice of business premises for immigrant entrepreneurs is access to customers. various participants agreed that operating in the same location for a long time was advantageous as it automatically creates goodwill, and the place becomes engraved in the minds of the community. parking and security were major factors for a business location among the participants, especially those who operated within shopping malls. the participants explained: ‘i have seen that a lot of our local people here they like to use the local language. so basically, it would help out i would say to use those local languages.’ (b2, 34 years old, male) ‘yes, and no my brother you see most of my customers are these young generations those working probably not married, so they communicate in english.’ (b5, 46 years old, male) ‘yes, definitely i do, i have learnt a couple of local languages.’ (b9, 36 years old, female) ‘yes, of course, you become one with the people, it is easier to communicate, and your customers also feel comfortable around you. i mastered the local languages very well.’ (b12, 61 years old, female) ‘it is in the mall, and i am renting.’ (b4, 41 years old, female) ‘you see this place the rent was reasonable plus there were no other shops close to me. i looked for a few places and i wanted one whereby my customers could see me easily.’ (b5, 46 years old, male) ‘so actually, the business is like this, it moves like this. it depends with the site you are and what you have.’ (b6, 48 years old, male) ‘you see we are in a busy area full of young people, so they see the signs out there.’ (b7, 39 years old, male) ‘mostly i can say young people, you see those doing job applications or school children. we are close to two colleges, a police station, and home affairs office. so, we have a lot of traffic in here. you see being in the cbd alone is a selling point.’ (b8, 44 years old, female) ‘for us, we had to be in a place which is safe, close to a lot of businesses and easily accessible. as you see parking is plenty and we can be easily located.’ (b9, 36 years old, female) these findings are in line with ngota, mang’unyi and rajkaran (2018:6), ngwenya (2017:81) and moyo (2014:263) who explained how immigrant entrepreneurs made use of local languages and business locations as business practices. in support, khosa (2014:89) reported that an overwhelming majority (73.1%) of his respondents recounted that there are some benefits derived from the knowledge of local languages. social networking participants benefitted immensely from being part of a community whereby elders provided guidance and taught business skills. those faced with challenges and had conflict resorted to social networks for remedies. mentorship and provision of finances were the main benefits of social networking. various participants acknowledge being part of a social network and noted how their businesses benefitted immensely from the association. another participant (biz 12) claimed being a mentor to upcoming business owners in the community. the participants clarified that: ‘business is all about saving costs, so we are always on the lookout for that. so, we constantly engage each other. since we cannot get bank assistance, we have to help each other as a community.’ (b8, 44 years old, female) ‘yes, we do with other zimbabwean business owners we share ideas on how to run a business.’ (b9, 36 years old, female) ‘it is important to stay in touch and abreast, we have friends who are economist and others with the insurance industry. they share their views on how we should look after our business. especially planning when it is right to take a risk and when not to. you see as a business you can never know everything, so you learn a lot from interacting with others. even sourcing of raw materials, you get leads from other fellow businesspeople.’ (b11, 48 years old, male) ‘now i am actually like a mentor to the young ones starting businesses. so, we teach each other, share ideas, and sometimes help young people with finances.’ (b12, 61 years old, female) the results have similarities to tengeh and nkem (2017:2) who indicated that networking is a business hub that provides knowledge on running a business and support. social networks provide financial resources, employees who are willing and flexible to work long hours for low pay, information and the trust needed by the immigrant entrepreneur (chrysostome 2010; dana & morris 2011; khosa & kalitanyi (2016). a seminal study by aldrich and waldinger (1990) reported that information about permits, reliable suppliers, management practices and promising business lines is usuallys obtained through an owner’s personal networks. business performance the findings unearthed that small businesses in terms of infrastructure ascertained business performance using sales volumes and profit. various participants admitted to having been affected by covid-19, which strained business performance for the financial year-ends 2020 and 2021. according to karunanayake (2020:1), covid-19 was a global pandemic that devastated business performance globally; the findings highlighted the impact of covid-19 on businesses. the participants explained how they evaluate business performance: ‘i would say i use both profit and sales to gauge business performance. the current situation it is quite bad, but before this covid-19 thing, it was okay. i would say it was well, it was doing well.’ (b2, 34 years old, male) ‘since i started, i have managed to grow a lot. my sales are way higher, and we are performing very well. i will still have to judge this year because corona grounded everyone.’ (b5, 46 years old, male) ‘business is good, we are doing very well. on my side i have to look at profit. we also check the people who open new accounts monthly on the café side and laundromat side.’ (b7, 39 years old, male) ‘mostly we look at our sales, then we consider the profit and investments we did to the business. you see one year my profit might be low but on the other side, i added new machinery in the business to make it function better.’ (b8, 44 years old, female) ‘we have different ways, like anyone else first thing is profit and sales, and then we consider other things like equity and assets we acquired. we have been doing very well, only the first year was tough because we invested heavily in machinery, but now it is growth every year. all the cars we have it is the business, the building and the expansion happening it is all returns of the business.’ (b11, 48 years old, male) ‘we consider a lot of factors like profit, sales volumes and also our investments. with profit, you compare with previous years or on a monthly basis, same as sales volumes, then with the investment, we tally up what we managed to acquire as a business over a certain period. all that is considered after removing all the expenses incurred by the business like the salaries and inputs.’ (b12, 61 years old, female) immigrant entrepreneurs were not forthcoming with their financial records; therefore, the assessment was done through observing physical assets and oral evidence on sales and profit. the same notion was raised by zulkiffli and perera (2011:2) who illustrated how entrepreneurs conceal information that pertains to business performance. discussion per research question as previously indicated, this study is guided by two research questions, and forthcoming is a discussion of the findings: what business practices do immigrant entrepreneurs implement? the study revealed that the following are the business practices used by immigrant entrepreneurs: social networking business location relationships with suppliers and customers bulk buying and transportation operational hours pricing and payment methods provision of credit lines and discounts advertising there was a consensus among the various participants that pamphlets, social media, banners and business cards were the cheapest and most effective modes of advertising. among all participants, word of mouth was regarded as the widely used practice that did yield returns. the findings outline that the implementation of business practice was not necessarily as outlined by porter’s business-level model; various participants indicated how multiple business practices were implemented simultaneously complementing each other in the creation and maintaining of a competitive advantage. as such, the findings are aligned with previous studies by ngwenya (2017), ibrahim (2016) and moyo (2015). the study reflects a strong indication that the application of business practices was beneficial to the performance of a business. in this study, every participant acknowledged making use of business practices in business. the researchers discovered that immigrant entrepreneurs were not opportunistic as indicated in other studies. as necessity immigrant entrepreneurs, they rarely have an option besides making the business succeed, thereby working tirelessly to ensure the success of the business: 2. how does the implementation of business practices affect the performance of businesses owned by immigrant entrepreneurs? in this study, various participants explained how advertising continuously enhanced their sales, profit and customer base. bulk buying was highlighted for lowering costs through economies of scale, which contributed to positive business growth. this study advances our understanding of business practices such as combining hard-working employees and long working hours, which led to positive business performance and expansion. various scholars such as muchineripi et al. (2019:7), sekatane (2018:105) and opoku and sandberg (eds. 2017:192) indicated that financial barriers faced by immigrant entrepreneurs in south africa were detrimental to their business prospects. furthermore, the lack of assets (collateral) and a good credit record were highlighted as impending immigrant entrepreneurs from accessing financial aid. this aligns with participant biz 8 who acknowledged resorting to social networking because of the inability to access bank financing. despite the drawbacks of lack of finances and covid-19, there was a clear indication that the participants’ businesses were performing positively. there was a strong attestation that the projected prospects would only yield positive performance and growth. the study revealed that immigrant entrepreneurs employed family members to save costs and mentor them. the research outcome contributes insights and valuable hints to prospective researchers. conclusion the findings exhibit that combining business practices improved business as new customers bring with them increased sales and market share, which lead to a positive influence on business performance. participants acknowledged being profit driven and that business practices enabled business success. the researchers suggest that there is propinquity between advertising a business and increased sales in a shop, which thereby result in realising more profit. in this study, various participants indicated how profitability derived from the implementation of business practices enabled them to expand by investing in new machinery, vehicles and buildings. all businesses had a clear expansion plan and noted that business practices were integrated either as combined or implemented concurrently. word of mouth came out as the most prominent option for promoting a business and retaining customers. saving on expenses by employing family members was vital in improving business performance. according to the study, there is an interconnected between implementing business practices and improved business performance. limitations of the study the research focused on a particular economic area with only 12 participants, and the results, therefore, might turn out differently if applied in another town or country. generalisation is impossible as each area possesses its own characteristics and traits. personal experiences, which form the core of this study, can be influenced by various factors and vary according to location. future research despite the contributions, this study factors in some limitations. therefore, regarding future research opportunities, there is a need to look further into how much are the costs incurred to implement business practices and if the results are justifiable. furthermore, exploring another gap in the research is the lack of indication on how long it takes immigrant entrepreneurs to notice a change after implementing a business practice. finally, not much is known about how the financial assistance obtained from relatives and the community is managed and repaid. acknowledgements the authors would like to specially thank the department of applied management, university of south africa for the invaluable support that contributed to the success of this manuscript. competing interests the authors have declared that no competing interest exists. authors’ contributions all authors contributed equally to this work. t.c. conducted the initial research as part of his master’s dissertation under the supervision of r.m.k. and m.p. funding information this research received no specific grant from any funding agency in public, commercial or not-for-profit sector. data availability the data that support the findings of this study are available from the corresponding author, t.c., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency or the authors. references abosede, a.j., obasan, k.a. & alese, o.j., 2016, ‘strategic management and small and medium enterprises (smes) development, a review of literature’, international review of management and business research 5(1), 315–335. adendorff, c. & halkias, d., 2014, ‘leveraging ethnic entrepreneurship, culture and family dynamics to enhance good governance and sustainability in the immigrant family business’, journal of developmental entrepreneurship 19(2), 1–23. https://doi.org/10.1142/s1084946714500083 afewerki, s., 2015, ‘immigrant entrepreneurship towards the realization of immigrants’ entrepreneurial performance and success in norway’, master’s dissertation in entrepreneurship, innovation and society, norwegian university of science and technology, faculty of social sciences and technology management, trondheim. agwu, e., 2018, ‘analysis of the impact of strategic management on the business performance of smes in nigeria’, academy of strategic management journal 17(1), 1–20. akin, n., bostanci, b. & akyol, e.m., 2017, ‘examining of immigrant entrepreneurship studies in international literature by using social network analysis’, problems and perspectives in management 15(2), 500–508. https://doi.org/10.21511/ppm.15(si).2017.03 aldrich, e.h. & waldinger, r., 1990, ‘ethnicity and entrepreneurship’, annual review of sociology 16, 111–135. http://doi.org/10.1146/annurev.so.16.080190.000551 bagwell, s., 2018, ‘from mixed embeddedness to transnational mixed embeddedness: an exploration of vietnamese businesses in london’, international journal of entrepreneurial behavior & research 24(1), 104–120. https://doi.org/10.1108/ijebr-01-2017-0035 borchardt, m., pereira, g., viegas, c., reolon, d., xavier, y. & battaglia, d., 2018, ‘providing goods to the base of the pyramid: opportunities for micro, small and medium-sized local producers’, journal of small business strategy 28(2), 80–89. buttenberg, k., 2017, ‘measuring business performance in young firms’, journal of business economics 8(5), 446–454. charman, a., petersen, l. & piper, l., 2012, ‘from local survivalism to foreign entrepreneurship: the transformation of the spaza sector in delft, cape town’, transformation: critical perspectives on southern africa 78(1), 47–73. https://doi.org/10.1353/trn.2012.0035 chrysostome, e., 2010, ‘the success factors of necessity immigrant entrepreneurs: in a search of a model’, thunderbird international business review 52(2), 137–152. https://doi.org/10.1002/tie.20320 cobbinah, c. & chinyamurindi, w.t., 2018, ‘motivational factors for engaging in dirty work entrepreneurship among a sample of african immigrant entrepreneurs in south africa’, sa journal of human resource management 16(1), 1–9. https://doi.org/10.4102/sajhrm.v16i0.1025 cooper, d.r. & schindler, p.s., 2014, business research methods, 12th edn., mcgraw-hill irwin, boston, ma. creswell, j., 2009, research design, 3rd edn., sage, los angeles, ca. crush, j. & tawodzera, g., 2017, comparing refugees and south africans in the urban informal sector, southern african migration programme, johannesburg. dalrymple, j.f., 2004, ‘performance measurement for sme growth: a business profile benchmarking approach’, 2nd world conference on pom & 15th annual pom conference, cancun, mexico, 30 april to 3 may, viewed 02 october 2021, from https://www.pomsmeetings.org/confproceedings/002/poms_cd/browse%20this%20cd/papers/002-0164.pdf. dana, l.p. & morris, m., 2011, ‘ethnic minority entrepreneurship’, in l.p. dana (ed.), world encyclopaedia of entrepreneurship, pp.149–157, edward elgar, cheltenham. dheer, r.j., 2018, ‘entrepreneurship by immigrants: a review of existing literature and directions for future research’, international entrepreneurship and management journal 14(3), 555–614. https://doi.org/10.1007/s11365-018-0506-7 dworkin, s.l., 2012, ‘sample size policy for qualitative studies using in-depth interviews’, archives of sexual behavior 41, 1319–1320. https://doi.org/10.1007/s10508-012-0016-6. field, d.n., 2017, ‘god’s makwerekwere: re-imagining the church in the context of migration and xenophobia’, verbum et ecclesia 1, 1–8. https://doi.org/10.4102/ve.v38i1.1676 garg, a.k., joubert, r.j.o. & pellissier, r., 2004, ‘measuring business performance: a case study’, southern african business review 8(1), 7–21. garg, a.k. & phayane, n., 2014, ‘impact of small businesses owned by immigrant entrepreneurs on the local community of brits’, journal of small business and entrepreneurship development 2(2), 57–85. gastrow, v. & amit, r., 2013, somalinomics: a case study on the economics of somali informal trade in the western cape, african centre for migration and society, university of witwatersrand, johannesburg. hesterly, w. & barney, j., 2019, strategic management and competitive advantage: concepts and cases, 6th ed, pearson, new jersey. ibrahim, b.s., 2016, ‘entrepreneurship amongst somali migrants in south africa’, master’s dissertation, university of the witwatersrand, johannesburg, viewed 09 june 2017, from http://hdl.handle.net/10539/21496. kademaunga, m., 2017, ‘thriving chinese migrant entrepreneurship in a deteriorating socio-economic environment in zimbabwe’, in c.c. nshimbi & i. moyo (eds.), migration, cross-border trade and development in africa, pp. 99–124, palgrave macmillan, london. kalitanyi, v., 2007, ‘evaluation of employment creation by african immigrant entrepreneurs for unemployed south africans in cape town’, master’s dissertation, university of the western cape, cape town. kalitanyi, v. & visser, k., 2010, ‘african immigrants in south africa: job takers or job creators?’, south african journal of economic and management sciences 13(4), 376–390. https://doi.org/10.4102/sajems.v13i4.91 karunanayake, p., 2020, ‘the covid-19 pandemic’, journal of the ceylon college of physicians 51(1), 1–3. https://doi.org/10.4038/jccp.v51i1.7878 khosa, r.m., 2014, ‘an analysis of challenges in running micro-enterprises: a case of african foreign entrepreneurs in cape town, western cape’, mtech thesis, cape peninsula university of technology, cape town. khosa, r.m. & kalitanyi, v., 2015, ‘migration reasons, traits and entrepreneurial motivation of african immigrant entrepreneurs: towards an entrepreneurial migration progression’, journal of enterprising communities: people and places in the global economy 9(2), 132–155. https://doi.org/10.1108/jec-07-2014-0011 khosa, r.m. & kalitanyi, v., 2016, ‘defining success of african immigrant-owned small businesses in cape town, south africa’, problems and perspectives in management 14(3), 46–54. https://doi.org/10.21511/ppm.14(3).2016.04 kirsten, e., vermaak, f. & wolmarans, h., 2015, ‘performance measurement in small and medium enterprises: south african accountants’ view’, journal of economic and financial sciences 8(1), 13–34. https://doi.org/10.4102/jef.v8i1.81 kloosterman, r., van der leun, j. & rath, j., 1999, ‘mixed embeddedness: (in)formal economic activities and immigrant businesses in the netherlands’, international journal of urban and regional research 23(2), 252–266. https://doi.org/10.1111/1468-2427.00194 kotane, i. & kurzimina-merlino, i., 2017, ‘analysis of small and medium sized enterprises’ business performance evaluation practice at transportation and storage services sector in latvia’, procedia engineering 178(2017), 182–191. https://doi.org/10.1016/j.proeng.2017.01.093 kothari, c.r., 2004, research methodology: methods and techniques, new age international, new delhi. ladzani, w.m. & van vuuren, j.j., 2002, ‘entrepreneurship training for emerging smes in south africa’, journal of small business management 40(2), 153–161. https://doi.org/10.1111/1540-627x.00047 leedy, p.d. & ormrod, j.e., 2015, practical research: planning and design, 11th edn., pearson education, boston, ma. marchand, k. & siegel, m., 2015, ‘immigrant entrepreneurship in cities’, in background paper for world migration report migrants and cities: new urban partnerships to manage mobility, international migration for migration, geneva, viewed 21 december 2019, from https://www.iom.int/sites/default/files/our_work/icp/mpr/wmr-2015-background-paper-kmarchand-msiegel.pdf. mashavira, n. & chipunza, c., 2021, ‘managerial conceptual competencies and the performance of small and medium-sized enterprises in zimbabwe’, southern african journal of entrepreneurship and small business management 13(1), 1–14. https://doi.org/10.4102/sajesbm.v13i1.356 maziriri, e. & chivandi, a., 2020, ‘modelling key predictors that stimulate the entrepreneurial performance of small and medium-sized enterprises (smes) and poverty reduction: perspectives from sme managers in an emerging economy’, acta commercii 20(1), 1–15. https://doi.org/10.4102/ac.v20i1.773 min, p.g., 1990, ‘problems of korean immigrant entrepreneurs’, international migration review 24(3), 436–455. https://doi.org/10.1177/019791839002400301 mishra, a. & mahalik, d., 2017, ‘impact of online-advertising on consumers’, international journal of advanced research 5, 1935–1939. https://doi.org/10.21474/ijar01/4625 moyo, i., 2014, ‘a case study of black african immigrant entrepreneurship in inner city johannesburg using the mixed embeddedness approach’, journal of immigrant & refugee studies 12(3), 250–273. https://doi.org/10.1080/15562948.2013.830172 moyo, i., 2015, ‘african immigrant traders in johannesburg inner city, south africa: deconstructing the threatening other’, phd thesis, university of south africa, pretoria, viewed 17 september 2019, from http://uir.unisa.ac.za/handle/10500/19651. muchineripi, j., chinyamurindi, w. & chimucheka, t., 2019, ‘a narrative analysis of barriers encountered by a sample of immigrant entrepreneurs in the eastern cape province of south africa’, the journal for transdisciplinary research in southern africa 15(1), 1–20. https://doi.org/10.4102/td.v15i1.556 najib, a.b., 2015, ‘ethnic/immigrant-owned business transnational diaspora entrepreneurship course’, economic geography ht 2015 department of social and economics [powerpoint presentation], viewed 17 september 2019, from http://slideplayer.com/slide/10192944/=za. najib, a.b., 2016, ‘immigrant small enterprises in rural sweden: local and transnational resource mobilisation’, in c. tamásy & j.r. diez (eds.), regional resilience, economy and society. globalising rural places, routledge, london, pp. 131–148. https://doi.org/10.4324/9781315604435 ngota, b.l., mang’unyi, e.e. & rajkaran, s., 2018, ‘factors impeding african immigrant entrepreneurs’ progression in selected small and medium enterprises: evidence from a local municipality in south africa’, south african journal of business management 49(1), 1–9. https://doi.org/10.4102/sajbm.v49i1.10 ngwenya, k., 2017, ‘somali immigrants and social capital formation: a case study of spaza shops in the johannesburg township of cosmo city’, master’s dissertation, university of south africa, pretoria, viewed 31 may 2019, from http://hdl.handle.net/10500/23364. olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. opoku, d. & sandberg, e. (eds.), 2017, challenges to african entrepreneurship in the 21st century, palgrave macmillan, cham. radipere, n.s., 2012a, ‘analysis of local and immigrant entrepreneurship in the south african small enterprise sector gauteng province’, phd thesis, university of south africa, pretoria, viewed 05 march 2019, from http://uir.unisa.ac.za/handle/10500/9848. rai, a., patnayakuni, r. & patnayakuni, n., 1997, ‘technology investment and business performance’, communications of the acm 40(7), 89–97. https://doi.org/10.1145/256175.256191 rogerson, c.m., 1997, international migration, immigrant entrepreneurs and south africa’s small enterprise economy: migration policy series no 3: 1–22, southern african migration programme, waterloo, viewed 04 june 2019, from https://scholars.wlu.ca/samp/99/. salkind, n.j., 2013, exploring research: pearson new international edition, pearson higher ed, new jersey, nj. sami, w., 2016, exploring the strategising practices of small business managers in selected small businesses in the accommodation sector in tshwane metropolitan area, master’s dissertation, university of south africa, pretoria, viewed 10 february 2020, from http://uir.unisa.ac.za/handle/10500/22203. sekatane, m.b., 2018, ‘south african women entrepreneurs: challenges and coping strategies’, in d. opoku & e. sandberg (eds.), challenges to african entrepreneurship in the 21st century, pp. 97–115, palgrave macmillan, cham. sitharam, s. & hoque, m., 2016, ‘factors affecting the performance of small and medium enterprises in kwazulu-natal, south africa’, problems and perspectives in management 14(2), 277–288. https://doi.org/10.21511/ppm.14(2-2).2016.03 small enterprise development agency, 2018, smme quarterly update, 3rd quarter 2017, viewed 28 july 2018, from http://www.seda.org.za/publications/publications/smme%20quarterly%202017-q3.pdf. tengeh, r.k. & nkem, l., 2017, ‘sustaining immigrant entrepreneurship in south africa: the role of informal financial associations’, sustainability 9(8), 1–16. https://doi.org/10.3390/su9081396 van zyl, c., 2020, ‘a practical performance measurement framework for smes in a south african context’, master’s dissertation, university of stellenbosch, stellenbosch, viewed 04 october 2021, from http://hdl.handle.net/10019.1/107844. walliman, n., 2011, research methods: the basics, routledge, new york, ny. zulkiffli, s.n.a. & perera, n., 2011, ‘a literature analysis on business performance for smes: subjective or objective measures?’, in sibr-thammasat 2011 bangkok conference, bangkok, thailand, june 16–18, 2011, pp. 1–9. 128 business development challenges in a rural disrict municipality in south africa sajesbm volume 5, (2012) www.sajesbm.com article no 128 89 business development challenges in a rural disrict municipality in south africa: a case of fezile dabi district municipality r.i.d pooe * head of department: logistics department vaal university of technology faculty of management sciences private bag x021 vanderbijlpark 1900 republic of south africa telephone: +27 16 950 9520 (w) fax: +27 16 950 5042 e-mail: pooe@vut.ac.za c. mafini vaal university of technology department of logistics private bag x021 vanderbijlpark 1900 republic of south africa telephone: +27 16 950 6883 e-mail: chengedzaim@vut.ac.za * to whom correspondence should be addressed abstract business development continues to be an important driver of economic growth in many rural settings. some of the results of business development in rural areas include job creation, innovation, entrepreneurship, infrastructural development, and skills development, among others. many developing countries have identified rural business development as a critical area in their development agenda. the purpose of this study was to explore business development challenges faced by enterprises in the fezile dabi district municipality in rural south africa. using the survey method, a questionnaire was administered to a purposive sample composed of 143 business owners and managers located within the municipality. data were assessed for frequencies and percentages on each item in the questionnaire. in addition, cronbach’s coefficient alpha was used to test the reliability of the scale. the findings of the study indicate that there are gaps in four areas, namely, markets and business development (1), labour supply (2), business planning (3) and the local operational environment (4). these gaps hinder business growth in the municipality. establishment of business incubators, improvement of networking between business leaders, and the implementation of an appropriate business retention and expansion program are some of the strategies that may be implemented to eliminate the identified gaps. sajesbm volume 5, (2012) www.sajesbm.com article no 128 90 keywords: business development, district municipality, economic growth, small to medium enterprises. introduction in both developed and developing worlds, local governments are under constant pressure to promote the development of localities and to improve the quality of services they deliver. the challenges are even greater for local governments in developing countries because they face an increasing number of factors that stand in the way for improved service delivery (reddy, haque, & de vries, 2008; pemberton & godwin, 2012). these challenges are exacerbated by the significant increase in the number and diversity of stakeholders who have particular interests in relation to the allocation of resources and service delivery (geddes & sullivan, 2007). however, the existence of an effective local government remains crucial in developing countries since it is responsible for facilitating development at grassroots level (haque, 2008). the district under examination in this study is the fezile dabi district municipality (fddm). this municipality is home to 17% of the population of the free state province of south africa and also covers close to 17% of the provincial land, making it the second smallest district municipality with the second smallest population in the province (fddm, 2008). fddm is made up of four local municipalities, namely, metsimaholo, moqhaka, ngwathe and mafube municipalities. the combined population and growth rates between 2001 and 2007 are illustrated in table 1. table 1: population trends in fddm from 2001 to 2007 source: fddm (2008) the relative economic contribution of the various local municipalities to the district’s economy, including the main economic activity, is illustrated in table 2. these statistics indicate that moqhaka and mafube local municipalities contribute the least 9% and 4% respectively to the gross geographic product of the district, while metsimaholo and ngwathe municipalities are the main contribuors at 68% and 20% repectively. name of municipality total pop. 2001 total pop. 2007 population growth per municipality 2001 -2007 % growth per municipali ty 2001 2007 fddm 460309 474039 13780 2.9 metsimaholo 167590 170522 2632 1.5 moqhaka 118509 95187 -23622 -19.8 ngwathe 115953 154658 36705 25 mafube 57657 53722 -3935 -7.4 sajesbm volume 5, (2012) www.sajesbm.com article no 128 91 table 2: economic contribution of municipalities in fddm municipality pop. distribution ggp contribution main source of economic activity metsimaholo 32.0% 68.0% mining, manufacturing, transport, tourism, agriculture moqhaka 36.0% 20.0% mining, agriculture, transport, construction, manufacturing ngwathe 20.0% 9.0% mining, agriculture, transport, construction, manufacturing mafube 12.0% 4.0% agriculture, construction, transport total 100% 100% source: fddm (2008) according to fddm (2008), the district’s economy grew by 2.1% per annum between 1996 and 2007. this compares to the 0.7% per annum growth for the free state province during the same period. a comparison of the production statistics in fddm from the years 1996 to 2007 reveals that district’s relative contribution to gross provincial product increased exponentially from 12.6% to 31.8% (fddm, 2011). the fddm report (2008) also estimated that 60 to 80% of job opportunities in the district are created by smes. a strategic plan developed by fddm (2011) highlights that the district municipality has identified manufacturing, mining, construction, tourism, and agriculture as the key drivers of its economy. the plan further indicates that the following key development areas have been prioritised as a framework for the district’s economic development in the medium to long term: • expansion of the manufacturing sector • diversification of agricultural development • development of local tourism • development and expansion of the transport and distribution industry • development of smes the growing interest in local governance in municipalities such as fddm is understandable considering the greater roles played by the private sector and civil society in local economic development. with this realisation, there is an observable trend in the european union and other developed countries that new forms of relationships between the public and private sectors emerge in relation to local governance (goymen, 2008). johannisson (2007) posits that when the local government joins forces with the local business and civil society new realities become enactable, despite the existence of obstacles which are known to be insurmountable in regional development. as noted by authors such as swoboda, meierer, foscht and morschett (2011) as well as kirkels and duysters (2010), effective collaboration requires effective participants that include government, private-sector and non-governmental organisations at both local and international levels. in agreement, coats and passmore (2008) opine that successful public service delivery depends on a continuous dialogue with citizens, who should be thought of as stakeholders on a par with government, experts, industry representatives, the media, the judiciary and service consumers. hjorth and johannisson (2003) stress that sustainable local economic development can be organised from below as well as from inside and is guided by the social agenda. this demonstrates that that the potential for regional development depends more on the quality of the relationships between firms and institutions than on the internal characteristics of individual actors (johannisson, 2007). despite these observations, it is interesting to note sajesbm volume 5, (2012) www.sajesbm.com article no 128 92 that most local governments still experience difficulties in relating to the private sector since the required trust has to be developed first, and that both the role players should recognise that they need to accept joint responsibility in local economic development (reddy, 2008). rural enterprise development johannison (2007) defines development as the process of creating an economic and political environment in which people can expand their capability and choices. he further suggests that when growth and progress are not connected, the unemployed and those workers in insecure and poorly paid jobs feel alienated from their national economy. van dijk (2000) also points out that it is important to create an enabling economic and political environment because a positive macro-economic context is more influential in promoting the development of small enterprises than very specific policies such as providing credit or training. enterprise development may be perceived as the strengthening of the integration of small firms with potential for growth and expansion into the economic mainstream, that is, the value chain system of modern industries (morales-nieto, 2008). liu (2004) points out that economic development is interrelated to sme development in that that the higher the level of economic development, the more flourishing the smes. regions with more developed smes typically possess much higher economic development levels, as noted by li, jingfeng and xuezhu (2012). tambunan (2006) also opines that smes in developing countries are important socially and economically for a number of reasons, including: • wide dispersion across rural areas and important for rural economies; • their capacity to employ a many people in their local economies; and • their ability to provide an opportunity for entrepreneurial and business skill development. the results of a study conducted by the commission for rural communities (2007) indicate that most rural districts in england experienced a significant growth in a number of small businesses between 1995 and 2004 and that their growth was marginally higher than in those in urban authorities. furthermore, bosworth (2009) observed that although the national economy in england is dominated by urban centers, nearly 28% of all small businesses are in rural areas. small businesses in rural areas are more likely to employ more people than their urban counterparts (nisula & pekkola, 2012; lean, 1998). patterson and anderson (2003) attribute this likelihood to two factors, namely, spatial variations and the relatively lower cost of labour. these observations demonstrate that sme growth in rural areas is a key contributor to economic development. german agency for technical cooperation (gtz, 2003) recognises that one of the strategies to increase active participation and linkages by the private sector in rural development is to create local business networks among businesses. organisations that are involved in networking have interconnected linkages that allow more efficient mobility towards predetermined objectives than would be the case if they had operated as single entities (dennis, 2000; aleke, ojiako & wainwright, 2011). the development of small enterprises in emerging countries is hampered by several challenges. grodach (2011) concluded that 6 key barriers to sustainable enterprise and economic development in rural areas namely, a conventional economic development mindset, incentive-based practice, a lack of resources, ad hoc planning, inter-regional competition, and a lack of coordinated regional planning. authorities may therefore examine these aspects and make structural adjustments where necessary in order to enhance the economic development of their regions. moreover, morales-nieto (2008) identifies three major structural problems in rural enterprise development, namely: sajesbm volume 5, (2012) www.sajesbm.com article no 128 93 • the lack of reliable data and information on the small enterprise sector (this data is useful for strategy and policy design) • the weak connection of the small enterprise sector with the formal modern economy in respect of its technological and market dynamics • the dispersion of tools and incentives, which are mostly provided through a huge number of public and private agents with diverse business philosophies, purposes and practices. van dijk (2000) argues that the second structural problem mentioned above is critical for the development of small enterprises and adds that backward and forward linkages between small, medium and large enterprises are often quite limited in most developing countries. the author further suggests that inter-linkages between firms of different sizes can be a source of capacity for small business especially in the areas of technology and innovation. moreover, scholars such as turner (2000) as well as andrabi, ghatak and khwaja (2006) point to the practice of flexible specialisation as a possible solution to this problem, as it emphasises the establishment of networks, clusters and other forms of interaction between small and large firms. flexible specialisation also emphasises the importance of maintaining a balance between competition and cooperation in areas such as design and innovation is emphasised (lovering, 2009), thereby enabling businesses to share information pertaining to the generation of innovative products. aleke et al. (2011) argue that successful technology diffusion has an impact on the productivity and effectiveness of smes operating in developing countries. this implies that the availability of state-of-the-art technology is an important driver for business expansion in rural areas. high and ever-increasing expectations are placed on ict in terms of bringing about improvement in quality of life, empowerment and economic development for the rural communities (hosman & fife, 2008). naik, joshi and basavaraj (2012) also draw attention to the fact that in most developing countries, the situation is complicated by a constellation of factors such as the non-availability of resources (e.g. computers) and a lack of support from governing authorities the authors further suggest that governments may support businesses in rural settings by establishing ict centers to in rural areas to provide information technology enabled services. availability of such icts to rural settings could encourage small business establishment and growth as well as significantly improve effectiveness of government service delivery. turner (2000) suggests that municipal collaborative governance is another key issue that influences enterprise development in rural settings. businesses are bound to be established and grow in areas where the municipality effectively collaborates with higher government. the findings of a recent study conducted by taylor (2012) reveals that state threats of amalgamation; shifting national policy empathies in rural development; and, local preferences for horizontal rather than vertical forms of cooperation are influential in catalysing a brand of defensive regionalism amongst local government actors. such oppositional response is dysfunctional and has adverse effects on local governance, which is always subservient to higher government, which may apply its controlling powers arbitrarily to influence the course of events (coles, 2010). mason, castleman and parker (2008,) stress that social capital and coordination is fundamental for regional development and initiatives. the authors also dwell on the fact that social capital is the value accessible from networks that are held together by a sense of reciprocity based on good will, mutual support, norms and trust. partnerships have become the language of most business and political rhetoric in seeking solutions to complex problems in rural and agricultural areas throughout the world (taylor, 2010). for instance, in many countries, strategic partnerships have been developed between local rural communities and global mining corporations and these have benefitted both parties sajesbm volume 5, (2012) www.sajesbm.com article no 128 94 significantly (hoppe, rickson & burch, 2007). however, it is important that such partnerships be balanced such that neither party ends up exploiting the other (derkzen, franklin & bock, 2008; edwards, goodwin, pemberton & woods, 2001) several authors (e.g. carroll & blair, 2012; ye & carroll, 2011; anselin, syabri & kho, 2006; fujita & krugman, 2004) underscore that local economic growth lies at the intersection of the disciplines of geography and economics, that is, the space-time interface. this implies that local economies, regardless of location may improve the growth of their economies by incorporating the geographic aspects of economic development, e.g. through the optimal use of all available spaces in an area for economic purposes such as industrialisation (lesage & pace, 2009). a low population density as well as transport constraints may impact negatively on rural economic development (owen, hogarth & green, 2012). furthermore, mounting emphasis is being placed on the role of skills in enhancing productivity and economic development (uk commission for employment and skills, 2010). this suggests that there is a strong need for investment in skills development on the supply side of the labor market as well as for improved use of the available skills. moreover, inward foreign direct investment (fdi) can also be an instrument for local economic development as it enhances the economic growth of recipient countries/ regions by bringing physical capital, advanced technology, and management expertise (ouyang & fu, 2012). problem statement enterprise development in rural municipalities continues to have a major influence on national economic development. however, in order for them to grow, rural businesses must be able to negotiate through a number of factors that determine their effectiveness. businesses in rural areas face challenges such as the inaccessibility to resources, lack of capacity to innovate, and lower awareness and usage of external business advice (north & osborne, 2000). westhead, ucbasaran and martin (2004) also detected that small businesses operating in more competitive urban areas were more likely to be engaged in collaborative partnerships and networks with other organisations and stakeholders than those in rural areas. there is currently a dearth of research on rural enterprise development particularly in the context of south africa. empirical evidence is therefore required that addresses this issue. the purpose of this study is straightforward: to explore business development challenges in a rural district municipality. the study is important in that, once these challenges are identified, municipal authorities in rural areas will have access to information on what strategies they may employ to stimulate business development within their constituencies. research methodology instrumentation and procedures for data collection in the current study, the survey methodology was used to examine business development challenges in fddm in south africa. the survey method was selected since it is a satisfactory and relatively easy means of collecting and analysing data pertaining to a particular population (zikmund, 2000). a literature review focused on factors/challenges that influence business development in rural settings study using both national and international sources was conducted. a 36 item sajesbm volume 5, (2012) www.sajesbm.com article no 128 95 questionnaire was then developed and administered to the sample of business owners and managers within fddm. the questionnaire was divided into two sections. section a used a nominal scale with precoded option categories to elicit the respondent’s biographical details, while section b elicited the respondent’s perspectives with regard to the areas of markets and business development, labour supply, business planning, and the local environment. these were measured using a five-point likert scale ranging from strongly agree (1), agree (2), not sure (3), disagree (4) to strongly disagree (5). the likert scale was used as it is relatively easy to construct, makes data easy to collect and analyse, thereby making them suitable for surveys (kothari, 2008). to identify and eliminate problems that might occur during the main survey (sudman & blair, 1998), and to ensure that the questionnaire communicated the information correctly and clearly to respondents, the questionnaire was pre-tested with a convenient sample of 20 small business owners and managers located in the vaal area in southern gauteng. in addition, an experienced researcher in the area of rural economic development reviewed the instrument for content validity. feedback from the convenient sample and the expert facilitated minor changes to the questionnaire. this was then followed by the administration of the questionnaire in the final survey. a covering letter which highlighted the purpose of the study was attached to the questionnaire. ethical considerations including the respondent’s right to confidentiality, privacy, non-participation, anonymity, informed consent and protection from victimization were adhered to. the questionnaire was administered to respondents across the entire district municipality through the assistance of 12 field workers who were identified and trained by the researchers. the field workers were assigned to local municipalities where they reside. the high response rate from the respondents may be attributed to this factor. participants in the current research, a purposive sample consisting of 160 businesses that met specific criteria was utilised. in a purposive sample, the sample elements are selected because it is expected that they can serve the research purpose (churchill & lacobucci, 2002). participating businesses had to meet the following preconditions: • the business had to be located within fddm. • the business must have been in operation for more than one year. • the business was legally registered under south african law. the questionnaire was administered to owners and managers of businesses in fddm. the actual data analysis included a total of 143 respondents who answered the questionnaire completely, giving a return rate of 89%, which was acceptable. research findings data analysis after the questionnaires were returned, they were edited and coded for input into the statistical package for the social sciences (spss: version 19 for windows). the reliability of the measuring scales was tested using cronbach’s coefficient alpha construct validity was assessed through the factor analysis procedure whereby the cross loading of variables were examined. four factors reflecting distinct dimensions with a high level of communalities showing cohesiveness of each factor were extracted. these factors accounted for 61% of the variance and were computed through the principal component analysis (pca) using varimax rotation. the factors are described in table 3. sajesbm volume 5, (2012) www.sajesbm.com article no 128 96 table 3: factor descriptors factor label cronbach alpha description 1 markets and business development 0.712 this refers to the process of strengthening ties with existing clients/customers while cultivating new ones 2 labour supply 0.632 this refers to the availability of suitable human resources 3 business planning 0.850 this refers to the determination of the goals and strategies in order to ensure growth and survival 4 local development 0.895 this refers to the building up of the economic capacity of a local area to improve its economic future and the quality of life for all. table 3 indicates that the cronbach alpha values ranged from 0.632 to 0.895. hair et al. (2010:385) argue that factor loadings greater than ±0.3 may be considered as adequate; while loadings greater than ±0.4 may be considered important and loadings greater than ±0.5 are more important. therefore, based on that prescription, all four factors extracted were retained in the study. demographic characteristics of respondents approximately 64% (n=92) of the respondents were male and 36 % (n= 51) were female. in addition, a majority of the business owners/ managers (71%; n= 102) were aged above 30 years and the remaining 29% (n= 41) were aged below 30 years. profiles of businesses the profiles of businesses that participated in the survey are illustrated in table 4. table 4: profile of businesses variable categories n n % type of business sole proprietor cooperatives close corporations private companies partnerships 143 143 143 143 143 33 10 47 40 13 23 7 33 28 9 nature of business mining/ quarrying manufacturing retail construction transport tourism community/personal service finance/insurance 143 143 143 143 143 143 143 143 4 20 59 19 11 13 7 10 3 14 41 13 8 9 5 7 sajesbm volume 5, (2012) www.sajesbm.com article no 128 97 table 4 indicates that a combined 84% (n=120) of the businesses were private companies, close corporations and sole proprietorships. with regard to the nature of business operations, a combined 68% (n= 97) businesses were in the retail, manufacturing and construction industries. approximately 83% of the businesses (n=119) employed less than 100 people. in terms of the number of years of business existence, 57% (n=82) of the businesses had been operational for less than 10 years. moreover, the majority of businesses (67%; n=96) were newly established enterprises. this trend is consistent with the commission for rural communities’ (2007) assertion that there is a high growth of smes in most rural areas. discussion markets and business development the responses to the markets and business development factor are described in table 5. table 5: responses to the markets and business development factor item item description strongly agree 1 agree 2 not sure 3 disagre e 4 strongly disagre e 5 % n % n % n % n % n 14 the inputs for my business are sourced within the municipality 6.3 9 53 77 0 0 16.9 23 23.8 34 19 political leaders in the local economy are able to mobilise resources for the advantage of local business 10.5 15 13.3 19 13.3 19 42.7 61 20.3 29 20 political leaders work together with the national and provincial leaders to position the local economy in the global context 22.4 32 9.1 13 7.0 10 25.9 37 35.7 13 27 the municipality handles the development of applications for businesses speedily 7.7 11 13.3 19 9.8 14 16.9 67 22.4 32 number of people employed by the business 1-10 11-20 21-50 51-100 101-200 201-500 501 + 143 143 143 143 143 143 143 30 52 16 21 4 6 14 21 36 11 15 3 4 10 number of years of business existence 1-5 years 6-10 years 11-15 years 16-20 years 21 years + 143 143 143 143 143 44 37 16 10 36 30.8 25.9 11 7.3 25 how the business was acquired inheritance newly established purchase 143 143 143 7 96 40 5.1 66.9 27.9 sajesbm volume 5, (2012) www.sajesbm.com article no 128 98 29 the local municipality has a good understanding of the problems facing the local economy 8.4 11 8 14 8 11 48 68 27.3 39 30 local government has been able to package the area for marketing purposes 7.7 11 9.8 14 7.7 11 47.6 68 27.3 39 31 the municipality has inappropriate bylaws and regulations that hinder business development 35.7 51 32.9 47 3.5 5 21.0 30 7.0 10 33 businesses in the local area have access to business support services providers 27.3 39 25.9 37 9.8 14 25.2 36 11.9 17 35 the local government encourages the establishment of small businesses 23.8 34 37.8 54 3.5 5 21.7 31 13.3 19 with regard to item 14, approximately 59% of respondents either agreed or strongly agreed with the statement that they source their inputs from suppliers based within the district. these results are consistent with tambunan’s (2011) observation that rural smes are exposed to marketing constraints as they do not have sufficient resources to explore their own markets but place a heavy dependence on their trading partners who do product marketing for them through either local production networks or subcontracting relationships. with regard to item 19, approximately 62% of respondents either disagreed or strongly disagreed with the statement that political leaders in the local economy were able to mobilise resources for the advantage of local business. in item 20, approximately 66% of respondents either disagreed or strongly disagreed with the statement that political leaders work together with the national and provincial leaders to position the local economy in the global context. this denotes that the role of municipalities in opening up markets in fddm has been compromised through unfavourable political dynamics. notably, these key issues were also mentioned as key changes affecting local government economic development in the dti report on smmes (2004). it appears then that there is little political support for business development in fddm. in terms of the handling of business applications (item 27), approximately 62% of the respondents either disagreed or strongly disagreed with the statement that the municipality handles the development of applications for businesses speedily. this finding sustains the possible existence of red tape and bureaucracy within fddm. in contrast, indon (2007) maintains that the rapid processing of business applications is an important legal mechanism that improves small business conditions in most contexts. with regard to items 29 and 30, approximately 75% of respondents either disagreed or strongly disagreed with the statement that the local municipality has a good understanding of the problems facing the local economy and with the statement that the municipality has been able to market the area, respectively. on the other hand, approximately 62% of respondents either agreed or strongly agreed with the statement that he municipality encouraged the establishment of smes (item 35) while approximately 69% of respondents either agreed or strongly agreed with the statement that the municipality has inappropriate bylaws and regulations that hinder business development (item 31). these results suggest that although the municipality demonstrates support to smes in some ways, its inability to understand the challenges facing smes as well as the existence of inappropriate legislative frameworks sajesbm volume 5, (2012) www.sajesbm.com article no 128 99 continue to hinder business development. the district municipality therefore has to initiate and implement programmes that affirm the fact that support for small businesses in rural areas is likely to be beneficial to the economic development of such areas (lean, 1998). a recent study conducted by liu, xu, su, and tao (2012) also proved that fiscal reforms enacted by government helped to enhance enterprise development as well as local governance effectiveness in rural china. labour supply the responses to the items in the labour supply factor are described in table 6. table 6: responses to the items in the labour supply factor item item description strongly agree 1 agree 2 not sure 3 disagre e 4 strongly disagre e 5 % n % n % n % n % n 16 labour costs are affordable in this municipality 52.4 75 22.4 32 9.8 14 10.5 15 4.9 7 18 the workforce in this municipality is appropriately skilled 11.9 17 16.1 23 8.4 12 41.3 59 22.4 32 21 the workforce serves as an attraction for new businesses and industries 29.4 42 42 60 7.0 10 14.7 21 7.0 10 26 uplifting the skills and capabilities of people is a challenge 22.4 32 53.1 76 6.3 9 11.2 16 7.0 10 the labour supply dynamics in fddm present an interesting paradox. cheap labour is readily available in many parts of south africa because the country has been experiencing high levels of unemployment for several years (kingdon & knight, 2006). it is possible that fddm has benefited from this situation. this is supported by the fact that the majority of respondents (74%) either agreed or strongly agreed with the statement that labour costs are affordable in fddm (item 16). the responses with regard to item 18 indicate that approximately 69% of the respondents either disagreed or strongly disagreed with the statement that the workforce in the municipal area is appropriately skilled (item 18). this could be symptomatic of the critical skills shortage that has bedeviled the whole of south africa for the past several years (kingdon & knight, 2005). the situation is further constrained by the fact that approximately 75 % of the respondents also indicated that that the uplifting of the skills and capabilities of people within the municipality is a major challenge (item 26). the labour supply situation in fddm is paradoxical in nature in the sense that on one hand the availability of cheap labour may be desirable for most businesses, yet on the other hand, this abundant human resource is inadequately skilled to make any meaningful contribution to business development within the municipality. the fact that the situation on the ground presents difficulties in the training of the available labour only serves to compound the problem. the uplifting of the skills and capabilities of the people in the area not only brings manifold economic benefits to the district, but individual businesses and people may also benefit. as observed by petrescu and simmons (2008), workers who work in firms or environments that offer both training and encouragement to develop skills are more likely to report that they are “satisfied”, or feel better, with their remuneration. sajesbm volume 5, (2012) www.sajesbm.com article no 128 100 business planning the responses to the items in the business planning factor are illustrated in table 7. table 7: responses to the items in the business planning factor item item description strongly agree 1 agree 2 not sure 3 disagre e 4 strongly disagre e 5 % n % n % n % n % n 12 use of information and communications technology is considered important to our business 39.9 57 41.3 59 10.5 15 6.3 9 2.1 3.0 13 local government encourages the use of ecommerce within the municipality 42.7 61 43.4 62 6.3 9.0 5.6 8.0 2.1 3.0 26 the local government creates a platform for networking among businesses and with the municipality 7.0 10 11.2 16 6.3 9.0 53.1 76 22.4 32 33 businesses have access to business support services 27.3 39 25.9 27 9.8 14 25.2 36 11.9 17 36 i expect my business to grow in the next three years 9.8 14 59.4 85 4.9 7.0 9.1 13 16.8 24 with regard to item 12, at least 81% of the respondents either agreed or strongly agreed that the use of information and communications technology (ict) is considered strategic to their businesses, while approximately 86% of the respondents either agreed or strongly with the statement that the local government encourages the use of e-commerce within the municipality (item 13). these results are in harmony with the suggestion by lee, chu and tseng (2011) that the adoption and use of current ict in business is a major determinant of corporate performance. the responses with regard to item 26 indicate that at least 75% of respondents either disagreed or strongly disagreed with the statement that the local government creates a platform for networking among businesses and with the municipality. this may imply that networking activities are either non-existent or are at a minimum in fddm, a situation which contradicts coats and passmore’s (2008) conclusion that networking groups are a very important tool for the development of any business enterprises. on item 34, approximately 68% of respondents either agreed or strongly agreed with the statement that they expect their businesses to grow in the next three years. this may imply that these businesses will create more job opportunities for the fddm community, while at the same time holding out to their owners the possibility of amassing wealth, variety, selffulfillment, and independence (tonge, larsen & roberts, 2000). local environment the responses to the items in the local environment factor are described in table 8. sajesbm volume 5, (2012) www.sajesbm.com article no 128 101 table 8: responses to items in the local environment factor strongly agree 1 agree 2 not sure 3 disagre e 4 strongly disagre e 5 item item description % n % n % n % n % n 15 the declining market is negatively affecting our business 28.7 41 41.3 59 8.4 12 14.7 21 7.0 10 17 markets are relatively easy to access from this municipality 23.1 33 58 83 7.7 11 9.1 13 2.1 3.0 22 the crime rate in this municipality is low 31.5 45 47.6 68 2.1 3.0 11.9 17 7.0 10 23 the municipality develops/ upgrades areas where there is growth 30.1 43 51.7 74 9.1 13 8.4 12 0.7 1.0 24 transport and logistics costs are low in this area 3.5 5.0 15.4 22 6.3 9.0 43.4 62 31.5 45 25 the municipality charges effective rates and taxes that support business in the area 2.1 3.0 10.5 15 17.5 25 45.5 65 24.5 35 28 local government service delivery is poor 31.5 45 30.1 43 6.3 9.0 18.9 27 13.3 19 32 public spaces in this town are attractive 28.7 41 27.3 39 3.5 5.0 27.3 39 13.3 19 34 land availability is a challenge in this municipality 9.8 14 59.4 85 4.9 7.0 9.1 13 16.8 24 with regard to access to markets, approximately 70% of respondents indicated that access to markets and low crime rates were among the most important reasons that encourage them to continue business within fddm. the relatively low crime rates coupled with affordability of labour costs could be two key areas that the district municipality may use in attracting business to the area. this is supported by ntuli (2000) who found that there is a positive correlation between low crime rates and economic and social development. at least 78 % of respondents also pointed at rising transport and logistics costs, rising costs of rates and taxes, poor service delivery from local government, and the shrinking market as the major constraints that they face in operating their businesses within fddm. consistently, arvis, raballand and marteau (2007) maintain that developing economies are primarily affected by high costs in essential services such as transport and logistics. in addition, charney (2010) also throws spotlight on the fact that the nature and level of public services such as rates, taxes and general service delivery can significantly influence economic development. this presupposes then that for enterprise development to be sustained in fddm, local government has to streamline its service delivery programmes and come up with a rates and taxes structure that promotes rather than stifles business. while access to markets seems to be the main reason why businesses stay within their localities, there is a growing concern about the shrinking market. there are two possible reasons for this phenomenon: namely, the unpredictable global economic climate (akyuz, 2011) and the notable decrease in the population rates of moqhaka and mafube local municipalities respectively. sajesbm volume 5, (2012) www.sajesbm.com article no 128 102 approximately 56% of the respondents indicated that public spaces around the towns in the fddm are unattractive. this depicts that there is a need for infrastructural development in and around fddm. interestingly, the issue of utilisation of public spaces in rural spaces continues to dominate productive conversations between economists and geographers (carroll & blair, 2012). as advised by smith and lomba (2008), infrastructure cannot be developed successfully in isolation from political and governmental structures, processes and systems. this entails that there has to be effective integration of stakeholder requirements and appropriate skilling to allow for effective planning and execution. with regard to item 34, approximately 69 % of the respondents either agreed or strongly agreed with the statement that the availability of land remains a challenge in fddm. mathe (2010) upholds that challenges such as these are mainly attributable to the now defunct apartheid spatial planning system which has proved very difficult to address in the democratic era of south africa. the author further attests that the post-apartheid government in the country has been unable to direct settlement planning and land use in a way that ensures access to economic opportunities. this demonstrates that proper lobbying by all stakeholders should be carried out to seek ways in which these colonial imbalances may be addressed. strengths, limitations, and implications for further research the strength of this study lies in the fact that it used a purposive sample. the sample was composed of businesses that were directly involved in the phenomenon being investigated (sooful, surujlal & dhurup, 2010). furthermore, the fact that there is a paucity of research on business development in south african rural municipalities indicates that this study constitutes groundbreaking research. however, the study is limited in that its results are confined to one rural municipality. consequently, questions may be raised on the generalisation of the research results. the current study presents several implications for further research. most of business activities in fddm are localised. this presents opportunities for further research on the regional expansion and internationalisation of rural businesses. since the upgrading of the skills of the residents is a challenge, a study can be conducted on how best the skills and competencies of people in the area may be improved. studies can also be conducted on the concerns raised by respondents, such as the rising transport and logistics costs, the rising costs of rates and taxes, shrinking markets, infrastructural development and land use. the results of the present study could be further refined by conducting the same study using a more qualitative approach. this could provide factual value that enables one to better understand the issues under spotlight. conclusions the purpose of this study was to explore business development challenges in a rural municipality in south africa. the results of the study have revealed that there are shortcomings with regard to several areas that influence the development of business in the fddm municipality. the municipality faces challenges in the upgrading of the skills and capabilities of the residents. there is evidence of poor service delivery and public spaces are still very unattractive. the available legislative frameworks do not support business development in the area. furthermore, more land is still needed for business; the municipality is yet to be packaged for marketing purposes, and partnerships or networks between businesses or between businesses and other strategic constituencies, such as government and political players, are still lacking. all these factors have a bearing on business development in the area. the municipality therefore has to come up with sajesbm volume 5, (2012) www.sajesbm.com article no 128 103 programmes that address these discrepancies in order to stimulate and sustain business growth and the retention of businesses within the constituency. despite the existence of gaps and inconsistencies highlighted in this study, the overall picture is significantly positive. for instance, approximately 69% of businesses anticipate that their production capacity will continue to increase in the years to come. should this trajectory be maintained, it will enhance the demand for labour in the municipality. furthermore, municipal authorities still exhibit some levels of support and interest in improving business development in the area. such developments denote the existence of high levels of optimism in businesses within fddm municipality. furthermore, the fact that the majority of businesses were established within the last ten years indicates that there is a significant propensity for entrepreneurship within the municipality. consequently, the district has begun to play a more significant role in its contribution toward the gross geographic product of the free state province. recommendations the findings of the study suggest that there are several challenges that need to be addressed by the fddm municipality with regard to business development in the area. the following recommendations would be helpful in meeting the identified challenges. since many businesses in fddm fall under the sme sector, as a policy intervention the district municipality may consider establishing or helping establish business incubators. business incubators are organisations designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections (grimaldi & grandi, 2005). atherton and hannon (2006) assert that incubators are a positive and effective means of public intervention, particularly in rural areas, as they can provide significant resources to new ventures and are likely to attract new firms and to enhance their prospects for start-up and survival. in order to stimulate the growth of their businesses, business leaders in the municipality should be encouraged to seek for greater business opportunities outside their municipal boundaries. in support, chell and baines (2000) indicate that there exists increased potential for business success if their owners are alert to business opportunities. strategies such as horizontal and vertical integration, diversification and market development strategies may be used for these purposes (reddy et al., 2008). in addition, smes can source funds from appropriate financial institutions or available government landing institutions (haque, 2008). these funds can be channeled toward the growth of smes in the municipality. with regard to communication, a paradigm shift should be adopted in the manner in which business and municipal authorities in fddm operate. channels of communication and networking platforms should be opened up between the local business community and the local government. such actions are likely to result in the creation of institutional trust and cooperation between these stakeholders. entrepreneurial networks can be established in rural communities as they are likely to facilitate enhanced innovation and cluster formation, both of which may be vital for the economic development of rural communities (maniukiewicz, williams & keogh, 1999; callois & aubert, 2007; mason et al. 2008). networks may also provide a platform for public participation, which yields benefits such as higher citizen input in community development, deliberative and reflexive dialogue and collaboration between stakeholders (moore, 1995). networking may be improved through the creation of business associations in fddm as well as the promotion of functions such as corporate golf days where sme owners and managers in the district can meet to interact. the municipality can also run programs such as the businessman or manager of the year functions to provide a platform where various stakeholders can meet to interact. sajesbm volume 5, (2012) www.sajesbm.com article no 128 104 overall, there is need for the municipality to come up with an effective business retention and expansion programme (br & e). br & e strategies assist all role players within the local economy to contribute in the economic development of their area (mason et al., 2008), and enables the municipality to anticipate and address the problems before they even occur (try, 2008). as such, municipalities become proactive rather than reactive while reassuring and promoting the well-being of existing businesses at the same time. silverman (2006) highlights that to achieve this, the municipality may develop and implement various programs meant to prevent businesses from failing (business retention) and efforts that show businesses the potential for expansion within the borders of the municipal area (business expansion). a ‘distressed business fund’ created by the municipality to bail out undercapitalised businesses could be an example of a business retention strategy. to help smes expand, the municipality could avail more land for business purposes. references akyuz, y. (2011), global economic prospects: the recession may be over but where next? global policy, 2,127–137. aleke, b., ojiako, u. & wainwright, d. (2011). social networks among small agribusinesses in nigeria. society and business review, 6 (3), 214-228. andrabi, t., ghatak, m. & khwja, a. i. (2006). subcontractors for tractors: theory and evidence on flexible specialization, supplier selection, and contracting. journal of development economics, 79 (2), 273– 302. anselin, l., syabri, i. & kho, y. (2006). geoda: an introduction to spatial data analysis. geographical analysis, 38 (1), 5-22. atherton, a. & hannon, p. d. (2006). localised strategies for supporting incubation – strategies arising from a case of rural enterprise development. journal of small business and enterprise development, 13 (1), 48-61. arvis, j. f., raballand, g. & marteau, f. (2007). the cost of being landlocked: logistics costs and supply chain reliability. world bank policy research working paper no. 4258. june. available at: http://ssrn.com/abstract=995079. accessed on 2011/ 10 / 27. bosworth, g. (2009). education, mobility and rural business development. journal of small business and enterprise development, 16 (4), 660-677. callois, j. m. & aubert, f. (2007). towards indicators of social capital for regional development issues: the case of french rural areas. regional studies, 41 (6), 809-821. charney, a. h. (2010). public services positively impact growth: a review of taxation and growth literature. available at: http://ebr.eller.arizona.edu/arizona_fiscal_issues/public_services_positively_impact_gr owth.aspx. accessed on: 2011/ 10/ 27. carroll, m.c. & blair, j. p. (2012). local economic development and the academy. applied geography 32 (1), 5-53. chell, e. & baines, s. (2000), networking, entrepreneurship and microbusiness behaviour, entrepreneurship and regional development, 12 (3), 195-215. sajesbm volume 5, (2012) www.sajesbm.com article no 128 105 coats, d. & passmore. e. (2008). public value: the next steps in public service reform. london: the work foundation (30 june 2009. available at: http://www.theworkfoundation.com/assets/docs/publications/201_pv_public_service_r eform_final.pdf). accessed: 2011/ 10/26. coles, r. (2010). collaborative governance and civic empowerment. perspectives on politics, 8 (2), 601-604. commission for rural communities (2007). the state of the countryside. crc: cheltenham. churchill, g. a. (jr) & lacobucci, d. 2002. marketing research: methodological foundations. 8th ed. fortworth: harcourt college publishers. dennis, c. (2000). networking for marketing advantage. management decision, 8 (4), 28792. derkzen, p., franklin, a., bock, b. (2008). examining power struggles as a signifier of successful partnership working: a case study of partnership dynamics. journal of rural studies 24, 458-466. dti report. (2004). entrepreneurial empowerment, job creation and equity facilitated: an analysis of the evolution of public sector support for small enterprises in south africa. review of ten years of small business support in south africa 1994 – 2004. available at: http://www.dti.gov.za/sme_development/docs/10_year_review.pdf. accessed: 2012/06/17. edwards, b., goodwin, m., pemberton, s. & woods, m. (2001). partnerships, power, and scale in rural governance. environment and planning c: government and policy, 19, 289-310 fddm. fezile dabi district municipality. (2008). integrated development plan. available at: www.feziledabi.gov.za/index.php?...fezile-dabi...idp-20082009. accessed 2011/ 10/ 13. fddm. fezile dabi district municipality. (2011). integrated development plan. availableat: http://mfma.treasury.gov.za/documents/01.%20integrated%20development%20plans/ 201011/03.%20district%20municipalities/dc20%20fezile%20dabi/dc20%20fezile% 20dabi%20-%20idp%20-%201011. accessed: 2012/ 06/18. fujita, m., & krugman, p. (2004). the new economic geography: past, present andthe future. papers in regional science, 83, 139-164. geddes, m. & sullivan, h. (2007). delivering development through local leadership in the commonwealth. background discussion. paper for the commonwealth local government conference, 26-29 march, auckland, nz. grimaldi, r, & grandi, a. (2005). business incubators and new venture creation: an assessment of incubating models. technovation, 25, 111–121. german agency for technical cooperation (2003). guide to rural economic and enterprise development. working paper edition 1.0, november. eschborn, germany. sajesbm volume 5, (2012) www.sajesbm.com article no 128 106 goymen, k. (2008). involving private enterprise in local development, in p.s. reddy, m.s. haque, & m.s. de vries. improving local government – outcomes of comparative research. palgrave macmillan: new york. grodach, c. (2011). barriers to sustainable economic development: the dallas–fort worth experience. cities 28 (4), 300–309. hair, j. f., black, b., babin, b., anderson, r. e., tatham, r. l. & black, w. c. (2010). multivariate data analysis: a global perspective. ny: pearson education inc. haque, m. s. (2008). local governance in south asia, in p.s. reddy, m.s. haque, & m.s. de vries, improving local government – outcomes of comparative research. palgrave macmillan: new york. hjorth, d. & johannison, b. (2003). conceptualising the opening phase of regional development as the enactment of a collective identity. concepts and transformation, 8 (1), 1-24. hoppe, p., rickson, r. & burch, d. (2007). governing rural landscapes and environments:the strategic role of local community and global corporate partnerships. in: cheshire, l., higgins, v., lawrence, g. (eds.), rural governance: international perspectives. routledge. hosman, l. & fife, e. (2008). improving the prospects for sustainable ict projects in the developing world. international journal of media and cultural politics, 4(1), 51–69. indon, r. (2007). legal mechanisms to empower informal businesses. thematic paper no 4escr-asia. available at: http://web.undp.org/legalempowerment/reports/national%20consultation%20reports/ country%20files/21_philippines/21_6_informal_business_rights.pdf. accessed: 2012/ 06/ 17. johannisson, b. (2007). enacting local development-theoretical and methodological challenges. journal of enterprising communities, 1 (1), 7-26. kingdon, g. & knight. j. (2005). unemployment in south africa, 1995-2003: causes, problems and policies. conference paper presented at the 10 year review of the south african economy conference, 28-29 october , stellenbosch university. kingdon, g. & knight, j. (2006). the measurement of unemployment when unemployment is high. labour economics, 13 (3), 291-315. kirkels, y. & duysters, g. (2010). broferage in sms networks. research policy, 39 (3), 375–385. kothari, c. r. (2008). research methodology: methods and techniques. 2nd ed. new delhi: new age international. lean, j. (1998). training and business development support for micro-businesses in a peripheral area. journal of european industrial training, 22 (6), 231-236. lee, y. c., chu, p. y. & tseng, h, l. (2011). corporate performance of ict-enabled business process re-engineering. industrial management & data systems, 111 (5), 735 -754. sajesbm volume 5, (2012) www.sajesbm.com article no 128 107 lesage, j.p., & pace, r. k. (2009). introduction to spatial econometrics. boca raton, london, new york: crc press taylor & francis group. li, l., jinfeng, c. & xuezhu, g. (2012). the growth evaluation model of manufacturing smes and application from system engineering perspective. systems engineering procedia, 5, 412-419. liu, d. (2004), the relation estimate of regional economic development and growth of small businesses, quantitative and technical economics, no. 5, p. 24, september. liu, m., xu, z., su, f. & tao. r. (2012). rural tax reform and the extractive capacity of local state in china . china economic review, 23 (1), 190-203. lovering, j. (2009). fordism, post-fordism and flexible specialisation. international encyclopedia of human geography, 232-242. maniukiewicz, c., williams, s., & keogh, w. (1999). partnerships and networks: lessons from facilitating entrepreneurship. journal of small business and enterprise development, 6 (1), 67-79. mason, c., castleman, t. & parker, c. (2008). communities of enterprise – developing regional smes in the knowledge economy. journal of enterprise information management, 21 (6), 571-584. mathe, k. (2010). improving spatial planning in south african district municipalities: towards inclusive growth and development. conference paper presented at overcoming inequality and structural poverty in south africa: towards inclusive growth and development. 20–22 september , johannesburg. moore, m. h. (1995). creating public value strategic management in government, cambridge, ma: harvard university press. morales – nieto, j. (2008). globalisation of microfinance markets: an overview and some conditions for success. available at: http://www.iamfi.com/pdf/globalization%20of%20microfinance%20markets%20an%20 overview%20and%20some%20conditions%20for%20success.pdf. accessed: 2011/10/ 14. naik, g., joshi, s. & basavaraj, k. p. (2012). fostering inclusive growth through egovernance embedded rural telecenters (egert) in india. government information quarterly 29 (1), 82–89. nisula, k. & pekkola, s. (2012). erp-based simulation as a learning environment for sme business. international journal of management education, 10 (1), 39-49. north, d. & osborne, d. (2000). the innovativeness and growth of rural smes in the 1990s. regional studies, 34 (2), 145-157. ntuli, t. g. (2000). impact of crime on socio-economic development at somopho. masters dissertation. university of zululand, south africa. sajesbm volume 5, (2012) www.sajesbm.com article no 128 108 ouyang, p. & fu, s. (2012). economic growth, local industrial development and interregional spillovers from foreign direct investment: evidence from china. china economic review, 23 (2), 445–460. owen, d., hogarth, t. & green, a. e. (2012). skills, transport and economic development: evidence from a rural area in england. journal of transport geography, 21 (21), 80– 92. patterson, h. & anderson, d. (2003). what is really different about rural and urban firms? some evidence from northern ireland. journal of rural studies, 19 (4), 477-490. pemberton, s. & goodwin, m. (2012). rethinking the changing structures of rural local government state power, rural politics and local political strategies? journal of rural studies, 26 (3), 272-283. petrescu, a. i. & simmons, r. (2008). human resource management practices and workers’ job satisfaction. international journal of manpower, 29 (7), 651-667. reddy, p.s. (2008). metropoles in africa, in p.s. reddy, m.s. haque, & m.s. de vries. improving local government – outcomes of comparative research. palgrave macmillan: new york. reddy, p.s., haque, m.s., & de vries, m.s. (2008). improving local government: outcomes of comparative research. palgrave macmillan: new york. silverman, r. m. (2006). central city socio-economic characteristics and public participation strategies: a comparative analysis of the niagara falls region’s municipalities in the usa and canada. international journal of sociology and social policy, 26 (3/4), 138153. smith, g. l. & lomba, f. a. c. (2008). the challenges of infrastructure development in the eastern limb of the bushveld complex of south africa. paper presented at the the southern african institute of mining and metallurgy conference in narrow vein and reef, south africa in december .available at: http://www.saimm.co.za/conferences/narrowvein2008/12-smith.pdf. accessed 2011/ 10/27. sooful, a. surujlal, j. & dhurup, m. (2010). dance and music as mediums for the social integration of children with intellectual disabilities into mainstream society. african journal for physical, health education, recreation and dance, 16 (4), 681-697. sudman, s. & blair, e. (1998). marketing research: a problem solving approach. boston: mcgraw-hill. swoboda, b., meierer, m., foscht, t. & morschett, d. (2011). international sme alliances: the impact of alliance building and configurational fit on success. long range planning 44 (4), 271-288. tambunan, t. t. h. (2006). development of small and medium enterprises in indonesia from the asia-pacific perspective, lpfe-usakti: jakarta. tambunan, t.t.h. (2011). development of small and medium enterprises in a developing country: the indonesian case. journal of enterprising communities: people and places in the global economy, 5 (1), 68-82. sajesbm volume 5, (2012) www.sajesbm.com article no 128 109 taylor, b. m. (2012). regionalism as resistance: governance and identity in western australia’s wheatbelt. geoforum, 43 (3), 507–517. taylor, b. m. (2010). between argument and coercion: social coordination in rural environmental governance. journal of rural studies, 26 (4), 383-393. tonge, r., larsen, p. & roberts, m. (2000). information systems investment within highgrowth medium-sized enterprises. management decision, 38 (7), 489-502. turner, s. (2000). small scale enterprises in ujung pandang, indonesia: flexible specialisation at work. new zealand geographer, 56 (2), 2-5. try, d. (2008). “mind the gap, please” – using public value theory to examine executive take-up of results-based management. international journal of productivity and performance management, 57 (1), 22-36. uk commission for employment and skills. (2010). 2010 review: the integration of employment and skills. available at: http://www.ukces.org.uk/publications/2010review-integration-of-employment. accessed: 2012/ 06/ 18. westhead, p., ucbasaran, d, & martin, b. (2004). internationalisation strategies selected by establish rural and urban smes. journal of small business and enterprise development, 11 (1), 8-22. van dijk, t. a. (2000). ideology, racism, discourse: debates on immigration and ethnic issues, in ter wal, j & verkuyten, m. (eds). comparative perspectives on racism, aldershot, uk: ashgate. ye, x. & carroll, m. c. (2011). exploratory space-time analysis of local economic development. apllied geography , 31 (3), 1049-1058. zikmund, w. g. 2000. business research methods. new york: dryden press abstract introduction literature review research methods and design results discussion conclusion acknowledgements references about the author(s) godfred anakpo department of economics, faculty of business and economic sciences, nelson mandela university, port elizabeth, south africa syden mishi department of economics, faculty of business and economic sciences, nelson mandela university, port elizabeth, south africa citation anakpo, g. & mishi, s., 2021, ‘business response to covid-19 impact: effectiveness analysis in south africa’, southern african journal of entrepreneurship and small business management 13(1), a397. https://doi.org/10.4102/sajesbm.v13i1.397 original research business response to covid-19 impact: effectiveness analysis in south africa godfred anakpo, syden mishi received: 19 jan. 2021; accepted: 12 apr. 2021; published: 31 may 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: following the outbreak of coronavirus disease 2019 (covid-19), many businesses have put out measures to counter the impact of the outbreak and its related reactions from economic actors (individuals, authorities and other businesses) on their business operations. however, nearly no empirical studies or reports have been carried out to investigate the effectiveness of those measures. aim: this study aimed at examining the effectiveness of business response measures to covid-19 impact on business outcome. setting: this study focused on businesses that are value-added tax (vat) registered. methods: a cross-sectional survey design was used. the authors applied logistic regression technique to analyse the effectiveness of business response measures on business outcome. results: the authors found evidence that business responses such as virtual connection, innovative e-commerce and increasing working hours are more effective business responses, whilst decreasing work hours, laying off workers temporarily and ordinary e-commerce are less effective measures against the impact of the outbreak. furthermore, business characteristics such as industry type (e.g. ‘agriculture, hunting, forestry and fishing’ and ‘electricity, gas and water supply’) are more resilient to covid-19 shock, whilst pure export market and small businesses, secondary and tertiary, are significantly less resilient. conclusions: firstly, the study shows that some business responses are more effective in remediating the adverse impact of covid-19 and therefore recommends policy intervention and industrial actions to promote them. secondly, it is also recommended that financial bailout and/or internet infrastructure and domestic support for small and export businesses could make them more resilient to the adverse impact of the outbreak. keywords: business response; covid-19 impact; outbreak; effectiveness analysis; south africa. introduction the outbreak of coronavirus disease 2019 (covid-19) has caused major economic shock and abnormalised business operation. globally, it was estimated that each additional month the covid-19 crises cost 2.5% – 3% of global gross domestic product (gdp), up to over 15% fall in a country’s gdp (fernandes 2020), and this trend is expected to continue to the future as a result of (1) the forced reduction in the production of goods and services because of lockdown restriction, (2) reduction in household demand for goods and services (e.g. reduction in tourism because of travel and movement restriction), (3) disruption of global production and supply chains and (4) the impact of uncertainty on business investment (arndt et al. 2020). the outbreak of covid-19 has far-reaching effects, leading to about ‘half a million firms at risk of collapse’ (amankwah-amoa, khan & wood 2020), accelerating unemployment by causing 24.3 million job losses (ozili & arun 2020). this has significantly reduced investor’s confidence (oecd interim economic assessment 2020), posed significant short-run logistical challenges and severely disrupted goods demand (juergensen, guimón & narula 2020). south africa is by no means exempted from the adverse impact of the covid-19 pandemic. for instance, south africa recorded a negative growth rate of −5.4% (arndt et al. 2020; boumans, link & sauer 2020), closure of many firms and a decrease in employment from 57% to 38% (ranchhod & daniels 2020). this affects the overall business turnover of companies and investors. to minimise the adverse impact of covid-19 crises, many businesses have put forth measures to counter the impact of the outbreak and its related reactions from economic actors (individuals, authorities and other businesses) on their business operations. several business responses have been applied since the outbreak of covid-19 and subsequent lockdown restriction. for instance, globally the use of virtual connection and e-commerce approach to counter the potential losses increased by 74% (bhatti et al. 2020), whilst others also engaged in modified business operation temporarily laying off workers. kumar et al. (2020) documented that few companies altered methods of production and diversified the production of goods and services to cope with the adverse effect. statistics south africa (2020) reported that most businesses adopted response measures such as changing method of producing goods and services, decreasing maintenance cost and investing in equipment as risk aversion measure. furthermore, van assche and lundan (2020) reported that virtual connection and conferencing are likely to positively impact multinational enterprises in the ‘new normal’ and pencavel (2015) on the other hand found that increasing the number of hours of work is more likely to increase productivity, ceteris paribus. empirical literature on the effectiveness of covid-19 response is mainly limited to governmental response measures (such as covid-19 relief funds, cash transfer, grant or bailout for some businesses). firstly, almost no empirical studies have sought to investigate the effectiveness of business response measures (covid-19 impact) on business outcome in the existing literature. secondly, literature on covid-19 impacts and effectiveness of response are either limited to government covid-19 relief or are mainly descriptive in nature without rigorous analysis. this article seeks to addresses these gaps in the literature. this study contributes to the literature and shape policy direction by investigating the effectiveness of business response to covid-19 impact on the business outcome (turnover) in the context of south africa with a more rigorous analysis. it is imperative to identify best practices as this and related shocks are inevitable in the future, which businessmen and policymakers ought to be equipped with. literature review there is a body of literature on covid-19 and its profound impact on economic and business activities (bartik et al. 2020; boumans et al. 2020; fairlie 2020; juergensen et al. 2020; kumar et al. 2020). for instance, in their descriptive analysis of over 5800 small businesses in north america, bartik et al. (2020) found that the outbreak of the pandemic with its lockdown and movement restrictions resulted in the closure of over 43% business temporarily or permanently, laid off about 40% of company’s employees, leading to decreased work hours and low productivity (pencavel 2015), whilst about 75% of small businesses risked losing business within 2 months of the outbreak because of insufficient funds. similarly, juergensen et al. (2020) conducted impact analysis of covid-19 crisis and policy response on the european smalland medium-sized enterprises (smes) in the manufacturing sector and found that most of the smes face significant logistical challenges at least in the short run, in addition to severe disruptions in demand (arndt et al. 2020) because of border closure, although the severity of this impact has differed across smes, which are important for inclusive growth (bhorat et al. 2018). they also argued that in the longer term, there will be different challenges and opportunities depending on the type of sme. kumar et al. (2020) also reported that the global production and supply chain system of goods is mostly disrupted because of movement restrictions, border closures resulting from the outbreak of covid-19. using literature review approach, amankwah-amoa et al. (2020) reported that pandemic precipitates business failures and has sped up the reconfiguration of the relationship between states and markets, deepened the divide between those with and without political connections, whilst experiential knowledge and skills resources may be both an advantage and a burden. furthermore, in his descriptive analysis, fairlie (2020) documented that african-american businesses were hit hard experiencing a 41% drop, dropped latinx business owners by 32%, asian business owners by 26%, about 36% losses in immigrant business and female-owned businesses dropped by 25%. the impact experience of businesses because of covid-19 crisis is not different in africa, which is often characterised with fragile fundamentals and weaker business resilience to shock (fatoki 2018). ozili (2020) showed from his descriptive analysis that covid-19 had negative effects on oil industry (through decline in oil prices) in nigeria, which in turn affects other business operation along oil supply chain. other literature that highlights the negative impacts of covid-19 on business operation and outcome includes khambule (2020) and kumar et al. (2020). a few studies have however, investigated some business response measures to remediate the impact of covid-19 crisis. limited literature exists on the response to covid-19 impact and its effectiveness. for instance, in his analysis of the effectiveness of governmental intervention such as cash transfer, relief packages and grant during covid-19, khambule (2020) revealed that whilst the south african government’s r500 billion social and economic relief is an effective response measure to stimulate economic activities, it does little to protect those in the informal economy, and thus further actions are needed for sme’s economic development (razumovskaia et al. 2020). concerning covid-19 energy sector responses in africa, akrofi and antwi (2020) found that only three countries (nigeria, kenya and burkina faso) had specific interventions for renewables and that interventions were mostly fiscal or financial and short term, with mediumto long-term measures often broad without being specific to the energy sector. in their business policy studies, van assche and lundan (2020) reported that virtual connection (conferencing) is likely to positively impact multinational enterprises in the ‘new normal’ (moodley & morris 2004; overgaard et al. 2020; wymbs 2000). in addition, in their studies on the impact of covid-19 on small businesses, bartik et al. (2020) reported that small business predicts business outcomes amidst pandemic because of their financial fragility. pencavel (2015) applied linear regression model to investigate the productivity of output (e.g. business output) and found that increasing the number of hours of work and worker (through employment) is associated with higher output and business turnover and vice versa. however, there is a paucity of literature on the effectiveness of business response measures with regard to the impact of covid-19 on business outcome. furthermore, the existing studies fail to go beyond descriptive measures to a more rigorous analysis on the effectiveness of business response measures to the impact of covid-19. to address this gap, this article is guided by the decision-making theory which states that under risk and uncertainty, individuals and, derivatively, business entities make rational choices through a process or sequence of activities involving stages of problem recognition, search for information, definition of alternatives and the selection of options, which are advantageous given an uncertain environment to affect outcome (ahmed & omotunde 2012; edwards 1954; turpin & marais 2004). thus, the business response decisions to covid-19 crisis are to remediate the effect of the pandemic, which affects business outcome. research methods and design the analysis in this article used data from statistics south africa covid-19 business impact survey design. this survey was conducted in may 2020 to provide close to real-time economic insight into the impact of the covid-19 pandemic on 1079 vat-registered businesses by using a rapid response survey. the survey data contain vital characteristics of the business operations, including industry types, market and the size. in this survey, nine industries were covered: agriculture, hunting, forestry and fishing; mining and quarrying; manufacturing; electricity, gas and water supply; construction; trade, transport, storage and communication; real estate and other business services; community, social and personal services; and others. export and import market information was also provided. in the survey, respondents were asked to provide annual turnover prior to the outbreak and if their business turnover was below, within or above normal during the level 4 lockdown period because of covid-19, and this was also captured in the data. furthermore, information on business responses to remediate the impact of covid-19 and its related outcome on business turnover was also collected. this encompasses the use of virtual connection, changing production methods, producing different goods and services, laying off workers temporarily, maintenance cost management, e-commerce, using new approach to reach customers, and investing in equipment, amongst others. using janky (2001) model with slight modification, business outcome is defined as a function of response decision, as follows: where busoutcomei denotes business outcome measured as one if business turnover is at least within normal (15.7%), zero if it is below normal (84.3%), respji is a vector of business response measures which is one if one falls in the following categories: use of virtual connection, changing production methods, producing different goods and services, laying off workers temporarily, maintenance cost management, e-commerce, using new approach to reach customers, investing in equipment, zero if otherwise. the variable i represents businesses, j is the number of response measures and x is a vector of covariates, which captures business characteristics such as industry types (which is measured as if a business falls within the following industries: manufacturing, agriculture, hunting, forestry and fishing; community, social and personal services; construction; electricity, gas and water supply; transport, storage and communication; mining quarry, and real estate and other business services, and zero if otherwise), business size (measured as one if small business, zero if otherwise) and market (one if a business is purely export driven, zero otherwise). in the second model, with the same analytical procedure, the industry type was collapsed into primary, secondary and tertiary sectors (see tables 1, 2 and 3). βj is the parameters of interest that measure the effectiveness of business response to covid-19 impact, and ɛ is the error term. in this analysis, maximum likelihood (ml) is used as the estimator for the logistic regression model. table 1: a summary statistics: industry types and sectors. table 2: summary statistics: business response measures. table 3: summary statistics: market, business size and turnover. it is also worth noting that businesses that are in economic crises and financial distress may often take actions such as laying off workers, reducing working hours and vice versa (allan & loseby 1993). thus, reversal causality, a potential issue of endogeneity, may sometimes be expected. however, the data used for the analysis in this study were responses provided by the respondents as measures aimed at coping or improving the business operations, turnover, amidst the covid-19 outbreak and this rules out the reversal causality. to validate this, a diagnostic test that approximates endogeneity test was conducted by regressing potential endogenous variables, such as laying off workers and increasing and decreasing working hours on the residuals from the given model (see table 4). the results were all insignificant, confirming that endogeneity was not a problem. table 4: results of preliminary test for endogeneity. results tables 1–3 provide summary statistics on key variables of interest, such as industrial composition and sectors into which the businesses belong, business response measures, types of market, business size and turnover. tables 1–3 show that about 20.9% of businesses are in the manufacturing industry, whilst 17.1% and 16.4% are in the trade and agriculture, hunting, forestry and fishing businesses, respectively. this is followed by real estate and other business services (11.7%); community, social and personal services (10.8%); transport, storage and communication (9.8%); mining and quarrying (2.5%); and electricity, gas and water supply (1.3%). these industries were broadly categorised into three sectors, namely, primary sector (19.7%), secondary sector (29.0 %) and tertiary sector (51.3%). this sectoral distribution reflects similar report on the economic sectors in south africa in 2019 (plecher 2020). concerning business response measures, table 2 reports that about 38.2% of businesses resorted to the use of virtual connection for business transaction because of the lockdown restriction to remediate the impact on business turnover. other businesses adopted measures such as decreasing working hours (34.9%), adopting new ways to sell (26.5), laying off workers (25.7%), decreasing maintenance cost (16.5), changing methods of producing goods and services (15.4%), altering goods and services provided (14.5%), e-commerce (11.8) investing in equipment and increasing working hours (4.6%). furthermore, table 3 shows that about 44.7% businesses deal with some form of export, and about 47.9% are micro and small businesses. in addition, 84.3% participants responded that business turnover was below the normal following the lockdown restriction because of covid-19 outbreak. table 5 displays results on the effectiveness of business response to covid-19 impact on business outcome (business turnover). the table documents results on two marginal effects: the first marginal effect includes reports on industry-type characteristics of the business, whilst the second marginal effect categorises industries into primary, secondary and tertiary sectors. the results show that businesses that use virtual connection and innovative e-commerce (interaction of new ways of contacting and selling to customers with e-commerce) in business transaction are, respectively, 4.5% and 13.6% more likely to keep their operation at least within the normal turnover. results also show that businesses that increase working hours are 7.4% more likely to be at least within their normal business turnover. it is also apparent from the table that the normal e-commerce is 11.2% less likely to keep the business turnover at least within the normal operation. table 5 also shows that business characteristics such as industry types, market and size are important predictors of business turnover amidst covid-19 crises. results indicate that businesses in agriculture, hunting, forestry and fishing, and electricity, gas and water supply are 10.3% and 17.8%, respectively, more likely to be at least within the business turnover (amidst covid-19), which implies more resilience to the shock of the outbreak. in addition, export-driven businesses are 8.8% less likely to operate at least within the normal turnover. other export businesses with local market potential or alternative transaction are 10.2% more likely to withstand the pandemic shock and remain within the normal operation. data in table 5 also indicate that small businesses are 11.3% less likely to operate within the normal business turnover. results in table 5 further reveal that the secondary and tertiary sectors are 6.6% and 6.5% less likely to be at least within the normal range of their business turnover as compared with the primary sector, such as agriculture-related business and mining, which are relatively less affected by the covid-19 restriction. table 5: effectiveness of business response to the coronavirus disease 2019 on the business outcome (turnover). discussion the significant positive relationship between business response measures such as the use of virtual connection and innovative e-commerce and business outcome is not surprising because the lockdown restriction following the outbreak of covid-19 coupled with social distancing regulation forced many businesses to use virtual or internet means to reach customers and business partners in south africa. for instance, following the pronouncement of lockdown in south africa because of covid-19 pandemic, there was significant spike in internet demand and traffic to an average of 27.5% (15% – 40%) within 1 month (seacom 2020). this finding reinforces a report by overgaard et al. (2020) that virtual way of business has turned to be part of a ‘new normal’ to maintain survival of businesses (i.e. to keep business transaction in the normal range). the findings of this study also reveal that business response measures such as increasing working hours are more likely to increases productivity and business outcome. the lockdown restriction causes the demand for certain essential goods (e.g. sanitary goods) to increase and therefore it is within expectation that could positively contribute to keeping business normal. secondly, time is also required to explore coping strategies through research to remediate the adverse consequences and therefore it is not surprising that increasing working hours is positively associated with high business turnover. on the contrary, responses such as decreasing working hours are negatively associated with business turnover. this implies that businesses that decrease working hours are less like to keep their business at least within the normal operation. this also confirms pencavel’s (2015) finding that increasing hours of work predicts high productivity and vice versa. it is however interesting to find that whilst innovative e-commerce (interaction of new ways of contacting and selling to customers with e-commerce) is positively related to business turnover at least within the normal range, the normal e-commerce is less likely to keep the business turnover at least within the normal operation. this finding goes against common positive expectation (wymbs 2000) arguably because the economic shock created by the covid-19 crises may have spillover effect across sectors and business operations, which may require a more tailored approach to e-commerce operation to increase business turnover. this could also be partly attributed to the fact that a significant proportion of e-commerce businesses are export driven. consequently, the lockdown restriction and subsequent border closure could make online goods delivery across borders difficult and may negatively affect business in the short term. concerning e-commerce in south africa, moodley and morris (2004) reported that business marketing strategy such as e-commerce has only marginally changed business activities and trading behaviour between international buyers and sellers in garment industry. the findings also suggest that the effectiveness of business response measures on business outcomes depends on some characteristics, such as industry types, type of market and business size. for instance, businesses in industries such as agriculture, hunting, forestry and fishing and electricity, gas and water supply show to be more resilient to the shock of the outbreak. concerning this, arndt et al. (2020) reported that production of electricity and water were part of essential goods and services continued during the lockdown period therefore, there was no disruption from the supply side. the authors also documented that agriculture activities are less affected as compared with other businesses, which predominantly involves social contact. thus, it is expected that business turnover is within the normal or above the normal. export-driven businesses are significantly negatively associated with business turnover. this finding is within expectation as many countries outside south africa also implement border closure and other containment measures in response to covid-19 outbreak; thus, the factory shutdowns, general delays in shipment and reduction in global demand are likely to affect export-driven businesses. the fall in export demand depends on the magnitude and duration of restrictions and border closure. according to a report by arndt et al. (2020), export demand is expected to fall by 40% – 75% except for agricultural export, which is expected to remain fairly the same. this finding is also consistent with that of juergensen et al. (2020) and kumar et al. (2020), who concluded that the pandemic has caused significant logistical challenges in the short run and severe disruptions in demand for goods and global production and supply chain system for smes. furthermore, small businesses are not resilient to shock such as covid-19 crises as shown in table 5. this finding is consistent with that of bartik et al. (2020) who documented that small businesses are financially fragile and therefore more prone to the adverse impacts of covid-19 pandemic. small, medium and microenterprises (smmes) have been identified as a key component to advancing inclusive growth and development in south africa (bhorat et al. 2018), so this effect, by implication, poses major threat to south africa’s economic health. the findings also reveal that the secondary and tertiary sectors are less resilient as compared with the primary sector. this finding reflects the general economic outlook of south africa where tertiary sector (services) remains the leading sector yet, the country recorded a negative growth rate of 5.4% (arndt et al. 2020; boumans et al. 2020). conclusion the outbreak of covid-19 and its related reactions from economic actors (individuals, authorities and other businesses) have major adverse impact on business operations. this triggers several responses from businesses to counter the effects. however, nearly no empirical studies or reports have been carried out to investigate the effectiveness of those measures. in this article, we applied logistic regression technique (using statistics south africa covid-19 business impact survey data) to examine the effectiveness of business response in remediating covid-19 impact on business outcome (turnover) in south africa. we found evidence that business responses such as virtual connection, innovative e-commerce and increasing working hours are significantly more likely to keep business operation against the shock of the outbreak and therefore are more effective business responses. however, responses such as decreasing working hours, laying off workers temporarily and ordinary e-commerce are significantly less likely to be effective against the impact of the outbreak. we also found that business characteristics such as industry type, size and market (export vs. local) predict business resilience to covid-19 shock; industry types such as ‘agriculture, hunting, forestry and fishing’ and ‘electricity, gas and water supply’ are significantly more resilient to covid-19 shock. furthermore, pure export market and small businesses, secondary and tertiary, are significantly less resilient to the covid-19 shock. implications and recommendations based on the findings of this study, we recommend policy intervention and industrial actions that promote virtual connection and innovative e-commerce for business operations. the findings imply that policy interventions need to be sensitive and tailored to the different types of smes in terms of industry, sector, market type and size rather than adopting a one-size-fits-all approach and should not only focus on business survival in the short term but building resilience for long-term operation through innovation. it is also recommended that financial bailout and/or internet infrastructure and domestic support for small and export businesses could also make them more resilient to the adverse impact of the outbreak. limitations the authors acknowledge that the analysis in this article is based on self-reported data from the business operators in the survey; therefore, it is likely that the respondents might either underestimate or overestimate their business outcomes amidst covid-19 outbreak. the qualitative nature of the data also limits detailed quantitative analysis (e.g. production function modelling for labour and capital change on output), and future research should include that. acknowledgements competing interests the authors have declared that no competing interests exist. authors’ contributions g.a. was responsible for conceptualisation, methodology, formal analysis, investigation and original draft writing. s.m. was responsible for supervision, writing reviews and editing and suggestions that enhanced the conceptualisation, methodology and write-up of this article. ethical considerations this article followed all ethical standards for research without direct contact with human or animal subjects. funding information funding for this study was provided by the national research foundation of south africa (grant number: 121890) and nelson mandela university through vice chancellor funds. data availability data used in this study can be accessed via http://www.statssa.gov.za/publications/report-00-80-01/report-00-80-01may2020.pdf. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references ahmed, m.t. & omotunde, h., 2012, ‘theories and strategies of good decision making’, international journal of scientific & technology research 1(10), 51–54. akrofi, m.m. & antwi, s.h., 2020, ‘covid-19 energy sector responses in africa: a review of preliminary government interventions’, energy research & social science 68, 101681. https://doi.org/10.1016/j.erss.2020.101681 allan, p. & loseby, p.h., 1993, ‘no-layoff policies and corporate financial performance sam’, advanced management journal 58(1), 44–49. amankwah-amoah, j., khan, z. & wood, g., 2020, ‘covid-19 and business failures: the paradoxes of experience, scale, and scope for theory and practice’, european management journal 39(2), 179–184. https://doi.org/10.1016/j.emj.2020.09.002 arndt, c., davies, r., gabriel, s., harris, l., makrelov, k., modise, b., robinson, s., simbanegavi, w., van seventer, d. & anderson, l., 2020, impact of covid-19 on the south african economy. southern africa towards inclusive economic development: working paper 111, viewed 25 september 2020 from https://sa-tied.wider.unu.edu/sites/default/files/pdf/sa-tied-wp-111.pdf bartik, a.w., bertrand, m., cullen, z., glaeser, e.l., luca, m. & stanton, c., 2020, ‘the impact of covid-19 on small business outcomes and expectations’, proceedings of the national academy of sciences 117(30), 17656–17666. https://doi.org/10.1073/pnas.2006991117 bhatti, a., akram, h., basit, h.m., khan, a.u., raza, s.m. & naqvi, m.b., 2020, ‘e-commerce trends during covid-19 pandemic’, international journal of future generation communication and networking 13(2), 1449–1452. bhorat, h., asmal, z., lilenstein, k. & van der zee, k., 2018, ‘smmes in south africa: understanding the constraints on growth and performance’, development policy research unit working paper 201802, development policy research unit: university of cape town, cape town. boumans, d., link, s. & sauer, s., 2020, covid-19: the world economy needs a lifeline but which one?, econpol europe policy brief 27, viewed n.d., from https://www.econpol.eu/publications/policy_brief_27 edwards, w., 1954, ‘the theory of decision making’, psychological bulletin 51(4), 380. https://doi.org/10.1037/h0053870 fairlie, r.w., 2020, the impact of covid-19 on small business owners: evidence of early-stage losses from the april 2020 current population survey (no. w27309), national bureau of economic research, viewed 15 october 2020 from https://onlinelibrary.wiley.com/doi/full/10.1111/jems.12400 fatoki, o., 2018, ‘the impact of entrepreneurial resilience on the success of small and medium enterprises in south africa’, sustainability 10(7), 2527. https://doi.org/10.3390/su10072527 fernandes, n., 2020, economic effects of coronavirus outbreak (covid-19) on the world economy, viewed 20 september 2020, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3557504 janky, b., 2001, ‘rational choice theory in sociology and quantitative empirical research: a survey’, review of sociology 7(1), 21–34. https://doi.org/10.1556/revsoc.7.2001.1.2 juergensen, j., guimón, j. & narula, r., 2020, ‘european smes amidst the covid-19 crisis: assessing impact and policy responses’, journal of industrial and business economics 47(3), 499–510. https://doi.org/10.1007/s40812-020-00169-4 khambule, i., 2020, ‘the effects of covid-19 on the south african informal economy: limits and pitfalls of government’s response’, loyola journal of social sciences 34(1), 95–109. kumar, a., luthra, s., mangla, s.k. & kazançoğlu, y., 2020, ‘covid-19 impact on sustainable production and operations management’, sustainable operations and computers 1, 1–7. https://doi.org/10.1016/j.susoc.2020.06.001 moodley, s. & morris, m., 2004, ‘does e-commerce fulfil its promise for developing country (south african) garment export producers?’, oxford development studies 32(2), 155–178. https://doi.org/10.1080/13600810410001699939 organisation for economic co-operation and development (oecd) interim economic assessment, 2020, coronavirus: the world economy at risk, organisation for economic co-operation and development, paris. overgaard, s., neyret, p., günther, k.p. & felländer-tsai, l., 2020, ‘virtual congresses – the new normal? efort 2020 re-worked: the virtual efort congress (vec) from 28 to 30 october 2020 is coming this way!’, efort open reviews 5(8), 519–521. https://doi.org/10.1302/2058-5241.5.200300 ozili, p.k., 2020, ‘covid-19 pandemic and economic crisis: the nigerian experience and structural causes’, journal of economic and administrative sciences, vol. ahead-of-print, no. ahead-of-print. https://doi.org/10.1108/jeas-05-2020-0074 ozili, p.k. & arun, t., 2020, spillover of covid-19: impact on the global economy, viewed 12 october 2020 from https://www.papers.ssrn.com/sol3/papers.cfm?abstract_id=3562570 pencavel, j., 2015, ‘the productivity of working hours’, the economic journal 125(589), 2052–2076. https://doi.org/10.1111/ecoj.12166 plecher, h., 2020, gross domestic product (gdp) distribution across economic sectors south africa 2019, viewed 04 october 2020, from https://www.statista.com/statistics/371233/south-africa-gdp-distribution-across-economic-sectors/. ranchhod, v. & daniels, r.c., 2020, labour market dynamics in south africa in the time of covid-19: evidence from wave 1 of the nids-cram survey, nids-cram working paper, southern africa, labour and development research unit: university of cape town, cape town. razumovskaia, e., yuzvovich, l., kniazeva, e., klimenko, m. & shelyakin, v., 2020, ‘the effectiveness of russian government policy to support smes in the covid-19 pandemic’, journal of open innovation: technology, market, and complexity 6(4), 160. https://doi.org/10.3390/joitmc6040160 seacom, 2020, how much internet traffic in south africa has increased due to the coronavirus, viewed 28 september 2020, from https://www.seacom.co.za/media-centre/how-much-internet-traffic-south-africa-has-increased-due-coronavirus/ statistics south africa (sats sa), 2020, business impact survey of the covid-19 pandemic in south africa, embargoed until: 21 april 2020, 10:00, viewed n.d. from http://www.statssa.gov.za/publications/report-00-80-01/report-00-80-01april2020.pdf turpin, s.m. & marais, m.a., 2004, ‘decision-making: theory and practice’, orion 20(2), 143–160. https://doi.org/10.5784/20-2-12 van assche, a. & lundan, s., 2020, ‘from the editor: covid-19 and international business policy’, journal of international business policy 3, 273–279. https://doi.org/10.1057/s42214-020-00065-7 wymbs, c., 2000, ‘how e-commerce is transforming and internationalizing service industries’, journal of services marketing 14(6), 463–477. https://doi.org/10.1108/08876040010347598 abstract introduction research theory literature review research methodology research results discussion of the results conclusion and managerial implications limitations and suggestions for future research acknowledgements references about the author(s) jeremiah madzimure centre for academic development, vaal university of technology, vanderbijlpark, south africa citation madzimure, j., 2020, ‘examining the influence of supplier integration on supply chain performance in south african small and medium enterprises’, southern african journal of entrepreneurship and small business management 12(1), a312. https://doi.org/10.4102/sajesbm.v12i1.312 original research examining the influence of supplier integration on supply chain performance in south african small and medium enterprises jeremiah madzimure received: 06 jan. 2020; accepted: 04 june 2020; published: 21 sept. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: as the south african economy continues to grow, the role of small and medium-sized enterprises (smes) as a potential source for employment creation and productivity within the country has become widely acknowledged. however, one area in which the smes in the country still need to develop is in their implementation of supply chain management practices, particularly their relationships with suppliers, which could result in either the failure or success of any business enterprise. majority of studies conducted in this area have focussed on large firms, thereby creating a research gap in this area. aim: the aim of this study was to examine the influence of supplier integration on supply chain performance in south african smes. setting: this study was conducted in gauteng province of south africa. methods: a quantitative research methodology was employed in this study. a convenient sample comprising 283 owners and managers from smes drawn from the gauteng province was used in the study. the collected data were then analysed using pearson’s correlation and regression analysis. results: positive correlations were found between supplier integration and both the tangible and intangible sub-dimensions of supply chain performance. supplier integration also predicted both the tangible and intangible sub-dimensions of supply chain performance. conclusion: these results imply that to improve the performance of their supply chains, it is imperative for smes to ensure that linkages with their suppliers are properly aligned for improved coordination, which leads to better relationships and supply of materials. this study contributes to the literature by proposing and testing the influence of supplier integration on supply chain performance. keywords: supplier integration; supply chain performance; tangible dimension; intangible dimension; smes; south africa. introduction small and medium enterprises (smes) play a crucial role in the south african economy. they contribute approximately 52% – 57% of the country’s gross domestic product (gdp) and up to 61% of the overall employment in south africa (sme south africa 2017). they play a crucial role in creating employment in an economy (doern 2009:279). over the past decade, many smes have shifted to the use of the internet in business in the quest for efficiency and effectiveness (basheka, oluka & mugurisi 2011:535; fernandes & vieira 2015:588; makien, kahkonen & lintukangas 2011:61). moreover, smes play a very important role in supply chain management (scm), as they may serve as producers, distributors, retailers, as well as customers (maiga 2016:2). therefore, it is not surprising that smes are the backbone of most economies in the world, including south africa. the national small business act no. 26 of south africa 1996, as amended in 2003, cited from madzimure (2019:8), defined sme as: [a] separate and distinct entity including co-operative enterprises and non-governmental organisations managed by one owner or more, including its branches or subsidiaries if any is predominantly carried out in any sector or subsector of the economy mentioned in the schedule of size standards and can be classified as a sme by satisfying the criteria mentioned in the schedule of size standards. according to government gazette (2003:8) cited from madzimure (2019:8): [a] small enterprise in south africa is one that employees 50 people or less and has a total turnover of up to r19m with a total asset value of r3m. a medium enterprise employs 50 up to 200 people and has a total turnover of r39m with a total asset value of r6m. hence, this study focussed only on smes. most studies on supplier integration and supply chain performance have focussed on large companies (aharonovitz, vieira & suyama 2018:284; chang, tsai & hsu 2013:38). current knowledge involving smes and supplier integration in developing countries, such as south africa, is still limited, which creates a need for further research to fill this research gap (boehmke & hazen 2017:163; karjalainen & kemppainen 2008:245). the aim of this study was to examine the influence of supplier integration on supply chain performance amongst smes in south africa. furthermore, the south african government is increasingly adopting and encouraging integration with supply chain partners, such as suppliers, to improve the survival of smes. this is in line with the objectives of the national development plan (ndp), which include innovation, employment creation and the adoption of technology as mechanisms for the economic development of the country (zarenda 2013:5). the south african government is eager to develop and streamline sme operations as smes make an important contribution to the economy (maziriri & chivandi 2020). many smes have been investing in information technology infrastructure over the past few years, ‘to automate and streamline their internal business processes’ (zhao et al. 2011:368). although these enterprises have been successful in maintaining inventories, their ordering systems and supplier management infrastructure still lack the ability to leverage the real power of inter-connectivity and integration with their suppliers to improve their supply chain performance (ataseven & nair 2017:252; sigal 2006:79). a contribution is made to the existing literature on smes and supplier integration in south africa, particularly in the context of developing countries, which was noted to be scant. secondly, a pioneering attempt was made to apply the configuration theory in order to explain the interrelationships of the research constructs, in which supply chain performance was the ultimate construct. a cross-examination of the extant theory indicates that the configuration theory has been applied in large firms and mostly in developed countries, and to the best knowledge of the researcher, the configuration theory has never been applied in the context of smes in south africa. the findings of this study, therefore, will fill this void that exists in academic literature. the results of this study can be used for organisational planning and possibly policy-making. they are also likely to benefit owners and managers in the sme sector, sme employee’s representatives or trade unions and the government of south africa at large. research theory the theoretical rationale underpinning this study is the configuration theory (miller 1986:233). according to sinha et al. (2005:389), the configuration theory allows for detailed examination of the dimension of supply chain integration and performance. this theory is appropriate because it can handle complicated organisational phenomena from a holistic perspective. the configuration approach involves dominant gestalts or configurations of observable characteristics or behaviours that may lead to an outcome (ward, bickford & leong 1996:599). the configuration theory indicates the need to consider organisational arrangements, that is, configurations, to obtain enhanced performance. therefore, this study considers supplier integration as the configuration of organisational resources to obtain better organisational performance. literature review supplier integration supplier integration refers to the ‘process of interaction and collaboration between the firm and its suppliers to ensure effective flow of supplies’ (zhao et al. 2011:372). other authors define supplier integration as a ‘process of acquiring and sharing technical, operational and financial information and related knowledge’ (narasimhan, swink & viswanathan. 2010). zhao et al. (2008:371) stated that many organisations across the globe are creating co-operative, mutually beneficial partnerships with supply chain partners, owing to increasing global competition (finger, flynn & paiva 2014:821; zhao et al. 2008:371). zhao et al. (2008:371) further stated that companies need to implement supply chain integration to meet the new challenges of the global competitive environment. small and medium enterprises constantly face the problem of on-time delivery (das, narasimhan & talluri 2006:203). through integration with suppliers, smes share order and inventory information with the suppliers. furthermore, supplier integration, which includes proper communication, sharing information and working together with suppliers, can reduce upstream complexity (bustinza et al. 2017:35; das et al. 2006:204). the benefits of supplier integration are that it enhances responsiveness, flexibility and timesaving (boehmke & hazen 2017:163). supplier integration also plays a key role in reducing transaction costs through the reduction of uncertainties and production costs (das et al. 2006:197; flynn, hou & zhao 2010:58; kang et al. 2018:1749; zhao et al. 2008:368). therefore, supplier integration has a positive impact on operational performance (devaraj, krajewski & wei 2007:1119). in supplier integration, opportunistic behaviours are greatly reduced under shared visions and co-operative goals (kanyoma, agbola & oloruntoba 2018:1005; wong, tjosvold & yu 2005:782). supply chain performance supply chain performance is defined as the extended supply chain’s activities in meeting end-customer requirements, including product availability, on-time delivery, and all the necessary inventory and capacity in the supply chain to deliver that performance in a responsive manner. one of the key aspects of successful supply chain performance is co-operation and mutual decision-making between trading partners (botta-genoulaz et al. 2010:834). supply chain integration practices, such as collaboration practices and information exchanges between partners, become essential within any supply chain, as they contribute to increased performance (sakka & botta-genoulaz 2009:1; srinivasan, mukherjee & gaur 2011:268; zhao, feng & wang 2015:162). overall, supply chain performance is recognised as an important factor for improving competitive advantage (amaratunga & baldry 2002:218; chang et al. 2013:35; shou et al. 2018:354). in this study, tangible and intangible supply chain performance measures, as suggested by gunasekaran, patel and tirtiroglu (2001:82) and anvari, nayeri and razavi (2011:63), were considered. conceptual framework and hypotheses the study tested the conceptual framework presented in figure 1. the predictor variable is supplier integration, which is linked to both tangible and intangible supply chain performance. tangible supply chain performance refers to measures of performance, such as cost, profits and cash turnover. the intangible dimensions include satisfaction, lead time and capacity utilisation. figure 1: conceptual framework. it is suggested that, as a result of integration within firms, a positive organisational performance might be enhanced because of sharing of risks; sharing of business information, which includes demand forecasts, inventory level and production planning decisions; as well as synchronising business process (so & sun 2010:474). the relationships between integration and sme performance have been extensively studied (kim 2009:328; kristal, huang & roth 2010:415; lau, yam & tang 2007:1), and these findings confirm that integration can be transformed into competitive capabilities thus contributing to positive supply chain performance. in addition to this, there are other researchers who confirmed the positive significant relationship between supplier integration and supply chain performance (bowersox, closs & stank 1999; flynn et al. 2010; frohlich & westbrook 2001; zhao et al. 2015:78). thus, this study is intended to confirm or disconfirm the findings of this relationship from other researchers. based on the above conceptual framework and the relationship between supplier integration and supply chain performance, the following hypotheses were formulated for testing in the study: h1: supplier integration exerts a positive and significant influence on tangible supply chain performance. h2: supplier integration exerts a positive and significant influence on intangible supply chain performance. the next section discusses the research methodology employed in this study. research methodology research approach and sample a quantitative research methodology was adopted for this study, as according to borrego, douglas and amelink (2009:54), a study of cause and effect relationships amongst different constructs is well suited for a quantitative research strategy. as this study assessed the relationships between supplier integration and supply chain performance, it was appropriate to use a quantitative approach because it would have been very difficult to include all 283 participants in a qualitative research. it was also necessary to generalise the results to other environments of smes, hence the need to choose a quantitative approach. this study also used a quantitative method to assist in establishing the causal relationship or influence of supplier integration and supply chain performance amongst smes. a cross-sectional survey design, which involves a descriptive study of a situation at one specific point in time, was adopted in this study to determine the opinions of owners and managers in smes. a cross-sectional survey offers advantages, such as allowing researchers to collect a large amount of information quickly, and it is usually inexpensive, thereby making it fit for this study. a total of 350 questionnaires were distributed to respondents, of which 294 were returned, and 11 were discarded owing to incomplete responses to different parts of the questionnaire. a total of 283 questionnaires were finally used in the study. the 283 respondents were owners and managers of smes that were based in the gauteng province, south africa. the study only requires inputs from managers and owners of smes because the researcher believed they will provide the most relevant information for the study. as no established database could be found to act as a sample frame, the business telephone directory was used as a starting point to come up with a list of smes in gauteng. telephone calls were made to establish whether these businesses were still in existence, if they qualified to be sme business enterprises in terms of the definition and whether they would grant permission to conduct the study in their organisations. a non-probability sampling method in the form of a convenience sampling technique was employed to select the participants in this study, as there was no single sample frame from which the list of smes could be drawn. a simple random sampling was also adopted to avoid bias. data collection and instrumentation data were collected through a face-to-face survey method using a structured questionnaire. the measurement instruments used in this study were adapted from previous studies. supplier integration was measured using eight items adapted from zhao et al. (2013), and the reliability coefficient alpha was 0.87. supply chain performance was measured using 10 items, adapted from chang et al. (2013), with the reliability coefficient alpha of 0.85. all measurement scales were measured using five-point likert-type scales, anchored by 1 = strongly disagree and 5 = strongly agree. the likert-type scale was chosen because it was very easy to code and analyse directly from the questionnaires, which were distributed to smes for a period of 3 months between may and july 2017. data analysis data were subjected to statistical analysis using the descriptive statistics technique in the form of percentages. regression analysis and correlation was performed using the statistical package for social sciences (spss), version 24.0 for windows. research results biographic information of participating enterprises of the 283 smes that participated in the study, 44.5% (n = 126) of the firms employed between 151 and 200 employees, whilst 37.5% (n = 106) of the firms employed between 101 and 150 employees. the analysis further shows that 27.5% (n = 78) of the firms earn between r20 to r30m in turnover. approximately 37.1% (n = 105) have a turnover of between r30m and r39m per year. males constituted 54.0% (n = 153) and females constituted 46.0% (n = 130) of the sample. those older than 60 years of age comprised 8.1% (n = 23) of the sample. the majority, 43.8%, (n = 124) of the sample, was in the range of 50–59 years. the 40–49 age range comprised 38.9% (n = 110) of the sample. a small percentage, 1.4% (n = 4), was younger than 30 years. exploratory factor analysis the different scales used in the study were tested for unidimensionality through exploratory factor analysis. prior to factor analysis, ‘the bartlett’s test of sphericity and the kaiser-meyer-olkin (kmo) measure of sampling adequacy was computed to establish whether the data were suitable for factor analysis’ (madzimure 2020:4) (see table 1). both tests provided an indication that the data set was suitable for factor analysis. however, four items were deleted from the supply chain performance scales (scp5, scp6, scp8 and scp14) because they had factor loadings below the recommended value of 0.5. the composite reliability (cr), average variance extracted (ave) and cronbach’s alpha were 0.88, 0.84 and 0.89, respectively, for supplier integration. the cr, ave and cronbach’s alpha were 0.93, 0.82 and 0.78, respectively, for tangible supply chain performance. lastly, for intangible supply chain performance, cr was 0.79, ave was 0.82 and cronbach’s alpha was 0.79. table 1: kaiser-meyer-olkin measure of sampling adequacy and barlett’s test. validity and reliability reliability ‘measures the quality of the research instrument used, in this case, the research questionnaire’ (sarantakos 2005:88). reliability in this study was ascertained using cronbach’s alpha coefficient. for the cronbach’s alpha coefficient and the cr, the recommended values should be greater than or equal to 0.70 for each scale (babbie 2013:49). as shown under the explanatory factor analysis, the cronbach’s alpha values for the three scales ranged between 0.78 and 0.89, which were above the recommended value of 0.70 (wade & love 2006), thereby confirming that reliability was satisfactory in this study. the cr ranged from 0.79 to 0.93, which further confirms the reliability of the instrument. validity refers ‘to the degree to which evidence supports any inferences a researcher makes, based on the data’ (mckinney 2011:6). in this study, four validities, namely, face, content, convergent and predictive validities were measured. to ensure face validity, the research study used several experts in scm to judge the questions independently. to ascertain content validity, a pilot study was conducted with a conveniently selected sample of 42 respondents, as recommended by wade and love (2006:135). to ascertain convergent validity, the factor loadings for each item were checked. most of the values were over 0.50, with few very close to 0.5, and were accepted. to check for predictive validity, regression analysis was used. as shown in tables 2 and 3, beta values between the dependent and independent values were positive, indicating that predictive validity was satisfactory in this study (babbie 2013; mckinney 2011). table 2: correlation analysis results. correlations and regression results the association between supplier integration and the two dimensions of supply chain performance was tested using pearson’s correlation. the results are shown in table 2. as revealed in table 2, there were strong positive inter-factor correlations between the three constructs. there was a strong positive and significant correlation between supplier integration and the tangible supply chain performance (r = 0.563; p < 0.01). another strong positive correlation (r = 0.576; p < 0.01) was found between supplier integration and intangible supply chain performance. there was also a strong positive correlation (r = 0.565; p < 0.01) between both dimensions of supply chain performance. the findings of this study suggest that supplier collaboration is a very important factor in influencing supply chain performance in smes. an analysis of the mean scores (table 2) shows that the three constructs had averages varying between 3.80 and 3.91. these scores depict a close inclination towards the agree point on the likert-type scale. this therefore implies that most respondents concurred that the implementation of supplier integration and the performance of the respective sme supply chains were both satisfactory (babbie 2013). regression analysis results to test whether the supplier integration predicted both dimensions of supply chain performance, regression analysis using the ‘enter’ method was applied. two regression models (tables 3 and 4) were computed. the assumptions of regression were fulfilled by testing for multicollinearity in both regression models. the tests proved that variance inflation factors (vif) were below the recommended maximum threshold of 10 and that tolerance values were less than the recommended minimum value of 0.2 for both regression models (o’brien 2007:674). thus, multicollinearity statistics did not indicate a serious threat to this study. table 3: regression model 1: supplier integration and supply chain performance – tangible dimension. table 4: regression model 2: supplier integration and supply chain performance – intangible dimension. as shown in table 3, supplier integration (r2 = 0.317) explained nearly 32% of the variance tangible supply chain performance. as indicated in table 4, supplier integration (r2 = 0.332) explained 33% of the variance tangible supply chain performance. discussion of the results as shown in table 3, supplier integration has a positive and significant relationship with tangible supply chain performance. this study posited a positive influence of supplier integration on tangible supply chain performance, and the results of this study confirmed this relationship. the results of the regression analysis show a positive beta value (β = 0.563; p = 0.000; t = 11.795), which validates the hypothesised positive influence of supplier integration on tangible supply chain performance. hypothesis 1 is therefore supported. table 3 reveals that supplier integration has a positive and significant linear relationship with intangible supply chain performance. this study posited a positive influence of supplier integration on intangible supply chain performance, and the results of this study confirmed that relationship. a positive beta value (β = 0.576; p = 0.000; t = 12.220) validates the hypothesised positive influence that supplier integration has on intangible supply chain performance. hypothesis 2 is therefore supported. the results of this study are consistent with previous findings (childerhouse & towill 2003; giménez & ventura 2005), which show convincing empirical evidence for the relationship between supplier integration and performance. however, some studies (droge et al. 2004; flynn et al. 2010) found different results. the findings of this study suggest that supplier integration is critical in improving firm performance, especially in small business. the results further show the need to co-operate and collaborate with their key suppliers (thus supplier integration) in order to survive, compete, prosper and gain competitive advantage and achieve excellence. conclusion and managerial implications the aim of this study was to examine the influence of supplier integration on supply chain performance. the study considered the tangible and intangible dimensions of supply chain performance. the results of the study suggest that supplier integration is an important factor in influencing supply chain performance in smes. the study suggest that sme owners and managers need to prioritise supplier collaboration by hosting regular workshops, seminars, trainings and meetings to enhance supplier integration because the study shows a strong positive relationship between the constructs. as the study also found the relationship between supplier integration and intangible supply chain performance to be positively significant, it is important for sme owners and management to create further synergies with their key suppliers, as this will enable them to prosper and gain competitive advantage. to co-operate and collaborate more often, forums such as education forums and business forums, amongst other forums, aimed at bringing together all supply chain members to discuss business issues could be created. these discussion forums will have to happen often, as they provide a platform for robust discussions that may lead to enhanced supplier integration, which further boosts sme performance. limitations and suggestions for future research the study focussed only on one province, therefore making it difficult to generalise the results of this study. further research focussing on all nine provinces could provide in-depth information. although this study used supplier integration as the only variable, other variables could be further explored and incorporated into the framework. for example, relationship between marketing variables can enhance firm performance, implying that a potential influence on supply chain performance might exist. future research is needed for examining the relationship between supplier integration, schedule attainment and competitive performance. in this study, supply chain performance was measured by tangible and intangible dimensions. further research could apply different supply chain performance dimensions such as the supply chain operations reference (scor) model, output resources and flexibility, amongst others. acknowledgements the author would like to thank almighty god. competing interests the author has declared that no competing interest exists. author’s contributions i declare that i am the sole author of this research article. ethical consideration this article followed all ethical standards for carrying out research. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references aharonovitz, m.c.s., vieira, j.g.v. & suyama, s.s., 2018, ‘how logistics performance is affected by supply chain relationships’, the international journal of logistics management 29(1), 284–307. https://doi.org/10.1108/ijlm-09-2016-0204 amaratunga, d. & baldry, d., 2002, ‘moving from performance to performance management’, facilities 20(5/6), 217–223. https://doi.org/10.1108/02632770210426701 anvari, g., nayeri, t. & ravazi, p., 2011, ‘supply chain management and its influence on operational performance’, journal of operations and supply chain management 4(2), 56–70. https://doi.org/10.12660/joscmv4n2p56-70 ataseven, c. & nair, a., 2017, ‘assessment of supply chain integration and performance relationships: a meta-analytic investigation of the literature’, international journal of production economics 185, 252–265. https://doi.org/10.1016/j.ijpe.2017.01.007 babbie, e., 2013, the practice of social research, 13th edn., cengage learning custom publishing, wadsworth, ca. basheka, b., oluka, p. & mugurisi, p., 2011, ‘compliance to public procurement reform in developing countries: the conceptual perspective from uganda’, international journal of procurement management 4(5), 535–548. https://doi.org/10.1504/ijpm.2011.042171 boehmke, b.c. & hazen, b.t., 2017, ‘the future of supply chain information systems: the open source ecosystem’, global journal of flexible systems management 18(2), 163–168. https://doi.org/10.1007/s40171-017-0152-x borrego, m., douglas, e.p. & amelick, c.t., 2009, ‘quantitative, qualitative & mixed research methods in engineering education’, journal of engineering education 98(1), 53–66. https://doi.org/10.1002/j.2168-9830.2009.tb01005.x botta-genoulaz, v., campagne, j.p., llerena, d. & pellegrin, c., 2010, supply chain performance: collaboration, alignment and coordination, john wiley & sons, london. bowersox, d.j., closs, d.j. & stank, t.p., 1999, 21st century logistics: making supply chain integration a reality, council of logistics management, michigan state university, east lansing, mi. bustinza, o.f., gomes, e., vendrell-herrero, f. & baines, t., 2017, ‘product–service innovation and performance: the role of collaborative partnerships and r&d intensity’, r&d management 49(1), 33–45. https://doi.org/10.1111/radm.12269 chang, h.h., tsai, y.c. & hsu, c.h., 2013, ‘e-procurement & supply chain performance’, international journal of management 18(1), 34–51. https://doi.org/10.1108/13598541311293168 childerhouse, p. & towill, d.r., 2003, ‘simplified material flow holds the key to supply chain integration’, the international journal of management science 31, 17–27. das, a., narasimhan, r. & talluri, s., 2006, ‘supplier integration – finding an optimal configuration’, journal of operations management 24(5), 563–582. https://doi.org/10.1016/j.jom.2005.09.003 devaraj, s., krajewski, l. & wei, j.c., 2007, ‘impact of e-business technology in operational performance: the role of production information integration in the supply chain’, journal of operations management 25(6), 1119–1216. https://doi.org/10.1016/j.jom.2007.01.002 doern, r., 2009, ‘investigating barriers to sme growth and development in transition environments: a critique and suggestions for developing the methodology’, international small business journal 27(3), 275–305. droge, c., jayaram, j. & vickery, s.k., 2004, ‘the effects of internal versus external integration practices on time-based performance and overall firm performance’, journal of operations management 22, 557–573. fernandes, t. & vieira, v., 2015, ‘public e-procurement impacts in small -&-medium enterprises’, international journal of procurement management 8(5), 587–607. https://doi.org/10.1504/ijpm.2015.070904 finger, a.b., flynn, b.b. & paiva e.l., 2014, ‘anticipation of new technologies: supply chain antecedents and competitive performance’, international journal of operations production management 34(6), 807–828. https://doi.org/10.1108/ijopm-09-2012-0386 flynn, b.b., hou, b. & zhao, x., 2010, ‘the impact of supply chain integration on performance: a contingency & configuration approach’, journal of operations management 28, 58–71. frohlich, m.t. & westbrook, r., 2001, ‘arcs of integration: an international study of supply chain strategies’, journal of operations management 19(2), 185–200. https://doi.org/10.1016/s0272-6963(00)00055-3 giménez, c. & ventura, e., 2005, ‘supply chain management as a competitive advantage in the spanish grocery sector’, international journal of logistics management 14(1), 77–88. https://doi.org/10.1108/09574090310806558 government gazette, 2003, no 26 national small business amendment act, parliament of the republic of south africa, cape town, p. 461, 1–10. gunasekaran, a., patel, c. & tirtiroglu, e., 2001, ‘performance measures and metrics in a supply chain environment’, international journal of operations and production management 21(2), 71–87. https://doi.org/10.1108/01443570110358468 kang, m., yang, m.a., park, y. & huo, b, 2018, ‘supply chain integration and its impact on sustainability’, industrial management data systems 118(9), 1749–1765. https://doi.org/10.1108/imds-01-2018-0004 kanyoma, k.e., agbola, f.w. & oloruntoba, r., 2018, ‘an evaluation of supply chain integration across multi-tier supply chains of manufacturing-based smes in malawi’, international journal of logistics management 29(3), 1001–1024. https://doi.org/10.1108/ijlm-10-2017-0277 karjalainen, k. & kemppainen, k., 2008, ‘the involvement of small-&-medium sized enterprises in public procurement: impact of resource perceptions electronic systems & enterprise size’, journal of purchasing & supply management 19(4), 238–246. https://doi.org/10.1016/j.pursup.2008.08.003 kim, s.w., 2009, ‘an investigation on the direct and indirect effect of supply chain integration on firm performance’, international journal of production economics 119(2), 328–346. https://doi.org/10.1016/j.ijpe.2009.03.007 kristal, m.m., huang, x. & roth, a.v., 2010, ‘the effect of an ambidextrous supply chain strategy on combinative competitive capabilities and business performance’, journal of operations management 28(5), 415–429. https://doi.org/10.1016/j.jom.2009.12.002 lau, a.k.w., yam, r.c.m. & tang, e., 2007, ‘the impacts of product modularity on competitive capabilities and performance: an empirical study’, internal journal of production economics 105(1), 1–20. https://doi.org/10.1016/j.ijpe.2006.02.002 madzimure, j., 2019, ‘the influence of strategic networks and logistics integration on firm performance among small and medium enterprises’, southern african journal of entrepreneurship and small business management 11(1), a282. https://doi.org/10.4102/sajesbm.v11i1.282 madzimure, j., 2020, ‘enhancing supplier integration through e-design and e-negotiation’, southern african journal of entrepreneurship and small business management 12(1), 1–8. https://doi.org/10.4102/sajesbm.v11i1.282 maiga, a.s., 2016, ‘assessing the impact of supply chain integration on firm competitive capability’, international journal of operations research and information systems 7(1), 1–2. https://doi.org/10.4018/ijoris.2016010101 makien, j., kahkonen, a. & lintukangas, k., 2011, ‘e-procurement as a success factor in co-operative purchasing’, journal of public procurement management 4(1), 56–70. maziriri, e.t. & chivandi, a., 2020, ‘modelling key predictors that stimulate the entrepreneurial performance of small and medium-size enterprises (smes) and poverty reduction: perspectives from sme managers in emerging economy’, acta commercii 20(1), 1–15. https://doi.org/10.4102/ac.v20i1.773 mckinney, k., 2011, quantitative analysis and reporting: telling a story with numbers, sage, thousand oaks, ca. miller, d., 1986, ‘configuration of strategy and structure: towards a synthesis’, strategic management journal 7(3), 233–249. https://doi.org/10.1002/smj.4250070305 narasimhan, r., swink, m. & viswanathan, m., 2010, ‘on decision for integration implementation: an examination of complementarities between product-process technology integration and supply chain integration’, decision sciences 41(2), 355–372. https://doi.org/10.1111/j.1540-5915.2010.00267.x o’brien, r.m., 2007, ‘a caution regarding rules of thumb for variance inflation factors’, quality & quantity 41(5), 673–690. https://doi.org/10.1007/s11135-006-9018-6 sakka, o. & botta-genoulaz, v., 2009, a model of factors influencing the supply chain performance, insa de lyon, liesp, pp. 1–6, universitea de lyon, lyon. sarantakos, s., 2005, social research, 3rd edn., macmillan, new york, ny. shou, y., li, y., park, y. & kang m., 2018, ‘supply chain integration and operational performance: the contingency effects of production systems’, journal of purchasing supply management 24(4), 352–360. https://doi.org/10.1016/j.pursup.2017.11.004 sigal, m., 2006, ‘e-procurement diffusion on the supply chain of food service operators: an explanatory study in greece’, information technology & tourism 8(2), 79–90. https://doi.org/10.3727/109830506778001438 sinha, k., kingshuk, k., van de ven, h. & andrew, h., 2005, ‘designing work within and between organisations’, organisational sciences 16(4), 389–408. sme south africa, 2017, why sa smes can expect better prospects in 2017, viewed 04 march 2020, from http://www.smesouthafrica.co.za/17024/3-reasons-sa-smes-can-expect-a-better-2017/. so, s. & sun, h., 2010, ‘supplier integration strategy for lean manufacturing adoption in electronic-enabled supply chains’, supply chain management: an international journal 15(6), 474–487. https://doi.org/10.1108/13598541011080455 srinivasan, m., mukherjee, d. & gaur, a., 2011, ‘buyer-supplier partnership quality and supply chain performance: moderating role of risks, and environmental uncertainty’, european management journal 29(4), 260–271. https://doi.org/10.1016/j.emj.2011.02.004 wade, m.r. & love, s., 2006, ‘development and validation of a perceptual instrument to measure e-commerce performance’, international journal of electronic commerce 10(2), 123–146. https://doi.org/10.2753/jec1086-4415100205 ward, p.t., bikford, d.j. & leong, g.k., 1996, ‘configurations of manufacturing strategy, business strategy, environment and structure’, journal of management 22(4), 597–626. https://doi.org/10.1177/014920639602200404 wong, a.s.h., tjosvold, d. & yu, z.y., 2005, ‘organisational partnerships in china: self-interest, goal independence & opportunism’, journal of applied psychology 90(4), 782–791. zarenda, h., 2013, south africa’s national development plan and its implications for regional development, tralac, stellenbosch. zhao, g., feng, t. & wang, d., 2015, ‘is more supply chain integration always beneficial to financial performance?’, industrial marketing management journal 45, 162–172. https://doi.org/10.1016/j.indmarman.2015.02.015 zhao, l., huo, b., sun, l. & zhao, x., 2013, ‘the impact of supply chain risk on supply chain integration and company performance: a global investigation’, international journal of supply chain management 18(2), 115–131. https://doi.org/10.1108/13598541311318773 zhao, x., huo, b., selen, w. & yeung, j.h.y., 2011, ‘the impact of relationship commitment on the integration between manufacturers and customers in a supply chain’, journal of operations management 29(1–2), 368–388. https://doi.org/10.1016/j.jom.2007.08.002 zhao, x.b., huo, b.b., flynn, b. & yeung, l., 2008, ‘the impact of power and relationship commitment on the integration between manufacturers and customers in a supply chain’, journal of operations management 26(3), 368–388. https://doi.org/10.1016/j.jom.2007.08.002 abstract introduction methodology findings conclusion acknowledgements references appendix 1 appendix 2 about the author(s) melodi botha department of business management, university of pretoria, south africa alex bignotti department of business management, university of pretoria, south africa citation botha, m. & bignotti, a., 2016, ‘internships enhancing entrepreneurial intent and self-efficacy: investigating tertiary-level entrepreneurship education programmes’, southern african journal of entrepreneurship and small business management 8(1), a45. http://dx.doi.org/10.4102/sajesbm.v8i1.45 original research internships enhancing entrepreneurial intent and self-efficacy: investigating tertiary-level entrepreneurship education programmes melodi botha, alex bignotti received: 14 mar. 2016; accepted: 13 apr. 2016; published: 29 sept. 2016 copyright: © 2016. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurship education interventions are deemed effective when they enhance interns’ entrepreneurial intent (ei) and entrepreneurial self-efficacy (ese). notwithstanding the emergence of internship as an experiential learning approach in entrepreneurship education, evidence about their potential to foster ei and ese lacks systemisation. aim: the aim of this study was to determine whether internships enhance ei and ese. furthermore, to what extent south african tertiary institutions include internships in their entrepreneurship and management curricula and the obstacles to such inclusion. setting: south africa has made a concerted effort to insert an entrepreneurship component across tertiary curricula. the evolution of this entrepreneurship component to experiential learning approaches is, however, unclear. methods: a qualitative research approach was followed. firstly, it reviewed empirical evidence for the positive relationship between internships and ei and ese. secondly, it conducted a survey of entrepreneurship and business management programmes at all 23 south african tertiary institutions and content analysed the retrieved information to determine whether such programmes include internships. finally, 10 experts were interviewed to unveil the constraints inhibiting the inclusion of internships in tertiary curricula. results: the results revealed empirical support for the positive influence of internships on both ei and ese. significant lack of inclusion of internships in tertiary curricula in south africa emerged, owing mainly to administrative issues, curriculum re-design challenges, and lack of mentoring capacity. conclusion: tertiary-level entrepreneurship education programmes should include an internship component. the paper suggested that tertiary institutions pilot-test the inclusion of internships with a small number of students and a selected cohort of small business owners. introduction the impact of entrepreneurs, entrepreneurship and small business on economic growth and development is well researched and documented (kibassa 2012:158; mlatsheni & leibbrandt 2011:120; thurik et al. 2008:673). for the economic potential of entrepreneurship to materialise, however, entrepreneurship has to be encouraged, by motivating individuals to become entrepreneurs and equipping them with the right skills to turn ideas into opportunities, and opportunities into successful ventures (peltier & scovotti 2010:515; volery et al. 2013:429). fostering of entrepreneurship has therefore become an accepted wisdom in both economic management and government resolutions (peltier & scovotti 2010:514; vanevenhoven & liguori 2013:316). research has shown that universities play an important role in fostering entrepreneurship (viviers, solomon & venter 2013:2). education is essential, not only to shape the mindsets of the youth but also to provide the skills and knowledge that are central to developing an entrepreneurial culture. a central premise of these statements is that entrepreneurship is not an innate characteristic but a phenomenon. experience and the influence of teachers, parents, mentors and role models all play a role in shaping the development of entrepreneurs (peltier & scovotti 2010:515; volery et al. 2013:429). vanevenhoven and liguori (2013:316) emphasise that individuals should be exposed to entrepreneurship education. these scholars found evidence across 70 countries that entrepreneurship graduates have significantly higher degrees of entrepreneurial motivation than non-entrepreneurship graduates (vanevenhoven & liguori 2013:322). the turbulent environment in which small businesses and entrepreneurs operate, however, requires universities to find hands-on, or experiential, learning approaches to prepare the entrepreneurs of the future (nabi, walmsley & holden 2013:1–2). experiential learning is the process whereby knowledge is created through the acquisition and adaptation of experience: thus knowledge that results from the combination of acquiring and transforming experience (radu lefebvre & redien-collot 2013:370). there has been increasing consideration of new approaches to curriculum pedagogy in universities, particularly in the form of work-integrated learning opportunities that aim to incorporate the workplace setting as a component of higher education (alpert, heaney & kuhn 2009:36; anderson et al. 2012; wan et al. 2013). alpert et al. (2009:37) highlight the fact that internships provide an experience of ‘learning by doing’ in a real business situation, but with guidance and support. students with internship experience gain career advantages in the form of more job offers, less time spent looking for the right job after graduation and increased monetary compensation (gault, leach & duey 2010:85). universities and colleges have been using internships as a means of providing business students with practical experience and preparing them for their future careers (moghaddam 2011:287; viviers et al. 2013:2). however, there seems to be a lack of south african tertiary institutions providing internships to their entrepreneurship students. despite the growing interest in internships by businesses, government and universities, limited scholarly research has been dedicated to the subject of internships in the entrepreneurship field (alpert et al. 2009:37; peltier & scovotti 2010:515). conversely, a considerable number of studies have been conducted on what predicts entrepreneurial behaviour. in this research stream, there is widespread consensus that the construct of entrepreneurial intent (ei) is one of the best predictors of entrepreneurial behaviour (ajzen 1991:181; davidsson 1995:2; krueger & carsrud 1993:196). a branch of this research stream has also investigated the antecedents, or triggering factors, of ei. entrepreneurial self-efficacy (ese), understood as the belief individuals have in their capabilities to perform entrepreneurial tasks and activities (hmieleski & corbett 2008:486), has consistently been found to be an antecedent of ei (kickul et al. 2008:329; wilson, kickul & marlino 2007:397). ese may also mediate the relationship between other antecedent variables and ei (zhao, seibert & hills 2005:1270), and at the same time act as a moderator of these relationships (barnir, watson & hutchins 2011:287; prabhu et al. 2012:573). the research problem there is consensus that entrepreneurially inclined individuals are more likely to start a business and that ese further contributes to the formation of ei (fayolle & liñán 2014:665; kautonen, van gelderen & fink 2013:668; sequeira, mueller & mcgee 2007:288). devising more effective entrepreneurship educational programmes requires a better understanding of the dynamics behind business start-up decisions (liñán, rodríguez-cohard & rueda-cantuche 2011:196). given that the focus in entrepreneurship education is shifting towards experiential learning methods such as internships (fayolle 2013:696), the question arises of whether or not internships enhance ei and ese. to date, studies examining internships as antecedents of ei and ese have been scarce in number and conducted in isolation. taking the ei and ese literature as point of departure, it is postulated that if internships do not increase the level of ei and ese in individuals, then internship-based entrepreneurship education programmes have not been effective. in this paper, entrepreneurship education is broadly defined to include both education and training, which deal with knowledge transfer and skills transfer, respectively. the aim of this paper is to conduct qualitative research by examining the empirical literature on whether or not internships enhance interns’ levels of ei and ese. in order to ground the present study in a south african context, it also conducts a survey approach whereby the information on university-level programmes in south africa is content analysed. this is done to identify which tertiary institutions offer internships as part of their entrepreneurship and business management programmes. (in this paper, ‘tertiary institutions’ in south africa are narrowly defined as south african universities and universities of technology or technikons). the consideration of both entrepreneurship and business management programmes was dictated by the awareness that entrepreneurship education can also be offered as part of a business management programme (martínez et al. 2010:23). since very few entrepreneurship and business management education programmes at tertiary-level in south africa include an internship component, this paper contributes to entrepreneurship education practice by highlighting the role of internships in fostering ei and ese, based on the empirical findings of previous studies. reasons for the exclusion of internships are highlighted and possible solutions are presented. this paper sets off by providing a brief overview of the supporting literature and then formulates research propositions. thereafter, the research methodology is described and the empirical findings presented. the findings and their implications are discussed. lastly, the limitations of the study are presented and recommendations for future research are highlighted. literature review experiential learning in entrepreneurship education notwithstanding the novelty that entrepreneurship represents in the sphere of higher education, it is one of the fastest growing tertiary-education fields, with the number of entrepreneurship degrees and courses multiplying every year (peltier & scovotti 2010:515). recently, providing entrepreneurship education and enhancing interest in and understanding of small businesses have been of increasing interest in higher education (varghese et al. 2012:358). previous studies have examined factors influencing ei, which include intrinsic personality traits, perceived barriers and support, and the socio-political-economic context of entrepreneurship (fayolle, gailly & lassas-clerc 2006:702). in the entrepreneurship education field, the belief that traditional classroom-based teaching methods are inadequate to equip students with the necessary tools and skills to start and run their own business ventures is gaining increasing consensus (varghese et al. 2012:361). as a consequence, traditional teaching methods must be complemented by innovative ways of thinking, diverse skills and new modes of behaviour to develop fully entrepreneurial approaches to education (alpert et al. 2009:36; peltier & scovotti 2010:515; zhao 2013:444). conversely, some studies have observed that experiential internship programmes can have an effect on students’ understanding, attitudes, perceptions, and intentions with regard to entrepreneurship and small businesses (varghese et al. 2012:358; volery et al. 2013:431). from the above discussion, it is evident that traditional teaching methods are not adequate in fostering students’ entrepreneurial behaviour. entrepreneurship education specifically necessitates collaboration between traditional and new innovative approaches to education, one of which is the experiential element offered by internships. internships as a form of experiential learning much has been written about the value of experiential learning (martínez et al. 2010:11; mason & arshed 2013:457). experiential learning theory posits that effective learning occurs when students are actively involved with an experience and then reflect on that experience. the activities involved in experiential learning help students integrate theory and real-world practice (peltier & scovotti 2010:515; pittaway et al. 2011:48). an internship, as mentioned before, is a form of experiential learning. an internship may be defined broadly as a temporary work position with an emphasis on education rather than employment (weible 2009:59). there are varying definitions of internships (moghaddam 2011:287; zhao 2013:445), but they all concur on some core characteristics. for the purposes of this study, an internship is defined as structured and career-relevant work in an external organisation, occurring in a controlled experiential environment, where a student receives academic credit and/or applicable knowledge. ‘learning by doing’, ‘action learning’ and ‘gaining experience’ are seen to be some of the main benefits that students gain and are often judged by students to be superior forms of learning when compared with traditional forms experienced in the curriculum (chen & shen 2012:35; pittaway et al. 2011:53). according to alpert et al. (2009:37), the many benefits of internships have been well documented in several studies. for students, an internship provides an experience of ‘learning by doing’ in a real business situation, but with guidance and support. internships bridge the gap between theory and practice and between classroom education and real-industry life. they provide a more valuable learning experience, enhance the meaning of the academic programme and create feelings of personal and social efficacy (alpert et al. 2009:37; daugherty 2011:470). according to kim and park (2013:72), an internship can provide participants with the opportunity of learning what the industry offers, which may be different from what they learn in the classroom and can certainly influence a student’s career choice in either a positive or negative manner (chen & shen 2012:30; daugherty 2011:470). more specifically, internships in an entrepreneurial venture or small business may foster the intern’s decision to pursue an entrepreneurial career. the experience in this type of internship is likely to have a significant impact on whether students decide to join the organisation and if they eventually aim for a career in that direction (nabi et al. 2013:3; zhao 2013:445). entrepreneurial intent and entrepreneurial self-efficacy the attempt to explain the decision to start a business venture has given rise to a body of research that has investigated the factors triggering this decision. one of the most widely reported factors is the construct of ei. ei may be defined as a conscious awareness and conviction by individuals that they intend to set up a new business venture and plan to do so in the future (buelens & izquierdo 2008:219; james & bell 2013:96). a great part of the research on ei has been derived from early works in the psychological field that focused on understanding human behaviour, such as ajzen’s (1991) theory of planned behaviour, which advances intention as a robust predictor of behaviour. early works in the field of entrepreneurship were also grounded in the construct of ei, such as shapero and sokol’s (1982) entrepreneurial event model, bird’s (1988) ei model and boyd and vozikis’ (1994) model of entrepreneurial intentionality, to name a few. intention-based models have attracted much attention from researchers, as they offer an opportunity to increase our understanding of and predictive ability for entrepreneurship (james & bell 2013:96). studies in the area of student propensity (intentionality) have ranged considerably between narrow personality-trait perspectives to broader perspectives taking into consideration social and environmental influences (de clercq, honig & martin 2012:653–654). according to buelens and izquierdo (2008:219), developing of attitudes and intentions towards entrepreneurship is paramount in business start-up behaviour. business start-up has been viewed as intentional and as best predicted by ei (gird & bagraim 2008:719). business start-up activities are not necessarily restricted to one or the other motivational categories but, in their intentionality dimension, constitute a combination of both the push and pull factors. the journey to entrepreneurship is not a function of a single motivating factor but a combination of them (nabi et al. 2013:9). however, there is evidence that entrepreneurial behaviour is preceded by ei, which is influenced by an individual’s entrepreneurship education (sánchez 2013:448). within the field of research on university students’ business start-up decisions, there is an over-abundance of studies that indicate a relatively high level of ei in the student population. there is still little consensus, however, on how this intention is formed, and research has revealed that different contextual factors may be related to university students’ motivation to start their own businesses, such as formal aspects (higher education courses) or informal ones (family and significant others). the aforementioned formal and informal elements are pivotal regarding business start-up, pulling graduates by affording education and support, as well as pushing graduates by forcing them to consider venture creation in the absence of traditional organisational jobs or high graduate unemployment (nabi et al. 2013:8). james and bell (2013:99), for instance, found that between 30% and 40% of participants in an entrepreneurship education programme had no desire to start a business immediately after completing the programme, whereas 70% of them wished to start a business within 5 to 10 years after the programme. similarly, viviers et al. (2013:10) indicate that there is a shift in favour of entrepreneurship as a career choice 5 years after graduation. these findings indicate that individuals undertaking entrepreneurship education develop ei, but they wish to start a business only in the medium term. it can be postulated that between completing the entrepreneurship education course and starting a business they want to gain some experience, knowledge and confidence. as discussed earlier, internships may successfully provide students with this learning experience before they embark on their own business. in sum, students’ ei is linked to their behavioural attitudes (one of which is wanting to gain experience before starting up), and the internship experience could enhance individuals’ self-confidence and maturity (kim & park 2013:77), fostering students’ ei. by doing this, students become more independent, ambitious and focused on becoming entrepreneurs (daugherty 2011:470; volery et al. 2013:431). these considerations lead to the first proposition. proposition 1: internships as a form of experiential learning enhance students’ ei. a considerable number of studies within the ei literature have investigated the antecedents of ei, or the factors that foster the development of the intention to start a business. the approaches followed by different authors are varied. some authors have focused on the impact on ei of personal characteristics and contextual factors, such as personal traits (de pillis & dewitt 2008), learning orientation and passion for work (de clercq et al. 2012), family business background (drennan, kennedy & redfrow 2005; zellweger, sieger & halter 2011), role models (van auken, fry & stephens 2006), peer influence (falck, heblich & luedemann 2012) and different types of entrepreneurial or other experiences (drennan et al. 2005; quan 2012). other authors (liñán et al. 2011) have based their work on the theory of planned behaviour, also in an educational context (do paço et al. 2011), and have confirmed the validity of this theory in examining how ei is developed. one of the most commonly cited antecedents of ei is ese. self-efficacy is a construct first devised by bandura (1977) in the psychological field, and is understood as the strength of people’s convictions of their own effectiveness in executing the behaviour required to achieve certain outcomes (bandura 1977:79). people with a high level of self-efficacy tend to set challenging goals, persist even in the face of failure and approach difficult tasks as challenges to be mastered rather than issues to be avoided (kibassa 2012:161). in an entrepreneurship context, ese is defined as the belief individuals have in their capability to perform entrepreneurial tasks and activities (hmieleski & corbett 2008:486). many authors have devoted their research efforts to the investigation of the relationship between ei and ese (see for example: barnir et al. 2011; boyd & vozikis 1994; kickul et al. 2008; prabhu et al. 2012; wilson et al. 2007; zhao et al. 2005), and have found ese to relate to the development of ei, as well as to function as both mediator and moderator of the effect of other variables on ei. individuals with higher ese are thus expected to have higher ei. as to the understanding of how ese is developed, it is worth mentioning that bandura (1977:80–83) advocates that self-efficacy can be developed through performance accomplishments and vicarious experience, among other factors. the former refers to a person experiencing success in performing certain behaviour, whereas the latter is concerned with a person’s observation of other people succeeding at a difficult task. both factors strengthen self-efficacy by helping individuals to have a stronger belief in their ability to perform certain tasks successfully. it can be postulated that both performance accomplishments and vicarious experience are enabled by internships, thus allowing for the development of interns’ ese. in fact, internship opportunities, especially in the small or start-up business sector, can benefit students by providing a rich learning experience that models future work environments and allows them to develop valuable skills that will prove beneficial in a variety of professional endeavours (narayanan, olk & fukami 2010:62; varghese et al. 2012:357). moreover, entrepreneurship internships provide a good opportunity to follow an entrepreneur and learn essential skills in starting and running a new business (nabi et al. 2013:3; zhao 2013:445). research has shown that the opportunity to acquire skills and experience achievement through applied internships reinforces ese, which in turn influences ei (narayanan et al. 2010:62; varghese et al. 2012:358). based on the above discussion, this paper investigates whether internships enhance interns’ levels of ese. this leads to the formulation of the second proposition. proposition 2: internships as a form of experiential learning enhance students’ ese. the variables included in the present investigation, and the propositions linking internships to ei and ese, are graphically represented in figure 1. figure 1: conceptual framework of the relationships between internships, ei and ese. the south african government currently spends large sums earmarked for the development of youth entrepreneurship (herrington & kew 2014:47). however, the government initiatives put in place since 1994 have not achieved the desired results, partly because of a widespread lack of awareness among the target population of these initiatives (herrington, kew & kew 2015:40). contextualising the present study in south africa, and based on the above literature review, it can be postulated that internships should be included in entrepreneurship and business management programmes at south african tertiary institutions, as an experiential learning component of entrepreneurship education at tertiary-level education. proposition 3: internships as a form of experiential learning are included in entrepreneurship and business management programmes of south african tertiary institutions. the following section describes the research methodology adopted by the present study, whereby information from the south african tertiary institutions was investigated to verify proposition 3. methodology this paper follows a pragmatist philosophical paradigm, as it is concerned with the practicality of internships with a view to enhancing ei and self-efficacy (saunders & tosey 2012:58). although the pragmatic approach is more used in mixed-method research, the researchers have adopted ‘the scientific notion that social inquiry was able to access the “truth” about the real-world solely by virtue of a single scientific method’ (mertens 2005:26). the relevance of including internships as a component of entrepreneurship and business management curricula at tertiary institutions is only justified by the verification from experience in research of the value of internships in fostering ei and ese. in order to verify the above propositions, this paper followed a qualitative research approach, laid out in three consecutive steps. firstly, it reviewed empirical research to find support for the positive relationship between internships and the constructs ei and ese, using the major online databases for the discipline of entrepreneurship. secondly, it carried out a survey of entrepreneurship and business management programmes at south african tertiary institutions, using publicly available information and telephone communication. the retrieved information was then content analysed to determine whether such programmes include internships in their curricula. finally, 10 experts in the field of entrepreneurship education at tertiary institutions were interviewed in order to understand, (1) the extent to which they were aware of the positive relationship between internships and the development of ei and ese; (2) why internships were included in tertiary-level entrepreneurship education programmes, or if not, why not and (3) what constraints they perceived to exist that might prevent their including internships in tertiary-level entrepreneurship education programmes. the review of empirical literature pertaining to the relationships between internships and ei and ese was conducted through the major online databases for the discipline of entrepreneurship: ebscohost, proquest, emerald and google scholar. the search was set to find sources dating from 2008 to 2014. the choice of conducting the literature review over the past six-and-a-half years of research was dictated by the decision to situate the present study within the most recent discussions about internships as a form of experiential learning in entrepreneurship education. the keyword combinations used in the search were the following: ‘internship’ and ‘entrepreneurial intent’; ‘internship’ and ‘entrepreneurial self-efficacy’; ‘work experience’ and ‘entrepreneurial intentions’; and ‘work experience’ and ‘entrepreneurial self-efficacy’. in order to limit the search to works pertaining to internships, ei and ese specifically, while not restricting the search excessively, the search used the above-mentioned keywords in the ‘abstract’ field. thereafter, 25 sources were deemed to pertain to the subject matter of investigation and were retrieved for further analysis. of these, 18 were journal articles, one was a doctoral thesis, two were conference papers and four were working papers. these data were content analysed to identify whether or not they empirically supported the propositions of this paper. the survey approach entailed a content analysis whereby the entrepreneurship and business management programmes offered at all 23 south african tertiary institutions were investigated. this investigation was performed in order to identify which tertiary institutions include internships as a component of their entrepreneurship and business management curricula. the data was content analysed to substantiate the relevance of internships for entrepreneurship education practice in south africa. university-level entrepreneurship and business management programmes up to master’s level were analysed by referring to online web-based programme brochures. when these were insufficient, telephone interviews were conducted. mba programmes were excluded from the investigation, since they provide education to individuals already in management positions, thus rendering the inclusion of internships redundant. for the interview part of this study, all 23 south african tertiary institutions were contacted. the researchers requested an interview with the person in charge of entrepreneurship and business management curriculum development, or another expert involved in curriculum design, in order to obtain possible reasons for internships not being included in their curricula at their institutions. the trustworthiness of the present qualitative research was guaranteed by (1) the use of precise search criteria in the review of empirical literature; and (2) the adoption of a survey approach whereby the data on university degrees was content analysed; namely, the assessment of whether entrepreneurship and business management degrees include internships in their curricula. these procedures minimised the level of researcher bias present in this paper, thus implementing one of the validation strategies used in qualitative research (creswell 2013:251). findings review of empirical literature the review of empirical studies that provide support for the relationship between internships and interns’ levels of ei and ese is summarised in table 1. eleven sources of the 25 originally identified were discarded, as further analysis revealed that they did not pertain to the present investigation or had not conducted empirical analyses. this led to 14 studies being included in this investigation, all empirically supporting proposition 1 and proposition 2. table 1: literature-based empirical support for propositions. as shown in table 1, out of the 14 studies in support of either or both proposition 1 and proposition 2, 13 studies report a positive influence of internships on the development of ei and six studies support the influence of internships on ese. survey and content analysis of entrepreneurship and business management programmes the survey of the content of entrepreneurship and business management programmes, which used publicly available information and telephone communication, successfully retrieved the content of such programmes for all 23 south african tertiary institutions. a comprehensive reading list of the sources of this survey is available in appendix 2. the survey performed a content analysis of the data relating to the internship component of south african tertiary institutions’ entrepreneurship and business management programmes. the results of this content analysis are outlined in appendix 1. the results reveal that durban university of technology is the only tertiary institution that has a programme including internships as part of its curriculum. interviews with experts in the field of entrepreneurship education the next step involved interviews (personal, telephonic or via email) with the relevant academics in the field of entrepreneurship at the various tertiary institutions in south africa. ten experts in the field of entrepreneurship education at tertiary-level were interviewed; they were affiliated with the following tertiary institutions: central university of technology, stellenbosch university, university of johannesburg, university of pretoria, university of the free state, vaal university of technology, and walter sisulu university. the experts were identified according to the following process: step 1: all 23 south african universities and universities of technology were considered. step 2: a telephonic and internet-based search of the lecturers specialising in entrepreneurship at these tertiary institutions was performed, and 109 entrepreneurship educators were listed. step 3: at least three entrepreneurship educators from each tertiary institution were contacted and asked to participate in an interview on the potential of internships in tertiary-level entrepreneurship and business management programmes to foster ei and self-efficacy. step 4: ten experts agreed to be interviewed. the interviews covered the following aspects, as previously mentioned: (1) the extent to which they are aware of the positive relationship between internships and the development of ei and ese; (2) why internships were included in university-level entrepreneurship education programmes, and if not, why not and (3) what constraints they perceived to exist that might prevent their including internships in university-level entrepreneurship education programmes. academics at the durban university of technology were not, however, available for interviews to provide reasons why they are including internships and the advantages of internships for their students. eight experts acknowledged that they were aware of the positive role played by internships in fostering interns’ ei and ese. as for the reasons why internships are not included in entrepreneurship and business management programmes, interviewee d and interviewee f referred to the lack of a sufficiently vast network of businesses in their geographical area to enable the inclusion of internships in their programmes. (some institutions, despite facing the same challenge, have redesigned their programmes to include compulsory ‘work-integrated learning’, as stated by interviewee c.) interviewee d also mentioned the administrative challenge of finding internships for a large number of students, while interviewee j admitted the lack of enough knowledge to warrant the inclusion of internships and the management thereof. additionally, interviewee g and interviewee i mentioned small business owners’ lack of time and financial resources as major obstacles. lack of administrative and other resources is also a constraint, as stated by interviewee h. it appears from the interviews that some universities – such as stellenbosch university and the university of the free state – support internships, but on an ad-hoc basis. they encourage students to find internships and they support them in securing these positions. the initiative, however, is taken by the students, usually at post-graduate level. finally, interviewees a, b and g highlighted other experiential learning components in their programmes, which are meant to produce the same results – in terms of skills and knowledge development – as internships. these other forms of experiential learning range from having lecturers who have a vast experience in entrepreneurship and business, to creative problem-solving and effectuation learning techniques. from the perspective of students, interviewees e and g attested to an unsatisfactory experience on the part of students who managed to secure an internship. with regard to possible constraints hindering universities from including internships in tertiary-education programmes, most experts mentioned the university’s lack of resources to manage and control internships, issues of curriculum redesign and academic credits, labour legislation constraints, and the lack of willingness and capacity of small business owners to mentor interns. interviewees h, i and j also mentioned that whereas internships in large companies are more readily available, internships in small businesses are not easily found and are essentially different. according to them, the challenge lies in identifying the right internships, which ultimately means knowing which entrepreneur profile is most suited to accommodate an intern successfully. discussion of findings the review of empirical literature conducted in this paper reveals that there is support for the proposition that internships as a form of experiential learning enhance students’ ei (p1). it appears, therefore, that when entrepreneurship education programmes include internships in their curriculum, participants are more likely to develop the intention to start a business. some of the studies analysed in this paper reported empirically about the positive relationship between internships and ei, even outside an entrepreneurship education context. in other words, people who have an internship experience appear to have higher ei, even though they are not part of a formal entrepreneurship education intervention. this is in line with previous research about the impact of previous work experience on start-up intentions and activities (gabrielsson & politis 2012; kemelgor, d’souza & henley 2011). the review of empirical literature also provides evidence for the support of the proposition that internships as a form of experiential learning enhance students’ ese (p2). this means that the hands-on experience gained during internships helps students to have a higher level of confidence in their capabilities to start and run their own business. this finding confirms the argument that internships are an effective learning method whereby participants acquire a greater knowledge of and confidence in the professional field underlying the internship experience (kuijpers, meijers & gundy 2011:26). moreover, as can be noted in table 1, most of the studies that empirically support the positive role of internships for the formation of ese also give empirical evidence for the positive influence that internships have on ei. this finding can be attributed to the fact that ese does not lead to entrepreneurial behaviour – such as business start-up activities – directly, but it influences entrepreneurial behaviour through its impact on ei (kickul et al. 2008; wilson et al. 2007; zhao et al. 2005). the implication for theory of these findings is that internships should be included in eiand ese-based models of entrepreneurial behaviour as one of the factors influencing these two constructs. as this paper’s review of empirical literature reveals, few studies have analysed the influence of internship on the development of ei and ese (alpert et al. 2009:37; peltier & scovotti 2010:515). the relevance of internships for enhancing ei and ese in a south african context was corroborated by the university-level entrepreneurshipand business management education survey whereby the data was content analysed in this paper. the results reveal that only one tertiary institution, the durban university of technology, includes internships as part of its curriculum. proposition 3 is thus only supported in the case of the durban university of technology, one out of 23 south african tertiary institutions. there is a significant lack of inclusion of internships as a form of experiential learning in south african tertiary-level entrepreneurship and business management education programmes. for practice, these findings imply that entrepreneurshipand business management education programme administrators at south african tertiary institutions should devise an experiential learning module based on an internship experience. from a student’s perspective, the findings of this study suggest that a more effective acquisition of ei and ese can be gained in university programmes that include an internship as part of the curriculum. the interviews conducted with experts in the field of entrepreneurship education at tertiary-level revealed that there is widespread awareness of the positive role played by internship in enhancing interns’ ei and ese. in light of this, the prevalent lack of inclusion of internships in university entrepreneurship and business management programmes seems contradictory. however, a number of reasons for this lack emerged from the interviews, pertaining mainly to administrative and conceptual difficulties. administrative issues include: tertiary institutions’ lack of sufficient internal resources – human and financial – to scout, manage and control internships; difficulty in finding internships for all enrolled students due to lack of enough small businesses; and challenges related to curriculum redesign. conceptual reasons for not including internships pertain mainly to some experts’ belief that there are other experiential learning curriculum components that are at least as effective as internships and easier to administer. the constraints that were mentioned by the experts attest to the difficulty – mainly administrative – in successfully integrating internships into university programmes. another considerable constraint is small business owners’ lack of capacity to mentor interns successfully. one possible solution to administrative challenges would be to pilot-test the inclusion of internships in a university programme with a manageable number of students. in this way, finding a number of suitable internships corresponding to the number of students would be more achievable. moreover, such an initiative would not require significant investment in terms of academic staff and time. finally, this solution would allow for establishing a stable relationship with a few, carefully selected, small business owners. this pilot-test inclusion of internships could be scaled up once it was established and had produced the intended results. conclusion the understanding of how ei can be fostered lies at the heart of research in the entrepreneurship field. following the first steps in the psychological study of human behaviour by ajzen (1985) and bandura (1977), many entrepreneurship scholars have studied entrepreneurial behaviour and, more specifically, business start-up decisions from the perspective of intention. within this branch of entrepreneurship research, ei is widely viewed as a robust predictor of the decision to start a business venture, with ese being one of the most cited antecedents of ei. entrepreneurship education offers another angle from which the promotion of business venture start-up can be examined. the number of entrepreneurship education programmes has multiplied in recent years (peltier & scovotti 2010:515) based on the realisation that entrepreneurship can be taught (kuratko 2005:580). the focus in this field, as in other educational fields, has shifted to experiential learning methods, including internships, which, because of the first-hand experience and exposure to entrepreneurship they provide, are believed to be effective in enabling and encouraging people to start their own businesses (zhao 2013:445). bringing together the intention-based and entrepreneurship education perspectives, this paper addressed one specific aspect of the formation of business start-up decisions, namely, whether or not internships enhance interns’ ei and ese levels. it conducted a review of empirical literature and investigated the results of empirical studies on the relationship between internships, on the one hand, and ei and ese on the other. thereafter, it followed a survey approach which content analysed the information on which south african universities offer entrepreneurship and business management programmes up to master’s level, and whether they include internships in their curricula. finally, it conducted interviews with experts in the field to assess the level of awareness about the potential of internships to raise interns’ ei and ese, understand the reasons why internships are or are not included in university programmes, and to explore the possible constraints faced when considering including internships in university curricula. the findings of this qualitative research are that there is empirical support for the positive influence of internships on the development of interns’ ei and ese. it was also found that there is a significant lack of inclusion of internships in south african tertiary institutions’ entrepreneurship and business management programmes. the reasons for this lack of inclusion of internships pertain mainly to tertiary institutions’ administrative capacity issues; difficulties in scouting, managing and controlling internship programmes for students; issues with curriculum redesign; and small business owners’ lack of capacity to mentor interns. in the light of the results of this paper, it is recommended that university-level entrepreneurship education programmes in south africa include internships as part of their curricula. it is suggested that tertiary institutions pilot-test the inclusion of internships with a small number of students and a selected cohort of carefully selected small business owners. limitations and future research as for all qualitative research studies, the findings of this paper should be interpreted taking into account certain limitations. firstly, the literature review methodology employed could have excluded some empirical studies, owing to the search criteria that were utilised. some studies may also have been overlooked on account of some degree of subjectivity on the part of the researchers in retrieving studies that were deemed relevant to the present analysis. the relatively small number of empirical studies on the topic of internships and their impact on interns’ ei and ese that were found in this study gives an indication of the research gap that exists in this field. there is a need to conduct more empirical investigations into the positive role that internships play in fostering ei and ese. this recommendation stems from the results of the literature review (table 1) conducted in this paper, which encompassed the global domain of entrepreneurship and thus affects the entire body of research on the topic of this paper. a meta-analysis could be conducted on all the studies on this topic to test the relationship between internships, ei and self-efficacy even further. more specifically, research on this topic needs to move forward to the investigation of what internship components make internships more effective in promoting the formation of ei and ese. this would encourage research that could contribute to the understanding of how to devise internship experiences that effectively increase interns’ levels of ei and ese. more evidence on the positive influence of internship experiences on the formation of ei and ese would corroborate the earlier conclusion that internships should be part of entrepreneurship education programmes. bearing in mind that ei and ese do not always translate into entrepreneurial behaviour in the form of starting a business venture (ajzen 1985:11; boyd & vozikis 1994:70), future research should investigate the possible mechanisms according to which internships may contribute to people’s start-up activities. for this type of analysis to take place, it is necessary that longitudinal studies be conducted, measuring both the development of ei and ese in the short term and business start-up activities in the long term. in order to situate the analysis of the role of internships in enhancing levels of ei and ese in the context of entrepreneurship education at university-level, future research could compare the levels of ei and ese of students enrolled in internship-inclusive entrepreneurship programmes with those of students enrolled in traditional entrepreneurship programmes. finally, with the objective of identifying and sharing best practices in the inclusion of internships in university programmes, future research could conduct case study investigations of the tertiary institutions – in south africa and outside of south africa – that have successfully integrated internships in their curricula. acknowledgements the authors acknowledge nokumuka dube for providing part of the background study to this paper. competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions the authors collaborated during the literature-study, analysis and article-writing phases of this paper. m.b. was the project leader, formulating the concept and devising the structure of the paper. a.b. was responsible for the review of empirical literature and survey approach. both authors conducted interviews with experts in the field of entrepreneurship education. references ajzen, i., 1985, ‘from intentions to actions: a theory of planned behavior’, in j. kuhl & j. beckmann (eds.), action control: from cognition to behavior, springer, heidelberg, germany. ajzen, i., 1991, ‘the theory of planned behavior’, organizational behavior and human decision processes 50(2), 179–211. http://dx.doi.org/10.1016/0749-5978(91)90020-t alpert, f., heaney, j. & kuhn, k.l., 2009, ‘internships in marketing: goals, structures and assessment – student, company and academic perspectives’, australasian marketing journal 17(1), 36–45. http://dx.doi.org/10.1016/j.ausmj.2009.01.003 anderson, e., johnston, n., iles, l., mcrae, n., reed, n. & walchli, j., 2012, ‘co-operative education and student recruitment, engagement and success: early findings from a multi-institutional study in british columbia’, journal of co-operative education and internships 46, 58–76. backes-gellner, u. & moog, p., 2008, who chooses to become an entrepreneur? the jacks-of-all-trades in social and human capital. working paper no. 76, institute for strategy and business economics, university of zurich, viewed 25 november 2013, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1091089 bandura, a., 1977, social learning theory, prentice-hall, englewood cliffs, nj. barnir, a., watson, w.e. & hutchins, h.m., 2011, ‘mediation and moderated mediation in the relationship among role models, self-efficacy, entrepreneurial career intention, and gender’, journal of applied social psychology 41(2), 270–297. http://dx.doi.org/10.1111/j.1559-1816.2010.00713.x basu, a. & virick, m., 2008, ‘assessing entrepreneurial intentions amongst students: a comparative study’, paper presented at the 12th annual meeting of the national collegiate inventors and innovators alliance, dallas, 20–22th march, 79–8, viewed 21 november 2013, from http://www.nciia.net/conf08/assets/pub/basu2.pdf bignotti, a., 2013, ‘factors relating to entrepreneurial career choice of secondary school students’, doctoral thesis, department of business management, university of pretoria, viewed 23 may 2014, from http://hdl.handle.net/2263/33489 bird, b., 1988, ‘implementing entrepreneurial ideas: the case for intention’, academy of management review 13(3), 442–453. boyd, n.g. & vozikis, g.s., 1994, ‘the influence of self-efficacy on the development of entrepreneurial intentions and actions’, entrepreneurship theory and practice 18(4), 63–77. buelens, m. & izquierdo, e., 2008, ‘competing models of entrepreneurial intentions: the influence of entrepreneurial self-efficacy and attitudes’, international journal of entrepreneurship and small business 13(1), 75–91. chen, t. & shen, c., 2012, ‘today’s intern, tomorrow’s practitioner? – the influence of internship programmes on students’ career development in the hospitality industry’, journal of hospitality, leisure, sport & tourism education 11(1), 29–40. http://dx.doi.org/10.1016/j.jhlste.2012.02.008 creswell, j.w., 2013, qualitative inquiry and research design: choosing among five approaches, 3rd edn., sage publications, thousand oaks, ca. cruz, n.m., escudero, a.i.r., barahona, j.h. & leitao, f.s., 2009, ‘the effect of entrepreneurship education programmes on satisfaction with innovation behaviour and performance’, journal of european industrial training 33(3), 198–214. http://dx.doi.org/10.1108/03090590910950578 daugherty, e.l., 2011, ‘the public relations internship experience: a comparison of student and site supervisor perspective’, public relations review 37(5), 470–477. http://dx.doi.org/10.1016/j.pubrev.2011.09.010 davidsson, p., 1995, ‘determinants of entrepreneurial intentions’, paper presented at the rent ix workshop, piacenza, 23–24th november, pp. 1–31, viewed 18 april 2013, from http://eprints.qut.edu.au/2076/ de clercq, d., honig, b. & martin, b., 2012, ‘the roles of learning orientation and passion for work in the formation of entrepreneurial intention’, international small business journal 31(6), 652–676. http://dx.doi.org/10.1177/0266242611432360 de grez, l. & van lindt, d., 2012, ‘the influence of a “learning-by-doing” program on entrepreneurial perceptions of economics students’, paper presented at the european conference on innovation and entrepreneurship, santarem, 21th september, pp. 156–162, viewed 27 november 2013, from http://0-search.proquest.com.innopac.up.ac.za/docview/1325746851/141ff1ce905621ad190/2?accountid=14717 de pillis, e. & dewitt, t., 2008, ‘not worth it, not for me? predictors of entrepreneurial intention in men and women’, journal of asia entrepreneurship and sustainability 4(3), 1–13. dohse, d. & walter, s.g., 2010, the role of entrepreneurship education and regional context in forming entrepreneurial intentions. working paper no. 2010/18, institut d’economia de barcelona, viewed 25 november 2013, from http://www.econstor.eu/handle/10419/59753 do paço, a.m.f., ferreira, j.m., raposo, m., rodrigues, r.g. & dinis, a., 2011, ‘behaviours and entrepreneurial intention: empirical findings about secondary students’, journal of international entrepreneurship 9(1), 20–38. http://dx.doi.org/10.1007/s10843-010-0071-9 drennan, j., kennedy, j. & redfrow, p., 2005, ‘impact of childhood experiences on the development of entrepreneurial intentions’, international journal of entrepreneurship and innovation 6(4), 231–238. http://dx.doi.org/10.5367/000000005775179801 dutta, d.k., li, j. & merenda, m., 2010, ‘fostering entrepreneurship: impact of specialization and diversity in education’, international entrepreneurship and management journal 7(2), 163–179. http://dx.doi.org/10.1007/s11365-010-0151-2 falck, o., heblich, s. & luedemann, e., 2012, ‘identity and entrepreneurship: do school peers shape entrepreneurial intentions?’, small business economics 39(1), 39–59. http://dx.doi.org/10.1007/s11187-010-9292-5 fayolle, a., 2013, ‘personal views on the future of entrepreneurship education’, entrepreneurship & regional development 25(7–8), 692–701. http://dx.doi.org/10.1080/08985626.2013.821318 fayolle, a., gailly, b. & lassas-clerc, n., 2006, ‘assessing the impact of entrepreneurship education programmes: a new methodology’, journal of european industrial training 30(9), 701–720. http://dx.doi.org/10.1108/03090590610715022 fayolle, a. & liñán, f., 2014, ‘the future of research on entrepreneurial intentions’, journal of business research 67(5), 663–666. http://dx.doi.org/10.1016/j.jbusres.2013.11.024 gabrielsson, j. & politis, d., 2012, ‘work experience and the generation of new business ideas among entrepreneurs: an integrated learning framework’, international journal of entrepreneurial behaviour and research 18(1), 48–74. http://dx.doi.org/10.1108/13552551211201376 gault, j., leach, e. & duey, m., 2010, ‘effects of business internships on job marketability: the employers’ perspective’, education + training 52(1), 76–88. http://dx.doi.org/10.1108/00400911011017690 gird, a. & bagraim, j.j., 2008, ‘the theory of planned behaviour as predictor of entrepreneurial intent amongst final-year university students’, south african journal of psychology 38(4), 711–724. http://dx.doi.org/10.1177/008124630803800410 herrington, m. & kew, j., 2014, gem south africa 2013 report, global entrepreneurship monitor, cape town, viewed 16 may 2014, from http://www.gemconsortium.org/docs/3336/gem-south-africa-2013-report herrington, m., kew, j. & kew, p., 2015, gem south africa 2014 report, global entrepreneurship monitor, cape town, viewed 11 may 2015, from http://www.gemconsortium.org/docs/3778/gem-south-africa-2014-report hmieleski, k.m. & corbett, a.c., 2008, ‘the contrasting interaction effects of improvisational behavior with entrepreneurial self-efficacy on new venture performance and entrepreneur work satisfaction’, journal of business venturing 23(4), 482–496. http://dx.doi.org/10.1016/j.jbusvent.2007.04.002 james, b. & bell, j., 2013, ‘evaluating the effects of business pre-planning coursework on student entrepreneurial intentions’, small business institute national conference proceedings 37(1), 96–103. kautonen, t., van gelderen, m. & fink, m., 2013, ‘robustness of the theory of planned behavior in predicting entrepreneurial intentions and actions’, entrepreneurship theory and practice 39(3), 655–674. http://dx.doi.org/10.1111/etap.12056 keat, o.y., selvarajah, c. & meyer, d., 2011, ‘inclination towards entrepreneurship among university students: an empirical study of malaysian university students’, international journal of business and social science 2(4), 206–220. kemelgor, b.h., d’souza, r. & henley, g., 2011, ‘the dynamics of entrepreneurial entry and firm performance of first career and second career entrepreneurs as mediated by prior knowledge’, southern journal of entrepreneurship 4(2), 18–45. kibassa, f.m., 2012, ‘small business research: upon finding definitions of entrepreneurship, entrepreneur and small firms’, european journal of business and management 4(15), 158–167. kickul, j., wilson, f., marlino, d. & barbosa, s.d., 2008, ‘are misalignments of perceptions and self-efficacy causing gender gaps in entrepreneurial intentions among our nation’s teens?’, journal of small business and enterprise development 15(2), 321–335. http://dx.doi.org/10.1108/14626000810871709 kim, h. & park, e.j., 2013, ‘the role of social experience in undergraduates’ career perceptions through internships’, journal of hospitality, leisure, sport & tourism education 12(1), 70–78. http://dx.doi.org/10.1016/j.jhlste.2012.11.003 krueger, n.f.j. & carsrud, a.l., 1993, ‘entrepreneurial intentions: applying the theory of planned behaviour’, entrepreneurship and regional development 5(4), 315–330. http://dx.doi.org/10.1080/08985629300000020 kuijpers, m., meijers, f. & gundy, c., 2011, ‘the relationship between learning environment and career competencies of students in vocational education’, journal of vocational behavior 78(1), 21–30. http://dx.doi.org/10.1016/j.jvb.2010.05.005 kuratko, d.f., 2005, ‘the emergence of entrepreneurship education: development, trends, and challenges’, entrepreneurship theory and practice 29(5), 577–597. http://dx.doi.org/10.1111/j.1540-6520.2005.00099.x lazear, e.p., 2005, ‘entrepreneurship’, journal of labor economics 23(4), 649–680. http://dx.doi.org/10.1086/491605 liñán, f., rodríguez-cohard, j.c. & rueda-cantuche, j.m., 2011, ‘factors affecting entrepreneurial intention levels: a role for education’, international entrepreneurship and management journal 7(2), 195–218. http://dx.doi.org/10.1007/s11365-010-0154-z lucas, w.a., cooper, s.y., ward, t. & cave, f., 2009, ‘industry placement, authentic experience and the development of venturing and technology self-efficacy’, technovation 29(11), 738–752. http://dx.doi.org/10.1016/j.technovation.2009.06.002 maina, r.w., 2011, ‘determinants of entrepreneurial intentions among kenyan college graduates’, kca journal of business management 3(2), 1–18, viewed 22 november 2013, from http://www.ajol.info/index.php/kjbm/article/view/65968 martínez, a.c., levie, j., kelley, d.j., saemundsson, r.j. & schøtt, t., 2010, global entrepreneurship monitor special report: a global perspective on entrepreneurship education and training, global entrepreneurship monitor, london, viewed 17 may 2014, from http://www.gemconsortium.org/docs/276/gem-special-report-on-education-and-training mason, c. & arshed, n., 2013, ‘teaching entrepreneurship to university students through experiential learning: a case study’, industry and higher education 27(6), 449–463. http://dx.doi.org/10.5367/ihe.2013.0180 mertens, d.m., 2005, research methods in education and psychology: integrating diversity with quantitative and qualitative approaches, 2nd edn., sage publications, thousand oaks, ca. mlatsheni, c. & leibbrandt, m., 2011, ‘youth unemployment in south africa: challenges, concepts and opportunities’, journal of international relations and development 14(1), 118–126. moghaddam, j.m., 2011, ‘perceived effectiveness of business internships: student expectations, experiences, and personality traits’, international journal of management 28(4), 287–303. nabi, g., walmsley, a. & holden, r., 2013, ‘pushed or pulled? exploring the factors underpinning graduate start-ups and non-start-ups’, journal of education and work 28(5), 481–506. http://dx.doi.org/10.1080/13639080.2013.805189 narayanan, v.k., olk, p.m. & fukami, c.v., 2010, ‘determinants of internship effectiveness: an exploratory model’, academy of management learning & education 9(1), 61–80. http://dx.doi.org/10.5465/amle.2010.48661191 peltier, w. & scovotti, c., 2010, ‘enhancing entrepreneurial marketing education: the student perspective’, journal of small business and enterprise development 17(4), 514–536. http://dx.doi.org/10.1108/14626001011088705 pittaway, l., rodriguez-falcon, e., aiyegbayo, o. & king, a., 2011, ‘the role of entrepreneurship clubs and societies in entrepreneurial learning’, international small business journal 29(1), 37–57. http://dx.doi.org/10.1177/0266242610369876 prabhu, v.p., mcguire, s.j., drost, e.a. & kwong, k.k., 2012, ‘proactive personality and entrepreneurial intent: is entrepreneurial self-efficacy a mediator or moderator?’, international journal of entrepreneurial behaviour & research 18(5), 559–586. http://dx.doi.org/10.1108/13552551211253937 quan, x., 2012, ‘prior experience, social network, and levels of entrepreneurial intentions’, management research review 35(10), 945–957. http://dx.doi.org/10.1108/01409171211272679 radu lefebvre, m. & redien-collot, r., 2013, ‘“how to do things with words”: the discursive dimension of experiential learning in entrepreneurial mentoring dyads’, journal of small business management 51(3), 370–393. http://dx.doi.org/10.1111/jsbm.12022 sánchez, j.g., 2013, ‘the impact of an entrepreneurship education program on entrepreneurial competencies and intention’, journal of small business management 51(3), 447–465. http://dx.doi.org/10.1111/jsbm.12025 saunders, m. & tosey, p., 2012. ‘the layers of research design’, rapport winter (2012/2013), 58–59. sequeira, j., mueller, s. & mcgee, j., 2007, ‘the influence of social ties and self-efficacy in forming entrepreneurial intentions and motivating nascent behavior’, journal of developmental entrepreneurship 12(3), 275–293. http://dx.doi.org/10.1142/s108494670700068x shapero, a. & sokol, l., 1982, ‘the social dimensions of entrepreneurship’, in: c.a. kent, d.l. sexton & k.h. vesper (eds.), encyclopedia of entrepreneurship, prentice-hall, englewood cliff, nj. thurik, a.r., carree, m.a., van stel, a. & audretsch, d.b., 2008, ‘does self-employment reduce unemployment?’, journal of business venturing 23(6), 673–686. http://dx.doi.org/10.1016/j.jbusvent.2008.01.007 van auken, h., fry, f.l. & stephens, p., 2006, ‘the influence of role models on entrepreneurial intentions’, journal of developmental entrepreneurship 11(2), 157–167. http://dx.doi.org/10.1142/s1084946706000349 vanevenhoven, j. & liguori, e., 2013, ‘the impact of entrepreneurship education: introducing the entrepreneurship education project’, journal of small business management 51(3), 315–328. http://dx.doi.org/10.1111/jsbm.12026 varghese, m.e., parker, l.c., adedokun, o., shively, m., burgess, w., childress, a., et al., 2012, ‘experiential internships: understanding the process of student learning in small business internships’, industry and higher education 26(5), 357–367. http://dx.doi.org/10.5367/ihe.2012.0114 viviers, s., solomon, g. & venter, c., 2013, ‘entrepreneurial intentions and behaviours of south african university students’, the southern african journal of entrepreneurship and small business management 6, 1–20. http://dx.doi.org/10.4102/sajesbm.v6i1.30 volery, t., müller, s., oser, f., naepflin, c. & del rey, n., 2013, ‘the impact of entrepreneurship education on human capital at upper-secondary level’, journal of small business management 51(3), 429–446. http://dx.doi.org/10.1111/jsbm.12020 walter, s.g. & dohse, d., 2009, the interplay between entrepreneurship education and regional knowledge potential in forming entrepreneurial intentions. working paper no. 1549, kiel institute for the world economy, kiel, germany, viewed 22 july 2014, from http://www.econstor.eu/handle/10419/28376 wan, c.s., yang, j.t., cheng, s.y. & su, c., 2013, ‘a longitudinal study on internship effectiveness in vocational higher education’, educational review 65(1), 36–55. http://dx.doi.org/10.1080/00131911.2011.634969 wang, y. & verzat, c., 2011, ‘generalist or specific studies for engineering entrepreneurs? comparison of french engineering students’ trajectories in two different curricula’, journal of small business and enterprise development 18(2), 366–383. http://dx.doi.org/10.1108/14626001111127124 weible, r., 2009, ‘are universities reaping the available benefits internship programs offer?’, journal of education for business 85(2), 59–63. http://dx.doi.org/10.1080/08832320903252397 wilson, f., kickul, j. & marlino, d., 2007, ‘gender, entrepreneurial self-efficacy, and entrepreneurial career intentions: implications for entrepreneurship education’, entrepreneurship theory and practice 31(3), 387–406. http://dx.doi.org/10.1111/j.1540-6520.2007.00179.x zellweger, t., sieger, p. & halter, f., 2011, ‘should i stay or should i go? career choice intentions of students with family business background’, journal of business venturing 26(5), 521–536. http://dx.doi.org/10.1016/j.jbusvent.2010.04.001 zhao, h., 2013, ‘turning small business interns into applicants: the mediating role of perceived justice’, journal of business venturing 28(3), 443–457. http://dx.doi.org/10.1016/j.jbusvent.2011.08.003 zhao, h., seibert, s.e. & hills, g.e., 2005, ‘the mediating role of self-efficacy in the development of entrepreneurial intentions’, journal of applied psychology 90(6), 1265–1272. http://dx.doi.org/10.1037/0021-9010.90.6.1265 appendix 1 table 1-a1: survey results of south african tertiary institutions’ entrepreneurship and business management programmes appendix 2 sources of survey of university programmes cape peninsula university of technology. n.d. diplomas and degrees. [online] available from: http://www.cput.ac.za/academic/faculties/business/prospectus [accessed: 2014-07-23]. central university of technology. 2014, department of business management. [online] available from: http://www.cut.ac.za/departments/department-of-business-management/ [accessed: 2014-07-23]. central university of technology. n.d. prospectus 2014. [online] available from: http://www.cut.ac.za/wp-content/uploads/2013/04/prospectus-2014-final.pdf [accessed: 2014-07-23]. durban university of technology. 2014. career information, national diploma: management. [online] available from: http://ddt72ar9zv4px.cloudfront.net/wp-content/uploads/career_leaflets/mansci%20management.pdf [accessed: 2014-07-23]. durban university of technology. n.d.a. bachelor of technology: management. [online] available from: http://www.dut.ac.za/sites/default/files/bsu/bachelor_technology_management_(btech).pdf [accessed: 2014-07-23]. durban university of technology. n.d.b. handbook for 2014, faculty of management sciences, department of entrepreneurial studies and management. [online] available from: http://www.dut.ac.za/sites/default/files/handbooks/mansci%20entrepren%20studies%20and%20mgt.pdf [accessed: 2014-07-23]. durban university of technology. n.d.c. short courses. [online] available from: http://www.dut.ac.za/sites/default/files/bsu/short_courses.pdf [accessed: 2014-07-23]. mangosuthu university of technology. n.d. faculty of management sciences. [online] available from: http://www.mut.ac.za/faculties/managementsciences. [accessed: 2014-07-23]. nelson mandela metropolitan university. n.d. degrees, diplomas & certificate. [online] available from: http://www.nmmu.ac.za/courses-on-offer/degrees,-diplomas-certificates [accessed: 2014-07-21]. north-west university. 2014a. faculty of economic and management sciences, qualifications undergraduate. [online] available from: http://www.nwu.ac.za/p-fems/undergrade.html [accessed: 2014-07-21]. north-west university. 2014b. postgraduate studies. [online] available from: http://www.nwu.ac.za/postgraduate-programmes-potchefstroom#businessman [accessed: 2014-07-21]. north-west university. n.d. economic and management sciences. [online] available from: http://www.nwu.ac.za/sites/www.nwu.ac.za/files/files/p-prospective_students/eng_faculty_booklets/economic.pdf [accessed: 2014-07-21]. rhodes university. 2014a. commerce degree structure. [online] available from: http://www.ru.ac.za/admissiongateway/application/curriculumselection/commerce/#d.en.71115 [accessed: 2014-07-22]. rhodes university. 2014b. postgraduate gateway. [online] available from: http://www.ru.ac.za/postgraduategateway/gateway/ [accessed: 2014-07-22]. stellenbosch university. n.d.a. 2015 all in one undergraduate prospectus. [online] available from: http://www.maties.com/assets/prospectus/eng_prospectus.pdf [accessed: 2014-07-22]. stellenbosch university. n.d.b. faculty of economic and management sciences, calendar 2013, part 10. [online] available from: http://stbweb01.stb.sun.ac.za/university/jaarboek/2013/2013_web_ems.pdf [accessed: 2014-07-22]. tshwane university of technology. n.d.a. baccalaureus technologiae: business administration. [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/btech_businessadministration.pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.b. baccalaureus technologiae: management. [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/btech_management.pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.c. magister technologiae: entrepreneurship. (structured). [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/mtech_entrepreneurship(structured).pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.d. national diploma: entrepreneurship. [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/ndip_entrepreneurship.pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.e. national diploma: entrepreneurship. (extended curriculum programme with foundation provision). [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/ndip_entrepreneurship(extended).pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.f. national diploma: management. [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/ndip_mangement.pdf [accessed: 2014-07-23]. tshwane university of technology. n.d.g. national diploma: management. (extended curriculum programme with foundation provision). [online] available from: http://www.tut.ac.za/prospectus/2014/pdf/6/management%20and%20entrepreneurship/ndip_management(extended).pdf [accessed: 2014-07-23]. university of cape town. 2014a. faculty of commerce, postgraduate studies. [online] available from: http://www.uct.ac.za/downloads/uct.ac.za/apply/handbooks/handbook6bcommercepostgraduatestudies2014.pdf [accessed: 2014-07-23]. university of cape town. 2014b. faculty of commerce, undergraduate studies. [online] available from: http://www.uct.ac.za/downloads/uct.ac.za/apply/handbooks/handbook6acommerceundergraduatestudies2014.pdf [accessed: 2014-07-22]. university of cape town graduate school of business. 2014. learning programmes. [online] available from: http://www.gsb.uct.ac.za/s.asp?p=28 [accessed: 2014-07-22]. university of fort hare. n.d. faculty of management and commerce. [online] available from: http://www.ufh.ac.za/files/faculty%20of%20management%20and%20commerce%20-%20accounting%20prospectus%20entry.pdf [accessed: 2014-07-23]. university of johannesburg. 2014. faculty of management, rules and regulations, undergraduate and postgraduate. [online] available from: http://www.uj.ac.za/en/faculties/documents/fom%20faculty%20rules%20and%20regulations%202014%20management%20final%2028.11.13.pdf [accessed: 2014-07-22]. university of kwazulu-natal. 2009. postgraduate diploma in entrepreneurship. [online] available from: http://gsbl.ukzn.ac.za/programmes/postgraduate-diplomas/pgdipentrepreneurship.aspx [accessed: 2014-07-23]. university of kwazulu-natal. n.d.a. entrepreneurship. [online] available from: http://management.ukzn.ac.za/libraries/postgraduate_programmes/entrepreneurship.sflb.ashx [accessed: 2014-07-23]. university of kwazulu-natal. n.d.b. management. [online] available from: http://management.ukzn.ac.za/libraries/postgraduate_programmes/management.sflb.ashx [accessed: 2014-07-23]. university of kwazulu-natal. n.d.c. postgraduate application guide 2014. [online] available from: http://applications.ukzn.ac.za/libraries/prospectus/2014_postgraduate_application_guide.sflb.ashx [accessed: 2014-07-23]. university of kwazulu-natal. n.d.d. postgraduate diploma programmes. [online] available from: http://management.ukzn.ac.za/libraries/postgraduate_programmes/postgraduate-diploma.sflb.ashx [accessed: 2014-07-23]. university of kwazulu-natal. n.d.e. undergraduate prospectus 2015. [online] available from: http://applications.ukzn.ac.za/files/2015%20undergraduate%20prospectus.pdf [accessed: 2014-07-23]. university of limpopo. 2013. economics and management offers. [online] available from: http://www.ul.ac.za/index.php?entity=economics%20and%20management [accessed: 2014-07-23]. university of pretoria. n.d.a. economic and management sciences 2014. [online] available from: http://web.up.ac.za/sitefiles/file/publications/2014/yearbooks/ems_undergraduate_yearbook-2014(eng).pdf [accessed: 2014-07-23]. university of pretoria. n.d.b. economic and management sciences 2014, postgraduate. [online] available from: http://web.up.ac.za/sitefiles/file/publications/2014/yearbooks/economic_and_management_sciences-(postgraduate)-2014.pdf [accessed: 2014-07-23]. university of south africa. n.d.a. master’s and doctoral studies. [online] available from: http://www.unisa.ac.za/qualificationsmd/ [accessed: 2014-07-22]. university of south africa. n.d.b. undergraduate and honours studies, college of economic and management science. [online] available from: http://www.unisa.ac.za/qualifications/index.asp?link=http://www.unisa.ac.za/qualifications/navigation/alph_3_99.html [accessed: 2014-07-22]. university of the free state. 2014a. faculty of economic and management sciences, bloemfontein campus, undergraduate, rule book 201. [online] available from: http://apps.ufs.ac.za/dl/yearbooks/221_yearbook_eng.pdf [accessed: 2014-07-23]. university of the free state. 2014b. faculty of economic and management sciences, postgraduate, rule book 2014. [online] available from: http://apps.ufs.ac.za/dl/yearbooks/223_yearbook_eng.pdf [accessed: 2014-07-23]. university of the free state. 2014c. faculty of economic and management sciences, qwaqwa campus, undergraduate, rule book 2014. [online] available from: http://apps.ufs.ac.za/dl/yearbooks/222_yearbook_eng.pdf [accessed: 2014-07-23]. university of the free state business school. 2014. faculty of economic and management sciences, business school rules 2014. [online] available from: http://apps.ufs.ac.za/dl/yearbooks/225_yearbook_eng.pdf [accessed: 2014-07-23]. university of the western cape. 2013a. prospectus, current postgraduate and research focuses. [online] available from: http://prospectus.uwc.ac.za/educate/research-post-grad/current-postgraduate-studies-and-research-focuses/ [accessed: 2014-07-23]. university of the western cape. 2013b. prospectus, faculty of economic and management sciences. [online] available from: http://prospectus.uwc.ac.za/educate/faculty-of-economic-and-management-sciences/ [accessed: 2014-07-23]. university of the witwatersrand. n.d.a. guide for applicants 2014, commerce, law and management. [online] available from: http://www.wits.ac.za/files/9l8dh_164396001359705025.pdf [accessed: 2014-07-23]. university of the witwatersrand. n.d.b. postgraduate programmes 2014/2015, faculty of commerce, law and management. [online] available from: http://www.wits.ac.za/files/o90ag_472767001399021082.pdf [accessed: 2014-07-23]. university of venda. n.d. student brochure. [online] available from: http://www.univen.ac.za/docs/univenstudentbrochure2014low.pdf [accessed: 2014-07-23]. university of zululand. n.d.a. faculty of commerce, administration and law, postgraduate programmes. [online] available from: http://www.unizulu.ac.za/images/postgraduate%20programmes.pdf [accessed: 2014-07-23]. university of zululand. n.d.b. faculty of commerce, administration and law, undergraduate programmes. [online] available from: http://www.unizulu.ac.za/images/undergraduate%20programmes.pdf [accessed: 2014-07-23]. vaal university of technology. 2014. faculty of management sciences. [online] available from: http://www.vut.ac.za/images/stories/admissions/management%20science%20booklet%202014.pdf [accessed: 2014-07-23]. walter sisulu university. n.d. prospectus 2014, faculty of business, management sciences and law. [online] available from: http://www.wsu.ac.za/wsuv1/img/fbmsl%20prospectus%202014%20low-res.pdf [accessed: 2014-07-23]. wits business school. 2014. mm in entrepreneurship and new venture creation. [online] available from: http://www.wbs.ac.za/programmes/degrees/mm_in_entrepreneurship_and_new_venture_creation [accessed: 2014-07-23]. abstract introduction literature review aim and objectives research design results discussion of findings conclusion and recommendations acknowledgements references about the author(s) thabisile mhlongo department of leadership and complexity, faculty of management sciences, durban university of technology, durban, south africa preeya daya graduate school of business, university of cape town, cape town, south africa citation mhlongo, t. & daya, p., 2023, ‘challenges faced by small, medium and micro enterprises in gauteng: a case for entrepreneurial leadership as an essential tool for success’, southern african journal of entrepreneurship and small business management 15(1), a591. https://doi.org/10.4102/sajesbm.v15i1.591 original research challenges faced by small, medium and micro enterprises in gauteng: a case for entrepreneurial leadership as an essential tool for success thabisile mhlongo, preeya daya received: 08 july 2022; accepted: 29 nov. 2022; published: 04 apr. 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: traditional approaches to managing and leading in entrepreneurial systems, founded on traditional, reductionist and linear thinking, could have issues coping with the inherent uncertainties, complexity and dynamics of such circumstances. entrepreneurial leadership is acknowledged as an important competency that entrepreneurs could adopt to enhance their leadership development and competitive and sustainable growth for their businesses. aim: this research study sought to evaluate leadership challenges that affect the performance and the gauteng province’s small, medium and micro enterprises (smmes) sustainability. setting: this study focuses on smmes in the gauteng province. methods: in this qualitative study, a systems dynamics approach was used to explore the impact of the various leadership problems and dynamics influencing the smme performance in the gauteng province. semi-structured interviews were conducted with 46 entrepreneurs, followed by creating causal loop diagrams to understand how system variables and components produce behaviours in interactive patterns within the entrepreneurial system. results: findings of the study revealed that smmes consistently suffer from relatively high levels of failures and lower performance levels caused by: (1) a lack of entrepreneurial leadership skills, (2) a lack of financial resources and/or finances, (3) a lack of financial education, (4) infrastructure constraints, (5) a lack of training, (6) a lack of technology and (7) crime and corruption. conclusion: this study highlights that the entrepreneurial context in south africa is dynamic and complex in nature and is limited by entrepreneurial leadership capabilities and a weak understanding of the business environment. contribution: this study employs a system dynamics approach that entrepreneurs can use to understand and solve important, complex socio-economic and sustainability problems that they encounter. keywords: entrepreneurs; smmes; systems thinking; system dynamics; causal loops; leadership; entrepreneurial leadership. introduction small, medium and micro enterprises (smmes) are recognised as essential contributors to growth in developing, economic development and developed countries (amra, hlatshwayo & mcmillan 2013; moise, khoase & ndayizigamiye 2020). muriithi (2017) contends that enterprises account for over 90% of businesses in both developed and emerging economies via job creation, employment, taxation and contribution to gross domestic products (gdp). small, medium and micro enterprises play a significant role in developing countries and offer solutions to unemployment, poverty and low-income challenges. small, medium and micro enterprises influence the national output, job creation, poverty reduction and elimination of economic inequality in numerous economies worldwide (organisation for economic cooperation and development [oecd] 2018). small, medium and micro enterprises are considered as the backbone and heartbeat of a country’s economy (bvuma & marnewick 2020; karagiorgos et al. 2020; leboea 2017). small, medium and micro enterprises face various obstacles, from a lack of available talent to problems optimising their value chains, implementing new ideas and running their businesses (telukdarie et al. 2022). almost 90% of businesses operating in south africa are regarded as smmes and account for over 80% of the economy’s employment and more than 50% of south africa’s (gdp) (petersen, bruwer & mason 2020). ndou (2014) and chimucheka (2013) observe that the south african government has recognised the significance of smmes to the south african economy. similarly, bhorat et al. (2018) indicate that the government has recognised the growth of smmes as a potentially sustainable solution for eliminating poverty and reducing inequality through creating employment opportunities. entrepreneurs are an essential source of job creation with long-term positive externalities realised through increased employment growth rates and incomes earned. notwithstanding the south african government’s efforts to promote entrepreneurship via laws, strategies and programmes, many smmes continue to be unsustainable (cant & wiid 2016) resulting from the numerous challenges that they face. studies have revealed that compared with other developing nations, south africa has one of the higher failure rates for smmes, with a failure rate of between 60% and 80% during the first and second years of business (leboea 2017; mthabela 2015). these findings reveal the daily challenges and bottlenecks that smmes face, which influence their sustainability. lampadarios (2015) and nkonge (2013) observe that the systemic and continued failure rate of smmes harms the economy in the short and long run. fonseca et al. (2012) point out that the business environment in south africa is very dynamic and affirms that the high failure rate and low entrepreneurial activity among smmes suggest inadequate entrepreneurial leadership capabilities and an insufficient understanding of the business environment. literature review the contribution of small, medium and micro enterprises in an economy small, medium and micro-sized companies play a significant role in net exports, employment creation, poverty eradication and the decrease of income inequality in many nations throughout the world. they also contribute to economic growth (zulu 2021). the importance of smmes in the south african setting is still at the forefront of policy deliberations, according to mohamed, yasseen and nkhi (2020), particularly given that smmes help to expedite socio-economic growth. in continued attempts to enhance smme growth, the south african government has produced a number of relevant policy interventions outlined in the national development plan. for instance, in 2014, the department of small business development (dsbd) played a vital role in the government’s initiatives to accelerate economic change by fostering the creation of competitive, sustainable entrepreneurs, small enterprises and cooperatives (mnguni 2018). the dsbd promotes small businesses in navigating the legal and administrative system and enhances efficient access to financial markets. before establishing the dsbd, the government previously offered the necessary support to smmes through capital funding and business incubations. equally, the department of trade and industry (dti) formulated a series of steps to encourage smmes’ growth by providing several organisational support and development processes or services. the national development plan (ndp) highlights the role smmes play in economic growth, removal of inequalities and poverty reduction. in continued attempts to enhance smme growth, the ndp committed to create approximately 11 million job opportunities required in south africa by 2030 to the smme sector and equally decrease the unemployment rate by approximately 6% (mnguni 2018). of concern is that smmes in the country continue to face an inimical business environment (bowmaker-falconer & herrington 2020). with the increase in unemployment rates in south africa, it is imperative to offer the necessary support to smmes to reduce unemployment (bhorat et al. 2018; bushe 2019; herrington, kew & kew 2015; herbst & gills 2015). challenges in the entrepreneurial system in south africa studies reveal that when compared with other developing nations, south africa has one of the highest failure rates for smmes, with a failure rate of between 60% and 80% during the first and second years of business (leboea 2017; mthabela 2015). the high failure rate can be linked to the entrepreneurial climate, which is not beneficial to the expansion and growth of businesses (matekenya & moyo 2022). the 2015 smme growth index headline results indicate that external factors and challenges impeding small business growth include arduous regulation high labour expenses, a lack of funding, challenging local economic circumstances, high municipal costs, poor service delivery and increased competition. mazzarol (2015) and koryak (2015) have shown that the lack of managerial experience and skills, low entrepreneurial culture and obstacles to market access are some notable reasons responsible for the failure of smmes. according to kongolo (2010), insufficient institutional support and financial resources have an impact on the sustainability and effectiveness of south african smmes. this is supported by van de vrande et al. (2009), who explain that in comparison with larger enterprises, smmes have weaker connections with other organisations, making it harder for them to get the information required to sustain their objectives (dodourova & bevis 2014). the challenges to the sustainability of smmes can be linked to poor management and leadership skills attributed to a lack of leadership experience and inadequate training and education, which affects technical and management competence (chimucheka 2013; hossain 2015). the actual world is unclear and complicated, which presents a variety of difficulties for business people (gregory & miller 2011). managers are challenged by the interconnection of people, ideas and beliefs as they attempt to ‘make sense’ of the world around them. entrepreneurs must recognise the complexity of the environment they operate in today and recognise that there is no ‘easy’ way to overcome the difficulties they confront (caldwell, harris & renko 2012). the strategic models on which management choices are based, according to rajagopal (2012:209), ‘need to be more comprehensive than ever, owing to a closer coupling among diverse components of the environment’. to reach this outcome, the ability of business people to think holistically and address systemic issues is to be improved. this can be performed by broadening the understanding of systems thinking and of systems in entrepreneurial contexts. entrepreneurial leadership leadership is an important entrepreneurial skill because it ensures that action is strategically directed to enabling the required outcomes. good leadership has been identified as one of the essential factors contributing to smes’ success (madanchia et al. 2016b). according to abdelkafi and täuscher (2015), leadership is a component or method that motivates groups of people to achieve a common objective. however, smme failure is primarily because of inadequate and subpar leadership abilities (razak 2011). one of the most significant issues confronting smmes in terms of management and technical knowledge was attributed to the lack of leadership abilities (mhlongo 2021). poor management abilities caused by insufficient training and education and a lack of business sustainability skills might be connected to the absence of a long-term business success vision (sustainable initiatives) in smmes (adendorff, emuze & vilakazi 2013; hogeforster 2014; kalane 2015; leboea 2017; ngibe & lekhanya 2019). it is also said that smmes lack the knowledge and resources to implement the necessary organisational reforms (singh & wasdani 2016). according to hashim, ahmad and zakaria (2012), it is becoming harder for executives to manage their firms in the 21st century successfully. as a result of its potential to help one recognise their value in the entrepreneurial process, leadership is significant as an entrepreneurial behaviour. as such, fostering innovation and adapting to shifting environments is essential (mamun, fazal & muniady 2019; renko et al. 2015). as a result of the complicated and non-linear nature of organisations, it is not possible to establish a single, practical theory of leadership or leadership effectiveness (osborn & marion 2009). leadership in entrepreneurship (use of leadership to provide successful entrepreneurship in driving a business to success) has been identified as an important skill that company owners might use to create sustainable and competitive growth for their companies (lubis 2017). leitch and volery (2017) emphasise the need to consider the cognitive, interpersonal and social complexity of leadership in smmes and the necessity to grasp the mechanisms that would explain results. according to leitch and volery (2017), studying and comprehending entrepreneurial leadership is necessary to further the field’s knowledge of small enterprises. the autonomous areas of entrepreneurship and leadership are seen to be converging and the blending of ideas from the two professions has resulted in the creation of a new, all-encompassing construct known as ‘entrepreneurial leadership’ (cogliser & brigham 2004; fernald, solomon & tarabishy 2005). balogun, bartunek and do (2015) define leadership in entrepreneurship as a distinct type of leadership that predominantly concentrates on dealing with challenges and complex matters and crises in organisational settings. for the authors, the notion of entrepreneurship leadership thus stems from a process whereby people who pursue entrepreneurial intentions and opportunities work collaboratively with others, using different cognitive methods to understand and respond to systems. davids (2012) states that the four key entrepreneurial leadership strategies include attention by vision, importance via communication, trust via placement and confidence via respect as the cornerstone of entrepreneurial leadership success. these models are essentially connected to leadership behaviour, which seeks to integrate appropriate leadership philosophies with appropriate degrees of development for each person to achieve specific goals (ebere & fragouli 2015). leitch and volery (2017) and renko et al. (2015) identify three approaches to the entrepreneurial leadership theory. according to the first theory, entrepreneurial leadership is a procedure that an entrepreneur participates in because it is a development of the area of entrepreneurship (leitch & volery 2017). this theory states that an entrepreneurial leader is an entrepreneur who can seize opportunities, take calculated risks and inspire a group of followers (leitch & volery 2017). the second perspective views an entrepreneurial leader as a typical leader with an entrepreneurial spirit and attitude, regardless of the organisation he works for, even if that organisation is enormous. this view relates entrepreneurial leadership to the area of leadership (leitch & volery 2017; renko et al. 2015). the final strategy places entrepreneurial leadership at the intersection of business and leadership. entrepreneurs are leaders by definition, and their leadership style is authentic leadership (leitch & volery 2017). harrison, agnew and serido (2015) recognise that context is essential when studying entrepreneurial leadership because models, ideas and analytical frameworks that work well in one field could not work in another. even though entrepreneurial leadership is a relatively new concept, simba and thai (2018) claim that it has been used to identify management development and growth-related problems in small enterprises. it is recognised as a leadership style developed to create strategic wealth (gupta, macmillan & surie 2004). this perspective has been expanded and emphasises the significance of identifying and seizing business opportunities (hejazi, maleki & naeiji 2012; renko et al. 2015). for the entrepreneurial activities to assist the development of more vital skills, resulting in organisational performance, entrepreneurial leadership strongly focuses on adopting a strategic approach to entrepreneurship. management is practical and geared at resolving issues and adding value to the marketplace (surie & ashley 2008). therefore, entrepreneurial leadership may be defined as a style of leadership that an entrepreneurial leader employs while taking business risks, being proactive and coming up with new ideas. entrepreneurial leaders tend to be creative, driven by success, enthusiastic, quick to seize opportunities and imaginative and the main objective (davids 2012). the entrepreneurial leadership skills provide entrepreneurs with personal competencies and skills to be cognisant of the changes in the global and local business environment, together with the effective inception and/or transferal of the individual smme values and strategies among the company’s team members, at all levels. to do this, entrepreneurs must know their strengths, weaknesses and leadership styles, as well as know what they eventually want to accomplish. entrepreneurs should make the most of their strengths to expand and develop their companies while gaining a competitive edge and long-lasting building enterprises (palalic et al. 2017). entrepreneurial leadership helps company owners to build new ideas and spot possibilities to see a prosperous future for their companies. systems thinking approaches the very complicated and dynamic business environment continues to be a problem for smmes, as seen by their comparatively high failure rates and subpar performance levels (maani & cavana 2007). the problems brought on by the rapid advancement of economic, technical, social and environmental development also contribute to the complexity of the corporate environment (maani & cavana 2007). the dynamic complexity of the business environment must be appropriately recognised and dealt with if smmes are to achieve their targeted goals and remain sustainable over the long run. to successfully handle these dynamic complexities and comprehend how the framework of complex systems, such as an entrepreneurial system causes system complexities, entrepreneurs must be skilled in systems thinking. according to balogun, agumba and ansary (2018), for smmes to generally improve their contribution to the economy of the nation and job creation, south africa must create an enabling environment and entrepreneurial system that enables entrepreneurs to grow. for the sector to reach its claimed potential, studies that aim to strengthen smmes’ resilience and their entrepreneurial leadership competencies (such as systems thinking skills) are important. through systems thinking intervention by business owners, the growing failure rates of smmes observed in the research may be significantly reduced. however, one of the biggest challenges that policymakers face is how to devise appropriate strategies and policies for smmes that could attain business sustainability in highly complex and dynamic entrepreneurial contexts. with the help of systems thinking, entrepreneurs may have the solution to the existing business challenges through engagement in holistic and non-reductionist thought processes. to ensure the survival and sustainable growth of small businesses in dynamic environments, understanding the system dynamics and system thinking approach that should be applied in dealing with distinct factors attributed to entrepreneurs’ leadership skills remains central. following rashed, deluyi and daud (2015), tofighi, teymourzadeh and ghanizadeh (2017) and afzal, siddiqui and dutta (2018), entrepreneurial complexities are best viewed and analysed using dynamic systems approaches. system dynamics abdelkefi and täuscher (2016) consider system dynamics a strategic approach or technique for re-organising complex systems and examining their behaviours. rengkung (2018) describes system dynamics as a modelling mechanism that examines necessary resources and abilities in a particular system for assessing and understanding the complex systems in which changes happen within the business environment over time. the most commonly employed model in system dynamics includes causal loop diagrams (clds) and stock-and-flow diagrams (sfds). causal loop diagram indicates a causal loop among the distinct groups of components and/or variables, whereas sfd is designed from the cld to focus on the physical structures (rengkung 2018). in system dynamics, the focus is always on understanding how system variables and components produce behaviours in interactive patterns within a system. system dynamics have formulated specific patterns and symbols to represent them; the variables and feedback loops take centre stage. naidoo (2015) argues that system dynamics offers an approach for mapping and modelling scenarios that happen in the real world in distinct and described settings. monat and gannon (2015) argue that the behaviour of components in the height of systems thinking offers counterintuitive; therefore, system dynamics and modelling are incorporated to improve the general understanding of the system’s behaviours over time. abdelkefi and täuscher (2016) believe that the system dynamics process enables modelling and simulating through integrating feedback loops of those same systems. including the real-scenario feedback loops allows entrepreneurs to alter the system to attain a competitive advantage compared with their competitors and improve overall business performance. business organisations are often established to solve one or more socio-economic issues, making the system dynamics approach critical. this can be accomplished through understanding the system’s dynamic structure that captures detailed facts, human response, sources of information and other direct and indirect factors, thus giving entrepreneurs an in-depth understanding of the status of the business and its complexities (tang & vijay 2011). the simulations established from the system dynamics models assist in coming up with suitable organisational policies and processes, enabling the business leaders to decompose a complex characteristic or social system into distinct elements, then coalescing them again to be envisioned and analysed to distinguish the eventual effects. aim and objectives this study sought to investigate leadership challenges in the entrepreneurial system that impact smmes’ performance and sustainability in the gauteng province. the study also intended to broaden the understanding of how a systems dynamics approach can be applied in entrepreneurial leadership towards addressing the complex dynamics faced by entrepreneurs in the entrepreneurial system. as such, the study aimed to explore the research questions: how the leadership challenges and complexities interact with each other in an entrepreneurial system and what constitutes an integrated conceptual system model that captures the systemic feedback loops, processes and structures governing the system behaviour? research design the data and findings reported here were part of a larger research project, which adopted a holistic system thinking approach and pragmatic technique, based on a mixed-methods research method comprising semi-structured interview and system dynamics modelling strategy. this article reports only on the qualitative component of the study, and in particular, the data and findings related challenges faced by smmes in gauteng province. researchers ought to select a research design to achieve the research’s goal; it is also critical to select an appropriate research design. according to leedey and ormrod (2015), a study design is a structure or plan used to collect and analyse data. furthermore, the research design is the overall strategy for the study (saunders, lewis & thornhill 2016). according to saunders et al. (2016) and sekaran and bougie (2017), there are six research designs: explanatory research design, experimental research design, causal research design, correlational research design and descriptive research design. an exploratory research design was used in this study. ‘an exploratory investigation is performed when nothing is known about the situation at hand or no information is accessible on how similar problems or research topics have been managed in the past’ (sekaran & bougie 2016:103). research approach in this qualitative study, the approach was deemed suitable to investigate phenomena in a particular context. in this case, it was used to investigate leadership challenges within the entrepreneurial context to understand the existing problem better. inductive methodology and interpretivism philosophy are often linked to qualitative research (saunders et al. 2016). according to interpretivist epistemology, social interaction produces all knowledge and reality. they are produced because of interactions between people and their surroundings, and reality is connected to the social context (green 2017). an inductive approach in a research study concerns the context in which a phenomenon occurs. the study began with semi-structured qualitative interviews and created clds. we used clds to show we empirical findings from smme entrepreneur interviews and workshop discussions. the cld approach is frequently used to demonstrate the causal links between various interacting variables, time delays, non-linear effects and feedback loops. it is an appropriate investigative approach for such scenarios (sterman 2000). to use this method, the entrepreneurs’ stories or narratives were reviewed from interviews and workshop discussions to identify the primary variables that emerge from the data and construct causal relationships between variables. setting the study’s population consisted of smmes from the cities of johannesburg, ekurhuleni and tshwane in the gauteng province. these smmes belonged to different sectors, including agriculture, mining and quarrying, manufacturing, electricity, gas and water construction, retail and motor trade, repair services, wholesale trade, catering, accommodation and other trade, transport, storage and communications, finance and business services, community and social and personal services. study population and sampling strategy newman, newman and newman (2011) define the study’s sample as ‘a small set of cases a researcher selects from a large pool and generalises to the population’. the purposive sampling technique was used to select 46 entrepreneurs who were in business over 1 year. the inclusion criteria were that the entrepreneurs needed to reside in the gauteng province and operate a business from either the cities of johannesburg, ekurhuleni or tshwane. purposive sampling, one of the most common sampling techniques for qualitative designs, was used in the study and is very popular among researchers in the social sciences (mack et al. 2005). the sample size of this study was large enough to provide a deep understanding of challenges within the entrepreneurial system and the creation of clds and modelling phases of the research process. data collection to collect rich data, semi-structured interviews were performed with 46 entrepreneurs. a semi-structured interview is a popular qualitative data-collecting approach. according to bryman (2008), semi-structured interviews are best suited to studies in which certain lines of inquiry must be examined while allowing the interviewee to provide subtlety, commentary and new themes for consideration. the purpose of the interview was to elicit respondents’ perspectives on the leadership problems that entrepreneurs encounter in their entrepreneurial environments. data analysis to convert the interview data to cld, the researcher followed the processes outlined by sterman (2000). during the first step of data collection, participants were asked to evaluate the entrepreneurial system’s leadership problems and complexity. basic clds were created based on the critical factors during the coding process. the second phase involved further analysis of the interview data and workshop discussions to determine the causal relationships between topics. the clds were then refined by specifying specific correlations between variables to explain variations in performance over time. these were then combined into unified diagrams with a single set of feedback mechanisms capable of describing the many behavioural patterns observed in this research. as the model evolved, we examined each connection in the cld to see whether the apparent relationship was validated by field data or previous research. this stage assisted us in ensuring that the model was founded on the acquired data and adhered to the main principles of decision-making and strategic management literature. ethical considerations ethical clearance to conduct this study was obtained from the durban university of technology faculty of management sciences research ethics committee (no. 3/18frec). the key ethical issues for this study were maintaining participants’ anonymity by securely, discreetly keeping data and writing up the findings in a way that did not reveal identifying characteristics. participants received comprehensive information about the research and were told they may leave at any moment without being penalised. before data collection, the researcher’s university’s research ethics committee authorised the project. results results and findings from the information gathered from semi-structured interviews and the data analysis are outlined in this section. this study highlighted a variety of internal variables that provide leadership problems, including crime and corruption: (1) a lack of financial resources or finance, (2) a lack of human resources, (3) insufficient financial education, (4) infrastructure restrictions, (5) insufficient training, (6) insufficient technology and (7) poor entrepreneurial leadership qualities. the interview data and critical factors were subsequently examined to determine the causal relationships between themes. these themes and connections served as the foundation for the development of clds. causal loop diagrams are possibly the most widely used system visualisation, communication and modelling tools in system dynamics. they may be used to develop a preliminary causal hypothesis for the subject under investigation and simplify the model’s depiction (sterman 2000; tsai & coyle 2002). feedback loops can be either reinforcing (virtuous or nasty) or balanced (stabilising or goal seeking). the relationship between the number of births and population increase is an example of a positive correlation. figure 1 indicates that all else being equal, more births result in a larger population, whereas fewer births result in a smaller population. figure 1: a causal loop diagram. this relationship is shown in figure 1 by adding a ‘+’ sign to the arrowhead. there is a negative correlation between the population growth and the number of deaths. a lower population results from more deaths, and a higher population results from fewer deaths. variables were categorised into clds as they were determined by the main themes that developed from the information. a comprehensive sd model was produced after these clds were combined and the connections across the several loops were determined. the combined and merged system model presents the merged loops in the leadership and entrepreneurial strategies depicted in figure 2. figure 2: the merged model. the model comprises 12 reinforcing loops (rl) and 7 balancing loops (bl), namely finance, operations, the external environment and communication are the major components of the merged model. the diagrams depicting the loops were developed using vensim system and they represent the research findings as depicted in figure 2. the individual clds are discussed here. figure 3 presents the environmental complexity and change causal loop depicting the difficulties of contemporary leadership, the continuation of traditional viewpoints on producing entrepreneurs and the growing divide between entrepreneurs and management leadership capabilities required to respond to business challenges and traditional leadership approaches prove futile. in the face of traditional leadership’s inability to deal with complex challenges, leading to increasing complexity. when it comes to solving complex problems, traditional ways of leading are not good (norcini et al. 2018). this is because according to norcini et al. (2018) traditional leadership approaches can neither meet evolving requirements nor align with them. figure 3: the environmental complexity and change causal loop diagram. the dynamics of regulatory compliance are depicted in figure 4, which shows that while the widespread availability of funds and adequate economic resources are essential to the growth of smmes, regulatory compliance is also an essential factor. however, entrepreneurs have to contend with stringent regulatory policy and related challenges within their context relating to insufficient institutional support. the loop highlights that the pressures imposed on the entrepreneurs to comply with the regulation in the face of limited resources (rl 3) and insufficient institutional support (rl 4) impacts their level of compliance (bl 1). one of the main things that negatively affect the advancement and growth of smmes was the way the enterprise legislative environment worked. some government rules in south africa are seen as a danger to the smme industry (viviers & muller 2004). therefore, entrepreneurs cannot reach their goals because of constraints such as ‘red tape’ and bureaucracy rules that are hard to follow and other taxes that make their workload heavier. figure 4: the regulatory compliance causal loop diagram. figure 5 reveals the managerial competence dynamics highlighting the impact of available financial resources on level of investment in managerial training and education and technology, which impact on the managerial competency (rl 5) and effective use of technology (rl 6) and ultimate business growth. there is little evidence that entrepreneurs are being trained in managerial competencies (mohammed & obeleagu-nzelibe 2014). figure 5: the managerial competence causal loop diagram. the lack of technology and leadership skills among smme managers and owners can be described by the fact that they do not have enough money for education and training, which impacts managerial competency and business growth (arasti, zandi & bahmani 2014; cho & gumeta 2015; zarefard & beri 2017). figure 6 depicts the capacity and productivity loop, which highlights the impact of financial constraints on investment in technology, and the ripple effect that this has on the business capacity and productivity (bl 2), employee motivation (bl 3), financial probity (bl 4) and incidence of theft and fraud (bl 5). insufficient investment in technology negatively influences capacity and productivity in the business also affects employee motivation, capacity and productivity. this ultimately exposes businesses to unethical conduct, the risk of incidence of theft and fraud. technology is significant to entrepreneurship in the same way that it is vital to the progress of smmes. the use of technology helps a business be more productive, quick to respond and good to its customers (dewa et al. 2014). this means that a business must use technology if it wants to improve its performance and profitability, which are important measures of how well it is doing (dubihlela & sandada 2014). figure 6: the capacity and productivity causal loop diagram. the competition dynamics shown in figure 7 illustrates that, even though globalisation benefits small and medium-sized enterprises greatly by providing the possibility for faster, more sustainable growth, this has increased competitive pressures on businesses to remain competitive (bl 6). coupled with rapid technological change, globalisation has altered the competitive environment in which smmes operate. the competitiveness of smmes is heavily influenced by the management competencies of business owners (cong & hai 2015). however, smmes are insufficiently equipped to face increasing pressures from globalisation. because of their limited resources, low managerial competence and lower productivity, many have found it difficult to compete; thus, smmes’ competitiveness has become a major challenge. small, medium and micro enterprises face a particular challenge regarding their competitiveness because they cannot spare the personnel as they need them for day-to-day operations. figure 7: the competitiveness dynamics causal loop diagram. figure 8 depicts internal controls and ethical dynamics demonstrate the inefficiency of internal controls that the sheer size of the smme limits its financial resources and capabilities and increases the lack of internal controls (rl 8) and unethical business behaviour (rl 9), thus increasing business costs (rl 10). small, medium and micro enterprise face problems such as how to use information technology well and how to quickly get to the right degree of financial excellence. the problem is made worse because business owners see internal controls more as a safety measure than as a way to reach organisational goals and make fewer mistakes. it is essential to understand this dynamic because many small businesses do not have good internal controls, which leads to unethical behaviour and higher costs. wilkins and haun (2014) say that many small businesses think internal controls are too expensive and unnecessary. figure 8: the internal controls and ethical causal loop diagram. finally, figure 9 depicts the crime and security dynamics and demonstrates the reinforcing loop of enhancing business growth through enhancing safety and security (rl 11). standard reinforcement loops are required for funding service investments (rl 12), whereas the balancing loop bl 7 represents the loss and expenses because of crime within the organisational system. the level of security increases and positively impacts business growth increases. any company that hopes to thrive and expand must first meet two prerequisite conditions: an environment with a low incidence of crime and a high degree of security. however, business crime increases the internal and external loss to crime, decreasing return on investments and business growth. according to bushe (2019), in south africa, more than any other african nation, a company would undoubtedly spend extra for safety services to protect its assets and survival. this exerts much burden on smme funds, which might be used to boost other businesses. figure 9: the crime and security causal loop diagram. discussion of findings our study contributes to the body of knowledge in several ways. firstly, this study has examined entrepreneurial leadership within the smme context. by doing this, we have answered leitch and volery’s (2017) call for more research knowledge of insight into entrepreneurial leadership. small, medium and micro enterprises fail primarily because their leaders do not have enough or good enough skills (razak 2011). in addition, traditional ways of leading businesses to improve efficiency are inefficient (leitch & volery 2017). this is in line with osborn and marion’s (2009) view that contexts can be so complicated that no one microscopic view can be deep and comprehensive enough to indicate a single productive understanding of leadership and its efficacy. secondly, the system thinking approach and system dynamics modelling were utilised to unpack the entrepreneur’s mental models regarding the leadership dynamics and challenges within entrepreneurial contexts. if smmes want to reach their goals and be successful in the long run, they need to understand and deal with the dynamic challenges of the enterprise environment. this means that entrepreneurs need to learn how to think about systems to deal with these changing problems and how the framework of complicated processes, like an entrepreneurial system, makes the system more complicated. thirdly, the study’s results show that smmes in gauteng suffer from various challenges, including limited entrepreneurial leadership expertise and operational practices necessary for developing small businesses. traditional leadership methods are not very good at solving complex problems in constantly changing situations, like entrepreneurial situations. thus, understanding the dynamics in environmental contexts and the limiting factor of traditional leadership approaches are important to manage the change and complexity in entrepreneurial contexts. according to the results of our study, one of the significant elements that negatively influenced the expansion and development of smmes was the business regulatory environment. complex regulatory procedures remain a significant obstacle to entrepreneurs. therefore, efforts to lower compliance costs should focus mainly on reducing commercial red tape and increasing the efficiency and clarity of administrative rules. this is supported by several authors, who ascertain that compliance with governmental rules and laws is a more significant encumbrance and hinders smme growth, and job creation and can impose an excessive and unnecessary burden on smmes (kamara 2017; shane 2014). managerial competence was cited as another significant challenge facing smmes. the absence of sustainability initiatives in smmes may be related to poor management abilities based on insufficient training, education and business expertise. studies support that the absence of sustainability initiatives in smmes may be related to poor management abilities based on insufficient training, education and business expertise (arham, boucher & muenjohn 2013; hogeforster 2014; leboea 2017; phikiso & tengeh 2017). furthermore, entrepreneurs have challenges getting the right technology and learning the appropriate and practical strategies. because of financial limitations, smmes are not only generally technologically creative, but these entrepreneurs also have inadequate expertise in implementing technology inside their companies. this influences smme productivity and capacity, represented in the productivity and capacity loop. these results agree with what giovannini and moran (2013) found, which is that not having enough money could substantially affect things like training, advancement, servicing charges, data structures and software services. the study also identified a lack of competitiveness as one of the challenges. currently, many smmes are characterised by using outdated technologies, limited technical skills and a lack of information regarding new technologies. this renders smmes unable to compete, affecting their competitiveness. furthermore, smmes face a particular challenge regarding their competitiveness, as the few people they have been engaged in running the business daily. lastly, the study results show that many small businesses do not have good internal controls, which can result in unethical behaviour. additionally, smmes have to contend with increasing operational costs because of crime. the global entrepreneurship monitor (gem) report (2012) revealed that corruption had become more prevalent, affecting the business’s capability to survive and develop, even though all businesses are being affected by the high crime rate (xavier et al. 2013). conclusion and recommendations the entrepreneurial context is very dynamic and complex. it emphasises that the low entrepreneurial activity and high failure rate among smmes are because of a lack of entrepreneurial leadership capabilities and understanding of the business environment. therefore, this study advances entrepreneurial leadership as an emerging and important competency to understanding leadership within an entrepreneurial context in emerging economies. future research should further explore the entrepreneurial leadership challenges facing entrepreneurs found in this research, in other provinces in south africa and beyond. to further understand the leadership issues faced by smmes in entrepreneurial systems, research should be conducted domestically and worldwide, comparing the results to what has been found in this study. from a practical perspective, entrepreneurs that embrace such entrepreneur leadership skills will not only be able to sustain further and expand their business endeavours but will have increased effectiveness in bonding with their team members and/or followers through the unity provided by a standard list of goals and values characterised by the smme in question. this study’s methodology and philosophy were based on the systems thinking technique previously repressed by the standard reductionist and/or logical positivist paradigm. in south africa, the study of entrepreneurial leadership and entrepreneurial systems has rarely used the system dynamics method. as a systems-based approach is more suited to coping with the complex dynamics of the actual world and entrepreneurial complexity is best perceived and articulated using dynamic ways, it is suggested as an alternate leadership approach. the use of system dynamics modelling has increased, although it has not often been used to research south africa’s entrepreneurial system. therefore, it is predicted that the findings will inspire further research in this area. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions this article was drawn from the t.r.m. phd thesis, and as such, took the lead in the research and the writing of the manuscript and p.d. was co-supervisor and provided conceptual input and guidance in the structuring and writing of the manuscript. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the data that support the findings of this study are available on request from the first author, t.r.m. the data are not publicly available because of their content that could compromise the privacy of research participants. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abdelkafi, n. & täuscher, k., 2016, ‘business models for sustainability from a system dynamics perspective’, organization & environment 29(1), 74–96. https://doi.org/10.1177/1086026615592930 adendorff, c., emuze, f. & vilakazi, e., 2013, ‘evaluating the skills of emerging entrepreneurs in a developing economy’, international journal of social entrepreneurship and innovation 2(3), 240–252. https://doi.org/10.1504/ijsei.2013.057019 afzal, m.n.i., siddiqui, s. & dutta, s., 2018, ‘determinants of entrepreneurial capability (ec) environment in asean-05 economies-a log-linear stochastic frontier analysis’, journal of global entrepreneurship research 8(1), 1–14. https://doi.org/10.1186/s40497-018-0101-y amra, r., hlatshwayo, a. & mcmillan, l., 2013, ‘smme employment in south africa’, in proceedings of the biennial conference of the economic society of south africa, bloemfontein, september 25–27, 2013. arasti, z., zandi, f. & bahmani, n., 2014, ‘business failure factors in iranian smes: do successful and unsuccessful entrepreneurs have different viewpoints?’, journal of global entrepreneurship research 4, 10. https://doi.org/10.1186/s40497-014-0010-7 arham, a.f., boucher, c. & muenjohn, n., 2013, ‘leadership and entrepreneurial success: a study of smes in malaysia’, world journal of social sciences 3(5), 117–130. balogun, j., bartunek, j.m. & do, b., 2015, ‘senior managers’ sensemaking and responses to strategic change’, organization science 26(4), 960–979. https://doi.org/10.1287/orsc.2015.0985 balogun, o.a., agumba, n.j. & ansary, n., 2018, ‘determinants of business overdraft accessibility within small and medium-sized enterprises in the south african construction industry: a case of gauteng province’, in chau, k.w., chan, i.y.s.w., weisheng. & webster, c (eds.), proceedings of the 21st international symposium on advancement of construction management and real estate. springer, hong kong, 12–14th december 2016, pp. 289–297. bhorat, h., asmal, z., lilenstein, k. & van der zee, k., 2018, smmes i n south africa: understanding the constraints on growth and performance, world bank, washington, dc. bowmaker-falconer, a. & herrington, m., 2020, south africa’s global entrepreneurship monitor (gem) report, university of stellenbosch business school, cape town. bryman, a., 2008, ‘research methods and methodology’, qualitative research in organisations and management 3(2), 159–168. https://doi.org/10.1108/17465640810900568 bushe, b., 2019, ‘the causes and impact of business failure among small to micro and medium enterprises in south africa’, africa’s public service delivery and performance review 7(1), 1–26. https://doi.org/10.4102/apsdpr.v7i1.210 bvuma, s. & marnewick, c., 2020, ‘sustainable livelihoods of township small, medium and micro enterprises towards growth and development’, sustainability 12(8), 31. https://doi.org/10.3390/su12083149 caldwell, k., harris, s.p. & renko, m., 2012, ‘the potential of social entrepreneurship: conceptual tools for applying citizenship theory to policy and practice’, intellectual and developmental disabilities 50(6), 505–518. https://doi.org/10.1352/1934-9556-50.06.505 cant, m.c. & wiid, j.a., 2016, ‘the use of traditional marketing tools by smes in an emerging economy: a south african perspective’, problems and perspec tives in management 14(1), 64–70. https://doi.org/10.21511/ppm.14(1).2016.07 chimucheka, t., 2013, ‘the impact of entrepreneurship education on the establishment and survival of small, micro and medium enterprises (smmes)’, journal of economics 4(2), 157–168. https://doi.org/10.1080/09765239.2013.11884975 cho, s. & gumeta, h., 2015, ‘factors affecting university students’ startup intention: comparative study on korean and chinese universities’, journal of korean entrepreneurship 10(3), 150–152. cogliser, c.c. & brigham, k.h., 2004, ‘the intersection of leadership and entrepreneurship: mutual lessons to be learned’, the leadership quarterly 15(6), 771–799. https://doi.org/10.1016/j.leaqua.2004.09.004 cong, l.c. & hai, v.h., 2015, ‘the influence of leaders on the competitiveness of the enterprises – the case of accommodation business in nha trang’, journal of trade science (14), 82–93. davids, j.p., 2012, ‘entrepreneurial leadership in dynamic markets’, doctoral dissertation, university of johannesburg, johannesburg. dewa, m.t., matope, s., van der merwe, a.f. & nyanga, l., 2014, ‘an empirical analysis of operational disturbances and their effect on business performance in manufacturing firms: case tooling industry south africa’, proceedings of the southern african institute for industrial engineering 26, 14–16. dodourova, m. & bevis, k., 2014, ‘networking innovation in the european car industry: does the open innovation model fit?’, transportation research part a: policy and practice 69, 252–271. https://doi.org/10.1016/j.tra.2014.08.021 dubihlela, j. & sandada, m., 2014, ‘impact of strategic planning on small and medium sized (smes) performance: the role of employee participation, implementation incentives and evaluation control’, journal of economics 5(1), 45–55. https://doi.org/10.1080/09765239.2014.11884983 ebere, e. & fragouli, e., 2015, ‘exploration of suitability of situational leadership in the oil and gas sector’, journal of social economics research 2(1), 10–30. https://doi.org/10.18488/journal.35/2015.2.1/35.1.10.30 fernald, l.w. jr., solomon, g.t. & tarabishy, a., 2005, ‘a new paradigm: entrepreneurial leadership’, southern business review 30(2), article 3. fonseca, s., milho, j., passos, p., araújo, d. & davids, k., 2012, ‘approximate entropy normalized measures for analyzing social neurobiological systems’, journal of motor behavior 44(3), 179–183. https://doi.org/10.1080/00222895.2012.668233 giovannini, a. & moran, j., 2013, finance for growth. report on the high level expert group on sme and infrastructure financing, viewed 22 june 2020, from http://europa.eu/efc/working_groups/hleg_report_2013.pdf. green, s., 2017, ‘a critical reflection on how information communication technology can facilitate high quality teaching and learning for dyslexic children and their spelling’, the step journal (student teacher perspectives) 4(4), 61–69. gregory, a. & miller, s., 2014, ‘using systems thinking to educate for sustainability in a business school’, systems 2(3), 313–327. https://doi.org/10.3390/systems2030313 gupta, v., macmillan, i.c. & surie, g., 2004, ‘entrepreneurial leadership: developing and measuring a cross-cultural construct’, journal of business venturing 19(2), 241–260. https://doi.org/10.1016/s0883-9026(03)00040-5 harrison, n., agnew, s. & serido, j., 2015, ‘attitudes to debt among indebted undergraduates: a cross-national exploratory factor analysis’, journal of economic psychology 46, 62–73. https://doi.org/10.1016/j.joep.2014.11.005 hashim, m.k., ahmad, s.a. & zakaria, m., 2012, ‘a study on leadership style in smes’, in international conference on isla mic leadership-2. the royale chulan, kuala lumpur, september 26–27. hejazi, s.a.m., malei, m.m. & naeiji, m.j., 2012, ‘designing a scale for measuring entrepreneurial leadership in smes’, international conference on economics, marketing and management iped r 28(2), 71–77. herbst, j. & gills, g., 2015, how south africa works, macmillan, johannesburg. herrington, m., kew, j. & kew, p., 2015, 2014 gem report sa: the crossroads – a goldmine or a time bomb?, dune, western cape government, cape town. hogeforster, m., 2014, ‘future challenges for innovations in smes in the baltic sea region’, procedia – social and behavioral sciences 110, 241–250. https://doi.org/10.1016/j.sbspro.2013.12.867 hossain, m., 2015, ‘a review of literature on open innovation in small and medium-sized enterprises’, journal of global entrepreneurship research 5(6), 1–12. https://doi.org/10.1186/s40497-015-0022-y kalane, l., 2015, reasons for failure in the free state, viewed 03 august 2020, from http://www.scholar.ufs.ac.za:8080/xmlui/bitstream/handle/11660/4557/kalanel.pdf?sequence=1&isallowed=y–81. kamara, a.i., 2017, ‘smes, microcredit and poverty reduction in developing countries’, bachelor’s thesis, università ca’foscari venezia. karagiorgos, a., gaitanaki, a., ignatiou, o. & terzidou, a., 2020, ‘role and contribution of administrative accounting to small and very small businesses’, journal of accounting and taxation 12(2), 75–84. https://doi.org/10.5897/jat2020.0399 kongolo, m., 2010, ‘job creation versus job shedding and the role of smes in economic development’, african journal of business management 4(11), 2288–2295. koryak, o., mole, k.f., lockett, a., hayton, j.c., ucbasaran, d. & hodgkinson, g.p., 2015, ‘entrepreneurial leadership, capabilities and firm growth’, international small business journal 33(1), 89–105. https://doi.org/10.1177/0266242614558315 lampadarios, e., 2015, ‘critical success factors (csfs) for small medium enterprises (smes): an empirical study in the uk chemical distribution industry’, doctoral dissertation, leeds beckett university. leboea, s.t., 2017, ‘the factors influencing sme failure in south africa’, master’s thesis, university of cape town. leedy, p.d. & ormrod, j.e., 2015, practical research. planning and design, 11th edn., pearson, boston, ma. leitch, c.m. & volery, t., 2017, ‘entrepreneurial leadership: insights and directions’, international small business journal 35(2), 147–156. https://doi.org/10.1177/0266242616681397 lubis, r., 2017, ‘assessing entrepreneurial leadership and the law: why are these important for graduate students in indonesia?’, international journal of arts & sciences 10(02), 41–76. maani, k. & cavana, r., 2007, systems thinking, system dynamics – managing change and complexity, 2nd edn., prentice hall, pearson education, auckland. mack, n., woodsong, c., macqueen, k., guest, g. & namey, e., 2005, qualitative research methods: a data collector’s field guide, 3rd edn., sage, thousand oaks, ca. madanchian, m., hussein, n., noordin, f. & taherdoost, h., 2016, ‘the relationship between ethical leadership, leadership effectiveness, and organizational performance: a review of literature in smes context’, european business and management 2(2), 17–21. https://doi.org/10.11648/j.ebm.20160202.11 mamun, a.a., fazal, s.a. & muniady, r., 2019, ‘entrepreneurial knowledge, skills, competencies and performance: a study of micro-enterprises in kelantan, malaysia’, asia pacific journal of innovation and entrepreneurship 13(1), 29–48. https://doi.org/10.1108/apjie-11-2018-0067 matekenya, w. & moyo, c., 2022, ‘innovation as a driver of smme performance in south africa: a quantile regression approach’, african journal of economic and management studies 13(3), 452–467. https://doi.org/10.1108/ajems-06-2021-0306 mazzarol, t., 2015, ‘smes engagement with e-commerce, e-business and e-marketing’, small enterprise research 22(1), 79–90. https://doi.org/10.1080/13215906.2015.1018400 mhlongo, t., 2021, ‘a systems’ thinking approach to entrepreneurial leadership: an analysis of smmes in the gauteng province’, doctoral dissertation, durban university of technology, durban. mnguni, a., 2018, ‘the development and sustainability of small and medium enterprises: the role of the department of small business development’, doctoral dissertation, north-west university. mohammed, u.d. & obeleagu-nzelibe, c.g., 2014, ‘entrepreneurial skills and profitability of small and medium enterprises (smes): resource acquisition strategies for new ventures in nigeria’, in proceedings of 25th international business research conference, taj hotel, cape town, january 13–14, 2014. isbn: 978-1-922069-42-9 mohamed, w., yasseen, y. & nkhi, n., 2020, ‘international financial reporting standards for small and medium-sized entities: a survey showing insights of south african accounting practitioners’, journal of economic and financial scienc es 13(1), a489. https://doi.org/10.4102/jef.v13i1.489 moise, l.l., khoase, r. & ndayizigamiye, p., 2020, ‘the influence of government support interventions on the growth of african foreign-owned smmes in south africa’, in m-á. galindo-martín, m-t. mendez-picazo & m-s. castaño-martíne (eds.), analyzing the relationship between innovation, value creation, and entrepreneurship, hershey, pa: igi global, pp. 104–124. https://doi.org/10.4018/978-1-7998-1169-5.ch006 monat, j.p. & gannon, t.f., 2015, ‘what is systems thinking? a review of selected literature plus recommendations’, american journal of systems science 4(1), 11–26. mthabela, t.e., 2015, ‘assessing the casual failures of emerging manufacturing smes in johannesburg’, master’s degree in management specializing in entrepreneurship and new venture creation, faculty of commerce, law and management, university of the witwatersrand, johannesburg. muriithi, s., 2017, ‘african small and medium enterprises (smes) contributions, challenges and solutions’, european journal of research and reflection in management sciences 5(1), 36–48. naidoo, p., chirinda, w., mchunu, g., swartz, s. & anderson, j., 2015, ‘social and structural factors associated with vulnerability to hiv infection among young adults in south africa’, psychology, health & medicine 20(3), 369–379. https://doi.org/10.1080/13548506.2014.936883 ndou, i., 2014, ‘an assessment of access to financial management services by small, medium and micro enterprises in thohoyandou business centre, limpopo, south africa’, international journal of economic and business management 2(4), 46–54. newman, i., newman, d. & newman, c., 2011, ‘writing research articles using mixed methods: methodological considerations to help you get published’, in t.s. rocco & t. hatcher (eds.), the handbook of scholarly writing and publishing, pp. 191–208, jossey-bass, san francisco, ca. ngibe, m. & lekhanya, l.m., 2019, ‘critical factors influencing innovative leadership in attaining business innovation: a case of manufacturing smes in kwazulu-natal’, international journal of entrepreneurship 23(2), 1–20. nkonge, d.k., 2013, ‘theological institutions, the future of the african church: the case of the anglican church of kenya’, research in humanities and social sciences 3(21), 68. norcini, j., anderson, m.b., bollela, v., burch, v., costa, m.j., duvivier, r. et al., 2018, ‘consensus framework for good assessment’, medical teacher 40(11), 1102–1109. https://doi.org/10.1080/0142159x.2018.1500016 oecd, 2018, enhancing the contributions of smmes in gem, oecd publishing, paris. osborn, r.n. & marion, r., 2009, ‘contextual leadership, transformational leadership and the performance of international innovation seeking alliances’, the leadership quarterly 20(2), 191–206. https://doi.org/10.1016/j.leaqua.2009.01.010 palalic, r.v., dizdarević, a., đilović, a. & ratten, v., 2017, ‘entrepreneurial intentions of university students: a case-based study’, journal of enterprising communities people and places in the global economy 11(3), 393–413. https://doi.org/10.1108/jec-12-2016-0046 petersen, a., bruwer, j.p. & mason, r., 2020, ‘source document usage and the financial sustainability of south african small, medium and micro retailers’, expert journal of business and management 8(1), 110–119. phikiso, z. & tengeh, r., 2017, ‘challenges to intra-family succession in south african townships’, academy of entrepreneurship journal 23(2), 1–14. rajagopal, r.s., 2012, ‘cognitive associations between advertising and brand response among consumers in mexico’, international journal of business innovation and research 6(6), 676–697. https://doi.org/10.1504/ijbir.2012.049491 rashed, f., deluyi, a.h.m. & daud, k., 2015, ‘developing a mathematical model of entrepreneurship based on transformational leadership behavior’, jurnal teknologi 72(5), 125–131. https://doi.org/10.11113/jt.v72.3952 razak, r.a., 2011, ‘entrepreneurial orientation as a universal remedy for the receding productivity in malaysian small and medium enterprises: a theoretical perspective’, inte rnational journal of business and social science 2(19), 1–9. rengkung, l.r., 2018, ‘modelling of dynamic capabilities: a system dynamics approach’, academy of strategic management journal 17(5), 1–14. renko, m., el tarabishy, a., carsrud, a.l. & brännback, m., 2015, ‘understanding and measuring entrepreneurial leadership style’, journal of small business management 53(1), 54–74. https://doi.org/10.1111/jsbm.12086 saunders, m., lewis, p. & thornhill, a., 2016, research methods for business students, 7th edn., pearson, harlow. sekaran, u. & bougie, r., 2016, research methods for business: a skill-building approach, 7th edn., john wiley & sons, haddington. shane, s., 2014, to help small business, cut regulation, viewed 28 july 2020, from https://www.entrepreneur.com/article/230727. simba, a. & thai, m.t.t., 2018, ‘advancing entrepreneurial leadership as a practice in msme management and development’, journa l of small business management 57(sup 2), 397–416. https://doi.org/10.1111/jsbm.12481 singh, c. & wasdani, k.p., 2016, finance for micro, small, and medium-sized enterprises in india: sources, and challenge s, adbi working paper 581, asian development bank institute, tokyo, viewed n.d., from http://www.adb.org/publications/finance-micro-smalland-medium-sized-enterprises-india-sources-and-challenges sterman, j.d., 2000, business dynamics. systems thinking and modeling for a complex world, international edition, mc-graw hill/irwin, boston, ma. surie, g. & ashley, a., 2008, ‘integrating pragmatism and ethics in entrepreneurial leadership for sustainable value creation’, journal of business ethics 81(1), 235–246. https://doi.org/10.1007/s10551-007-9491-4 tang, v. & vijay, s., 2011, ‘system dynamics origins, development, and future prospects of a method’, research seminar in engineering systems 83, 1–12. telukdarie, a., philbin, s., mwanza, b.g. & munsamy, m., 2022, ‘digital platforms for smme enablement’, procedia computer science 200, 811–819. https://doi.org/10.1016/j.procs.2022.01.278 tofighi, s., teymourzadeh, e. & ghanizadeh, g., 2017, ‘academic entrepreneurship in a medical university: a system dynamics approach’, internat ional review (1–2), 58–72. https://doi.org/10.5937/intrev1702058t tsai, g. & coyle, j.t., 2002, ‘glutamatergic mechanisms in schizophrenia’, annual review of pharmacology and toxicology 42(1), 165–179. https://doi.org/10.1146/annurev.pharmtox.42.082701.160735 van de vrande, v., de jong, j.p., vanhaverbeke, w. & de rochemont, m., 2009, ‘open innovation in smes: trends, motives and management challenges’, technovation 29(6–7), 423–437. https://doi.org/10.1016/j.technovation.2008.10.001 viviers, w. & muller, m.l., 2004, ‘the evolution of competitive intelligence in south africa: early 1980s-2003’, journal of competitive intelligence and management 2(2), 53–69. wilkins, a.m. & haun, a.l., 2014, ‘reframing the discussion on internal control’, the cpa journal 84(10), 48. xavier, s.r., kelley, d., herrington, m. & vorderwulbecke, a., 2013, global entrepreneurship monitor (gem) 2012, global report, gsb, university of cape town, cape town. zarefard, m. & beri, s.e., 2017, ‘relationship between entrepreneurs’ managerial competencies and innovative start-up intentions in university students: an iranian case’, international journal of entrepreneurship 21(3), 1–19. zulu, b.c., 2021, ‘an economic development policy implementation approach to creation of sustainable maritime smmes in the kwazulu-natal province’, in sanja bauk & stojče dimov ilčev (eds.), the 1st international conference on maritime education and development, november 23–24, 2020, durban. springer, cham, pp. 297–303. p182 constraints on decision making regarding post-commencement finance in business rescue sajesbm volume 6, (2013) 168 www.sajesbm.com article no 182 www.sajesbm.com constraints on decision making regarding post-commencement finance in business rescue marius pretorius* department of business management university of pretoria, south africa wanya du preez gordon institute of business science university of pretoria, south africa * corresponding author department of business management university of pretoria, 0002 south africa marius.pretorius@up.ac.za abstract since its introduction, business rescue has become a critical consideration in business strategy decision making. one of the critical components of business rescue, which appears largely unsuccessful to date, involves securing post-commencement finance (pcf) to restore the company’s financial health. despite extensive theory in the literature on failure, there is a void regarding post-commencement finance. specialist practitioners and financiers with extensive experience in rescue and turnaround were interviewed in this study. findings showed that many critical factors and reasons for lack of interest are due to the newness of the south african companies act 71 of 2008 (introduced may 2011). these include business rescue filing being left too late; the poor financial state of the business that files for rescue; and the significant impact on the outcome by some of the key players (especially the financiers and business rescue practitioners). better understanding of this aspect would be beneficial for creditors, rescue practitioners, shareholders, government regulators, court officials and educators alike. key words: business rescue, post-commencement finance, turnaround, decision making. sajesbm volume 6, (2013) 169 www.sajesbm.com article no 182 introduction according to a chinese proverb, “when you fall into a pit, you either die or get out”. for businesses in rescue, “not dying” often depends on post-commencement finance (pcf), as this often defines the possibility of “getting out”. financial distress is the trigger, the measure and the result of a business in need of a rescue. when businesses become “over-leveraged” or financially distressed, for reasons within or beyond their control, access to finance becomes increasingly difficult; if not virtually impossible. the difficulty of accessing pcf forces distressed businesses to operate on a cash basis or confront the possibility of liquidation or forced sale of their assets. this has been evidenced in the recent financial crisis, where the raising of post-commencement finance/post-petition finance has become a major obstacle for businesses that require rescue or reorganisation (vriesendorp & gramatikov, 2010). therefore, financing is a critical component of the success of business rescue, and is of the utmost importance in the turnaround attempt. the number of liquidations and insolvencies is an important barometer of the general health and fortunes of businesses in the country. in south africa, the total number of firms that have been liquidated/declared insolvent increased from 3225/1642 respectively in 2005 to 3992/4020 in 2010, which represents a respective increase of 23% and 144% (statistics south africa, 2012) over a period of five years. the considerable increase in liquidations over the past few years confirms a growing trend of financial distress among south african companies. international insolvency reform over the past 20 years; supported by policy makers, politicians and practitioners; has focused mainly on corporate rescue, through the development of legislation focused on business reorganisation (vriesendorp & gramatikov, 2010). this was first seen in countries such as the united states (us) (chapter 11 of the bankruptcy code, 1978) and the united kingdom (uk) (cork, 1982), which were leading the way by establishing corporate rescue regimes in their respective countries. as a result of this, countries such as canada have followed the us, and commonwealth countries such as australia have developed their own rescue legislation to support businesses in distress, and to regulate the claims of creditors in these situations. today almost all modern democracies have established statutory corporate rescue procedures with the purpose of providing protection for insolvent (financially distressed) businesses and potentially afford distressed companies a ‘second chance’. today, it seems increasingly important for a business to obtain turnaround finance at the beginning of the process of financial distress, as this is directly linked to the likelihood of success of the turnaround. this paper starts by exploring the relevant legislation and defining the concept of postcommencement financing. secondly, it links pcf to different regimes internationally as guidelines. thirdly, it explains the qualitative research design. fourthly, it reports the findings, tracking substantiation and insights from the subjects to supplement the theory and literature. finally, we draw conclusions and propose a framework for pcf with recommendations for policy guidelines. the south african case south africa introduced the new south african companies act 71 of 2008 (republic of south africa, 2008), which came into effect in may 2011. it contains chapter 6: “business rescue and compromise with creditors” (republic of south africa, 2008). this chapter effectively replaced the judicial management procedures from the companies act of 1973, perceived as a failed regime. the aim and purpose of the new chapter is to provide companies in sajesbm volume 6, (2013) 170 www.sajesbm.com article no 182 financial distress with an opportunity to reorganise and restructure, and therefore maximise their chances of continuing to trade. according to lotheringen (2013: pers com), in the first 28 months since the introduction of the new rescue legislation, 1202 businesses opted for the route of business rescue instead of liquidation. furthermore, a projected 5300 jobs have been saved through successful business rescue proceedings (cipc, 2013). at present, however, it is not possible to determine the number of jobs associated with unsuccessful business-rescue proceedings (implied ending in liquidation) in any rescue regime, a degree of financial support is required from the commercial environment through the provision of additional funding and agreement by existing creditors to postpone or compromise their claims. ironically, when rescue is most needed, businesses struggle to obtain additional credit, or the creditors themselves are financially stressed (vriesendorp & gramatikov, 2010). therefore one of the critical components of the business rescue plan involves securing turnaround finance to meet short-term trade obligations (such as working capital requirements), covering turnaround/restructuring costs, and restoring the company’s balance sheet to solvency. recent research suggests that the lack pcf is one of the five main reasons why business rescues in south africa have failed (pretorius, 2012). obtaining turnaround finance and returning the business to liquidity presents a challenge for financially distressed organisations, and therefore the first port of call is normally internal funds (assets or ‘slack’ of various nature) which are mostly non-existent. distressed organisations in south africa also seem to have experienced increased difficulty in attracting turnaround finance in the form of loan capital and private equity capital. thus inability to obtain the necessary funding may contribute to the ultimate demise of their turnaround prospects. it may even be the main contributor to the turnaround process. the importance of pcf in business rescue is substantiated by the act, which enhances the preferential priority of pcf. section 135 of chapter 6 of the companies act no. 71, 2008 provides for pcf, which ranks in preference above existing unsecured claims against the debtor company (republic of south africa, 2008). the ranking of pcf is an attempt by the legislators to stimulate turnaround financing for these distressed businesses. a similar concept is prevalent in the equivalent us chapter 11 provisions, which provide for debtor-inpossession (dip) financing. pelser (2012) has stated that one of the largest stumbling blocks for the new regime is the inability to secure capital. initial exploration of a sample of business rescue plans (pretorius, 2012) suggests low levels of post-commencement financing, and therefore the status quo needs to be investigated and compared with best practice for international standards. post-commencement financing fundamentally, securing financing is essential to a successful business turnaround. a key requirement that need to be expanded on in the rescue plan is the magnitude and nature of the financing required to rescue the business, which is referred to as post-commencement finance. the definition of post-commencement financing is expressed as follows in the companies act 71 of 2008, chapter 6, section 135 (republic of south africa, 2008:240): (1) to the extent that any remuneration, reimbursement for expenses or other amount of money relating to employment becomes due and payable by a company to an employee during the company’s business rescue proceedings, but is not paid to the employee, the money is regarded to be post-commencement financing; and (2) during its business rescue proceedings, the company may obtain financing other than as contemplated is subsection (1), and any sajesbm volume 6, (2013) 171 www.sajesbm.com article no 182 such financing – (a) may be secured to the lender by utilising any asset of the company to the extent that it is not otherwise encumbered; and (b) will be paid in the order of preference set out in subsection (3)(b). (3) after payment of the practitioner’s remuneration and costs referred to in section 143, and other claims arising out of the costs of the business rescue proceedings, all claims contemplated in subsection (1) will be treated equally, but will have preference over all claims contemplated in subsection (2), irrespective whether or not they are secured; and all unsecured claims against the company; or in subsection (2) will have preference in the order in which they were incurred over all unsecured claims against the company. (4) if business rescue proceedings are superseded by a liquidation order, the preference conferred in terms of this section will remain in force, except to the extent of any claims arising out of the costs of liquidation. it can be deduced that unpaid claims by employees related to employment or reimbursements of expenses during the rescue process are considered pcf, which carries a super-priority status in the act. furthermore, the ranking of claims in terms of the section 135 provisions is as follows (republic of south africa, 2008): 1. the business rescue practitioner’s remuneration and costs (as per section 143) arising from business rescue proceedings (section 135(3)); then 2. all other claims from costs of business rescue proceedings; then 3. all pcf claims related to employment once business rescue has commenced; then 4. secured lenders/creditors pre-business rescue; then 5. all secured pcf claims related to third-party lenders/creditors (section 135(3)(a)(i)); then 6. insolvency act preferences; then 7. unsecured claims by pcf or lenders/creditors during business rescue in the order in which they were incurred (section 135(3)(b)); then 8. remuneration of employees which became due and payable before business rescue commenced (section 144(2)); and then 9. all unsecured claims against the company. recent case law has sought to clarify the position of secured creditors through the judgement handed down by judge kgomo in the south gauteng high court on 10 may 2013. the case of merchant west working capital solutions (proprietary) limited v. advanced technologies & engineering company (proprietary) limited & gainsford states clearly that the claim of secured creditors who advanced funds prior to the start of business rescue now ranks after the claims of post-commencement financiers (secured and unsecured). this may be an encouraging development for the distressed investing industry. this judgment is under review. this study aims to better understand the apparent absence of post-commencement finance for business rescue in south african companies, as opposed to the findings of international research, where post-commencement finance is actively raised. the above motivation leads to a crucial research problem, which this research attempts to answer, namely: what is the sajesbm volume 6, (2013) 172 www.sajesbm.com article no 182 status (i.e. nature and extent) of post-commencement finance in south africa? more specifically, questions that need to be answered through this research include: 1) what are the types and sources of financing required for a business that has filed for business rescue? 2) what are the critical success factors for advancement of financing by the creditors/lenders? 3) what are the reasons for lenders’ lack of interest in financing businesses which have filed for business rescue? the research was designed to identify and report perceptions of subjects about pcf to gain insight into the causes associated with the apparent lack of such funding. international guidelines on post-commencement finance business decline is a normal part of business, generally negatively perceived by affected parties and firms; this is partly why this legislation that supports debtor concerns has been instituted. often affected parties involved in rescue understand neither the complexity of business decline (pretorius, 2009), nor the various reasons that have been suggested for failure, with their many signs indicating the different causes. these include diminishing resources, poor management, strategic issues, operational issues and combinations thereof. the many variables that determine how business failure occurs influence the decision making of the rescue process. scientific literature on rescue from developing countries such as south africa is almost nonexistent (pretorius & holtzhauzen, 2013:469) compared with that from the us, uk, australia and canada. understandably, rescue practitioners protect their strategies as “intellectual property”, as they represent their competitive advantage. the international literature incorporated in this study involved all scientific resources from abi-inform, ebsco-host, proquest, sciencedirect, blackwell and other databases for titles published. post-commencement finance theory/literature review various country regimes associated with their approaches to pcf are described in table 1. it is necessary to look at the contextual differences to better understand how the key issues are addressed by each regime. table 1: comparison of pcf related rescue issues in the us, uk, canada, australia and south africa usa uk can aus rsa philosophy debtor friendly creditor friendly debtor friendly debtor friendly debtor friendly sajesbm volume 6, (2013) 173 www.sajesbm.com article no 182 approach “chapter 11” very sophisticated and evolved industry (lots of case law) prescriptive process and predictable upfront consultative process mature distressed investing market strictly court driven with specialist solvency/rescue courts and specialised judges “company voluntary arrangement” viability assessment done upfront before filing laws and practice well settled and institutionalised high level of certainty mature distressed investing market strictly court driven with specialist solvency/ rescue courts and specialised judges similar to uk and us “deed of company arrangement” consultative process with total consensus upfront (incl. pcf) personal financial commitment from administrator strictly court driven with specialist solvency/ rescue courts and specialised judges official turnaround ceo (trustee) not a practitioner, but rather part of management (fiduciary obligation) administrator (similar to liquidator) does not take over running of business monitor (not a practitioner) – also trustee administrator (also liquidator) business rescue practitioner rescue culture debtor friendly (company is in possession) management have power and responsibility to keep business afloat extremely transparent and robust process parties support and embrace the process, positive with little reputational damage creditor friendly and large-bank driven – banks play a major role in influencing and leading rescue (can remove administrator) -no specific mention formalised effective court-driven process personal financial accountability of administrator high levels of commitment and certainty sajesbm volume 6, (2013) 174 www.sajesbm.com article no 182 concept of pcf exists? yes, referred to as dip financing no specific mention informally adopted dip financing with application of balances of prejudices test no specific mention yes pcf priority super-priority status after secured claims n/a super-priority status ahead of other creditors including prefiling bank lenders n/a preferentia l ranking after brp’s remuneration and costs, and costs of brp proceedings pcf dip financing (through the court) super-priority status pre-packaged finance agreed upfront prior to filing (collateral required) process is well established, standardised, formalised, prescriptive and sophisticated specialised dip financing firms financing agreed upfront no formalised concept such a pcf no priority status (rare that other creditors rank ahead of bank) secured creditors do not have voting rights as already secured super-priority status secured creditors have voting rights similar rankings to usa pcf agreed upfront super-priority status trade creditors are majority of debt holders secured creditors have voting rights focus of this research source: based on du preez (2012) what post-commencement finance typically entails du preez (2012) has reported that the typical financiers of pcf are banks, creditors and the shareholders. most of these parties would want to investigate the company to establish whether they believe in its viability and whether they want to provide the business with another chance of survival. for financiers, the nature and extent of pcf mostly depends on the type of business and its current financial situation, and what the risk appetite of the lender is. typical providers are the following: � banks the traditional bank is the best-known lending institution. banks are generally conservative lenders who price for high risk. it is highly unusual for banks to take an equity stake in a business, as that is not their core mandate. banks historically do not have specialist rescue units or a separate business rescue product, as business rescue is not their core focus; therefore all these cases are dealt with as part of their normal credit processes. recently banks have started address this discrepancy. sajesbm volume 6, (2013) 175 www.sajesbm.com article no 182 � trade creditors the second potential type of financier is trade creditors or suppliers of a business. often trade creditors continue to supply on revised terms (e.g. cash on delivery) if they see the long-term potential/benefit of the business relationship (or if they might be crippled by the loss of this client). sometimes trade creditors supply credit in order to retrieve as much of their money as possible from the process. trade creditors are ideal for certain short-term working capital needs. in some cases, where the company in business rescue is a strategic partner or key competitor, the trade creditors may take equity in the business or buy the whole business in order to obtain a strategic asset or access to a customer base through a debt-equity swop. � customers customers are a source that is often overlooked; however, this depends on the type of business. again, the customers might like the product so much that they are prepared to put in some financing, or they may need the product as it is crucial for their business (du preez, 2012). � shareholders shareholders can act as a potential financier of pcf, particularly if they are also serving in management/directorship positions (for example in owner-managed businesses). however, the tendency of directors to file too late for rescue drastically reduces shareholders’ appetite to advance funding. this is even more challenging in the case of a public company, due to the sheer number of shareholders that need to be considered and affected parties to be managed. � development finance institutions due to the nature of the mandate and key strategic objectives of a development finance institution, such institutions as the industrial development corporation (idc) and the development bank of south africa (dbsa) are ideal candidates to advance pcf in rescue situations. they often become involved where there is a broader developmental or social agenda at stake. however, what inhibits these organisations from being effective in this case is the time that they currently take to authorise the provision of financing, and the level of bureaucracy built into their internal processes. this limits the freedom and agility that the brp requires as part of the role. � alternative financiers: distressed lenders and private equity firms the last major category (du preez, 2012) of financiers is broadly referred to as “alternative financiers” and includes organisations such as private equity (pe) firms, venture capital (vc) firms and distressed lenders (dl). the future of pcf might lie with these firms, as the traditional financiers do not currently display a sufficient appetite for pcf. these entities generally have a higher risk appetite. such entities would typically buy out distressed debt and/or have pe/vc funds available to utilise for this purpose. the potential incentive for them to enter this industry is the higher risk-return investment, buying debt or assets at depressed prices, higher payment priority in terms of the pcf rankings, and potential debt-to-equity swaps in cases where they have identified a viable business with long-term prospects. du preez (2012) has reported that the presence of distressed lenders in south africa is either non-existent or unknown, and few products have been designed to accommodate the high level of risk associated with this type of financing. therefore brps and management do not currently have ready access to this financing option. however, interest in the field is growing as investors become more comfortable with the concept and the risks involved. sajesbm volume 6, (2013) 176 www.sajesbm.com article no 182 some pe funds have been in discussions about establishing distressed funds, but so far none have been forthcoming. typical problems associated with pcf as the new business rescue regulations came into effect only in may 2011, it is too early to evaluate the impact and effectiveness of post-commencement finance. traditional funding options (particularly loan funding) for distressed businesses are limited, because existing lenders are attempting to manage their existing risk exposure and do not want to risk more than they have already invested. existing lenders wants to mitigate their risk exposure by reducing rather expanding the exposure. furthermore, if additional funds were advanced, the traditional lenders would require unencumbered assets or surety, which are often not available to a business once it has moved into financial distress. with the advent of the regulations around pcf, new options for obtaining new investment and distressed funding have been released. a significant consideration for any investor is to receive a return on the investment; therefore opportunities for private equity firms to intervene are pronounced. however, the private equity market in south africa is very small and underdeveloped and needs to be supported in terms of creating and stimulating demand for distressed debt. as can be concluded from the above review and because the implementation of the companies act in south africa is so recent, there is little or no literature available on pcf, and therefore little guidance on its current extent. identifying key prerequisites for pcf is therefore critical in order to increase its occurrence. research design research approach the research approach was exploratory and qualitative in nature, aimed at improved understanding of the status of pcf. it aimed to identify and explain the embedded knowledge and experience of specialist rescue practitioners and specialists who had been involved in many informal turnarounds and rescues as bank officials. as noted in the literature review, the theory base for post-commencement financing (and international equivalents) has emerged from a developed-world paradigm, and little research has been done in a south african or similar developing market, due to the short time since the adoption of the legislation. a qualitative, largely exploratory approach was therefore considered most appropriate for this research study, given that the study aimed to help to build theory related to post-commencement financing in distressed businesses that operate in a south african context. a process of deduction was used to test theoretical propositions, and a research strategy designed to do this was utilised (saunders & lewis, 2012). the propositions (set out in table 2 and following text) provided a conceptual framework and guided data collection and analysis. the research sought support (or lack of support) in the results that emerged from the data, leading to conclusions. content, narrative and comparative analysis was then utilised to draw conclusions. research process the research study took the form of a two-phase qualitative study, in which a thorough review of the literature culminated in propositions which were tested. phase one involved a detailed review of the turnaround literature to build an understanding of concepts relating to the study and to provide justification for the research topic. sajesbm volume 6, (2013) 177 www.sajesbm.com article no 182 specifically, the following data was sourced: international best practice for postcommencement finance; the different phases of financing required; the related success factors; and reasons for lenders’ lack of interest in financing distressed businesses. the results were used to formulate initial propositions, which were then tested through semistructured interviews. the propositions informed the interview protocol used for data collection, and were used to guide analysis. the following inclusion criteria for literature sources were applied: mention of pcf or distress funding; explanations of different country regimes and requirements for granting pcf. as for major seminal works, the date was not seen as a limitation, especially when an article was referenced widely; relevance and contribution to the body of knowledge on postcommencement finance was paramount. each article was scrutinised for confirmation of concepts, as well as additional concepts and variances under different conditions and contexts, especially regimes. when analysed, this research identified key concepts using grounded theory research. phase two involved a series of face-to-face semi-structured expert interviews with 18 experts in the field of business rescue, in order to explore the propositions submitted. the reasoning the research used was mostly inductive, to explore the subjects’ understanding, experience, interpretation and knowledge building for the different experiences they reported on. key scientific beliefs of researchers in attempting to answer these questions, the researchers were aware of their own methodological values, beliefs and philosophical assumptions. these assumptions could influence how they conducted the research; they stated them in order to understand the ‘intellectual climate’ in which they conducted the research. ontological positions these comprise the researchers’ views on the very nature and essence of research. researcher a is an objective realist who believes that knowledge arises from facts associated with the cases and the context. if the researcher found repeated mention of applications, preconditions, causes and responses, he could “generalise” them. his interest was mainly in business strategy during decline. researcher b is a constructionist practitioner who believes that situations can be explained, especially when one has participated in their processes. people’s views, actions, reactions, interactions, social relations, social and cultural practices, rules and values reflect the experiences that guide their decision making. therefore, understanding such subjective experiences and interpretations may uncover unknown relationships and lead to improved insights into the experience of brps. her interest was mainly in business principles applicable to the turnaround and rescue situations. the personal experiences of the subjects and their views on the different questions and problem statements were interesting to the researchers. the specialists shared their experiences willingly and responded openly to all the questions the researchers asked during the interviews. epistemological positions the theory of knowledge (epistemology) of the researchers diverged to some extent. this allowed for interplay on how much can be concluded about social phenomena and how knowledge can be demonstrated. researcher a worked primarily from a scientific paradigm and secondarily from a consultant paradigm. he had had experience of rescues and business failures himself. he had worked sajesbm volume 6, (2013) 178 www.sajesbm.com article no 182 as an academic and also as a strategy and turnaround consultant. this influenced his search for factual directives, patterns and answers in order to correct future situations of a similar nature. researcher b worked from a business-rescue practice paradigm and looked for a description of this relevant issue as part of her master’s dissertation. thus, both authors were subject to their own biases and therefore chose structured datagathering methods. research method the detailed methodology is described as follows: research setting eighteen industry specialists with practical experience were purposively selected to participate in this study through interviews. interviews, times and venues were arranged to conveniently suit the subjects. subjects were reassured that there would be total anonymity and that the results would only be used for the research project. subjects participated voluntarily. it was found that they were relaxed when answering the questions, since these were based on their field of expertise. it is believed that these positive interview conditions led to unbiased sharing and meaningful conclusions drawn from the discussions of their perceptions and experience. sampling respondents were identified through the researchers’ own contacts and purposively selected based on accessibility and perceived experience of subjects. the criteria used to select subjects purposively from the population were based on the following qualifiers: business rescue practitioners: � they had all been involved, directly or indirectly (formally or informally) in turning around a distressed organisation or business unit (having led, or been a member of, a turnaround team). � they had extensive rescue experience, having worked in a business venture for more than three years, long enough to fully appreciate the dynamics and see the interactions and results of such turnarounds. � they were well seasoned and generally experienced business people, as the research aimed to extract knowledge and wisdom from the “grey hair” of industry. � they were each licensed as a senior business rescue practitioner by cipc (companies and intellectual property commission). members of financing institutions � they all had senior corporate rescue experience. � they had senior decision-making power in the organisation – mainly banking. � they had all been involved, directly or indirectly (formally or informally) in turning around a distressed organisation or business unit. � they were well seasoned and generally experienced business people. the researchers approached the subjects individually, requesting their participation. the experts (subjects) met all the above criteria, having driven turnaround situations in their past and present work situations, and being recognised by reputation in the industry. sajesbm volume 6, (2013) 179 www.sajesbm.com article no 182 saturation was observed and the sample size was deemed to be more than sufficient, based on the benchmark of six to twelve interviews being the ideal sample size for qualitative research (guest, bunce & johnson, 2006). data collection methods the methods are described according to the process followed. interview protocol the interview protocol design was based on information gathered from the literature review and the propositions developed from this. the final interview guide posed six broad questions, all of which were open-ended, and they were then followed up by more detailed questions. table 2 shows how each of the questions related to the individual propositions. table 2: how the research interview questions related to the propositions propositions questions proposition #1: internationally there are clear directives for post-commencement finance. what are the key directives internationally around post-commencement finance? proposition #2: post-commencement finance for business rescue in south africa is almost nonexistent. in your experience, what is the current nature and extent of post-commencement finance for business rescue in south africa? proposition #3: post-commencement finance varies over clear phases. what are the different phases of postcommencement finance that a business in distress needs? proposition #4: prerequisites for successful post-commencement finance can be identified. are there known prerequisites for successful post-commencement finance that you have obtained through your experience? if so, what are they? proposition #5: the reasons for lenders’ (venture capitalists, banks, other institutions) lack of interest in post-commencement finance are clear. what would you describe as the reasons for lenders’ (banks, private equity firms, other institutions etc.) lack of interest in postcommencement finance? data collection semi-structured interviews were used for the data collection in phase two of the study. each interview lasted for approximately 60 to 90 minutes. all interviews were recorded on a voice recorder, and the recordings were later transcribed into written documents. each transcription took an average of four hours to complete and a further four hours to analyse. data analysis though there was only one key source of evidence (the subjects), the researchers used “investigator triangulation” (yin, 2003:98) to extract as much richness as possible. from the many views expressed, specifically the subjects’ own version of their experiences, insights and interpretations, the researchers identified and recorded aspects relevant to the research propositions using in-depth interview notes, evaluating and checking the researcher interpretations. a combination of content and narrative analysis was used to test and refine the theory-based propositions (yin, 2003). the interview transcripts were organised around themes emerging from the interviews. content analysis was used to analyse the data collected from the interviews (leedy & sajesbm volume 6, (2013) 180 www.sajesbm.com article no 182 ormrod, 2001). in line with marshall and rossman (2006), the researchers identified salient themes, recurring ideas or language, patterns of belief that linked people and settings together, and categories/themes into which segments of text were placed. a qualitative data-analysis tool called atlas.ti data analysis software version 7.0 was used to organise, code, label and analyse the data into logical categories/constructs and themes and to index the different pieces of data for easy retrieval. strategies used to ensure quality data the researchers checked quality as the interviews progressed. here they asked the subjects, as the key informants, to judge the researchers’ interpretations of the different issues. as the focus of this study was mainly explanatory, the interview process focused on how things were perceived as the specialists described them, thus using “explanation building” to improve internal validity (yin, 2003:34). findings the first research objective was to describe the nature and extent of pcf in south africa, to lead to the identification of key drivers and inhibitors of pcf. the second research objective was to provide reasons for the current extent of pcf in south africa. the findings are discussed based on the propositions set. findings linked to proposition 1: internationally there are clear directives for postcommencement finance the detailed analysis of responses by the specialist subjects yielded some salient results pertaining to their thinking about pcf and its impact on business rescue. during the interviews, it became clear that the brps and the financiers held some similar views, but with varying denotations and terminology. instances where the outlook on approaches was similar were therefore grouped in the relevant categories. however, there were also very starkly contrasting opinions, which have been outlined in the results. firstly, clear directives for pcf can be identified internationally, and used as a yardstick for best-practice principles on distressed financing in south africa. results from the expert interviews revealed that key international prescriptions can be identified across the four jurisdictions analysed. secondly, the super-priority status of pcf, an upfront consultative process with all stakeholders (including an agreement on pre-packaged finance prior to filing) and the strictly court-driven process with highly specialised court judges were cited most frequently by subjects as the most common directives for pcf. interestingly, 13 of the 18 subjects reported directives from the us corporate rescue regime. this is probably because chapter 11 is the best-known and most successful rescue system internationally. eight brps and seven financiers mentioned practices in australia, while the uk and canadian regulations were the least known. the subjects identified a number of best-practice considerations for pcf locally. the consultative nature of the processes, the early engagement with key stakeholders and the super-priority status of pcf were cited many times, and were therefore identified as the main international prerequisites for pcf. the specific rescue culture of a country was also deemed important, impacting on the nature of rescue proceedings and the dealings among the different parties involved. based on the above, the research found support for the proposition that clear international directives for pcf could be identified. sajesbm volume 6, (2013) 181 www.sajesbm.com article no 182 findings linked to proposition 2: post-commencement finance for business rescue in south africa is almost non-existent. most subjects stated that the current extent of pcf in sa is small to non-existent. this is a concern, as the ability to successfully raise pcf has a major influence on the overall successful outcome of a business rescue, stressed by seven brps and four financiers. upon further enquiry as to the reasons for the low levels of pcf in south africa, the subjects shared the reasons detailed in table 3. these are reported for the two groups of subjects, including how many subjects cited each one. table 3: reasons for the apparent current non-existence of pcf in south africa ranking mentione d by # brps mentioned by # fins 1st newness of legislation: lack of understanding of business rescue legislation; do not want to take a risk on the “unknown”. processes not clear, many loopholes and inefficiencies. 4 3 2nd lack of case law and legal precedents: creates uncertainty and is expensive to test. 6 4 3rd negative role of the banks: powerful role of banks in business rescue – sway proceedings in their favour due to majority vote. banks use loan documentation inappropriately – state that you are in breach if you file for business rescue; you have to consult with them first before filing (contra to act). banks are uncompromising and unreasonable during pcf negotiations as they already have security, don’t want to take a loss. 2 2 1 4th companies are incorrectly filing for br: wrong reasons, wrong size, receiving wrong advice, poor timing. 3 5th poor quality rescue plans. 3 6th abuse of the system: companies are deliberately filing for br as delaying tactic to buy time, ulterior motives. erodes trust of financiers (related to factor 4 above) 3 7th viability of business is poor 1 8th lack of security and available unencumbered assets 1 [note: brp = business rescue practitioners; fin = financiers] the main reasons for the lack of pcf shared by most subjects therefore centre mainly on the fact that the legislation is still very new, ill understood and incorrectly applied in practice, as well as the lack of case law to interpret the act, and incorrect filings due to the wrong interpretation of the law. in addition, the powerful influence of the banks, and their lack of cooperation in the process, has a negative impact on the outcome of pcf negotiations. subjects reported that in the few instances when pcf is advanced, they have observed in what format or shape it is provided, as well as who the typical financiers are. uncertainties were raised regarding the definition and interpretation of what constitutes pcf, including lack of clarity on the definition of insolvency. it is critical that such uncertainty be clarified in order to provide potential financiers with the confidence that their funding will be recognised as a higher priority debt and the certainty that it will be repaid. sajesbm volume 6, (2013) 182 www.sajesbm.com article no 182 it can therefore be concluded that support was found for proposition 2, i.e. that the current extent of pcf in south africa is almost non-existent. findings linked to proposition 3: post-commencement finance varies over clear phases the general response to this question from brps and financiers alike was that the different phases would be determined by, and detailed in, the business rescue plan itself, therefore it would include all financing required, from filing (day one of business rescue) until the closure of rescue proceedings. it would also be further affected by the particular context of the business itself, and the product or service that it provides. currently there is a perceived high risk for a lender advancing financing in the period immediately after filing but before approval of the plan. the probable reason for this is that should the plan not be approved, there is no clarity about whether this loan would constitute pcf and whether the lender would be repaid. although this appears incorrect in terms of the definition of pcf in the act, the view of certain of the financiers reinforces this perception. table 4 lists the three key phases of pcf that were identified during the interviews, and the period covered by each phase. it was noted that each phase might be financed by a different lender. support for proposition 3 was therefore found that pcf varies over clear phases. table 4: key phases of pcf identified by subjects phase # phase name period 1 critical and emergency funding immediately post-filing to first meeting with creditors – associated with working capital to keep the business operating 2 pre-plan funding after phase 1 funding has been stabilised to pre-rescue plan approval 3 post plan exit funding after rescue plan until business has come out of financial distress findings linked to proposition 4: prerequisites for successful post-commencement finance can be identified during the interviews a range of prerequisites for success were shared by both financiers and brps. there were many correspondences between the two groups of subjects; however, there were also numerous items identified that were unique to a particular group. these differences have been emphasised in table 5, which lists the seven key directives that were identified, the number of times the item was mentioned during interviews, and how many subjects cited each prerequisite. ranking was arbitrarily based on the number of mentions. sajesbm volume 6, (2013) 183 www.sajesbm.com article no 182 table 5: prerequisites for successful pcf identified by subjects ranking prerequisites for success (number of mentions) mentioned by # brps mentioned by # fins 1 the availability of security (34) 8 6 2 positive impact of the profile and actions of the business rescue practitioner (32) 6 7 3 a sustainable plan based on a viable business (30) 9 6 4 distressed businesses involving and engaging financiers upfront, prior to filing for business rescue (22) 6 3 5 earlier filing for business rescue by distressed businesses (15) 6 3 6 good relationship of financier with management and the brp: trust, openness and transparency (8) 4 6 7 existence of another financial backer/potential buyer (7) 2 3 other considerations: the risk of losing more if they do not provide funding; the need to protect or preserve their existing security; the need for the value and commercial viability of additional financing to be visible; and certainty of being repaid. as can be seen from table 5, fourteen of the subjects felt that the most important criterion for success was having sufficient security available while a further 13 subjects felt that the role of the brp had an immense impact on the ability to successfully raise pcf. lastly, 15 subjects stated that a critical success factor was the existence of a viable business case (model), supported by a sustainable rescue plan. thus support was found for proposition 4: prerequisites for successful post-commencement finance can be identified. findings linked to proposition 5: the reasons for lenders’ lack of interest in postcommencement finance are clear. the response to this proposition was the most voluminous and comprehensive of all the questions posed to subjects. the reasons for the failure in the quest for pcf also invoked the most passion and frustration by subjects. table 6 lists 11 reasons for the apparent lack of interest of lenders in pcf, the number of times each was mentioned, and how many subjects from each group cited each reason. table 6: reasons for lack of interest in pcf by lenders as identified by subjects ranking reasons for lack of interest (number of mentions) mentioned by # brps mentioned by # fins 1st negative impact of the profile and actions of the business rescue practitioner (51) * 7 6 2nd business rescue filing by distressed businesses for wrong purpose and too late (46) * 7 6 3rd inadequate business rescue culture and perceptions of business rescue in south africa (45) 8 5 4th concerns and uncertainty regarding the priority ranking of pcf (38) 6 4 sajesbm volume 6, (2013) 184 www.sajesbm.com article no 182 5th banks being conservative and risk-averse due to regulations such as basel (23) 4 7 6th financiers reluctant to risk losing money (21) 6 4 7th lack of cooperation by banks during business rescue proceedings (20) 7 5 8th distressed business not involving and engaging financiers prior to filing for business rescue (13) * 2 3 9th inadequate state of the relationship of financier with management and the brp (5) * 2 2 10th non-availability of security (4) * 2 1 11th financiers lacking confidence in the rescue plan based on a viable business (4) * 3 other: lack of accurate and reliable information; opposing interests; lack of regulation of industry; mistrust of the business rescue system; the degree of opaqueness in the interpretation of the act, company size; lack of awareness, education and understanding of business rescue; financiers not wanting to lead the precedence-setting process; banks not wanting to lose control of the process. (*) previously identified in proposition 4 as a prerequisite for success six of the prerequisites for success discussed in proposition 4 closely correlate to the reasons reported for lack of interest by financiers. the remaining reasons centre on factors such as the influence of the banks, the south african rescue culture and uncertainties that exist in the industry with regard to pcf rankings. thus support was found for proposition 5: the reasons for lenders’ lack of interest in postcommencement finance are clear. key observations from the findings the research findings presented are consistent with the extant literature. however, this study contributes to the broader theory and expands the subject by identifying the specific complexities in the pcf landscape, as well as current practices identified by those practically involved in the industry. during data collection, most subjects stated that the current extent of pcf in sa is small to non-existent. this is a concern, because the ability to successfully raise pcf has a major influence on the overall success of a business rescue. the key observations are discussed and explore insights into the status of pcf as well as success factors to consider for raising pcf in the future. critical pre-filing procedures: early consultation, viability assessment and prepackaged financing the first contribution relates to all the critical pre-filing procedures that are required to take place to ensure a higher probability of securing pcf. these elements seem not to have received the attention they deserve in the literature, but serve as a rich, all-inclusive theme in the overall findings. the key message emerging from these findings stresses that in order for pcf to be obtained successfully, some critical processes need to be followed before a business files for rescue. these include upfront consultation and collaboration with key stakeholders (especially financiers) in order to advise them of the situation, discuss alternatives and options and therefore ensure the buy-in from all parties prior to filing. in line with the findings of pretorius (2013a), it is also critical for the brp to perform a feasibility and sajesbm volume 6, (2013) 185 www.sajesbm.com article no 182 viability assessment prior to accepting the engagement and prior to filing, in order to determine whether the company is an appropriate case (reasonable prospect) for business rescue. lastly, and most importantly, as a result of the above two steps, the future postcommencement financier should be identified, and consensus obtained early on regarding the nature, timing and extent of pcf. these findings concur with international directives and best practice for pcf. the impact of the newness of the legislation: lack of understanding and awareness, deficiency of case law and legal precedents, and incorrect filing by companies the second contribution of this study relates to the impact of the nascent legislation, and the subsequent effects: lack of knowledge about the law, the absence of legal cases to guide interpretation of the act, and the “wrong” companies filing for rescue due to the previous two factors. the absence of sufficient awareness, knowledge and understanding of business rescue has resulted in many players being reticent about participating in the industry because of the many loopholes and inefficiencies that still exist in the law, and the uncertain interpretation thereof. the current perceptions of business rescue further compound its perceived ineffectiveness. this has been exacerbated by the scarcity of case law and legal precedents, which creates uncertainty in the industry. in addition, business rescue is an expensive process for the different players to pursue and test. furthermore, companies usually file too late in their distress timeline, when all possible turnaround and rescue options or efforts would have already been exhausted. financiers are generally interested only in companies which still have a viable business model in place, with potential and realistic future prospects. the previously creditor-friendly culture in south africa, solely protecting the interests of creditors, will also take a long time to change into a debtor-friendly culture focused on corporate renewal. finally, as a result of the above three factors, it has been observed that many businesses that should not be filing for rescue (due to their size or their being more suitable for liquidation) are doing so mainly as a delaying tactic. much of this has to do with these businesses either abusing the moratorium or receiving incorrect advice from financial and legal advisors. often their motives are associated with alternative objectives rather than with rescuing the business. all of these factors unfortunately erode the trust of the financiers. a relationship of trust, openness and transparency with management and the brp is critical for the confidence of the financier in the distressed business. ambiguities in the legislation and uncertainties in the industry a direct consequence of the liability of newness gives rise to the third major contribution of this study. a host of ambiguities has been identified, and the opaqueness of the act gives rise to uncertainty in its interpretation; for instance, the definition of post-commencement funding, the definition of insolvent, the ranking of priorities, what constitutes a successful business rescue, and more. a crucial concern that was raised is the fact that pcf in the local legislation does not enjoy super-priority status in debt rankings especially being ranked after employment. this criterion is a key requirement in the international directives and best practice for pcf. without this provision for super preference, there is little or no incentive for non-traditional financiers (e.g. distressed lenders or private equity firms) to advance funds, as the risk is too high and the returns too low. furthermore, the lack of regulation of the industry, and more specifically the management of brps as a profession, is concerning for all stakeholders and leads to mistrust in the system. sajesbm volume 6, (2013) 186 www.sajesbm.com article no 182 it is therefore critical that these aspects be clarified in order to provide potential financiers with confidence to participate in the industry, as well as certainty that their funding will be recognised as a higher-priority debt during business rescue. the availability of security and related losses for financiers the fourth major contribution sheds light on a critical factor that is almost a fail-safe criterion for a business to be able to raise pcf: the extent of unencumbered assets available as security for the financier. this is a critical non-negotiable factor for almost all (traditional) financiers to provide pcf, as it provides them with the certainty that they will be repaid and/or not lose a substantial amount of their funds if the business is liquidated. therefore financiers might also advance funding in order to protect or preserve their existing security as well as to increase their level of confidence and certainty of being repaid. nontraditional financiers are typically interested in the value and commercial viability of additional financing provided at attractive returns. the role of the brp in the ability to raise pcf: experience, knowledge and ability to prepare a sound rescue plan the fifth significant contribution presented by this study is the significant impact of the role of the brp in the ability of the distressed business to obtain rescue financing. it was evident from the findings that an experienced and competent brp with collaborative networks and a thorough understanding of the business-rescue provisions and associated industry is much more effective at raising pcf than a brp who does not possess the required competencies and qualities. an apparent impact of the above is the effect that the brp competencies (pretorius, 2013b) have on the quality and soundness of the rescue plan presented to creditors. in practice many rescue plans are unsustainable and not based on a viable business. lack of accurate and reliable information also further aggravates the problem (pretorius & holtzhauzen, 2008:100). dominant (and potentially adverse) role of the banks the sixth contribution of this study pertains to the impact that banks have had on the ability of brps to raise pcf. as banks are usually the major creditor (and therefore have a majority vote during business rescue proceedings), they often have a significant influence on the outcome of the rescue plan, the pcf raised and ultimately the success of the business rescue. banks have been perceived and blamed as too conservative and risk-averse and therefore not cooperative during proceedings. banks will also seldom provide additional financing, unless another financial backer or potential buyer of the business has already committed to the distressed business. some of the reasons provided for this are that because of the highly regulated industry in which they operate, they are uncompromising and unreasonable during pcf negotiations; they always want to make sure they do not lose any money or dilute their security, nor lose control of the process, and that no other creditor is better off than the bank as the main creditor. this paper, however, does not question the internal decision making structures of banks but only report the perceptions of the subjects. discussion and implications for industry the discussion expands some key insights obtained from this research. firstly, the subjects confirmed that there were clear and crucial directives for pcf found internationally that could be utilised as best-practice principles for the utilisation and application of pcf in south africa. the data from the study largely supported the literature in identifying these directives, but also stressed that some elements appear to be more important than others, depending sajesbm volume 6, (2013) 187 www.sajesbm.com article no 182 on the context (e.g. priority of the ranking and early finalisation of pcf), and that formalisation of procedures by the court is critical for consistency and clarity of processes. secondly, it was confirmed that the current extent of pcf in south africa is almost nonexistent, with various reasons being cited for this. uncertainties and ambiguities in the legislation were identified as a key contributor, confirming unquantifiable risk as a key deterrent to investment. thirdly, the responses confirmed that there are distinct phases of pcf, with specific financing requirements in each phase. they also provided more detail on the typical financier, as well as the approximate time frame of financing required. the purpose is to provide clarity on what vital financing requirements exist in each phase, and therefore identify who is potentially well placed to support the business financially in each of these phases. fourthly, a list of prerequisites for the successful raising of pcf during business rescue procedures was identified. this could assist management, brps and financiers alike and increase the availability of pcf in future. the interviews provided rich evidence about the prerequisites that govern all parties to ensure the securing of pcf on a more regular basis. finally, the research uncovered insights regarding the availability of pcf to ensure a fresh understanding of the business rescue landscape in south africa. the overall findings showed not only that there are prerequisites for finding pcf internationally, as explained in the literature, but that there are many key success factors to be found locally in order to ensure the successful implementation of business rescue proceedings. the findings are significant and noteworthy for the management of businesses, brps and financiers. there are several factors that may influence the availability of pcf, and these can be summarised broadly as follows. early engagement with key stakeholders and a preassessment of the business are critical to identify the nature of funding required, and to obtain commitment for financing from a proposed lender. according pcf priority status is crucial to attract financiers, but this needs to be supported by sufficient and available security, a sound rescue plan and a sustainable business model. crucial in all of these steps is the role of the brp, who has to build credibility, confidence and trust with all key parties in order to win their support and persuade them to believe in the future potential of the business. open, regular and transparent communication is essential in all dealings described. some of the reasons for the current failures in raising finance are symptomatic of the fact that the legislation is barely 28 months old, and has not had sufficient time to settle, mature and develop into concrete guidelines and processes. framework proposed the primary enhancers and inhibitors of pcf are presented as a framework to illustrate the key success factors that promote pcf, as well as disincentives for pcf in south africa. there is an overlap with the key international directives for pcf. this framework could be used by management, brps and academics alike to increase the likelihood that approved pcf will become available. sajesbm volume 6, (2013) 188 www.sajesbm.com article no 182 figure 1: primary influencers of enhanced pcf (own compilation) process strictly court driven and highly formalisedprocess strictly court driven and highly formalised international prerequisites 1 pre-assessment, early establishment and securing of pcf 2 lenders require security to reduce the risks of nonpayment 3 rankings and priority status of pcf – incentive 4 maturity of rescue law and case precedents enhancersenhancers inhibitors/restrictorsinhibitors/restrictors upfront engagement with financiers prior to filing for business rescue upfront engagement with financiers prior to filing for business rescue much easier filing for business rescue by businesses much easier filing for business rescue by businesses the availability of security, i.e. unencumbered high quality assets available in the business the availability of security, i.e. unencumbered high quality assets available in the business the impact of the profile and actions of the business rescue practitioner the impact of the profile and actions of the business rescue practitioner a comprehensive and sustainable plan based on a viable business with sound underlying business model a comprehensive and sustainable plan based on a viable business with sound underlying business model an open and transparent relationship between management and its financiers an open and transparent relationship between management and its financiers another financial broker another financial broker no upfront involvement of financiers prior to filing for business rescue no upfront involvement of financiers prior to filing for business rescue filing for rescue too late and for the wrong purpose filing for rescue too late and for the wrong purpose unavailability of sufficient security unavailability of sufficient security concerns and uncertainty regarding the priority and ranking of pcf concerns and uncertainty regarding the priority and ranking of pcf lack of regulation of industry and uncertainties in the act lack of regulation of industry and uncertainties in the act financiers lack of confidence in the rescue plan based on a perceived non-viable business financiers lack of confidence in the rescue plan based on a perceived non-viable business negative state of the relationship of the financier with management and the brp negative state of the relationship of the financier with management and the brp the negative impact of the profile and actions of the business rescue practitioner the negative impact of the profile and actions of the business rescue practitioner sajesbm volume 6, (2013) 189 www.sajesbm.com article no 182 limitations, future research and implications research limitations research methods and strategies are always subject to limitations. three are specific to this research: � bias from the researchers in interpretation of the data, as explored in the methodology section � the timing of the research, which took place within the first two years of the new regime. the landscape may therefore change in another two years. however, the principles are in line with international literature and general works on business failure. � finally, as the sample is not representative of the population (universe), non-probability sampling may result in a finding that is not representative of the population. however, sufficient saturation was achieved for the results to be generalised. recommendations for future research the topic of this research is relatively new in academic terms, and consequently the research design was exploratory in nature. therefore the research has focused on building theory, rather than on testing that theory. future avenues for research might include an explanatory study utilising either qualitative or quantitative methods, and utilising real-life business-rescue case studies (successful or not) that have been completed since may 2011. the research project has been aimed at uncovering insights regarding the current pcf levels and best-practice principles to ensure success. future research to quantify the status of pcf might be useful to confirm and validate the findings of this research. finally, the relation between business plan quality and access to pcf would probably be of great benefit to the industry. such research is under way. implications for business the sa business rescue legislation is an important tool to support businesses in financial distress, but it has had limited success since its recent enactment. consensus is that the legislation itself and its purpose are sound; however the interpretation and implementation thereof result in the inability of businesses and practitioners to raise pcf, and ultimately business rescue fails as a whole. the legislation has the potential to support the south african government in achieving the macro-economic and social goals for south africa, by reducing the incidence of liquidation and business failure and thereby preserving the country’s levels of employment. companies, brps, financiers and government alike should offer collective support to facilitate and promote the development and stimulation of this crucial corporate renewal industry. this could be done by taking cognisance of the recommendations outlined for each party in this paper, as well as by utilising the framework proposed. it would be naïve to believe that the road to an established and successful business rescue industry would be without its challenges and constraints; however, the most visionary players will not view these as inconveniences to overcome but rather embrace these as opportunities to leap ahead of competitors and carve out competitive advantage. “a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty” (winston churchill). sajesbm volume 6, (2013) 190 www.sajesbm.com article no 182 acknowledgements the authors are indebted for their time and effort to the subjects who participated in the interviews. references cipc (companies and intellectual property commission). 2012. law society of south africa/unisa workshop, 21 september. johannesburg: cipc. cork, s. k. (1982). report of the review committee in insolvency law and practice. retrieved november 5, 2012, from http://discovery.nationalarchives.gov.uk/searchui/details?uri=c11294862 du preez, w. 2012. the status of post-commencement finance for business rescue in south africa. johannesburg: gordon institute of business science. unpublished guest, g., bunce, a. & johnson, l. 2006. how many interviews are enough? an experiment with data saturation and variability. field methods 18(1): 59–82. leedy, p.d. & ormrod, j.e. 2001. practical research: planning and design. 7th edition. upper saddle river, nj: merrill/prentice hall. lotheringen, a. 2013. personal communication, 17 june. port elizabeth. marshall, c. & rossman, g.b. 2006. designing qualitative research. thousand oaks, ca: sage. pelser, h. 2012. sa's business rescue track record. (september 4). available at: http://www.moneyweb.co.za/mw/content/en/moneywebindustrials?oid=609761&sn=2009+detail [accessed 20 september 2012]. pretorius, m & holtzhauzen, g.t.d. 2008. ‘critical variables of venture turnarounds: a liabilities approach’, southern african business review, 12(2):87-107. pretorius, m. 2009. defining business decline, failure and turnaround: a content analysis. south african journal of entrepreneuship and small business management ns 2(1.1): 1-16. pretorius, m. 2012, july 11. business rescue plans (unpublished research). pretorius, m. & holtzhauzen, g.t.d. 2013. ‘business rescue decision making through verifier determinants – ask the specialists. south african journal of economics and management sciences. 16 (4), december 468-485. pretorius, m. 2013a. tasks and activities of business rescue practitioners. south african business review 17(3) december (forthcoming). pretorius, m. 2013b. a competency framework for the business rescue practitioner profession. paper presented at south african institute of management scientists conference held 16-17 september. potchefstroom, south africa. republic of south africa. 2008. south african companies act 71 of 2008. government gazette 421 (32121). available at: http://www.info.gov.za/view/downloadfileaction?id=98894 [accessed 22 february 2012]. saunders, m. & lewis, p. 2012. doing research in business and management. harlow, essex: pearson education. statistics south africa. 2012. statistical release p0043: statistics of liquidations and insolvencies (preliminary). available at: www.statssa.gov.za [accessed 5 november 2012]. sajesbm volume 6, (2013) 191 www.sajesbm.com article no 182 vriesendorp, r.d. & gramatikov, m.a. 2010. funding corporate rescue: the impact of the financial crisis. insol international insolvency review 19(3): 209–237. yin, r.k. 2003. case study research: design and methods. thousand oaks, ca: sage. abstract introduction methodology results discussion of findings conclusion and recommendation acknowledgements references about the author(s) ishmael o. iwara institute for rural development, faculty of agriculture, university of venda, thohoyandou, south africa beata m. kilonzo institute for rural development, faculty of agriculture, university of venda, thohoyandou, south africa jethro zuwarimwe institute for rural development, faculty of agriculture, university of venda, thohoyandou, south africa vhonani o. netshandama department of community engagement directorate, faculty of human and social science, university of venda, thohoyandou, south africa citation iwara, i.o., kilonzo, b.m., zuwarimwe, j. & netshandama, v.o., 2021, ‘entrepreneurs’ endogenous attributes necessary for small enterprise success in vhembe rural areas, south africa’, southern african journal of entrepreneurship and small business management 13(1), a331. https://doi.org/10.4102/sajesbm.v13i1.331 original research entrepreneurs’ endogenous attributes necessary for small enterprise success in vhembe rural areas, south africa ishmael o. iwara, beata m. kilonzo, jethro zuwarimwe, vhonani o. netshandama received: 17 apr. 2020; accepted: 23 mar. 2021; published: 20 may 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: enterprises in south africa, especially in rural areas, continue to fail, despite the continuous support from government. a key contributing factor is that most enterprises’ support is channelled to exogenous factors without recognising their endogenous predisposition as well. aim: this article isolated entrepreneurs’ endogenous attributes which if complemented with exogenous support could spur enterprise success. setting: this study focussed on addressing enterprise failure in rural areas of vhembe; however, the findings can be applied in other areas in south africa and beyond. methods: a sample of 81 participants was drawn using the snowball sampling technique. the qualitative data gathered from this sample using a semi-structured questionnaire were then analysed through atlas-ti v8 from which 49 items were isolated. this informed a quantitative component that entailed the development of a 5-point likert scale for data collection in the second phase of the study, where, subsequently, 280 respondents were engaged. the principal component analysis was used to reduce the data dimension of 49 items to five principal components which accounted for 68.794% of the total variance. results: the five principal components isolated were bridging-networks (38.044), self-belief (15.802), risk-awareness (6.144), resilience (4.532) and non-conforming (4.271). further analysis was performed on data collected from 83 participants who met the 50% performance threshold using the linear regression. bridging-network is the most important endogenous success factor in the study area, followed by nonnon-conformist risk-awareness, resilience and self-belief. conclusion: results conform to grassroots realities, thus, a framework anchored on this was developed to support enterprises grassroots enterprises. keywords: endogenous attributes; enterprise failure; rural area; success factors; grassroots realities. introduction small scale enterprises’ failure in south africa has been a topical issue for years. trends of enterprise performance in the country indicate that growth of local enterprises, especially small, micro and medium enterprises (smmes), has declined in the recent years (asah, fatoki & rungani 2015; douglas et al. 2017; madzimure 2020; rabie, cant & wiid 2016). this has positioned the country to be at par with countries with the high enterprise failure rates in the world. according to the small enterprise development agency (seda 2014/15), the failure rate of newly established enterprises stands at 75%. nheta et al. (2020) suggested a framework for improving entrepreneur preparedness as three out of four enterprises collapse within 3 years of their establishment. the resultant socio-economic predicament poses serious challenges to the country’s employment prospects. indeed, south africa is considered as having the highest youth unemployment in the world (stat sa 2018), and the high unemployment issue has been linked directly to smmes’ failure in the country (iwara et al. 2019; nyamunda & van der westhuizen 2018; tshabalala 2014). evidence from developed economies, such as usa, singapore, japan and china also indicates that smmes development is the backbone of economic growth and contributes significantly to overall employment in these countries (musa & semasinghe 2013). a close look at smmes failure in south africa shows that there is underutilisation of certain endogenous predisposing factors to successful venturing (iwara 2018; nkondo 2017). it seems that enterprise support in the country emphasises more on exogenous factors, such as access to finance, security and the market. endogenous factors have not been given ample attention in small business research, even though in some countries they have been found to complement exogenous factors effectively. according to blume and sargent (2015), a holistic entrepreneurial activity is that which successfully harnesses both exogenous and endogenous components in its framework, although there is a strong belief that a significant component of smmes’ failure is attributable to constraints from the exogenous environment, especially finance (agbenyegah 2013; agwa-ejon & mbohwa 2015; asongu & odhiambo 2019; cant & wiid 2013; chimucheka & rungani 2011; kato & tsoka 2020; moos & sambo 2018). it becomes particularly worrisome when the majority of smmes with access to various forms of exogenous support still fail (sustainable development consortium 2007; madichie, mpiti & rambe 2019; malebana 2017; ramukumbasup et al. 2011). despite this, the role of endogenous factors towards the success of smmes can be the missing link in their poor performance in south africa. a study in rural areas of the limpopo province by ladzani and netswera (2009) established that nearly 80% of the smmes perceived access to finance as the main challenge to small enterprises. this observation is consistent with studies conducted in other areas of south africa, and this is noted by scholars, such as hansen et al. (2012), agwa-ejon and mbohwa (2015), moos and sambo (2018). more often, the support offered to smmes by the government and other stakeholders focussed more on exogenous factors that include finance and access to market. the department of trade and industry (dti), for instance, ensures access to small business support mainly in the form of funding and information, strengthening small businesses’ advocacy as well as enhancing effective service and monitoring impact (dti 2007). the continual benefit from exogenous factors, especially, finance is now in doubt because of the high failure rate of those who have access to finance. for instance, abor and quartey (2010) contended that endogenous attributes, such as ability to identify suitable product for a particular market, formalisation of an enterprise and proper record keeping, are of equal importance to the operation of a successful small enterprise, as access to finance. this narrative conforms with mmbengwa (2013), nkondo (2017) and iwara (2018) arguments that failure to consider endogenous attributes contributes significantly to enterprise failure in south africa. based on these arguments, it can be assumed that entrepreneurs’ endogenous factors play a significant role towards enterprises’ success as exogenous factors do; however, these have not been given much attention. entrepreneurship support systems and entrepreneurs have positioned exogenous factors as crucial for enterprise success, neglecting the place of endogenous factors and this is a concern that should be addressed urgently. this article established the endogenous attributes that complement exogenous attributes in enhancing small enterprises’ success. these attributes were identified from local entrepreneurs who have managed small enterprises successfully in rural areas. the study’s focus on successful enterprises is with the assumption that they can better inform, from experience, whose attributes are required not only to drive, but guarantee smmes success. these attributes emanate from grassroots enterprises in the rural areas, hence, the belief that they can inform small enterprises capacity building in the same context. this article is organised as follows – firstly, an overview of enterprise development and endogenous attributes associated with it is explained, then the methodological approach which entails the composition of the participants, sampling techniques, data collection approaches and analytical methods is discussed and lastly, the findings along with interpretations are expatiated. enterprise development in south africa cognisant of the fact that entrepreneurial activities, especially, those of small enterprises are critical to improving economic growth in the country (lekhanya & mason 2014), the dti was introduced as an integrated institution for the promotion of entrepreneurship and small enterprises development (dti 2007). this was amongst other integral reforms by the post-1994 government to reintegrate the marginalised into the economy, create job opportunities and poverty reduction through entrepreneurship (white paper on local government, republic of south africa [rsa] 1998). as earlier mentioned, the dti was designed to enhance access to small business support of various forms and monitor their impact. the dti black business supplier development programme, small enterprise finance agency (sefa) and the industrial development corporation (idc) were structures created to support the mandate. subsequently, the national youth development agency (nyda), the seda, the centre for small business promotion (csbp), the ntsika enterprise promotion agency and the khula enterprise finance limited were also initiated (sa economic development department 2014). in the limpopo province, where the current study was conducted, ladzani (2010) explained that the provincial government was involved in the discussion process that led to the white paper on the national strategy for the development and promotion of small business in the country. taking into account that smmes are pivotal for leveraging unemployment and the economic inequality the country is grappling with, the province joined efforts with other provinces to support the national small business amendment act of 2004. this provides, amongst others, a favourable business environment, market accessibility, flexible policies and regulations as well as security for small businesses development. in the context of limpopo, two key structures were established – the limpopo economic development enterprise (lede) that seeks to develop and promote a suitable enterprise sector by assisting with investment opportunities for grassroots entrepreneurs (lede 2006) and the trade and investment limpopo (til) that is responsible for the development of a network for establishments that intend to expand its market operations within the country and beyond (til 2006). several other initiatives through the local municipal governments were rolled out in an effort to scale up enterprises; however, despite these efforts, small enterprises’ failure rates continue unabated. based on the synthesised literature, several efforts made to promote enterprises are anchored on exogenous factors, with very little attention paid to the contribution of entrepreneurs’ endogenous factors. this gap could account for the failure, therefore, leaving room for researchers to explore the role of endogenous factors in business success. endogenous attribute entrepreneurs’ endogenous attribute is a well conceptualised construct in schumpeter’s innovation theory of entrepreneurship and economic development. endogenous attributes refer to the internal traits of an entrepreneur (ed. schumpeter 1934). it is the inner features, morals and mental qualities distinctive to an individual which influence their motives, actions and performance (ha et al. 2014; ummah & gunapalan 2012). schumpeter opines that endogenous factors are also key drivers that determine positive change in entrepreneurial activities and bring success. innovation, as one of the drivers, is at the centre of economic change and it brings about significant creativity (ed. schumpeter 1934); however, this is not sufficient to guarantee success unless well harnessed. the basic components of innovation, such as invention, diffusion and development of ideas are its identified intrinsic values. the advancement of these values in an entrepreneurial environment makes some entrepreneurs successful whilst others fail even if given equal market opportunity (chu, benzing & mcgee 2007; de faria cosme 2012; krejci, strielkowski & čabelková 2015; ed. schumpeter 1934; stefanovic et al. 2010). in agreement with schumpeter, sledzik (2013) averred that entrepreneurs’ success depends on their ability to combine new goods and services, be innovative, exploit the latest method of production, find suitable markets and sources of supply as well as interact with new organisations in their activities. given these arguments, the place of endogenous factors in business venturing cannot be undermined, thus, sole reliance on exogenous support cannot guarantee successful enterprises. in brazil, djankov et al. (2007) established that ability to relate and collaborate with family, be smart and the ability to harness opportunities timeously are important endogenous attributes entrepreneurs should possess to thrive. in addition, entrepreneurs’ attitude that reflects motivation, capacity to identify and pursue an opportunity, as well as ability to add value to economic goods were mentioned. a comparative study in usa and norway isolated positive mindset and the ability to align to the environment as key entrepreneurs’ endogenous attributes (mongia 2013). shrewdness, a profit-driven mindset, strict management, high level of professionalism and willing to explore new opportunities were also discussed in the literature on american small enterprises (buchanan 2015; acs, szerb & autio 2015). chuang and liao (2010) emphasised the ability to source and hire skilled workers, as well as manage and regulate their activities as ensuring efficiency. these views are consistent with krejci et al. (2015), when they examined the factors influencing the performance of enterprises in ict, in the czech republic; they found that decisions on the nature of investment and earnings-employee ratio based on skills and knowledge were paramount in enhancing the success of small and medium enterprises. in a similar study carried out in malaysia, rose, kumar and yen (2006) investigated the dynamics of entrepreneurs’ success factors and established that understanding of market systems and customer relationship are prime attributes that influence performance. the identification of different endogenous factors responsible for business success, across studies and countries indicates that the entrepreneurship landscape is far from being straightforward. this makes it essential to locate area-specific endogenous attributes for capacity building as what is appropriate in one environment may not apply to another. to emphasise on the need for context-specific research on enterprises, ummah and gunapalan (2012) examined factors influencing entrepreneurial success in sri lanka, and mentioned that innovation and determination are key endogenous factors to successful enterprises. sledzik (2013), siriwan et al. (2013) and ha et al. (2014) emphasised innovative thinking, creative mindset, ability to work exceptionally hard and risk-taking as influential. some of these results conform with the findings of studies made in thailand, laos and bangladesh which identify with working exceptionally hard, good communication, marketing skills, self-evaluation and the understanding of modern technologies as important endogenous entrepreneurial attributes (ha et al. 2014). murugesan and jayavelu (2017) and baluku, matagi, musanje, kikooma and otto (2019) highlighted the roles of optimism, personality and perceived control as well as self-efficacy. in another study, carried out in kenya, maina (2012) revealed the ability to relate personal ideas with what is existing in the market as essential. similarly, bensassi and jabbour (2017) asserted that skills and experience are key endogenous attributes responsible for the success of enterprises run by returning migrants in egypt. in addition, the international financial corporation (ifc) (abouzaid 2018), belz (2015) and al-youm (2015) established family bonds and social ties as endogenous attributes responsible for good enterprise performance. swai (2014) mentioned the ability to handle uncertainty and failure, opportunity identification skills and self-confidence as prime factors in tanzania. in the context of south africa, studies have shown variation in the nature of endogenous attributes required to run a successful small enterprises. a study by bozas (2011) performed in umhlathuze, kwazulu-natal province identifies strict financial management, client management, sound planning and self-discipline as success-driving entrepreneurs’ endogenous factors. mmbengwa (2013) also mentioned these on the subject of innovation and risk-taking in the peri-urban poor communities of george municipality in the western cape province. nkondo (2017) and iwara (2018) whose studies were performed in thulamela local municipality in the limpopo province, documented collaborative spirit, marketing and managerial skills as key endogenous attributes; however, which of these factors are peculiar to entrepreneurs in rural areas of vhembe have still not been documented, and this may constrain targeted support for the area. methodology this study was conducted in vhembe district municipality, limpopo province. participants, smmes entrepreneurs, were drawn from villages within the four local municipalities in the district, namely, collins chabane, makhado, musina and thulamela. this was performed using snowball and purposive sampling techniques and whilst the snowball sampling technique enabled one participant to refer to another, the purposive sampling technique was ideal in selecting entrepreneurs with not less than 5 year experience of business operation. an exploratory mixed-method research design was adopted which allowed a quantitative research method to build on a qualitative one (creswell & sinley 2017). the qualitative phase enabled the study to unearth endogenous factors responsible for successful enterprise development and the quantitative component of the study allowed for the clarification of the factors. the use of the atlas-ti v8 open coding system for qualitative analysis extracted 49 attributes from a pool of participants’ narratives (figure 1). a 5-point likert-type scale was then developed for scoring and measuring the attributes which was later tested on 280 participants. figure 1: network diagram showing endogenous variables influencing sme success. principal component analysis (pca) fitted on the data dimension reduced the 49 variables to five principal components (table 1). the bartlett’s test of sphericity and kaiser-meyer-olkin measure (kmo) were used to test both sampling adequacy and the appropriateness of the variables (table 2). in order to isolate successful enterprises from others, profit margin, trends of new products, enterprise survival and enterprise expansion factors were used as a standard for measuring performance. the scale-reliability analysis was performed for cronbach’s alpha test for quality assurance and reliability of the results. furthermore, multicollinearity was tested using the variant inflation factor (vif) method. the importance of the five principal components identified from running pca on 49 proxy attributes for examining enterprise development was investigated using two linear regression models. firstly, a regression model fitted on the overall sample (n = 280) (table 3) and a regression model fitted on the sample that met success standards of the study (n = 83) (table 4). table 1: endogenous factor loading and communalities based on a principal component analysis with varimax rotation (n = 280). table 2: kaiser-meyer-olkin and bartlett’s test. table 3: the significant endogenous variables influencing small and micro scale enterprises success (n = 280). table 4: the significant endogenous variables influencing sme success (n = 83). ethical considerations the ethical approval was obtained from the university of venda research ethical committee, sardf/19/ird/01/2603. results results obtained from atlas-ti qualitative analysis present 49 endogenous attributes inherent in entrepreneurs (figure 1). the use of pca in the quantitative analysis reduced the data structure made up of 280 rows and 49 variables to five principal components (see figure 2). the first five variables selected have eigen values over two; together, they explain over 68.796% of the total variability in the data structure, thus, the remaining 44 variables account for 31.204% (table 1). this leads us to the conclusion that a five-factor solution is adequate. figure 2: the scree plot and eigen-values used to extract endogenous factors. the first factor explained 38.044% variance which is the highest. it was labelled ‘bridging networks (bn)’ because of high loadings by the following items – create linkages for larger sales (0.910), continuous search for change (0.877), diversify investments (0.875), involvement in online business (0.850), consistent with specific business ideas (0.841) and identify with business associations (0.840), collaboration and partnership (0.802). the second factor was labelled ‘sb’ because of high loading by the following variables – aim for bigger opportunities (0.870), complete task within set timeframe (0.852), effective control of credit to client (0.817), good relationship with suppliers (0.795), make future projections (0.778), self-sustenance (0.766) and good customer relations (0.711). the variance explained by this factor was 15.802%. the third factor from the pca was labelled ‘risk awareness (ra)’ because of high loadings of the following items – desire for control (0.798), maintain moderate receivables from clients (0.789), ideation and survey before investments (0.748), profit reinvestments (0.668), influence employee in a moderate manner (0.659) and work with timeframe (0.639). the variance that loaded in the factor was 6.144%. the fourth factor was named ‘resilience (r)’ given that it loaded – confidence in executing a task (0.696), ability to deal with obstacles (0.659), perseverance and courage (0.501) and improve from failure (0.497). the factor had 4.532% variance. the fifth factor was called ‘nonconformist’ because of high loadings by the following items – perform unpleasant tasks (0.738) and seek out unique ways of doing business (0.587). the variance explained by this factor was 4.271%, which is the least amongst the five factors extracted in the pca. except for one item (improve from failure) which had a variance of 0.497%, other 25 out of the 26 extracted items in the pca loaded 50 and above. this reflects that the factors extracted a large variance. the cronbach’s alpha reliability test performed for quality assurance yielded the following points for the five factors: 0.956, 0.927, 0.927, 0.458 and 0.811. the kmo was 0.914 (table 2), supporting halim et al. (2014) who maintained that the kmo is most acceptable at 0.50 and above. bartlett’s test of sphericity yielded 17470.862 with 0.00 significance, showing the level of appropriateness to utilise pca. the result showing loading and commonalities based on a pca with a varimax rotation (n = 280) is presented (table 1). regression model endogenous variables the model relating enterprise success with five endogenous factors identified from running pca on the survey data (table 3) is given as (equation 1): where p (performance) is the dependent variable and bn, sb, ra, r and nc (non-conformist) are the explanatory variables of the regression model. the test for multicollinearity performed using the vif method yielded 4.291. this is below five and within the scientific acceptable limit, thus, there is no significant presence of multicollinearity that may cause turbulence. the model, therefore, is adequate and the result is reliable. the intercept value of β0 = 32.78 is the value of enterprise performance when all explanatory variables are held constant, that is, bn = sb = ra = r = nc = 0. the intercept value is statistically significant at 5% level of significance (t = 43.2, p < 0.05). this means that the value of the intercept is significantly different from zero as was assumed by the null hypothesis (h0:β0 = 0) which, in this case, was rejected in favour of the alternative hypothesis (h0:β0 ≠ 0). the coefficient value for the bn variable is β1 = 21.6, implying that enterprise performance increases by 21.6% for every unit increase in the rating of the variable, when all other explanatory variables are held constant (that is, sb = ra = r = nc = 0). in the context of this study, this means that as the rating for the bns variable increases, the performance rating also increases. the coefficient value of the bns variable is statistically significant at 5% level of significance (t = 28.5, p < 0.05) implying that the parameter value is different from zero. the coefficient value of the sb variable (β2 = 1.35) tells us that the performance increases by 1.35% for every unit increase in the rating of the variable when all other independent variables are set to zero (that is, bn = ra = r = nc = 0). this parameter is non-statistically significant at 5% level of significance (t = 1.78, p = 0.07) implying that the parameter value was different from zero. the ra coefficient value of β3 = 6.18 as reported, signifies 6.18% increase in enterprise performance for every unit increase in the rating of the variable whilst holding other variables constant (bn = sb = r = nc =0). the parameter value is statistically significant at 5% level of significance (t = 8.14, p < 0.05), thus, the coefficient value for the ra is different from zero. regarding the r variable, a parameter value of β4 = 2.98 was reported implying that every unit increase in the factor causes enterprise performance to increase by 2.98% whilst holding other independent variables constant. this parameter value is statistically significant at 5% level of significance (t = 3.92, p < 0.05), therefore, the null hypothesis that the coefficient value was equal to zero is rejected in favour of the alternative hypothesis which says that the coefficient value was different from zero. the coefficient value for the nc variable of β5 = 1.92 was reported implying that enterprise performance increases by 1.92% for every unit increase in the rating of the variable. the parameter value is statistically insignificant at 5% level of significance (t = 3.95, p < 0.055), implying that the coefficient value for the nc is indifferent from zero. overall, the model is statistically significant at 5% level of significance (f [5.274] = 180.6, p < 0.05), thus, having the ability to explain 77% of the total variation in enterprise performance (adjusted r-squared value = 0.76). also, based on the above results, it can be inferred that bn and ra are the most important factors amongst all five factors influencing enterprise performance towards success, followed by others. regression model, endogenous variables (n = 83) the multi linear regression (mlr) was fitted to investigate enterprise success and five principal components based on the data structure of successful enterprises (n = 83) and the results are explicitly stated (table 4). the model is given as (equation 2): the multicollinearity test using vif indicates that the overall vif value for the data structure fitted in the model is 1.1947, which is less than two. this implies the absence of multicollinearity in the dataset, thus, the model is adequate and the result is reliable. the intercept value of β0 = 56.71 means that the value of performance is constant at 56.71% when all other variables are held constant (that is, when bn = sb = ra = r = nc = 0). the intercept value is statistically significant at 5% level of significance (t = 10.97, p < 0.05) implying that the intercept value is different from zero (that is, the null hypothesis that β0 = 0 is rejected in favour of the alternative hypothesis (h0:β0 ≠ 0). the coefficient value of (β1 = 7.58) for the bn variable shows a 7.58% increase in performance per every unit increase in the rating of the variable when other explanatory variables are held constant (that is, sb = ra = r = nc = 0). this parameter value is statistically significant at 5% level of significance (t = 2.48, t = p = 0.01), that is, the parameter value of β1 = 7.58 is different from zero as the null hypothesis that β1 = 0 is rejected in favour of the alternative hypothesis (ha:β1 ≠ 0). the coefficient value (β2 = −1.05) for the sb variable means that performance decreases by 1.05% for every unit increase in the variable when other explanatory variables are held constant, (that is, bn = ra = r = nc = 0); however, the parameter value (t = -0.78, p = 0.43) is not statistically significant at 5% level of significance, implying that the parameter value of the variable is indifferent from zero as it failed to reject the null hypothesis that β2 = 0. similarly, the coefficient value for the ra variable of β3 = 1.32 means that enterprise performance will increase by 1.30% for every unit improvement on the factor whilst other independent variables are held constant (bn = sb = r = nc = 0); however, this parameter value is statistically non-significant as the null hypothesis is retained at 5% level of significance (t = 0.50, p = 0.61). a coefficient value of β4 = 3.70 is reported for the r factor. the parameter value means that for every unit increase in the rating of the r variable, enterprise performance will increase by 3.70%. this parameter is statistically non-significant at 5% level of significance (t = 1.62, p = 0.10) implying that it cannot be differentiated from zero (the null hypothesis of β4 = 0 is retained). a coefficient value of β5 = 0.94 was reported for the nc variable. this implies that enterprise performance will increase by 0.94% for every unit increase in the rating of the factor when other explanatory variables (bn = sb = ra = r) are set to 0. this parameter is statistically insignificant at (t = 0.50, p = 0.64), thus, at this level of significance, cannot be differentiated from zero. overall, the model is statistically significant at 5% level of significance (f5.77 = 2.998, p = 0.00). also, it can be inferred that using the coefficients, bn still holds its position as the most important enterprise success factor followed by r, ra and n whilst sb is the least influential. although, sb has the least impact amongst the five factors, it still needs to be carefully managed as it is negatively related to enterprise success. the model served its purpose for this study, given that it enabled inference to be made on the crucial nature of endogenous factors known to influence enterprise success in vhembe, as obtained post-pca. discussion of findings following a sequential exploratory mixed-method research design, five components emerged as important endogenous predisposing enterprise success. in descending order of importance, they are – bns, non-conforming, ra, r and sb. the discussion of the finding follows this hierarchy of the result. bridging networks based on the result, ‘bns’ as a component encompasses attributes such as creating linkages for larger sales, continuous search for change, involvement in online business, business collaboration and partnerships as well as connecting with other relevant business associations. in the context of this study, bn is the ability to connect and interrelate through various channels that are paramount to business growth. it explains the capacity to establish good relationships with various individuals within and beyond family boundaries (souza et al. 2016). entrepreneurs bns connect them with people who may directly or indirectly support their ideas (akhtar et al. 2015). through this component, entrepreneurs are able to operate with others in a concerted effort to achieve a goal (duchaine et al. 2007), and this is essential for expanding the scale of operation. networking begins with entrepreneurs’ mindset, believing that their ideas are resourceful to society and that people around them have a significant role to play in it. from the narrative, it was explained that: ‘well, the local demand is very little to reach the desired target. we go to urban areas, search for larger firms to supply our products in wholesales. although the profit is lesser when compared with retails it is preferable given the constant flow of supplies in larger amount …’ (participant 19, 31 years old) ‘reaching out to big companies or organisation helps a lot. initially, carrot and beetroot were the only products i supplied. at some point, one of the hotels i had spoken to indicated that there was demand for potatoes in large quantity. at the initial stage, i would buy from others to supply, however, i have started my production on a large scale …’ (participant 41, 27 years old) networking in business has been widely discussed as an important component not only to enterprise performances but also its formation and sustainability. according to mlotshwa and msimango-galawe (2020), the more entrepreneurs were involved in networking that relates to their business ideas and maintain the relationships effectively, and their businesses would perform better. in asia, for instance, the bazaar entrepreneurship model, kaizen entrepreneurship model and wenzhou model of entrepreneurship have networking as an important component (dana 2014; fukase 2015; graupp & wrona 2015; wang, chen & zang 2005). these models were built on the assumption that they will enable connections with essential external stakeholders to promote collectivism – community of practice in business which is very efficient in operating an enterprise. one of the participants mentioned: ‘taking a loan to start a good business in this country is a big deal … aside the strenuous conditions for accessing such of which most people cannot afford, the interest rate is alarming, sometimes up to 30%. one would end up doing the business for their creditors … so, i canvassed and bring my friends into the business and then we agreed on certain amount each should contribute to start the business. aside a few stakeholders we have met for marketing, we are doing perfectly well because all hands are on the desk.’ (participant 28, 34 years old) collectivism, a product of networking in business, enables people with a similar mindset to join resources to create a successful enterprise. studies have shown that networking capacity is a potent factor behind the success of most foreign-owned small enterprises in south africa (charman, petersen & piper 2012; nkondo 2017); this gives them a strong competitive advantage over the locals (malgas & zondi 2020). these researchers explained that foreign entrepreneurs in south africa, especially the asians, often network through various platforms, connect with one another and collaborate amongst themselves in business. networking, therefore, is an ideal skill for locally owned enterprises in the country and the government should invest in it. resilience research has shown that there is a positive relationship between resilient and business development (kunaka & moos 2019). resilience is the ability to endure hardships and uncertainties, and afterwards, recover from any shortfalls (alon & shneor 2017). it explains the ability of entrepreneurs to adapt to disruptions that pose threats to businesses’ existence (kativhu 2019). a resilient entrepreneur, therefore, is steadfast in the pursuit of goals, and persistent in achieving success even in the presence of obstacles (souza et al. 2016). from the narrative, a participant explains: ‘determination and perseverance are key … people feel business will yield result from the moment they start, as a result quit after a while. this is not always the case. one must be passionate to follow their dreams regardless of obstacles and the growth level. i have a strong sense of belonging to my business. i learn from obstacles and each failure.’ (participant 11, 42 years old, male, non-supported in extremely rural area) resilience is pivotal to any enterprise or different forms of business ownership. this is because some ventures ended up failing for issues that could have been managed should there have been moderate r. a participant mentioned: ‘this is my fifth year in this business … i have failed three times in different years but i don’t give up. chicken is vulnerable to weather and certain living conditions as well as prey, so one is bound to encounter uncertainties. sometimes, over 70% of them will die in my farm, and it is a lot of money … i can only check what went wrong, sometimes change their feeds and medication, but i don’t quit. when things are not okay, i operate in small scale until i regain …’ (participant 7, 52 years old) participants’ view of r and business sustainability corroborate those of alon and shneor (2017) who asserted that real entrepreneurs endure uncertainties and see how they could transform them into opportunities, whilst others give up. lack of r would continue to impact negatively on entrepreneurs who have low potential to survive and succeed. risk awareness being aware of a possible risk is essential in directing the nature of investments and the day-to-day tasks of an enterprise (pahuja & sanjeev 2015). this helps entrepreneurs to take precautions ahead of an obstacle and directs proper use of resources to maximise output (saleem & abideen 2011). despite its importance, most entrepreneurs are not risk-conscious; as a result they invest without taking precautions and fail in the long run. a supported female in a rural area mentioned: ‘i am only operating a car wash business … people are beginning to see the potentials in this business in the area and many are investing without minding its implications competition sets in as a result of homogeneity. to make a difference from what others are doing, i am looking for innovative way to render my service, and also look for alternative business to complement …’ (participant 13, 38 years old) in an effort to overcome the risk of failure, some enterprises diversify investments and/or shift resources to areas of higher yield, possibly with low cost as is also recommended by amiri and marimaei (2012) and chavez (2016). risk awareness helps one to have a sense of success and failure in their entrepreneurial endeavours (oser & volery 2012). such senses enable entrepreneurs to make proper adjustments that can assist them to avoid failure. it gives the ability to ‘connect the dots’ and the conviction to follow and efficiently execute an idea and succeed in business (beattie 2016; jan, irshad & nadeem 2013), thus, it is important for entrepreneurs to be conscious of risk. for instance, an entrepreneur mentioned: ‘all businesses have strength, weakness, opportunities and threats. what makes a successful business is the understanding of these factors and how they can either be explored or managed appropriately to avoid failure. i constantly use these factors to evaluate any business action i am about to take; if returns to scale offer more than what i can give in, then the risk is worth taking, otherwise, walk away. besides, i don’t put in too much money at a go in one business initiative but invest in phases, bit by bit until it grows so that i don’t lose much should the business fail.’ (participant 33, 57 years old) literature reveals that successful entrepreneurs take calculated and moderate risks (chavez 2016; karabulut 2016; souza et al. 2016). the pertinent question, however, is – how does an entrepreneur understand what is worth doing? this notion is discussed from different perspectives. in the study area, successful entrepreneurs with ideation subject any business ideas to quality control and assurance before the business is rolled out. this is a sure method to measure the viability of an innovation. these findings are in line with wang et al. (2005) and alon and shneor (2017) who emphasised the need to measure business fit by means of survey. in this, an idea is developed based on an existing gap, and is then tested for quality control before execution (alon & shneor 2017; darnihamedani 2016). an entrepreneur mentioned: ‘no matter how good a business idea, it will fail if not properly positioned. before i even started, i did a bit of survey in the area to see what other enterprises are offering, what the society wants, and the area that could attract more customers … cost of production and external risk such as theft were prime factors in my survey. it is important to understand the nature of market one enters …’ (participant 46, 31 years old) research showed that a moderate risk can be maintained by means of market survey (chavez 2016) or trend analysis using business records (jan et al. 2013). the approach supports souza et al. (2016) who recommended periodic business evaluation and self-analysis to access performance. this provides a basic understanding of businesses with low impact for improvements or potential areas to shift investment direction. according to haq (2015), an understanding of market environment, especially, needs of the society provide the basics for entrepreneurs to navigate smoothly. these attempts enable entrepreneurs to gain insight into the entrepreneurial ecosystem, and plan their enterprise appropriately in a manner that conforms to existing market needs (auerswald 2015). the current study also indicated that entrepreneurs reinvest profit in their enterprises to minimise risk of falling below competition. some entrepreneurs work with timeframe, maintain moderate receivables from clients and influence employees in a moderate manner to deliver. this is consistent with the recommendation from alon and shneor (2017) that employees are variable factors of production, as such, they should be moderately influenced for efficient output. it is suspected that extreme influence and/or pressure on employees may result in stress and unproductivity. some resourceful employees may quit in the event where they cannot withstand the excess pressure. non-conforming being a non-conformist is a sign of novelty, and such entrepreneurs are opportunity-driven and pace-setters. they tend to search for unique and innovative ways of addressing issues rather than the common ways used by their counterparts. an entrepreneur in the study area stated: ‘i do my things my own way to make a difference, father better than what every other person does … in this market environment, competition is high, people are always on the run to imitate anything one introduces, so one has to make a difference to remain relevant … i do printing business, sell stationaries and other items here, some people have started the same thing around. what i did was that i negotiate with people around for delivery service. they could send their work to me through email or whatsapp to print and bring to them. it makes it easier and convenient …’ (participant 30, 26 years old) the freedom to think differently from others makes some entrepreneurs exceptional, given equal opportunities (beattie 2016; parker 2018; tidd & bessant 2018). according to amiri and marimaei (2012) and amorós, etchebarne and felzensztein (2012), entrepreneurs who do not conform to prevailing idea often set a pace for others to follow. they have the ability to remodel existing ideas into new knowledge to solve unique problems (ed. schumpeter 1934). an entrepreneur mentioned: ‘operate business on the basis of market principles and high needs, not following what others are doing … relevant experience and unique pattern of doing things is essential when venturing into a business, especially in farming, which is usually a common business many people can do even without a high level of specialized skills … i just think aloud to make a little difference in everything i do, and this is the secret behind my success …’ (participant 41, 53 years old) participants’ views about venturing into successful businesses imply that for an enterprise to perform exceptionally well, given the high levels of competition, novelty is necessary as it enables them to explore better options, and operate innovatively from others. this reasoning conforms with amorós et al. (2012) and alon and shneor (2017) who contended that having unique ways of doing business shows novelty and this is essential in aging enterprises. non-conformists are inclined to risk investing proactively in areas that facilitate new product and wealth creation, rather than following prevailing ideas (amankwah-amoah, boso & antwi-agyei 2018; beattie 2016): ‘fresh vegetables, fruits and potatoes have high demand in our local market, and everyone is into the business … just too many of us … however, i decided to deviate from others. usually, people use inorganic fertilizers to grow their farms because the soil here is not fertile to guarantee rich products … but i decided to go organic by using cow dung, chicken faeces and sawdust to grow mine … targeting people with health issues and the upper class families. organic products are less expensive to produce but costlier than those produced with inorganic fertilizers …’ (participant 26, 32 years old) non-conformism provides new dimension for occupying the market by means of new ideas and products (jan et al. 2013; mbizi et al. 2013; pahuja & sanjeev 2015; abd rani & hashim 2017). on the other hand, following similar ideas will cause homogeneity wherein too many products pursue few demands. many entrepreneurs may not withstand the competition, hence, fail in the long run. self-belief self-belief explains the confidence and ability to succeed in specific situations or accomplish a task in the face of obstacle. it explains the extent to which an entrepreneur is certain about sufficient capabilities to perform various entrepreneurial tasks successfully (galawe 2017; abd rani & hashim 2017). entrepreneurs with high belief generally go for demanding tasks with hopes of maximising gains. according to a non-supported female entrepreneur in rural area: ‘… in business, one should dream big, make projections and work towards them … it can only be you and your business, so give it all efforts. be the boss, take charge and effective control, total responsibility and account for every action … most importantly, there must be elements of confidence, independence and self-sustenance to plan a business and ascertain good trajectories …’ (participant 39, 61 years old) successful entrepreneurs have a mindset of self-sustenance, confidence in completing tasks within set timeframes, determination for bigger opportunities and a strong sense of controlling relations. seen as a vital business attribute, beattie (2016) and alon and shneor (2017) considered sb as an ability to independently approach, manage and complete an innovative task. essentially, a sb mindset produces a sense of leadership and capacity to ensure that work is performed, at the most efficient time, using appropriate resources and at the barest minimum cost (hsu, wiklund & cotton 2017; karabulut 2016; souza et al. 2016). this is paramount in developing and managing a successful business and being an effective entrepreneur. conclusion and recommendation currently, the support being offered to small enterprises, especially in rural areas of south africa, is mostly centred on exogenous factors and excludes endogenous attributes which are equally pivotal. investments based on endogenous attributes are insufficient because of the widely shared narrative that exogenous supports, such as finance and access to market, are the only influential factors leading to success of smes. for successful entrepreneurship, however, exogenous and endogenous factors should be combined in finding strategies to support the smes. unearthing specific entrepreneurs’ endogenous attributes that should complement the exogenous factors for successful enterprises in the context of vhembe rural areas revealed that bn is a key to enterprise success. entrepreneurs showing r, having ra, being nc and having sb are some of the endogenous factors influencing sme success in the areas. studies have already isolated various endogenous factors in different areas; however, some are area-specific and this brings uncertainties on the precise nature of the support that should be given to grassroots entrepreneurs. the literature has not documented specific entrepreneurs endogenous factor support required in rural areas of vhembe, making the current findings essential for context-specific intervention. most studies conducted on small enterprise in the area make reference to exogenous performance indicators such as small business start-up capital, access to finance, government regulations, security measures and competition from foreign businesses. it is expected, therefore, that these findings will better inform stakeholders on how best to capacitate the grassroots entrepreneurs by harnessing endogenous capital that can complement exogenous factors to ensure small enterprises’ success: whilst investing in exogenous factors, it is essential for policymakers, agencies and entrepreneurship development practitioners to see the need to also improve the endogenous attributes identified in this study. the five factors should be included in toolkits used for entrepreneurial capacity-building in the study area. entrepreneurs should scale up on their endogenous attributes to enable them manage the business landscape and thrive. future studies should endeavour to compare and contrast the five factors highlighted in this study with those from other areas of south africa and beyond, to see how the indicators hold ground. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions i.o.i. was the lead researcher. b.m.k., j.z. and v.o.n. supervised the research initiative. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data available can only be shared through the research host (university of venda), upon resonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abd rani, s.h. & hashim, n., 2017, ‘factors that influence women entrepreneurial success in malaysia: a conceptual framework’, international journal of research 4(1), 16–23. acs, z.j., szerb, l. & autio, e., 2015, the global entrepreneurship and development index. in global entrepreneurship and development index 2014,pp. 39–64, springer, cham. abor, j. & quartey, p., 2010, ‘issues in sme development in ghana and south africa’, international research journal of finance and economics 39(6), 215–228. abouzaid, s., 2018, ifc family business governance handbook, 4th edn., international financial corporation, washington, dc. agbenyegah, a.t., 2013, ‘challenges facing rural entrepreneurship in selected areas in south africa’, phd thesis, north-west university, potchefstroom. agwa-ejon, j. & mbohwa, c., 2015, ‘financial challenges faced by smmes in gauteng south africa’, in international association for management of technology (iamot) conference proceedings, 08–11 june, pp. 1–15. akhtar, c.s., ismail, k., hussain, j. & umair-ur-rehman, m., 2015, ‘investigating the modera_ting effect of family on the relationship between entrepreneurial orientation and success of enterprise: case of pakistani manufacturing smes’, international journal of entrepreneurship and small business 26(2), 233–247. al-youm, a-m., 2015, ‘hazem hassan: family businesses in egypt not growing’, egypt independent, 19 may, viewed 17 july 2019, from https://egyptindependent.com/hazem-hassan-family-businesses-egypt-not-growing/. alon, i. & shneor, r., 2017, ‘more than makeup: how atsoko overcame the challenges of entrepreneurship in tanzania’, global business and organizational excellence 36(6), 25–33. https://doi.org/10.1002/joe.21811 amankwah-amoah, j., boso, n. & antwi-agyei, i., 2018, ‘the effects of business failure experience on successive entrepreneurial engagements: an evolutionary phase model’, group & organization management 43(4), 648–682. https://doi.org/10.1177/1059601116643447 amiri, n.s. & marimaei, m.r., 2012, ‘concept of entrepreneurship and entrepreneurs traits and characteristics’, scholarly journal of business administration 2(7), 150. amorós, j.e., etchebarne, s. & felzensztein, c., 2012, ‘international entrepreneurship in latin america: development challenges’, esic market economic and business journal 43(3), 497–512. https://doi.org/10.7200/esicm.143.0433.3i asah, f., fatoki, o.o. & rungani, e., 2015, ‘the impact of motivations, personal values and management skills on the performance of smes in south africa’, african journal of economic and management studies 6(3), 308–322. https://doi.org/10.1108/ajems-01-2013-0009 asongu, s.a. & odhiambo, n.m., 2019, ‘challenges of doing business in africa: a systematic review’, journal of african business 20(2), 259–268. https://doi.org/10.1080/15228916.2019.1582294 auerswald, p.e., 2015, enabling entrepreneurial ecosystems: insights from ecology to inform effective entrepreneurship policy, research series on city, metro and regional entrepreneurship, october 2015, ewing marion kauffman foundation, kansas city, mo. baluku, m.m., matagi, l., musanje, k., kikooma, j.f. & otto, k., 2019, ‘entrepreneurial socialization and psychological capital: cross-cultural and multigroup analyses of impact of mentoring, optimism, and self-efficacy on entrepreneurial intentions’, entrepreneurship education and pedagogy 2(1), 5–42. beattie, s., 2016, ‘which entrepreneurial traits are the most critical in determining success’, otago management graduate review 14(1), 13–20. belz, a., 2015, ‘women drive success of somali mall in minneapolis’, startribune, 31 august, 2015, viewed n.d., from https://www.startribune.com/women-drive-success-of-somali-mall-in-minneapolis/323386601/ bensassi, s. & jabbour, l., 2017, return migration and entrepreneurial success: an empirical analysis for egypt, global labor organization discussion paper no. 98. blume, l.e. & sargent, t.j., 2015, ‘harrod 1939’, the economic journal 125(583), 350–377. https://doi.org/10.1111/ecoj.12224 bozas, l.a., 2011, ‘key success factors for small businesses trading within the city of umhlathuze’, published masters dissertation, university of kwazulu-natal, republic of south africa. buchanan, l., 2015, the u.s. now has 27 million entrepreneurs, viewed 25 november 2018, from https://www.inc.com/leigh-buchanan/us-entrepreneurship-reaches-record-highs.html. cant, m.c. & wiid, j.a., 2013, ‘establishing the challenges affecting south african smes’, international business & economics research journal (iber) 12(6), 707–716. https://doi.org/10.19030/iber.v12i6.7869 charman, a., petersen, l. & piper, l., 2012, ‘from local survivalism to foreign entrepreneurship: the transformation of the spaza sector in delft, cape town’, transformation: critical perspectives on southern africa 78(1), 47–73. https://doi.org/10.1353/trn.2012.0035 chavez, j., 2016, the personality characteristics of an entrepreneur and their effects on the performance of a new business venture, helsinki metropolia university of applied sciences, helsinki, viewed n.d., from https://core.ac.uk/download/pdf/45600476.pdf. chimucheka, t. & rungani, e.c., 2011, ‘the impact of inaccessibility to bank finance and lack of financial management knowledge to small, medium and micro enterprises in buffalo city municipality, south africa’, african journal of business management 5(14), 5509–5517. chu, h.m., benzing, c. & mcgee, c., 2007, ‘ghanaian and kenyan entrepreneurs: a comparative analysis of their motivations, success characteristics, and problems’, journal of development entrepreneurship 12(3), 295–322. https://doi.org/10.1142/s1084946707000691 chuang, c.h. & liao, h.u.i., 2010, ‘strategic human resource management in service context: taking care of business by taking care of employees and customers’, personnel psychology 63(1), 153–196. creswell, j.w. and sinley, r.c., 2017, ‘developing a culturally-specific mixed methods approach to global research’, kzfss kölner zeitschrift für soziologie und sozialpsychologie 69(2), 87–105. https://doi.org/10.1007/s11577-017-0453-2 dana, l.p., 2007, ‘asian models of entrepreneurship: from the indian union and the kingdom of nepal to the japanese archipelago: context, policy & practice’, small business economics 28(1), 105–107. darnihamedani, p., 2016, individual characteristics, contextual factors and entrepreneurial behaviour, no. eps-2016-360-s&e, viewed n.d., from https://repub.eur.nl/pub/93280. de faria cosme, h., 2012, ‘perceived production planning and control problems at cataler south africa’, phd thesis, university of kwazulu-natal, durban. department of trade and industry (dti), 2007, integrated strategy on the promotion of entrepreneurship and small enterproses, viewed n.d., from https://www.datocms-assets.com/7245/1574922892-integrated-strategy-on-the-promotion-of-entrepreneurship-small-enterprises.pdf. djankov, s., qian, y., roland, g. & zhuravskaya, e., 2007, what makes a successful entrepreneur? evidence from brazil, viewed 08 february 2019, from https://eml.berkeley.edu/.pdf. douglas, j., douglas, a., muturi, d. & ochieng, j., 2017, ‘an exploratory study of critical success factors for smes in kenya’, in toulon-verona conference excellence in services, pp. 223–234, university of verona, verona. duchaine, p., bourdages, b., lecours, l., marchesseault, c., st-germain, l. & morneau, g., 2007, entrepreneurial spirit in college: entrepreneurial profile, activity 4, viewed 18 february 2019, from: http://entrepreneuriat.inforoutefpt.org/documents/file/ang_profil.pdf. fukase, a., 2015, ‘mitsubishi ufj joins crusade on cross-shareholding’, wall street journal, july 31, 2015, viewed n.d., from https://www.wsj.com/articles/mitsubishi-ufj-joins-crusade-on-cross-shareholding-1438345700 galawe, n.j., 2017, ‘endogenous and exogenous risk factors in the success of south african small medium enterprises’, phd thesis, university of the witwatersrand, johannesburg. graupp, p. & wrona, b., 2015, the twi workbook: essential skills for supervisors, productivity press, new york, ny. ha, m., siriwan, u., ramabut, c., thitikalaya, n., thitikanlaya, t. & kiatnarong, c., 2014, ‘key factors for successful entrepreneurship in thailand’, open journal of social sciences 2(9), 116. https://doi.org/10.4236/jss.2014.29020 halim, m.b.a. & ishak, m.a., 2014, ‘post-election behavior? is it possible? a framework based on hirschman (1970) model’, australian journal of basic and applied sciences 88(12), 67–75. hansen, a., kimeria, c., ndirangu, b., oshry, n. & wendle, j., 2012, assessing credit guarantee schemes for sme finance in africa: evidence from ghana, kenya, south africa and tanzania, afd working paper 123. haq, m., 2015, ‘south asian ethnic minority small and medium enterprises in the uk: a review and research agenda’, international journal of entrepreneurship and small business 25(4), 494–516. https://doi.org/10.1504/ijesb.2015.070222 hsu, d.k., wiklund, j. & cotton, r.d., 2017, ‘success, failure, and entrepreneurial re-entry: an experimental assessment of the veracity of self-efficacy and prospect theory’, entrepreneurship theory and practice 41(1), 19–47. https://doi.org/10.1111/etap.12166 iwara, i.o., 2018, ‘endogenous attributes of successful youth entrepreneurs in selected wards of thulamela local municipality’, master’s dissertation, university of venda, thohoyandou. iwara, i.o., netshandama, v.o., kilonzo, b. & zuwarimwe, j., 2019, ‘socio-cultural issues contributing to poor youth involvement in entrepreneurial activities in south africa: a prospect of young graduates in thohoyandou’, african journal of development studies 9(2), 111–134. https://doi.org/10.31920/2075-6534/2019/9n2a6 jan, s., irshad, m. & nadeem, a., 2013, ‘determinant of the success factors for entrepreneurship business’, international review of basic and applied sciences 1(7), 156–164. karabulut, a.t., 2016, ‘personality traits on entrepreneurial intention’, procedia-social and behavioral sciences 229, 12–21. https://doi.org/10.1016/j.sbspro.2016.07.109 kativhu, s., 2019, criteria for measuring resilience of youth-owned small retail businesses in selected rural areas of vhembe district, south africa, viewed n.d., from https://www.semanticscholar.org/paper/criteria-for-measuring-resilience-of-youth-owned-in-kativhu/2522bf8798f5bcff0f040c0abff8693e3ca1b23f. kato, a.i. & tsoka, g.e., 2020, ‘impact of venture capital financing on small-and medium-sized enterprises’ performance in uganda’, the southern african journal of entrepreneurship and small business management 12(1), 11. https://doi.org/10.4102/sajesbm.v12i1.320 krejcí, m., strielkowski, w. & čabelková, i., 2015, ‘factors that influence the success of small and medium enterprises in ict: a case study from the czech republic’, business: theory and practice/verslas: teorija ir praktika 16(3), 304–315. https://doi.org/10.3846/btp.2015.521 kunaka, c. & moos, m., 2019, ‘evaluating mentoring outcomes from the perspective of entrepreneurs and small business owners’, the southern african journal of entrepreneurship and small business management 11(1), a214. https://doi.org/10.4102/sajesbm.v11i1.214 ladzani, w., 2010, ‘historical perspective of small business development initiatives in south africa with special reference to limpopo province’, problems and perspectives in management 8(3), 68–79. ladzani, w. & netswera, g., 2009, ‘support for rural small businesses in limpopo province, south africa’, development southern africa 26(2), 225–239. https://doi.org/10.1080/03768350902899512 lekhanya, l.m. & mason, r.b., 2014, ‘selected key external factors influencing the success of rural small and medium enterprises in south africa’, journal of enterprising culture 22(3), 331–348. https://doi.org/10.1142/s0218495814500149 limpopo economic development enterprise (lede), 2006, roots for growth and development, viewed 13 december 2018, from https://www.limdev.co.za/about.htm madichie, n.o., mpiti, n. & rambe, p., 2019, ‘impact assessment of funding on technology acquisition by small businesses: a case study of hair salons in a south african municipality’, journal of enterprising communities: people and places in the global economy 13(1/2), 145–166. madzimure, j., 2020, ‘examining the influence of supplier integration on supply chain performance in south african small and medium enterprises’, the southern african journal of entrepreneurship and small business management 12(1), a312. https://doi.org/10.4102/sajesbm.v12i1.312 maina, s.w., 2012, ‘factors influencing the development of youth entrepreneurship in ongata rongai township, kajiado county, kenya’, unpublished phd thesis, university of nairobi, nairobi. malebana, m.j., 2017, ‘knowledge of entrepreneurial support and entrepreneurial intention in the rural provinces of south africa’, development southern africa 34(1), 74–89. https://doi.org/10.1080/0376835x.2016.1259990 malgas, m. & zondi, w.b., 2020, ‘challenges facing small business retailers in selected south african townships’, the southern african journal of entrepreneurship and small business management 12(1), a202. https://doi.org/10.4102/sajesbm.v12i1.202 mbizi, r., hove, l., thondhlana, a. & kakava, n., 2013, ‘innovation in smes: a review of its role to organisational performance and smes operations sustainability’, interdisciplinary journal of contemporary research in business 4(11), 370–389. mlotshwa, s.h. & msimango-galawe, j., 2020, ‘the risk of overvaluing networking on small and medium enterprises performance in gauteng province, south africa’, the southern african journal of entrepreneurship and small business management 12(1), a294. https://doi.org/10.4102/sajesbm.v12i1.294 mmbengwa, v.m, groenewald, j.a. & van schalkwyk, h.d., 2013, ‘evaluation of the entrepreneurial success factors of small, micro and medium farming enterprises (smmes) in the peri-urban poor communities of george municipality, western cape province, rsa’, african journal of business management 7(25), 2459–2474. mongia, a.k., 2013, characteristics and attitudes of successful entrepreneurs: a comparable study of norwegian entrepreneurs in norway and in the us, viewed n.d., from http://docplayer.net/24158428-characteristics-and-attitudes-of-successful-entrepreneurs.html. moos, m. & sambo, w., 2018, ‘an exploratory study of challenges faced by small automotive businesses in townships: the case of garankuwa, south africa’, journal of contemporary management 15(1), 467–494. murugesan, r. & jayavelu, r., 2017, ‘the influence of big five personality traits and self-efficacy on entrepreneurial intention: the role of gender’, journal of entrepreneurship and innovation in emerging economies 3(1), 41–61. musa, b.m. & semasinghe, d.m., 2013, ‘entrepreneurship and unemployment: a literature review’, in international conference on business & information, p. 2. nheta, d.s., shambare, r., sigauke, c. & tshipala, n., 2020, ‘entrepreneurship gaps framework model: an early-stage business diagnostic tool’, the southern african journal of entrepreneurship and small business management 12(1), 7. https://doi.org/10.4102/sajesbm.v12i1.297 nkondo, l.g., 2017, ‘comparative analysis of the performance of asian and black-owned small supermarkets in rural areas of thulamela municipality, south africa’, phd thesis, university of venda, thohoyandou. nyamunda, j. & van der westhuizen, t., 2018, ‘youth unemployment: the role of transformative learning in making the youth explore entrepreneurship’, journal of contemporary management 15(1), 314–343. oser, f. & volery, t., 2012, ‘sense of failure and sense of success among entrepreneurs: the identification and promotion of neglected twin entrepreneurial competencies’, empirical research in vocational education and training 4(1), 27–44. https://doi.org/10.1007/bf03546505 pahuja, a. & sanjeev, r., 2015, introduction to entrepreneurship, viewed 16 may 2019, from https://bit.ly/2byjoks. parker, s.c., 2018, the economics of entrepreneurship, cambridge university press, new york, ny. rabie, c., cant, m.c. & wiid, j.a., 2016, ‘training and development in smes: south africa’s key to survival and success?’, the journal of applied business research 32(4), 1009–1023. https://doi.org/10.19030/jabr.v32i4.9717 ramukumbasup, v.m.t., groenewald, j.a., van schalkwyk, h.d., gundidza, m.b. & maiwashe, a.n., 2011, ‘factors that influence the success and failure of land bank supported farming small, micro and medium enterprises (smmes) in south africa’, journal of development and agricultural economics 3(2), 35–47. republic of south africa (rsa), 1998, white paper on local government: ministry of provincial affairs and constitutional development, government printer, pretoria. rose, r.c., kumar, n. & yen, l.l., 2006, ‘the dynamics of entrepreneurs’ success factors in influencing venture growth’, journal of asia entrepreneurship and sustainability 2(3), 1–19. https://doi.org/10.3844/jssp.2006.74.80 saleem, s. & abideen, z., 2011, ‘examining success factors: entrepreneurial approaches in mountainous regions of pakistan’, european journal of business and management 3(4), 56–67. schumpeter, j.a. (ed.), 1934, the theory of economic development: an inquiry into profits, capital, credits, interest, and the business cycle, transl. from the german by redvers opie, transaction publishers, new brunswick. small enterprise development agency (seda), 2014, annual review 2013/ 2014: seda technology programme, small enterprise development agency, pretoria. siriwan, u., ramabut, c., thitikalaya, n. & pongwiritthon, r., 2013, ‘the management of small and medium enterprises to achieve competitive advantages in northern thailand’, international journal of arts & sciences 6(1), 147. sledzik, k., 2013, schumpeter’s view on innovation and entrepreneurship in management trends in theory and practice, s. hittmar (ed.), faculty of management science and informatics, university of zilina & institute of management, university of zilina. pp. 89–95, viewed n.d., from https://www.academia.edu/5396861/schumpeter_s_view_on_innovation_and_entrepreneurship. south africa (sa) economic development department, 2014, small business promotion project, smme toolkit, version 4, economic development department, pretoria. souza, g.h.s.d., santos, p.d.c.f.d., lima, n.c., cruz, n.j.t.d. & lezana, a.g.r., 2016, ‘entrepreneurial potential and success in business: a study on elements of convergence and explanation’, ram: revista de administração mackenzie 17(5), 188–215. https://doi.org/10.1590/1678-69712016/administracao.v17n5p188-215 statistics south africa (statssa), 2018, quarterly labour force survey – qlfs q4:2018, viewed 07 february 2019, from http://www.statssa.gov.za/?p=11882 stefanovic, i, prokic, s. & rankovic, l., 2010, ‘motivational and success factors of entrepreneurs: the evidence from a developing country’, original scientific paper 28(2), 251–269. sustainable development consortium, 2007, settlement implement support strategy (sis) for land and agrarian reform in south africa: synthesis document, commission on restitution of land and rights in department of land affairs, pretoria, viewed n.d., from https://www.gov.za/sites/default/files/gcis_document/201411/dlasynthesisreportsept2007.pdf. swai, e., 2014, ‘women entrepreneurs: motives, characteristics and outturn evidence from mzumbe award’, phd thesis, mzumbe university, mzumbe. tidd, j. & bessant, j.r., 2018, managing innovation: integrating technological, market and organizational change, john wiley & sons, hoboken, ny. trade and investment limpopo (till), 2006, about til, viewed 12 october 2018, from https://www.til.co.za/about_til.htm. tshabalala, n.g., 2014, ‘crime and unemployment in south africa: revisiting an established causality: evidence from the kwazulu natal province’, mediterranean journal of social sciences 5(15), 519. https://doi.org/10.5901/mjss.2014.v5n15p519 ummah, s. & gunapalan, s., 2012, ‘factors influencing on entrepreneurial success: an empirical study on women headed families in ampara and batticaloa districts in sri lanka’, international journal of business, economics and law 1(1), 141–148. wang, z., chen, j. & zang, z., 2005, ‘strategic human resources, innovation and entrepreneurship fit’, international journal of manpower 26(6), 544–559. https://doi.org/10.1108/01437720510625458 microsoft word 131 audiology antoinites language edited.doc sajesbm volume 6, (2013) 87 www.sajesbm.com article no 131 www.sajesbm.com audiology, entrepreneurship and innovation: a perspective on private practice alex antonites* department of business management faculty of economic and management sciences university of pretoria pretoria annemarie ross gordon institute of business sciences (gibs) university of pretoria *corresponding author email: alex1@up.ac.za abstract objective: this paper investigates the correlation and contact points between entrepreneurship as a discipline and the profession of audiology. the research focuses on specific areas of entrepreneurship (e.g. innovation as an entrepreneurial skill) and the impact it has on audiology private practices as key role players in the biotechnology industry. design: this study used a two-stage research design comprising of an exploratory study and a formal study to survey the entrepreneurial and business skills of audiologists as entrepreneurs in private practice. findings: the findings describe severe deficiencies specifically the business and entrepreneurial skill sets of the professional audiologist as an entrepreneur. the mind-set of the audiologist is not that of an entrepreneur, but rather of a small business owner. a lack of self-confidence to be creative, take risks, and identify new opportunities or innovate in terms of products, process and services was found. audiologists are not necessarily concerned about the creation of employment, or the growth and profitability of their practices. autonomy and security are the primary objectives of most practice owners. keywords innovation, entrepreneurs, women entrepreneurs, entrepreneurship, audiology, biotechnology. sajesbm volume 6, (2013) 88 www.sajesbm.com article no 131 background given the global failure of the formal and public sector to absorb the growing number of job seekers, increasing attention has focused on entrepreneurship as an unconditional solution to the problem of socio-economic disintegration. wickham (2006) provided a constructive linkage by acknowledging that economists have long recognised the importance of the entrepreneur. frequent occurrences of entrepreneurial activity create potential for economic growth and job creation (herrington, kew & kew, 2008). recent empirical evidence has also conveyed the imperative role of entrepreneurs in productivity growth (grossmann, 2009). the entrepreneur is seen as a consequential solution to the intricate and vigorous inequality found in the socio-economic environment. the focus of this study encapsulates the biotechnology sector, which represents an attractive and promising high growth industry currently and in the future (ahn & meeks, 2007). despite the formidable odds, the anticipation surrounding biomedical enterprises remains high. after three decades, the biotechnology industry has emerged to hold great promise for addressing a wide range of critical challenges in developed and developing countries, including healthcare, security, alternative energy, environmental remediation, and increasing agriculture crop yields with reduced pesticide use. this is potentially an area in which a diverse number of opportunities will arise to induce entrepreneurship development, with a specific study reference to women entrepreneurs in the biomedical branch of industry. one of the largest segments of the biotechnology industry is human healthcare. the broad scientific advances and commercial successes in the field have captured the attention and aspirations of policy makers, business people, and investors alike in spurring sector growth. due to advances in technology and the need to continuously improve the quality of life for people with hearing loss, the specialised field of audiology formed the focus of analysis (ahn & meeks, 2007). the purpose of this study was to analyse the entrepreneurial mind set and orientation (for example levels of confidence, perception of entrepreneurship and the desire to take the risk necessary to start and manage a business/practice) as well as the skills set of the woman audiologist as an entrepreneur in private practice in south africa. this study analysed her performance motivation, entrepreneurial and business skills, as well as the ability to create and grow a profitable business through innovation in the field of audiology. literature review biotechnology the molecular waltzes of life take place largely inside cells; one simple definition of biotechnology, according to grace (2006), is “the commercialisation of cell biology”. more generally, biotechnology is an umbrella term that covers various elements for using the properties of living things to make products or provide services. furthermore, what is new about modern biotechnology is not the principle of using various organisms, but the techniques for doing so, stated grace. uctu and essop (2013) described the critical role of this industry as propelling economic growth, contributing to significant market dynamism and inducing levels of innovation in south africa. gastrow (2008) indicated the relevance of these roles by mentioning the national biotechnology strategy (nbs), which commenced in 2001 as a strategic impetus to drive biotechnological advances. the nbs frames the development of biotechnology knowledge, skills, capacities and tools. kidman (2009) supported the emphasis on skills development and recommended the inclusion of knowledge perspective from a secondary level. ultimately, the commercialisation of biotechnology changes lives and the source or vehicle of technology transfer into the market place is the biotech-company. in this context, uctu and essop (2013: 27 29) defined a biotechnology company as an entity where the “…company’s major economic activity is within the biotechnology field and uses a minimum of one biotechnology-related technique, whereas an active company either manufactures and sells biotechnology products or performs r & d in the biotechnology field”. sajesbm volume 6, (2013) 89 www.sajesbm.com article no 131 in south africa this sector currently employs 73 565 people, including both “active” and “core” biotechnology companies (uctu & essop, 2013). one of the growth nodes in this sector is the global biopharmaceutical industry, with more than $70 million in turnover and 700 publicly listed companies, as well as double-digit growth in north america, europe, and asia-pacific in 2006. the latter shows the attractive nature of biotechnology on a global scale (ukropcová & šturdík, 2011:122). the positive correlation between high levels of entrepreneurial activity and employment creation consequently apply to the main focus of this study, embracing just one focus area or sub-branch of industry in the broader field of biotechnology. it suggests that increased levels of entrepreneurial activity in this sector could fundamentally increase growth and much needed employment creation. several constraints prevent the entry of more bioentrepreneurial ventures. naidoo (2009) identified indicative obstacles in actively participating in this branch of industry as access to finance; market disequilibrium; a poor intellectual property rights framework; and an insubstantial institutional enabling environment within a national system of innovation. in an entrepreneurial framework the latter applies even more, reflecting on the audiologist as the key unit analysis. the audiologist as a private practitioner in this research frame is labelled a “bio-entrepreneur”. bio-entrepreneurship uctu and jafta (2013) highlighted the vital role entrepreneurship plays in developing and growing the biotechnological field, with reference to the relatively undeveloped and young nature seen in south africa. in support, christopher and kaur (2011) provided evidence from india, where a meaningful level of 25% growth has been experienced in this sector with the encompassing socio-economic benefits. in contemplating the growth and benefits of biotechnological entrepreneurship, meyers (2012) reflected on the increased need for academic disciplinary inclusion on a formal level (curricula). current obstacles include an absence of teaching on innovation; insufficient finances; a lack of sustained networks, experience and education; academic domain recognition; and bureaucratic academic systems preventing interdisciplinary alignment needs. the findings of kaufmann (2013:853 854) showed that macro level constraints exist in inducing biotechnological entrepreneurship in singapore and israel. these countries implemented targeted biotech policies over a decade in order to develop a strong bioentrepreneurial cluster, but both cases were unsuccessful. singapore followed a “top-down, strategically planned vertical targeted” development approach and israel “horizontal targeting where prioritisation results from the on-going identification of specific market failures in sectors with high growth potential”. uctu and jafta (2012) contributed evidence from hong kong which indicated the integrated role of academia and bio-entrepreneurial spinoffs. the majority of these spinoffs are small, undeveloped and managed by academics with critical constraints, including a lack of product demand and technical issues with physical product development. the core of entrepreneurship and innovation, particularly in the biotechnological environment, can be seen in the development of the “new”, be it products or services, with corresponding adding of value and profit-driven decision-making (maija, carsrud & brannback, 2009). technology-intensive small and medium-sized enterprises (young biotechnology ventures such as audiology practices) cannot compete with established corporations (such as large pharmaceutical multi-nationals) in volume, production capacity, promotion or price subsidisation. instead, their competitive advantages rise from being more innovative than their competition and finding a niche where they can make the most out of their knowledge-based capabilities (maija, carsrud & brannback, 2009). the latter should be placed in the context of entrepreneurship, and the specific need for entrepreneurial skills to enhance competitiveness, innovation and quality driven service delivery in this branch of industry, namely audiology. sajesbm volume 6, (2013) 90 www.sajesbm.com article no 131 innovation and entrepreneurship innovation and new product development are crucial sources of competitive advantage in the biotechnology industry (tushman, anderson & o’reilly, 1996). after all the cost-cutting, down-sizing and re-engineering, innovation and product development are levers through which firms can re-invent themselves. continuous streams of incremental, architectural (a combination or linkage of existing technology in novel ways), modular, radical and discontinuous innovation, generates sustainable competitive advantage (smith, 2010). dobni (2008) stated that these innovative organisations have the following in common: first and foremost, they are competitive innovators in that they continually break through to the next level because they are constantly defining it. secondly, they understand that it is not the organisation that is innovative; rather it is the sum of the people who, through the way they think and act, allow the organisation to be innovative. thirdly, they possess a certain culture one that is proactive and market driving – that is palpable and employees all know why they are at the top of their game. fourthly, these organisations made decisions in the past to become innovative – decisions which required sacrifices but which they are benefiting from today. lastly, innovative organisations leverage resources; they are able to better define, engage and pursue emergent opportunities. innovation creates long-lasting advantages and produces dramatic shifts in competitive positioning; being good at it will provide a competitive advantage, being great at it can result in major industry-wide disruptions. the message is clear and suggests that organisations need to innovate. there is also a sense amongst managers that to remain competitive, they need to do something new and different. innovation efforts run the gamut from reinforcing business processes to seeking product and service improvements, and reworking the corporate fabric in an attempt to unleash employee creativity at all levels (dobni, 2008). the firms that have been able to shift from today’s strength to tomorrow’s strength are those that can develop and migrate competencies, such that their old competencies provide a platform for building new, often fundamentally different, competencies (tushman et al., 1996). entities of this nature are able to sustain a competitive advantage over time and shape technology cycles through creating streams of innovation. these streams include incremental, competence-enhancing, innovation; architectural or modular innovation; as well as fundamentally new competence-destroying innovation. by building on a technology life cycle, the idea of innovation streams, which are patterns of innovation that are required for sustainable competitive advantage, is introduced. innovation streams focus attention away from innovations in isolation, towards patterns of fundamentally different innovations as the market unfolds, and are driven by shifts in the underlying technology cycle (tushman et al., 1996). innovation has been and must continue to be a major driver of rising living standards (oecd innovation strategy, 2009). preliminary estimates for several organisation for economic cooperation and development (oecd) countries show that firms now invest as much in intangible assets related to innovation (research & development, software, relevant skills, organisational know-how and branding) as they do in traditional capital such as machinery, equipment and buildings. such investment accounted for up to 1 percentage point – or around one-quarter – of labour productivity growth in austria, finland, sweden, the united kingdom and the united states between 1995 and 2006 (oecd innovation strategy, 2009). moreover, much multi-factor productivity (mfp) growth – that is, the joint productivity of capital and labour – is linked to innovation and improvements in efficiency. collectively, estimates suggest that investment in intangible assets and mfp growth accounted for between two-thirds and three-quarters of labour productivity growth in oecd countries such as austria, finland, sweden, the united kingdom and the united states between 1995 and 2006. innovation was seen as the main driver of this growth. differences in mfp also account for much of the gap between advanced and emerging countries, which is an indication that innovation is also a key source of future growth for emerging countries (oecd innovation strategy, 2009). where does the audiologist as an entrepreneur fit in this scenario? sajesbm volume 6, (2013) 91 www.sajesbm.com article no 131 there is a significant relationship between opportunity identification and exploitation, innovation and entrepreneurship. according to antonites and van vuuren (2005), a generally accepted definition of an entrepreneur is an individual who has the ability to realise a specific vision from virtually anything; a definite human creative action. a differentiating factor defining the true entrepreneur is represented by the entrepreneurial skills creativity and innovation. the fundamental skill to “create” is to be able to generate an idea and transform it into a viable, growth-oriented business. a person is also considered to be an entrepreneur if he/she owns a business, assumes the risks associated with ownership, deals with the uncertainties of coordinating resources and is in charge of day-to-day management of the business (hanson, 2009). according to acs (2007), it is someone who specialises in making judgmental decisions about the coordination of scarce resources. the term ‘someone’ emphasises that the entrepreneur is an individual, while the term ‘judgmental’ implies that the decision cannot simply be a routine application of a standard rule. acs (2007) also suggested that entrepreneurship is what happens at the intersection of history and technology, and that history is the codified record of what has happened in the past while technology is the way to view the future. innovation also induces entrepreneurial orientation. maija, carsrud and brannback (2009) described entrepreneurial orientation as one that emphasises aggressive innovation, risky projects, and a proclivity to pioneer innovations that pre-empt competition. the authors developed a scale for the measurement of the three components of entrepreneurial orientation; innovativeness, pro-activeness, and risk taking. innovativeness reflects a tendency to support new ideas, novelty and creative processes, thereby departing from established practices and technologies. hence innovativeness as conceptualised in entrepreneurial orientation is akin to explorative learning in organisational learning literature (maija et al., 2009). the authors also found that pro-activeness refers to a posture of anticipating and acting on future wants and needs in the marketplace, and risk taking is associated with a willingness to commit large amounts of resources to projects where the likelihood and cost of failure may be high. closely related to the previous statements of entrepreneurial orientation, antonites and van vuuren (2005) explained that entrepreneurial skills are embraced by the following concepts: creativity and innovation; risk propensity; opportunity identification; and role models. these skills are learned through knowledge, education or learning. maija et al. (2009) stated that innovation is the lifeblood of virtually every successful technology-based business, and according to rwigema and venter (2004) innovation is present in many facets of a new business, including the creation of a new product or service, inventive ways to cut costs, ways of improving products, and finding new ways to combat competition. the analysis of science and technology-based health innovation has given scarce attention to the role of health systems in the innovation process (thorsteinsdóttir, 2007). this is certainly true with regards to the limited analysis of innovation in this sector in developing countries, but applies as well to the copious literature on innovation in this sector that has focused on industrially advanced countries. in other sectors, the users of innovation have played crucial roles in the innovation process, therefore it is important to understand the potential role of health systems in shaping science and technology-based health innovation (thorsteinsdóttir, 2007). women entrepreneurship research conducted by hanson (2009) focused on women entrepreneurship for a number of reasons. firstly, women’s businesses have largely been ignored in the literature on entrepreneurship. secondly, women’s businesses have been dismissed as insignificant because they are viewed as being too small or in sectors of the economy that supposedly matter too little to economic growth. thirdly, despite this academic neglect, women’s business ownership worldwide has been growing rapidly – more so than men’s (oecd, 2004) – and entrepreneurship has become a key livelihood strategy for many women. sajesbm volume 6, (2013) 92 www.sajesbm.com article no 131 motivation for women entrepreneurs is linked to career selection, claimed the department of trade and industry special report on south african women entrepreneurs (2005). key indicators included the level of education and training; individual desires; career-entry expectations and career self-sufficiency; academic ability and peer aspirations; socio economic background and the ability to overcome cultural conditioning and learning experiences; differences in orientation and motivations; and race and culture. women business owners cite a number of reasons for becoming entrepreneurs. an analysis of the main reasons suggests the following trends: • challenges/attractions of entrepreneurship; • self-determination/autonomy; • family concerns – balancing career and family; • lack of career advancement/discrimination; and • organisational dynamics – power/politics. brush and cooper (2012) showed evidence of the fundamental impact women entrepreneurs have on economic growth, employment creation and innovation. they also indicated that only 10% of literature on entrepreneurship to date has focused on women entrepreneurship. contrary to hanson (2009) and brush and cooper (2012), hughes, jennings, brush, carter, and welter (2012) stated that a keen interest in the field of women entrepreneurship has evolved over the past decade, and requested a new direction for research. their study identified three areas of concern within the field of women entrepreneurship research: literature concentrates on entrepreneurship as merely an economic activity with wealth creation as the core outcome and not potentially one with social impact (“…literature were reframed from entrepreneurship as an economic activity with possible social change outcomes to entrepreneurship as a social change activity with a variety of possible outcomes?”, p.431) a prevailing “objectivist ontological” and “epistemological position” position portrayed in the majority of the literature on women entrepreneurship. hughes et al. (2012:432) tabled the concerns and set research questions for a new direction as follows: table 1: illustrative women’s entrepreneurship studies suggested by expanding questions and explanations as well as shifting approaches explanations/approaches traditional questions non-traditional questions explanations/approaches traditional questions non-traditional questions explanations/approaches traditional questions non-traditional questions individualistic explanation and objectivist approach studies comparing the performance of firms headed by men versus women studies comparing whether male and female entrepreneurs engage differentially in strategies such as bricolage and effectuation contextual explanation and objectivist approach studies examining whether the proportion of women engaging in entrepreneurial activity differs across countries studies examining whether the work-family experiences of female entrepreneurs change across their life course sajesbm volume 6, (2013) 93 www.sajesbm.com article no 131 explanations/approaches traditional questions non-traditional questions explanations/approaches traditional questions non-traditional questions explanations/approaches traditional questions non-traditional questions individualistic explanation and constructionist approach studies comparing how men and women construct notions of ‘entrepreneurship’ and ‘growth’ studies comparing how male and female entrepreneurs construct entrepreneurial opportunities contextual explanation and constructionist approach studies exploring the processes by which resource acquisition is gendered within different contexts studies exploring how gender-role identities are reconstructed in time and space through entrepreneurship as emancipation source: adapted from hughes, jennings, brush, carter, and welter (2012:432) the table created a platform for future research directions in women entrepreneurship with the following principal courses of action (p. 432): • reframed old questions in fresh and innovative ways, thereby generating new insights to long-standing theoretical and empirical debates; • posited entirely new questions that had not been examined before, particularly with respect to the heterogeneity of women’s entrepreneurship; • studied new sites of entrepreneurship, especially new regions, national contexts, and industries; and • utilised new methodological approaches that would help to build and improve upon the rigour and creativity of empirical research. this study builds on the third notion of understanding “new sites of entrepreneurship” with reference to audiologists in the biotechnological industry. audiology the primary operational settings for clinical audiologists are in hospitals, physicians’ offices, private practices, speechand hearing clinics, and schools (katz, 2002). in the late 1990s there was, however, a move towards private practices in the united states. according to the american speech-language-hearing association (2010), 37% of audiologists were in private practice either fullor part-time. this shift has had a profound effect on professional education and organisations, as well as the way audiology is practiced and perceived. kirkwood (2007:1) summarised the importance of audiologists as entrepreneurs as follows: “…there are various reasons why private practice should be the rule rather than the exception in audiology especially now that all those entering the field are doctors. ownership gives practitioners authority over patient care decisions, financial independence, and greater respect from other professionals and the public. it will also enable audiology to attract better, more committed entrants and achieve higher status”. audiology in south africa fulfils a small niche market need in the health sector (bakker, 2008). 43% of audiologists are in private practice either fullor part-time. as it is such a small market, not much has been documented or researched to define the audiology market. in south africa there are 54 audiologists and 916 speech therapists and audiologists (dual qualification) registered in private practice [board of healthcare funders (bhf) (email correspondence, 30 april 2010)]. the researchers reasoned that a significantly smaller number of audiologists are actively involved in independent audiology practices. there are several reasons for this (bakker, 2008): many speech therapists and audiologists choose to practice only as speech therapists because of the lower costs of entry into independent sajesbm volume 6, (2013) 94 www.sajesbm.com article no 131 practice together with lower monthly overheads; some audiologists may be employed fulltime by other institutions, i.e. government institutions, but will have a small private practice after-hours or over weekends to augment their income. this arrangement is facilitated by the fact that the cost of registering with the bhf is low, enabling them to occasionally see family and friends in a private capacity. the researchers surmise that these practices cannot be seen as real independent private practices, as the audiologists are not dependent on the income and are not deeply invested in the success or entrepreneurial performance of the private practice. audiology is a dynamic profession, characterised by continued and rapid growth in innovation, in which traditional practices are constantly reviewed in a quest to improve efficacy and accountability (swanepoel, 2004). audiologists have to continuously develop, implement and improve assessment and treatment protocols (fitting of hearing aids, auditory rehabilitation and counselling) that meet the individual needs of children and adults with impaired hearing (alpiner & mccarthy, 2000). there is also a global challenge to improve the health status of all people, and in order to survive, the profession needs to continuously reinvent itself through innovation in order to become sustainable and remain competitive (kritzinger, 2000). in a study investigating south african audiologists in private practices, it was found that audiologists in independent private practices experience difficulties practicing profitably in the present circumstances (bakker, 2008). a stagnant trend in profitability was noticed in 24% of respondents and a negative trend was noticed in 10% of respondents’ practices. this could be because of the increasing regulatory effect the medical aids and government have on the industry, or it could be a lack of planning knowledge. south african audiologists have little or no practice management knowledge, and clear gaps in knowledge were noticed in all fields except communication (bakker, 2008). another reason why audiologists in independent private practices experience difficulty practicing profitably is the absence of a value innovation strategy (moore, 2010). firms that focus on value creation try to improve the perceived value of their services or goods, but often do not execute sufficiently to stand out in the marketplace. those that focus on innovation tend to be technology-driven and may be considered market pioneers ahead of industry standards, but a sole focus on innovation can be lost in a dynamic market. a value innovation strategy places an equal emphasis on value and innovation and is the key to a successful business strategy (moore, 2010). practitioners offer value primarily through the fitting and service of those products. according to cottle (2010), innovation in a healthcare practice is defined as: • introduction / improvement of referral protocols • redesigning / streamlining pathways • matching staff skills to patient needs • patient and public involvement nemes (2007) stated, however, that older audiologists did not take any business courses before starting their own practices; many had to pick up management skills along the way and at a cost. they may have neglected certain areas of their businesses either because they never had the time to address those issues or they did not know how important they could be to the success of their business. nemes (2007) furthermore reported that most audiologists focus on what they do best – taking care of patients, and neglect what they do not know, which could be a platform for innovation. audiology is facing new challenges, such as innovation in terms of products, processes and services. bakker (2008) posited that the audiology practice is regarded as a culture of caring and service, and is not necessarily managed with a focus on innovation and profitability (or entrepreneurship). audiologists therefore need certain skills sets to achieve entrepreneurial performance and generate revenues in order to ensure sustainable private practices. sajesbm volume 6, (2013) 95 www.sajesbm.com article no 131 the purpose of this study is to analyse the entrepreneurial mind-set, and more specifically innovation orientation, as well as the skills sets of women audiologists as entrepreneurs in private practice in south africa. methodology the research design used explorative quantitative research (cross-sectional) to survey the entrepreneurial and business skills base of audiologists in private practice, their contribution to innovation in the biotechnological field, as well as the support and enabling environments for women entrepreneurs in the field of audiology. the primary method used to gather data was the survey method. this method was developed in the form of a self-administered, structured electronic questionnaire to establish the entrepreneurial skills, business skills and needs of audiologists in private practices in south africa that will eventually produce innovation. women audiologists owning private practices in south africa was the unit of analysis. the registered 151 private practices were sampled and questionnaires were distributed to all. a response rate of 38% was achieved (57 responses). the response rate allowed for frequency distribution and pearson’s product moment correlation as the core data analysis formats. proposition 1: p 1.0: there is no relationship between the entrepreneurial skills of a woman audiology entrepreneur and innovation. proposition 2: p 2.0: there is no relationship between the business skills of a woman entrepreneur and innovation. proposition 3: p 3.0: women audiologists as entrepreneurs do not have training needs. proposition 4: p 4.0: there are no business support structures for women audiologists as entrepreneurs in private practice. sample the sample for this study comprised the 151 audiologists in independent private practices. a response rate of 38% was achieved which resulted in an acceptable response rate to perform specific descriptive analysis. sajesbm volume 6, (2013) 96 www.sajesbm.com article no 131 results and findings demographics the following demographical results apply: the largest percentage of respondents was 26-30 (27%). the second biggest demographics were 31-35 and 41-45 years of age (20%). from these demographics, it seems that the younger generation audiologists (27%) have private practices earlier on in their careers. the audiologists older than 50 years were less inclined to open / manage private practices, possibly because they were closer to retiring age. another reason for younger audiologists to open up a private practice might be explained by the fact that independence is an important motivator. it might also be due to the fact that they do not have families yet, therefore they are more inclined to take risks and also have more time to spend in a private practice. the latter correlates with hughes et al.’s findings (2012), and more specifically addresses “the heterogeneity of women’s entrepreneurship” required in future research. graph 1: age graph 2: qualifications sajesbm volume 6, (2013) 97 www.sajesbm.com article no 131 71% of the respondents only had an undergraduate degree, while 24% had masters degrees and only 5% had doctorate degrees. a high percentage (24%) of audiologists had done their masters degrees in the field of audiology, which is an indication of their studiousness and their willingness to improve their audiological knowledge. this knowledge, however, only applies to their scope of practice and does not improve their business knowledge. only 5% of the respondents had doctorate degrees, which might indicate that there is no real motivation / incentive for obtaining this degree as it would not positively impact on the success or profitability of the practice. a degree in this industry also does not imply an increase in salary, unless this person is in an academic environment where salaries are linked to qualification. almost half of the respondents (49%) were situated in gauteng, where business is perceived to be more lucrative and generally more successful than in smaller towns. just over half of the practices (51%) were situated in cities, with the remainder (49%) in smaller towns. this is most likely because audiologists identify opportunities further away from other more established practices, or because of marital obligations. currently there are no private practices in rural areas because the dispensing of hearing aids from a private practice largely relies on medical aids, to which low income populations do not have access. these findings correlate with the view of bakker (2008) that audiology in south africa fulfils a small niche market need. this study showed that 30% of the respondents had worked for 2-5 years before they opened up their own practices, but more respondents (44%) had worked for more than five years before opening their own practices. this might be due to the following facts: • audiologists have not received sufficient training in the field of entrepreneurial and business skills, and do not feel comfortable working without the support or guidance of experienced audiologists. • audiologists feel that they do not have the knowledge and skills to open up and manage their own businesses successfully. • audiologists do not have access to start-up funding as the equipment is expensive, and young audiologists do not necessarily have other assets to serve as collateral. currently there is a dire need for training in terms of entrepreneurial and business skills at the universities in south africa; there are only basic business modules that provide for limited understanding, which do not provide for a solid working knowledge in these areas. audiologists therefore do not have an entrepreneurial mindset, and if they do consider opening a practice, they do not feel equipped and do not have the confidence required to graph 3: professional experience sajesbm volume 6, (2013) 98 www.sajesbm.com article no 131 take this risk (soer, 2009). again, these findings correlate with bakker’s (2008), who posited that private practices experience difficulties practicing profitably in the current climate. stanger (2004) stated that business advice and training organisations should ensure that they cater for those areas of business most often undertaken or needed by women entrepreneurs, i.e. financing/financial management, marketing and promotions, and confidence building. work environment graph 4: work environment the percentage of respondents that had worked in private practice was significantly higher over all three specified time periods. 23% of the respondents had worked at hearing aid companies for up to five years before opening their own practices. 47% of the respondents had owned private practices for more than five years. 75% of the audiologists were owners of one practice, 18% of two practices and one outlier audiologist owned 13 practices. 44% of the practice owners did not employ professional staff (audiologists), 19% did not employ a manager, and 16% did not employ an administrative person. 39% of the practice owners did, however, employ one administrative person, 12% employed one manager and 14% of the practice owners employed one professional person. 11% of practice owners employed two professional people and 9% employed two administrative people. no practice employed more than one manager. the statistics for three or more employees were insignificant. in terms of managerial expertise, 44% of audiologists started one business, 7% started two businesses, 2% started three businesses, 2% started four businesses, 2% started five businesses and 2% started more than five businesses. 4% of the respondents bought two practices in the survival phase, 4% bought one and two practices in the stabilisation phase, 4% bought two practices in the growth phase and 11% of the respondents had bought practices in the maturity phase. 71% of the audiologists worked full day and 22% worked flexible hours. 71% of the audiologists felt that they did not receive sufficient tertiary training to be able to manage a private practice successfully. this study indicated that the environments the audiologists had worked in before opening their own practices clearly influenced their entrepreneurial mindsets. according to the questionnaire, the highest amount of respondents has worked in hospitals (25) and the second highest in schools (21). on average, 91% of the audiologists that had worked in schools, hospitals and hearing aid manufacturing companies had moved out on their own much quicker (within five years) than the audiologists who had worked in a private practice. twelve of these only decided to go independent after 10 or more years, and seven after 6-10 years. the fact that audiologists working in institutions opened up their own private practices sooner than audiologists working in private practices sajesbm volume 6, (2013) 99 www.sajesbm.com article no 131 did, is most likely an indication of bureaucratic environments forcing audiologists into more independent, flexible environments. audiologists working at private practices as employees find themselves in more fulfilling environments, and are therefore less likely to pursue change. it is important to note that even though positions in governmental institutions have more benefits such as medical aids and pensions, most of the audiologists still chose to be more independent. 47% had owned practices for more than five years, which is an indication that a successful private practice is a good business to own. if a practice functions optimally, it is profitable and ensures independency. if an audiologist also works in a hospital or school environment, she cannot necessarily ensure client satisfaction due to time and resource constraints. in general it seems that private practices are managed to the best of the audiologists’ abilities, but they have no intention of expanding or growing organically. typical private audiology practices are smaller, with 22 of the audiologists employing one administrative person but no managers or professional people (audiologists). eight practices employed one professional person, and seven practices employed one manager. from the results of this study it seems that audiologists have smaller practices with only one to three employees, but hardly ever more than three employees. from this information one can conclude that the mindset of the audiologists is that of a small business owner rather than an entrepreneur. referring to nieman and nieuwenhuizen (2009), owners of small businesses are not necessarily interested in growth as an objective; autonomy and security are the primary objectives of some owners of smaller businesses, and they are not concerned about creating employment. this perception has important consequences for women entrepreneurs, as there might be other reasons why women run smaller businesses, such as a lack of external financing, poor credibility as business owners and managers, or a desire to keep their business small and manageable (arenius et al., 2005). a significant result was the audiologists who strongly agreed that client satisfaction is the most important measure of success. they further agreed with the fact that increased productivity, profit, turnover, market position and personal satisfaction are important measures of success. it is useful to note that additional employment was not an important measure of success of the business (7% strongly disagreed, and 20% disagreed). these results indicated that not all audiologists are exclusively businesswomen and that women entrepreneurs also have to manage their work-life balance. according to matiwane and hendricks (2005), women business owners cited a number of reasons for becoming entrepreneurs, and an analysis of the main reasons suggested important trends such as family concerns – balancing career and family. 22% of the women audiologists worked flexi hours to allow them to accommodate both their career and families. 71% worked full time, and a possible explanation for this might be that they did not employ sufficient people, and therefore carry out a lot of the functions themselves. sajesbm volume 6, (2013) 100 www.sajesbm.com article no 131 graph 5: measurement of success these findings related directly with hughes et al.’s (2012), by stating that literature concentrates on entrepreneurship as merely an economic activity with wealth creation as the core outcome and not potentially one with social impact. women’s entrepreneurial performance in this context should be measured in terms of social impact rather than merely one variable; profitability. entrepreneurial experience 61% of the respondents regarded themselves as entrepreneurs, while the remaining 39% did not. 44% of the respondents often identified new opportunities for growth, and 51% described themselves as often being creative. 61% of the respondents take risks, but only sometimes. only 17% always identify new opportunities for growth, only 7% always take risks, and only 22% are always creative. hanson (2009) advocated that access to credit alone is rarely sufficient to change the position of women in the place she works and lives. the author stated that what is needed are grassroots actions that build women’s skills, confidence and sense of belonging; expand women’s knowledge of potential suppliers and markets; and connect women with other business owners. in general it seems that private practices are managed to the best of the audiologists’ abilities, but they have no plan to expand or grow organically. sajesbm volume 6, (2013) 101 www.sajesbm.com article no 131 graph 6: personal inclination hisrich, peters and shepherd (2005) discussed major gender differences such as the performance of firms owned by men vs. women. their studies showed that businesses headed by women tend to be smaller than those headed by men (arenius, minniti & langowitz, 2005). normally, the smaller size is perceived to be a problem and it is assumed that, if they could, women would want to expand their businesses as much as male entrepreneurs do. in this industry, however, this does not seem to be the case, as audiologists seem to prefer having smaller businesses and employ less people. the findings of the entrepreneurial experiences (entrepreneurial inclination and innovation) and entrepreneurial skills contradicted each other. the respondents did not score themselves highly on their entrepreneurial experiences (22% are always creative, 7% always take risks, and only 17% always identify new opportunities for growth), yet in terms of entrepreneurial skills, a large percentage scored themselves as having a good working knowledge about the evaluation of new feasible opportunities, risk management, as well as creating and refining new products, services and processes. this discrepancy might be due to the fact that audiologists do not have knowledge about the true meaning of entrepreneurship, or lack knowledge concerning the business aspects of the practice. only 10% of the respondents always source new products and 46% often source new products. 4% of the respondents always suggest new product improvements to suppliers, while 37% often suggest new products to suppliers. sajesbm volume 6, (2013) 102 www.sajesbm.com article no 131 graph 7: product innovation maija, carsrud and brannback (2009) described entrepreneurial orientation as one that emphasises aggressive innovation, risky projects, and a proclivity to pioneer innovations that pre-empt competition. innovation is the core skill in this context as it drives differentiation and competitive advantage. the entrepreneurial experience of being creative, taking risks, identifying new opportunities for growth, inventing new ways of communicating with endusers and identifying potential new referral sources do impact innovation. according to maija et al. (2009), innovativeness reflects a tendency to support new ideas, novelty and creative processes, thereby departing from established practices and technologies. hence innovativeness as conceptualised in entrepreneurial orientation is akin to explorative learning in organisational learning literature. even though 61% of the audiologists regarded themselves as entrepreneurs, they were not inclined to be creative, take risks or identify new opportunities for growth. these results imply that only 22% think imaginatively and creatively in order to identify new opportunities and solutions to take advantage of opportunities (kuratko & hodgetts, 1998). 17% of the respondents always revised personnel conditions, and 44% of the respondents often did. 17% always revised internal operations, whilst 48% often revised internal operations. none of the respondents always renegotiated costs with manufacturers and suppliers, and only 19% often renegotiated costs. only 5% always revised cost of operations, and 50% often did. sajesbm volume 6, (2013) 103 www.sajesbm.com article no 131 0% 10% 20% 30% 40% 50% revise cos t of opera tions renegotia te co sts manufacturers & suppliers revise internal operations revise personnel conditions 2% 10% 0% 5% 14% 26% 14% 15% 29% 45% 21% 19% 50% 19% 48% 44% 5% 0% 17% 17% alwa ys often sometimes ra rely not at all graph 8: process innovation according to this study, audiologists do not aggressively innovate in the areas of products, processes or services. process innovation reflects directly on management skills as it encompasses an internal operational management process. maija, carsrud and brannback (2009) stated that innovation is the lifeblood of virtually every successful technology-based business, and according to rwigema and venter (2004), innovation is present in many facets of a new business, including the creation of a new product or service, inventive ways to cut costs, ways of improving products and finding new ways to combat competition. graph 9: service innovation 0% 5% 43% 38% 14% 2% 12% 43% 31% 12% 0% 14% 33% 38% 15% 2% 2% 26% 50% 20% 33% 0% 50% identi fy potenti al new markets invent new s ervi ce offeri ngs to new/exi s ti ng invent new ways of communi cati ng wi th end-us ers identi fy potenti al new referral s ources none of the above al ways often someti mes rarel y not at al l sajesbm volume 6, (2013) 104 www.sajesbm.com article no 131 users and consumers play a growing role, with firms involving them in the innovation process in order to better satisfy their needs. firms recognise this as a way to explore new growth opportunities at lower risk and to offer greater flexibility without necessarily incurring high costs. users’ experiences with products can help focus future innovations. the virtuous cycle of innovation can be better facilitated through increasing interaction between demand and supply (oecd innovation strategy, 2009). 20% of the respondents always identify potential new referral sources, whereas 50% often identify potential new referral sources. 38% often invent new ways of communicating with end-users. 43% of the respondents sometimes invent new service offerings, and 31% often invent new service offerings. 43% sometimes identify potential new markets, and 38% often identify new markets. even though this study clearly shows that client satisfaction is of utmost importance to the audiologists who operate primarily in the service sector, an inclination towards the user/consumer is critical. the results of this study show that audiologists do not innovate in terms of products, processes or services, even though they regard themselves as entrepreneurs. skills sets in terms of skills sets the following results were obtained: most of the respondents had a graph 10: entrepreneurial skills working knowledge in the areas of relationships with suppliers, potential customers and financial institutions; the evaluation of new feasible opportunities; risk management; as well as creating and refining new products, services and processes. sajesbm volume 6, (2013) 105 www.sajesbm.com article no 131 some of the respondents were, however, more uncertain about risk management and creating and refining new products, services and processes. most of the respondents had a working knowledge of effective management of personnel, marketing strategies, financial management, decision-making processes and effective communication with stakeholders, but most had no understanding of basic laws and only a theoretical understanding of business plans. entrepreneurs identify business opportunities to create and deliver value for the stakeholders (ardichvilia, cardozo & ray, 2003). in the case of this study, the stakeholders were in most cases the audiologists themselves, which should be a significant incentive / motivational factor, yet only a small percentage creatively pursued new business opportunities. while elements of opportunities may be ‘‘recognized,’’ opportunities are made, not found, and is thus an active and involved process (ardichvilia, et al., 2003). careful investigation of, and sensitivity to, market needs, as well as an ability to spot sub-optimal deployment of resources, may help an entrepreneur begin to develop an opportunity (which may or may not result in the formation of a business). but opportunity development also involves entrepreneurs’ creative work. the need or resource ‘‘recognized’’ or ‘‘perceived’’ cannot become a viable business without this ‘‘development” (ardichvilia, et al., 2003). sajesbm volume 6, (2013) 106 www.sajesbm.com article no 131 graph 11: business skills most of the respondents had a working knowledge of effective management of personnel, marketing strategies, financial management, decision-making processes and effective communication with stakeholders. most had, however, no understanding of basic laws and only a theoretical understanding of business plans. regarding business skills, audiologists need a better working knowledge to be able to run their practices in a professional manner. it does not have to be a solid professional knowledge, however, as being the owner of a practice one needs to be a generalist. graph 12: need for entrepreneurial skills training nemes (2007) stated that audiologists have to pick up management skills along the way. this might impact negatively on the business as they never have the time to address the important issues or they might not know how important those areas could be to the success of their business. nemes furthermore reported that it is easier for most audiologists to focus sajesbm volume 6, (2013) 107 www.sajesbm.com article no 131 on what they do best – taking care of patients. business skills are, however, a prerequisite for innovation to enter the market place. in order for an audiologist to offer value primarily through processes and services, she needs a working knowledge of business processes. training needs in terms of business training needs, the following applies: graph 13: need for business skills training sajesbm volume 6, (2013) 108 www.sajesbm.com article no 131 most of the respondents had a need for basic applications / working knowledge in the areas of relationships with suppliers, potential customers and financial institutions (52%); evaluation of the feasibility of new opportunities (50%); as well as risk management (55%). only 24% of the respondents had a need for a working knowledge of the refining of new products, services and processes based on innovative and creative thinking. there was no real need for a theoretical understanding of these concepts. if the perceived skills and training needs are compared, it is clear that there is a need for training in all areas of entrepreneurial skills, except for one, which is the innovation of products, processes and services. as has been mentioned, the results show that only 39% of audiologists innovate in terms of products, processes or services, even though they regard themselves as entrepreneurs, yet only 24% felt the need for training in these areas. this might be due to the fact that the total focus is on client satisfaction and not innovation and profitability. there is a need for professional knowledge in the areas of basic laws and financial statements, however there is a significant need for a basic application / working knowledge of the areas of effective management of personnel (40%), operations strategy (43%), marketing strategy (48%), strategic decision making (48%), effective communication with stakeholders (41%), as well as the drafting of business plans (38%). from these results it also seems that there is less of a need in the areas of business training than in entrepreneurial training. in his study, antonites (2003) mentioned that some of the training programmes are very pragmatic and that there needs to be active involvement in entrepreneurial activities, an understanding of the dynamic characteristics of the entrepreneurial environment, and the introduction of the existing reality aspects to the practice situation. isaacs, visser, friedrich and brijlal (2007) concluded that entrepreneurship education and training needs to be localised, i.e. researching the local environment and circumstances before implementing another general programme which will not in any way contribute to skills improvement and therefore to small and medium enterprise development and ultimately job creation. these authors also stated that education alone cannot completely prepare entrepreneurs to be successful business owners, but education increases the chances of success. entrepreneurship education reflects the concern that people should possess the skills, knowledge and attitudes to create their own future, manage their own affairs, and solve their own problems. this includes: • education for enterprise (i.e. developing business-related skills); • education about enterprise (i.e. knowledge and understanding); and • education through enterprise (i.e. learning to be enterprising) (isaacs, visser, friedrich & brijlal, 2007). support systems the following results show the need for business support systems to enable the entrepreneurs to perform. there is currently a dysfunctional entrepreneurship-enabling environment within the context of support systems in specific areas. graph 14 indicates what current support is offered and secondly what enabling support is required to increase entrepreneurial performance: sajesbm volume 6, (2013) 109 www.sajesbm.com article no 131 graph 14: entrepreneurship enabling support systems – current and future. as can be seen from the above, a significant need for enabling support systems exists particularly in the following areas: • confidence building (79%) • moral support (79%) • financial support (83%) • mentorship support (81%) • management training (93%) sajesbm volume 6, (2013) 110 www.sajesbm.com article no 131 according to verwey (2005), a women entrepreneurship programme should include financial assistance; management assistance and training; as well as networking, mentoring and counselling. confidence is a huge factor that influences performance, as confidence in one’s own skills, knowledge, and ability to start a new business increases entrepreneurial alertness, and therefore leads to the creation of more new businesses (langowitz & minniti, 2007). attitudes toward entrepreneurship (or anything else for that matter) reflect, to a large extent, subjective perceptions rather than objective conditions. results show that a strong positive and significant correlation exists between self-confidence, opportunity perception, and the likelihood of starting a new business. in fact, the perception of having sufficient skills is a dominant variable that seems to have an effect independent of institutional settings, culture, and overall level of entrepreneurial activity. results also suggest that perceptions explain an important portion of the difference in entrepreneurial propensity across genders, since men tend to perceive themselves in a more optimistic light and, as a result, have stronger incentives to start new businesses (langowitz & minniti, 2007). bruin et al. (2007) stated that the self-perceptions of women may restrict their ability to recognise business opportunities, thus constraining entrepreneurship or leading to certain forms of female entrepreneurship. this refers to self-imposed barriers where women (wrongly) perceive that they may not have the right opportunities and know-how to start or grow their own businesses (bruin et al., 2007). in terms of the relationship analysis between constructs the following propositions were tested: proposition 1 p. 1.0. there is no relationship between the entrepreneurial skills of a woman entrepreneur and innovation. from this study it is evident that there is a significant relationship between entrepreneurial experience and innovation. the inferential statistical analysis proved that a significant relationship exists between: entrepreneurial experience and innovation (r = 0.982, p =0.000); entrepreneurial skills and innovation (r = 0.449, p = 0.000); age and innovation (r = 0.251, p=0.059 – only at 6% level); and motivation and innovation (r = 0.313, p=0.018). the primary proposition p1.0 was rejected. proposition 2 p. 2.0. there is no relationship between the business skills of a woman entrepreneur and innovation. the terms ‘small business’ and ‘entrepreneurial venture’ are often used interchangeably (zeithaml & rice, 2005). business skills are necessary to enable a person to start and operate a business, whereas entrepreneurship skills are more about creating a new business venture where the emphasis is on profitability, growth and exit strategies (isaacs, visser, friedrich & brijlal, 2007). inferential results showed that a significant relationship exists between: business skills and innovation (r = 0.476, p = 0.000); and qualifications and innovation (r = 0.364, p = 0.007). the primary proposition p2.0 was rejected. proposition 3 p 3.0: women audiologists as entrepreneurs do not have entrepreneurship training needs. isaacs, visser, friedrich and brijlal (2007) argued that a positive correlation exists between education and business creation. based on timmons and spinelli (2004) and others who were of the opinion that entrepreneurship can be learnt, kuratko (2003) observed the decision by many tertiary institutions in the united states of america, europe, east asia and latin america to design and implement relevant entrepreneurship teaching programmes. the findings show that the primary proposition p3.0 was consequently rejected. sajesbm volume 6, (2013) 111 www.sajesbm.com article no 131 proposition 4 p 4.0: there are no support structures for women audiologists as entrepreneurs in private practice. it is noteworthy that even though 43% of audiologists felt that there was currently no support in terms of networking, 100% of the respondents felt that there was no future need for networking support, despite all the literature that proves that it is the key to success. this might be due to the fact that they have not been contextualised with the entrepreneurial benefits of networking. chengadu (2010) concurred that one of the reasons that women lack entrepreneurial intentions is because of the absence of role models and networking. the author gathered that women want more role models of the same sex; they want to network with them and to hear about their failures and successes. based on these findings, the primary proposition p4.0 was accepted. conclusion and recommendations according to stoop (2008), south african audiologists in private practice measure low on innovation and subsequently a clear entrepreneurial orientation. their practices are characterised by a culture of caring and service, but are not managed like other businesses with a focus on profitability. according to this study, audiologists are not creative in terms of engaging in the process of innovation in the sense of the development of products, processes or services, even though 61% of the respondents regarded themselves as being entrepreneurs and maija, carsrud and brannback (2009) stated that innovation is the lifeblood of virtually every successful technology-based business. this study shows that audiologists have inadequate entrepreneurial experience in terms of being creative, taking risks and identifying new opportunities for growth. even though the results clearly show that client satisfaction is of the utmost importance to the audiologists, and that users and consumers play a role with firms involving them in the innovation process in order to better satisfy their needs (moore, 2010), the results of this study still show that audiologists do not innovate in terms of products, processes or services, whilst regarding themselves as entrepreneurs. it is hereby found that audiologists need a better working knowledge in terms of business skills to be able to run their practices in a more profitable manner (where profit forms a critical component of the entrepreneurial process). it does not have to be a solid professional knowledge, but as the owner of a practice, it would greatly benefit the entity if she was a generalist who had a good working knowledge of the most important functional aspects of the business and the entrepreneurial process. audiologists predominantly focus on their clients and technical service offerings, and not on functional business managerial tasks and specifically innovation as a strategy. in order for an audiologist to offer value, primarily through processes and services, she needs at a minimum a working knowledge of business processes. from these results it also seems that there is a dire need for training in both business skills and entrepreneurial skills. 71% of the audiologists felt that they had not received sufficient tertiary training to be able to manage a private practice successfully. bakker (2010) confirmed these results prior to this study by stating that there are only basic business modules that provide for limited understanding of entrepreneurial and business skills. in terms of enabling support structures, this study suggests that there are currently limited support systems in the areas of management training, mentorship support, financial support and confidence building. one can conclude from these findings that the mind-set of an audiologist is not that of an entrepreneur, but rather that of a small business owner. autonomy and security are the primary objectives of most of the practice owners. this lack of performance is caused by a severe absence of entrepreneurial and business skills training in the industry, coupled with almost non-existent support systems as well as a lack of self sajesbm volume 6, (2013) 112 www.sajesbm.com article no 131 confidence in taking risks and identifying new opportunities. all of these are core components of entrepreneurial orientation, and more specifically, drivers of innovation. recommendations the findings of this research have two key recommendations that could enhance the audiology profession and their stakeholders: recommendation 1: the inclusion of entrepreneurial and business skills training in the curricula of the audiologist. these skills will not only induce much-needed innovative products, services and products aligned with feasible market opportunities, but also enable the entrepreneurial audiologist to manage her practice effectively and efficiently as a business venture within the frame of all the functional managerial spheres. recommendation 2: the creation of an efficient entrepreneurship enabling environment that establishes an industry focused support system with reference to mentorship, guidance and confidence building. references acs, z.j. (2007) how is entrepreneurship good for economic growth? 25th economic conference of progress foundation, october 31, 2007. massachusetts: great barrington. ahn, m.j., & meeks, m. (2007) building a conducive environment for life science based entrepreneurship and industry clusters. journal of commercial biotechnology, 14, 20. alpiner, j.g. & mccarthy, p.a. (2000) rehabilitative audiology: children and adults. 3rd ed. united states: lippincott, williams & wilkins. antonites, a.j. (2003). an action learning approach to entrepreneurial creativity, innovation and opportunity finding. doctoral thesis. university of pretoria. antonites, a.j. & van vuuren, j.j. (2005) inducing entrepreneurial creativity, innovation and opportunity-finding skills. south african journal of economic and management sciences, 8, 255-271. bakker, l. (2008) a study to investigate south african audiologists in private practice’s knowledge of strategic planning in comparison to international norms for small business management. published m thesis, university of pretoria. board of healthcare funders (bhf) (email correspondence, 30 april 2010). brush, c.g., & cooper, s.y. (2012). female entrepreneurship and economic development: an international perspective. entrepreneurship & regional development: an international journal, 24:1-2, 1-6, doi: 10.1080/08985626.2012.637340 chengadu, s. (2010) a study of the characteristics of successful high impact women entrepreneurs in order to understand the factors that inhibit higher levels of entrepreneurial activity amongst women in south africa. unpublished m thesis, university of cape town. christopher, d. and kaur, s. (2011). entrepreneurship in biotechnology sector. the iup journal of entrepreneurship development, vol. viii, no. 3, pp. 40-59. cottle, s. (2010) measurement for improvement: demonstrating quality, innovation and productivity. nhs improvement: audiology. www.improvement.nhs.uk/audiology [accessed 12 april 2010] dobni, c.b. (2008) the dna of innovation. journal of business strategy, 29(2), 43-50. gastrow, m. (2008) great expectations: the state of biotechnology research and development in south africa, african journal of biotechnology, 7, 4, pp.342–8. sajesbm volume 6, (2013) 113 www.sajesbm.com article no 131 grace, e.s. (2006) biotechnology unzipped: promises and realities. 2nd ed. usa: fitzhenry & whiteside grossmann, v. (2009) entrepreneurial innovation and economic growth. journal of macroeconomics, 31, 602–613. hanson, s. (2009) changing places through women’s entrepreneurship. economic geography, 85(3), 245-267. herrington, m., kew, j. & kew p. (2008) global entrepreneurship monitor: executive report. graduate school of management, cape town: university of cape town, 1-64. herrington, m., kew, j. & kew, p. (2009) tracking entrepreneurship in south africa: a gem perspective. graduate school of management, university of cape town, 1-169. hughes, k.d., jennings, j.e., brush, c., carter, s. & welter f. (2012). extending women’s entrepreneurship research in new directions. entrepreneurship theory and practice special issue: extending women's entrepreneurship in new directions volume 36, issue 3, p. 429–442. isaacs, e., visser, k., friedrich, c. & brijlal, p. (2007) entrepreneurship education and training at the further education and training (fet) level in south africa. south african journal of education, 27, 613-629. katz, j. (2002) handbook of clinical audiology. 5th ed. united states: lippincott, williams & wilkins kaufmann, d. (2013). the influence of causation and effectuation logics on targeted policies: the cases of singapore and israel. technology analysis & strategic management, 25:7, 853870, doi: 10.1080/09537325.2013.815714 kidman, g. (2009). attitudes and interests towards biotechnology: the mismatch between students and teachers. eurasia journal of mathematics, science and technology, 5(2). pp. 135-143. kirkwood, d. h. (2007). a move in the right direction. hearing journal. 60(12): 4. doi number 10.1097/01.hj.0000338121.91969.ad kritzinger, a.m. (2000) establishing a computer-based data system for early communication intervention in south africa. unpublished d.phil, university of pretoria. kuratko, d.f. (2003) entrepreneurship education: emerging trends and challenges for the 21st century. coleman foundation white paper series for the u. s. association of small business and entrepreneurship. available from www.usabe.org. [accessed 25 september 2006]. kuratko, d.f. and hodgetts, r.m. (1998) entrepreneurship – a contemporary approach. 4th ed. harcourt brace college publishers: orlando maija, r., carsrud, a. & brannback, m. (2009) the effect of a market orientation, entrepreneurial orientation, and technological capability on innovativeness: a study of young biotechnology ventures in the united states and in scandinavia. journal of small business management vol 47(3), p 331 meyers a. (2012). the birth of a discipline: bioentrepreneurship. journal of commercial biotechnology. 18(4), 3–4. doi: 10.5912/jcb.567 moore, m. (2010) create value innovation. advance for audiologists: strategies for growth and profitability, 12 (2), 40. naidoo, d. (2009). the technology innovation agency (tia): a public support mechanism for technological innovation in a developing country. african journal of science, technology, innovation and development (ajstid), 1, 2 & 3, pp.235–42. sajesbm volume 6, (2013) 114 www.sajesbm.com article no 131 nemes, j. (2007) some masters of management offer suggestions for a successful practice. the hearing journal, vol. 10. oecd innovation strategy (2009) available from www.oecd.org/innovation/strategy [accessed 23 augustus 2010]. rwigema, h. and venter, r. (2004) advanced entrepreneurship. oxford university press. cape town. smith, d. (2010) exploring innovation. 2nd ed. london: mcgraw-hill education. stoop, g. (gjs@oticon.co.za), 17 september 2010. re: mba: thesis. email to a. ross (annemarie.ross4@gmail.co.za). swanepoel, d.c. (2004) infant hearing screening at maternal and child health clinics in a developing south african community. unpublished d.phil, university of pretoria. timmons, j.a. & spinelli, s. (2004) new venture creation: entrepreneurship for the 21st century. boston: irwin / mcgraw-hill. the department of trade and industry special report on south african women entrepreneurs (2005). thorsteinsdóttir h. 2007. the role of the health system in health biotechnology in developing countries. technology analysis & strategic management volume 19, issue 5, 2007. tushman, m.l., anderson, p.c. & o’reilly, c. (1996) technology cycles, innovation streams and ambidextrous organisations: organisation renewal through innovation streams and strategic change. managing strategic innovation and change. 2nd ed. new york: oxford university press. uctu r. & essop h. (2013). the role of government in developing the biotechnology industry: a south african perspective. prometheus: critical studies in innovation. 31:1, 21-33, doi: 10.1080/08109028.2013.763631 uctu r. & jafta r.c.c. (2013). bio-entrepreneurship as a bridge between science and business in a regional cluster: south africa’s first attempts. science and public policy. august 40 (4). uctu r & jafta r.c.c. (2012). academic entrepreneurship in south east asia: an exploratory study of spin-offs in biotechnology from hong kong universities. asian journal of technology innovation. volume 20, issue 1, pages 141-154 doi: 10.1080/19761597.2012.681439 ukropcová, d. & šturdík e. (2011). biotechnology commercialization in the world. acta chimica slovaca, vol.4, no.1, p. 115 125 wickham, p.a. (2006) strategic entrepreneurship: a decision-making approach to new venture creation and management. london: pearson education limited. zeithaml, c.p. & rice, g.h. (2005) entrepreneurship / small business education in american universities. journal of small business management, 25, 44-50 p166 logistics benefits and challenges in smes mafini sajesbm volume 6, (2013) www.sajesbm.com article no 166 145 www.sajesbm.com logistics benefits and challenges: the case of smes in a south african local municipality chengedzai mafini* department of logistics vaal university of technology osayuwamen omoruyi department of logistics vaal university of technology * corresponding author department of logistics, vaal university of technology p.bag x021 vanderbijlpark, 1900 chengedzai@hotmail.com abstract small and medium enterprises (smes) are the lifeblood of every economy. however, in order for them to sustain their role of contributing to the mainstream economy, smes have to implement effective strategies in all of their business operations, inclusive of logistics. the function of logistics is important to smes because it is the quintessence of the organisation’s relationship with suppliers and customers. the aim of this study was to investigate the challenges encountered as well as the benefits realised by smes during the implementation of logistics strategies. a quantitative approach using the cross-sectional descriptive survey technique was used in which a three-section questionnaire was administered to a randomly selected sample of 131 sme owners and managers in emfuleni local municipality in gauteng province, south africa. data analysis was conducted using simple descriptive statistics. the results of the study reveal that financial constraints, the lack of logistics skills among the workforce, high costs of information technology and rapid technological advancements were the most important challenges to smes. challenges related to inventory and environmental management emerged as the least relevant. enhanced competitive advantage, increased sales and a reduction in operational costs were the most important benefits to smes. reduction in labour turnover and innovation emerged as the least important benefits. based on the findings, several recommendations were proposed. key words: sme, benefits, challenges, emfuleni local municipality introduction and background to the study in recent times, small to medium enterprises (smes) have become a topical subject among management and research practitioners the world over. this has lead to a proliferation of sajesbm volume 6, (2013) www.sajesbm.com article no 166 146 research interests centred on smes. in the context of business research, a number of studies (pittaway & morrissey, 2004; ellegaard, 2006; hendrickson, 2009; gourova, 2010; chin, hamid, rasli & baharun, 2012) have focused on business practices and strategies that smes could adopt for both competitive advantage as well as survival in the challenging and dynamic global operational environment. the function of logistics has become known as an important instrument in contemporary business practice, because it is available for manipulation by all business enterprises, inclusive of smes. despite the fact that the practicality of logistics is evident in its involvement in everyday life, most smes often consider logistics strategy either as an addendum to overall strategy formation or as a strategy that is implemented exclusively by large organisations (lukka, 2005). this perspective is erroneous because it has been proved that logistics performs a strategic role to both smes and large enterprises (levey & powell, 2005). logistics has become so essential to an extent that smes that are planning to build a corporate perspective of the future without recognising the importance of logistics as a strategic focus may only be engaged in wishful thinking (drew & smith, 1998). the implementation of logistics strategies by smes is associated with a family of indispensible paybacks that may be realised, which are important for both short and long term success (narasimhan & talluri, 2009). however, no process or strategy, regardless of the benefits associated with its adoption, is immune to challenges (hagen, zucchella, cerchiello & de giovanni, 2012). the same principle holds true for the adoption of logistics strategies by smes. smes are often inundated with a multiplicity of logistics challenges in their day to day operations (polychronakis & li, 2008). it is expedient then that both these challenges as well as benefits are subjected to empirical introspection on a perpetual basis. an updated expose’ of these challenges will create opportunities for current and appropriate solutions to be found and for the benefits associated with the optimisation of logistics strategies to be realised. aims of the study the purpose of this study is twofold. first the study aims to investigate the benefits of implementing logistics strategies in smes. second, the study aims to investigate the challenges that smes face in adopting and implementing logistics strategies. the study was conducted using smes that are located in emfuleni local municipality in gauteng province, south africa. emfuleni local municipality covers areas such as evaton, sharpville, sebokeng, bophelong, polokong, vereeniging and vanderbijlpark. structure of the paper this paper is structured as follows: the paper will first discuss the literature review covering four areas that are important in this study, namely logistics strategies, smes, logistics benefits and logistics challenges. this will be followed by the methodology section, which will specify the modalities that were implemented in conducting the study. the methodology section will be succeeded by the results and discussion section where the outcomes of the study will be highlighted. conclusions and recommendations as well as the limitations of the study and the implications for further research will occupy the final sections of the paper. literature review logistics widely regarded as the backbone of any company, the function of logistics management encompasses an assemblage of organisational disciplines that include material planning and handling, transportation, procurement, warehousing and information systems that allow goods and services to overcome time and space (gentle, 2008). it may also be perceived as the process of planning and implementing the flow of products, parts, services and sajesbm volume 6, (2013) www.sajesbm.com article no 166 147 related information necessary for production and delivery (lasserre, 2004). logistics has an important theoretical and conceptual foundation, drawing on theories from a range of disciplines such as marketing, purchasing and supply, business strategy, supply-chain management (scm), economics, organisational theory as well as general management (dekker, bloemhof & mallidis, 2012). therefore, a clear understanding of the company’s culture and the value logistics places on these disciplines as well as the processes and management style necessary in dealing with them will lead to manifold benefits for the organisation (escriba-esteve, sanchez-peinado & sanchez-peinado, 2009). as a strategic management activity in an organisation, logistics can have a phenomenal impact on the operational, market and financial performance of the organisation (narasimhan & talluri, 2009). several authors (bienstock, royne, sherrell & stafford, 2007; koskinen & hilmola, 2008) suggest that logistics is a necessary cornerstone of a competitive strategy for organisations that strive to keep pace with market changes, increased market share and shareholder value. generally, logistics is regarded as a strategy to keep pace with competitors, market changes and supply-chain integration (meade & sarkis, 1998). it also enables companies to be more flexible and responsive in order to cope with changes in the internal and external environment (zhang, vonderembse & su lim, 2005). the drive for greater efficiencies and cost reductions has forced many organisations to specialise in a limited number of key areas, such that most logistics strategies have been outsourced by large organisations as a strategy to improve performance and reduce costs (mclvor, 2006). logistics strategy is among the major reasons for the existence of an enterprise, the thread that connects the enterprise and its customers and helps the organisation to stay alert in order to survive in striving for business success in today’s unpredictable operating environment (chopra & meindl, 2010). logistics may also be conceptualised within the rubric of the value in the form of products and services that that it creates for companies and delivers into the hands of the ultimate customers (christopher, 1998; mckinnon, 2009). in this context, logistics creates additional value and brings capital into the organisation to enhance the product life-cycle for continuous improvement and product development because the key for an organisation’s success is that more money as well as capital should flow into the organisation than flows out (kruse, 2007). however, this can only be realised if logistics strategies are carefully initiated, developed and implemented (benjaafar, li & daskin, 2010). it appears then, that organisational efficiency and performance can be enhanced if logistics strategy is considered as an important business approach in the organisation. small to medium enterprises (smes) there is no single universally accepted definition of smes (hamisi, 2011). instead, definitions for the concept vary from country to country (hill & wright, 2001). consequently, there has been an avalanche of conceptualisations from a wide spectrum of authors (e.g. simpson & docherty, 2004; deros, yusof & salleh, 2006; mutula & brakel, 2006). however, for the purposes of this study smes can be perceived as the efficient motor of every market economy that is differentiated from large enterprises as having a maximum of r40 million annual turnover, a minimum of 75 percent of company assets owned by company manager, owner-manager or their families who manage the company personally, and a maximum of r27 million balance-sheet total (loecger, 2000). smes are further sub-divided according to the number of employees e.g. 0-50 employees for small companies, 50-250 employees for medium companies and more than 250 employees for large companies (loecger, 2000; falkena, 2000). smes originate from entrepreneurial individuals, who identify new opportunities in society and who are motivated to exploit such opportunities (burke, 2006). therefore, in terms of sajesbm volume 6, (2013) www.sajesbm.com article no 166 148 their characteristics, smes are also analogous to the entrepreneurial new venture, especially in areas such as risk taking, flexibility, innovation/creativity hands-on management (ellegaard, 2006). a number of researchers (rogerson, 2000; ruiz-santos, ruiz-mercader & mcdonald, 2003; o’regan & ghobadian, 2004; simpson & docherty, 2004; pasanen & laukkanen, 2006; oke, burke & myers, 2007; chiware & dick, 2008) acknowledge that despite their restriction in terms of the number of employees, annual sales and balance sheet, the role of smes in facilitating economic development, alleviating poverty, increasing employment and providing and supplying various items of daily use at an affordable cost to both consumers and large enterprises (les) of any country is of exceptional significance. for example, in south africa smes constitute 95 per cent of the total business of both the formal and informal sectors (soontiens, 2002). smes also create substantial job opportunities, help narrow the gap between urban and rural development, alleviate poverty, and as well employ more people per unit of investment as compared to large firms (zelealem & pansiri, 2006). moreover, smes are the source of new ideas, materials, processes and services, that larger organisations are unable to provide (chen, 1999). this demonstrates that smes are an important driver of economic growth in south africa, which has compelled government, cooperate bodies, and institutions to exert more emphasis on innovative smes research and development (oke et al., 2007; nielsen & thomsen, 2009). smes are also renowned for their fast decision-making, on-time availability of goods and services/raw material and innovative products which cater for the needs of the individual in the economy, flexible personalised services and a speedy response to changing market demands (karjalainen & kemppainen, 2008). in support, raymond and croteau (2006) underscore that smes have advantages in terms of flexibility, reaction time and innovation capacity that make them central actors in the economy. for this reason smes are commonly referred to as a ‘building block for achieving economic development and growth’ (soontiens, 2002). the benefits of logistics strategies in smes logistics as an overarching activity is of paramount importance to smes because it is the essence of the organisation’s relationship with the customer, who is in turn, the revenue generator for smes (burt, petcavage & pinkerton, 2010). it determines where the money comes from and addresses the reason for existing in business, that is, to create and profit by satisfying customers’ needs (krajewski, ritzman & malhotra, 2010). logistics strategies also provide continuous customer relationship improvement in order to gain competitive priority (chen, 1999). the marketer informs the customer about the product and its benefits and describes how the product could be used by the customer as well as how the customers can get the product (fawcett, magnan & mccarter, 2008). given this impetus, the customer eventually places an order. when the customer places an order, something happens along the chain which the marketers call ‘delivering on the promise, which is the responsibility of logistics (burt et al., 2010). this implies that logistics merges the gap between the producers or suppliers, marketers and the customers (fawcett et al., 2008). it determines whether the sme will be able to deliver the product as promised or will let the customer down (hong & jeong, 2006). the way a logistics strategy is implemented by the smes determines their commitment to customers and profitability. logistics is therefore important for all organisations because it makes or breaks customer relationships (cant, strydom, jooste & du plessis, 2006). a study conducted by anja, thomas and sascha (2009), which focused on smes in germany concluded that smes tend to consider logistics strategy as very important, due to sajesbm volume 6, (2013) www.sajesbm.com article no 166 149 its value-added benefits and the competitive advantages it provides that lead to profit maximisation. additionally, another study conducted by mason, ribera, farris and kirk (2003) found that smes in the usa seek to optimise every stage of the logistics chain to maximum value and they strive to optimise the operation of the supply chain as a whole in areas such as product delivery time, inventory holding cost, and the overall cost-to-market. this further attests to the significance of logistics to smes. logistics has emerged as a powerful source of competitive advantage to south african smes, especially after transportation deregulation and improvements in information technology that have enabled companies to gain competitive advantage through competence in speed delivery of customer orders, reliability, flexibility/responsiveness to changing market demands and low-cost distribution (van der vorst, beulens & van beek 2005, zacharia & mentzer, 2007). furthermore, logistics processes can also provide a basis for a competitive profit edge through transportation and distribution activities (agapiou, clausen, flanagan & norman, 1998; krajewski, et al., 2010). logistics strategies also lead to effective business process redesign, elimination of traditional barriers and a total supply chain viewpoint (anja et al., 2009). lesserre (2004) adds that most companies have realised that logistics is not only a way to differentiate from competitors, but also a strategy factor in maximising the value chain. consequently, logistics strategies within smes are growing due to new requests from customers, ongoing improvement in internal processes and reevaluation of company logistics strategies (levey & powell, 2005). as the marketplace becomes more intense with competitive pressure, high levels of turbulence and uncertainty, smes require logistical capabilities to provide superior value and to manage delay and disruption to operations as well as to ensure uninterrupted service to customers (braunscheidel & suresh, 2007). generally, the emergence of logistics pertains to the development of flexibility and quick response in order to cope with challenges of more dynamic market places (drew & smith, 1998). therefore smes can exploit logistics strategies as a prevailing source of future value-creation and to strengthen capabilities for coping with ever-more disruptive and traumatic market developments. challenges to smes logistics capabilities smes typically face a number of challenges such as pressure from larger competitors, the need to function independently, shortage of resources and several operational problems such as in areas of inventory management and organisational capacity. for instance, smes experience difficulties/challenges in their performance because supply chain integration is complex (ebrahim, ahmed & taha, 2008). the implementation of logistics strategies within smes is often triggered by pressure from customers or by large enterprises whose focus is on the adoption of a pull approach rather than the traditional push approach (gelinas & bigras, 2004). as a result, smes are compelled to broaden the vision of their logistics chain strategy to refocus activities on basic skills. because of these increasing needs in implementing logistics strategies, smes may experience more difficulties/challenges in implementing their logistics strategy in order to compete effectively (thakkar, kanda & deshmukh, 2008). to be successful, smes must understand the importance of logistics strategy implementation, be observant and adjust to the needs of their customers to preserve their market shares and to assure their growth (hong & jeong, 2006). however the need for independence and autonomy by smes, together with a low propensity to delegate and consult, may be obstacles to the introduction of success factors such as participatory management, the use of a decision support system, and the use of external expertise for logistics subcontracting (gelinas & bigras, 2004). sajesbm volume 6, (2013) www.sajesbm.com article no 166 150 logistics strategy demands that organisations further widen the scope of the business activities, which can become more challenging as product life-cycles shorten, product variety increases, and technological advancement proceeds at an exponential rate and there is an increase in demand for customer satisfaction (bozarth, donald & barbara, 2007). furthermore, smes also lack technical manpower, research and development, finance and education, which are factors that frequently propel many smes into a sustained negative trajectory (cocca & alberti, 2010). as a key driver of economic growth, smes must develop themselves strategically to be more competitive to meet domestic, international and globalisation challenges and to offer good product/service design and performance (raymond & croteau, 2006). smes also face the challenge of using logistics strategies that play a key role in aligning business strategy such as delivery, ordering, productivity and responsiveness to customer needs (deros et al., 2006). another challenge to sme logistics capabilities involves complications related to inventory management, which relate to the dilemma of holding excess inventory in order to meet high demand or to hold small volumes of inventory in order to protect the company’s liquidity (hendricks & singhal, 2005). in certain cases, many smes also struggle to ensure that the right product is available in the right quantities at operational level, as exhibited through errors and delivery problems (hamisi, 2011). such smes fail to satisfy the needs of their customers (zeithaml, bitner, gremler & pandit, 2008). abonyi (2005) also contends that because of their limited size and isolation, most smes are inhibited from attaining economies of scale in the purchase of vital inputs such as equipment, raw materials, finance, and consulting services. as a result, smes are often unable to identify potential markets; and are incapable of exploiting existing market opportunities that require large volumes, reliable quality and acceptably high standards, and to ensure the regular supply of their products to their customers (udin, khan & zairi, 2006). because of limited resources, smes are often unable to benefit from the opportunities offered by global value chains because of their low connectivity to global transport networks and their weak productive capacity (arvis, mustra, panzer, ojala & naula, 2007). in the technologically oriented operational environment of today, technology-related issues and revolutions continue to inflict smes with poor market competitiveness, since most smes do not have sufficient capitalisation to adopt new technologies (mbamba, 2009). research methodology research approach in the current study, a quantitative approach using the cross-sectional descriptive survey technique was used (creswell, 2009). in quantitative research the primary objective is to quantify the collected data and to generalise the results from the sample to the population of interest (malhotra, 2007). the quantitative approach was selected for the current study because quantitative research enhances the objectivity of the study since it is cheap, flexible and less time-consuming to conduct (cooper & schindler, 2011). the quantitative nature of the study was also based in the need to quantify the data collected and to generalise the findings (fouche & de vos, 2005) in terms of the impact of logistics strategies on smes in emfuleni local municipality in the current study to other smes in south africa and beyond. participants the target population for the current study consisted of smes located in emfuleni local municipality. the sampling frame comprised a list of 1026 registered smes which was accessed from the database of emfuleni local municipality. for the purpose of the current study, probability sampling using the simple random sampling technique was utilised to select the sample size. simple random sampling was selected because it is simple to apply, sajesbm volume 6, (2013) www.sajesbm.com article no 166 151 makes data analysis reasonably easy and has a sound mathematical basis (gravetter & forzano 2003; strydom 2005). the sample size was set at n=200, consistently with previous studies (overby & servais, 2005; zeimpekis & giaglis, 2006; haan, kisperska-moron & placzek, 2007; thakkar et al., 2008; vaaland & heide, 2007) in which almost the same ranges of sample size were used to examine the benefits of logistics strategies in smes, as illustrated in table 1. table 1: sample sizes used in previous studies year authors scope of study sample size used 2007 haan , kisperskamoron & placzek logistics management and firm size; a survey among polish small and medium enterprises 127 2007 vaaland & heide can the smes survive the supply chain challenges 200 2008 thakkar, kanda & deshmukh supply chain management in smes: development of constructs and propositions. 77 2005 overby & servais, small and medium-sized firms import behaviour: the case of danish industrial purchasers 105 2006 zeimpekis & giaglis urban dynamics real-time distribution services: insights from smes. 73 instrumentation and data collection techniques for the purposes of the current study, a three section questionnaire was developed. section a of the questionnaire elicited information on the demographic characteristics of the respondents as well as the profile of the smes. section b elicited data on the challenges faced by smes in the implementation of logistics strategies. questions used in section b were adapted from previous studies (fawcett et al., 2008; hendrikson, 2009; mbamba, 2009) which also focused on logistics related challenges faced by smes. section c elicited questions (adapted from pittaway & morrissey, 2004; hong & jeong, 2006) on the benefits realised by smes in the implementation of logistics strategies. questions on sections b and c were configured in a six point likert style format anchored by ‘1’ = not important and ‘6’ = the very important. likert scales were used because they are relatively easy to construct, make data easy to collect and analyse, thereby making them suitable for surveys (kothari, 2008). to ascertain content validity, which is the representativeness of the content of the measurement instrument (malhotra, 2009) the questionnaire was pre-tested with a conveniently selected sample of thirty smes. feedback from the pre-test sample was used as the basis for effecting some changes to the questionnaire. after the pre-test, the refined questionnaires were re-distributed to a different conveniently selected sample of twenty smes as a pilot study in order to check the reliability of the scale. the pilot study revealed that the scale had satisfactory reliability levels which ranged from 0.722 to 0.845 (maree & pietersen, 2007) and that there were no further ambiguities in the questions. a covering letter which listed the researchers’ details as well as the topic and purpose of the study was attached to the questionnaire. ethical considerations such as the participants’ right to anonymity, confidentiality, privacy or non-participation, informed consent and protection from discomfort, harm and victimisation were adhered to during the administration sajesbm volume 6, (2013) www.sajesbm.com article no 166 152 of the questionnaire. out of the 200 questionnaires that were initially distributed to smes, 147 were returned, giving a return rate of 74%. however, after the screening process, 16 questionnaires were eliminated because they either had incomplete answers or they were answered incorrectly. this culminated in 131 questionnaires, which were used in the actual data analysis. research results demographic profile of respondents the questionnaire was completed by various sme business owners and managers in emfuleni local municipality. approximately 61% (n=80) of the respondents were male and 39 % (n= 51) were female. in addition, a majority of the business owners/ managers (64%; n= 84) were aged above 30 years and the remaining 36% (n= 47) were aged below 30 years. in terms of academic qualifications, 43% (n=56) of respondents were in possession of either a higher education diploma or a certificate; 14% (n=18) were in possession of at least a university degree and 35% (n=46) had completed matric. the later characteristic was favourable to the current study because it indicated that the literacy levels of respondents were sufficiently high, which was a reflection of their ability to understand the questions in the data collection instrument. profiles of businesses the profiles of smes that participated in the survey are illustrated in table 2. table 2: profile of participating smes variable categories n n % number of years of business existence ≤4 years 5-7 years 8-10 years ≥11 years 131 131 131 131 44 35 18 34 33.59 26.72 13.74 25.95 annual sales ≤ r1 million r1 millionr 2 million r2 millionr 3 million r3 millionr 4 million ≥r4 million 131 131 131 131 131 69 31 13 12 6 52.67 23.66 9.92 9.16 4.59 number of employees ≤50 50-99 100-200 ≥200 131 131 131 131 82 27 14 8 62.60 20.56 10.69 6.15 type of industry trading services engineering chemicals and pharmaceutical electrical and electronics building and materials wood and furniture food and beverages other 131 131 131 131 131 131 131 131 131 29 10 9 7 11 12 29 19 5 22.14 7.63 6.87 5.34 8.87 9.18 21.72 14.79 3.46 sajesbm volume 6, (2013) www.sajesbm.com article no 166 153 an analysis of the profile of smes that participated in the study (refer to table 2) indicates that approximately 60% (n=79) of the businesses had been in operation for periods less than seven years. a majority of the smes (53%; n=69) had an annual turnover of less than one million rand. furthermore, approximately 63% (n=82) of the participating smes employed less than 100 people. in terms of the type of industry of the participating smes, the most highly represented industry sectors were trading (22%; n=29), wood and furniture (22%; n=29) and food and beverages (15%; n=19). scale reliability the internal consistency of the two major scales (sections b & c) used in the study is reported in table 3. the cronbach alpha value for the logistics challenges scale was 0.722 and the cronbach alpha value for the logistics benefits scale was 0.845. the cronbach alpha value for the entire scale was 0.773. these values were all above the acceptable threshold level of 0.70 (malhotra, 2011). table 3: mean and internal consistency of scales dimension description number of items mean cronbach alpha logistics challenges logistics benefits overall scale 16 27 43 4.729 4.955 4.846 0.722 0.845 0.773 content validity is the representativeness of the content of the measurement instrument (malhotra, 2011). the pre-testing and piloting of the questionnaire significantly improved the content validity of the entire instrument. in addition, high alpha values were achieved in the reliability tests for the various sub-scales, thereby indicating a satisfactory level of construct validity. logistics challenges facing smes table 4 illustrates the responses obtained on challenges that are faced by smes in implementing logistics strategies, as elicited through section b of the questionnaire. the challenges have been placed in rank order, in accordance with the frequencies obtained. table 4: challenging factors in implementing logistics strategies rating of challenges challenges valid n 1(%) 2 (%) 3 (%) 4 (%) 5 (%) 6 (%) position in rank order financial constraints 131 7.63 3.05 9.92 22.90 23.66 32.82 1 lack of skills/competences among workforce 131 6.11 3.82 13.74 16.03 28.24 32.06 2 high cost of information technology 131 3.82 6.11 6.11 22.90 32.82 28.24 3 rapid technological advancement 131 6.87 4.58 6.11 25.19 24.43 32.82 4 logistics excellence among competitors 131 6.98 2.55 10.85 23.26 30.23 27.13 5 greater demands from order givers 131 5.34 3.05 16.79 15.27 28.24 31.30 6 increased use of third-party logistics services 131 7.69 5.38 16.92 26.38 26.92 17.69 7 competition on domestic markets 131 5.34 5.34 13.74 19.08 25.19 31.30 8 sajesbm volume 6, (2013) www.sajesbm.com article no 166 154 increased global competition 131 9.23 4.85 14.62 15.38 34.62 22.31 9 lack of quality logistics personnel 131 8.40 6.11 13.74 20.61 25.19 25.95 10 organisational transformation 131 8.40 3.82 12.21 25.19 27.48 22.90 11 refocusing of activities on basic skills 131 8.40 6.87 7.63 24.43 29.01 23.66 12 high customer expectations 131 5.34 3.82 6.87 19.08 26.72 38.17 13 lack of knowledge on how to use current logistical techniques 131 5.43 5.43 18.05 18.05 26.36 28.68 14 environmental concerns (green logistics) 131 9.16 4.58 15.27 21.37 27.48 22.14 15 inventory-management complications 131 6.11 5.34 16.79 18.32 24.43 29.01 16 average percentage per response 6.89 4.54 12.40 20.72 27.56 27.89 key: 1 = not important 6 = very important the analysis of the results as illustrated in table 4 yields two streams of observations. financial constraints, the lack of skills among employees in smes, the high cost of information technology and rapid technological advancements emerged as the most important challenges among smes. at the bottom-most quadrants of the matrix were inventory management complications and environmental concerns. financial constraints emerged as the top ranking challenge that smes face in implementing logistics strategies. consistently with this result, a task force commissioned in 2007 by the south african government to investigate modalities of financing smes acknowledged that a majority of smes are undercapitalised and are unable to obtain assistance from financial institutions because they do not have sufficient collateral (falkena et al., 2010). musara & olawale (2012) also advocate that access to finance has been singled out as one of the major challenges impeding the survival and growth of smes in south africa. consequently, the bulk of smes are unable to effectively implement various pivotal operational strategies which ensure their growth and sustenance (rogerson, 2008; talavera & shafer, 2008). since logistics strategies are fundamental to the organisation (kuthiala, 2003) it is natural that the overall failure of smes to acquire sufficient financial capital could have a detrimental effect to implementation of logistics strategies. in the study, the lack of personnel who are adequately skilled to implement logistics strategies emerged as the second most important challenge. it is generally acknowledged that south africa as a country faces a crippling shortage of skilled labour (grant thornton’s international business report, 2012). the type of unemployment experienced in south africa is termed structural unemployment, which is unemployment that is linked to a deficit in skilled manpower in certain areas that are critical to the country’s economic prosperity (chadha, 1994; sharp, 2011). more specifically, there is a shortage of appropriately qualified skilled manpower in the supply chain industry in south africa (heyns & luke, 2012). moreover, in situations where there is a scarcity of qualified skills, the few available skilled personnel are likely to demand higher remuneration, which can only be sustained by larger enterprises rather than smes (damaskopoulos & evgeniou, 2003). it appears then that this scenario has had a significant impact on the implementation of logistics strategies by smes. sajesbm volume 6, (2013) www.sajesbm.com article no 166 155 one of the main factors that influences in the success or failure of enterprise is technology. in this study, technological issues emerged as the third and fourth most important challenges facing smes. the best use of technology doubtlessly helps the enterprise in reducing costs of production, maintaining consistency in quality, improving productivity and to develop the competitiveness of the enterprise (napier, serger & hansson, 2004). however, the diffusion of technology into the sme sector remains a daunting challenge, all round (nepal, karki & niraula, 2006). in most developing countries, the technology used by smes in their operations is imported, which presents a cost–related albatross for smes, since they are inadequately financed to meet the expense (dti, 2004). furthermore, rapid technological advancements linked to logistics, such as electronic data interchange (edi), distribution resources planning (drp), automated storage/retrieval systems (as/rs) and are capital intensive in terms of adoption (zacharia & mentzer, 2004). therefore, it is only natural that both the high cost of information technologies and the fast pace at which technology is changing have become major threats to smes as they implement logistics strategies. in the study, complications related to the management of inventory emerged as the least important challenge among smes. this result demonstrates that smes perceived that inventory management has not yet posed a severe threat to their implementation of logistics strategies. to appreciate the possible reasons for this result, one needs to understand the most common cause of inventory complications. inventory-related challenges are mostly linked to a phenomenon known as the bullwhip effect, which relates to overwhelming variations in inventory as triggered by the unpredictability of market demand of a particular product (cannella & ciancimino, 2010). typical consequences of the bullwhip effect include either stock-outs or over-stock situations in the supply chain, which have the further effect of complicating planning. the demand of inventory in the market is in turn associated with economic factors, such as whether there is a recession or there is prosperity (tempelmeier, 2006). notably, despite being adversely affected by the global economic recession that struck many developed and emerging market economies from around september 2008, a notable fact is that market dynamics and permutations (e.g. inventory demand) in south africa were slowed down but were not reversed. this could be attributed to the fact that africa as a whole has relatively weak global linkages (bakrania & lucas, 2009). therefore, although the country was affected by the global economic meltdown (jacobs, 2009), demand for products in south africa has remained stable such that most companies in the country have enjoyed consistent product demand which is in line with their forecasts (mboweni, 2008). environmental concerns emerged as the second least important challenge. the results of the current study demonstrate that environmental concerns, such as the call for the implementation of green logistics, have little importance to smes in their implementation of logistics strategies. this is interesting, since the phrase ‘green logistics’, which relates to the adoption of environmentally friendly logistics strategies, has captivated the world in the past few decades (lin & ho, 2008). however, the findings of the study are consistent with previous research by evangelista, huge-brodin, isaksson and sweeney (2011) which reveals that firm characteristics such as company size and the number of people employed are positively correlated to the adoption of green logistics. as such, smes, by virtue of their size, are unlikely to be early adopters of green logistics strategies. in agreement, isaksson, björklund, evangelista, and huge-brodin (2011) also found greater aversion to the adoption green logistics among smes. such aversion may be attributed to a constellation of factors that include the lack of economic resources, the lack of knowledge and experience, and a plethora of technical, information and managerial barriers, all which tend to overwhelm smes (biondi, frey & iraldo, 2000). therefore, these factors compel smes to be least concerned with environmental issues. sajesbm volume 6, (2013) www.sajesbm.com article no 166 156 benefits derived from implementing logistics strategies table 5 represents the findings from a cluster of questions dealing with the perceived benefits of implementing logistics strategies in smes. the benefits have been placed in rank order, in accordance with the frequencies obtained in the study. table 5: benefits of implementing logistics strategies benefit rating benefits valid n 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 6 (%) position in rank order gaining competitive advantages 131 3.82 1.53 7.63 16.79 25.95 44.27 1 increased sales 131 2.29 2.29 11.45 16.79 32.06 35.11 2 reduction in operational costs 131 4.62 3.08 8.46 19.23 32.31 32.31 3 increased turnover 131 1.54 1.54 6.15 17.69 32.31 40.77 4 reduce inventory level 131 3.15 0.79 10.24 20.47 32.28 33.07 5 reduce lead-time in production 131 0.77 3.08 5.38 13.08 24.62 53.08 6 resource planning and cost-saving 131 2.29 1.53 8.40 12.21 29.01 46.56 7 improved coordination in departments 131 4.62 1.54 6.15 18.46 30.00 39.23 8 increase in coordination between suppliers 131 1.53 2.29 7.63 9.92 35.88 42.75 9 increase in coordination with customers 131 0.76 1.53 5.34 13.74 32.06 46.56 10 forecasting 131 0.00 3.05 6.11 16.03 31.3 43.51 11 support of information systems 131 2.31 3.08 12.31 15.38 26.92 40.00 12 more accurate costing 131 4.62 5.38 10.00 16.15 28.46 34.62 13 difference in actual & forecast demand 131 4.62 4.62 16.15 20.77 23.08 30.77 14 frequent changes to orders 131 7.69 2.31 16.92 20.77 26.15 26.15 15 shorter manufacturing lead-time 131 6.20 4.65 6.98 17.83 31.78 32.56 16 customers' special demands 131 1.54 3.08 7.69 14.62 27.69 45.38 17 customers' satisfaction 131 1.53 0.76 3.82 11.45 19.85 62.60 18 improvement in customers' service 131 3.88 0.78 8.53 22.48 27.13 37.21 19 provides support in achieving objectives 131 3.82 0.76 3.82 16.79 32.06 42.75 20 quick response to customer needs 131 1.54 2.31 3.85 10.00 29.23 53.08 21 quick facilitation of the business processes 131 3.82 0.00 5.34 12.98 32.06 45.80 22 uniqueness of the product 131 3.05 3.82 6.87 14.50 29.77 41.98 23 anticipation of customer needs 131 1.54 2.31 6.15 13.85 33.85 42.31 24 flexibility 131 1.53 2.29 9.16 12.98 28.24 45.80 25 sajesbm volume 6, (2013) www.sajesbm.com article no 166 157 ability to innovate 131 1.53 0.76 5.34 9.92 31.3 51.15 26 reduced labour turnover 131 2.29 0.00 4.58 12.21 22.14 58.78 27 average percentage per response 2.85 2.19 7.79 15.45 29.17 42.52 key: 1 = not important 6=very important an analysis of the results of the study in terms of the benefits derived from implementing logistics strategies (refer to table 5) reveals that gaining competitive advantages, increased sales and a reduction in operational costs were the most important paybacks to smes. reduced labour turnover and the ability to innovate occupied the two lowest quadrants in the matrix. competitive advantage occupied the highest position among the benefits derived from implementing logistics strategies. this result has congruence with quayle’s (2003) assertion that logistics has also become more prominent as a critical success factor in competitive advantage, since it can be used to outperform competitors in providing the right product to the right place at the right time. logistics provides competitive advantage through an array of its associated areas that include quick response systems, efficient consumer response, cross docking, management of incoming raw materials, production, storing of finished goods, its delivery to the customer as well as after sales service (gunasekaran, 2003). when an sme enterprise uses logistics as a competitive weapon in an effective manner, it is able to perform better than the competition (uden, 2007). the findings of this study seem to suggest that most smes have realised this fact, and are therefore deriving sustainable competitive advantage from their logistics strategies. the results of this study also reveal that increased sales were the second highest ranking benefit. this finding demonstrates that by implementing logistics strategies, smes experience increased sales, which they consider to be a very important benefit. this is important, since increased sales are an antecedent to increased profits, which is the very reason for existing in business (ayyagari, thorsten & demirgüc-kunt, 2005). logistics is responsible for the distribution of products, which ensures that products are timely delivered to the marketplace, where they can be easily accessed by the customer (roslin & ismail, 2008). this could be most opportune to smes, chiefly because sales are the major driver of profit in most businesses, both large and small (kotler & armstrong, 2010). therefore, smes could employ logistics strategies as an instrument for enhancing their market share through accelerated sales. in this study, the reduction of operational costs emerged as the third most important benefit attributable to the implementation of logistics strategies by smes. the fact that efficient logistics pushes down costs is well established. besides increased sales, profit may also be increased by reducing operational costs (ciumag & ciumag, 2010). for instance, optimisation of the logistics arm of procurement can enable an sme to achieve significant savings in costs (zhao & tang, 2009). the same applies to other logistics activities. the rational is that if logistics costs are suppressed, the funds that have been saved are available to the company and may also be used to boost operational profits (koovappadi, 2012). this principle is manifested through the theory of constraints (toc), a concept aimed at ensuring organisational effectiveness and efficiency in supply chains through reducing costs rather than through increasing sales (alexandre, 2009). reduction of labour turnover and increased innovation emerged as the lowest ranking benefits. this implies that smes have not been able to link any decreases in turnover of manpower to the implementation of logistics strategies. consistently, ugbam, onwumere sajesbm volume 6, (2013) www.sajesbm.com article no 166 158 and imo (2012) link labour turnover in smes to a consortium of work related, behavioral, and attitudinal factors, rather than to the adoption of logistics strategies. with regard to innovation, respondents gave innovation a ‘less important’ tag, which suggests that they did not link it to the implementation of logistics strategies. this finding, however, contradicts previous studies (mcadam, stevenson & armstrong, 2000; lai, 2007) which reveal that the adoption and implementation of logistics strategies by smes has a stimulus effect on innovation in the organisation. conclusions and recommendations the purpose of the study was to investigate the challenges encountered as well as the benefits derived by smes from the implementation of logistics strategies. although the findings of the study are not surprising, they provide extended evidence regarding the perceptions of sme owners and managers towards these challenges and benefits. the study acknowledges the dominating influence and importance of four challenges namely, finance, skills shortages among logistics practitioners, high costs associated with information technology and rapid technological developments faced by smes in implementing logistics strategies. inventory management complications and environmental concerns emerged as the least important challenges experienced by smes in implementing logistics strategies. increases in competitive advantage, increased sales and the reduction of operational costs emerged as the most important benefits that smes realise in implementing logistics strategies. however, the reduction of labour turnover and increases in innovation were the least important benefits to smes. based on the findings of the study, several recommendations can be made. to address the challenges related to financial capitalisation, smes could seek financial assistance from government initiatives such as the black business supplier development program (bbsdp), a program run by the department of trade and industry and is aimed at fast-tracking smes that show a good potential for growth into the mainstream economy (dti, 2012). further financial assistance could be accessed through collaborative efforts between the smes and their suppliers. as a remedy to the extensive skills shortages, smes could invest in sustained training and development programs aimed at enhancing the logistics-related skills of their workforce (brum, 2010). to deal with the complications associated with technology, smes could ensure that technology issues are co-opted into strategic planning initiatives, such that they form part of the goals and vision of the enterprise (gagnon & dragon, 1998). however, this can only be attained when smes have managed to obtain adequate financial assistance, since the adoption of technology also depends on the availability of financial resources. if implemented, these strategies will effectively assist smes to proactively deal with nagging challenges encountered during the implementation of logistics strategies. limitations and implications for further research despite all efforts made by the researchers to eliminate any flaws related to the study, a few remain, of which some should be highlighted. first, the scope of the study was restricted to smes in emfuleni local municipal only. as a result, care should be exercised in generalising the findings of the study to smes in other contexts. second, it was not possible for the researchers to control how the respondents completed the questionnaires, since respondents completed the questionnaires at their own time and in the absence of the researchers. greater accuracy could have been achieved if the questionnaires had been completed in the presence of the researchers. sajesbm volume 6, (2013) www.sajesbm.com article no 166 159 the study has implications for further research. similar studies could be conducted using an amplified number of smes. since this study was conducted using a quantitative approach, the results of the study could also be refined by using a mixed-method approach. comparative studies using smes and large enterprises could be conducted which focus on the challenges and benefits associated with the implementation of logistics strategies. managerial implications this study has relevance in that it adds value to the knowledge of the challenges as well as the benefits of implementing logistics strategies by smes. managers in smes can therefore allocate more resources to providing solutions to those challenges that emerged as most important in this study. the recommendations suggested in this study may also be adopted to ease the impact of these challenges on smes. upon realising that the implementation of logistics strategies has a wide array of benefits as observed in this study, managers in smes may refocus, synchronise and positively adjust their logistics strategies in order to position their organisations to be recipients to these pertinent paybacks. references abonyi, g. (2005). integrating smes into global and regional value chains: implications for sub-regional cooperation in the greater mekong sub-region. prepared for unescap, bangkok, thailand. agapiou, a., clausen, l.e., flanagan, r. & norman, g. (1998). the role of logistics in the materials flow control process. construction management and economics, 16,131-137. alexandre, l. (2009). theory of constraints and the combinatorial complexity of the productmix decision. international journal of production economics, 121(1), 121-129. anja, s., thomas, b. & sascha, k. (2009). international entrepreneurship: towards a theory of sme internationalization. journal of international business and economics, 9(1), 1-12. arvis, j.f., mustra, m.a., panzer, j., ojala, l, & naula, t. (2007). connecting to compete: trade logistics in the global economy. international bank for reconstruction and development: the world bank. ayyagari, m., thorsten, b. & demirgüc-kunt, a. (2005). small and medium enterprises across the globe. world bank policy research working paper 3127, world bank, august , washington, d.c. available at: http://siteresources.worldbank.org/dec/resources/84797-1114437274304/smeglobe.pdf. accessed on 2013/04/08. bakrania, s. & b. lucas (2009): the impact of the financial crisis on conflict and state fragility in sub-saharan africa, governance and social development resource centre, issues paper. available at: http://www.gsdrc.org/go/emerging-issues#crisis. accessed on 2013/04/07. benjaafar, s., li, y. & daskin, m. (2010). carbon footprint and the management of supply chains: insights from simple models. available at: http://www.ie.umn.edu/faculty/ faculty/pdf/beyada-3-31-10.pdf. accessed on 24/05/10. sajesbm volume 6, (2013) www.sajesbm.com article no 166 160 bienstock, c.c., royne, m.b., sherrell, d. & stafford, t.f. (2007). an expanded model of logistics service quality: incorporating logistics information technology. international journal of production economics, 133, 205-222. biondi, v., frey, m. & iraldo, f. (2000). environmental management systems and smes motivations, opportunities and barriers related to emas and iso 14001 implementation. greener management international spring, 29, 55-69. bonney, j. (1994). supply chain management: treat it like a product. journal of american shipper, 36(2), 39-43. bozarth, c.c., donald, p.w., barbara, b.f. & james, e.f. (2007). the impact of supply chain complexity on manufacturing plant performance. journal of operations management, 27(1), 78-93. braunscheidel, m.j. & suresh, n.c. (2007). the organisational antecedents of a firm’s supply chain agility for risk mitigation and response. journal of operations management, 27(2), 119-140. brum, s. (2010). what impact does training have on employee commitment and employee turnover. available at: http://www.uri.edu/research/lrc/research/papers/brumcommitment.pdf. accessed on 2011/01/13. burke, r. (2006). small business smes: guide to running business. thames and hudson: burke publishing. burt, d., petcavage, s. & pinkerton, r. (2010). supply management. 8th ed. boston: mcgraw-hill. cannella, s. & ciancimino, e. (2010). on the bullwhip avoidance phase: supply chain collaboration and order smoothing. international journal of production research, 48(22), 6739-6776. cant, m.c., strydom, j.w., jooste, c.i. & du plessis, p.j. (2006). marketing management. 4th ed. cape town: juta & co. chadha, b. (1994). disequilibrium in the labour market in south africa. imf working paper. washington. international monetary fund. chen, w.h. (1999). the manufacturing strategy and competitive priority of smes in taiwan: a case survey. asia pacific journal of management, 16, 331-349. chin,t. a., hamid, a.b.a., raslia, a. & baharun, r. (2012). adoption of supply chain management in smes. procedia social and behavioral sciences 65, 614619 chiware, e.r.t. & dick, a.l. (2008).the use of icts in namibia’s smes sector to access business information services. the electronic library, 26(2), 145-157. chopra, s. & meindl, p. (2010). supply chain management, strategy, planning and operation. upper saddle river, new jersey: pearson. christopher, m. (1998). logistics and supply chain management: strategies for reducing costs and improving services. 2nd ed. new york: financial times management. sajesbm volume 6, (2013) www.sajesbm.com article no 166 161 ciumag, a. & ciumag, m. (2010): analysis of the relationship between cost, price and profit in lignite extraction. published in: international scientific conference ecotrend, vi-th edition. available at: http://mpra.ub.uni-muenchen.de/30969/ accessed on 2013/04/07. cocca, p. & alberti, m. (2010). a framework to assess performance measurement systems in smes. international journal of productivity and performance management, 59(2), 186200. copper, d. & schindler, p. (2011). business research methods. 11th ed. boston. mcgraw hill. creswell, j.w. (2009). research design: qualitative, quantitative and mixed method approaches. london: sage. damaskopoulos, p.& evgeniou, t. (2003). adoption of new economy practices in smes in eastern europe. european management journal, 21 (2), 133-145. dekker, r., bloemhof, j. & mallidis, i. (2012). operations research for green logistics: an overview of aspects, issues, contributions and challenges. european journal of operational research, 219, 671-679. department of trade and industry (the dti) (2012). black business supplier development programme . available at: http://www.services.gov.za/services/content/home/organisationservices/businessincentives/ blackbusinesssupplier/en_za. accessed on 2012/11/07. deros, b.m., yusof, s.m. & salleh, a.m. (2006). a benchmarking implementation framework for automotive manufacturing smes. international journal of benchmarking, 13(4), 396-430. drew, s.a.w, & smith p.a.c. (1998). the new logistics management: transformation through organisational learning. international journal of physical distribution and logistics management, 28(10), 666-681. dti report. (2004). entrepreneurial empowerment, job creation and equity facilitated: an analysis of the evolution of public sector support for small enterprises in south africa. review of ten years of small business support in south africa 1994 – 2004. available at: http://www.dti.gov.za/sme_development/docs/10_year_review.pdf. accessed on 2012/06/17. ebrahim, n. a., ahmed, s. & taha, z. (2008). r&d networking and value creation in smes. department of engineering design and manufacture, faculty of engineering, university of malaya, kuala lumpur. ellegaard, c. (2006). small company purchasing: a research agenda. journal of purchasing & supply management, 12, 272 -283. escriba-esteve, a., sanchez-peinado, l. & sanchez-peinado, e. (2009). the influence of top management teams in the strategic orientation and performance of small and mediumsized enterprises. british journal of management, 20, 581-597. evangelista, p., huge-brodin, m., isaksson, k. & sweeney, e. (2011). the impact of 3pl’s green initiatives on the purchasing of transport and logistics services: an exploratory study. proceedings of the 20th annual ipsera conference: “vision 20/20 preparing today for sajesbm volume 6, (2013) www.sajesbm.com article no 166 162 tomorrow’s challenges” 10th-13th april, maastricht, the netherlands. falkena, h. (2000). smes access to finance in south africa: a supply side regulatory review.report by the task group of the policy board of financial services and regulations. cape town: kluwer publishers. falkena, h., abedian, i., von-blottnitz, m., coovadia, c., davel, g., madungandaba, j., masilela, e. & ree, s. (2010). smes access to finance in south africa: a supply side regulatory review. available at: http://www.treasury.gov.za/publications/other/access%20to%20finance%20in%20south%2 0africa%20-%20a%20supply-side%20regulatory%20review.pdf. accessed on 20/03/2013. fawcett, s. e., magnan, g. m. & mccarter, m. w (2008). benefits, barriers, and bridges to effective supply chain management. supply chain management: an international journal, 13(1), 35 48. fouche, c.b. & de vos, a.s. (2005). problem formulation. in de vos, a.s., strydom, h., fouche, c.b. & delport c.s.l., ed. research at grass roots: for the social sciences and human service profession. 3rd ed. pretoria: van schaik publishers. gagnon,y & dragon, j. (1998). the impact of technology on organizational performance. journal of public sector management, 43(1), 19-31. gentle. j.a. (2008).tips to become a logistics professional. available at: http://www.logisticsmgmt.com/blog/640000464/post/560022456.html. accessed on 2013/04/04. gelinas, r. & bigras, y. (2004). the characteristics and features of smes: favourable or unfavourable to logistics integration? journal of small business management, 42(3), 263278. gourova, e. (2010). knowledge management strategy for small and medium enterprises. proceedings of the international conference on applied computer science, 639-648. gunasekaran, a. (2003). the successful management of a small logistics company. international journal of physical distribution & logistics management, 33(9), 825-842. grant thornton’s international business report. (2012). grant thornton survey reveals overregulation is sa’s biggest constraint to business expansion. available at: http://www.gt.co.za/news/press-releases/international-businessreport/2012/ibrq4_2011.asp. accessed on 2012/03/05. gravetter, f.j. & forzano, l.b. (2003). research method for the behavioural sciences. belmont: wadsworth thomson learning. haan, j., kisperska-moron, d. & placzek, e. (2007). logistics management and firm size: a survey among polish small and medium enterprises. international journal of production economics, 108(1-2), 119-126. hagen, b., zucchella, a., cerchiello, p. & de giovanni, n. (2012). international strategy and performance: clustering strategic types of smes. international business review 21, 369382. sajesbm volume 6, (2013) www.sajesbm.com article no 166 163 hamisi, s. (2011). challenges and opportunities of tanzanian smes in adapting supply chain management. african journal of business management, 5(4), 1266-1276. hendrickson, m. (2009). sme competitiveness in the caribbean: challenges and opportunities. eclac. port of spain office. hendricks, k. & singhal, v.r (2005). the effect of supply chain disruptions on long-term shareholder value, profitability and share price volatility. the university of western ontario london, ontario, canada. heyns, g. & luke, r. (2012). skills requirements in the supply chain industry in south africa. journal of transport and supply chain management, 2, 107-125. hill, j. & wright, l.t. (2001). a qualitative research agenda for small to medium-sized enterprises. marketing intelligence & planning, 19(6), 432-443. hong, p., & jeong, j. (2006). supply chain management practices of smes: from a business growth perspective. journal enterprise information management, 19(3), 292-302. isaksson, k., björklund, m., evangelista, p & huge-brodin, m. (2011). the challenge and adoption of green initiatives for transport and logistics service providers. available at: liu.diva-portal.org/smash/get/diva2:476094/fulltext01. accessed on 2013/04/0 7. jacobs, p (2009): questioning pro-poor responses to the global economic slump. review of african political economy, 122(36), 194-217. karjalainen, k. & kemppainen, k. (2008). the involvement of small-and medium-size enterprises in public procurement: impact of resource perceptions, electronic systems and enterprise size. journal of purchasing & supply management, 14, 230-240. krajewski, l. j., ritzman, l. p. & malhotra, m. k. (2010). operations management. processes and supply chains. 9th ed. new york: pearson. kruse, g. (2007). cash is king – and don’t you forget it. journal of operations management, 33(6), 13-17. koskinen, p. & hilmola, o.p. (2008). supply chain challenges of north-european paper industry. journal of industry management & data systems, 108(2), 208-227. kothari, c. r. (2008). research methodology: methods and techniques. 2nd ed. new delhi: new age international. kotler, p. & armstrong, g. (2010). principles of marketing. new jersey. prentice hall. koovappadi, e. (2012). logistics cost reduction: best practices. available at: http://ezinearticles.com/?logistics-cost-reduction---best-practices&id=814237. accessed on 2013/04/02. kuthiala, k. (2003). e-commerce in india: challenges and choices. journal of services research 2 (2), 139-155. sajesbm volume 6, (2013) www.sajesbm.com article no 166 164 lai, r. s. (2007). policy innovation of logistics for smes in taiwan. the 34th international small business congress, november 13, taiwan. available at: http://www.isbc2007.org/isbc/upload/2879.pdf. accessed on 2013/04/06. lasserre, f. (2004). logistics and the internet: transportation and location issues are crucial in the logistics chain. journal of transport geography, 12, 73-84. levey, m. & powell, p. (2005). strategies for growth in smes: the roles of information and information systems. burlington: oxford. lin c.y. & ho, y.h (2008). an empirical study on logistics service providers’ intention to adopt green innovations. journal of technology management & innovation, 3(1), 17-26. loecger, u. (2000). small and medium-sized enterprises: delimitation and the european definition in the area of industrial business. european business review, 12(5), 261-264. lukka, a. (2005). evolution of logistics theory. lappeenranta: finland. malhotra, n. k. (2007). marketing research: an applied orientation. 2nd ed. new jersey, upper saddle river: prentice-hall. malhotra, n. k. (2009). marketing research: an applied orientation. 6th ed. eaglewood cliffs, new jersey: prenticehall. malhotra, n. k. (2011). basic marketing research. 4rd ed. eaglewood cliffs, new jersy: prenticehall. maree, k. & pietersen, j. (2007). surveys and the use of questionnaires. in maree, k., ed. first steps in research. pretoria: van schaik publishers.155-170. mbamba, u.o.l. (2009). the technology challenges in procurement management. 24th materials management professionals’ annual conference, december 1st-3rd, 2009, arusha, tanzania. mboweni, t.t. (2008). an annus horribilis? address by mr tt mboweni, governor of south african reserve bank at the annual dinner in honour of the ambassadors and high commissioners accredited to the republic of south africa. pretoria, 27 november 2008. mcadam, r., stevenson, p. & armstrong, g. (2000). innovative change management in smes: beyond continuous improvement. logistics information management, 13(3), 138-149. mckinnon, a. (2009).the present and future land requirements of logistical activities. land use policy, 26, 293-301. mclvor. r. (2006). how the transaction cost and resource-based theories of the firm inform outsourcing evaluation. journal of operations management, 27(1), 45-63. meade, l. & sarkis, j. (1998). strategic analysis of logistics and supply chain management systems using the analytical network process. logistics & transportation, 34(3), 201-215. musara, m. & olawale, f. (2012). access to finance in the sme sector: a south african perspective. asian journal of business management 4(1), 58-67. sajesbm volume 6, (2013) www.sajesbm.com article no 166 165 mutula, s.m. & brakel, p.v. (2006). e-readiness of smes in the ict sector in botswana with respect to information access. the electronic library, 24(3), 402-417 napier, g., serger, s.s. & hansson, e. w. (2004). strengthening innovation and technology policies for sme development in turkey: opportunities for private sector involvement. available at: http://www.iked.org/pdf/strengthening%20innovation%20and%20technology%20policies%2 0for%20sme%20development%20in%20turkey.pdf. accessed on 2013/04/02. narasimhan, r. & talluri, s. (2009). perspectives on risk management in supply chains. journal of operations management, 27(2), 114-118. nepal, c., karki, b.r. & niraula, k.p. (2006). technology transfer in smes: problems and issues in the context of nepal. available at: http://www.unescap.org/tid/publication/indpub2306_chap3.pdf. accessed on 2013/04/07. nielsen, a.e. & thomsen, c. (2009). csr communication in small and medium-sized enterprises: a study of the attitudes and beliefs of middle managers. international journal of corporate communications, 14(2), 176-189. o’regan, n. & ghobadian, a. (2004).testing the homogeneity of smes: the impact of size on managerial and organisational processes. european business review, 16(1), 64-67. oke, a., burke, g. & myers, a. (2007).innovation types and performance in growing uk smes. international journal of operations & production management, 27(7), 735-753. overby, j.w. & servais, p. (2005). small and medium-sized firms import behaviour: the case of danish industrial purchasers. journal of industrial marketing management, 34, 7183. pasanen, m. & laukkanen, t. (2006). team-managed growing smes: a distinct species? management research news, 29(11), 684-700. pittaway, l. & morrissey, b. (2004). buyer-supplier relationships in small firms: the use of social factors to manage relationships. lancaster university management school working paper. polychronakis, y & li, x. (2008). barriers to international supply chain collaboration for small chinese costume jewellery suppliers. salford business school, university of salford, manchester city, uk. quayle, m. (2003). a study of supply chain management practice in uk industrial smes. supply chain management: international journal. 8(1), 79-86. raymond, l. & croteau, a.m. (2006). enabling the strategic development of smes through advanced manufacturing systems: a configurational perspective. industrial management & data systems, 106(7), 1012-1032. rogerson, c.m. (2008). tracking smme development in south africa: issues of finance, training and the regulatory environment. arbon forum, 19, 61-81. rogerson, c.m. (2000). successful smes in south africa: the case of clothing producers in the witwatersrand. development southern africa, 17(5), 687-716. sajesbm volume 6, (2013) www.sajesbm.com article no 166 166 roslin, r. m. & ismail, n. (2008). assessing competitive advantage of smes through effective supply chain management. management dynamics. 20(2), 74-91. ruiz-santos, c., ruiz-mercader, j. & mcdonald, f. (2003). the use of contractual working time flexibility by spanish smes. personnel review, 32(2), 164-186. sharp, l. (2011). south africa’s extraordinary skills shortage adcorp. available at: http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71619?oid=235542&sn=d etail&pid=71619. accessed on 2012/03/05. simpson, m. & docherty, a.f. (2004). e-commerce adoption support and advice for uk smes. journal of small business and enterprise development, 11(3), 315-328. soontiens, w. (2002). managing international trade: an analysis of south africa smes and regional exports. management decisions, 40(7), 710-719. strydom, h. (2005). sampling and sampling methods. in de vos, a.s., strydom, h., fouche, c.b. & delport c.s.l., ed. research at grass roots: for the social sciences and human service profession. 3rd ed. pretoria: van schaik publishers. 192-204. talavera, o. & d. shafer, (2008). entrepreneurs' gender and financial constraints: evidence from international data. journal of computer economics, 37(2), 270-286. tempelmeier, h. (2006). inventory management in supply networks: problems, models, solutions. norderstedt: books on demand. thakkar, j., kanda, a. & deshmukh, s.g. (2008). supply chain management in smes: development of constructs and propositions. asia pacific journal of marketing & logistics, 20(1), 97-131. uden, l. (2007). how to promote competitive advantage for smes: issues, ideas and innovation. journal of business systems, governance and ethics, 2(2), 1-15. udin, z.m., khan, m.k. & zairi, m. (2006). a collaborative supply chain management framework. part 1 planning stage. business practice management journal. 1(5), 671-687. ugbam, o. c., onwumere, j.u.j. & imo, g. (2012). the impact of labour turnover on survival of small and medium scale enterprises: evidence from nigeria. european journal of business and management, 4(18), 187-213. vaaland, t.i. & heide, m. (2007). can the sme survive the supply chain challenge? international journal of supply chain management, 12(1), 20-31. van der vorst, j.g.a.j., beulens, a.j.m. & van beek, p. (2005). innovations in logistics and ict in food supply chain networks. in jongen, w.m.f. & meulenberg, m.t.g., ed. innovation in agric-food system. wageningen: wageningen academic publishers. 245-292. zacharia, z.g. & mentzer, j.t. (2004). logistics salience in a changing environment. journal of business logistics, 25(1), 187-202. zacharia, z.g. & mentzer, j.t. (2007). role of logistics in new product development. journal of business logistics, 28(1), 83-110. sajesbm volume 6, (2013) www.sajesbm.com article no 166 167 zelealem, t.t. & pansiri, j. (2006). perceive managerial problems in smes: evidence from botswana. development & learning in organizations, 20(5), 15-17. zeimpekis, v. & giaglis, g.m. (2006). urban dynamic real-time distribution services: insights from smes. journal of enterprise information management, 19(4), 367-388. zeithaml, v.a., bitner, m.j., gremler, d.d. & pandit, a. (2008). service marketing: integrating customer focus across the firm. 4th ed. tata mcgraw-hill: publishing company limited. zhang, q., vonderembse, m.a. & su lim, j. (2005). logistics flexibility and its impact on customer satisfaction. international journal of logistics management, 16(1), 71-95. zhao, x. & tang, q. (2009). analysis and strategy of the chinese logistics cost reduction. international journal of business and management, 4(4), 188-191. about the author(s) maphelo malgas department of retail business management, faculty of business and management sciences, cape peninsula university of technology, cape town, south africa graduate school of business and leadership, university of kwazulu-natal, durban, south africa wellington b. zondi graduate school of business and leadership, university of kwazulu-natal, durban, south africa citation malgas, m. & zondi, w.b., 2021, ‘corrigendum: challenges facing small business retailers in selected south african townships’, southern african journal of entrepreneurship and small business management 13(1), a457. https://doi.org/10.4102/sajesbm.v13i1.457 note: doi link to the original article: https://doi.org/10.4102/sajesbm.v12i1.202 corrigendum corrigendum: challenges facing small business retailers in selected south african townships maphelo malgas, wellington b. zondi published: 29 nov. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. in the version of this article initially published, malgas, m. & zondi, w.b., 2020, ‘challenges facing small business retailers in selected south african townships’, southern african journal of entrepreneurship and small business management 12(1), a202. https://doi.org/10.4102/sajesbm.v12i1.202, the first author’s second affiliation was omitted in the ‘authors’ and ‘affiliations’ sections. the following affiliation should be added as his second affiliation: graduate school of business and leadership, university of kwazulu-natal, durban, south africa. this correction does not alter the study’s findings of significance or overall interpretation of the study’s results. the authors apologise for any inconvenience caused. abstract introduction problem background research purpose and objectives literature review research hypotheses methodology research results conclusion and recommendations limitations and directions for future studies contribution of the study acknowledgements references about the author(s) godknows gomwe faculty of economics and management science, school of management science, north-west university, mmabatho, south africa marius potgieter faculty of economics and management science, school of management science, north-west university, mmabatho, south africa alpheaus m. litheko faculty of economics and management science, school of management science, north-west university, mmabatho, south africa citation gomwe, g., potgieter, m. & litheko, a.m., 2022, ‘proposed framework for innovative business intelligence for competitive advantage in small, medium and micro-organisations in the north west province of south africa’, southern african journal of entrepreneurship and small business management 14(1), a501. https://doi.org/10.4102/sajesbm.v14i1.501 research project registration: project research number: nwu-00028-21-a4 original research proposed framework for innovative business intelligence for competitive advantage in small, medium and micro-organisations in the north west province of south africa godknows gomwe, marius potgieter, alpheaus m. litheko received: 08 dec. 2021; accepted: 20 june 2022; published: 29 july 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: innovative business intelligence enjoys popularity amongst mainly large organisations, particularly in the private sector. however, very limited studies have validated the impact of business intelligence in small, medium and micro-organisations (smmes), especially in a developing economy. aim: to devise an innovative business intelligence as a competitive advantage model and to establish the impact of innovative business intelligence as a competitive advantage, as measured by success or growth and innovation in smmes in north west province, south africa. setting: primary research was conducted amongst smmes owners or managers and employees in the north west province, south africa. methods: the final sample consisted of 12 smme owners or managers and 394 other employees of smmes. the study used mixed methods and adopted a survey design. in-depth interviews and a structured questionnaire were used for data collection. results: the study established that management support and internal environment commitment support the implementation of innovative business intelligence. training and employee motivation are insignificant in enhancing innovative business intelligence as competitive advantage. conclusion: management of smmes must define clear goals and objectives, as well as support and provide education mechanisms for new technology advancement. the technology-acceptance model (tam) of adoption is merely one of the key techniques smmes can employ to improve the implementation of business intelligence as a new technology instrument to promote quality decision-making and profitability. keywords: business intelligence; innovation; competitive advantage; smmes; internal environment. introduction small, medium and micro-organisations (smmes) ought to stay alert in operating their businesses in today’s dynamic environment of increased competition, greater flexibility of innovation, information technology (it) and unbridled expectations from consumers (gale & kroeze 2011). business intelligence should ideally be acknowledged for enhancing quality decision-making by converting organisational data into useable information (chen & lin 2021). in today’s dynamic environment, gaining competitive advantage is a result of technological innovation and its application in the business environment. the significance of smme organisations is acknowledged by many african countries, as well as developed countries such as the united kingdom and the united states of america (watkins 2012). in today’s highly complex and ever-changing market conditions, smmes strive to survive and succeed, and the ever-changing market conditions demand smmes to make timeous decisions that are effective and specific to fit the circumstances and business model of the business. this study is premised on innovative business intelligence and its effect on the competitive advantage of smmes in a selected district in the north west province of south africa. there is a need for research to explore innovative business intelligence as a competitive advantage for smmes, given that there is limited empirical evidence on innovative business intelligence as a major influence on the competitiveness of smmes. the goal of this research is to look into the relationship between the three constructs, which include the influence of business intelligence on smmes operations, the mediating effect of innovation and the attainment of competitive advantage. the impact of smmes is essential because smmes play an important role in developing economies (chimucheka & mandipaka 2015). innovative business intelligence is essential for smme growth and gaining a competitive advantage. subsequently, a closer look will be taken at the background to this study and the problem statement that motivated this paper. problem background business intelligence is the collection and transformation of raw data into useful information for managerial decision-making (evelson 2015). this can lead to the prevention of productivity loss, gaining agility in the marketplace and aiding an organisation in monitoring its performance substantially (chen et al. 2019). recent articles on business intelligence suggest that business intelligence is a useful tool for decision-making (runciman 2015). in support of this, yusof and yusof (2013) mentioned that business intelligence does enjoy popularity amongst mainly large organisations, particularly in the private sector. from the aforementioned, it is prudent to assert that business intelligence enables smmes to integrate information (data) for decision-making. by harnessing business intelligence, smmes can recognise previously unknown occurrences and patterns of business processes for future decision-making. however, cheung and li (2012) opine that the current demand for business intelligence adoption has no restrictions on organisational size. abzaltynova and williams (2013) support cheung and li in that smmes indeed now have the same need to implement business intelligence adoption, similar to larger organisations. therefore, research has to be done on smmes, specifically those in the ngaka modiri molema district. current theories suggest the resource-based view (rbv) and its derivative, the dynamic capability view (dcv), where smmes must develop resources that are unique to their consumers, difficult to copy and distinguishable from competitors (barney 2012; hoffman 2018). thus, smmes who can develop their business intelligence capabilities will enhance their competitive advantage. the challenge facing smmes is how to harvest new information. guarda et al. (2013) elucidate that business intelligence is defined as a management strategy rather than a technology. this is evident in today’s business environment, as indicated by rungani and potgieter (2018). numerous smmes find it challenging to be sustainable in today’s ever-changing market conditions. the world bank reported in 2016 that nearly 140 million smmes in 130 countries were employing 65% of the overall labour force (world bank 2016), and this led to supporting the growth of smmes becoming a major priority, especially during the covid-19 pandemic of 2020. the south african government, during this catastrophe, supported smmes by lowering interest rates as well as with an array of financial, technical and research support initiatives, as reported by coad et al. (2020). contributing to this discourse, the small enterprise development agency (2016) pointed out that smmes require information that will allow decision-making to predict the behaviour of competitors, suppliers, consumers, technology, acquisitions, product and services and the business environments. chen et al. (2019) indicate that comprehensive studies of business intelligence report that it enables organisations to make quality decisions as smmes face strong, competitive, dynamic and volatile environments. small, medium and micro-organisations therefore have to consider the effort it requires to gather information in order to improve their decision-making. nasab, selamat and masrom (2015) and salehi et al. (2020) contend that the implementation of business intelligence adoption is vital in obtaining information and simultaneously contributing towards an increased knowledge base for managers. the global entrepreneurship monitor (gem) (2014), cited by bosma and levie (2010) and kalane (2015), equally concurs that smmes experience a lack of information, which causes a failure to viably oversee initiated business plans. consequently, the adoption of innovative business intelligence will most likely improve the competitiveness of smmes. this study contributes to the connection between innovative business intelligence and competitive advantage in smmes in developing economies. whilst there are previous studies that have examined the subject of business intelligence in south africa (venter & tustin 2009) and explained the application of innovation (abualloush, bataineh & aladwan 2017) and competitive advantage (guarda et al. 2013), there are insufficient studies that have investigated the association of the constructs in an smme environment. this study is going to deliberate on this research gap. this study aims to give smmes insight into how to implement innovative business intelligence adoption strategies, as this is pivotal for achieving organisational competitiveness. adopting business intelligence is critical for decision-making in highly competitive, ever-changing market conditions, and the findings of this research will broaden the scope of smmes’ knowledge as there is a lack of academic material related to this field of study and specific to the geographical area where this study was undertaken. it is also intended to devise an innovative business intelligence model that can be used by smmes to gain competitiveness in their operations. the theoretical contribution of the study rests in the development of a conceptual framework adapted from models developed by venter and tustin (2009), ahmad (2015), mukuche (2015) and eidizadeh, salehzadeh and esfahani (2017). the study sought to develop a model that links business intelligence, innovation and competitive advantage, specifically for smmes. in summary, the following problem statement is formulated for this study. many smmes fail during the early stages of their existence, and a reason for this could be their lack of information. do they regard innovative business intelligence as beneficial to their decision-making? businesses, irrespective of their size, are aware of the concept of innovative business intelligence. are there any observable positive outcomes for those that practise innovative business intelligence to ensure that there are proper information management strategies in place? research purpose and objectives patidar (2013) stated that research objectives are the goals to be achieved in conducting research. goals set out what is hoped to be achieved at the end of a study. the aim spells out the main purpose of a study, because objectives are the means used to achieve those desired outcomes. the aim of this study is to develop a framework for utilising innovative business intelligence as a competitive advantage for smmes in the ngaka modiri molema district of the north west province in south africa. the above aim raises the following core study objectives: to determine how business intelligence influences innovation in smmes to ascertain how business intelligence influences competitive advantage in smmes to establish how innovation influences competitive advantage in smmes. literature review business intelligence is a business product that is used in decision-making (habjan & popovic 2007). business intelligence can be used by different industries, such as manufacturing, healthcare and telecommunications (ahmad 2015). in addition to this, jokel, aminy and klasson (2019) assert that business intelligence systems provide a wealth of data from historical, present and forecasted views of an organisation’s operations. furthermore, business intelligence systems are referred to as decision support systems (dss) (jokel et al. 2019). central to the above descriptions is that business intelligence is a process that converts raw data into useable information, which may then be transformed into strategic actions to help key managers make more informed, actionable decisions (evelson 2015). the role of innovative business intelligence in smme success and survival is well acknowledged, and it is generally accepted as having a positive impact on smmes (o’donnell et al. 2002). innovative business intelligence strategies guide smme managers to sustain existing market structures whilst also reinventing their products to better satisfy consumer needs. marshall (2021) asserts that innovative business intelligence is a requirement for smmes’ success and growth because it is a core mandate that underpins small business organisations. therefore, innovative business intelligence is important in organisational learning as a necessary attribute that leads to the survival and competitive advantage of smmes. a reported number of studies, such as that of ahmad, ahmad and hashim (2016) and karabegovic et al. (2018) have been conducted on business intelligence where the potential benefits of adopting business intelligence in different sectors of the economy were reviewed. in the electronics industry, as reported by eckerson (2003), smmes manage to accrue a substantial amount of money by selling smaller quantities of out-of-stock items by adopting business intelligence solutions. in the automobile manufacturing sector, an increase in return on investment was realised by using information on financial business intelligence with a quick repossessed vehicle loan. sahay and ranjan (2008) assert that business intelligence can reduce inventory expenses by applying on-time accurate information on supplier shipments. business intelligence can also lead to more reliable and faster reports, on improved decision-making and increased income because of a cut in it expenses and increasing the quality of client relationships. dumitrita (2011) stated that other benefits of business intelligence are rising revenue, lowering cost, improved internal communication and leveraging the investment in enterprise resource planning (erp) (skyrius 2015). xu and hwang (2007), aghdaie, sanayei and etebari (2012) and meihami and meihami (2014) all used the technology-acceptance model (tam) by adoption of user satisfaction, ease of use and the quality of information on business intelligence. other interesting work focused on business intelligence and innovation, which used tam and drivers of innovation (doi) (ahmad 2015; chang, tai & hsu 2010; chen et al. 2012; eidizadeh et al. 2017). all of these studies mentioned indicate that the adoption of business intelligence and innovation can enhance the competitive advantage of smmes. eidizadeh et al. (2017) mentioned innovation as a mediating role in the connection between business intelligence and competitive advantage and performed a relatively small formal study on the drivers of innovation, particularly the internal environment’s effect on an organisation in terms of competitive advantage. the study by mukuche (2015) emphasises that it is critical for insurance organisations to set clear business intelligence objectives that are aligned with the organisation’s objectives and people, because roles should be established at the onset of every project. another study on business intelligence by ahmad (2015) recommends that organisations’ internal resources, such as business intelligence, perceptions and governance of business intelligence, enhance the successful deployment of business intelligence. results from a study by venter and tustin (2009), a study conducted in south africa, demonstrate that organisations lack capitalising on business intelligence opportunities; that the coordinating of business intelligence functions are affected; and that those on the general management level reported low levels of satisfaction with the quality of business intelligence, as well as the collection, analysis and dissemination of information. a further study on factors such as internal environment issues, which also affect business intelligence deployment in an organisation, is strongly suggested. figure 1 illustrates the conceptual framework. figure 1: graphical presentation of the conceptual framework of this study. research hypotheses h1: business intelligence has a positive influence on innovation. h2: innovation has a positive impact on competitive advantage. h3: business intelligence has a positive influence on competitive advantage. methodology research paradigm the research paradigm that is pertinent to this study, in line with the research aims, is pragmatism, which combines the postpositivist and constructivist paradigms. the goal of the postpositivist paradigm is to develop objective knowledge through a credible research method that improves research findings’ correctness, validity, dependability and generalisability (schulze & kamper 2014). in the constructivist paradigm, the researcher is a full participant in the research process (saunders, lewis & thornhill 2016; schulze & kamper 2014). the constructivist method subscribes to the position that knowledge is socially produced and is dependent on the interaction between the researcher, research objects and the natural environment in which the study is done from an ontological perspective (creswell et al. 2016; wahyuni 2012). research design to strengthen the validity of the findings, the study used a descriptive research design with a single cross-sectional approach. the approach can be divided into two ways for presenting and describing data, that is, in graphical and numerical ways (creswell et al. 2016; devlin 2018; saunders et al. 2016). research approach mixed methods research (quantitative and qualitative approaches) was adopted as a framework and individual interview data and quantitative survey data were acquired for this study (bryman & bell 2014; christensen, johnson & turner 2014; creswell et al. 2016). quantitative research is based on the postpositivist paradigm and uses statistical tools to determine the correlations between the variables that shape the phenomenon under investigation (maree 2012). the constructivist worldview underpins the qualitative approach, which is based on describing links between study items and the context within which the research is done (mccusker & gunaydin 2014). research participants this study used the nonprobability sampling method for both the qualitative and quantitative components to gather the primary data required. on in-depth interviewing, data saturation was a high priority in this study, which meant the researcher could not stop collecting data until participants started repeating information, further data collection became redundant or the information provided added no value to the research issue. the 12 interviews in this study attained technical saturation, meaning no new information emerged from the interviews. a list of smmes was received from the provincial department of finance for the north west’s central supply database in order to determine the sample size for the questionnaire survey. the sample size was calculated using the raosoft and survey monkey sample size calculators, which take into account four parameters when calculating the sample size: margin of error, confidence level, population and response distribution. the sample size calculators were set to have a margin of error of 5%, a confidence level of 95% and a response distribution of 50% by default, and a population size of 2747 was added. the sample size was then calculated and both tools indicated that the minimum number of respondents was 400 smmes in order to obtain a representative sample. care was taken to ensure that no respondents from the quantitative survey population participated in the in-depth interviews. research instruments to facilitate the analysis of the qualitative data, the computer software package atlas.ti was used to examine the qualitative data, the coding of the data into themes and subthemes in order to establish the key factors describing the impact of innovative business intelligence on smmes’ competitive advantage. the quantitative data were examined using a consolidation of descriptive and inferential statistics. lomax and vaughn (2012) explain descriptive statistics comprise techniques that allow for the tabulation and summarising of the descriptors of the research focus for a given study. this study adopted descriptive statistics for analysing the structure of the sample, using the latest spss version. these figures include frequencies, means and standard deviations. ensuring reliability and validity both quantitative research and qualitative research require high levels of reliability and validity. the study employed reliability and validity in qualitative studies to ensure the study’s precision, exactness and trustworthiness (assarroudi et al. 2018). the study followed a rigorous and precise protocol throughout data collection, analysis and interpretation to make the study reliable and valid (elo et al. 2014). internal consistency was assessed using the cronbach’s alpha coefficient, total item correlations and composite dependability. cronbach’s alpha and the composite reliability should be above 0.6, whilst total-item correlations should be above 0.5 (fraering & minor 2006). the seven measures utilised in this investigation were adapted from prior studies, each of which had a cronbach alpha value of 0.60 or higher, showing that the scales were trustworthy and appropriate for this study (leonidou et al. 2010). the study used triangulation to assure validity by validating the interview data using many sources of information (kern 2018). validity is concerned with the integrity of the conclusions that can be generated from research (bryman 2015; cooper 2005). the instrument’s content validity was evaluated by management academics in this study. statistical analysis the computer software package atlas.ti was used to examine the qualitative data. the statistical package for the social sciences (spss) and the analysis of moment structures (amos) software packages were used. to check the accuracy of the measurement scales, a confirmatory factor analysis (cfa) was conducted and tested using structural equation modelling (sem). to check the model fit, indicators that include the normal fit index (nfi), standardised root mean square residual (srmr), goodness-of-fit index (gfi) and the comparative fit index (cfi) were used to explain the pattern of association between variables. ethical considerations when performing a research study, research ethics refers to the code of conduct or expected societal norms of behaviour of individuals and relationships (akaranga & makau 2016; sekaran & bougie 2016). in this study, several ethical considerations were observed. firstly, the cooperation and formal voluntary consent of smmes were sought, including their right to terminate their participation at any point along the procedure. secondly, full details of the nature of this study were communicated to potential respondents. thirdly, anonymity was pledged, and respondents were not identifiable by the results as presented as findings. fourthly, responses were protected by using pseudocodes and not recording any identifiable information, as well as keeping all collected data safely. in addition, this study was registered with the ethics committee of the north-west university (nwu) and the ethics policy was strictly adhered to. ethical approval to conduct this study was obtained from the economic and management science research ethics committee (ems-rec) north west university (reference number: nwu-00028-21-a4). research results demographic details of respondents and small, medium and micro-organisations organisations eight of the 12 owners or managers who took part in the study were male and four were female. their educational backgrounds include three diploma holders, six tertiary degrees and three postgraduate degrees. in terms of the duration of the organisation, one participant stated that the organisation had been in operation for more than 2 years; one stated that the organisation had been in existence for more than 3 years; and 10 stated that their organisations had been in existence for more than 4 years. this implies that the participants are well experienced and that their responses are of great value to this study. women accounted for a higher percentage of the respondents (53.3%), whilst men accounted for only 46.7% of those who participated in the survey. a large majority of respondents (41.1%) were between the ages of 29 and 39 years, followed by those between the ages of 40 and 50 years (26.4%) and (9.1%) above 50 years. the highest percentage of respondents (35.8%) graduated from high school, followed by 26.4% with a bachelor’s degree and 24.4% with a tertiary institution diploma. in the ngaka modire molema district, a total of 2.5% had been in existence for a year; 10.2% had been in existence for 2 years now. a total of 21.1% of smmes had been in existence for 3 years now; 28.7% had been in business for 4 years now; and 37.6% had 4 years and more in business. this implies that the majority of the organisations had been in business for more that 2 years, which indicated that most of them were likely to have more information about innovative business intelligence as a competitive advantage. qualitative research results the results of a qualitative data analysis performed with the atlas.ti software are presented. the coding method, as shown in table 1, demonstrates the relationship or association between the themes and their codes, as they all come from innovative business intelligence as a competitive advantage for smmes. table 1: layout of the themes, categories and codes. contribution of business intelligence influence the first issue to emerge from all interviews, as shown in table 1, was the influence of business intelligence, which was divided into four categories: (1) business intelligence advantages, (2) business intelligence problems, (3) business intelligence nature and (4) business intelligence skills. atlas.ti used auto-coding on the transcript to illustrate participants’ understanding and opinions about essential elements that drive business intelligence amongst smmes in the ngaka modire molema district of the north west province. similarly, to represent the codes entered in atlas.ti, the business intelligence topic was separated into categories and subcategories. business intelligence adoption with top management support, such as staff enthusiasm and proper education and training for user interfaces, has delivered good outcomes according to the business owners interviewed, as evidenced by the long survival of their organisations. these participants explained that business intelligence training resulted in speedier decision-making, increased employee satisfaction and improved decision-making quality over time. contribution of innovation influence on competitive advantage when looking at the impact of innovation on smmes in the ngaka modire molema district, five categories of innovation emerged: (1) organisational innovation, (2) product innovation, (3) process innovation, (4) market innovation and (5) internal environment innovation. the impact of innovation varies depending on which smmes are involved. some companies employ innovation quite well for the majority of their product processes, whilst others use it very infrequently. according to the participants, the challenges of innovation are a lack of funding, management backing and employee competence. because of the high costs of process research and development, as well as market innovation, the cost of innovation can be very high. the gem report (2017) indicates that one of the key causes of organisational failure and discontinuity in south africa is a lack of organisational innovation. according to the findings, the research and development department tries to be innovative in their organisations in a variety of ways. although the participants are inventive in various ways, such as product, process and market innovation, as evidenced by their comments, what is crucial is that such innovation contributes to their organisation’s success and competitive advantage. some participants, on the other hand, seek incentives for presenting new ideas and a welcoming climate for innovators in their organisations, which contradicts this conclusion. therefore, this is a call on those smme owners or managers who are not innovative to try to be so in order for their organisations to prosper and remain competitive. competitive advantage participants’ responses were obtained on items they deemed necessary for smmes’ effective competitive advantage in the ngaka modire molema district, in the north west province. six categories of competitive advantage emerged: (1) price discounts, (2) business intelligence, (3) online promotional strategies, (4) employee training and development, (5) customer relationship management and (6) unique product designs. in light of this, the majority of smme owners or managers believe that customer relationship tactics or methods will help to promote customer service, loyalty and brand recognition. some participants acknowledged that continual personnel development and training are good management techniques. this will require ongoing employee training, encouraging the sharing of ideas or information during training sessions and providing monitoring. price discounts were also found as a successful management tactic for gaining a competitive advantage. the qualitative data analysis and presentation of the findings revealed that the participants’ statements on innovative business intelligence as a competitive advantage had parallels and differences. however, it was clear from the in-depth discussions that all stakeholders’ involvement, participation and support are critical for the long-term expansion of smmes in the ngaka modire molema district. the following appears to emerge from the data analysis: the participants believe that there is a link between innovation and business intelligence and that if the two are combined, smmes will gain a competitive advantage. the success of business intelligence implementation is aided by top management support and collaboration amongst all stakeholders. providing incentives and motivation to employees improves employee–customer relationships as a competitive advantage strategy, and information exchange is critical for the organisation’s success. quantitative data analysis and interpretation structural equation model in the initial structural model (structural model a), it was hypothesised that business intelligence has a direct positive influence on internal environment, market innovation and product innovation, which in turn have a direct positive influence on process innovation. figure 2 depicts that the model does not fit the data well. the model has two paths that are insignificant. figure 2: structural model a. the model fit was assessed using the following indices produced by spss amos, namely the standardised root mean residual (srmr), the gfi, the cfi and the normed fit index (nfi). the fit indices in table 2 show that this model does not fit the data well. the model has two paths, which are insignificant: internal environment –> process innovation and product innovation –> process innovation. table 2: recommended benchmarks for structural equation modelling. in the hypothesised model, figure 1, it was hypothesised that business intelligence has a direct positive influence on market innovation, process innovation, product innovation and internal environment, which in turn have a direct positive influence on competitive advantage. figure 3 depicts the regression path estimates for the structural model. figure 3: structural model b. all paths are significant. figure 3 reflects that the model is a better fit for the data. as shown in table 2, the model computed acceptable model fit indices of srmr = 0.052, gfi = 0.968, cfi = 0.923 and nfi = 0.927. business intelligence has a significant direct influence on product innovation (path estimate = 0.53, p < 0.05) and internal environment (path estimate = 0.27, p < 0.05). market innovation (path estimate = 0.50, p < 0.05), and process innovation (path estimate = 0.50, p < 0.05) have a significant positive influence on competitive advantage. business intelligence is shown to have indirect relationship with market innovation and process innovation. the model reveals new relationships. product innovation (path estimate = 0.42, p < 0.05) has a significant positive influence on internal environment. going further, product innovation (path estimate = 0.38, p < 0.05) has a significant positive influence on market innovation. on its part, market innovation (path estimate = 0.42, p < 0.05) is shown to have a significant positive influence on process innovation. through hypothesis h1, it was conjectured that business intelligence has a positive impact on product innovation. this is in line with the contention of eidizadeh et al. (2017) that business intelligence plays a central role in enhancing product innovation by providing information on changes in consumer taste and preferences. given the analysis result, the hypothesis is therefore accepted, and the conclusion is that business intelligence positively impacts product innovation. business intelligence has a positive influence on process innovation, and it was speculated that business intelligence has a positive impact on process innovation. this is supported by the assertion of eidizadeh et al. (2017) that organisations that practise business intelligence exhibit high levels of innovation through quality information. in light of the above result, the hypothesis is therefore supported, and it is resolutely held that business intelligence positively influences process innovation. business intelligence has a positive effect on market innovation, and it had been predicted that business intelligence has a positive impact on market innovation. in view of the above result, the hypothesis is therefore rejected. business intelligence has a positive influence on the internal environment of the organisation, and it had been conjectured that business intelligence has a positive impact on the internal environment of the organisation. in view of the above result, the hypothesis is therefore accepted, and we deduce that business intelligence has a positive impact on the internal environment of the organisation. this is in line with venter and tustin (2009), who state that there is a need for internal environment awareness to enhance business intelligence implementation. through hypothesis h2, it had been speculated that product innovation has a positive influence on competitive advantage. this is in line with ahmad’s (2015) contention that an increase in the differentiated product innovation is expected to enhance the propensity of high competitive advantage. from the research results, it can be concluded definitively that product innovation positively influences competitive advantage. process innovation has a positive influence on competitive advantage. the structural model was designed so as to test the causal relationship process innovation and competitive advantage. the results show a strong causal link, which was statistically significant (β = 0.50; p < 0.05). this confirms hypothesis h2 that process innovation has a positive impact on competitive advantage. this is supported by eidizadeh et al. (2017) that innovation impacts gaining competitive advantage positively and significantly. market innovation has a positive impact on competitive advantage, and it was speculated that market innovation has a positive influence on competitive advantage. this is supported by the assertion of eidizadeh et al. (2017) that organisations that exhibit high levels of market innovation concern are presumed to develop a market differentiation. in light of the above result, the hypothesis is consequently supported, and it is resolutely held that market innovation positively influences competitive advantage. internal environment has a positive influence on competitive advantage, and it had been conjectured that internal environment has a positive impact on competitive advantage. in view of the above result, the hypothesis is therefore accepted, and it is deduced that business intelligence has a positive impact on the internal environment of the organisation. this is supported by venter and tustin (2009) and ahmad (2015) that there is a need for organisational awareness (internal environment) to facilitate the implementation of business intelligence practices. through hypothesis h3, it had been conjectured that business intelligence has a positive impact on competitive advantage. in view of the above result, the hypothesis is consequently accepted, and it is deduced that business intelligence has a positive impact on competitive advantage. this is supported by ahmad (2015) and eidizadeh et al. (2017) that business intelligence has a positive and significant impact on gaining competitive advantage. conclusion and recommendations this study aimed to propose a model of innovative business intelligence as a competitive advantage for smmes. figure 4 depicts the steps and prerequisites for using innovative business intelligence to gain a competitive advantage. small, medium and micro-organisations owners or managers are the players and coordinators in the implementation of innovative business intelligence as depicted in the framework. there is a significant and positive correlation between business intelligence and product innovation and internal environment. in turn, product innovation influences market innovation. market innovation influences internal environment, process innovation and competitive advantage. this implies that smme organisations with a high business intelligence tend to be more product innovative, as well as those with a positive internal environment commitment. figure 4: proposed framework for innovative business intelligence. based on the overall findings of this study, it can be said that all the identified factors in figures 1 and 4 have a positive correlation coefficient (p < 0.05) and significant relationship and therefore influence innovative business intelligence as a competitive advantage as depicted in the proposed framework. the framework was created following a thorough assessment of the literature as well as the outcomes. in the ngaka modire molema district, the framework shows the process flow and sequence of innovative business intelligence as a competitive advantage for smmes. each of the components, as well as their associated elements, indicates how they contribute to the survival and competitive advantage of smmes. limitations and directions for future studies finding the most up-to-date information on the subject from secondary data sources was difficult because of the importance of secondary data sources on innovative business intelligence as a competitive advantage, and there was also a scarcity of secondary data on business intelligence for smmes, as there is mostly secondary data on business intelligence as a technologically implemented rather than a management tool to enhance quality decision-making. apart from innovative business intelligence, future studies could focus on assessing whether other factors (such as concern for competitive shareholder interests) affect the use of business intelligence and consider implementing tam and conducting a consultation of managers and directors of big corporations. contribution of the study this study contributes to the application of innovative business intelligence as a competitive advantage for smmes. furthermore, this research adds to the body of information on how to survive in a competitive environment. it is worth noting that smme organisations play a significant part in the success and growth of the south african economy, including employment generation, small business enterprise development, market variety, promotion of local products and improvements in living conditions. this study aimed to highlight the importance of smmes in the development of the economy, as it will increase their employment rate and increase their involvement and participation in the economy. the long-term success of smmes is dependent on the implementation of sustainable and growing strategies through high-quality and timely decision-making. acknowledgements the authors acknowledge dr felix chikosha for data curation. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions g.g. contributed the writing of the original copy; m.p. and a.m.l. contributed to the editing and supervision. funding information this research received funding from the north west university bursary and faculty bursary. data availability data were available from the central supply database of north west province. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abualloush, s., bataineh, k. & aladwan, a.s., 2017, ‘impact of information systems on innovation (product innovation, process innovation)-field study on the housing bank in jordon’, international journal of business administration 8(1), 95–105. https://doi.org/10.5430/ijba.v8n1p95 abzaltynova, z. & williams, j., 2013, ‘developments in business intelligence software’, journal of intelligence studies in business 3(2), 18–38. https://doi.org/10.37380/jisib.v3i2.68 aghdaie, s.f.a., sanayei, a. & etebari, m., 2012, ‘evaluation of the consumers’ trust effect on viral marketing acceptance based on the technology acceptance model’, international journal of marketing studies 4(6), 79. https://doi.org/10.5539/ijms.v4n6p79 ahmad, a., 2015, ‘business intelligence for sustainable competitive advantage’, in m. quaddus (ed.), sustaining competitive advantage via business intelligence, knowledge management, and system dynamics, emerald group publishing limited, pp. 437–457, bingley, uk. ahmad, a., ahmad, r. & hashim, k.f., 2016, ‘innovation traits for business intelligence successful deployment’, journal of theoretical and applied information technology 89(1), 96. akaranga, s.i. & makau, b.k., 2016, ‘ethical considerations and their applications to research: case of the university of nairobi’, international journal for education integrity 16(1), 1–10. assarroudi, a., heshmati nabavi, f., armat, m.r., ebadi, a. & vaismoradi, m., 2018, ‘directed qualitative content analysis: the description and elaboration of its underpinning methods and data analysis process’, journal of research in nursing 23(1), 42–55. https://doi.org/10.1177/1744987117741667 barney, j.b., 2012, ‘purchasing, supply chain management and sustained competitive advantage: the relevance of resource-based theory’, journal of supply chain management 48(2), 3–6. https://doi.org/10.1111/j.1745-493x.2012.03265.x bosma, n.s. & levie, j., 2010, global entrepreneurship monitor 2009 executive report, now publisher inc. bpston-delft. bryman, a., 2015, social research methods [google play version], aljazeera news, new york, ny. bryman, a. & bell, e., 2014, research methodology: business and management contexts, oxford university press southern africa, british journal of management, atlantic university, usa. chang, h.w., tai, y.c. & hsu, j.y.j., 2010, ‘context-aware taxi demand hotspots prediction’, international journal of business intelligence and data mining 5(1), 3–18. https://doi.org/10.1504/ijbidm.2010.030296 chen, n., liu, w., bai, r. & chen, a., 2019, ‘application of computational intelligence technologies in emergency management: a literature review’, artificial intelligence review 52(3), 2131–2168. https://doi.org/10.1007/s10462-017-9589-8 chen, y. & lin, z., 2021, ‘business intelligence capabilities and firm performance: a study in china’, international journal of information management (57), 102232. https://doi.org/10.1016/j.ijinfomgt.2020.102232 cheung, c.f. & li, f.l., 2012, ‘a quantitative correlation coefficient mining method for business intelligence in small and medium enterprises of trading business’, expert systems with applications 39(7), 6279–6291. https://doi.org/10.1016/j.eswa.2011.10.021 chimucheka, t. & mandipaka, f., 2015, ‘challenges faced by small, medium and micro enterprises in the nkonkobe municipality’, international business & economics research journal (iber) 14(2), 309–316. https://doi.org/10.19030/iber.v14i2.9114 christensen, l.b., johnson, r.b. & turner, l.a., 2014, research methods, design, and analysis, 12th edn., pearson, london, uk. coad, a., nightingale, p., stilgoe, j. & vezzani, a., 2020, ‘the dark side of innovation’, industry and innovation 28(1), 102–112. cooper, t., 2005, ‘slower consumption reflections on product life spans and the “throwaway society”’, journal of industrial ecology 9(1–2), 51–67. https://doi.org/10.1162/1088198054084671 creswell, j.w., ebersohn, l., eloff, i., ferreira, r., ivankova, n.v., jansen, j.d. et al., 2016, first steps in research, 2nd edn., van schaik publishers, london, uk devlin, a.s., 2018, environmental psychology and human well-being: effects of built and natural settings, academic press, cambridge, ma, usa. dumitrita, b.m., 2011, ‘business intelligence’, journal of information systems & operations management 5(1), 175–181. eckerson, w., 2003, understanding business intelligence, what works, vol. 16, data warehousing institute, seattle, wa. eidizadeh, r., salehzadeh, r. & esfahani, a.c., 2017, ‘analysing the role of business intelligence, knowledge sharing and organisational innovation on gaining competitive advantage’, journal of workplace learning 29(4), 250–267. https://doi.org/10.1108/jwl-07-2016-0070 elo, s., kääriäinen, m., kanste, o., pölkki, t., utriainen, k. & kyngäs, h., 2014, ‘qualitative content analysis: a focus on trustworthiness’, sage open 4(1), 1–10. https://doi.org/10.1177/2158244014522633 evelson, b., 2015, ‘the forrester wave: agile business intelligence platforms, q3 2015’, forrester 1, 9–16. fraering, m. & minor, m.s., 2006, ‘sense of community: an exploratory study of us consumers of financial services’, international journal of bank marketing 24(5), 284–306. https://doi.org/10.1108/02652320610681738 gale, l. & kroeze, j.h., 2011, the role of ict within small and medium enterprises in gauteng, kzn university, sa. gem, 2017, global entrepreneurship monitor: global report 2016/2017, viewed from https://gnosis.library.ucy.ac.cy/handle/7/42386, http://gemconsortium.org/country-profit/46 guarda, t., santos, m.f., augusto, m.f., silva, c. & pinto, f., 2013, ‘process mining: a framework proposal for pervasive business intelligence’, in 2013 8th iberian conference on information systems and technologies (cisti) (1–4), pp. 187–190, ieee, london, august 2013. habjan, a. & popovic, a., 2007, ‘achieving business process change with improved business intelligence systems: a case of slovenian company’, in 7th wseas international conference on applied computer science, july 2007, venice, italy, pp. 346–351. hoffman, z., 2018, ‘the baron’s cloak: a history of the russian empire in war and revolution, by willard sunderland’, canadian-american slavic studies 52(1), 94–97. https://doi.org/10.1163/22102396-05201008 jokel, h., aminy, b. & klasson, m., 2019, self-service business intelligence: towards a csf model for ssbi success, lund university, sweden. kalane, l., 2015, ‘reasons for failure of smes in the free state’, doctoral dissertation, university of the free state. karabegovic, a., ponjavic, m., ferhatbegovic, e. & karabegovic, e., 2018, ‘spatial data and processes integration in local governance of bosnia and herzegovina’, in 2018 41st international convention on information and communication technology, electronics and microelectronics (mipro), ieee, february 2018, pp. 1298–1303, basel, switzerland. kern, f.g., 2018, ‘the trials and tribulations of applied triangulation: weighing different data sources’, journal of mixed methods research 12(2), 166–181. https://doi.org/10.1177/1558689816651032 lomax, r.g. & hahs-vaughn, d.l., 2012, an introduction to statistical concepts, routledge, new york. leonidou, l.c., leonidou, c.n. & kvasova, o., 2010, ‘antecedents and outcomes of consumer environmentally friendly attitudes and behaviour’, journal of marketing ma nagement 26(13–14), 1319–1344. https://doi.org/10.1080/0267257x.2010.523710 maree, j.g., 2012, ‘career adapt-abilities scale – south african form: psychometric properties and construct validity’, journal of vocational behavior 80(3), 730–733. https://doi.org/10.1016/j.jvb.2012.01.005 marshall, j., 2021, ‘effective decision-making at the museum’, doctoral dissertation, vanderbilt university. mccusker, k. & gunaydin, s., 2015, ‘research using qualitative, quantitative or mixed methods and choice based on the research’, perfusion 30(7), 537–542. https://doi.org/10.1177/0267659114559116 meihami, b. & meihami, h., 2014, ‘knowledge management a way to gain a competitive advantage in firms (evidence of manufacturing companies)’, international letters of social and humanistic sciences 3(14), 80–91. https://doi.org/10.18052/www.scipress.com/ilshs.14.80 moss, s., 2009, fit indices for structural equation modelling, viewed 27 june 2016, from http://www.psych-it.com.au/psychlopedia/article.asp. mukuche, a.k., 2015, ‘business intelligence and competitive advantage in insurance firms in kenya’, doctoral dissertation, university of nairobi. nasab, s.s., selamat, h. & masrom, m., 2015, ‘a delphi study of the important factors for bi system implementation in the public sector organizations’, jurnal teknologi 77(19), 114–120. https://doi.org/10.11113/jt.v77.6539 o’donnell, a., gilmore, a., carson, d. & cummins, d., 2002, ‘competitive advantage in small to medium-sized enterprises’, journal of strategic marketing 10(3), 205–223. https://doi.org/10.1080/09652540210151388 patidar, j., 2013, writing research objectives, viewed 17 august 2015, indian institute of management bangalore, india, http://repository.iimb.ac.in/handle/2074/7978 runciman, d., 2015, ‘digital politics: why progressives need to shape rather than merely exploit the digital economy’, juncture 22(1), 11–16. https://doi.org/10.1111/j.2050-5876.2015.00831.x rungani, e.c. & potgieter, m., 2018, ‘the impact of financial support on the success of small, medium and micro enterprises in the eastern cape province’, acta commercii 18(1), 1–12. https://doi.org/10.4102/ac.v18i1.591 sahay, b.s. & ranjan, j., 2008, ‘real time business intelligence in supply chain analytics’, information management & computer security 16(1), 28–48. https://doi.org/10.1108/09685220810862733 salehi, v., salehi, r., mirzayi, m. & akhavizadegan, f., 2020, ‘performance optimization of pharmaceutical supply chain by a unique resilience engineering and fuzzy mathematical framework’, human factors and ergonomics in manufacturing & service industries 30(5), 336–348. https://doi.org/10.1002/hfm.20845 saunders, m., lewis, p. & thornhill, a., 2016, research methods for business students, 7th edn., pearson education limited, pearson, london, uk. schulze, s. & kamper, g., 2014, ‘the use of mixed methods as reflected in two eminent south african educational research journals’, journal for new generation sciences 10(1), 130–147. sekaran, u. & bougie, r., 2016, research methods for business: a skill building approach, john wiley and sons, chichester, united kingdom. skyrius, r., 2015, ‘the key dimensions of business intelligence’, in k. nelson (ed.), business intelligence, strategies and ethics, pp. 27–72, nova science publishers, new york, usa. small enterprise development agency (seda), 2016, strategic plan (2015/16–2018/19), viewed 07 september 2016, from https://www.thedti.gov.za. venter, p. & tustin, d., 2009, ‘the availability and use of competitive and business intelligence in south african business organisations’, southern african business review 13(2), 88–117. wahyuni, d., 2012, ‘the research design maze: understanding paradigms, cases, methods and methodologies’, journal of applied management accounting research 10(1), 69–80. watkins, j.a., 2012, ‘a literature review of small and medium enterprises (sme) risk management practices in south africa’, african journal of business management 6(21), 6324–6330. https://doi.org/10.5897/ajbm11.2709 world bank group, 2016, world development report 2016: digital dividends, world bank, washington, dc. xu, h. & hwang, m.i., 2007, ‘the effect of implementation factors on data warehousing success: an exploratory study’, journal of information, information technology, and organizations 2, 1–14. https://doi.org/10.28945/135 yusof, e.m.b.m. & yusof, a.r.m., 2013, ‘the study on the application of business intelligence in manufacturing: a review’, international journal of business intelligence research (ijbir) 4(1), 43–51. https://doi.org/10.4018/jbir.2013010104 abstract introduction research purpose and objectives problem background literature review and hypotheses development research methodology research findings discussion of findings conclusions and recommendations limitations and directions for future studies contributions of the study acknowledgements references about the author(s) nhamo mashavira business management, management sciences, central university of technology, bloemfontein, south africa crispen chipunza business management, management sciences, central university of technology, bloemfontein, south africa citation mashavira, n. & chipunza, c., 2021, ‘managerial conceptual competencies and the performance of small and medium-sized enterprises in zimbabwe’, southern african journal of entrepreneurship and small business management 13(1), a386. https://doi.org/10.4102/sajesbm.v13i1.386 original research managerial conceptual competencies and the performance of small and medium-sized enterprises in zimbabwe nhamo mashavira, crispen chipunza received: 02 nov. 2020; accepted: 01 july 2021; published: 31 aug. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: literature is replete with evidence on the impact of managerial competencies on firm performance. yet, there is minimal evidence on how managerial conceptual competencies in particular, affect the performance of small and medium enterprises (smes) in zimbabwe. aim: the current study was meant to find the impact of managerial conceptual competencies on the performance of smes in zimbabwe’s harare province. setting: the under-exploration of the relationship between managerial conceptual competencies and sme performance, in an economy that at present is highly informalised, provides a platform for further exploration of this phenomenon. methods: the study adopted a purely quantitative approach that employed a structured direct survey design. results: the study established that owners and/or managers had reasonable levels of conceptual competencies and that smes performed fairly well in terms of both innovation and return on investment (roi). it was found out that statistically significant relationships existed between managerial conceptual competencies and sme performance when measured by innovation and roi. conclusion: in view of the results, it can be concluded that the performance of smes in terms of innovation and roi can be influenced, to some extent, by owner and/or managers’ conceptual competencies. keywords: managerial competence; conceptual competencies; performance; smes; zimbabwe. introduction small and medium enterprises (smes) are well acknowledged globally for their substantial contributions in the areas of employment, promotion of exports, output, and nurturing entrepreneurship. they account for over 55% of the gross domestic product (gdp) and over 65% of total employment in the high-income countries (li, jiang & li 2020). small and medium enterprises provide over 70% of total employment and 60% of gdp in low-income countries (li et al. 2020). in the eu countries and even the usa, estimates suggest that smes provide over 60% of the employment, 40% – 60% of the gdp and contribute 30% – 60% of exports (the zimind 2017). in emerging economies, the sme sector contributes about 45% of aggregate employment and up to 33% of the gdp (organisation for economic cooperation and development 2017). japan has the biggest share of smes among the developed countries, comprising 99.7% of total enterprises (saka & chan 2020). in south africa, smes make 91% of the formal businesses, contributing between 51% and 57% of the gdp and providing about 60% of employment (cant & wiid 2013). according to mukoswa (2020), the united nations industrial development organisation estimates that small, medium and micro enterprises (smmes) comprise 90% of private businesses in developing countries, contributing above 50% of employment and gdp in most african countries. the finscope micro, small and medium enterprises (msme) survey (2013) revealed that 46% of the adults in zimbabwe run a sme. in zimbabwe, smes employ more than 60% of the country’s labour force and contribute about 50% of the gdp (nyathi et al. 2018). the finscope msme survey report further revealed that zimbabwe has over 3.5 million small enterprises in the hands of 2.8 million entrepreneurs. this suggests that one out of every five people in zimbabwe run a business. the above statistics suggest beyond reasonable doubt that smes play a significant role in african economies, and their performance should be a cause of concern for both governments as well as academicians. given the critical role played by sme performance in their survival, it may be necessary to consider what performance entails. the term performance is often used in academia to describe the results of a firm’s activities (kotane & kurzimina-merlino 2017). according to ncube and chimucheka (2019), a firm’s performance refers generally to how well or badly a firm performs in view of the agreed objectives. kotane and kurzimina-merlino (2017), observe an evolution towards merging financial and non-financial measures in the measurement of business performance. firm performance can therefore be measured using objective measures like return on investment (roi) and non-financial measures (or subjective measures) such as innovation (veliu & manxhari 2017). unfortunately, there is no agreed upon method for identifying, measuring, and assessing financial and non-financial performance indicators (kotane & kurzimina-merlino 2017). this, therefore, calls for higher level competencies among entrepreneurs. the finscope msme survey (2013) reveals that 46% of sme owners in zimbabwe have limited exposure to any managerial skills or knowledge. consequently, the paucity of requisite competencies among owners and/or managers has an impact on the performance of smes (aidara et al. 2021). yet, the higher the level of competency possessed by sme owners, the greater are their chances of survival (tola & chimucheka 2018). the primary cause behind the failure of smes revolved around entrepreneurship management skills, which may include financial management, human resource management, start-up, social and interpersonal, leadership, marketing, personality, business and technical management skills (mamabolo, kerrin & kele 2017). entrepreneurs, particularly those operating in the sme sector, face several situations requiring them to make quick decisions. therefore, high levels of conceptual competencies are imperative for both the success and survival of their businesses (vijay & ajay 2011). a study by bushe (2019) on smmes in south africa, established that chief amongst the causes of the enterprises’ failure was entrepreneur incapacity. by entrepreneurial incapacity, the author meant that entrepreneurs lacked the skills, knowledge and aptitude to both form and nurture a successful business. regarding zimbabwe, recent studies (majukwa 2019; njanike 2019) on smes confirmed the critical role played by managerial expertise in sustaining sme profitability. however, the aforementioned studies, like many of their predecessors, tend to lump competencies together, hence precluding helpful and accurate feedback, and leads to questioning exactly what it means to attain competence (norman, norcini & bordage 2014). therefore, there remains an evident dearth of studies on how managerial conceptual competencies of sme owners and/or managers in an african country, in particular, affect business performance. accordingly, this study examines the impact of managerial conceptual competencies on business performance in smes in harare province, zimbabwe. research purpose and objectives the term competency (plural competencies) has been popularised in human resources management; and of late, in training and career guidance. while on one hand, the term ‘competent’ from which ‘competence’ is derived has a clear and diverse meaning (evangelista 2011), on the other hand, there are many definitions of the term competency as it is commonly used in real activities for people affirmation of their potential to work (konigova, urbancova & fejfar 2012). two key connotations upon which definitions of competencies are commonly based exist. according to königová et al. (2012), the first meaning treats competencies as a scope and power of authority linked to a certain body or person, while the second considers it as the capacity – that is capabilities to do specific activities, to have certain characteristics and skills, to be qualified in a given discipline. in general, competencies are a set of specific knowledge, abilities, traits, motives, skills, values and attitudes necessary for an individual’s development and effective involvement in an organisation (königová et al. 2012). managerial competencies can be defined as a set of skills, attitude, knowledge and behaviour that an individual requires to be effective in a number of jobs and various types of organisations (manxhari, veliu & jashari 2017). they can also be understood as the right combination of behaviours, knowledge and skills possessed by a person and could be a source of sustained organisational performance (gunawan & aungsuroch 2017). the role played by managerial competencies in the performance of businesses still remains a vital matter within organisational literature (mitchelmore & rowley 2010). therefore, a competency, being an individual trait, can be measured reliably and can help differentiate superior performers from mediocre, or productive performers from the unproductive ones (yuliandi 2014). the seminal work by chandler and jansen (1992) maintains that an effective manager must be competent in three areas viz., conceptual, interpersonal and political. conceptual competencies, which involve the mental ability to manage all of the firm’s activities and interests, are related to the capacity to think out of the box by way of stimulating new thinking patterns and developing new ideas which may even require diverting from normal procedures of doing things (chandler & jansen 1992). although the relationship between managerial competencies and enterprise success remains an important matter within literature (ofei, paarima & barnes 2020), it is unfortunate that research on this relationship is not considered adequate and needs further inquiry (sidek & mohamad 2014). worse still, research on the competence-performance nexus among smes in zimbabwe is still in its infancy. yet, issues pertaining to the development of individual competencies are increasing as a result of the continuous search for sources of performance and improving the performance of managerial employees (szczepańska-woszczyna 2014). regarding the development of individual competencies, the human capital theory regards education as a key investment that influences development of owners and/or managers’ competencies (becker 1964). when owners and/or managers increase their education, they are expected to gain more knowledge which is likely to increase their ability to run the enterprises successfully (mahadalle & kaplan 2017). however, generalisations could be misleading since the attainment of competencies from investments in education may depend on the targeted competencies to be gained, and the learning environment. pertaining to another demographic variable – gender, jennings and cash (2006) found a solid base of empirical research showing that female and male business owners differ in critical ways with respect to their: human and social capital; goals and success criteria; motivations; strategic choices; use of financial capital; and growth orientations. it has been established that women’s overall experience, knowledge and skills of engaging into business activities were below average (ed. naudé 2013). consequently, female sme owners are more likely to be less motivated to achieve high performance, compared to males, as their time has to be divided between home and work (hundley 2001). this has a negative impact on their propensity to acquire requisite competencies and even their ability to gain experience which is a requisite for better enterprise performance (klapper & parker 2011), hence the need to consider even the non-economic outcomes of their entrepreneurial activities (carranza, dhakal & love 2018). on the contrary, shava and rungani (2016) maintain that male and female-owned smes perform at similar levels, provided owners possess high business-related experience. while the aforementioned evidence is commendable in terms of highlighting the role of demographic variables and management competencies in the performance of firms, literature on how managerial conceptual competencies in particular affect the performance of zimbabwean smes remains scanty. the under-exploration of this relationship, particularly in an economy that at present is highly informalised, provides a platform for further exploring the phenomenon. moreover, researchers often make the assumption that entrepreneurial competency (managerial competency being one of its components) distinguishes non-entrepreneurs from entrepreneurs, without carrying out empirical examination and testing such an assumption (xiang, worthington & higgs 2014). based on this, the current study aims to determine the impact of managerial conceptual competencies on sme performance in zimbabwe as measured by roi and both process and product innovation (simply called innovation in the current study). both process and product innovation are closely associated with the concept of technological innovation (akinwale, adepoju & olomu 2017). on the one hand, technological process innovations have to do with new elements that are used in the production process, and include both capital and intermediate goods, such as information technology equipment, processing machines and industrial robots (hervas-oliver, sempere-ripoll & boronat-moll 2014). on the other hand, product innovation involves either the creation of a new product from new materials or modification of existing products to meet customer satisfaction (rosli & sidek 2013). since schumpeter (1934) suggested the central role of innovation in economic development in 1934, innovation began to be widely regarded as a vital factor affecting business performance. innovation and roi were chosen as measures of performance in the current study because of the emerging trend towards merging both financial and non-financial measures in the measurement of business performance (kotane & kurzimina-merlino 2017) in order to achieve more balance. in view of the above, the current study is guided by the following objectives: to examine owners and/or managers’ demographic characteristics such as gender, education and designation. to find out the managerial conceptual competencies of owners and/or managers in smes in zimbabwe. to determine the performance of smes in zimbabwe when measured by roi and innovation. to evaluate the impact of managerial conceptual competencies of owners and/or managers on the enterprises’ performance. problem background the implementation of the bretton-woods driven economic structural adjustment programme (esap) in the early 1990s resulted in numerous company closures and retrenchments – which made a foundation for a rebound in the sme sector (jongwe 2011). this was exacerbated by the macroeconomic meltdown which reached its climax in 2008, and did not spare the ordinary citizen. zimbabwe experienced a 50% reduction in its economic growth, a 60% closure of factories, and close to a 100% drop in foreign currency reserves (zindiye, chiliya & masocha 2012). kawaza (2014) indicates that the retrenchment board publicised that the number of recorded retrenchments from january to 27 june 2014 stood at just over 2060 in zimbabwe. this did not reflect the full number of retrenchments, since an estimated 30% did not apprise the board when retrenching their staff numbers. it is believed that between 100 and 400 employees were retrenched every week (kawaza 2014). furthermore, pursuant to the supreme court judgement in don nyamande and another versus zuva petroleum (pvt) ltd delivered in july 2015, affirming an employer’s common law right to terminate unilaterally a contract of employment on notice, employees were left exposed to the caprice of unscrupulous employers (mucheche 2017). thousands of workers were fired on 3 months’ notice, aggravating the high unemployment levels existing in the country. this inevitably led to an increase in ‘informal businesses’ occupying every empty space in urban areas – in the form of flea markets, craft shops and vendors, selling all kinds of wares, including air-time, fruit, furniture and clothing. the main motive to start a business was survival, with 63% of sme owners being driven by poverty, unemployment, the need to provide for family and other related reasons (finscope msme survey 2013). interestingly, aidara et al. (2021) revealed that entrepreneurial competencies showed a significant and positive influence on the performance of informal entrepreneurs in senegal. another study by majukwa (2019) meant to explore the strategies used by the zimbabwean sme owners to sustain their businesses established that enriching management competencies through enhancing the strategies used by smes owners to remain in business might help businesses compete more effectively. owners and/or managers knowledgeable of managing the intricacies of starting a business could easily maximise workforce capabilities to increase revenue and sustain growth (majukwa 2019). owners and/or managers were found to perform badly in the vital management areas of market development, trade promotion, access to finance, and the creation of a conducive legal framework (majukwa 2019). yet, the following skills are generally agreed to be important for entrepreneurs: management skills (the ability to nurture management systems, coordination, and organisation), idea generation, analytical and conceptual competencies, the ability to recognise and exploit opportunities, customer management skills, decision-making skills, motivation and delegation skills, the ability to develop strategies for exploiting opportunities, hiring, commitment, and leadership skills (mitchelmore & rowley 2010). other studies (alene 2020; gizaw, tsega & hailegiorgis 2019) also established that entrepreneurs’ demographic, behavioural and psychological characteristics, their technical know-how and managerial skills are often mentioned as germane determinants of an sme’s performance. furthermore, some studies (carranza et al. 2018; mozumdar, van der velde & omta 2020) purport that human factors such as knowledge, skills and experience of the owners and/or managers and employees are the key distinctive competencies of small firms. literature review and hypotheses development the resource-based view the resource-based view (rbv), originated by penrose (1959) was popularised by barney (1991). the rbv mainly proposes that the strategic advantage of a business is buttressed by its core competencies, which provide competitive advantage that is sustainable and can be attained through the availability of resources and the employment of a resources management strategy (barney 1991; wernerfelt 1984, 1995). the rbv holds that it is possible to realise competitive advantage through deployment of capabilities and resources. according to the rbv, it is the combination of capabilities and resources that could differentiate one business from the other, and will permit a business’s superior offerings (agyapong, ellis & domeher 2016). the rbv maintains that effective firms will find their future leverage by developing unique capabilities, which are likely to be intangible or implicit in their nature. however resource unavailability is one weakness of smes. most smes lack in size-specific advantages, finance, and the businesses’ ability to use their capabilities to the most. the theory maintains that not all business resources are important in enabling it to create a competitive advantage. a sustainable competitive advantage could be achieved if the resources are valuable, inimitable, non-substitutable, and non-transferable (barney 2001, 1991; kraaijenbrink, spender & groen 2009; peteraf 1993). a firm’s resources comprise tangible, external and intangible assets. tangible assets include physical resources like plant, land, equipment or stocks, which are visible and can be assessed (wilk & fensterseifer 2003). according to grant (1991), tangible resources can either be physical assets or financial. intangible assets such as organisational routines and processes, human capabilities, networks or patents are neither visible nor quantifiable (wilk & fensterseifer 2003). external resources include knowledge and relationships acquired through interactions with customers, suppliers, competitors, and other institutions. intangible resources are regarded as the most significant from a strategic viewpoint (lockett & thompson 2001). the rbv literature (barney 1991, 1986a, 1986b; rumelt 1987) holds that performance and competitive advantage outcomes result from firm-specific capabilities and resources that are costly to replicate by rivals. although resources like economies of scale, technology, finance and natural resources could generate value, the rbv asserts that such centres of value are accessible to all, and are also easily replicated when compared to complex resources such as human resources (barney 1991). ever since the seminal work by penrose (1959), there has been a phenomenal growth in managerial competencies literature (mitchelmore & rowley 2010), as the identification and development of owners/manager competencies would give venture firms an edge over competitors. managerial conceptual competencies and firm performance according to katz (2009): [c]onceptual skill involves the ability to see the enterprise as a whole; it includes recognizing how the various functions of the organization depend on one another, and how changes in any one part affect all the others; and it extends to visualizing the relationship of the individual business to the industry, the community, and the political, social, and economic forces of the nation as a whole. (p. 18) managerial conceptual skills can be regarded as the cognitive ability to view the firm as a whole and the connection between its parts (ikupolati et al. 2017). it, therefore, encompasses the entrepreneur’s information processing, thinking and planning abilities. managerial conceptual competencies are needed to strategically plan for enterprises. these competencies permit managers to assess situations and suggest alternative courses of action. good managerial conceptual skills are a requisite for the top management, who do strategic planning. managerial conceptual competencies help managerial professionals visualise concepts, analyse potential challenges and design creative solutions (university canada west 2021). they give managers some strategic advantage as they allow them to predict potential risks and strategise accordingly. managerial conceptual skills give managers the opportunity to be very analytical in working with concepts; be critical thinkers – who can think through ideologies, concepts and philosophies that form the basis of an organisation, its goals and vision (ofei et al. 2020). these skills (considered a must for both middle and top managers) enable them to ask hypothetical or ‘what if’ questions, working with abstract ideas (ofei et al. 2020). managers can therefore conceptualise and even synthesise abstract ideas for the organisation and for the staff. as has been alluded to above, it is unfortunate that research on the managerial competence-performance nexus is not adequate and needs further inquiry (sidek & mohamad 2014). the same could be said of the managerial conceptual competence-performance nexus. a study by ikupolati et al. (2017) established that the managerial conceptual skills of nigerian entrepreneurs made employees become goal driven and boosted their self-confidence when proffering solutions to challenges they might encounter while executing their duties. as observed by katz (2009), it is evident that appreciating relationships among an enterprise’s parts and recognising the major elements in any situation, enables owners and/or managers to act in ways which advance the overall welfare of the whole enterprise. an empirical study by lopa and bose (2014) on the owners and/or managers of smes in the manufacturing industry in khulna city, bangladesh, identifies six groups of competencies, namely organising, relationship, commitment, strategic, opportunity and conceptual competencies. the study established that all the competencies were needed by entrepreneurs in manufacturing firms to improve their performance (lopa & bose 2014). another investigation consisting of start-ups and established smes reveals that established smes considered functional competencies (related to general business management and technical skills) as more vital than start-ups (botha, van vuuren & kunene 2015). these findings suggest that start-up firms need to concentrate on the significance of functional competencies if they are to increase the likelihood of being reputable enterprises. the authors found out that, start-ups, and established smes regard enterprising competencies (that depend on personal and entrepreneurial skills) as important. although the current study did not separate established smes from start-ups, the business management competencies alluded to in the study by botha et al. (2015) are related to managerial conceptual competencies. mustafa and ayse (2017) refer to managerial conceptual competencies as administrative skills and hold that entry level managers require less of them compared to technical skills for instance; and that middle level management require a considerable amount of both skills. they further maintain that senior managers, who must have a perspective of the whole enterprise, and an appreciation of how the several functions of the enterprise depend on one another, would require more of administrative and less of technical skills (mustafa & ayse 2017). contrary to the studies above, motlaq et al. (2012) found out that a managerial conceptual skills training among women managers of the mashhad municipality in iran seems to have increased their job satisfaction rather than their job performance. what is not clear, however, is whether the causal relationship differs according to the type of organisation under study considering the differences existing between large corporations and the smes. similarly, while minimal work has been done on managerial conceptual competencies in entrepreneurial firms, no known research has attempted to find how they affect sme performance in an african country. the current study, among other things, seeks to close such a gap in literature by suggesting a relationship between managerial conceptual competencies and firm performance. to validate the aforesaid relationships within the context of smes in harare province, zimbabwe, the following hypotheses were proffered: h1: there is a statistically significant relationship between managerial conceptual competencies and sme performance as measured by innovation. h2: there is a statistically significant relationship between managerial conceptual competencies and sme performance as measured by roi. small and medium enterprise performance firm performance generally refers to how well or badly an enterprise performs relative to agreed objectives (ncube & chimucheka 2019). small business performance has been associated with their failure or success (hamid et al. 2018). high performance therefore means a more successful business, and vice versa. veliu and manxhari (2017) maintain that business performance can be measured using both objective (and financial) measures like profitability and subjective (or non-financial measures) like innovation. business performance measures could therefore be grouped into two main categories, namely, ‘financial and non-financial measures’ (rashid et al. 2018). terms, such as financial and operational measures; shortand long-term measures; or finance and efficiency (johari et al. 2018; salleh et al. 2018) are often used, but, whatever terms are used, they still revolve around the financial and non-financial criteria. prior to the 1980s, financial indicators (e.g. profit, roi and sales per employees) were the only measurement standard of performance, but starting from the 1990s to date, attention has been shifting from financial to non-financial measures such as trust, customer satisfaction, quality of product and so on (nerisa 2015). the shift to subjective information is reasonable since most smes are characterised by informality and poor record keeping. related to this are the challenges that ordinarily arise from the reluctance by owners and/or managers of most privately owned enterprises to share objective financial data. according to gupta and batra (2016), objective measures of business performance are considered to be private and confidential, and are often guarded from the scrutiny of the public. there is unanimity among scholars that financial metrics are still relevant and valid, although there is need to balance them with contemporary, externally focussed and intangible metrics such as innovation, employee satisfaction among others (bititci, firat & garengo 2013; yip et al. 2009). it is against this background that this study had to use a balanced approach in the measurement of performance so as to meet both non-financial results as well as financial results (chong 2008). the choice to use roi as a measure of financial performance was reached because it tells entrepreneurs whether their investment was successful or not (lee 2012). roi helps in the assessment of the extent to which a business’ resources have been used efficiently, and it also shows the effectiveness of one’s investment in the business (lee 2012). as a result of the formidable challenges linked with the gathering and interpretation of financial data collected from smes, mostly owned by private players, researchers have but little choice besides contending with subjective measures of business performance (dekker et al. 2015). according to shouyu (2017), the irresistible evidence on the significance of innovation in augmenting a business’ ability to adapt to the ever changing business environment resulted in its choice as a subjective performance measure in the current study. innovation in smes lies at the centre of inclusive growth strategies, since more innovative enterprises tend to be more productive, can pay attractive wages and provide better conditions of work to their employees (organisation for economic cooperation and development 2018). in addition, recent developments in technologies and markets provide new opportunities for sme innovation and growth. research methodology research design the study employed a structured direct survey design. it is the most common data collection method and involves questionnaire administration (malhotra et al. 2017). a typical questionnaire contains questions that require fixed responses from the participants who would have to select from pre-determined sets of responses (malhotra et al. 2017). the survey method has the advantage that questionnaires are easy to administer, and the data obtained is consistent as the responses are limited to given responses (malhotra et al. 2017). its other strength lies in that, fixed-response items reduce discrepancies in results that could be caused by differences in interviewers. consequently, the coding, analysis and even interpretation of data becomes simple. research approach the quantitative and qualitative approaches are the two approaches generally used to gather and report information in research (ben-eliyahu 2014). the decision to take a qualitative or quantitative approach should be based on one’s research questions and the nature of the data to be collected and analysed in order to address the question (matthews & ross 2010). hughes (2006) posits that qualitative and quantitative approaches are strongly associated with subjectivity and objectivity, respectively. the current study was purely quantitative in its approach. quantitative research deals with measurement and numbers, and uses standardised measures in order to fit the different perspectives and experiences of the participants into predetermined response categories (wyllie 2019). the social phenomena under study were regarded as objective in nature and subjects were measured only once. research participants owners and/or managers in harare province were chosen because the province had a higher concentration of smes (madzivanzira 2011). however, no comprehensive database of smes in the province could be found at the ministry of small and medium enterprises and cooperative development; the informal traders association; the informal sector association; and even at the small enterprise development corporation (sedco). it therefore, became unfeasible to draw a comprehensive sampling frame for the smes. as a result, convenience sampling had to be used. some authors (de vos et al. 2014; gray 2014) call convenience sampling accidental, volunteer, haphazard, or availability sampling considering that respondents are usually those nearest or most accessible. convenience sampling is the cheapest and least time-consuming. sampling units are easy to measure and are often cooperative and accessible (malhotra et al. 2017). questionnaires were then distributed after making some introductory remarks (reminiscent of issues covered in the cover page of the questionnaire) to the respondents. questionnaires were hand delivered and research assistants only availed themselves in the event of the participants encountering problems. given the geographical scope of the study, research assistants were appointed to assist in the distribution of questionnaires. two former trained students were chosen to assist in the distribution of questionnaires. a total of 106 questionnaires were completed. research instruments the researcher used a self-constructed structured questionnaire as the only method of gathering primary data. the self-constructed items helped measure managerial conceptual competencies, innovation and roi. section a solicited biographical information, and the other two sections solicited information on managerial conceptual competencies and firm performance. section b measured the managerial conceptual competencies of owners and/or managers. the choice of items to measure managerial conceptual competencies was influenced by the seminal work by chandler and jansen (1992), katz (2009) and papulová and mokroš (2007), which considered the competencies as a requisite for effective management. most items for this section were adapted from the managerial behaviour self rating msai-key form (cameron & quinn 2011). respondents were required to indicate their level of agreement with given statements on a likert scale, ranging from 1-strongly disagree to 5-strongly agree. examples of items used to measure managerial conceptual competencies were: ‘i initiate cross functional teams that focus on important issues’, and, ‘i have developed a clear strategy for helping the business successfully accomplish my vision of the future’. section c measured firm performance in terms of innovation and roi for the period 2015 and 2016. items for section c were influenced by the works of anwar (2018); ismanu et al. (2017) and emenyoni et al. (2014) among others. the section required respondents to indicate their level of agreement with given statements. for example, pertaining to innovation, ‘owner/managers initiated unique improvements to product features in 2015’. regarding roi, an example is: ‘this firm’s overall returns exceeded overall costs in 2015’. the scale: 1. strongly disagree to 5. strongly agree was used. ensuring reliability and validity reliability deals with the ability of an instrument to reproduce consistent results in time and space, or from different observers, on the aspects of coherence, equivalence, stability, and homogeneity (de souza, alexandre & guirardello 2017). if research is to be reliable, then, it must show that it was done on similar groups of respondents in the same context (however defined), which will lead to similar results being found. the cronbach’s alpha (or coefficient alpha) of determining internal reliability of instruments was used, since it could easily be integrated into computer software for quantitative data analysis (bryman & bell 2007). this coefficient ranges between 0 and 1, and a value of 0.6 or less shows that internal consistency reliability will be unsatisfactory. table 1 shows the reliability statistics results. table 1: reliability statistics results. a cronbach’s alpha of 0.712(α = 0.712) is a good reliability measure. it means that all the items were reliable and internally consistent in examining how the two variables relate. regarding face validity of the instrument, experts were involved in validating the questionnaire items (sangoseni, hellman & hill 2013). pilot testing of the instrument was done on smes that did not take part in the final study. pilot testing also allowed the researcher to gauge the suitability of the instrument and accommodate amendments that could increase the instrument’s reliability (de vos et al. 2011). research procedure completed hand-delivered questionnaires were collected at an agreed date. as a result, the response rate increased because of the personal contact and the convenience that the process afforded participants (de vos et al. 2011). data for the years 2015 and 2016 were gathered. statistical analysis the spss version 20 was used for storing and organising the data. the package also assisted in analysis of demographic data, correlational analysis as well as hypothesis testing. ethical considerations to begin with, the researcher had to be granted clearance by the faculty research ethics committee. respondents’ consent was sought before participation. the cover page provided room for participants to withdraw if they so wish. the participants were also made aware of the intended use of the information. data had to be stored in ways that precluded unauthorised access in order to ensure confidentiality. research findings demographic variables the biographical information was mainly categorical in nature. a categorical variable is one that can take on one of a limited, and normally fixed number of possible values, allocating each individual or other unit of observation to a particular category or nominal group on the basis of some qualitative characteristic (kaur 2013). that is, they can only be measured in terms of whether the concerned items belong to certain distinct groups, but one cannot quantify or even rank order the categories (kaur 2013). descriptive statistics were employed in describing categorical variables. table 2 shows the gender and education of the respondents. according to table 2, males dominated in either the ownership or management of smes, and a majority of respondents had a secondary education. table 2: gender and education of respondents. table 3 shows the designation of respondents. according to table 3, many respondents were owner-managers, and very few hr managers took part in the survey. table 3: designation of respondents. table 4 shows the data regarding managerial conceptual competencies of owners and/or managers and firm performance. table 4: managerial conceptual competencies and firm performance. average mean scores ranging between 3.62 and 4.12 on the likert scale ranged from 1 strongly disagree (1) to strongly agree (5), suggest moderate agreeability. conceptual competence was measured using 19 items, whose mean was 4.12, median 4.00 and a standard deviation of 0.26. innovation and roi were each measured using six items whose means, medians and standard deviations are shown in table 4. managerial conceptual competencies versus innovation in assessing the impact of managerial conceptual competencies on innovation, spearman’s correlation coefficient was used. table 5 reports the results that were found. table 5: spearman’s correlation on managerial conceptual competencies versus innovation. results as reported in table 5, show a correlation coefficient value of 0.324 implying a weak positive correlation between the two variables. furthermore, the correlation is statistically significant at 1% as supported by a p-value of 0.000 which is less than 0.01. we, therefore, reject the null hypothesis and accept the alternative hypothesis which says that: there is a statistically significant relationship between managerial conceptual competencies and sme performance, as measured by innovation. managerial conceptual competencies versus return on investment in assessing the impact of managerial conceptual competencies on roi, spearman’s correlation coefficient was again used, and the results are reported in table 6. table 6: spearman’s correlation on managerial conceptual competencies versus return on investment. results in table 6 show a weak positive correlation of 0.332 between managerial conceptual competencies and business performance measured using roi. the correlation is statistically significant at 1% as supported by a p-value of 0.000 which is smaller than 0.01. we, therefore, reject the null hypothesis and conclude that there is a statistically significant relationship between managerial conceptual competencies and sme performance as measured by roi. discussion of findings gender and education according to table 2, males dominated in either the ownership or management of smes. they comprised 86.8% of the research participants. slightly over 31% of the participants had either a diploma or university degree, whose relevance to the industry was not ascertained. according to lopez-nicolas et al. (2020), male entrepreneurs outnumber their female counterparts, as female entrepreneurs encounter many challenges in starting and sustaining a business. the fact that fewer start-ups made by females survive to maturity when compared to their male counterparts (minniti 2017), could explain why male participants dominated in the current study. regarding gender of owners and/or managers, studies have found it to significantly predict management problems and success only when it is combined with other moderating variables (collins-dodd, gordon & smart 2004; tocher & rutherford 2009). other studies (detienne & chandler 2007; lopez-nicolas et al. 2020) established that positive results among female-owned firms confirm that women occupying top managerial positions are a unique resource, with a specific innovation capacity and a distinct behaviour regarding experimentation, thus, supporting the notion that women tend to be more engrossed with learning–innovating sequences than men. the extent to which gender of the entrepreneur affects sme performance is an area that requires rigorous study since a lot of nuances and myriads of moderating variables need to be considered in the nexus. it is again beyond the scope of the current study to delve into these issues. the main reason to start businesses in zimbabwe was survivalist (irrespective of one’s education), with 63% of sme owners being driven by poverty and unemployment (finscope msme survey, zimbabwe 2013). yet, competencies were found to be related to entrepreneur characteristics like education, motivation or work experience (santos & bode 2012). this study’s findings resonate well with bushe (2019), who established that chief amongst the causes of the enterprises’ failure was entrepreneur incapacity in terms of skills, knowledge and aptitude to both form and nurture a successful business. herrington and wood (2003) maintained that lack of training and education reduced the capacity of management in new businesses in south africa, and was one among many reasons behind low levels of entrepreneurial creation and high rate of failure of new ventures. mamabolo et al. (2017) identified the main cause of sme failure among south african entrepreneurs to be lack of entrepreneurship management skills. the requisite competencies could be labelled as financial management, human resource management, start-up, social and interpersonal, leadership, marketing, personality, business and technical management skills (mamabolo et al. 2017). in view of this, they reached the conclusion that the aforementioned skills framework could serve as a baseline for skills training, mentoring, support and development programmes meant to develop critical and practical skills required in entrepreneurship – even amidst a weaker overall educational system, levels of entrepreneurship activity could thus be enhanced. findings from a related study that tested a novel framework to investigate problems related to human resource management (hrm) in smes – established that more experienced sme owners and/or managers were more likely to perceive hrm problems as acute (tocher & rutherford 2009). furthermore, sme owners and managers who had a college degree were more likely to consider hrm problems as serious. the fact that more educated and experienced managers perceived hrm problems could be a result of the attention they gave to such issues. experience and education increase the likelihood that owners and/or managers become conscious of the serious nature of the hrm problems, while their less-enlightened counterparts may not notice problems because of the ignorance of the manifest symptoms (rutherford et al. 2004). this could explain why, in spite of the low education levels of owners and/or managers in the current study, they still responded in affirmative to items measuring their conceptual competencies. interestingly, a study carried out on immigrant-owned smes in south africa, assessing the impact of managerial competencies on performance of the enterprises indicated a relationship between education and the performance of owners (fatoki 2014). the study, however, discovered that higher education levels (matric and above) were insignificantly related to enterprise performance. similarly, a more recent study by chundu, pindiriri and kaseke (2020) on zimbabwean msmes found out that although the coefficient on education variable had a significant positive relationship with the firm’s growth in case of sole proprietors and micro-enterprises, it was, however, insignificant in the case of smes. in conclusion, research evidence on whether education level has a bearing on sme performance or not, remains eclectic and inconclusive because of the contextual differences and the fact that different studies use different proxies like number of employees, balance sheet size and turnover for size. designation of respondents most of the participants (40.8%) in the survey were owner-managers, and very few enterprises had hr departments (4.9%). as has been observed by forth and bryson (2018), smes are less likely to use formal management practices (that could require a fully-fledged hr department) when compared to larger firms, although such practices bring demonstrable advantages for those who use them. furthermore, in smes, where resources may be limited, there may be very few formal human resource professionals or departments, and informal hiring practices are natural, given the cost concerns and the firm’s structure (singh, rigsby & ramgulam 2018). unfortunately, in the absence of an hr department, its duties are delegated to other departments, and yet enterprises stand to benefit from it. an hr department helps streamline activities, creates a fair, transparent and impartial system that could deliver equal employment prospects, justifiable promotions, tracks employee tenures and provides solutions to queries on insurance and medical issues, amongst others (umer 2012). the hr department would even assist create an organised organisational structure with justifiable grading and pay structures, benefit schemes, promotion and employee compensation plans among other numerous advantages (umer 2012). the sheer lack of managerial capacity and culture in these firms results in managerial techniques and tools being perceived as of minimal benefit to the firm (pekkola, saunila & rantanen 2016). frequently, employees occupy several positions at the same time, organisation structures are flat, and though the owner-manager is in charge of both managerial and operational functions, managerial activities are usually neglected (barisic & boricevic 2013). performance of small and medium enterprises in zimbabwe innovation and roi were each measured using six items whose means, medians and standard deviations are shown in table 4. mean scores of 3.88 and 3.62 for innovation and roi, respectively, suggest moderate performance. a survey on zimbabwean smes by makanyeza and dzvuke (2015) established that although the influence of innovation on the enterprise performance varied according to the type of industry, smes were found to be somewhat innovative. these results are in agreement with those established by the current study. surprisingly, a study by mpando (2015) on smes in the harare metropolitan, found no significant difference on the impact of innovation on sme performance across educational level, level of management and gender. although literature on the financial performance of zimbabwean smes is scanty, maseko and manyani (2011) revealed that most smes do not maintain adequate records of accounts because of inadequate accounting knowledge, hence the inefficient use of accounting information in the measurement of financial performance. even if the information might be available, it may be imperfect and inaccurate because of poor record keeping that characterise most smes. worse still, according to maseko and manyani (2011), owners and/or managers in smes do not value profitability (of which roi is one other measure of profitability) as a measure of enterprise performance, although they are compelled to compute profits for the purposes of tax. managerial conceptual competencies among small and medium enterprises owners and/or managers in zimbabwe the study established that owners and/or managers possessed fairly reasonable levels of conceptual competencies. an average score of 4.12 for 19 items measuring managerial conceptual competencies on the likert scale ranged from strongly disagree (1) to strongly agree (5), suggests moderate agreeability. literature on the managerial competencies of owners and/or managers of zimbabwean smes is still limited and to date, no known studies on managerial conceptual competencies have been done. however, peripheral studies (gwatsvaira & mtisi 2016; sandada & mangwandi 2015) alluding to management competencies in general, identified lack of management skills (among a plethora of other factors) as causal to poor sme growth and performance. unlike the aforementioned studies, the current study measured a specific competence among owners and/or managers. contrarily, this study established that the owners and/or managers possessed moderate managerial conceptual competencies, which had weak positive correlations of 0.332 and 0.324 with roi and innovation, respectively. managerial conceptual competencies and firm performance a statistically significant relationship between managerial conceptual competencies and firm performance as measured by both roi and innovation was established. although there is a paucity of literature on managerial conceptual competencies and sme performance, the current study’s results corroborate findings from past studies (botha et al. 2015; ikupolati et al. 2017; lopa & bose 2014). as has been observed by katz (2009), the appreciation of relationships among an enterprise’s parts, afforded by conceptual competencies, enable owners and/or managers to act in ways which advance the overall welfare of the whole enterprise. conceptual skills are more essential for managers than interpersonal or technical skills (sidek & mohamad 2014). in addition, the highest level of leading change in the public sector required a set of conceptual skills that are critical for achieving the desired change (jasim 2019). middle managers were found to have a lower set of conceptual skills, and fewer skills were required at the third level of management (jasim 2019). past studies in developing countries (benzing, chu & bove 2005; sidek & mohamad 2014) confirmed that conceptual skills of entrepreneurs were important to business growth. however, the aforementioned studies did not use hybrid or balanced approaches in their measurement of performance. generally, managerial competencies have been found to contribute directly to organisational performance (agbenyegah & mahohoma 2020; botha, carruthers & venter 2019; yusuf & suseno 2020). the main cause behind the failure of smes revolved around entrepreneurship management skills, be they labelled as financial management, human resource management, start-up, social and interpersonal, leadership, marketing, personality, business and technical management skills (mamabolo et al. 2017). a study by sánchez (2012) that used both financial and non-financial indicators to measure enterprise performance concluded that entrepreneurial competencies have both direct and indirect impact on sme performance via the mediating influence of organisational capabilities. although scholars distinguish managerial competencies from entrepreneurial competencies (lerner & almor 2002), some suggest competence in entrepreneurship requires competencies in both entrepreneurial and managerial competencies (man, lau & chan 2002). another study by mohsin et al. (2017) found out that entrepreneurial competencies were important for the success of malaysian smes. they concluded that the success of malaysian smes was largely dependent on the entrepreneurs’ competencies in driving innovative performance. a related study by al mamun, fazal and muniady (2019), produced a path analysis and mediation test that proved that entrepreneurial skills and market orientation were critical enterprise resources that affected firm performance both directly and indirectly. the study also confirmed that networking was a critical resource influencing performance through entrepreneurial competencies. that being the case and especially given that smes tend to face limited resources, owners and/or managers should not only develop, but channel their competencies towards activities that have a bearing on enterprise performance. accordingly, the rbv, with its intra-organisational emphasis, holds that performance emanates from firm-specific capabilities and resources (barney, ketchen & wright 2011). the rbv is based on the fact that effective organisations will base their future competitiveness on developing unique capabilities, which may often be intangible or implicit in their nature – managerial conceptual competencies are one such capability. according to the rbv, in order for smes to attain competitive advantage, there is need for them to harness their internal resources to the fullest. in this vein, the current study validates the rbv, since statistically significant relationships between managerial conceptual competencies and sme performance as measured by both roi and innovation were established. specifically, the correlation between managerial conceptual competencies and the two measures of performance (roi and innovation) were statistically significant at 1% as supported by p-values of 0.000 which are smaller than 0.01. these results agree with those by masoud and al khateeb (2020) which revealed that managerial competencies were significantly correlated to the performance of small businesses. the competencies referred to in the aforesaid study included planning and organising, scenario building, customer focus, strategic thinking and team work which happen to be so closely related to the conceptualisation of managerial conceptual competencies envisaged in the current study. furthermore, the current study’s findings corroborate an earlier study by mashavira, chipunza and dzansi (2021) that also found a statistically significant relationship between managerial political competencies and enterprise performance. although mashavira et al. (2021) and masoud and al khateeb (2020) used different sets of competencies to the one used in the current study, the relationship between managerial competencies (however defined) and performance seems to be supported empirically. conclusions and recommendations males dominated in either the ownership or management of smes and a majority of owners and/or managers had secondary education. most of the participants in the survey were owners and/or managers, and very few enterprises had hr departments. the study established that owner and/or managers had reasonable levels of conceptual competencies and that smes performed fairly well in terms of both innovation and roi. it was also established that statistically significant relationships existed between managerial conceptual competencies and sme performance as measured by both innovation and roi. it can, therefore, be concluded that, the performance of smes with regards to roi and innovation can be influenced by the owners and/or managers’ levels of conceptual competencies. given the pivotal role managerial conceptual competencies play in sme performance, it is recommended that sme owners and/or managers invest in competence enhancement programmes and place more emphasis towards learning modern technologies to boost both innovation and enterprise profitability. in view of this, the ministry of small and medium enterprises and cooperative development and agencies like the sedco and others promoting entrepreneurship in zimbabwe need to be recapitalised through more government funding to enable them to offer mentorship and learner-ship to owners and/or managers. this could, in a way, motivate enterprises set up hr departments since very few enterprises had such a department. in addition, since males dominated both ownership and management of the smes, it is also recommended that government should provide women with sponsored relevant entrepreneurial preparatory programmes in order to address historical gender imbalances. robust and deliberate government policies meant to stimulate women’s participation in entrepreneurial ventures should be put in place. no comprehensive data base of smes in the province could be found at the ministry of small and medium enterprises and cooperative development; the informal traders association; the informal sector association; and even at sedco. it is therefore recommended that government through the relevant ministry, agencies or associations fund the development of a reliable national database for start-ups and entrepreneurial ventures (which is not available at present) if any meaningful progress is to be achieved towards developing them sustainably. limitations and directions for future studies firstly, numerous competency models could be identified from literature; therefore, it may not be easy to isolate a specific competence and treat it independently, apart from others; since competencies are interdependent (szczepańska-woszczyna 2014). future studies may have to consider how clusters of interdependent competencies affect sme performance. secondly, poor record keeping and informality characterising most smes meant that participants had to rely on their memory for most of the information. thirdly, since the study made use of cross-sectional data for harare province, future studies should strive to gather longitudinal data involving nation-wide samples in order to validate and enhance the generalisability of findings of the current study. contributions of the study from a theoretical viewpoint, this research contributed in validating the rbv by barney (1991) through exploring the intangible managerial resource capabilities smes could leverage on to enhance their performance. furthermore, a number of studies on managerial competencies (hayton 2015; lopa & bose 2014) were done in developed countries with different contextual realities from those obtained in zimbabwe, where levels of managerial conceptual competencies and even the conceptualisation of smes differ significantly. worse still, there is dearth of studies that specifically consider managerial conceptual competencies in zimbabwe. in view of this, the current study is one of the very few, if any, that sheds light on the nexus between managerial conceptual competencies and sme performance, in an african country. the other contribution of the current study is in the area of performance measurement. the study adopted balanced measures of business performance by including a more recent, intangible and externally focused measure (innovation) to complement roi – a more traditional financial measure (bititci et al. 2013). acknowledgements competing interests the authors declares that they have no competing interests. authors’ contributions n.m. & c.c. contributed equally to this work. funding information this research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors. data availability data had to be stored in ways that precluded unauthorised access in order to ensure confidentiality. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references agbenyegah, a.t. & mahohoma, t., 2020, ‘the impact of selected entrepreneurial competencies on smes performance in ethekweni regions of south africa: theoretical and practical implications’, acta universitatis danubius: oeconomica 16(4), 64–85. agyapong, a., ellis, f. & domeher, d., 2016, ‘competitive strategy and erformance of family businesses: moderating effect of managerial and innovative capabilities’, journal of small business and entrepreneurship 28(6), 449–477. https://doi.org/10.1080/08276331.2016.1217727 aidara, s., mamun, a.a., nasir, n.a.m., mohiuddin, m., nawi, n.c. & zainol, n.r., 2021, ‘competitive advantages of the relationship between entrepreneurial competencies and economic sustainability performance’, sustainability 13(2), 864. https://doi.org/10.3390/su13020864 akinwale, y.o., adepoju, a.o. & olomu, m.o., 2017, ‘the impact of technological innovation on sme’s profitability in nigeria’, international journal of research, innovation and commercialisation 1(1), 74–92. https://doi.org/10.1504/ijric.2017.082299 alene, e.t., 2020, ‘determinants that influence the performance of women entrepreneurs in micro and small enterprises in ethiopia’, journal of innovation and entrepeneurship 9, 24. https://doi.org/10.1186/s13731-020-00132-6. al mamun, a., fazal, s.a. & muniady, r., 2019, ‘entrepreneurial knowledge, skills, competencies and performance: a study of micro-enterprises in kelantan, malaysia’, asia pacific journal of innovation and entrepreneurship 13(1), 29–48. https://doi.org/10.1108/apjie-11-2018-0067 anwar, m., 2018, ‘business model innovation and smes performance: does competitive advantage mediate?’, international journal of innovation management 22(7), 185–357. https://doi.org/10.1142/s1363919618500573 barisic, a.f. & borisevic, m., 2013, ‘role of management consulting in a process of professionalization of sme management’, učenje za poduzetništvo/entrepreneurial learning 3(2), 144–160. barney, j.b., 1986a, ‘strategic factor markets: expectations, luck, and the theory of business strategy’, management science 32(10), 1512–1514. barney, j.b., 1986b, ‘organizational culture: can it be a source of sustained competitive advantage’, academy of management review 11(3), 656–665. barney, j.b., 1991, ‘firm resources and sustained competitive advantage’, journal of management 17(1), 99–120. barney, j.b., 2001, ‘resource-based theories of competitive advantage: a ten-year retrospective on the resource-based view’, journal of management 27(6), 643–650. https://doi.org/10.1177/014920630102700602 barney, j.b., ketchen, d.e., jr. & wright, m., 2011, ‘the future of resource-based theory: revitalization or decline?’, journal of management 37(5), 1299–1315. https://doi.org/10.1177/0149206310391805 becker, g.s., 1964, human capital, columbia university press, new york, ny. ben-eliyahu, a., 2014, understanding different types of research: what’s the difference between qualitative and quantitative approaches?, viewed 15 september 2016, from http://chronicle.umbmentoring.org/on-methods-whats-the-difference-between-qualitative-and-quantitative-approaches/. benzing, c., chu, h.m. & bove, r., 2005, ‘the motivation, problems and perceived success of entrepreneurs in romania’, journal of the academy of business administration 10(1/2), 73–88. bititci, u., firat, s.u.o. & garengo, p., 2013, ‘how to compare performances of firms operating in different sectors?’, production planning and control 24(12), 1–18. https://doi.org/10.1080/09537287.2011.643829 botha, m., carruthers, t.j. & venter, m.w., 2019, ‘the relationship between entrepreneurial competencies and the recurring entrepreneurial intention and action of existing entrepreneurs’, southern african journal of entrepreneurship and small business management 11(1), a214. https://doi.org/10.4102/sajesbm.v11i1.191 botha, m., van vuuren, j.j. & kunene, t., 2015, ‘an integrated entrepreneurial performance model focusing on the importance and proficiency of competencies for start-up and established smes’, south african journal of business management 39(3), 33–40. https://doi.org/10.4102/sajbm.v46i3.101 bryman, a. & bell, e., 2007, business research methods, 2nd edn., oxford university press, oxford. bushe, b., 2019, ‘the causes and impact of business failure among small to micro and medium enterprises in south africa’, africa’s public service delivery and performance review 7(1), 1–26. https://doi.org/10.4102/apsdpr.v7i1.210 cameron, k.s. & quinn, r.e., 2011, management skills assessment instrument (msai), viewed 15 march 2018, from http://cf2015.bhcarroll.edu/files/session-1-congregational-development/quinn-and-cameron-management-skills-assessment-instrument.pdf. cant, m.c. & wiid, j.a., 2013, ‘establishing the challenges affecting south african smes’, international business & economics research journal 12(6), 707–716. https://doi.org/10.19030/iber.v12i6.7869 carranza, e., dhakal, c. & love, i., 2018, female entrepreneurs: how and why are they different?, world bank, washington, dc. chandler, g.n. & jansen, e., 1992, ‘the founder’s self-assessed competence and venture performance’, journal of business venturing 7(3), 223–236. https://doi.org/10.1016/0883-9026(92)90028-p chong, g.h., 2008, ‘measuring performance of small-and-medium sized enterprises: the grounded theory approach’, journal of business and public affairs 2(1), 1–10. chundu, m., pindiriri, c. & kaseke, n., 2020, ‘does size matter in determining growth of micro, small and medium enterprises (msmes) in zimbabwe’, open journal of business and management 8, 1888–1907. dekker, j., lybaert, n., steijvers, t. & depaire, b., 2015, ‘the effect of family business professionalization as a multidimensional construct on firm performance’, journal of small business management 53(2), 516–538. de souza, a.c., alexandre, n.m.c., & guirardello, e.d., 2017, ‘psychometric properties in instruments evaluation of reliability and validity’, epidemiologia e serviços de saúde, brasília 26(3), 1–10. https://doi.org/10.5123/s1679-49742017000300022 detienne, d.r. & chandler, g.n., 2007, ‘the role of gender in opportunity identification’, entrepreneurship theory and practice 31, 365–386. https://doi.org/10.1111/j.1540-6520.2007.00178.x de vos, a.s., strydom, h., fouché, c.b. & delport, c.s.l., 2011, research at grassroots: for the social sciences and human services professions, 4th edn., van schaik publishers, cape town. emenyoni, c.a., nwosu, a.c., lemchi, j.i. & iheke, o.r., 2014, ‘analysis of productivity, profitability, incomes and return on investments in youth smes in niger delta’, nigeria, international journal of small business and entrepreneurship research 2(1), 20–34. evangelista, l., 2011, study on existing frameworks to validate competence of career guidance practitioners, european commission, brussels, viewed 08 august 2011, from http://www.improveguidance.eu/sites/default/files/issues-08082011.pdf. fatoki, o., 2014, ‘the impact of managerial competencies on the performance of immigrantowned enterprises in south africa’, mediterranean journal of social sciences 5(6), 141–144. https://doi.org/10.5901/mjss.2014.v5n6p141 finscope msme survey zimbabwe, 2013, fin mark trust, viewed 02 september 2017, from https://finmark.org.za/finscope-msme-survey-zimbabwe-2012/. forth, j. & bryson, a., 2018, the impact of management practices on sme performance, discussion paper series, iza – institute of labor economics, bonn, pp. 1–38. gizaw, y., tsega, s. & hailegiorgis, k., 2019, ‘assessment of the challenges and opportunities of women entrepreneurs, in, assessment of the challenges and opportunities of women entrepreneurs in sodo town, wolaita zone, snnpr’, asian journal of economics, business and accounting 10(1), 1–8. https://doi.org/10.9734/ajeba/2019/v10i130097 grant, r.m., 1991, ‘the resource-based theory of competitive advantage: implications for strategy formulation’, california management review 33(3), 114–135. https://doi.org/10.2307/41166664 gray, d.e., 2014, doing research in the real world, 3rd edn., sage, los angeles, ca. gunawan, j. & aungsuroch, y., 2017, ‘managerial competence of first – line nurse managers: a concept analysis’, international journal of nursing practice 23(1), e12502. https://doi.org/10.1111/ijn.12502 gupta, v.k. & batra, s., 2016, ‘entrepreneurial orientation and firm performance in indian smes: universal and contingency perspectives’, international small business journal: researching entrepreneurship 34(5), 660–682. https://doi.org/10.1177/0266242615577708 gwatsvaira, o. & mtisi, s., 2016, ‘an investigation into the factors contributing to lack of growth of small and medium enterprises (smes) in the furniture manufacturing industry in kelvin north, bulawayo, zimbabwe’, the international journal of business & management 4(12), 1–12. hamid, i.z.a, azizan, n.a. & sorooshian, s., 2018, ‘predictors for the success and survival of entrepreneurs in the construction industry’, international journal of engineering business management 7(1), 1–8. hayton, j., 2015, leadership and management skills in smes: measuring associations with management practices and performance, department of business, innovation and skills, bis research paper number 224, viewed n.d., from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/418404/bis-15-204-leadership-and-management-skills-in-sme.pdf. herrington, m. & wood, e., 2003, global entrepreneurship monitor, south african report, viewed 18 march 2016, from http://www.gbs.nct.ac.za/gbswebb/userfiles/gemsouthafrica2000pdf. hervas-oliver, j.l., sempere-ripoll, f. & boronat-moll, c., 2014, ‘process innovation strategy in smes, organizational innovation and performance: a misleading debate?’, small business economics 43(4), 873–886. https://doi.org/10.1007/s11187-014-9567-3 hughes, c., 2006, qualitative and quantitative approaches to social research, viewed 24 february 2014, form http://www2.warwick.ac.uk/fac/soc/sociology/staff/hughes/researchprocess/quantitative_and_qualitative_approaches.docx. hundley, g., 2001, ‘why women earn less in self-employment’, journal of labour research 22(4), 817–829. https://doi.org/10.1007/s12122-001-1054-3 ikupolati, a.o.p., adeyeye, m.m., oni, e.o., olatunle, m.a. & obafunmi, m.o., 2017, ‘entrepreneurs’ managerial skills as determinants for growth of small and medium enterprises (smes) in nigeria’, journal of small business and entrepreneurship development 5(1), 1–6. https://doi.org/10.15640/jsbed.v5n1a1 ismanu, s., salim, u., moeljadi, s.a., 2017, ‘the effect of innovation strategy on financial performance small and medium enterprises in indonesia’, international journal of applied business and economic research 15(12), 365–379. jasim, a.f.a., 2019, ‘conceptual skills in leading change: a competence approach to public sector leadership’, a thesis submitted to the faculty of law and business in fulfilment of the requirements for the degree of phd in business management at the british university in dubai february 2019. jennings, j.e. & cash, m.p., 2006, ‘women’s entrepreneurship in canada: progress, puzzles and priorities’, in c.g. brush et al. (eds.), growth-oriented women entrepreneurs and their businesses, pp. 53–87, edward elgar publishing, northampton, ma. johari, r.j., tarmizi, m., mohd, h. & rashid, n., 2018, ‘a revisited note on internal audit function and good corporate governance a revisited note on internal audit function and good corporate governance’, international journal of academic research in business and social sciences 8(12), 716–728. https://doi.org/10.6007/ijarbss/v8-i12/5067 jongwe, a., 2013, an agenda for support for smes, financial gazette, 31 january. kotane, i. & kurzimina-merlino, i., 2017, ‘analysis of small and medium sized enterprises’ business performance evaluation practice at transportation and storage services sector in latvia’, procedia engineering 178(2017), 182–191. https://doi.org/10.1016/j.proeng.2017.01.093 katz, r.l., 2009, skills of an effective administrator, 2nd edn., harvard business school publishing, boston, ma. kaur, s.p., 2013, ‘variables in research’, ijrrms 3(4), 36–38. kawaza, k., 2014, massive retrenchments in first 2014 quarter, 23 may 2014, zimbabwe independent, viewed n.d., from https://www.theindependent.co.zw/2014/05/23/massive-retrenchments-first-2014-quarter/. klapper, l.f. & parker, s.c., 2011, ‘gender and the business environment for new firm creation’, world bank research observer 26(2), 237–257. https://doi.org/10.1093/wbro/lkp032 kraaijenbrink, j., spender, j.c. & groen, a.j., 2009, ‘the resource-based view: a review and assessment of its critiques’, journal of management 36(1), 349–372. königová, k., urbancová, h. & fejfar, j., 2012, ‘identification of managerial competencies in knowledge-based organizations’, journal of competitiveness 4(1), 129–142. https://doi.org/10.7441/joc.2012.01.10 lee, b., 2012, financial guide for small and medium enterprises, cpa australia ltd., singapore. lerner, m. & almor, t., 2002, ‘relationships among strategic capabilities and the performance of women-owned small ventures’, journal of small business management 40(2), 109–125. https://doi.org/10.1111/1540-627x.00044 li, x., jiang, b. & li, j., 2020, ‘adoption of supply chain finance by small and medium enterprises in china’, business process management journal 27(2), 486–504. https://doi.org/10.1108/bpmj-09-2020-0399 lockett, a., & thompson, s., 2001, ‘the resource-based view and economics’, journal of management 27(6), 723–754. lopa, n.z. & bose, t.k., 2014, ‘relationship between entrepreneurial competencies of sme owners/managers and firm performance: a study on manufacturing smes in khulna city’, journal of entrepreneurship and management 3(3), 1–12. lopez-nicolas, c., nikou, s., molina-castillo, f.-j. & bouwman, h., 2020, ‘gender differences and business model experimentation in european smes’, journal of business & industrial marketing 35(7), 1205–1219. https://doi.org/10.1108/jbim-05-2019-0194 madzivanzira, a., 2011, smes key to economic recovery, the patriot, viewed 06 january 2016, form http://www.thepatriot.co.zw/old_posts/smes-key-to-economic-recovery/. mahadalle, a. & kaplan, b., 2017, ‘entrepreneurial characteristics and competencies as determinants of corporate performance: a study on small enterprises in mogadishu, somalia’, international journal of research-granthaalayah 5(5), 243–254. https://doi.org/10.29121/granthaalayah.v5.i5.2017.1856 majukwa, d., 2019, ‘sustainability strategies for small and medium sized enterprises in zimbabwe’, doctoral study submitted in partial fulfillment of the requirements for the degree of doctor of business administration, walden university. makanyeza, c. & dzvuke, g., 2015, ‘the influence of innovation on the performance of small and medium enterprises in zimbabwe’, journal of african business 16(1–2), 198–214. https://doi.org/10.1080/15228916.2015.1061406 malhotra, n.k., nunan, d., birks, d.f. & wills, p., 2017, marketing research: an applied approach, 5th edn., pearson education ltd., london. mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, southern african journal of entrepreneurship and small business management 9(1), a111. https://doi.org/10.4102/sajesbm.v9i1.111 man, t., lau, t. & chan, k.f., 2002, ‘the competitiveness of small and medium enterprises. a conceptualisation with focus on entrepreneurial competencies’, journal of businessventuring 17(2), 123–142. https://doi.org/10.1016/s0883-9026(00)00058-6 manxhari, m., veliu, l. & jashari, j., 2017, ‘developing models of managerial competencies of managers: a review’, international journal of economics, commerce and management 4, 186–200. maseko, n. & manyani, o., 2011, ‘accounting practices of smes in zimbabwe: an investigative study of record keeping for performance measurement (a case study of bindura)’, journal of accounting and taxation 3(8), 171–181. https://doi.org/10.5897/jat11.031 mashavira, n., chipunza, c. & dzansi, d.y., 2021, ‘managerial political competencies and the performance of small and medium-sized enterprises in south africa’, acta commercii 21(1), a884. https://doi.org/10.4102/ac.v21i1.884 masoud, e.y. & al khateeb, l., 2020, ‘the influence of managerial competencies on the business performance in the small business funded by jordan river foundation’, european journal of business and management 12(20), 49–59. matthews, b. & ross, l., 2010, research methods: a practical guide for the social sciences research, pearson education limited, london. minniti, m., 2017, female entrepreneurship, role models and network externalities in middle-income countries, the routledge companion to global female entrepreneurship, routledge, abingdon, pp. 197–213. mitchelmore, s. & rowley, j., 2010, ‘entrepreneurial competencies: a literature review and development agenda’, international journal of entrepreneurial behavior & research 16(2), 92–111. https://doi.org/10.1108/13552551011026995 mohsin, m.b.a., halim, h.a., ahmad, n.h. & farhan, n., 2017, ‘assessing the role of entrepreneurial competencies on innovation performance: a partial least squares (pls) approach’, the journal of business inquiry 16(special issue 1), 88–101. motlaq, m.a., motlaq, m.a., dareke, m. & rezaei, h., 2012, ‘the effect of conceptual skills training on the degree of job satisfaction and performance in women managers’, the first international conference of women’s health, shiraz, iran, june 14–15, 2012. mozumdar, l., van der velde, g. & omta, s.w.f., 2020, ‘determinants of the business performance of women entrepreneurs in the developing world context’, mdpi, j multidisciplinary scientific journal 3(2), 215–235. https://doi.org/10.3390/j3020017 mpando, i.t., 2015, ‘an assessment of the impact of innovation & business networks on the performance of smes in the harare metropolitan’, unpublished master’s thesis, university of zimbabwe. mucheche, c., 2017, amendments to the zimbabwean labour act [chapter 28:01] and their implications on the employment relationship: a review of some critical sections of the labour amendment act no. 5 of 2015, the zimbabwe electronic law journal, zimbabwe legal information institute, harare. mukoswa, m.c., 2020, ‘the survival of foreign nationals’ small businesses in johannesburg’, master’s dissertation, university of johannesburg, johannesburg, viewed 04 march 2021, from http://hdl.handle.net/102000/0002. mustafa, a. & ayse, p., 2017, ‘managerial competencies and impact on management levels’, international journal of advanced research in management and social sciences 6(9), 1–16. naudé, w. (ed.), 2013, entrepreneurship and economic development theory, evidence and policy, iza discussion paper number 7507, in entrepreneurship and economic development, palgrave macmillan, new york, p. 304. ncube, m.s. & chimucheka, t., 2019, ‘the effect of managerial competencies on the performance of small and medium enterprises in makana municipality, south africa’, african journal of hospitality, tourism and leisure 8(5), 1–15. nerisa, p., 2015, ‘business university student entrepreneurial competencies: towards readiness for globalization’, in proceedings of the second european academic research conference on global business, economics, finance & banking, zurich, 3rd–5th july, paper id: z549. njanike, k., 2019, the factors influencing smes growth in africa: a case of smes in zimbabwe, regional development in africa, intechopen limited, london. norman, g., norcini, j. & bordage, g., 2014, ‘competency-based education: milestones or millstones?’, journal of graduate medical education 6(1), 1–6. https://doi.org/10.4300/jgme-d-13-00445.1 nyathi, k.a., nyoni, t., nyoni, m. & bonga, w.g., 2018, ‘the role of accounting information in the success of small & medium enterprises (smes) in zimbabwe: a case of harare’, journal of business and management (drj-jbm) 1(1), 01–15. ofei, a.m.a., paarima, y. & barnes, t., 2020, ‘exploring the management competencies of nurse managers in the greater accra region, ghana’, international journal of africa nursing sciences 13, 1–7. https://doi.org/10.1016/j.ijans.2020.100248 organisation for economic cooperation and development, 2017, ‘enhancing the contributions of smes in a global and digitalised economy’, meeting of the oecd council at ministerial level paris, 7th–8th june 2017. organisation for economic cooperation and development, 2018, ‘promoting innovation in established smes, parallel session 4’, sme ministerial conference, mexico city, 22nd–23rd february 2018. papulová, z. & mokroš, m., 2007, importance of managerial skills and knowledge in management for small entrepreneurs, e-leader, prague, pp. 1–8. pekkola, s., saunila, m. & rantanen, h., 2016, ‘performance measurement system implementation in a turbulent operating environment’, international journal of productivity & performance management 65(7), 947–958. https://doi.org/10.1108/ijppm-01-2015-0018 penrose, e., 1959, the theory of the growth of the firm. wiley, new york, ny. peteraf, m.a., 1993, ‘the cornerstone of competitive advantage: a resource – based view’, strategic management journal 14(3), 179–191. rosli, m.m. & sidek, s., 2013, ‘the impact of innovation on the performance of small and medium manufacturing enterprises: evidence from malaysia’, journal of innovation management in small & medium enterprise 2013, 1–16. https://doi.org/10.5171/2013.885666 rumelt, r.p., 1987, ‘theory, strategy, and entrepreneurship’, in d.j. teece (ed.), the competitive challenge, pp. 137–158, ballinger publishing company, cambridge, ma. rutherford, m.w., buller, p.f. & mcmullen, p.r., 2004, ‘human resource management problems over the life cycle of small to medium-sized firms’, human resource management 42(4), 321–335. saka, a.b. & chan, d.w.m., 2020, ‘adoption and implementation of building information modelling (bim) in small and medium-sized enterprises (smes): a review and conceptualization’, engineering, construction and architectural management 28(7), 1829–1862. https://doi.org/10.1108/ecam-06-2019-0332 salleh, f., ibrahim, m.d., yazid, a.s., afthanorhan, a., rashid, n. & ghazali, p.l., 2018, ‘micro small and medium enterprise demand for general takaful: proposed theoretical framework and hypotheses development’, international journal of academic research in business and social sciences 8(12), 599–612. https://doi.org/10.6007/ijarbss/v8-i12/5058 sánchez, j., 2012, ‘the influence of entrepreneurial competencies on small firm performance, the influence of entrepreneurial competencies on small firm performance’, revista latinoamericana de psicología 44(2), 165–177. sandada, m. & mangwandi, l., 2015, ‘an assessment of the influence of selected smes on the performance of small to medium sized family owned businesses in the zimbabwe retail sector’, audoe 11(5), 5–16. sangoseni, o., hellman, m. & hill, c., 2013, ‘development and validation of a questionnaire to assess the effect of online learning on behaviors, attitude and clinical practices of physical therapists in united states regarding of evidencebased practice’, internet journal of allied health science practice 11, 1–12. santos, f.m. & bode, c.s., 2012, the organizational foundations of corporate social entrepreneurship, viewed 12 september 2018, from http://www.insead.edu. schumpeter, j.a., 1934, the theory of economic development: an inquiry into profits, capital, credits, interest, and the business cycle, transaction publishers, piscataway, nj. shava, h. & rungani, e.c., 2016, ‘influence of gender on sme performance in emerging economies’, acta commercii 16(1), a408. https://doi.org/10.4102/ac.v16i1.408 shouyu, c., 2017, ‘the relationship between innovation and firm performance: a literature review’, advances in computer science research 82, 648–652. sidek, s. & mohamad, m.r., 2014, ‘managerial competencies and small business growth: empirical evidence from microfinance participants’, ijms 21(1), 39–59. https://doi.org/10.32890/ijms.21.1.2014.10404 singh, r., rigsby, j. & ramgulam, n., 2018, ‘formal human resource management (hrm) practices and the performance of small and medium-sized enterprises (smes): a study of smes in the caribbean nation of trinidad’, journal of eastern caribbean studies 42(2), 1–36. szczepańska-woszczyna, k., 2014, ‘smes managers – a need for competence’, acta technologica dubnicae 4(1), 1–16. https://doi.org/10.1515/atd-2015-0008 the zimind, 2017, smes hold key to economic growth, viewed 21 february 2017, from https://www.thestandard.co.zw/2011/10/23/smes-hold-key-to-economic-growth/. tocher, n. & rutherford, m.w., 2009, ‘perceived acute human resource management problems in small and medium firms: an empirical examination’, entrepreneurship theory and practice 33(2), 455–479. https://doi.org/10.1111/j.1540-6520.2009.00299.x tola, z. & chimucheka, t., 2018, ‘the importance of entrepreneurial competencies on the performance of women entrepreneurs in south africa’, the journal of applied business research 34(2), 223–236. https://doi.org/10.19030/jabr.v34i2.10122 umer, m., 2012, ‘human resource management theory and practices in small and medium-sized enterprises (smes) and enterprises performance in pakistan’, global journal of management and business research 12(13), 28–44. university canada west, 2021, how can you improve your managerial skills?, viewed 26 may 2021, from https://www.ucanwest.ca/blog/education-careers-tips/how-can-you-improve-your-managerial-skills. veliu, l. & manxhari, m., 2017, ‘the impact of managerial competencies on business performance: smes in kosovo’, vadyba journal of management 1(30), 59–65. vijay, l. & ajay, v.k., 2011, ‘entrepreneurial competency in sme’s’, bonfring international journal of industrial engineering and management science 1(special issue), 5–10. https://doi.org/10.9756/bijiems.1002 wilk, e.o. & fensterseifer, j.e., 2003, ‘use of resource-based view in industrial cluster strategic analysis’, international journal of operation and production management 23(9), 995–1009. wernerfelt, b., 1984, ‘a resource-based view of the firm’, strategic management journal 5(2), 171–180. wernerfelt, b., 1995, ‘the resource-based view of the firm: ten years after’, strategic management journal 16(3), 171–174. wyllie, t.m., 2019, qualitative and quantitative research approaches, pp. 1–10, unicaf university, malawi. xiang, d., worthington, a.c. & higgs, h., 2014, ‘discouraged finance seekers: an analysis of australian small and medium-sized enterprises’, international small business journal 33(7), 689–707. https://doi.org/10.1177/0266242613516138 yip, g.s., devinney, t.m. & johnson, g., 2009, ‘measuring long term superior performance: the uk’s long-term superior performers 1984–2003’, long range planning 42, 390–413. yuliandi, s., 2014, ‘influence of competency, knowledge and role ambiguity on job performance and implication for ppat performance’, journal of economics and sustainable development 5(12), 111–116. yusuf, f.a. & suseno, b.d., 2020, ‘sustainability innovativeness agility as an intervening variable in the managerial competence to business performance relationship of a family-owned company’, international journal of innovation, creativity and change 13(9), 479–498. zindiye, s., chiliya, n. & masocha, r., 2012, ‘the impact of government and other institutions’ support on the performance of small and medium enterprises in the manufacturing sector in harare, zimbabwe’, international journal of business management and economic research 3(6), 655–667. https://doi.org/10.5897/ajbm11.2387 abstract introduction theoretical context research design and methods findings and analysis discussion of key findings conclusions and practical recommendations recommendations and direction for future studies acknowledgements references about the author(s) tshililo r. farisani graduate school of business and leadership, college of law and management, university of kwazulu-natal, durban, south africa school of management, it and governance, college of law management, university of kwazulu-natal, durban, south africa citation farisani, t.r., 2022, ‘assessing the impact of policies in sustaining rural small, medium and micro enterprises during covid-19 pandemic in south africa’, southern african journal of entrepreneurship and small business management 14(1), a505. https://doi.org/10.4102/sajesbm.v14i1.505 original research assessing the impact of policies in sustaining rural small, medium and micro enterprises during covid-19 pandemic in south africa tshililo r. farisani received: 13 dec. 2021; accepted: 06 may 2022; published: 09 dec. 2022 copyright: © 2022. the author licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the coronavirus disease 2019 (covid-19) pandemic has persistently threatened the survival of rural livelihoods everywhere in south africa. this may have adverse effects on the implementation of policies and strategies that support rural small medium and micro enterprises (smmes). rural-based local institutions and their policies play major roles in sustaining rural smmes and livelihoods during disasters and yet there is little research to provide future directions. aim: this article aims to contribute to an understanding of the impact of the implementation of present and past smme policies in sustaining rural livelihoods during disasters in south african rural municipalities. setting: this research focussed on institutions and their policies in the jozini local municipality and matatiele local municipality. these rural-based local municipalities in south africa were chosen as relevant case studies for this study because of their experiences with frequent fire and drought crises or disasters. methods: the study employed a qualitative research methodology. in line with the interpretative paradigm, a social network analysis, together with one-on-one interviews, were chosen as research instruments for the collection of data from two rural municipalities. nvivo 12 was used for data analysis. results: the findings of the study revealed that, while policy and legal frameworks are in place to support smmes, in reality, very little support (during disasters) trickles through to rural-based smmes. conclusion: the conclusions drawn from this study revealed that, in the absence of provincial and nationally based institutions to ensure the implementation of their policies, rural smmes established alternative processes to sustain their smmes during disasters. keywords: smme policy implementation; socio-economic crisis; collaboration; rural; smme sustainability. introduction the coronavirus disease 2019 (covid-19) pandemic threatened the survival of many rural livelihoods and small medium and micro enterprises (smmes) across the globe (afshan, shahid & tunio 2021; alon, farrell & li 2020; cortez & johnston 2020). as a result of the pandemic, the implementation of policies and strategies in various governments globally has been put to the test in a way that has never been seen before (ratten 2020). the way institutions implement policies to respond to disasters such as covid-19 is therefore crucial in sustaining livelihoods and businesses. drawing from this understanding, this article aims to contribute to an understanding of the impact of the implementation of present and past smme policies in sustaining rural livelihoods in south africa. jozini local municipality (jlm) and matatiele local municipality (mlm), which are rural-based local municipalities in south africa, were chosen as relevant case studies for this study because of their experiences with frequent fire and drought crises. mahadea and kaseeram (2018) detailed several challenges experienced by smmes in poverty-stricken areas in south africa. many poverty-stricken communities in rural municipalities have been a focus of the new south african government’s (post-1994) policies. ssekitoleko and du plesis (2021) concur and point out that the aim was and remains to be redressing the imbalances of the past and implement a developmental local government to create jobs, grow the economy and mitigate poverty using smmes. mazibuko (2013) affirms and further argues that pre-1994, the institutions of the former apartheid government in south africa were directly used to suppress the indigenous black majority’s livelihoods options by advocating for policies that disempowered them. according to mazibuko, the 1913 land act (also known as the natives land act, 1913) had relevant authoritative institutions to enforce policies that were adopted under it. all the above-mentioned studies (i.e. mahadea & kaseeram 2018; mazibuko 2013; ssekitoleko & du plesis 2021) reported on various challenges that south african smmes experience but did not provide future policy implementation directions to rural-based institutions. dubihlela and van schalkwyk (2014) hold that the sustainability of livelihoods through smmes is a challenge in many rural communities. nevertheless, this study has many loopholes as it failed to properly advise on the possible strategies or policies rural smmes can adopt to sustain themselves during a crisis. however, the major weakness of their work is that it blames rather than suggests practical solutions that could resonate with rural practitioners during a crisis. in their study, dubihlela and van schalkwyk (2014) blame both the post-1994 national and local government institutions for unclear procedures that rural smmes can follow to access institutions meant to support smmes in their areas during a crisis. nevertheless, bhorat et al. (2018) corroborate this observation and add that the exclusion of the rural smme stakeholders in policymaking and implementation in the new south africa is the root of many challenges that militate against sustainable rural livelihoods through smmes. in their own words, bhorat et al. (2018) contend further that: [t]he majority of smme owners did not participate due to lack of information – either because they did not know the programme existed or because they did not know whom to contact. (p. 46) despite not offering solutions, the work of bhorat et al. (2018) points to a need for further research on how to ease the challenges associated with processes that have been used to empower smmes with the hope to sustain rural livelihoods preand post-socio-economic crisis. love (2003) is among the researchers in the last two decades who have emphasised the need for a greater understanding of the policy implementation process as a way of effectively addressing the barriers to policy implementation. in motivating further research in policy implementation processes, bhuyan, jorgensen and sharma (2010) pointed to three reasons why the policy implementation process matters: it promotes accountability, enhances effectiveness and fosters equity and quality. patnaik and shambu (2014) agree with this view while stating: [t]o provide policy directions, there is need for a bridge in the gap between understanding of sla and implementation of rural livelihood mission. there seems to be a little interface between practitioners and academics in jointly understanding rural livelihood systems. (p. 356) it is against this backdrop that this research is conceptualised, that is, to explore and understand the complexities of smme policy implementation within a rural municipality context to provide recommendations on how smme policies, plans and strategies can significantly contribute to sustainable livelihoods during this era of covid-19 pandemic and beyond. the original contribution to knowledge in this study lies in the proposed framework and suggestions to guide the implementation of sa rural smme policies. in building such a framework, the important concepts of sustainable livelihoods framework (slf) and institutional theory are introduced first. the rural smme friendly policies are then also introduced and discussed through slf and institutional theory lenses. theoretical context conceptualising the sustainable livelihoods framework the first published reference to sustainable rural livelihoods was made by r. chambers and m.s. swaminathan in their contribution to the brundtland commission in 1987 (conway 2011). according to kollmair and gamper (2002), the origins of the sustainable livelihoods approach (sla) can be traced back to the work of robert chambers in the mid-80s, who developed the approach to advance development cooperation between relevant poverty reduction stakeholders. haida (2009) explains that the sla approach made significant advances in the early nineties as a development concept to understand food security and famines. sustainable livelihoods approach is therefore well placed to assist in understanding rural-based local institutions and their policies in sustaining rural smmes and livelihoods during disasters. kollmair and gamper (2002) point out that chambers’ concepts of sla were developed in 1997 by the british development for international development (dfid) in their development cooperation programmes. elasha et al. (2005) assert that the 1992 united nations (un) conference on environment and development further developed the approach and advocated that it be included in a broad goal to fight poverty. elasha et al. (2005) elaborate further by indicating that sla continues to gain recognition and is used by development practitioners as a framework to understand different perspectives of livelihood improvement. the slf (see figure 1) is one of the best frameworks to understand events during and post socio-economic crisis because of its ability to allow the user to examine the impact of institutions, their policies and processes on the livelihoods of people (toner & franks 2006). figure 1: the sustainable livelihoods framework. smyth and vanclay (2017:68) provide us with a better understanding of figure 1 through a comprehensive definition of the slf. smyth and vanclay (2017) state: in its simplest form, the framework views people as operating in a context of vulnerability. within this context, they have access to certain assets or poverty-reducing factors. these gain their meaning and value through the prevailing social, institutional and organizational environment. this environment also influences the livelihood strategies – ways of combining and using assets – that are open to people in pursuit of beneficial livelihood outcomes that meet their livelihood objectives. (p. 68) figure 1 is particularly important in this study because it clarifies the roles that institutions, through their policies, can provide viable assets during disasters to sustain smmes and livelihoods. nevertheless, there are criticisms concerning power-related problems experienced by the marginalised institutions or individuals levelled against slf (baumann & sinha 2001; carney et al. 1999; mazibuko 2013). thus, another theory that may be important in underpinning the understanding of the impact of institutions and their policies will be important for this study. institutional theory is therefore proposed as a well-placed theory to fill some of the gaps identified in the sla approach. this is because the institutional theory’s two elements (regulative and cultural-cognitive) can expand the condensed social factors and provide solutions to power relations problems during policy planning, implementation, monitoring and evaluation. the institutional theory will be used in this study as a supportive lens to review the impact that sa’s smme policies, strategies and relevant implementing agencies have on the rural smmes. institutional theory new institutionalism has been famously unpacked first by authors such as meyer and rowan (1977) through their article titled, ‘institutional organizations: formal structure as myth and ceremony’. dimaggio and powell (1983) were second to weigh in with their article ‘the iron cage revisited: institutional isomorphism and collective rationality in organizational fields’. new institutionalism views institutions as collective cognitions that would over time rise to the degree of social correction. this is what makes new institutionalism more relevant to this study as it reviews the impact that institutions (which have rural and national footprint), as well as their legislation, strategies and policies, have on the rural smmes’ sustainability. this is where elements of the institutional theory come in. there are three elements of the institutional theory that impact institutions. these are known as regulative, normative and cultural-cognitive pillars (scott 2013). table 1 summarises the three elements of institutional theory and allows for clarification as to why the regulative element and cultural element are chosen for this study. the regulative element’s focus is on the institution’s policies, legislation and rules, while the cultural element’s focus is on the institution’s shared values, beliefs and assumptions. table 1: comparison between regulative, normative and cultural-cognitive elements of institutional theory. the regulative element allows for the analysis of the impact of institution’s policies, legislation and rules on the rural smmes during and post-crisis, while the cultural cognitive element allows for the analysis of the impact of shared values, beliefs and assumptions of the institutions that support rural smmes during and post-crisis. research design and methods the study employed a qualitative research methodology. an interpretive paradigm was chosen for this study because of its ability to provide an understanding of people’s lived experiences (chilisa 2011; mertens 2009). in line with the interpretive paradigm, a social network analysis (sna), together with one-on-one interviews, was chosen as research instruments for the collection of data from two rural municipalities. the study was conducted (as part of a phd research project) in a space of 2 years during which both primary and secondary data were collected. secondary data were collected throughout the study period while primary data were collected in 6 months from two municipalities about 800 km apart. this meant that time was set aside for each local municipality (jozini & matatiele local municipalities) that had more participants confirming their availability. purposive sampling was used in this study. because of the nature of rural areas whereby institutions are not properly documented and are scattered, it was important for the snowball sampling to be carried out to supplement purposive sampling. snowball sampling assisted in identifying institutions that could give further corresponding information or other rural smme supportive institutions that the researcher was not familiar with, but which other participants knew as they worked together for local smme sustainability. both articles of jaja, dawson and gaudet (2017) and that of ennis and west (2010) agree in pointing out that the sna tool is instrumental in identifying existing and potential institutions’ connections. social network analysis was particularly important in that it allowed the researcher to go further than with a semi-structured interview tool. social network analysis goes further because it allowed the participants to correct and remind each other (cross-check) important aspects of policies or rules and assets. thus, sna was particularly important in identifying institutions and policies or rules that bring or assist with dispersing crucial assets during disasters to sustain smmes and livelihoods. a total of 69 participants that represented all stakeholders (see table 2) in the study areas were interviewed. eighteen of such participants were interviewed from mlm using sna and 16 of such participants were also interviewed from mlm using sna. the balance (from 69) of the participants were interviewed using semi-structured interviews (see table 2). all institutions and structures (see figure 2 and figure 3 in the findings section below) were represented in line with jensen and jankowski (1991) guide. that is, all leaders or stakeholders who availed themselves to represent their institutions were interviewed in both municipalities. table 2: interview table showing participants and tools used in this study. figure 2: summary of jozini local municipality’s small medium and micro enterprises social and institutional networks. figure 3: summary of matatiele local municipality’s small medium and micro enterprises social and institutional networks. this study ascribed to the grounded theory (gt) analysis as defined by strauss and corbin (1990). in their own words, strauss and corbin (1990:7) defined gt analysis process as a process that begins with: [o]rganizing data into discreet categories according to their properties and dimensions and then using descriptions to elucidate those categories and then theorizing, conceiving or intuiting ideas-concept –then also formatting them into a logical, systematic, and explanatory scheme. (p. 7) that is, the process defined by strauss and cobin was followed after the recorded information was transcribed. nvivo 12 was used to analyse the vast data collected because of the software’s ability to analyse different types of data. bazeley and jackson (2007) corroborate by pointing out that, [t]he efficiencies afforded by software release some of the time used to simply ‘manage’ data and allow an increased focus on ways of examining the meaning of what is recorded. (p. 22) nvivo 12 made it possible to import and analyse and present the data collected during fieldwork using semi-structured interviews, social network analysis, pictures and secondary data. ethical considerations this study followed all ethical standards according to the university of kwazulu-natal guidelines, reference number: hssrec/00000253/2019. all participants signed the consent form and participated voluntarily. the respondents were assured of anonymity and that the information gathered was for research purposes only. to ensure validity and reliability in this study, the researcher followed bougie and sekaran (2009)’s guide. bougie and sekaran (2009) point out that the validity and reliability of a study depend heavily on two aspects: how the tools of collecting data were administered and whether the tools chosen can capture the relevant data that the researcher is looking for. the researcher ensured that two different types of tools were used to collect data and that one tool was used to follow up and validate the findings of the first tool. triangulation was therefore used to validate the collected data repeatedly during the fieldwork. table 2 provides a summary of data collection and sampling showing participants and tools used as explained above. findings and analysis this part of the study presents the findings and analysis of the study. the objective of this article is to contribute to an understanding of the impact of the implementation of present and past smme policies in sustaining rural livelihoods during disasters in south african rural municipalities. implementation and challenges of small medium and micro enterprise policies, laws and regulations in the promotion of rural smal medium and micro enterprises the first in the smme policies, laws and regulations to be discussed is the broad-based black economic empowerment (bbbee) legislation of 2004 and the national strategy on the development and promotion of small business (nsdpsb) in south africa (1995). the leading institutions and organisations responsible for the implementation are presented in figure 2 and figure 3. broad-based black economic empowerment and the national strategy on the development and promotion of small business broad-based black economic empowerment and nsdpsb were passed to empower previously disadvantaged communities to participate in the local and national economy. small medium and micro enterprises in the jlm and mlm have also been impacted by the above-mentioned national legislation. the leading institutions and organisations responsible for the implementation of national strategy for the development and promotion of franchising (nsdpf) and national informal business upliftment strategy (nibus) in the study areas have been identified as the department of small business development (dsbd), department of public enterprises, mlm, jlm (local business chambers), smme representative institutions (these differ in each municipality), traditional authorities and ngos. the strength of the study areas is in the readily available land (natural resources) and the working force (human resources) that are available for future empowerment projects. the weaknesses identified (from the findings) are in the generalisation (by the national government) of the two empowerment policies’ implementation guidelines and the inability of local officials to implement them locally. the generalisation and lack of implementation happen because of lack of or poor consultations. the senior local economic development officer interviewed at jlm pointed out that such lack of or poor consultations impact the sustainability of rural smmes and livelihoods directly. he further states that the reason the tourism industry and associated rural smmes are struggling is that ‘it is not well marketed’ (participant 2, male, jozini local municipality). he further remarks concerning the poor effort of all relevant departments to work together in empowering rural smmes saying ‘it is still at a very small scale’ (participant 2, male, jozini local municipality). the local traditional leader interviewed was also of the view that relevant departments that are crucial in sustaining rural smmes during disasters were simply not consulting with relevant rural stakeholders. he points to an existing example where the community indicated they need national or provincial water department offices to have offices in the areas most affected by drought, but their views are being ignored. in his own words, he states that: ‘what we would like them to do is for them to bring umhlathuzi closer. it is currently based in empangeni. empangeni is not complaining about water, we are’ (participant 4, male, jozini local municipality). empangeni is about 200 km away from the area that is being referred to by the respondent. the findings further reveal that the impact of bbbee and nsdpsb on rural smmes has been slow except for mnothophansi associated small-scale farmers at jlm. next to be presented in the findings section are the nsdpf in sa (2000) and the nibus (2013). national strategy for the development and promotion of franchising and national informal business upliftment strategy national strategy for the development and promotion of franchising and nibus are critical pieces of legislation in that they enable the rural smmes to access the market regardless of size or previous economic participation record. thus, small informal businesses are not only recognised but assisted (through the provision of resources or assets identified in the slf) to thrive. the leading institutions and organisations responsible for the implementation of nsdpf and nibus in the study areas have been identified as the department of trade and industry, dsbd, small enterprise development agency, small enterprise finance agency, andm, mlm, jlm, smme representative institutions, ngos and local retailers. the strength or positive developments from the collective efforts of the stakeholders in the study areas is that in both mlm and jlm there are now opportunities for new markets and important business equipment. the leading participant from the mlm local economic development tourism unit elaborated on how rural smmes continue to benefit from the opportunities generated as a result of good collaboration between key stakeholders. she stated that: ‘a good example is the matatiele music festival. at this event, alfred nzo district municipality is the leading stakeholder we have. alfred nzo district municipality assists with funding for the event. the event is structured in a way that benefits the local b&b/lodges.’ (senior mlm local economic development officer, female, matatiele local municipality) she then continued: ‘but also, the other smmes selling meat, vegetables and alcoholic beverages find opportunities to sell their products. the licensed outdoor alcohol seller and braai meat supplier will have the opportunity to sell their products at such festivals. the local artists benefit the most and therefore few national artists are called to participate. the type of artist performing every year depends on where we want to create exposure/opportunities for the locals. so we have traditional singers, poetry, jazz and so on and so on.’ (senior mlm local economic development officer, female, matatiele local municipality) this statement by the participant indicates that every stakeholder has a crucial role in the sustainability of rural smmes and livelihoods. local municipalities in both mlm and jlm have, in their implementation of the nsdpf and nibus strategies, successfully concluded franchising arrangements that benefit local smmes and local livelihoods. the jlm local economic development interviewed proudly remarked that: ‘[f]armers have signed a partnership with cambridge. cambridge is going to take our products not only to this cambridge store but to other cambridge stores. our produce will now go to other stores through the fruit spot. our farmers have signed an agreement with the fruit spot. fruit spot then takes the products to different stores. it won’t be a provincial, it will be national because fruit spot operates nationally because it is under massmart. ‘(participant 2, male, jozini local municipality) the weaknesses or negative developments identified are that there are challenges associated with politics and a lack of knowledge in accessing the resources made available through nsdpf and nibus. a positive impact of good collaboration between rural smmes is more evident in nibus’s success in jlm although the same cannot be said concerning mlm as far as physical resources are concerned. the positive impact is evident because of tractors, a truck, coldroom, solar panels and other physical resources that can be observed at ndumo community local farmers’ site office site managed by monthophansi. national development plan the analyses of the participants’ views and opinions are based on their experiences as far as the sustainability of rural smmes is concerned, that is, the national development plan’s (ndp) position in issues such as job creation, growing the economy and reducing the impact of inequality on the sustainability of rural smmes. the leading institutions and organisations responsible for the implementation of ndp in the study areas have been identified as dedeat, eastern cape province drdar, kwazulu-natal provincial department of agriculture and rural development (kzn dard), dsbd, mlm, jlm, local ngos, local smme representatives and traditional authorities. the strength or positive development from the collective efforts of the stakeholders in the study areas is the ability (expertise) to produce good-quality crops and good-quality meat that are ready for exportation despite challenges. the weakness or negative development identified is that the loss of income because of a combination of lack of new markets and poor infrastructure that weighs heavily on rural smmes. the impact of the weakness identified weighs heavily (i.e. slow the envisioned empowerment/sustainability process) on the implementation of all already discussed policies in this study. disaster risk management act 2002 (act no.57 of 2002) the disaster management policy framework clarifies the roles and resources needed to sustain rural smmes. resources are needed for fighting disasters such as drought, fire and possibly covid-19. the participants’ views are based on their experiences as far as the sustainability of rural smmes is concerned, that is, how the key stakeholders are participating in the implementation of the legislation presented above. all the stakeholders presented from the beginning of this section are considered key in ensuring there is enough participation in the implementation of every local municipality’s disaster risk management act 2002 (act no.57 of 2002). the strength or positive development from the collective efforts of the stakeholders in the study areas is that local chiefs, small-scale rural vegetable farmers and livestock owners have devised local plans that allow them to survive local disasters. the weaknesses identified are the local municipalities’ lack of staff capacity and funding to hire qualified firefighters and other disaster management staff. a senior councillor at jlm acknowledged that they do not have enough staff capacity. in his own words, he stated that ‘they are not enough’ (participant 6, male, jozini local municipality). he further pointed out that they have ‘challenges getting funds’ (participant 6, male, jozini local municipality) elsewhere to address the existing staff capacity challenges within the municipality. a lack of a clear consultation process to address disaster challenges has also been identified as a major weakness. the mlm officer interviewed confused and interchanged concerning the roles played by ngos and consultants that work for the municipality. such confusion has also been observed from the ngo representative that works with the municipality. in her own words, she stated that: ‘we as the ngos are the implementing agencies on behalf of the government’ (participant 5, female, matatiele local municipality). nevertheless, the undesirable impact of such a lack of a clear consultation process has led local rural stakeholders to devise their rural friendly processes to fight disasters. the ngo employee who also manages the local rural partnership between ngos, mlm and relevant government departments pointed out that compliance with government regulations has been a problem. she also pointed out how the ngos have managed to overcome the problem of compliance with established rural regulations to sustain grazing land during disasters. in her own words, she stated: ‘conservation grazing agreements are also seen as local sustainable livelihoods projects because they are based on compliance and benefits. that is, the community comply with the land grazing resting rules and the ngos such as conservation south africa, mid natural pty and environmental rural solutions; bring the auctions (market) where they sell their livestock and earn livelihoods. people agree on different grazing methods, it could be rotational resting or rotational grazing. these agreements last for a period and at the end of such period, the benefits of auctions are organized by the ngos for the community that is, environmental rural solutions; or conservation south africa.’ (participant 5, female, matatiele local municipality) discussion of key findings this section presents and discusses key findings and their implications considering slf (see figure 1) and institutional theory (see table 1). the discussions lead to the summarised original contribution to knowledge in the form of different policy implementation suggestions and a new proposed framework (see figure 4) that sustains rural smmes in times of disasters. figure 4: proposed rural smme policy implementation framework. broad-based black economic empowerment and the national strategy on the development and promotion of small business: key findings and implications the key finding concerning bbbee and nsdpsb is that government departments such as dedeat and drdr hardly collaborate with local ngos, traditional leaders and the local business community when embarking on the economic empowerment of rural smmes. such an approach denies the locals an opportunity to engage with other stakeholders that are needed in the implementation of policies. a purely regulative approach without a cultural cognitive approach also denies local values, beliefs and approaches a part in the implementation strategies. chirau and blaser-mapitsa (2020) concur and point out that such an omission is at the centre of the failed implementation of well-resourced policies, laws and regulations in south african municipalities. the implication of such an approach is the exclusion of rural smme representative institutions in crucial empowerment networks and hence the continuation of the current slow transformation process in the country. this means the approach by the policymakers has not made it easier for the majority of rural smmes to benefit from bbbee and nsdpsb policies. the approach by the government departments identified above is therefore going against the national government’s aim of redressing the imbalances of the past and implementing policies that promote developmental local government as described by ssekitoleko and du plesis (2021). suggested approach to implementation of broad-based black economic empowerment and the national strategy on the development and promotion of small business after careful analysis of the findings, it is therefore suggested in this study that the participants could benefit from a more collaborative process (see figure 4, the proposed framework below). this may entail asking the previous owners or current owners (identified as transformation resistance stakeholder in figure 4) to slowly transfer ownership until the prospective owners whom the government wants to empower know enough to run the business on their own. while such an approach has been partly blamed for the slow transformation process in the country, it is a better option for handing over the business to those who cannot operate. implementers (those identified to have the transformation capacity in figure 4) could avoid the challenges of throwing more funding and resource into training and attending empowerment meetings if they research the best candidates who are willing to offer land and such peaceful transfer of land. they would then go on to publicise such successful examples causing many landowners to want to instead of having to (palthe 2014). such an approach to being proactive and engaging the stakeholders before making binding decisions is consistent with scott’s (2008) findings. such an approach is also consistent with slf and institutional theory’s cultural cognitive element. therefore, a thorough information processing exercise, in this case, would lead to proactive judgements. proactive judgements by the implementers rather than dealing with the consequences of the judgements reached without engaging the white farm owners whose land needs to be transferred to the locals. mushangai (2015) also affirms such a leadership approach detailed by scott by pointing out that bbbee is meant to assist rural smmes with the necessary support that is tailored for management, ownership and skills development purposes. scott and mushangai’s analysis are also applicable to the implementation of nsdpsb. that is because prior engagements could ensure a successful empowerment encounter and hence save the implementers time and money in implementing the strategy during and post disasters. next to be discussed are the nsdpf in sa (2000) and the nibus (2013)’s contribution to rural smmes. national strategy for the development and promotion of franchising and national informal business upliftment strategy: key findings and implications the key finding concerning nsdpf and nibus is that local collaboration between rural smmes makes it easier for investors and big businesses to move in. the findings revealed that investors and big businesses (such as andm, spar, cambridge, fruit spot and local butcheries) participated in the implementation of the above-mentioned strategies in both mlm and jlm whenever there was a good collaboration among the stakeholders. an example of such a good collaboration between rural smmes is nibus’s success in jlm although the same cannot be said concerning mlm as far as physical resources are concerned. this view is echoed by lüdeke-freund (2020) who argues that smme networks form the crucial ecosystem needed for entrepreneurial sustainability. these findings and analysis are consistent with smyth and vanclay’s (2017) own analysis, which is informed by the sustainable livelihoods’ framework. the slf emphasises the need for all stakeholders to work together (availing a diversity of individual resources or assets to each other) to produce sustainable livelihood outcomes. this finding implies that organised rural smme institutional networks will not only attract better investments which are crucial in the sustainability of rural smmes but also make it easier for other stakeholders to participate in the implementation of nsdpf and nibus. kang et al. (2021) corroborate and further affirm scott and meyer’s (1983) argument that local stakeholders need to identify with the local initiatives for them to be supportive. suggested approach to implementation of the national strategy for the development and promotion of franchising and national informal business upliftment strategy the analysis of the findings revealed that nsdpf and nibus’s main contributions to rural smmes in the study areas have been in market creation and bringing physical resources. the findings also pointed to the different distribution and limited success confined to either jlm or mlm. an example is that nibus’s success was confined to jlm and not mlm as far as physical resources are considered. therefore, it is important to find out why so many stakeholders contributed physical resources at jlm and not mlm. the findings are the same concerning nsdpf. the reason derived from the findings is that the concentration of small-scale farmers in one place and speaking through one co-operative (mnothophansi) made it easy for the investors to engage jlm vegetable rural smmes. there is also a need for engagement before the commitment and arrival of physical resources as donors and investors often need assurance that the physical resources will be safe and looked after. once the donors are satisfied with the answers out of engagements they then willingly commit and release such physical resources. they donate and support because they want to and not because the laws of the land require them to participate in the economic empowerment of the rural smmes. such findings are consistent with palthe’s (2014) analysis and the proposed framework in figure 4. the proposed framework (figure 4) puts collaboration at the centre of transformation encounters. that is because, through elements of institutional theory and slf, the rules or policies of sponsors are considered alongside the values and assumptions of the local community. that is because, through elements of institutional theory and slf, the rules or policies of sponsors are considered alongside the values and assumptions of the local community, whose livelihoods need sustaining through smmes. molefe, meyer and de jongh (2018) also corroborate such a proposed framework on collaboration and go further to recommend that collaboration in the transformation strategies must be an ongoing (see figure 4 for the ongoing process starting from the situational process, planning, implementation, monitoring and evaluation) exercise among stakeholders. such an ongoing collaboration exercise is key to the ongoing support and sponsorship needed for successful nsdpf and nibus implementation and the sustainability of rural smmes during and post disasters. next to be discussed is the ndp. national development plan strategy is key in the implementation of all sa government policies. national development plan: key findings and implications this study’s findings on the impact of ndp focus on three goals associated with the strategy’s aim of growing the economy, creating jobs and reducing inequality. such goals include promoting access to the international markets so that rural smmes and farmers can participate, investing in local infrastructures such as roads, water and electricity so that rural smmes can have access to better services, and improvements in skills, that is, mentoring and coaching workshops on running smmes, so that rural smmes can offer improved or quality services. the key finding concerning the goals of the ndp is that there is little to no progress in the implementation of ndp goals in the rural municipalities covered by this study. the failure to implement ndp is more evident in the first two goals (i.e. promoting access to the international markets and investing in local infrastructure), while the last goal (i.e. improvements in skills) is largely implemented by ngos. such little progress in the first two goals could be traced to reliance on a regulative approach rather than a cultural approach. on the other hand, where cultural approaches were sought by mainly ngo leaders the progress was better but limited, because of the limited resources or assets that ngo leaders could master compared to the government. the main aspect of the regulative and cultural approaches being applied in both cases involves using force (power to make rules and enforce them) and shared values (finding something that works for all parties). these power relations that are being raised have to do with how much voice and influence other rural smme institutions have at different levels of policy planning, implementation, monitoring and evaluation. kang et al. (2021) affirm and put it this way: [t]he collaborative monitoring &evaluation system enables the sharing of a common understanding of the programs’ goal, strengthens collaborators’ commitment to the program, and extends the understanding of the program’s progress and evaluation activities. (p. 7) this simply means that when people feel consulted, the easier it is for them to be part of the implementation process. see figure 4 for the proposed implementation process that ensures that all stakeholders feel consulted (i.e. ongoing process from situational analysis to evaluation) and part of (i.e. rules and policies of sponsors are observed alongside local values and beliefs or assumptions of the local community) the programme. the implication of such a lack of collaboration at different levels in the implementation of ndp is the continuation of the status quo involving strategies that do not translate to improved implementation, transformed rural smmes, sustainable smmes or livelihoods. suggested approach to implementation of the national development plan the first two goals of promoting access to the international market by rural smmes and farmers, and investment in the local infrastructure such as roads, water and electricity has seen far little progress in their implementation as compared to the third goal of improvements in skills – mentoring and coaching workshops on running smmes. thus far little progress in the first two goals could be traced back to reliance on the regulative approach rather than a cultural approach by the implementers (see palthe 2014). on the other hand, where cultural approaches were sought by mainly ngo leaders, the progress wabetter but limited because of the limited resources that ngo leaders could put together as compared to the government. a close examination of the proposed framework in figure 4 gives insight into how the government leaders could do better by using their power not only to enforce but seek shared values. in that way, the implementers could achieve the goals of ndp. this is so because the proposed framework (which consolidated views from slf, institutional theory and monitoring and evaluation processes) clarifies the roles and stages in the engagement and sharing of resources needed in the implementation process. next to be discussed are the key findings and implications related to the disaster risk management act 2002 (act no. 57 of 2002). disaster risk management act 2002 (act no.57 of 2002): key findings and implications the disaster management framework clarifies the roles and resources needed to sustain rural smmes (national disaster management centre 2005). these resources are needed to fight disasters such as drought, fire or covid-19 impact. the key finding concerning the implementation of the disaster risk management act (act no. 57 of 2002) is that local municipalities outsource their responsibilities to consultants in responding to disasters and forging new solutions that should sustain rural smmes affected by local disasters. the problem is that consultants work with fixed deadlines and they do not create enough time to offer their services to local smme leaders as to how they can collectively find lasting solutions to these constant disasters. therefore, by delegating their work to the consultants, the local municipalities have delegated all local stakeholders to work with the consultants. such undertakings imply that other leaders from ngos, traditional leaders and business communities are not able to implement some of the recommendations because they were not part of their making (kang et al. 2021; scott 2008; scott & meyer 1983). another implication is that crucial resources or assets (see slf) needed by rural smmes during disasters will either be inadequate to sustain rural smmes and rural livelihoods on their arrival, or they will not come at all (smyth & vanclay 2017). suggested approach to implementation of disaster risk management act 2002 (act no.57 of 2002) from those interviewed in the study areas, the summary of the findings and analysis concerning the disasters that frequently devastate the areas have been presented above. these are frequent droughts and fires that make most smmes unsustainable immediately or shortly after occurring. while all leaders from the available stakeholders in each municipality act in assisting local smmes to survive such disasters, the local municipality is by law obligated to lead. such obligation by law also means that they are solely responsible if there is widespread devastation of life or livelihoods in their municipality. it is in that view that the municipalities are doing everything on their own to avoid the blame. in doing that, the findings reveal that they employ consultants to speed up the process of recovery after such disasters. because consultants work with deadlines, they do not make enough time available for consultation with the local smme leaders as to how they can collectively find lasting solutions to these constant disasters. therefore, by delegating their work to the consultants, the local municipalities have delegated all leaders’ work to the consultants. the results of such undertakings are that other leaders from ngos, traditional leaders and business communities (see figure 2 and figure 3) would not be able to implement some of the recommendations because they were not part of their making. by changing their legal obligation perspective, local municipality leaders could work directly with local leaders and not only avoid rebellion against the findings and recommendations of the consultants but create recommendations that every leader can internalise because they were part of solution making process and feel that their interests in sustaining their livelihoods are safeguarded. such undertakings are not only consistent with the proposed framework (see figure 4) but are consistent with kang et al. (2021) and scott’s (2008) analysis. scott (2008) points out that: actors who align themselves with prevailing cultural beliefs are likely to feel competent and connected; those who are at odds are regarded as, at best, ‘clueless’ or, at worst, ‘crazy’. from this perspective, it is easy to understand that if the crucial stakeholders do not feel valued in the process of the above-mentioned regulation, the implementation route will be more challenging for the implementers. however, the findings in this section also revealed that a lack of consultation process between the local municipalities and communities in overcoming local disasters has given birth to local alternative processes. local alternative processes whereby the local ngos (such as ers in mlm) and local tribal authorities (such as chiefs in jlm) work together with local communities to fight local disasters and sustain their smmes. while the local initiatives at both municipalities have managed to keep many local businesses during frequent disasters over the years, such a process needs further collaboration (see the proposed framework shown in figure 4) from the local and national stakeholders to maximise the impact by sustaining rural smmes during and post disasters. figure 4 propose that policymakers ought to involve all stakeholders (i.e. following a five-step continuous process starting with a situational analysis and ending with evaluation) to ensure effective rural friendly policy making and implementation. figure 4 further proposes that policies, rules and regulations can only be implementable in rural areas if they are considered alongside rural values, beliefs and assumptions when responding to disasters. such a proposal draws lessons from the grazing agreements and rules that were successfully implemented (see findings section). such agreements and rules were successful because they considered the local values, beliefs and assumptions in fighting local rural disasters and sustaining livelihoods. conclusions and practical recommendations this study established that the failures of south african policies in empowering rural smmes to sustain rural livelihoods as anticipated by national policymakers are rooted in the strategies employed to implement smme policies, laws and regulations discussed in this study. the national policymakers are not fully embracing the contribution of rural smmes or rural stakeholders in the crucial stages of policymaking and implementation. policymakers are also not giving rural stakeholders enough platform to shape the strategies that would result in the sustainability of rural smmes and rural livelihoods. it is recommended that strategies that national policymakers employ to sustain rural smmes and rural livelihoods be thoroughly discussed with all stakeholders before policymaking, during policymaking and continuously during implementation in rural areas. the original contribution to knowledge in this study lies in the proposed framework (figure 4) and suggestions to guide the implementation of sa rural smme policies during disasters such as fire, drought or covid-19. keeping in mind that full collaboration during policymaking and policy implementation between national policymakers and local rural stakeholders could be costly, it is recommended that cost-cutting measures and leadership approaches be considered. discussions on policymaking and policy implementation should be announced from the top (national) but be allowed to be led by local rural stakeholders for a reasonable period before national policymakers are fully engaged. rural institutions such as ngos who have both interest and resources (meeting venues or finances to pay initial costs) should lead discussions on how best to maximise policy implementation and sustain smmes and rural livelihoods. ngos or other best-suited rural institutions should lead with the blessing of national policymakers to allow local stakeholders to consolidate their preferred approach in the implementation of policies to maximise outcomes that are rural friendly. what follows are the recommendations for future studies. recommendations and direction for future studies this study established that the existing rural (local) knowledge that guides or responds to disasters, as well as the need to sustain rural smmes, is not fully understood by policymakers. it is therefore recommended that future studies focus on the best processes of transferring rural knowledge into national, provincial and local policymaking institutions like the national parliament, provincial legislatures and municipal councils in sa. the transfer of rural knowledge is crucial in guiding the policymakers and legislators on how best to approach policymaking so that the implementers at the local level can identify with it and find it easily implementable and beneficial in the sustainability of rural smmes during and post disasters. acknowledgements a great part of this article stems from the author’s phd thesis entitled ‘sustaining south african rural smmes, a sustainable livelihoods research’, submitted in january 2021 and passed in september 2021. prof. betty c. mubangizi supervised the phd thesis but was unable to contribute to this article. the author would also like to thank his wife, nickie hlekani farisani, for her support and suggestions with the diagrams and figures. competing interests the author declares that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. author’s contributions t.f.r. planned and conducted the research, reviewed the literature, formulated the research design, collected and analysed the data, made interpretations and finalised the article. funding information t.r.f.’s phd thesis titled, ‘sustaining south african rural smmes, a sustainable livelihoods research’ was sponsored by both the university of kwazulu-natal (ukzn) and national research foundation (nrf). the financial assistance of the nrf is hereby acknowledged. data availability the data that support the findings of this study are available upon reasonable request. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references afshan, g., shahid, s. & tunio, m.n., 2021, ‘learning experiences of women entrepreneurs amidst covid-19’, international journal of gender and entrepreneurship 13(2), 162–186. https://doi.org/10.1108/ijge-09-2020-0153 alon, i., farrell, m. & li, s., 2020, ‘regime type and covid-19 response’, fiib business review 9(3), 152–160. https://doi.org/10.1177/2319714520928884 baumann, p. & sinha, s., 2001, linking development with democratic processes in india: political capital and sustainable livelihoods analysis, overseas development institute, london. bazeley, p. & jackson, k., 2007, qualitative data analysis with nvivo qualitative project book, sage, thousand oaks, ca. bhorat, h., asmal, z., lilenstein, k. & van der zee, k., 2018, ‘smmes in south africa: understanding the constraints on growth and performance’, development policy research unit working paper 201802, dpru, university of cape town. bhuyan, a., jorgensen, a. & sharma, s., 2010, taking the pulse of policy: the policy implementation assessment tool, futures group, health policy initiative, task order 1, washington, dc. british department for international development, 1999, sustainable livelihoods guidance sheets 1–2, dfid, london. carney, d., drinkwater, m., rusinow, t., neefjes, k., wanmali, s. & singh, n., 1999, livelihoods approach compared, department for international development (dfid), london. chilisa, b., 2011, indigenous research methodologies, sage, thousand oaks, ca. chirau, t.j. & blaser-mapitsa, c., 2020, ‘how performance management regulations shape evaluation practice in south african municipalities’, evaluation and program planning 82, 101831. https://doi.org/10.1016/j.evalprogplan.2020.101831 conway, g., 2011, ‘exploring sustainable livelihoods’, in a. cornwal & i. scoones (eds.), revolutionizing development: reflections on the work of robert chambers, pp. 85–92, earthscan, london. cortez, r. & johnston, w., 2020, ‘the coronavirus crisis in b2b settings: crisis uniqueness and managerial implications based on social exchange theory’, industrial marketing management 88, 125–135. https://doi.org/10.1016/j.indmarman.2020.05.004 dimaggio, p.j. & powell, w.w., 1983, ‘the iron cage revisited: institutional isomorphism and collective rationality in organizational fields’, american sociological review 48(2), 147–160. https://doi.org/10.2307/2095101 dubihlela, j. & van schaikwyk, p.j., 2014, ‘small business incubation and the entrepreneurial business environment in south africa: a theoretical perspective’, mediterranean journal of social sciences 5(23), 264–269. https://doi.org/10.5901/mjss.2014.v5n23p264 elasha, b.o., elhassan, n.g., ahmed, h. & zakieldin, s., 2005, sustainable livelihood approach for assessing community resilience to climate change: case studies from sudan, assessments of impacts and adaptations to climate change (aiacc) working paper, 17. ennis, g. & west, d., 2010, ‘exploring the potential of social network analysis in assetbased community development practice and research’, australian social work 63(4), 404–417. https://doi.org/10.1080/0312407x.2010.508167 haida, m., 2009, sustainable livelihood approaches. the framework, lessons learnt from practice and policy recommendations, drylands development centre. jaja, j., dawson, j. & gaudet, j., 2017, ‘using social network analysis to examine the role that institutional integration plays in community-based adaptive capacity to climate change in caribbean small island communities’, local environment 22(4), 424–442. https://doi.org/10.1080/13549839.2016.1213711 jensen, k.b. & jankowski, n.w., 1991, handbook of qualitative methodologies for mass communication research, routledge, london. kang, y., cho, m., rahman, m.m., cho, y., han, s. & dutta, m.l., 2021, ‘design of a collaborative monitoring and evaluation system for a community-based nutrition project in rural bangladesh’, evaluation and program planning 84, 101892. https://doi.org/10.1016/j.evalprogplan.2020.101892 kollmair, m. & gamper, s., 2002, the sustainable livelihood approach. development study groups, university of zurich (ip6). love, a.j., 2003, ‘beyond the black box: strengthening performance measurement through implementation evaluation’, presentation to the canadian evaluation society national capital chapter, november 26, 2003, viewed 21 march 2021, from http://www.evaluationcanada.ca/distribution/20031126_lovearnold.pdf. lüdeke-freund, f., 2020, ‘sustainable entrepreneurship, innovation, and business models: integrative framework and propositions for future research’, business strategy and the environment 29(2), 665–681. https://doi.org/10.1002/bse.2396 mahadea, d. & kaseeram, i., 2018, ‘impact of unemployment and income on entrepreneurship in post-apartheid south africa: 1994–2015’, southern african journal of entrepreneurship and small business management 10(1), 1–9. https://doi.org/10.4102/sajesbm.v10i1.115 mazibuko, s., 2013, ‘understanding underdevelopment through the sustainable livelihoods approach’, community development 44(2), 173–187. https://doi.org/10.1080/15575330.2012.683798 mertens, d., 2009, transformative research and evaluation, the guilford press, new york, ny. meyer, j. & rowan, b., 1977, ‘institutional organisations: formal structure as myth and ceremony’, american journal of sociology 83(2), 340–363. https://doi.org/10.1086/226550 molefe, k., meyer, n. & de jongh, j., 2018, ‘a comparative analysis of the socio-economic challenges faced by smmes: the case of the emfuleni and midvaal local municipal areas’, journal of economics and behavioural studies 10(4), 7–21. https://doi.org/10.22610/jebs.v10i4(j).2401 mushangai, d., 2015, does the state disable small businesses? a critique of hernando de soto, university of the witwatersrand, master of arts research report, department of development studies. national disaster management centre, 2005, disaster management framework, viewed n.d., from http://www.ndmc.gov.za/frameworks/disaster%20management%20framework.pdf. palthe, j., 2014, ‘regulative, normative, and cognitive elements of organizations: implications for managing change’, management and organizational studies 1(2), 59–66. https://doi.org/10.5430/mos.v1n2p59 patnaik, s. & shambu, p.c., 2014, ‘revisiting sustainable livelihoods: insights from implementation studies in india’, vision 18(4), 353–358. https://doi.org/10.1177/0972262914553258 ratten, v., 2020, ‘coronavirus (covid-19) and entrepreneurship: changing life and work landscape’, journal of small business & entrepreneurship 32(5), 503–516. https://doi.org/10.1080/08276331.2020.1790167 scott, w., 2013, institutions and organizations: ideas, interests, identities, sage, thousand oaks, ca scott, w.r., 2008, institutions and organizations: ideas and interests, 3rd edn., sage, thousand oaks, ca. scott, w.r. & meyer, j.w., 1983, ‘the organization of societal sectors’, in j.w. meyer & w.r. scott (eds.), organizational environments: ritual and rationality, pp. 129–153, sage, beverly hills, ca. smyth, e. & vanclay, f., 2017, ‘the social framework for projects: a conceptual but practical model to assist in assessing, planning and managing the social impacts of projects’, impact assessment and project appraisal 35(1), 65–80. https://doi.org/10.1080/14615517.2016.1271539 ssekitoleko, p. & du plessis, y., 2021, ‘unravelling the makings for entrepreneurial success: a case study of the maponya business in south africa’, the southern african journal of entrepreneurship and small business management 13(1), 10. https://doi.org/10.4102/sajesbm.v13i1.424 toner, a. & franks, t., 2006, ‘putting livelihoods thinking into practice: implications for development management’, public administration and development 26(1), 81–92. https://doi.org/10.1002/pad.395 abstract introduction literature review research methods and design findings conclusion acknowledgements references appendix 1: interview guideline about the author(s) lindie schuld gordon institute of business sciences, university of pretoria, pretoria, south africa cornelia m. joynt department of accounting, faculty of economic and management sciences, university of pretoria, pretoria, south africa alex j. antonites department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa citation schuld, l., joynt, c.m. & antonites, a.j., 2023, ‘the influence of entrepreneurial bricolage and design thinking on opportunity development’ southern african journal of entrepreneurship and small business management 15(1), a631. https://doi.org/10.4102/sajesbm.v15i1.631 original research the influence of entrepreneurial bricolage and design thinking on opportunity development lindie schuld, cornelia m. joynt, alex j. antonites received: 12 oct. 2022; accepted: 26 feb. 2023; published: 16 aug. 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurial activity in an efficiency-driven economy is fundamental to economic growth, yet its sustainability and opportunities are concerning. both entrepreneurial bricolage and design thinking could enhance opportunity development, but their effectiveness and incorporation into an integrated approach to opportunity advancement require further investigation. aim: this study explores design thinking and entrepreneurial bricolage as facilitating constructs for entrepreneurial opportunity development, employing the design-centred entrepreneurship perspective and the conceptual framework offered by various authors; it investigates the effectiveness of the theoretical frameworks mentioned; and lastly it explores the potential of amalgamating these frameworks into a more comprehensive structure for entrepreneurial opportunity development. setting: the sample consisted of entrepreneurs in south africa. methods: fourteen semi-structured interviews with founders of small and medium entrepreneurial ventures in various south african industry sectors were conducted. results: current frameworks pertaining to bricolage and design thinking proficiencies were appropriate for opportunity development and could be effectively integrated. however, some contributory factors should be included, such as organisational culture, business partners and a non-linear rather than a methodical approach. conclusion: entrepreneurial bricolage has a significant influence on developing and establishing opportunities. the value of design thinking was confirmed with a specific focus on a human-centred approach, creativity and innovation. however, contradictory to design thinking authors, entrepreneurs described the design thinking process as non-linear and disordered. contribution: this study provides empirical evidence to enrich the understanding of the elusive entrepreneurial opportunity development process by integrating the design-centred entrepreneurship framework with the entrepreneurial bricolage perspective into a single, more comprehensive framework. keywords: design thinking; design model; creativity; problem solving; innovation; opportunity development; bricolage. introduction entrepreneurship is a significant catalyst to enhance economic activity as businesses and society are challenged by technological disruption, unstable economies and demographic fluctuations (toma, grigore & marinescu 2014). it furthermore contributes meaningfully to resource distribution, economic progress and social transformation (bjørnskov & foss 2016), which results in more employment opportunities and an upsurge in per capita income growth (du & o’connor 2018). this prominence of the entrepreneurial phenomenon has made it a valuable field for research and development studies (simón-moya, revuelto-taboada & guerrero 2014), with a focus on entrepreneurial antecedents, opportunity advances (alvarez & barney 2014) and their economy-wide significance (bjørnskov & foss 2016). there is a growing consensus in the entrepreneurial domain that recognising and pursuing opportunities, with a focus on knowledge, creativity and entrepreneurial bricolage, are fundamental to entrepreneurial progression (van vuuren & alemayehu 2018). however, many prospective entrepreneurs have limited knowledge of the market, industry and technological areas that are considered fundamental to transforming an idea into a feasible and desirable offering with the potential to yield viable monetary outcomes (goldsby et al. 2017). traditionally, entrepreneurial behaviour was studied by drawing largely on economic thinking: the entrepreneur discovers and evaluates an opportunity and then seeks resources to develop the venture and aims to create returns from operating the venture. conversely, fisher (2012) contends that entrepreneurs sometimes deviate from this traditional model. in these cases, alternative theoretical perspectives on entrepreneurial behaviour, such as entrepreneurial bricolage, provide insights into their decisions. entrepreneurial bricolage is the creative employment of scarce resources (vanevenhoven et al. 2011), which demands creativity and innovation from entrepreneurs. innovation, although critical to the entrepreneurial process, is inadequate for opportunity development because rapidly changing environments and growing technological intricacies hinder the abilities of organisations and entrepreneurs to continuously leverage opportunities (park, srivastava & gnyawali 2014). entrepreneurial bricolage aids innovation practices and is regarded as a problem-solving agent in the opportunity-finding process (witell et al. 2017). the essential role of bricolage in frugal innovation is additionally supported by iqbal, ahmad and halim (2021) in emphasising its antecedent position in the process. the role of frugal innovation, on the other hand, spells sustainable performance, which is critical in current resource scarcity conditions. the same is also supported by the findings of agarwal, bhatti and levänen (2021), by incorporating causation as a key component with bricolage. butt, bowra and chaudhry (2021) further this thinking by elaborating on the mediating effect of bricolage and business model innovation while agreeing to the agency role of bricolage towards sustainable innovation, which is critical in the entrepreneurial space. in essence, bricolage emphasises the actions that generate entrepreneurs’ behavioural frameworks. as a result, a practical understanding of entrepreneurs and their actions enables inferences for enhanced opportunity development (welter, mauer & wuebker 2016). design approaches (which include design thinking) are regarded as a means of constructing innovative solutions for prospective entrepreneurs, seeking to create novel offerings from plausible opportunities for new venture creation (bucktowar, kocak & padachi 2015; carlgren, rauth & elmquist 2016). entrepreneurial design thinking in the broader design framework has been criticised in the past as lacking impact and relevance because of theoretical, methodological and scientific challenges (cash 2018). liedtka (2015) congregated a distinctive validation of the problem-solving purpose of design thinking but referred to the absence of data showing its role in material, innovative outcomes and entrepreneurial opportunity development. the idea of applying design thinking to facilitate innovation and opportunity development is therefore considered an emergent field of study without a clear theoretical foundation (carlgren et al. 2016). this notion rapidly changed, and to substantiate the role of design thinking in entrepreneurship and innovation management, klenner, gemser and karpen (2022:66) found a concrete correlation by investigating the ‘entrepreneurial ways of designing’ and ‘designerly ways of entrepreneuring’. these findings contributed to the theoretical foundation (or a lack thereof) by testing the relationship between design thinking and effectuation theory. even though some research has been conducted on the potential association between bricolage and the entrepreneurial process, a direct stimulus between entrepreneurial bricolage and opportunity development is yet to emerge (rönkkö, peltonen & arenius 2014; vanevenhoven et al. 2011). the purpose of this research was, firstly, to explore design thinking and entrepreneurial bricolage as facilitating constructs for entrepreneurial opportunity development, employing the design-centred entrepreneurship perspective offered by goldsby et al. (2017) in the conceptual framework proposed by vanevenhoven et al. (2011); secondly to investigate the effectiveness of the theoretical frameworks offered by these authors and lastly to explore the amalgamation of these frameworks into a more comprehensive and practical structure given the prevalence of entrepreneurial bricolage and design thinking for entrepreneurial opportunity development and fulfilment. this study contributes to academia and practice by integrating the design-centred entrepreneurship contribution (goldsby et al. 2017) with the entrepreneurial bricolage perspective suggested by vanevenhoven et al. (2011) into a single, more comprehensive framework to enrich understanding of the elusive entrepreneurial opportunity development process. furthermore, this study contributes to empirical research on the applicability of the conceptual framework that was theorised by vanevenhoven et al. (2011). vanevenhoven et al. (2011) calls for empirical research to test the conceptual framework to gain deeper insights into opportunity development: while our conceptual framework needs the support of subsequent data, we hope we have advanced efforts to create a reasoned model of the entrepreneurial process that will provide valuable insights when tested empirically. (p. 63) this article is structured as follows. the next section provides a literature review and presents the research questions as a result. thereafter, the methodology is discussed, followed by findings and the conclusion of this research. literature review entrepreneurship an entrepreneur used to be regarded as an initiator – one who identifies and pursues the opportunity, and who assumes the burden of risk (carland, carland & stewart 1996). although risk-taking valour was earlier identified as one of the primary characteristics of entrepreneurship, both creativity and innovation have lately moved to the forefront (linke 2017; zoo, de vries & lee 2017). the findings of mickiewicz and kaasa (2022) support the enhanced emphasis of creativity in opportunity finding and exploitation phases of the entrepreneurial process (as compared with the classical performance and risk orientations as key drivers). these proficiencies have been described as a primary driving force to differentiate organisational offerings from those of competitors (jarvis 2016; nieman & niewenhuizen 2014). in a comprehensive bibliometric analysis, rosa et al. (2021) illustrate a substantial increase in scientific journal publications in the past 6 years that include creativity and innovation as key components in entrepreneurship research. the latter positions and aligns the contribution of this study per se. there is a growing consensus that the identification and pursuit of business opportunities have become distinguishing characteristics of entrepreneurship (lans, blok & wesselink 2014). within the view of opportunity development, toma et al. (2014) proposed that entrepreneurship involves a process of innovative activities, ‘a creative human process’ in response to identified opportunities, where others perceive only disorder and ambiguity. in a more recent study, lim, lee and al mamun (2021) revealed that the ability or competency to identify opportunities is dissimilar from the skills to ideate for or exploit opportunities. its findings contribute further to conveying that ‘absorptive capacity’, ‘entrepreneurial alertness’ and ‘entrepreneurial knowledge’ are meaningful contributors to opportunity-finding competency. in an extensive literature study, claudhary and trzcieliński (2021) include agility as a key competence in opportunity-finding processes, especially in our current volatile and turbulent market conditions. entrepreneurial alertness, in the context of opportunity finding, accentuates the inclusion of agility towards prompt identification of and reaction to new opportunities. scholarly interpretations of entrepreneurship, such as behavioural and occupational schools of thought, assume a narrow view of the entrepreneurial phenomenon, focusing on either entrepreneurial conduct (stuetzer et al. 2018) or new venture creation as an occupational preference (klein 2008). in contrast, the synthesis view represents an integrated approach to the entrepreneurial concept. fayolle et al. (2016) describe it as an intricate and multi-dimensional occurrence that necessitates a more comprehensive analysis of entrepreneurship as a process, resource and state of being. literature on the comprehensive analysis of entrepreneurship as a process is limited. this study aims to provide greater insight into the understanding of the entrepreneurial process of opportunity identification, development and pursuit, with creativity and design thinking as key components towards innovation. innovation innovation is a critical antecedent to entrepreneurial development and inseparable from the entrepreneurial phenomenon (ošenieks & babauska 2014). new innovations create a disequilibrium in the market, resulting in economic advancement (malecki & spigel 2017). the activation of various network features among diverse stakeholders aids the transformation from idea to implementation and offers organisations enhanced opportunities by resource integration and co-creation (frow et al. 2015). the process of innovation is considered a recurrent system of ideas that are generated rapidly, implemented, revised and re-enacted by testing and application, with interdependent processes and outcomes. however, it is recommended that existing theories of innovation practices be re-examined in the current digital era, specifically the foundational assumptions regarding innovation boundaries, the agency for innovation and the association between innovation processes and related effects. these assumptions were that: (1) innovation is focused on fixed products, (2) innovation-agency is centralised and (3) the practices and outcomes of innovation are noticeably diverse (nambisan et al. 2017). innovation-driven economies exhibit more efficient and robust entrepreneurial ecosystems than those found in factorand efficiency-driven economies and the latter encompasses several discouraging conditions for entrepreneurial advancement (herrington & kew 2018). environmental factors that contribute to innovation play a pivotal role in shaping business opportunities and the subsequent success or failure of new business ventures (angulo-guerrero, pérez-moreno & abad-guerrero 2017; simón-moya et al. 2014). entrepreneurship in efficiency-driven economies, such as south africa, is fundamental to economic growth, yet the quality of entrepreneurial activities and the establishment of opportunities in the country are concerning (van vuuren & alemayehu 2018). south africa is constrained by restrictive regulations, its lack of an entrepreneurial education system (herrington & kew 2018) and its slow entrepreneurial growth. prospective entrepreneurs are hindered by insufficient resources (van vuuren & alemayehu 2018). the positive relation between bricolage and innovation is well documented in recent studies (beltagui, sesis & stylos 2021; do vale, collin-lachaud & lecocq 2021; iqbal et al. 2021; kamara et al. 2022; mishra 2021; ratnayake 2022) and proves to be pivotal in the entrepreneurial process. entrepreneurial bricolage entrepreneurial bricolage is the application of combinations of available resources to solve new problems and create opportunities (chen & fan 2015). bricolage proficiencies – the creative employment of scarce resources – may enable the establishment, advancement and exploitation of opportunities (vanevenhoven et al. 2011). consequently, entrepreneurial bricolage is entrenched in the entrepreneurial process, with the capability to create significant value by using attainable resources (welter et al. 2016). simba, ojong and kuk (2021) argue from an emerging markets perspective, which is consequently the focus area of this study, that bricolage is even more of a suitable process in these complex market conditions and describe it as follows: ‘… firms would more or less use bricolage to resolve issues of resource constraints and develop idiosyncratic relationships with their resource-poor environments’ (2021:114). bricolage is divided into four entrepreneurial competencies: (1) a dynamic approach to resource scarcity, (2) creative techniques of grouping resources, (3) the utilisation of available resources and (4) the ability to collaborate with external stakeholders (witell et al. 2017). accordingly, bricolage is the interplay between problem-solving, opportunity-finding and resource combination. bricolage proficiencies and activities are therefore critical for establishing opportunities to reassign resources innovatively in the construction of novel offerings (chen & fan 2015). bricolage may entail both internal and external activities (vanevenhoven et al. 2011), where internal bricolage refers to distinctive entrepreneurial characteristics, such as understandings, personal experiences and knowledge, and external bricolage refers to the activities undertaken in the external environment, including attaining resources and advancing collaborative networks with external partners. the conceptual model suggested by vanevenhoven et al. (2011) depicts the effect of bricolage on the entrepreneurial process (figure 1). this model incorporates a synthesised approach to opportunity development, where opportunity detection or formation leads to opportunity expansion and opportunity exploitation. in this model, opportunities are iterative and may be altered or regenerated at any time. both internal and external bricolage enhance the entrepreneur’s efforts in each phase and enrich them when transitioning from one phase to another. figure 1: conceptual model of the effect of bricolage on the entrepreneurial process. bricolage initiatives may help to create a collaborative environment for internal management activities and develop external partner relationships. this collaborative environment enhances creative efficiencies and contributes to value-added business activities (de klerk 2015). while the entrepreneurial process is characterised by uncertainty, ambiguity and time pressures for decisions, opportunities transition between stages in the entrepreneurial process because of bricolage. testing the conceptual model proposed by vanevenhoven et al. (2011) will assist academia and other stakeholders through a better understanding of this intricate process. while vanevenhoven et al. (2011:63) contends that ‘…the use of bricolage as an explanatory concept is an appropriate means to examine entrepreneurship’, this conceptual, theoretical proposition has not been tested empirically. therefore, to investigate the importance of entrepreneurial bricolage in the entrepreneurial opportunity development process, the following research question (rq) was developed: rq 1: what is the influence of entrepreneurial bricolage on the entrepreneurial opportunity development process? although literature on the influence and effect of entrepreneurial bricolage in the entrepreneurial opportunity development process is limited, a link between the business environment and design thinking practices was first established in the mid-1980s (johansson-sköldberg, woodilla & çetinkaya 2013). design thinking design thinking is a collaborative problem-solving technique (luchs, swan & creusen 2016). it is defined as ‘a human-centred design methodology’ and an approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology and the requirements for business success (brown 2008). however, literature contains differences in the definition of design thinking and its iterative processes. johansson-sköldberg et al. (2013), for instance, defined the process as one of idea generation, deduction, testing and induction, whereas seidel and fixson (2013) focus on the three key approaches of need-finding, brainstorming and prototyping. a search for a more practical approach to defining design thinking reveals extensive descriptions of design thinking practice by prominent consultants, such as ideo and continuum, and leading educators, including the darden business school, the rotman business school and the stanford design school (liedtka 2015). according to liedtka (2015), even though these practitioners and scholars use different terminology, they share views of the design thinking process, as illustrated in table 1. however, suggestions that design thinking may aid in dealing with a multifaceted reality and enable innovative strategic management lack theoretical basis (johansson-sköldberg et al. 2013). table 1: models of design thinking processes in practice. the practical accounts of the design thinking process can therefore be summarised as an iterative process of discovering user requirements, which encompasses a deep understanding of the customer; the formation of numerous concepts to address consumer needs and experimentation with and prototyping of the ideas generated (seidel & fixson 2013), to find a solution that is feasible, desirable and viable (goldsby et al. 2017). the design thinking approach, according to goldsby et al. (2017), is valuable as an innovative approach to product or service enhancement and also an effective means of uncovering or establishing new venture opportunities. as such, the authors proposed integrating design initiatives into the entrepreneurial process, terming the concept design-centred entrepreneurship. the notion of design embraces ambiguity and complexity and, therefore, suitably enriches innovative activities in pursuit of new venture discovery or creation (carlgren et al. 2016; oyson & whittaker 2015; ramoglou & zyglidopoulos 2015). the design thinking approach is a response to the digital era, characterised by modern technology and business – curtailing complexity and enhancing innovation (kolko 2015). design-centred entrepreneurship the conceptual model proposed by goldsby et al. (2017) applies design thinking principles to opportunity development, maximising organisational viability while controlling business risk. their design process underscores the proof-of-concept elements, which were omitted from prior entrepreneurial literature. the design process emphasises successive and incremental indicators related to the feasibility, desirability and viability of business offerings. goldsby et al. (2017) suggested that ideation, prototyping, market engagement and business modelling help develop venture opportunities and fulfilment (see figure 2). a discussion of each of the action stages follows. figure 2: a conceptual model for design-centred entrepreneurship. ideation the starting point for opportunity development is the formulation of a concept in an ideation process (goldsby et al. 2017). ideation refers to developing novel and advantageous ideas to address both distinct and wicked problems (perry-smith & manucci 2017). wicked problems are ill-structured or difficult to comprehend (dorst 2006), and solving these problems has the potential to produce greater innovation outcomes and superior economic benefits. during this stage, deep insights are gathered from a customer perspective to explore plausible alternatives to perceived consumer difficulties; this supports the creation of organisational offerings that customers are likely to require, select and embrace (goldsby et al. 2017). seidel and fixson (2013) and liedtka (2015) proposed several techniques for the ideation phase, such as observing or interviewing potential customers, journey mapping, brainstorming and a jobs-to-be-done analysis. prototyping newly formulated ideas need to be presented to indicate their intention clearly (goldsby et al. 2017). the use of prototyping methods helps transform abstract ideas into tangible concepts through experience journeys, business concept illustrations and storyboarding (liedtka 2015; seidel & fixson 2013). customer feedback and insights from experts are obtained to determine the feasibility of the offering from market and technical perspectives (goldsby et al. 2017). market engagement establishing the proof-of-concept for the idea’s customer appeal and desirability is imperative at this stage. the potential market and the business offering are iteratively created in a co-creating environment (goldsby et al. 2017). the firm can view business offerings from a customer perspective through constructive consumer dialogue and gain insight into the risk–benefit considerations deliberated by the customer. greer and lei (2012) acknowledged the market’s positive association with a co-creating environment (or collaborative innovation, in design thinking terms) as being essential in developing novel products and services. however, these authors noticed several impediments to incorporating collective efforts. the impediments include increased development costs, possible interference in the development process should patrons decide to terminate their partnership with the particular firm and a potential deficiency of consumers’ experience, knowledge and foresight. all these factors limit the value of the insights provided to the organisation (greer & lei 2012). business modelling the final stage of the design-centred entrepreneurship process is compiling a business model to clarify the operations of the prospective business (goldsby et al. 2017). the nascent entrepreneur must indicate how resources, such as competencies, knowledge, skills and other assets (galindo & méndez 2014) obtained during the ideation, prototyping and market engagement phases, would be combined to formulate the venture’s value proposition and explain how profits would be generated (goldsby et al. 2017). the proof-of-concept status in this phase is economic feasibility. a business model explains how organisations conduct business and encompasses system-level and holistic approaches (zott, amit & massa 2011). goldsby et al. (2017) view its purpose as illustrative as to how value is created and captured. it may include business activities and partners, necessary resources, cost structures, customer segments and relations, value propositions, sales channels and revenue streams (joyce & paquin 2016). limited research on the influence of design thinking led to the development of the following research question: rq 2: what is the influence of the design-centred approach on the entrepreneurial opportunity development process? in summary, both design thinking and entrepreneurial bricolage have emerged as potential facilitators of entrepreneurial opportunity development and enactment, as is evident in the conceptual models of vanevenhoven et al. (2011) and goldsby et al. (2017), relating to entrepreneurial bricolage and design-centred entrepreneurship, respectively. however, the models merely offer a theoretical account of these constructs but fail to integrate the concepts into a comprehensive framework for opportunity development. even though vanevenhoven et al. (2011) describe bricolage as a process of adaptive design, the authors omit central design thinking elements. likewise, the conceptual model proposed by goldsby et al. (2017) assimilates the principles of design thinking as integral to its process yet excludes entrepreneurial bricolage as a possible value-add. literature lacks evidence in support of the amalgamation of these theoretical frameworks, and consequently the following research question was developed to explore the potential to combine the conceptual frameworks proposed by vanevenhoven et al. (2011) and goldsby et al. (2017) into a more comprehensive and practical structure for entrepreneurial opportunity development. rq 3: considering the prevalence of entrepreneurial bricolage and design thinking in opportunity development processes, can the frameworks be amalgamated to propose a comprehensive and practical structure for entrepreneurial opportunity development? research methods and design research design the conceptual models put forward by vanevenhoven et al. (2011) and goldsby et al. (2017), relating to entrepreneurial bricolage and design-centred entrepreneurship, respectively, required supplementary exploration for integration into a comprehensive framework for opportunity development. therefore, an exploratory design was considered appropriate (carlgren et al. 2016). this study required reflective perceptions, opinions and approaches collected through sampled communications with entrepreneurs; therefore, a qualitative approach was followed (mcmanus et al. 2017). a mono-methodological, qualitative approach was used to gain an enhanced understanding of the practical implications involved in entrepreneurial opportunity development (kaivo-oja 2015). the research involved an in-depth understanding of entrepreneurs in their natural setting to permit a more extensive enquiry of the bricolage and design constructs and their facilitation in the entrepreneurial process (chowdhury 2014). the entrepreneurial process is a multifarious social construct that needs diverse viewpoints and methods in its research approach. an interpretive approach was used as a meaningful assessment of respondents’ opinions and reflections (leitch, hill & harrison 2010). the approach allowed the researchers to apprehend the differences among individual entrepreneurs as social protagonists and accentuated the significance of individual characteristics in a social setting (chowdhury 2014; saunders & lewis 2012). the researchers considered the effectiveness and contributory constituents of entrepreneurial bricolage and design thinking in entrepreneurial opportunity detection, development and formation and investigated how they are revealed considering the context in which they transpire (chowdhury 2014). sampling non-probability sampling was applied because of the inaccessibility of a comprehensive population list. accordingly, the likelihood of selecting a particular participant was not known (saunders & lewis 2012). a purposive sampling technique was employed. the selected participants were either founders or cofounders of small and medium entrepreneurial ventures in various south african industry sectors. they were nominated for their specific virtues, knowledge and experiences and were therefore conversant with the subject matter, allowing relevant and meaningful data collection (etikan, musa & alkassim 2016). because it was a qualitative study, the sample of 14 individual entrepreneurs was small (see table 2 for their details). in qualitative research, the sample size is circumstantial, and even though the number of semi-structured interviews was premeditated, the conclusive determinant was data saturation (etikan et al. 2016), which occurs when further data gathering delivers limited or no additional insights or themes (boddy 2016). in this study, data saturation was attained after the 13th interview. it was followed by one additional interview before the data collection process was concluded. table 2: details of the participants. data collection fourteen semi-structured, open-ended, in-depth, face-to-face interviews were conducted (saunders & lewis 2012). open-ended questions were followed by targeted questions relating to the initial coding categories derived from the literature reviewed, which supported the qualitative deductive approach (hsieh & shannon 2005). two pilot interviews were conducted to evaluate the interview procedure and ensured that the questions were comprehensible and congruent to the research questions and objectives (saunders & lewis 2012). the piloted discussions were satisfactory and were consequently included in the final research sample. electronic correspondence was used to request the members of the sample to participate in the interviews, to introduce the researchers and provide details about the purpose of the research and how the collected data would be used. an interview guide (appendix 1) was compiled to enable a more focused discussion and included initial questions and predetermined themes from pertinent literature, focusing on the theoretical models of vanevenhoven et al. (2011) and goldsby et al. (2017). the predetermined themes and questions merely served as a guideline, and questions could be altered or rearranged (park & park 2016). interviewees were requested to discuss eight questions, some open-ended and some probing, after which they could add comments. they were encouraged to share their views freely and to respond to the questions from personal knowledge, perceptions and experiences. table 3 maps the interview questions against the relevant research questions. table 3: research question and interview question mapping. the time taken to complete each interview ranged from 20 min to 1 h and 15 min, with the average interview lasting around 50 min. with the permission of each participant, the interviews were recorded using a voice-recording device, and detailed notes were taken. data analysis the detailed notes and transcribed interview recordings were constantly scrutinised to pursue preliminary insights and recognise data saturation. data were analysed using specialist qualitative data analysis software, based on both open and axial coding. the directed approach informed the variables of interest for the study and the initial coding categories. these categories were applied to the individual transcriptions, and new codes and categories were created for the text that could not be categorised by the initial coding (hsieh & shannon 2005). after scrutiny, some new coding categories were observed separately, and some were incorporated with the initial constructs identified, after which the combined coding categories were collated into preliminary research themes (braun & clarke 2006). both descriptive data and frequency codes were used to refine the preliminary themes and to confirm the relevant findings; these resonate with previous research outcomes (braun & clarke 2006; elo & kyngäs 2008). the thematic analysis identified, examined and reported patterns that emerged from the data collected and presented significant ideas, thoughts and constructs related to the research questions and thus supported the narrative for the research conducted (braun & clarke 2006; saunders & lewis 2012). trustworthiness semi-structured interviews present challenges regarding data reliability, forms of bias and the validity of the data collected (saunders & lewis 2012). reliability the open-ended questions utilised were flexible and could convey inconsistent results, should the study be repeated. this drawback was mitigated by the informed or directed approach to the interview process, which made it more homogenous. bias the use of the theoretical models proposed by vanevenhoven et al. (2011) and goldsby et al. (2017), which informed the directed approach, could cause confirmation bias (hsieh & shannon 2005). however, this possibility was moderated by the inclusion of open-ended questions. as probing questions potentially guide the answers provided by participants to some extent (hsieh & shannon 2005), the researchers made a concerted effort to preserve unrestricted feedback from participants. the range of diverse themes that were uncovered and recorded is evident of an unbiased interview process that was followed. validity validity refers to the degree to which the collection technique accurately measures what it is proposed to measure and whether the conclusions made correlate with the research questions (saunders & lewis 2012) was augmented with the use of a consistency matrix. to further mitigate the challenges mentioned, the researchers scrutinised the groundwork and the management and recording of results during every research phase. researchers also ensured that requests by respondents were clarified, responses were investigated and topics were discussed from multiple viewpoints (elo et al. 2014; leitch et al. 2010). finally, to enhance the value and rigour of the research findings, this article specifies the limitations of the study and the realistic expectations if it is replicated. ethical considerations ethical clearance to conduct this study was obtained from the gordon institute of business science university of pretoria research ethics committee before collecting data from the participants. they were informed of the voluntary nature of participation and were assured that the information collected would be reported without individual identifiers. participants signed research consent forms before the interviews commenced. findings the research conducted helped to attain the relevant research objectives and responses to the research questions posed. table 4 lists the constructs derived from the literature, and this research study defines them and indicates their relevance to entrepreneurial bricolage, design thinking and design-centred entrepreneurship. the frequency with which each construct was mentioned in the interviews is displayed in descending order. table 4: a summary of findings. from the 14 interviews, 189 sub-constructs were derived that were categorised into eight main constructs (see table 4). the ‘x’ in table 4 denotes the overlap of constructs under the themes during responses. constructs (such as innovation and creativity) and subsequent themes overlap in nature, for example, if a respondent commented on innovation as an enhancing factor for entrepreneurial bricolage and how it increases design thinking this construct’s frequency would be denoted as ‘one’ but would be categorised under both themes, namely ‘entrepreneurial bricolage’ and ‘design thinking’ and is disclosed with the ‘x’ in the relevant column. research question 1: what is the influence of entrepreneurial bricolage on the entrepreneurial opportunity development process? entrepreneurial bricolage was found to have a significant influence in the development and establishment of entrepreneurial opportunity development. its prominence in both the internal and external environment (or internal and external bricolage) is shown in table 4 by the substantial number of references to these particular constructs. however, the constructs were found to either support or hinder the entrepreneurial process, depending on the variables considered. internal environment vanevenhoven et al. (2011) documented and discussed a list of internal predicates (such as prior knowledge of markets, customer problems, life experiences and educational attainments); however, expanding on this theoretical proposition, organisational culture and the value of partners was found to be imperative catalysts for opportunity development in this study. these constructs were consequently added as additions to the internal bricolage constructs and extend the conceptual model put forward by vanevenhoven et al. (2011). the participants responded to the question on the importance of internal bricolage and alluded to organisational culture as follows: ‘i have got two manufacturing staff that are very vested in my business. i am very open and transparent with them with financials and stuff, so they understand where we are. we have frank discussions about what the future of the business is and, very surprisingly, they have been unbelievably creative.’ (participant 1, male, postgraduate qualification) ‘if people don’t feel appreciated and they don’t feel like they are adding value, then they are just not going to participate. but you find that a lot of them become advocates in their different organisations and they find a lot of opportunities for us, so it’s very important.’ (participant 12, male, postgraduate qualification) participants responded to the question on the importance of internal bricolage and alluded to having a partner or partners, which they considered as aiding in the development of opportunities as follows: ‘obviously, the constraints are more emotional, the fear of starting, but i think that a good … help to start is having a good business partner … never underestimate the importance of a business partner and not just any business partner, but one that’s different to you and can see your blind spots and vice versa.’ (participant 5, male, postgraduate qualification) ‘we are quite different in our approaches to problems and the way we run a business and all of that, but luckily it counted in our favour because what was lacking on my side he can make up for and vice versa.’ (participant 9, male, undergraduate qualification) ‘well, the three of us that started … get along really, really well … i think it has been more valuable than anything else.’ (participant 14, male, postgraduate qualification) external environment the frequency with which external bricolage was mentioned accentuated its significant influence on opportunity development. capital constraints and technological stimuli were the most prominent variables to enable opportunity creation and establishment. capital constraints sometimes induced entrepreneurial opportunity development, rather than hindering it. the lack of capital and consequent inability to appoint adequate staff obliged entrepreneurs to assume multiple roles within the organisation. this allowed them to gain in-depth knowledge of the business offerings and processes, enabling them to better detect potential opportunities and to enhance offerings. some of the responses are as follows: ‘i don’t believe that you can build a business and, from the get-go, hire people to do a job. you need to know what that job is before you can make it most efficient … financial constraints make you thrifty, and that means that you figure it out; you don’t just throw money at problems, and so you learn lessons and you do things smarter.’ (participant 1, male, postgraduate qualification) ‘i would not have gotten to know all the steps in the business and all the processes and the products in as much detail.’ (participant 11, male, undergraduate qualification) various participants noticed that a greater ability to access capital would have advanced opportunity development and enactment: ‘… employing the right people from the start … having people to do new business development…’ (participant 10, female, undergraduate qualification) ‘if funding was not an issue, i would have employed at least ten people and i would have been international by the third year. i would have run international operations by then.’ (participant 3, male, undergraduate qualification) ‘we probably would have developed the brand a lot quicker … and we definitely would have taken on the international market far quicker if we had capital, which we didn’t.’ (participant 8, male, postgraduate qualification) technology: access to technological utilities amplified the creation of new offerings or ventures and their consequent success: ‘so those sort of are opportunities. especially with tech you can do anything, you can build anything.’ (participant 5, male, postgraduate qualification) ‘i am also relatively technical. i mean, i played the role of cio at a large insurance company so i had a good background in that space. i knew what the technology could or couldn’t do. we are trying to come up with creative ideas of how to solve problems for customers using technology in ways that haven’t happened in the market.’ (participant 8, male, postgraduate qualification) the importance of social media was highlighted by several other participants: ‘you know you sometimes see trends also on social media … and you realise, well, there’s another gap in the market.’ (participant 7, female, postgraduate qualification) ‘you have got to use all the platforms you can on social media and online.’ (participant 9, male, undergraduate qualification) research question 2: what is the influence of design thinking on the entrepreneurial opportunity development process? the human-centred approach, which underpins the design thinking process, was among the top five constructs in the frequency table and included references to customer education, emotion, feedback, focus, relationships and understanding. creativity and innovation were at the forefront of recognising opportunities. also, among the top five, this construct is perhaps best explained by the following remarks: ‘creativity is very, very important because you can’t see past the problem if you can’t see the opportunities.’ (participant 2, female, postgraduate qualification) ‘any start-up, for that matter, has to be creative about how they think about who they are, how they position themselves and how they are going to say it differently.’ (participant 5, male, postgraduate qualification) ‘i think, if you are creative, you are resourceful. you can do a lot with the little that you have. yes, and creativity feeds on itself. so, the more creative you are, the more creative you become, the more ideas you think of. it’s not a stagnant thing.’ (participant 7, female, postgraduate qualification) the research confirmed the utility of the design thinking approach. however, it indicated flaws in the practicality of prototyping in particular instances and in the systematic approach proposed in the literature reviewed. the flaws in the idea of prototyping some entrepreneurs were able to create a minimum viable product for customers to test and provide feedback, yet this ability was closely associated with the type of offering under consideration and, especially, the product’s packaging. the ‘look and feel’ of the item sometimes played a significant role in customers’ perception of its value, communicating its purpose, what the brand stood for and what it meant to the customers. in these instances, the practicality of producing a minimum viable product was not realistic. this restricted the iterative nature of the design thinking phases of prototyping, market engagement and ideation and sometimes led to offerings that did not appeal to their intended market. flaws in the idea of a systematic approach the process of creating, discovering and exploiting opportunities was found to be a non-linear and somewhat disordered practice, rather than the methodical approach advocated by the design thinking literature and the design-centred entrepreneurship process offered by goldsby et al. (2017). the following comments reveal the entrepreneurs’ deviating and abstract process of creating opportunities and planning venture activities: ‘anyway, we were building the plane as we jumped out … so you kind of just do it as you go … you consider as much as you can.’ (participant 1, male, postgraduate qualification) ‘so we went into this thing quite blinded. we established a need; we spoke to a few people.’ (participant 4, female, grade 12 qualification) ‘fairly unscientifically. i have run a big organisation. you basically take the collective insights that you have got over time, and you apply your intuition.’ (participant 8, male, postgraduate qualification) the interviewees had the same sentiments about formulating a business model and plan (ranked fifth in the frequency table): ‘it’s trial and error, hey. so we – funny enough, we are only drafting our first business plan now, a year into the business.’ (participant 12, male, postgraduate qualification) ‘starting out, we didn’t think of that. we had an idea of – we obviously had a very clear idea of what we wanted this product to be in the south african and international context, but we haven’t physically thought about what the organisation would look like to make that happen. it’s something that we have only recently started to consider and define, actually.’ (participant 14, male, postgraduate qualification) research question 3: considering the prevalence of entrepreneurial bricolage and design thinking in opportunity development processes, can the frameworks be amalgamated to propose a comprehensive and practical structure for entrepreneurial opportunity development? the intersecting constructs in entrepreneurial bricolage and design-centred entrepreneurship shown in table 4 affirmed the proposal to converge the two theoretical models suggested by vanevenhoven et al. (2011) and goldsby et al. (2017). the research findings established that these processes are interrelated and, in some instances, inseparable. however, particular aspects and phases of the design-centred entrepreneurship process supported by goldsby et al. (2017) required modification to address the practicality of prototyping, and the inclusion of business modelling as a definitive stage following the ideation, prototyping and market engagement phases. the enhanced framework depicted in figure 3 integrates the processes of entrepreneurial bricolage and design-centred entrepreneurship. it demonstrates the mutual reliance of these processes and their role in developing and enacting entrepreneurial opportunities. figure 3: entrepreneurial opportunity establishment: an integrated bricolage and design perspective. the integrated framework illustrates the dynamic and iterative approach of the entrepreneurial opportunity development process, supported by the conceptual models offered by vanevenhoven et al. (2011) and goldsby et al. (2017). a summary of the interactions between the constructs in the integrated model follows: bricolage proficiencies initiate the process and have a continuing effect on the various opportunity development and exploitation phases (vanevenhoven et al. 2011). the framework accentuates the significance of the human-centred approach (carlgren et al. 2016; kimbell 2009; prud’homme van reine 2017) in pursuing an enriched understanding of market trends, deficiencies of current business practices and difficulties experienced by customers. the integrated framework supports the uncovering and selection of potential solutions (bucktowar et al. 2015; liedtka 2015) and assists in testing and implementing ideas (johansson-sköldberg et al. 2013; seidel & fixson 2013). the testing and implementation stages are merged into a single development phase because the prototyping is dependent on the type of product on offer. the business modelling process is an evolving endeavour because entrepreneurs refine initial business plans, processes and value propositions according to the knowledge and learning accumulated throughout the entrepreneurial opportunity process. conclusion summary of findings and theoretical implications this study explored the influence of entrepreneurial bricolage and design thinking on entrepreneurial opportunity development, using the design-centred entrepreneurship perspective offered by goldsby et al. (2017) and the conceptual framework proposed by vanevenhoven et al. (2011). as a result of the exploratory nature of this study, important enhancements to the current theoretical frameworks were uncovered. although the researchers did not intend to explore enhancements to the current theoretical frameworks, enhancements transpired from interviews with entrepreneurs. these enhancements are therefore reported to enrich literature although these were not deliberately explored through initial research questions in this study. entrepreneurial bricolage entrepreneurial bricolage was found to have a significant influence on developing and establishing entrepreneurial opportunities. the existing external variables of capital and technology displayed both progressive and delimiting properties, and business partners and organisational culture were added as internal variables to enhance the proposed conceptual frameworks. some respondents reported that capital constraints steered them to assume multiple roles in the process, leading to an enriched understanding of the offering, industry and market that enabled them to realise opportunities. other respondents reported that a lack of capital constrained their ability to attain opportunities, especially international expansion. nonetheless, capital deficiencies played a significant role. technological stimuli were among the most prominent external variables in enabling and establishing opportunities and amplifying the creation of new offerings or ventures. respondents valued the contributions of business partners, and their competencies were found to be deeply integrated into the internal processes required to develop and establish opportunities, whereas vanevenhoven et al. (2011) viewed partnerships as part of the external environment. respondents gave prominence to integrating an advantageous organisational culture from the start, but organisational culture was omitted from the bricolage process described by vanevenhoven et al. (2011). design thinking overall, the value of design thinking in the entrepreneurial opportunity development process was confirmed, with a specific focus on the human-centred approach and an emphasis on creativity and innovation. however, respondents found the practicality of prototyping to be limited for some products, and their design process was non-linear and somewhat disordered, rather than the methodical approach advocated by goldsby et al. (2017) and other design thinking authors. integrating bricolage and design thinking the final research question confirmed the integrative potential of the two theoretical models suggested by vanevenhoven et al. (2011) and goldsby et al. (2017) and, as a result, proposed an enhanced framework that converges these models. contribution the study contributed to the prevailing understanding of entrepreneurial opportunity development and enactment: firstly, it examined the conceptual models proposed by vanevenhoven et al. (2011) and goldsby et al. (2017). this study provides evidence in support of the application of these conceptual frameworks in understanding the entrepreneurial opportunity development process. in addition to exploring these frameworks from an empirical perspective, this study uncovered enhancements to these frameworks. lastly, this study offers an integrated framework in which entrepreneurial bricolage and design thinking are synthesised to better encompass the intricate process of entrepreneurial opportunity development. managerial implications the insights provided could help current and prospective entrepreneurs or owners of small and medium-sized enterprises (smes) understand how opportunities are created and enacted in an environment characterised by rapid decision-making, fluctuating markets and multiple resource constraints. the enhanced understanding could facilitate new ventures, novel offerings, organisational competitiveness and commercial sustainability. limitations of this study and suggestions for future research the limitations observed here could provide areas for future research: (1) the population was defined as entrepreneurs within south africa, thus limiting the relevance to different environments or countries. similar studies conducted in diverse environments may be particularly useful; (2) the new framework could be tested in a different contextual setting or a larger population to determine its generalisability and usefulness. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions all authors contributed equally to the development of the study, drafting, editing and submission of the manuscript. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data are available upon request from the corresponding author, c.m. joynt. it is held securely in the repository of the university and is only accessible by the researchers involved in the study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references agarwal, n., bhatti, y.a. & levänen, j., 2021, ‘linking frugal innovation to frugal entrepreneurship through effectuation, causation, and bricolage’, academy of management proceedings 2021(1), 11386. https://doi.org/10.5465/ambpp.2021.11386abstract alvarez, s.a. & barney, j.b., 2014, ‘entrepreneurial opportunities and poverty alleviation’, entrepreneurship theory and practice 38(1), 159–184. https://doi.org/10.1111/etap.12078 angulo-guerrero, m.j., pérez-moreno, s. & abad-guerrero, i.m., 2017, ‘how economic freedom affects opportunity and necessity entrepreneurship in the oecd countries’, journal of business research 73(c), 30–37. https://doi.org/10.1016/j.jbusres.2016.11.017 beltagui, a., sesis, a. & stylos, n., 2021, ‘a bricolage perspective on democratising innovation: the case of 3d printing in makerspaces’, technological forecasting and social change 163, 120453. https://doi.org/10.1016/j.techfore.2020.120453 bjørnskov, c. & foss, n.j., 2016, ‘institutions, entrepreneurship, and economic growth: what do we know and what do we still need to know?’, academy of management perspectives 30(3), 292–315. https://doi.org/10.5465/amp.2015.0135 boddy, c.r., 2016, ‘sample size for qualitative research’, qualitative market research: an international journal 19(4), 426–432. https://doi.org/10.1108/qmr-06-2016-0053 braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa brown, t., 2008, ‘design thinking’, harvard business review, viewed 15 august 2022 from https://web-s-ebscohost-com.uplib.idm.oclc.org/ehost/pdfviewer/pdfviewer?vid=1&sid=d9ce744e-b650-42f7-a3ba-60384bb1d09b%40redis. bucktowar, r., kocak, a. & padachi, k., 2015, ‘entrepreneurial orientation, market orientation and networking: impact on innovation and firm performance’, journal of developmental entrepreneurship 20(4), 1550024. https://doi.org/10.1142/s1084946715500247 butt, s.a., bowra, z.a. & chaudhry, n.i., 2021, ‘investigating the predictors and outcomes of entrepreneurial bricolage’, review of economics and development studies 7(3), 343–356. https://doi.org/10.47067/reads.v7i3.370 carland, j.c., carland, j.w. & stewart, w.h., 1996, ‘seeing what’s not there: the enigma of entrepreneurship’, journal of small business strategy 7(1), 1–20. carlgren, l., rauth, i. & elmquist, m., 2016, ‘framing design thinking: the concept in idea and enactment’, creativity and innovation management 25(1), 38–57. https://doi.org/10.1111/caim.12153 cash, p.j., 2018, ‘developing theory-driven design research’, design studies 56, 84–119. https://doi.org/10.1016/j.destud.2018.03.002 chen, y.w. & fan, h.l., 2015, ‘creative self-efficacy and innovation speed of new ventures: the mediating role of entrepreneurial bricolage’, world academy of science, engineering and technology, international journal of social, behavioral, educational, economic, business and industrial engineering 9(7), 2369–2372. chowdhury, m.f., 2014, ‘interpretivism in aiding our understanding of the contemporary social world’, open journal of philosophy 4(3), 432. https://doi.org/10.4236/ojpp.2014.43047 claudhary, t.k. & trzcieliński, s., 2021, ‘agile enterprise and opportunity recognition in smes: a concise bibliometric analysis’, european research studies 24(5), 48–63. https://doi.org/10.35808/ersj/2703 de klerk, s., 2015, ‘the creative industries: an entrepreneurial bricolage perspective’, management decision 53(4), 828–842. https://doi.org/10.1108/md-03-2014-0169 dorst, k., 2006, ‘design problems and design paradoxes’, design issues 22(3), 4–17. https://doi.org/10.1162/desi.2006.22.3.4 do vale, g., collin-lachaud, i. & lecocq, x., 2021, ‘micro-level practices of bricolage during business model innovation process: the case of digital transformation towards omni-channel retailing’, scandinavian journal of management 37(2), 101154. https://doi.org/10.1016/j.scaman.2021.101154 du, k. & o’connor, a., 2018, ‘entrepreneurship and advancing national level economic efficiency’, small business economics 50(1), 91–111. https://doi.org/10.1007/s11187-017-9904-4 elo, s., kääriäinen, m., kanste, o., pölkki, t., utriainen, k. & kyngäs, h., 2014, ‘qualitative content analysis: a focus on trustworthiness’, sage open 4(1), 2158244014522633. https://doi.org/10.1177/2158244014522633 elo, s. & kyngäs, h., 2008, ‘the qualitative content analysis process’, journal of advanced nursing 62(1), 107–115. https://doi.org/10.1111/j.1365-2648.2007.04569.x etikan, i., musa, s.a. & alkassim, r.s., 2016, ‘comparison of convenience sampling and purposive sampling’, american journal of theoretical and applied statistics 5(1), 1–4. https://doi.org/10.11648/j.ajtas.20160501.11 fayolle, a., landstrom, h., gartner, w.b. & berglund, k., 2016, ‘the institutionalization of entrepreneurship: questioning the status quo and re-gaining hope for entrepreneurship research’, entrepreneurship and regional development 28(7–8), 477–486. https://doi.org/10.1080/08985626.2016.1221227 fisher, g., 2012, ‘effectuation, causation, and bricolage: a behavioral comparison of emerging theories in entrepreneurship research’, entrepreneurship theory and practice 36(5), 1019–1051. https://doi.org/10.1111/j.1540-6520.2012.00537.x frow, p., nenonen, s., payne, a. & storbacka, k., 2015, ‘managing co-creation design: a strategic approach to innovation’, british journal of management 26(3), 463–483. https://doi.org/10.1111/1467-8551.12087 galindo, m.á. & méndez, m.t., 2014, ‘entrepreneurship, economic growth, and innovation: are feedback effects at work?’, journal of business research 67(5), 825–829. https://doi.org/10.1016/j.jbusres.2013.11.052 goldsby, m.g., kuratko, d.f., marvel, m.r. & nelson, t., 2017, ‘design-centered entrepreneurship: a four stage iterative process for opportunity development’, journal of small business and entrepreneurship 29(6), 477–490. https://doi.org/10.1080/08276331.2017.1377396 greer, c.r. & lei, d., 2012, ‘collaborative innovation with customers: a review of the literature and suggestions for future research’, international journal of management reviews 14(1), 63–84. https://doi.org/10.1111/j.1468-2370.2011.00310.x herrington, m. & kew, p., 2018, is there a change in attitude towards the small and medium business sector south africa 2017/18, pp. 1–84, global entrepreneurship monitor, cape town, south africa. hsieh, h.f. & shannon, s.e., 2005, ‘three approaches to qualitative content analysis’, qualitative health research 15(9), 1277–1288. https://doi.org/10.1177/1049732305276687 iqbal, q., ahmad, n.h. & halim, h.a., 2021, ‘insights on entrepreneurial bricolage and frugal innovation for sustainable performance’, business strategy & development 4(3), 237–245. https://doi.org/10.1002/bsd2.147 jarvis, l.c., 2016, ‘identification, intentions and entrepreneurial opportunities: an integrative process model’, international journal of entrepreneurial behavior and research 22(2), 182–198. https://doi.org/10.1108/ijebr-02-2015-0041 johansson-sköldberg, u., woodilla, j. & çetinkaya, m., 2013, ‘design thinking: past, present and possible futures’, creativity and innovation management 22(2), 121–146. https://doi.org/10.1111/caim.12023 joyce, a. & paquin, r.l., 2016, ‘the triple layered business model canvas: a tool to design more sustainable business models’, journal of cleaner production 135, 1474–1486. https://doi.org/10.1016/j.jclepro.2016.06.067 kaivo-oja, j., 2015, towards better participatory foresight processes-linking participatory foresight research to the methodological machinery of qualitative research and phenomenology, finland futures research centre, turku school of economics, university of turku. kamara, s., arslan, a., kontkanen, m. & tarba, s.y., 2022, ‘a bricolage perspective on construction innovation in a bop market: evidence from a finnish family-owned micro-enterprise’, in d. dikovo & e. ipsmiller (eds.), research handbook on innovation in international business, pp. 206–218, edward elgar publishing, cheltenham, uk. kimbell, l., 2009, ‘design practices in design thinking’, european academy of management 5, 1–24. klein, p.g., 2008, ‘opportunity discovery, entrepreneurial action, and economic organization’, strategic entrepreneurship journal 2(3), 175–190. https://doi.org/10.1002/sej.50 klenner, n.f., gemser, g. & karpen, i.o., 2022, ‘entrepreneurial ways of designing and designerly ways of entrepreneuring: exploring the relationship between design thinking and effectuation theory’, journal of product innovation management 39(1), 66–94. https://doi.org/10.1111/jpim.12587 kolko, j., 2015, ‘design thinking comes of age’, harvard business review 1–7, viewed 7 july 2022 from https://cdn.fedweb.org/fed-42/2892/design_thinking_comes_of_age.pdf. lans, t., blok, v. & wesselink, r., 2014, ‘learning apart and together: towards an integrated competence framework for sustainable entrepreneurship in higher education’, journal of cleaner production 62, 37–47. https://doi.org/10.1016/j.jclepro.2013.03.036 leitch, c.m., hill, f.m. & harrison, r.t., 2010, ‘the philosophy and practice of interpretivist research in entrepreneurship: quality, validation, and trust’, organizational research methods 13(1), 67–84. https://doi.org/10.1177/1094428109339839 liedtka, j., 2015, ‘perspective: linking design thinking with innovation outcomes through cognitive bias reduction’, journal of product innovation management 32(6), 925–938. https://doi.org/10.1111/jpim.12163 lim, w., lee, y. & al mamun, a., 2021, ‘delineating competency and opportunity recognition in the entrepreneurial intention analysis framework’, journal of entrepreneurship in emerging economies 15(1), 212–232. https://doi.org/10.1108/jeee-02-2021-0080 linke, r., 2017, ‘design thinking, explained’, ideas made to matter, viewed 10 october 2022, from http://mitsloan.mit.edu/newsroom/articles/design-thinking-explained/?utm_source=mitsloantwitter. luchs, m.g., swan, k.s. & creusen, m.e., 2016, ‘perspective: a review of marketing research on product design with directions for future research’, journal of product innovation management 33(3), 320–341. https://doi.org/10.1111/jpim.12276 malecki, e.j. & spigel, b., 2017, ‘innovation and entrepreneurship’, in h. bathelt, p. cohendet, s. henn & l. simon (eds.), elgar companion to innovation and knowledge creation, pp. 625–637, edward elgar publishing, northampton, ma. mcmanus, p., mulhall, s., ragab, m. & arisha, a., 2017, ‘an investigation in the methodological approaches used in doctoral business research in ireland’, paper presented at ecrm 2017 16th european conference on research methods in business and management studies, dublin, academic conferences and publishing, june 22–23. mickiewicz, t. & kaasa, a., 2022, ‘creativity and security as a cultural recipe for entrepreneurship’, journal of institutional economics 18(1), 119–137. https://doi.org/10.1017/s1744137420000533 mishra, o., 2021, ‘design thinking and bricolage for frugal innovations during crisis’, journal of innovation management 9(3), 1–26. https://doi.org/10.24840/2183-0606_009.003_0002 nambisan, s., lyytinen, k., majchrzak, a. & song, m., 2017, ‘digital innovation management: reinventing innovation management research in a digital world’, mis quarterly 41(1), 223–238. https://doi.org/10.25300/misq/2017/41:1.03 nieman, g. & nieuwenhuizen, c., 2014, entrepreneurship: a south african perspective, van schaik, pretoria. ošenieks, j. & babauska, s., 2014, ‘the relevance of innovation management as prerequisite for durable existence of small and medium enterprises’, procedia – social and behavioral sciences 110, 82–92. https://doi.org/10.1016/j.sbspro.2013.12.850 oyson, m.j. & whittaker, h., 2015, ‘entrepreneurial cognition and behavior in the discovery and creation of international opportunities’, journal of international entrepreneurship 13(3), 303–336. https://doi.org/10.1007/s10843-015-0156-6 park, b.j.r., srivastava, m.k. & gnyawali, d.r., 2014, ‘walking the tight rope of coopetition: impact of competition and cooperation intensities and balance on firm innovation performance’, industrial marketing management 43(2), 210–221. https://doi.org/10.1016/j.indmarman.2013.11.003 park, j. & park, m., 2016, ‘qualitative versus quantitative research methods: discovery or justification?’, journal of marketing thought 3(1), 1–8. perry-smith, j.e. & mannucci, p.v., 2017, ‘from creativity to innovation: the social network drivers of the four phases of the idea journey’, academy of management review 42(1), 53–79. https://doi.org/10.5465/amr.2014.0462 prud’homme van reine, p., 2017, ‘the culture of design thinking for innovation’, journal of innovation management 5(2), 56–80. https://doi.org/10.24840/2183-0606_005.002_0006 ramoglou, s. & zyglidopoulos, s.c., 2015, ‘the constructivist view of entrepreneurial opportunities: a critical analysis’, small business economics 44(1), 71–78. https://doi.org/10.1007/s11187-014-9590-4 ratnayake, c., 2022, ‘entrepreneurial resource bricolage and social innovation: moderating effect of entrepreneurial alertness’, journal on innovation and sustainability risus 13(2), 92–110. https://doi.org/10.23925/2179-3565.2022v13i2p92-110 rönkkö, m., peltonen, j. & arenius, p., 2014, ‘selective or parallel? toward measuring the domains of entrepreneurial bricolage’, in a.c. corbett & j.a. katz (eds.), entrepreneurial resourcefulness: competing with constraints, advances in entrepreneurship, firm emergence and growth, vol. 15, pp. 43–61, emerald group publishing limited, bingley. rosa, a.c.m., rosa, a.m., das neves, j.m.s., souza, c.p. & dos santos, b.r.o.b., 2021, ‘innovative entrepreneur and creativity: a bibliometric analysis’, global scientific journals 9(3):449–460. saunders, m. & lewis, p., 2012, doing research in business and management, pearson, harlow. seidel, v.p. & fixson, s.k., 2013, ‘adopting design thinking in novice multidisciplinary teams: the application and limits of design methods and reflexive practices’, journal of product innovation management 30(suppl. 1), 19–33. https://doi.org/10.1111/jpim.12061 simba, a., ojong, n. & kuk, g., 2021, ‘bricolage and mses in emerging economies’, the international journal of entrepreneurship and innovation 22(2), 112–123. https://doi.org/10.1177/1465750320969621 simón-moya, v., revuelto-taboada, l. & guerrero, r.f., 2014, ‘institutional and economic drivers of entrepreneurship: an international perspective’, journal of business research 67(5), 715–721. https://doi.org/10.1016/j.jbusres.2013.11.033 stuetzer, m., audretsch, d.b., obschonka, m., gosling, s.d., rentfrow, p.j. & potter, j., 2018, ‘entrepreneurship culture, knowledge spillovers and the growth of regions’, regional studies 52(5), 608–618. https://doi.org/10.1080/00343404.2017.1294251 toma, s.-g., grigore, a.-m. & marinescu, p., 2014, ‘economic development and entrepreneurship’, procedia economics and finance 8, 436–443. https://doi.org/10.1016/s2212-5671(14)00111-7 vanevenhoven, j., winkel, d., malewicki, d., dougan, w.l. & bronson, j., 2011, ‘varieties of bricolage and the process of entrepreneurship’, new england journal of entrepreneurship 14(2), 53–66. https://doi.org/10.1108/neje-14-02-2011-b005 van vuuren, j. & alemayehu, b.z., 2018, ‘the role of entrepreneurship in transforming efficiency economies into innovation-based economies’, the southern african journal of entrepreneurship and small business management 10(1), 1–12. https://doi.org/10.4102/sajesbm.v10i1.140 welter, c., mauer, r. & wuebker, r.j., 2016, ‘bridging behavioral models and theoretical concepts: effectuation and bricolage in the opportunity creation framework’, strategic entrepreneurship journal 10(1), 5–20. https://doi.org/10.1002/sej.1215 witell, l., gebauer, h., jaakkola, e., hammedi, w., patricio, l. & perks, h., 2017, ‘a bricolage perspective on service innovation’, journal of business research 79, 290–298. https://doi.org/10.1016/j.jbusres.2017.03.021 zoo, h., de vries, h.j. & lee, h., 2017, ‘interplay of innovation and standardization: exploring the relevance in developing countries’, technological forecasting and social change 118, 334–348. https://doi.org/10.1016/j.techfore.2017.02.033 zott, c., amit, r. & massa, l., 2011, ‘the business model: recent developments and future research’, journal of management 37(4), 1019–1042. https://doi.org/10.1177/0149206311406265 appendix 1: interview guideline discussion guide and interview questions organisation:  start time: date:      end time: thank you for taking the time to meet with me today, your contribution to this research is much appreciated. this research aims to determine whether entrepreneurial bricolage and design thinking may be considered as facilitators to entrepreneurial opportunity development. information obtained in this interview will be treated as confidential, and as such, i would like to encourage you to share your views freely. before we commence with the interview, i would like to request to make use of a recording device. may i also request that a consent form is signed? demographical information: please indicate your age group and gender. what are your current qualifications? what position or role do you fulfil in the organisation? please describe your start-up phase. prompt 1: when did your business start (registration date)? prompt 2: when did you activate your first paying client? prompt 3: elaborate on any constraints faced in starting your business. kindly explain your start-up structure. prompt 1: are you the sole founder or part of an entrepreneurial team (please explain the structure of such a team)? prompt 2: do you have employees (if yes, how many)? prompt 3: what was your start-up costs? please clarify the nature of your business and the relevant industry. question 1: ideation and market engagement 1.1 kindly define your business offering. prompt 1: do you consider your business offering to be novel and distinctive compared with products or services delivered by competitors? 1.2 how did you formulate your idea or concept? prompt 1: was the idea formulated because of perceived consumer difficulties? prompt 2: how did/do you uncover consumer wants and needs? (proof of concept – desirability). prompt 3: have you considered to collaborate with customers or business partners? why or why not? question 2: prototyping 2.1 please explain the aspects considered in determining the feasibility of your business offering. prompt 1: how do you transform abstract ideas into feasible business offerings? prompt 2: how do you determine market feasibility? prompt 3: how do you determine technical feasibility? (proof of concept – feasibility). prompt 4: kindly explain if any form of prototyping was used and if so please describe the nature of prototypes utilised. 2.2 how did you experience the resource acquisition process? prompt 1: which resources were required to aid in the transformation process and are these easily attainable? question 3: business modelling 3.1 elaborate on your organisation’s value proposition. prompt 1: how did you determine your venture’s value proposition? prompt 2: how is value created and captured? (proof of concept – viability). 3.2 did/do you expect profitability in the short, medium and long-term? prompt 1: how did you determine potential profits for the organisation? 3.3 which elements were considered in determining how the organisation will ‘do business’? prompt 1: did you consider elements such as business activities and partners, resources necessary, cost structures, customer segments and relations, value propositions, sales channels and revenue streams? why or why not? prompt 2: which of these elements do you consider to be most important? why do you consider these to be significant? question 4: bricolage in general 4.1 discuss your opportunity finding process. prompt 1: how did you discover your current or prospective business opportunity? 4.2 how did you convert the opportunity into an established venture? prompt 1: did creativity play a role? how? prompt 2: was it difficult to obtain the required resources? explain which resource and why? prompt 3: did other stakeholders aid in the transformation process? who were they and how did they contribute towards the establishment of the business? question 5: internal bricolage 5.1 discuss the role your personal characteristics played in starting the venture. prompt 1: do you consider personal characteristics to be advantageous with regard to the innovative use of scarce resources? which characteristics do you regard as beneficial? in which way did these assist? (entrepreneurial characteristics, in this sense, refer to understandings, personal experiences and knowledge). prompt 2: do you regard this as a continues process? if so, in which sense? question 6: external bricolage 6.1 describe the effect of the external environment at the start-up phase. prompt 1: do you consider the external environment to be advantageous with regards to the innovative use of scarce resources? which external elements do you regard as beneficial? in which way did these assist? (the external environment, in this regard, includes the attainment of resources, and the advancement of collaborative networks with external partners). prompt 3: do you regard this as an ongoing process? if so, in which sense? question 7: how would you change your start-up process if capital was not a constraint? question 8: what was the most evident learning that took place during the opportunity finding phase of your business? 145 entrepreneurial intentions and behaviours of sa students-revision-2 sajesbm volume 6, (2013) www.sajesbm.com article no 145 1 entrepreneurial intentions and behaviours of south african university students dr suzette viviers senior lecturer, department of business management, stellenbosch university mr goosain solomon* lecturer, department of business management, stellenbosch university ms chanel venter lecturer, department of business management, stellenbosch university * corresponding author department of business management stellenbosch university private bag x1 matieland, stellenbosch 7602 south africa t: 021 808 2475 f: 021 808 2226 e: gsolomon@sun.ac.za abstract the entrepreneurial intentions and behaviours of south african university students are important factors to consider when developing entrepreneurship offerings at local universities. this article reports on pertinent findings from a study which set out to determine south african students’ career choice intentions and entrepreneurship behaviours as well as their knowledge and utilisation of, demand for and satisfaction with entrepreneurship offerings of local universities relative to international universities. a survey, using a 15question structured web-based instrument was used to capture the responses from university students across 26 nations in the global university entrepreneurial spirit students’ survey (guesss) conducted in 2011. key findings are that few south africa university students intend to enter into an entrepreneurship career immediately after completion of their studies, whereas close to a third of respondents were interested in doing so five years after graduation. the vast majority of students were satisfied with entrepreneurship offerings at south african universities. more physical support such as network access platforms are however needed as well as awareness of and access to small business funding mechanisms. better marketed and focussed entrepreneurship offerings are essential to foster an environment at south african universities to promote entrepreneurship as career choice. sajesbm volume 6, (2013) www.sajesbm.com article no 145 2 keywords: entrepreneurial intentions, entrepreneurial behaviours, global financial crisis, south african university students introduction and problem statement in the light of the role that entrepreneurship plays globally in terms of social and economic enhancement, the third global university entrepreneurial spirit students’ survey (guesss) was undertaken in 2011. the survey set out to measure the entrepreneurial intentions and behaviours of university students in 26 countries, including south africa. this article focuses exclusively on the responses of 697 south african university students to they survey. universities play an important role in fostering entrepreneurship since they are strongly associated with the creation of opportunity-based enterprises (autio 2005). a better understanding of the factors influencing entrepreneurship offerings at universities will assist educators in designing strategies to stimulate entrepreneurial intentions and behaviours. this article pays particular attention to the empirical findings of the 2011 guesss, more specifically to: • south african students’ knowledge of entrepreneurship offerings at their respective universities, their demand for and utilisation of these offerings, and their level of satisfaction with these offerings; • the career choice intentions of university students giving particular attention to changes that might have occurred as a result of the global financial crisis; • the entrepreneurial behaviours of south african students; and • south africa’s entrepreneurial index value. research design and methodology the objectives of this study called for the use of a cross-sectional survey. details on the questionnaire design, sample selection as well as the methods used to collect and analyse primary data are presented next. questionnaire design in 2003, researchers at the swiss research institute of small business and entrepreneurship at the university of st. gallen and the kfw endowed chair for entrepreneurship at the european business school in germany designed the first guesss questionnaire. they developed a set of 15 questions to measure entrepreneurial intentions and behaviours among university students. by using the same questions, scales, methods and constructs across countries and universities, tangible comparisons of tendencies and trends can be made over time. sampling twenty-six countries participated in the survey, with a final sample of 93 265. the south african sample (n = 697) was drawn from 15 universities. the 2011 survey was marketed to approximately 13 800 students at these universities by making announcements during lectures, placing advertisements on websites, sending e-mails to students, and displaying posters on university campuses. although the sample was not necessarily representative of the overall student population in south africa, the study did, however, provide valuable insights into south african students’ entrepreneurial intentions and behaviours. most of the respondents studied at four universities, namely stellenbosch university (44.8%), north-west university (14.9%), the university of pretoria (10.8%) and the nelson mandela metropolitan university (10.5%). the remaining respondents (19.4%) came from the other eleven universities. sajesbm volume 6, (2013) www.sajesbm.com article no 145 3 data collection and analysis the survey was administered by means of a web-based questionnaire. the raw data were processed by the project coordinators in switzerland, and datasets were distributed to representatives in each participating country. descriptive statistics based on 697 questionnaires were computed using the ibm spss statistics (version 19) software program. sample description biographic details of the south african and international university student samples are presented in table 1. table 1 sample description – biographic details south african students n = 697 international students n = 93 265 age % % younger than 25 years 86.9 60.6 25 to 30 years 8.6 25.8 older than 30 years 4.3 13.6 total 100 100 gender male 44.8 54.7 female 55.2 45.3 total 100 100 home language afrikaans 40.2 n/a english 38.7 n/a other official south african languages(a) 15.6 n/a other(b) 5.5 n/a total 100 100 (a) isindebele, isixhosa, isizulu, sesotho sa leboa, sesotho, setswana, siswati, tshivenda and xitsonga (b) german, french, chinese, swahili and oshiwambo south african students were generally younger than their international counterparts and slightly more males participated in the south african survey than females. the predominant home languages of south african participants were english and afrikaans. figure 1 illustrates that more south african students were enrolled for undergraduate qualifications than students in the international sample, whereas the opposite was true for postgraduate studies. sajesbm volume 6, (2013) www.sajesbm.com article no 145 4 figure 1: study level profile of south african and international students the majority of south african students (71.3%) were enrolled for qualifications at business and economic sciences faculties, specialising in management/business administration, economics and accounting/financial accounting/internal auditing. twenty per cent of students studied towards degrees in the natural sciences with the remainder enrolled for qualifications in the social sciences. having profiled the sample, the focus of this article now turns to students’ awareness of, demand for, utilisation of and evaluation of entrepreneurship offerings at their respective universities. entrepreneurship offerings at south african universities universities play a pivotal role in promoting more and better entrepreneurship. it is therefore important to investigate the nature and quality of entrepreneurship offerings available to students. for the purpose of this paper entrepreneurship offerings were classified into three categories, namely lectures and seminars, workshops and coaching opportunities, and the provision of resources for founders/entrepreneurs. students’ awareness of university offerings students were requested to indicate their level of awareness of entrepreneurship offerings at their respective universities. the findings are ranked from best known to least known offerings per category in table 2. sajesbm volume 6, (2013) www.sajesbm.com article no 145 5 table 2 students’ awareness of existing university offerings south african students (n = 697) international students (n = 93 265) type of offering item % yes % no % do not know % yes % no % do not know entrepreneurship in general 80.8 4.7 14.5 61.0 9.8 29.2 business planning 79.5 4.6 15.9 53.8 9.9 36.3 entrepreneurial marketing 72.2 5.9 22.0 41.4 13.5 45.2 innovation and idea generation 66.4 6.6 27.0 47.7 11.9 40.4 financing entrepreneurial ventures 60.5 8.3 31.1 32.2 18.8 49.1 social entrepreneurship 51.9 8.6 39.5 34.4 15.5 50.0 technology entrepreneurship 47.5 10.5 42.0 30.8 18.5 50.7 lectures and seminars family businesses 22.2 17.1 60.7 14.9 29.2 55.9 networking with experienced entrepreneurs 48.4 14.1 37.6 45.7 15.8 38.5 mentoring and coaching programmes for entrepreneurs 48.1 12.5 39.5 25.5 19.3 55.2 business plan contests/workshops 47.6 14.3 38.0 39.1 17.1 43.9 contact point for entrepreneurial issues 43.8 11.8 44.5 32.0 16.8 51.2 workshops and coaching opportunities contact platforms with potential investors 34.7 16.6 48.6 22.7 22.9 54.4 technology and research resources (library, web) 92.7 1.6 5.7 74.3 5.2 20.4 provision of resources seed funding/financial support 56.0 10.2 33.9 19.4 23.6 57.0 table 2 shows that south african students were more aware of entrepreneurship offerings than those in the international sample, with lectures on entrepreneurship in general (80.8%) and business planning (79.5%) being most prominent. it might also be as a result of the bulk of the south african students being commerce students (71.3%) compared to the international sample where most students were registered for qualifications in the natural sciences (32.9%). many students, however, reported low levels of awareness in terms of the existence of entrepreneurship offerings. of interest was the relatively high level of awareness of theoretically based offerings such as general entrepreneurship to the relatively low level of awareness of more practical offerings such as contact points for entrepreneurial issues. this can be understood in the light that most students in the south african sample were commerce students with a high probability of having entrepreneurship as a module. table 2 also shows the high level of awareness of the technological and research resources that are available at the students’ respective universities, more so in the south african sample than in the international sample. since universities provide students with state-ofthe-art technological research support, this result could have been expected. this finding was in contrast to that of the 2008/9 guesss survey, which revealed relatively low levels of awareness for start-up financing (15.9%) (scheepers, solomon & de vries 2009:14). the increase in awareness reported in the present study was rather encouraging in that it suggests higher levels of interest in entrepreneurship. sajesbm volume 6, (2013) www.sajesbm.com article no 145 6 the demand for university entrepreneurship offerings respondents were further asked concerning their need for specific entrepreneurship offerings. table 3 represents the findings ranked in order of most in demand to least in demand for the south african sample. table 3 the demand for university entrepreneurship offerings (not currently offered) south african students international students type of offering item valid n would like % do not need % valid n would like % do not need % business planning 143 87.4 12.6 43 107 65.6 34.4 innovation and idea generation 234 85.9 14.1 48 753 69.5 30.5 financing entrepreneurial ventures 275 84.4 15.6 63 257 65.3 34.7 entrepreneurship in general 134 82.8 17.2 36 338 64.0 36.0 entrepreneurial marketing 194 80.4 19.6 54 666 52.7 47.3 technology entrepreneurship 366 73.2 26.8 64 525 49.5 50.5 social entrepreneurship 335 69.3 30.7 61 146 54.3 45.7 lectures and seminars family businesses 542 47.0 53.0 79 353 42.4 57.6 networking with experienced entrepreneurs 360 86.4 13.6 50 654 70.7 29.3 contact platforms with potential investors 455 84.8 15.2 72 064 66.1 33.9 mentoring and coaching programmes for entrepreneurs 362 83.7 16.3 69 487 64.2 35.8 business plan contests/workshops 365 80.5 19.5 56 834 59.5 40.5 workshops and coaching opportunities contact point for entrepreneurial issues 392 79.3 20.7 63 416 67.1 32.9 seed funding/financial support 307 80.8 19.2 75 158 70.6 29.4 provision of resources technology and research resources (library, web) 51 74.5 25.5 23 910 62.0 38.0 as shown in table 3, a clear demand exists for all entrepreneurship offerings mentioned. overall, the demand for entrepreneurship offerings was relatively higher among the south african sample than among the international sample. this finding might be attributed to the increased emphasis on entrepreneurship by local government and the media in recent years (the new growth path 2011). understanding the nature of the demand presents an opportunity for south african universities to sharpen the focus of their marketing strategies. utilisation of university entrepreneurship offerings the study also examined students’ utilisation of existing offerings. table 4 presents the findings ranked from the most utilised to the least utilised, based on the south african sample. it is evident from table 4 that south african students utilised existing entrepreneurship offerings relatively more than their international counterparts. the topics most utilised are the entrepreneurship sensitising topics, namely entrepreneurship in general, business planning, entrepreneurial marketing, and innovation and idea generation. a trend of decreased utilisation as the offerings become more applied and practical was observed, supportive of the notion that the students were keen on entrepreneurship, but deferred active engagement. high utilisation of technological and research resources can be expected at universities as tertiary students are expected to actively engage in research using a variety of state-of-the-art technology and other resources for research. sajesbm volume 6, (2013) www.sajesbm.com article no 145 7 table 4 utilisation of offerings south african students international students type of offering item valid n % yes % no valid n % yes % no entrepreneurship in general 563 71.9 28.1 56 915 55.4 44.6 business planning 554 68.6 31.4 50 146 53.1 46.1 innovation and idea generation 463 67.2 32.8 44 501 53.9 46.9 entrepreneurial marketing 503 61.9 38.4 38 591 48.0 52.0 family businesses 155 58.1 41.9 13 905 43.9 56.1 social entrepreneurship 362 58.0 42.0 32 107 45.8 54.2 financing entrepreneurial ventures 422 57.3 42.7 29 997 39.2 60.8 lectures and seminars technology entrepreneurship 331 55.9 44.1 28 730 39.5 60.5 networking with experienced entrepreneurs 337 59.3 40.7 42 601 44.1 55.9 mentoring and coaching programmes for entrepreneurs 335 51.9 48.1 23 768 30.1 69.9 contact point for entrepreneurial issues 305 51.1 48.9 29 841 37.8 62.2 contact platforms with potential investors 242 44.2 55.8 21 192 32.9 67.1 workshops and coaching opportunities business plan contests /workshops 332 43.7 56.3 36 425 34.4 65.6 technology and research resources (library, web) 646 86.5 13.5 69 341 74.6 25.4 provision of resources seed funding/financial support 390 46.2 53.8 18 101 41.8 58.2 students’ evaluation of offerings utilisation of an offering may not necessarily provide a reliable indication of the quality of an offering. therefore, it was necessary to determine the level of satisfaction with entrepreneurship offerings. the students were asked how satisfied they were with the entrepreneurship offerings they utilised. the responses were captured on a five-point likertscale with 1 representing ‘not at all satisfied’ and 5 representing ‘very much satisfied’. the findings are presented in table 5. sajesbm volume 6, (2013) www.sajesbm.com article no 145 8 table 5 students’ level of satisfaction with entrepreneurship offerings south african students international students students’ level of satisfaction with … item valid n mean sd valid n mean sd business planning 380 3.92 0.89 26 643 3.74 0.99 innovation and idea generation 311 3.89 0.92 24 005 3.77 0.99 entrepreneurial marketing 310 3.84 0.91 18 506 3.77 0.96 entrepreneurship in general 405 3.83 0.8 31 527 3.72 0.95 social entrepreneurship 210 3.74 0.97 14 709 3.71 0.97 technology entrepreneurship 185 3.66 0.93 11 348 3.68 0.97 family firms 90 3.64 0.93 6 100 3.63 1.01 lectures and seminars about … financing entrepreneurial ventures 242 3.60 0.94 11 745 3.61 0.99 business plan contests / workshops 145 3.76 0.96 12 543 3.66 1.01 mentoring and coaching programmes for entrepreneurs 174 3.68 0.97 7 165 3.67 1.01 networking with experienced entrepreneurs 200 3.64 0.98 18 768 3.70 0.99 contact platforms with potential investors 107 3.57 0.98 6 969 3.61 1.03 workshops and coaching offerings about … contact point for entrepreneurial issues 156 3.57 0.99 11 271 3.69 1.04 technology and research resources (library, web) 559 4.24 0.83 51 702 3.80 1.01 provision of resources to founders/entrepreneurs seed funding / financial support 180 3.83 1.03 7 569 3.63 1.09 the findings suggest that students in both samples seemed to be satisfied with the entrepreneurship offerings at their respective universities. at first glance this finding implies that universities are responding adequately to the needs of students in terms of entrepreneurship offerings. more in-depth research on the topic of entrepreneurship education in south africa, however, suggests that entrepreneurship programmes, both in terms of content and methods, do not appear to achieve the desired outcomes. farrington, gray and sharp (2001:11) for example call for the integration of different learning experiences into entrepreneurship programmes, such as real world case studies and ‘exposure to practice management’ in order to provide students with a more realistic perspective of what an entrepreneurial career and business ownership entails. radipere (2012:11015) also calls for greater use of interactive methods in entrepreneurship education and specifically recommends simulations to allow students to develop analytical and decision-making skills. technology and research resources received the highest rating for satisfaction in both samples as well as the highest response rate from all the offerings. this finding was sajesbm volume 6, (2013) www.sajesbm.com article no 145 9 indicative of the reliance of the student population on technology, which begs investigation of the impact of the broader university context on the entrepreneurial intentions and behaviours of the respondents. the university context students were requested to specify their level of agreement with a number of statements concerning the influence that the university context had on their entrepreneurial intentions and behaviours. their responses were captured on a seven-point likert-scale, with 1 representing ‘strongly disagree’ and 7 representing ‘strongly agree’. based on the mean scores, the three most significant influences reported by the south african students were: • understanding the actions someone has to take in order to start a business (mean score = 5.13); • identifying an opportunity (mean score = 5.04); and • understanding the attitudes, values and motivations of entrepreneurs (mean score = 5.00). analysis of the three dimensions suggested that the students were seeking firstly to understand the process of starting a business and thereafter to understand the qualities of being entrepreneurial (frese & de kruif 2000:18). for the international students, the mean scores ranged from 3.67 to 4.28, suggesting that the international students were fairly indifferent about the effect of the influence the university environment has on their entrepreneurial intentions and behaviours. however, interestingly, the international sample’s most significant influence was to understand the attitudes, values and motivations of entrepreneurs (mean score = 4.28), followed by identifying an opportunity (mean score = 4.24), which corresponded to two of the top three influences on the entrepreneurial intentions of the south african sample. the third most significant influencing factor from the university context for the international sample was the ability to develop networks (mean score = 4.15), an influence which the south african sample rated second last (mean score = 4.63). the career choice intentions of students according to barringer and ireland (2008:15), students enter the labour market immediately after graduation to gain experience and knowledge, and to develop social capital before they pursue longer-term career aspirations. since the transition to a new democracy in south africa in 1994, the tendency has been for students to enter a professional career, indicative of a culture that places a premium on professions in the fields such as law, engineering, finance, education and health care. furthermore, the south african government is encouraging a shift towards a growing knowledge economy by increasing the number of phd graduates in order to increase scientific research and development (republic of south africa 2008:28). to gain insight into students’ career choice intentions, they were asked which career path they intended to pursue directly after their studies and five years after completion of their studies. students could only select one answer for each question, from thirteen choices, grouped into four categories. the results of the four categories are summarised in figure 2. sajesbm volume 6, (2013) www.sajesbm.com article no 145 10 figure 2 overall shift in career choice intentions: south african and international students figure 2 indicates a shift, for both samples, in favour of entrepreneurship as a career choice five years after graduation. the shift suggests that the majority of the participating students intended to gain experience in established firms before pursuing entrepreneurship as a longterm career option. in addition, slightly more south african students were interested in establishing their own businesses directly after graduation (12.6% vs. 11.0%) and five years after graduation (43.8% vs. 34.4%) compared to the international sample. as shown in table 6, in comparison to the 2008/9 survey, the intention to start a new business has decreased in both samples, especially in south africa. table 6 changes in career intentions over time south african sample international sample intention to start a new business 2011 2008/9 2011 2008/9 directly after graduation 12.6% 25.0% 11.0% 15.7% five years after graduation 43.8% 61.3% 34.4% 42.2% since the publication of the 2008/9 survey, the global economic climate has changed considerably. smmes have been particularly hard hit by the global financial crisis, with most of the job losses in the global economy occurring in this sector (the impact of the global crisis on sme and entrepreneurship financing and policy responses 2009). students might therefore have become more wary of entrepreneurship as career choice. the entrepreneurial behaviours of students the guesss is based on the premise that entrepreneurial behaviour is preceded by entrepreneurial intentions. entrepreneurial intentions are influenced by an individual’s personal and family background, motives for becoming an entrepreneur, and exposure to entrepreneurship education. according to farrington, venter and neethling (2012:19), the use of intentions models as a means of explaining entrepreneurial intentions have increased in entrepreneurship research in recent years. most of these models are based on the work of shapero and sokol (1982) and ajzen (1991). ajzen’s (1991) theory of planned behaviour suggests that the degree of intention is proportional to the probability of action; however the intention is preceded or influenced by a combination of three factors. it is the individual’s attitude towards the intended action which refers to the self-image of the individual in performing the perceived behaviour, in this case being engaged in entrepreneurial activity. it is also the normative context of the individual which refers to the degree of influence the social environment of the individual has on influencing him or her to engage in entrepreneurship activity. lastly, it includes the individual’s perception of their ability to succeed in the intended role of being an sajesbm volume 6, (2013) www.sajesbm.com article no 145 11 entrepreneur which would invariably be influenced by past experience and their ability to overcome obstacles. according to shapero and sokol’s (1982) entrepreneurial events model, entrepreneurship activity is triggered by externalities that constitute a major shift or unbalanced force in the environment within which the person finds him/herself. these externalities could be political or religious displacement, job dissatisfaction, ethnicity, family, friends, colleagues and even mentors. externalities can have a negative or positive influence on the environment, however, negative externalities are found to have a larger influence on entrepreneurship activity. to these ends, the activities of the students with intentions to found a business are investigated in the following section. intentional founders of the south african respondents, 70.6 per cent had intentions to establish an own company, while from the international sample, 42.1 per cent showed similar intentions. a section of the questionnaire was devoted to collect data on the activities of students who intended to found a business. students were probed on the steps followed in setting up the business, the anticipated founding date, intended industry, founding idea, potential partners, capital required and perceived barriers to founding a business. the responses to these issues are reported below. steps in setting up the business intentional founders had to indicate which steps, ranging from non-activity and tentative steps, to the more concrete actions, such as purchasing equipment, they have taken towards setting up their own businesses. students could select more than one step. the findings relating to this question are presented in table 7. table 7 steps taken towards setting up a business south african intentional founders (n = 492) international intentional founders (n = 39 280) steps taken n % n % no steps taken 105 21.3 10 592 27.0 thinking through initial business ideas 334 67.9 25 395 64.7 developed a business plan 89 18.1 7 330 18.7 identified a market opportunity 233 47.4 13 353 34.0 looked for potential partners 164 33.3 10 862 27.7 purchased equipment 13 2.6 2 152 5.5 worked on product development 46 9.3 3 731 9.5 discussed with potential customers 67 13.6 5 225 13.3 requested funding from institutions 8 1.6 1 165 3.0 decided on date of foundation 18 3.7 1 416 3.6 except for identification of a market opportunity and purchasing of equipment, it appeared that the steps taken towards setting up a business for the south african and international sample showed a relatively similar trend. although students expressed a keen interest in entrepreneurship in the long term, the evidence did not show concretisation of their interest in the short term. however, the purchasing of equipment was the highest level of concrete steps towards setting up a business, and the south african sample (2.6%) seemed to have not made the financial commitment to the degree that the international sample (5.5%) had done. sajesbm volume 6, (2013) www.sajesbm.com article no 145 12 anticipated founding date intentional founders were also asked to indicate the anticipated time (in years) that it would take until they actually established their own business. only 3.4 per cent of the south african sample and 3.7 per cent of the international sample answered this question, indicating periods ranging from less than one year to more than ten years, comparative to a short-, mediumand long-term view. barring the students with a short-term founding date, less than one year, this finding was indicative of the notion that the physical start-up of a business venture is often seen as a vague, futuristic action. this is in line with the previous finding of students first wanting to obtain relevant business experience before opting for the establishment of an own venture. anticipated industry to better understand the industries the students were targeting, the students were asked in which industries they would establish their businesses. the south african students’ responses in order of industry preference was firstly the finance industry, followed by advertising, marketing and design industries and then the hospitality, professional consulting, information technology (it) and retail industries. the construction industry was viewed as the least attractive industry by prospective entrepreneurs. the international students primarily showed interest in the advertising, marketing and design, communications, it, law, tax and consulting industries. formulation of founding idea idea generation can be attributed to various sources and has captivated researchers for decades (lindsay & craig 2002:13; howell & boies 2004:123; barringer & ireland 2008:30). respondents were asked concerning the sources of their founding ideas for starting a business. more than one source could be selected for the idea. the results are presented in table 8. table 8 source of founding idea south african intentional founders (n = 492) international intentional founders (n = 39 280) source n % n % hobby or recreational pastime 210 42.7 12 223 31.1 university studies 198 40.2 17 805 45.3 idea from self or fellow students 151 30.7 11 787 30.0 family members 144 29.3 7 152 18.2 academic, scientific or applied research 78 15.9 4 513 11.5 current or former work activity 71 14.4 10 552 26.9 friends outside university 50 10.2 4 325 11.0 the main source of ideas for the south african respondents originated from their hobbies or recreational pastimes (42.7%), followed by university studies (40.2%) and for the international sample it is primarily from their university studies (45.3%), followed by their hobbies or recreational pastimes (31.1%). in both samples groups, friends outside the university made the lowest contribution to new business ideas. anticipated partnering intentional founders were asked if they planned to establish their business with any partners and if so, how many. the results are presented in table 9. most of the respondents in the two samples showed a preference for partnering with one or two partners. sajesbm volume 6, (2013) www.sajesbm.com article no 145 13 table 9 number of anticipated founding partners south african intentional founders international intentional founders number of partners n % n % none 156 31.7 13 808 35.2 one partner 173 35.2 15 656 39.9 two partners 110 22.4 7 038 17.9 three partners 29 5.9 1 514 3.9 four or more partners 24 4.9 1 264 3.2 total 492 100 39 280 100 intentional founders who preferred to start their business with one or more partners were asked to elaborate on where they planned to recruit these partners from. multiple answers were permitted, and it was found that partnership with either university acquaintances or friends was preferred over family and spouses. furthermore, intentional founders were asked concerning ownership. the majority of founders (60% of the south african sample and 62.5% of the international sample) leaned towards staying in control of their own businesses. capital less than a third of the respondents (22.6% of the south african sample and 27.9% of the international sample) had an idea of the amount and type of capital required to establish their businesses. this result was not surprising, considering the levels of demand for lectures and seminars on financing entrepreneurial ventures (see table 3). intentional founders were also asked concerning the source of their finances. figure 3 represents the findings for sources of finance expressed as percentages. figure 3: planned sources of finance (in percentages) (intentional founders south african n = 492; intentional founders international n = 39 280) an analysis of figure 3 suggests a strong preference for own funding followed by debt financing and preference shares. the identified order is in line with existing capital structure literature (myers 1984:581; fama & french 2002:1). sajesbm volume 6, (2013) www.sajesbm.com article no 145 14 perceived barriers to founding a business the perceptions of the respondents on the barriers to founding a business were gauged on a seven-point likert-scale with 1 representing ‘not applicable at all’ to 7 representing ‘very applicable’. the perceived barriers to founding an own business are ranked in table 10 from the highest to the lowest mean scores with reference to the south african sample. table 10 perceived barriers to founding an own business south african students international students statement valid n mean sd valid n mean sd access to capital (debt and equity financing) 488 5.10 1.61 38 652 4.89 1.80 bearing financial risk 486 4.45 1.73 38 501 4.42 1.77 general economic environment 484 4.21 1.60 38 520 4.15 1.75 lack of contact to clients/customers 489 3.98 1.73 38 468 3.99 1.82 having relevant technical know-how 486 3.68 1.80 38 419 3.54 1.86 high workload of an entrepreneur 488 3.65 1.81 38 406 3.37 1.86 state laws (rules and regulations) 487 3.50 1.76 38 511 3.89 1.83 having the necessary skills and capabilities 485 3.49 1.86 38 467 3.47 1.87 lack of the right business idea 486 3.41 1.76 38 476 3.40 1.93 the three most highly rated perceived barriers to founding an own business are similar for the south african and the international samples, namely access to capital (debt and equity financing), bearing financial risk and general economic environment respectively. the south african findings are in line with those of preisendörfer, bitz and bezuidenhout (2012:3) who found that the most significant barriers for the expansion of black entrepreneurship in south african townships are restricted financial and human capital resources. the lack of access to finance was also the major hindrance to promoting indigenous entrepreneurship in australia (shoebridge, a., buultjens, j. & peterson, l-s. 2012:1). the ranking of the perceived barriers in table 10 differs somewhat from that of the 2010 south african global entrepreneurship monitor (gem) where access to finance and financial support only ranks third behind inadequate and ineffective education and training and government policies (herrington, kew & kew 2010:31). attention now shifts to students who have already founded businesses of their own, i.e. active founders. active founders as expected, a very small portion of the south african sample (2.4%) comprised active founders. although the sample was too small to determine trends in all dimensions probed, the data gathered still illuminated and confirmed some of the trends proposed by the intentional founders. most of the active founder respondents (58.8%) founded businesses on their own. consistent with the intentional founders’ choices in terms of industry sectors, the highest percentage of respondents in both samples indicated doing business in the information technology and communications industry. sajesbm volume 6, (2013) www.sajesbm.com article no 145 15 with regard to sources of ideas, universities were perceived as important breeding grounds for new business ideas. business ideas for both samples originated from self or fellow students, current or former work activities, university studies, family members, hobbies or recreational pastimes as well as friends outside university. the international sample also derived ideas from academic, science or applied research, which was not the case with the active founders from the south african sample. the active founders were also asked whether they had any relevant experience before founding their business. students in the international sample had more experience than their south african counterparts (of the south african sample 70.6% did not have relevant professional work experience before starting their own business whereas for the international sample it was 34.6%). sources of finance figure 5 illustrates the sources of finance used to start an own business compared to the intended sources. own funds were used to finance the active founders in more than 70 per cent of the cases in both samples, which is in agreement with existing literature (barringer & ireland 2008:286). the share of equity in the majority of the cases for both samples was either 100 per cent or 50 per cent. figure 4 comparison between intended and utilised sources of finance (in percentages) (active founders: south africa n = 17; international n = 2 324) number of employees and annual sales in established businesses (current and planned) of the south african respondents, a quarter had no employees, a third employed one or two employees, and 40.2 per cent employed three to twenty-five employees. almost a third of the south african respondents planned to employ at least 50 employees in five years’ time. of the international sample, 48.6 per cent had no employees. fourteen south african respondents provided information about their annual sales figures. slightly more than 14 per cent made no sales in the previous year, just over 64 per cent generated sales of less than r2 million, the rest (almost 22%) reached sales between r2 million and r12 million. more than half (57%) planned to have sales over r12 million in five years’ time. surprisingly, one respondent did not plan to generate sales. this was sajesbm volume 6, (2013) www.sajesbm.com article no 145 16 possibly a non-profit organisation. an intention regarding business growth in the short to medium term was observed. business performance since establishment the performance for the businesses that have been established by the south african and international samples is shown in table 11, and is ranked from the highest to the lowest mean scores, based on the south african sample. table 11 business performance since its establishment south african students frequency distribution (%) international students statement valid n mean sd 1 worse 2 pretty bad 3 rather bad 4 equal 5 rather good 6 better 7 best valid n mean sd development of profit 17 4.71 1.21 0.0 0.0 11.8 41.2 23.5 11.8 11.8 2258 4.37 1.64 development of sales 17 4.47 1.23 0.0 5.9 11.8 35.3 29.4 11.8 5.9 2272 4.38 1.67 development of market share 17 4.35 1.58 0.0 17.6 11.8 23.5 17.6 23.5 5.9 2254 4.11 1.66 creation of jobs 17 3.35 1.50 17.6 5.9 23.5 35.3 11.8 5.9 0.0 2255 3.38 1.82 the findings for both samples reveal that sales, market share and the creation of jobs developed as expected by the active founders. the development in market share also demonstrated a good performance by the south african sample. foundation process the principles for the foundation processes for both samples are listed in table 12, and are ranked from the highest to the lowest mean scores, based on the south african sample. the respondents’ level of agreement with a number of founding principles was gauged by way of a seven-point likert-scale. table 12 foundation process principles south african students international students statement valid n mean sd valid n mean sd i was careful not to commit more resources than i could afford to lose 17 5.65 1.37 2 245 5.04 1.89 i allowed the business to evolve as opportunities emerged 17 5.53 1.07 2 250 5.37 1.52 i was flexible and took advantage of opportunities as they arose 17 5.41 0.80 2 244 5.69 1.32 i used a substantial number of agreements with customers, suppliers and other organisations and people to reduce the amount of uncertainty. 17 5.41 1.23 2 251 4.42 1.89 i adapted what i was doing to the resources we had. 17 5.35 1.10 2 241 5.43 1.50 i used pre-commitments from customers and suppliers as often as possible. 17 5.29 0.92 2 247 4.42 1.98 i analysed long-run opportunities and selected what i thought would provide the 17 5.24 1.39 2 261 4.25 2.02 sajesbm volume 6, (2013) www.sajesbm.com article no 145 17 best returns. i designed and planned business strategies. 17 5.06 1.64 2 256 4.50 1.88 i tried a number of different approaches until i found a business model that worked. 16 5.06 1.73 2 246 3.48 2.04 i avoided courses of action that restricted our flexibility and adaptability. 17 5.00 1.28 2 250 4.93 1.64 i organised and implemented control processes to make sure we meet objectives. 17 5.00 1.32 2 251 4.18 1.93 the product/service that i now provide is essentially the same as originally conceptualised. 17 5.00 1.32 2 247 4.92 1.80 i researched and selected target markets and did meaningful competitive analysis. 17 5.00 1.54 2 256 4.28 1.96 i was careful not to risk more money than i was willing to lose with my initial idea. 17 5.00 1.77 2 241 4.94 1.92 i was careful not to risk so much money that the business would be in real trouble financially if things did not work out. 17 4.88 1.83 2 248 5.08 1.90 i experimented with different products and/or business models. 17 4.59 1.70 2 244 3.86 2.04 i designed and planned production and marketing efforts. 17 4.41 1.46 2 243 4.26 1.94 the product/service that i now provide is substantially different than i first imagined. 17 4.29 1.96 2 252 3.23 2.10 it is evident from table 12 that similar principles are dominant across the two samples. active founders preferred not to over-commit their resources and remained flexible enough to integrate new ideas into their business, and turn these ideas into opportunities. south africa’s guesss entrepreneurial index value the guesss entrepreneurial index value provides an indication of entrepreneurial power which is determined by comparing the extent to which students thought of founding a business to the extent to which they have already become active entrepreneurs. the findings revealed an entrepreneurial index value of 25.13 for the south african student sample. the value of the entrepreneurial index value for the overall sample is 27.22. the relative value reinforces the gap between intentions and actions among south african students noted earlier in this article. polish students reported the highest entrepreneurial index value (68.25) and tunisian students reported the lowest entrepreneurial index value (16.00). summary, conclusions and recommendations this article reported on the entrepreneurial intention and behaviour of south african university students. comparisons were made between a south african sample and an international sample of university students. the profiles of the south african and international samples were relatively similar in terms of age, gender and study level. students in the international sample were, however, slightly older than their south african counterparts and were more likely to be enrolled for a postgraduate qualification. in the three categories of entrepreneurship offerings evaluated, namely lectures and seminars, workshops and coaching opportunities, and provision of resources, south african sajesbm volume 6, (2013) www.sajesbm.com article no 145 18 students were more aware of entrepreneurship offerings at their universities and utilised more of the offerings than the international sample and also expressed higher levels of satisfaction. both groups of students were generally satisfied with the available offerings, but demanded additional practical activities and resources, such as seed funding and financial support. the university context had a positive influence on south african students’ entrepreneurial intentions and behaviours. in particular contact with likeminded peers and mentors were regarded as important in generating business ideas and understanding the entrepreneurial process. existing entrepreneurship literature suggests that the level of entrepreneurship in south africa is low and generally of a poor quality. south africa ranks relatively high in the 2010– 2011 global competitiveness report in terms of the standard of scientific research institutions (29th out of 139 countries) (schwab 2011:39). the challenge lies in the fact that only 15 per cent of south africans have access to tertiary education, placing south africa in 99th position in the global ranking. access to tertiary education should be addressed to unlock the country’s innovation potential, and universities in south africa should increase the number of postgraduate students. although the intention to start a new business had decreased in south africa compared to the 2008/9 survey, in general, south african students were more interested in establishing their own businesses than the international sample. both groups of students were more inclined to start their own ventures after gaining some industry experience and establishing support networks. the majority of south african students (70.6%) viewed themselves as intentional founders, as opposed to 42.1 per cent of students in the international sample. a clear pattern of passivity was observed among students in both the samples in that very few realised their intentions to start their own businesses with goal-driven actions. a possible solution could be to assist students in taking small steps towards their goal with an easy, achievable start. therefore, a number of smaller actions could help potential entrepreneurs to turn their thoughts into actions, and their dreams into reality. a stronger emphasis should also be placed on increasing pro-activeness and the value of a business plan as a roadmap – not only in the start-up phases, but also in subsequent phases. the researchers are of the opinion that, unless entrepreneurs are empowered with the necessary legislative support and increased skills, easier access to funding may even increase the cost of small business failure. notably, the international sample viewed previous work experience as a major source of business ideas and learning opportunities, which was not the case with the south african sample. this might be partly attributed to the fact that there is no formal internship requirement as part of the south african university curriculum. south african universities could include internships in their entrepreneurship offerings. universities need to assess the level of students’ awareness, utilisation and satisfaction regarding entrepreneurship offerings. furthermore they should investigate the demand for particular activities to boost entrepreneurial orientation, clarify the entrepreneurship process and enhance business management skills. the marketing of entrepreneurial offerings should be more strategically focussed. entrepreneurship offerings need to be marketed with specific levels of audiences in mind. the first level refers to those that need to be made aware or sensitised, followed by those that are sensitised and need to be encouraged to act, while the third level would be those who have acted and need support. sajesbm volume 6, (2013) www.sajesbm.com article no 145 19 this article contributes to a better understanding of entrepreneurship offerings at south african universities and suggests how universities could strategise and formulate more streamlined entrepreneurship education strategies. more specifically, it is recommended that universities firstly adopt a comprehensive, three-phased approach: sensitise, act, support. in addition, they should continually review and realign entrepreneurship offerings targeting specific areas of business requirements, for example, dealing with the financial aspects of new venture creation, prepare students to gain immediate access to the labour market, and lastly enhance network development with relevant stakeholders. research-driven approaches are required for a better understanding of how to develop entrepreneurship. africa suffers from a lack of comprehensive entrepreneurship research and should develop a more balanced and holistic perspective of entrepreneurship research, (kiggundu 2002:241). kiggundu suggests that more comprehensive entrepreneurship research is required and that african researchers include the entrepreneur and not only the firm and external environment in their research. kiggundu further postulates entrepreneurship research be scaled towards an integral part of useable mainstream knowledge instead of receiving traditional ‘step-child’ status. access to capital (in this study, referred to as the perceived barrier to obtaining start-up capital) was viewed as a major stumbling block in the initial phases of establishing a business. although the south african government has increased its support to new businesses, communication around these opportunities is not conveyed in a consistent and clear manner. furthermore, it seems that the message does not reach the intended target audience. government should employ more focussed strategies of communicating the infrastructure of their support. they, government, should thus invest in more effective, structured links with universities to change these perceptions and to reverse the apparent lack of concrete entrepreneurial actions among students. acknowledgements the authors sincerely thank pearson education southern africa and the braxton group for financial support of this research. references ajzen, i. 1991. the theory of planned behavior. organizational behavior and human decision processes, 50(2):179–211. autio, e. 2005. global entrepreneurship monitor: 2005 report on high expectation entrepreneurship. london school of business, mazars & babson. [online]. available from: http://www.gemconsortium.org/docs/download/268 [accessed 2012-03-30]. barringer, b.r. & ireland, r.d. 2008. entrepreneurship: successfully launching new ventures. 2nd ed. new jersey: pearson. fama, e.f. & french, k.r. 2002. testing trade-off and pecking predictions about dividends and debt. review of financial studies, 5(1):1-33. farrington, s.m., venter, d.j.l. & neethling, a. 2012. entrepreneurial attributes and intentions: perceptions of south african business science students. management dynamics, 21(3):17-33. sajesbm volume 6, (2013) www.sajesbm.com article no 145 20 farrrington, s.m., gray, b. & sharp, g. 2011. perceptions of an entrepreneurial career: do small business owners and university students concur? management dynamics, 20(2):2-17. frese, m. & de kruif, m. 2000. psychological success factors of entrepreneurship in africa: a selective literature review, in frese, m. (ed.). 2000. success and failure of microbusiness owners in africa: a psychological approach; westport: quorum. herrington, m., kewe, j. & kew, p. 2010. 2010 global entrepreneurship monitor. cape town: uct centre for innovation and entrepreneurship. howell, j.m. & boies, k. 2004. champions of technological innovation: the influence of contextual knowledge, role orientation, idea generation, and idea promotion on champion emergence. the leadership quarterly, 15(1):123-143. kiggundu, m.n. 2002. entrepreneurs and entrepreneurship in africa: what is known and what needs to be done. journal of developmental entrepreneurship, 7(3):239–258. lindsay, n.j. & craig, j.b. 2002. a framework for understanding opportunity recognition entrepreneurs versus private equity financiers. the journal of private equity, 6(1):1324. myers, s. c. 1984. the capital structure puzzle. journal of finance. july, 39(3):575-92. preisendörfer, p., bitz, a. & bezuidenhout, f.j. 2012. business start-ups and their prospects of success in south african townships. south african review of sociology, 43(3):3-23. radipere, s. 2012. south african university entrepreneurship education. african journal of business management, 6(44):11015-11022. republic of south africa. department of science and technology, 2007. innovation towards a knowledge-based economy: ten-year plan for south africa (2008–2018) [online]. available from: http://www.esastap.org.za/download/sa_ten_year_innovation_plan.pdf [accessed: 2012-04-04]. scheepers, m.j., solomon, g. & de vries, a. 2009. global university entrepreneurial spirit students’ survey: south african report. entrepreneurial intentions and behaviour of south african university students. university of stellenbosch. [online] available from: [http://www.guesssurvey.org/e_publication_nat.html [accessed: 2011-01-17]. schwab, k. (ed.). 2011. the global competitiveness report 2010–2011. world economic forum. [online]. available from: http://www3.weforum.org/docs/wef_globalcompetitivenessreport_2010-11.pdf [accessed: 2011-08-05]. shapero, a. & sokol, l. 1982. the social dimensions of entrepreneurship. in kent, c.a., sexton, d.l. & vesper, k.h. (eds.). 1982. encyclopaedia of entrepreneurship. englewood cliffs: prentice hall. shoebridge, a., buultjens, j. & peterson, l-s. 2012. indigenous entrepreneurship in northern nsw, australia. journal of developmental entrepreneurship, 17(3):1-31. the impact of the global crisis on sme and entrepreneurship financing and policy responses. 2009. organisation for economic co-operation and development, 23 june, [online]. available from: http://www.oecd.org/dataoecd/40/34/43183090.pdf [accessed 2011-07-01]. the new growth path. 2011. south african government information. [online]. available from: http://www.info.gov.za/aboutsa/economy.htm [accessed: 2011-04-01]. http://www.sajesbm.co.za open access page 1 of 1 reviewer acknowledgement acknowledgement to reviewers in an effort to facilitate the selection of appropriate peer reviewers for the southern african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on https://sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at https://sajesbm. co.za 2. in your ‘user home’ [https://sajesbm.co.za/ index.php/sajesbm/user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest(s). 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the southern african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 tel: 086 1000 381 the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of peer reviewers in the overall publication process – not only in shaping individual manuscripts, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank the following reviewers who participated in shaping this volume of the southern african journal of entrepreneurship and small business management. we appreciate the time taken to perform your review(s) successfully. adolph c. neethling alex bignotti anèa burke anne crafford arno meyer cecile nieuwenhuizen charles o’neill chukuakadibia e. eresia-eke dawie bornman daniel twesige elma van der lingen iniobong w. akpan johannes m. smith joash mageto johann van der spuy kerrin myres lerato e. mohalajeng marius pretorius mfazo c. madondo monika kirsten nomusa b. mazonde orthodox tefera paul kariuki raj rajaram salome van coller-peter thea tselepis wendy van schalkwyk wesley niemann http://www.sajesbm.co.za� https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za/index.php/sajesbm/user https://sajesbm.co.za/index.php/sajesbm/user mailto:publishing@aosis.co.za microsoft word p140 development model for family business successions adendorf emuze ward .doc sajesbm volume 6, (2013) www.sajesbm.com article no 140 134 www.sajesbm.com development model for family business successions evaluation with a south african case study chris adendorf phd nmmu business school fidelis emuze * central university of technology, free state bloemfontein, 9300, south africa graham ward nmmu business school * to whom correspondence should be addressed private bag x20539 central university of technology, free state, bloemfontein, 9300, south africa phone: 051 507 3661, femuze@cut.ac.za abstract family businesses (fb) contribute between 45 and 90% to global gross domestic product (gdp). however, empirical research has raised the alarm pertaining to the need to prolong the longevity of such businesses. findings indicate that within the next 5 years, over 50% of fb executives could retire from day to day running of such businesses. this highlights the significance of successful business successions. the dynamics around the succession process and the criteria influencing successful successions have thus engaged the attention of researchers. therefore, the purpose of this study was to better understand the development of successors in fb. the study began with a literature survey through which a development model was identified. the study then went on to evaluate the model through an fb case study. the single qualitative case study was used to test whether the six (6) prepositions proposed in the model applied to the case that was studied. through one-onone interviews and a qualitative data analysis, it was observed that the 6 prepositions were applicable to the fb. in other words, fb grappling with succession planning can be advised to endeavour to understand and take actions aligned with the prepositions. keywords: family businesses, small businesses, shareholders, succession sajesbm volume 6, (2013) www.sajesbm.com article no 140 135 background a family business (fb) may be defined as "a business governed and / or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families” (chua, chrisman and sharma, 1999). however, reports from the united states of america (usa) indicate that many founders of businesses that were started in the “baby-boom” period are reaching or are close to retirement age and are in need of successors (cullen, 2005). recent research conducted by venter and boshoff (2007) show that 30% survive the second generation; with little more than 14% making it past the third generation. as a result, landes (2006) refers to family firms that have succeeded to the third generation as “dynasties” and he describes the achievement as “mammoth”. walsh (2011) further observes that family business succession is the process of transitioning the management and the ownership of the business to the next generation of family members. the transition may also include family assets as part of the process. family members typically play a controlling role in both the management succession as well as the ownership succession. as such, the effective integration and management of the family component will have a determining effect on the success of the succession process. fb succession typically involves the transfer of knowledge, control, power and management responsibilities from one generation to the next one (santiago, 2000). a successful fb succession should seek to improve the profitability of the business and stakeholders (bigliardi and dormio, 2009). however, it should be noted that psychological factors could affect successions. such factors are not limited to candidates’ personal skills and experience outside the business, commitment to the family goals and the legitimacy of the successor as viewed through the eyes of the employees within the company (poutziouris, smyrnios, klein, 2006). nevertheless, succession planning in fb is reportedly a subject area that is under explored. in other to contribute to the debate and also considering the low success rate of fb successions, this study was embarked upon to: • assist fb with improving the success rate of successions, and • provide future researchers with additional criteria that may contribute to successful fb successions. thus, the overall research objective was underpinned by the need to analyse and verify cater and justis’ (2009) proposed model entitled “development of successors from followers to leaders in small family firms”, in order to determine if the model prepositions could influence successions in fb. the research problem the main problem assumed for the study is the reported low success rate of fb successions. this low success rate has proliferated empirical studies related to fb so that the dynamics that may positively and / or negatively affect successful successions can be identified. it is notable that past findings agreed that the succession process should be planned well in advance as the transfer of knowledge and leadership skills are essential to the process (cullen, 2008; venter and boshoff, 2007; chua et al., 1999; cater and justis, 2009). in order to solve the abovementioned main problem, cater and justis (2009) developed a model that proposed six dynamic prepositions that could influence the emergence of successors in fb. these prepositions include: • a positive parent / child relationship between the founder or incumbent and the successor enhances the development of successor leadership; sajesbm volume 6, (2013) www.sajesbm.com article no 140 136 • the possession of a long-term orientation enhances successor leadership; • the possession of the spirit of cooperation among successors enhances successor leadership; • the thorough and rapid acquisition of company and industry knowledge enhances the development of successor leadership; • understanding the role of manager–builder in the family firm enhances the development of successor leadership, and • understanding one’s orientation toward risk taking enhances one’s development as a successor leader. review of related literature venter and boshoff (2007) suggest that the transfer of leadership is one of the biggest reasons fb fail to move from one generation to the next. a lack of a planned approach to succession and choice made by families over the ownership structure are often the reason for the failure of successions (cullen, 2005; venter and boshoff, 2007; chua et al., 1999; farrington, 2009). banking moguls such as the rothschild family found that by having “lots” of children, they have a better chance of business continuity (landes, 2006). this was based on the premise that potential successors would emerge from the children. daniell (2008) notes that fb that have managed to trade beyond the third generation think long term and typically has the character and tenacity to ride out the bad times, and make the necessary adaptations for survival by implementing difficult decisions in order to ensure the survival of the business above other commercial considerations. however, family firms have complexities related to ownership and family conflicts (schwass, 2008). according to schwass (2008), due to these complexities, fb may adopt unconventional business models that will enable them to achieve greater success than their non-family owned counter parts. in brief, in as much as family members may be instrumental to business success, they may also have a negative effect on the performance of the business by inflicting the need for conflict resolution far too often (schwass, 2008). benefits of family businesses chrisman, chua and sharma (2003) argue that it would be invaluable to research the relationship between family involvement and competitive advantage as this would allow the exploitation of the ability of family firms to enhance their economic performance. grant (2007) observed that competitive advantage is evident in fb where there is typically more loyalty, passion and commitment than in non-family owned businesses because successors could strive to build on the legacy of their founders. landes (2006) suggests that one of the greatest competitive advantages a company can have is the bloodline. grant (2007) further argues that the value system of a family firm is passed down from generation to generation. this value system creates a work culture that continues into the personal lives of the members. barney, clark and alvarez (2002) suggest that family bonds may even offer opportunities over and above non-family businesses due to family members’ willingness to share information more readily. since successors tend to enjoy a longer period of grooming and preparation for succession, it can be argued that fb has an advantage over non-family owned businesses in this regard (daniell, 2008). colli (2003) suggests that in most cases, the preparation of the successor is handled within the family. daniell (2008) finds that larger families often resort to a “family constitution”, which sets out an approach and guide for members to abide by, thus sajesbm volume 6, (2013) www.sajesbm.com article no 140 137 minimising conflict and tabulating a success path for the business. the constitution defines the family, its identity, vision, values, mission and the rights and responsibilities of members. in addition, the constitution typically has checks and balances in place to curb the abuse of power (daniell, 2008). landes (2006) provides an example where mayer rothschild, a prominent banker, drew up a partnership agreement to guide the family before he died. the agreement provided clear rules for order, family behaviour and the succession of power, and it gave his descendants a code by which they could live by and protect their private and business lives. mayer rothschild made it clear that there would be no room in the fb for females or sons-in-law and furthermore, that his heir and descendants would only be allowed to marry jewish wives (landes, 2006). pitfalls of family businesses family firms suffer challenges not commonly found among non-family businesses because problems are carried over into the family (schulze, lubatkin and dino, 2003). grant (2007) mentions that between generations, personal goals of the members may differ. the difference thus requires clarifications to avoid harmful conflicts, which has the potential to destroy the business. as an illustration, excessive pressure that could lead to conflicts that hinder the development of the business may be placed on family members to succeed the family business (bertrand and schoar, 2006). the gucci family is a prime example of a family business, which rose to great heights only to be brought into disarray through family member differences, lawsuits and other debilitating conflicts (daniell, 2008). another potential risk faced by fb is that of divorce (daniell, 2008). this sensitive issue can range from insignificant to enormous depending on the couple involved, the nature of the divorce, the structure of the family wealth and the local laws involved (daniell, 2008). research shows that the two most potentially harmful risks to the family firms are excessive shareholding and difficult sons-in-law (daniell, 2008). barney et al. (2002) believe that the need to maintain family ties reduces family members’ ability to maintain other strong social ties, which may weaken their social networking skills. however, one of the most challenging areas is that of compensation. grant (2007) argued that often funds are misused for personal goals at the detriment of the fb. founders tend to be poor planners and find it difficult to share and articulate their vision to potential successors (grant, 2007). grant (2007) went on to say that the sooner the founder manages the “family element” effectively, the better the chances are that the fb will be transferred to the next generation. the research method in accordance with yin (2003), a prominent fb within port elizabeth, south africa, was chosen as the case study. the business is part of a successful franchise chain that is concerned with the wholesale and retail sales of motor spare parts and accessories to mechanical shops and the general public. the firm opened for trading in 1995 with only one store. at the time of the investigation, the firm has grown to three stores. under the successful leadership of the founder, a further franchise was acquired in 2001. in 2005 the two eldest brothers were instrumental in opening the last franchise. all the franchises operate in the port elizabeth area and each one is run separately by one of the brothers. the family consisted of the parents and 4 siblings as indicated in table 1. the eldest sibling is female. she opted not to succeed the parents. the remaining siblings are males and each plays a significant role in the day to day running of the business. the founder and the 3 brothers individually own 25% stake in the fb. the founder participates in significant meetings that may affect the family business, but leaves the day-to-day decisions to the successors. the founder still draws an income from the business apart from the 25% shares that he maintains in the firm. sajesbm volume 6, (2013) www.sajesbm.com article no 140 138 table 1 respondents to the case study title code description age sex ownership (%) founder ff father 61 male 25.0 founder fm mother 58 female 0.0 sibling s sister 37 female 0.0 successor sibling sse eldest brother 34 male 25.0 successor sibling sss second brother 33 male 25.0 successor sibling sst third brother 29 male 25.0 the data collected from the interviews were analysed and verified against the six prepositions in cater and justis (2009) successor development model. the questionnaire was designed to collect data to support or negate the prepositions. the questions were semi-structured in nature. the responses were tape recorded so that they could be analysed at a later time. the specific questions of the questionnaire were based on the literature reviewed and the identified problems. the questionnaire comprised of a total of 47 questions and was developed and based on categories such as the qualification of respondent and family business; structure of the family business and relationships; brief history of the family business; training and development of successor; succession process; and management and policies. however, findings related to the last 5 sections are herein presented for the sake of brevity. results and discusion all the six respondents agreed that ff started the fb as he has always wanted to start his own business. when moving in with fm’s mother, the opportunity presented itself as household expenses were reduced. the family members said sse was given four months to travel overseas before returning to assist ff with the running of the fb. at the inception, �fm assisted for six years in the evenings as the bookkeeper, before handing over to her sister; and sse and sss assisted ff with preparations of the first store, which was started in june 1995. the second and third store opened in 2001 and 2005 respectively. when asked about information pertaining to the culture and values espoused by the fb, all successors agreed that ff is a very hardworking founder who put a lot of hours into the fb to make it successful. they noted that �ff worked behind the counter personally in order to make sure that required service delivery standard was maintained. sst observed that there is a very open door, professional, yet relaxed culture in the firm. �for example, the successors encourage a monthly gathering of the employees for a braai; �drinks (alcohol and non-alcohol) were often consumed after work in a bid to provide an opportunity for the employees and the successors to communicate in a relaxed manner. in effect, friendliness and a feeling of family belonging amongst employees were encouraged by the successors. more so, ff stated that the employees comprised of their extended family members that include three brothers and four sisters. according to walsh (2011), family business succession comprises management succession and the ownership succession. each requires involving family members so that at the end of the processes family members will have been involved and will feel comfortable making decisions about their individual and collective futures in the management and ownership of the family business. through family communication links, the training and development of successors for desired outcomes can be assured. family communication and other related activities should lead to the manifestation of integrated family unit after the succession sajesbm volume 6, (2013) www.sajesbm.com article no 140 139 period (walsh, 2011). thus, the findings of the case study are discussed based on succession related development, management and process issues in the next sections. training and development of successors all respondents confirmed that there was a lot of “shop talk”, especially around the dining room table and at family gatherings when they were growing up to the extent that fm often had to control the amount of “shop-talk” discussed around the table. the daily turnover and profitability of the business were openly discussed by ff. all respondents recalled that the “shop-talk” was of a positive nature and it encouraged the involvement of the siblings in the business. in order to get the siblings involved in the enterprise, ff would however have to resolve conflicts among family members who are in the business, formulate a succession plan and developing a strategic business plan that should incorporate a retirement and estate plan (walsh, 2011). sss recalls that he could tell whether the day had been a good or poor one by the expression on ff’s face when he returned home after work. in fact sst stated that he learnt many of the part codes by just listening to dinner table “shop-talk”. however, the ‘shop-talks’ were not intentionally done rather they often occur due to the fact that ff and fm worked hard in the fb. in any case, both ff and fm usually speak positively about the fb during such talks. all the successors agreed that ff had a lot of pride in the firm since the family name was at stake. the siblings all felt that for the most part, the parents spoke positively about the business with pride. it was also mentioned that ff and fm stopped giving the siblings pocket money in order to earn money as they work part time at the fb. fm recalls that ff ensured that the siblings earned the minimum wage rate when they began to work in the firm. ff equally ensured that the successors worked at all levels of the fb and were not given any preferential treatment. this help build relationships with the other employees. ff also ensured that the successors were treated the same as other employees, in that if they wanted to work, they had to work every weekend regardless of other commitments. the siblings were then asked to discuss any part time or holiday work that they did at the firm. in their view, the part time work was structured as ff ensured that the successors gained experience in all facets of the business. at one time or the other, each successor was a driver or spares store man, and also worked at the sales counter or in the procurement and administration departments. ff ensured that the successors started at the bottom of the business and worked their way up to management positions. all the successors were encouraged to work in the fb during school holidays and over weekends. ff insisted that if the successors wanted to work during school holidays; they had to commit to all of the days. all successors agreed that the wages they received were market related and would have been the same as if ff had employed someone else. for instance, sse and sst were both fired by ff from their positions during the succession process in the past. before re-joining the business, they were required to re-apply for their positions through an interview process. ff recalls that sss was very nearly fired from his position too. however, it is notable that none of the successors gained significant work experience outside the fb. while sse and sst had small informal work while travelling overseas, sss only did community service for one year as a clinical psychologist before joining the firm. in terms of formal education, s did not study any further after leaving secondary school; sse studied a bachelor of commerce, but did not complete the final year due to work related pressures; �sss has achieved a master’s degree in clinical psychology; and sst studied bachelor of commerce, but did not complete the final year before he joined the firm. these suggest that tertiary education may not have played significant roles in the development of all the successors. family business succession process all the respondents agreed that ff initiated the succession process in the firm. ff always had the intention of sse taking over the business as he had documents showing sse’s later sajesbm volume 6, (2013) www.sajesbm.com article no 140 140 succession in the business drawn up. when in 2002 at the age of 53, ff had a heart attack, fm then realised a need to accelerate the succession process. fm therefore encouraged sss and sst to join the firm. fm realised that sse’s strength lies in his procurement and marketing abilities and not in financial matters. fm perceived that for the survival of the business, sss should be encouraged so as to create a stronger business team. perhaps, if not for the 2002 heart attack, ff contends that he would still be working in the business. when asked to discuss the incumbent’s attitude towards children succeeding parents. ff revealed that he was initially very nervous that the successors would not have the ability to succeed at running the firm. ff also perceived that the successors would not have the same amount of pride when running the business. so he made it very clear that if the successors were not running the business properly he would sell it. in order to show that he was serious; ff then withheld ownership of the business for 3 years during the succession process. he only relented when he became comfortable with the idea that the successors could manage the business. initially ff intended for sse to take over the business as the other male siblings were not interested. after ff’s heart attack in 2002, sss and sst were given the opportunity to also join the fb, while �ff monitored the progress of succession from his office at home. three years into the succession process, ff began the process of transferring ownership to the successors. sss was instrumental in creating a family trust with each trustee owning 25% of the shares as indicated in table 1. sss assisted by appointing an attorney to compile a family trust and to create a “roles and responsibilities” constitution. each successor raised finance that was used to purchase 25% of the newly formed trust. each successor now manages and is responsible for one store. the time between initiating the succession to leadership takeover by the successors took approximately two years. sst recounted that s showed no interest in becoming a successor in the business. in addition, the respondents were then asked to discuss conflicts during the process. it came out that during the succession process, sse felt that equal shareholding between the successors was very unfair to him given the fact that he had worked in the business since its inception. all the successors opined that the conflict concerning the shares that lasted for approximately one year, was a “make or break” for the business. however, fm and sss were instrumental in convincing sse to realise that it would only be fair and in the best interests of the business if each successor controlled an equal share and earned equal salaries. as compensation for sse’s longer service to the fb, sse was initially given a greater profit share. however, by the year 2011, all successors had an equal share of the profits. giving everyone a chance to have their say and express their thoughts and feelings, privately and repeatedly as well as a considerate listening ability would have assisted in preventing the escalation of the conflict (thompson, 2006). during the succession process, ff and fm gave most of the coaching and mentoring to the successors. the successors often had to work under supervisors while they were learning the business. sse and sst recalled that the development / leadership style of ff was to lead by example. tacit and explicit knowledge were obtained by the successors by observing ff. ff recalls warding off many ideas sse had by stating that when he succeeded the business, he could implement them. sse observed that ff’s desire to do things right made ff a good role model. ff’s coaching concentrated more on the “the bigger picture” areas that entail how to succeed in business, ethics, morals, people skills and critical success factors. such critical success factors for the fb include good customer service; �care of staff; correct stock holding; monitoring cash flow; honesty and integrity; and stock range. the respondents were also asked to comment on the satisfaction levels of other stakeholders after the succession process was concluded. in responding, sss noted that bankers were not too concerned as long as loans were paid timely. fm states that the banks were very impressed with sss’s conservative approach to finance and were more than sajesbm volume 6, (2013) www.sajesbm.com article no 140 141 eager to offer funding. ff perceives that sse is very well respected by the part suppliers. he adds that sst is well thought of as a public relations person. when attending national franchisee gatherings, both ff and fm are proud that at all three successors are well respected by their peers. sss and sse opined that working alongside employees created strong employee relationships and ensured their buying-in after the succession. in the fb, all the successors created a second tier of management structure when they succeeded ff. new managers were appointed from existing employees with improved packages. it was apparent from the responses that common mistakes that plague family successions were less evident during the succession process in the case study. thompson (2006) contends that not preparing yourself, not preparing your successor, not preparing the business, not really giving up control, hanging on too long, not securing your retirement money, not including your successors in the planning process and not doing a commercially sensible deal could derail the trajectory of a succession process. therefore, making sure these mistakes do not occur is important for a successful outcome. there is also a need to commit to having an open, transparent and written succession plan that embrace a safe, open and objective process to uncover all the issues in the process (thompson, 2006). in spite of the conclusion of the succession period, all the respondents agreed that the ff attends quarterly meetings and other management meetings as a consultant. ff attends a minimum of four fb meetings to give advice to the management of the business. fm adds that all the successors have a great respect for ff business skills and they would all walk away from a business deal if ff did not think it was viable. this reported family cohesion is elaborated upon by stenholm (2010) who says in a family company, the most successful leadership transitions occur when the board, family council and management regularly work together to develop chief executive criteria that is closely aligned to the organization’s strategic objectives while ensuring that likely internal candidates are benchmarked against the best-in-class and address any skill gaps. it is good business practice for family companies to position themselves for the future by investing in robust leadership development and succession planning processes that adapt succession planning best practices to the unique characteristics of family-owned businesses (stenholm, 2010). management and policies each successor has an equal share in the business and controls one of the three stores in port elizabeth. there is no ceo in place in the business. decisions are made on a “one trustee, one vote basis”, in the event of a split decision; the majority of votes would be accepted. however, it was noted that sss by virtue of his communication and conflict resolution abilities has a tendency towards overall leadership and control. therefore, he often acts as the chairman in meetings. in this context, all the successors are currently performing manager-builder roles in the form. the successors have plans to expand the business, both within the franchise group and into different industries. sse has the most entrepreneurial tendencies out of all of the successors. sss also was of the opinion that the residential growth in port elizabeth is occurring in the areas where their stores are located. this offers opportunities for increased sales for their business. however, ff feels that the fb should not be allowed to grow too quickly as this could put pressure on cash flow in the firm. the respondents further contend that the successors perceived that most of the major business challenges for the current fb structure have been addressed by them. concerning constitution or set of rules that are governing the firm, a “beneficiaries’ agreement” was signed by all the successors and ff regarding the ownership of the company and variations thereof. a “list of functions” was also signed by each successor. the list indicates the responsibilities that each successor must perform. nevertheless, the respondents noted that issues are openly discussed (often informally) or at a meeting between the successors and with regard to larger decisions ff is always consulted. as sss controls the administration and finance, he often has the final say before a decision is made; advising whether the business can afford to undertake a project or not. the “one trustee, one sajesbm volume 6, (2013) www.sajesbm.com article no 140 142 vote” has not been applicable thus far since consensus is often reached between the trustees before going to vote. as mentioned, if ff does not like a business transaction all the successors would walk away from the deal. all the respondents agreed that pride, integrity, honesty and fairness to employees are very important in the firm. the respondents were of the opinion that equity between successors, pride and the family name associated with the business, trust and harmonious / close family relationships, among others, are the main reasons for the success of the fb. in this sense, fm is instrumental in maintaining and promoting good family relationships in the firm. all the successors further mentioned that they are very proud of the fb and perceive that their name is synonymous with the success of the fb. even ff contends that he would “love” to see the third generation participate in the business. ff recounted that while driving with the successors to a business trip recently, the successors were beginning to talk about how and what would be required to have the third generation succeed them. however, only sss has a nine month old son and has not given much consideration to his son succeeding him at the time of the interview. sse and sst do not have children yet and have not given much consideration to future children succeeding them. against the backdrop of the view that majority of owner managers intend to pass the business on to their children, but less than 30% have a succession plan and the perception that only 30% of owner-managed businesses are passed on to the first generation, and that only 10% make it to the third (thompson, 2006), the long term succession planning that is mentioned in the studied case is a step in the right direction. future research prior to the implementation of the succession plan, the successors to this case study faced an ownership dilemma. sse perceived that equal shareholding offered to his brothers was unfair given the amount of time he had worked for the firm prior to their involvement and that the other successor had previously shown no interest in the business. the negotiation skills of sss when drafting the “beneficiaries’ agreement” and the conflict management skills of fm were crucial for the success of the succession. all successors now agree that without equal ownership of the business, the business would not survive. thus, future research may look at the importance of equal ownership and earnings between successors for the survival of such businesses. conclusions as family businesses continue to dominate the economic landscape, it is argued that this study contributes to the debate regarding the success rate of successions to some extent. of particular significance regarding this case study was the importance of resolving the ownership conflict between the successors during the succession process. all the respondents viewed the resolution of this conflict as paramount to the success of the succession. the successors all opined that equal ownership remains crucial to the harmony between the successors and thus the continuance of the business. concerning the six prepositions proposed by cater and justis (2009), certain inferences can be made based on the findings of the case study. all the respondents agreed that trust among the family members was essential to the positive outcome of the succession process. this is in agreement with the first preposition. although sse was chosen to succeed ff from the onset of the business, the inclusion of sss and sst by fm showed a willingness to have all siblings succeed in the business. the structured approach by ff regarding successors’ ability to acquire knowledge of the business supports the long-term orientation of ff to have the business succeeded by the siblings. fm played an important role in managing the conflict between the siblings during the succession process, displaying a desire to have a smooth succession transfer. all the successors share a deep sense of sajesbm volume 6, (2013) www.sajesbm.com article no 140 143 pride associated with the family name, a situation that contributes to the display of a strong sense of leadership continuity. the above arguments thus support the preposition that a long term orientation that promotes succession existed in this case. although the successors were very competitive when growing up and rivalry existed among them, their relationships were and remain very cordial. the eventual realisation by sse that equal ownership should exist, together with the negotiations between the other successors show their willingness to cooperate. all the successors are satisfied with the “one trustee, vote” concept, which lays a foundation for future conflict resolution and decision making between the successors. the willingness of the family members to get together regularly suggests that they favour the spirit of togetherness. the structured staggered approach to profit sharing and ownership distribution ensured a fair method of compensation to the successors. thus, the willingness of the successors to resolve and negotiate a fair integration to succession shows they have a positive spirit towards cooperation. in addition, ff ensured that the successors had a “hands on” approach when working parttime and when joining the family business. this also meant that employees accepted the successors from the onset of the succession process. the successors were required to work under supervisors or were mentored by ff. ‘shop talk’ also provided the successors with knowledge about the industry and other stakeholders. the aforesaid supports the preposition that the successors acquired rapid knowledge of the industry. all the successors are looking to expand the business using the inherited business foundation as a platform. these observations support the preposition that the successors have adopted a manager-builder type role in the business. the findings of this case show that the successors are ambitious and willing to take calculated risks with expansion efforts. this supports the findings of cater and justis (2009) that successors typically perceive themselves to be more risk orientated than predecessors. references barney, j.b. clark, c. & alvarez, s. (2002) where does entrepreneurship come from: network models of opportunity recognition and resource acquisition with application to the family firm? in: proceedings of the second annual conference on theories of the family enterprise. philadelphia: university of pennsylvania. bertrand, m. & schoar, a. (2006) the role of family in family firms. journal of economic perspectives, 20 (2), pp. 73-96 bigliardi, b. & dormio, a.i. (2009) successful generational change in family business. measuring business excellence, 13(2), pp. 44-50. cater, j.j. & justis, r.t. (2009) the development of successors from followers to leaders in small family firms: an exploratory study. family business review, 22 (2), pp. 109-124. chrisman, j.j., chua, j.h. & sharma, p. (2003) current trends and future directions in family business management studies: toward a theory of the family firm. coleman white paper series. chua, j.h., chrisman, j.j. & sharma, p. (1999) defining the family business by behavior. entrepreneurship theory and practice, 23(4), pp. 19-39. colli. a. (2003) the history of family business 1850-2000. cambridge, uk: cambridge university press. cullen, m. (2005) the development of an entrepreneurial model to promote the survival and growth of family estate wine businesses in the south african wine industry. phd thesis. nelson mandela metropolitan university. sajesbm volume 6, (2013) www.sajesbm.com article no 140 144 daniell, m.a. (2008) strategy for the wealthy family: seven principles to assure riches to riches across generations. new jersey: john wiley & sons. farrington, s.m. (2009) sibling partnerships in south african small and mediumsized family businesses, phd thesis. nelson mandela metropolitan university. grant, r.m. (2007) contemporary strategy analysis: concepts, techniques, applications. 6 th ed. oxford: wiley-blackwell. javitch, d.g. (2005) successful succession planning. [online] available from: http://www.entrepreneur.com/humanresources/employeemanagement columnistdavidjavitch/article77974.html [accessed 1 march 2010] landes, d.s. (2006) dynasties. fortunes and misfortunes of the world’s great family businesses, boston: penguin (non-classics). poutziouris, p.z., smyrnios, k.x., & klein, s.b. (2006) handbook of research on family business. cheltenham: edward elgar. santiago, a.l. (2000) succession experiences in philippine family businesses. family business review, 13(1), pp. 15-40. schulze, w. s., lubatkin, m. h. & dino, r. n. (2003) toward a theory of agency and altruism in family firms. journal of business venturing, 18(4), pp. 473-490. schwass, j. (2008) dealing with the complexity of family business: strategies for long-term success. [online]. available from: http://www.imd.ch/research/challenges/upload/tc025_08_dealing_with_complexitiy_of_famil y_business.pdf [accessed 28 april 2010] stenholm, g. (2010) beyond the family tree: succession planning for family business [online]. available from: http://content.spencerstuart.com/sswebsite/pdf/lib/fambus_0310.pdf [accessed 7 july 2013] thompson, p. (2006) succession planning and the family business [online]. available from: http://www.thompsonlaw.ca/pdf_folder/succession_plans_fb_06.pdf [accessed 7 july 2013] venter e. & boshoff c. (2007) the influence of organisational-related factors on the succession process in small and medium sized family businesses. management dynamics, 16(1), pp. 42-55. walsh, g. (2011) family business succession: managing the all-important family component. ottawa: kpmg enterprise. yin, k.r. (2003) case study research design and methods. 2nd edition. california, usa: sage publications. abstract introduction research methods and design results discussion conclusion limitations and future research acknowledgements references footnote about the author(s) wesley j. rosslyn-smith department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa marius pretorius department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa citation rosslyn-smith, w.j. & pretorius, m., 2022, ‘establishing turnaround potential before commencement of formal turnaround proceedings’, southern african journal of entrepreneurship and small business management 14(1), a590. https://doi.org/10.4102/sajesbm.v14i1.590 original research establishing turnaround potential before commencement of formal turnaround proceedings wesley j. rosslyn-smith, marius pretorius received: 29 june 2022; accepted: 19 aug. 2022; published: 27 oct. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: determining the turnaround potential of a firm has plagued academia and practice. existing failure prediction tools yield limited insight into turnaround potential and are heavily dependent on financial metrics. this framework made a valuable contribution to research in this field as it added a new perspective for decision-making purposes. aim: practitioners, judges or directors require a quick, efficient framework to aid in developing a reliable opinion on the likelihood of liquidation of a firm intending to commence with reorganisation proceedings. the aim is to speed up the liquidation of economically inefficient firms that attempt to seek shelter in reorganisation. setting: the study was conducted in south africa and made use of experts in the field of turnaround management. methods: the indicators were derived from a strong and widely used managerial tool known as the delphi method. the relative importance of each element was allocated using a powerful mathematical model known as the analytic hierarchy process (ahp). results: this study identified key indicators for the nine liabilities with accompanied weights of relative importance for a likelihood of liquidation framework. anchor scale values are proposed for each indicator to assist in its application. the framework is timely in its application, considers the availability of accurate data, inexpensive to implement and easy to interpret. conclusion: the likelihood of liquidation framework was developed to include a broader spectrum of liabilities to assist in deciding the viability of recovery of a firm in reorganisation. keywords: turnaround; reorganisation; insolvency; commencement standard; ahp; delphi technique. introduction in recent years there has been a significant contribution made by researchers and practitioners on the prediction of business failures (wu, gaunt & gray 2010:36). failure can be defined in various ways, taking into consideration the specific interest or condition of the firm under scrutiny. reorganisation1 is often an important vehicle for failing firms and their creditors to pursue intensive turnaround strategies. however, one is often under the impression to conclude that reorganisation has failed if the firm is subsequently liquidated or sold, whereas this may be the desired outcome of an efficient process. reorganisation is aimed at rescuing an economically viable firm that experiences temporary financial difficulty – financially distressed (franks & torous 1992). critical to the decision to pursue turnaround efforts is the likelihood of the firm succumbing to liquidation. an economically distressed firm will not find any salvation within reorganisation and will simply erode the value of the firm away. therefore, a commencement standard looks to screen out severely economically distressed firms that will not benefit from reorganisation proceedings. such a standard may look to failure prediction models; however, traditional prediction models typically rely on financial metrics and have difficulty in considering other crucial elements of economic viability (deakin 1977; trahms, ndofor & sirmon 2013:1289). furthermore, there is criticism over the lack of methodological rigour in identifying the turnaround potential of firms on which to conduct such analysis (pandit 2000:32; pearce & robbins 1993:626). a valuable contribution to research in this field must therefore seek to redress this neglect, forming new ways of filtering these phenomena from proceedings. the likelihood of liquidation framework (lol) was developed to include a broader spectrum of liabilities to assist in deciding the viability of recovery of a firm in reorganisation. the lol is a basic arrangement of liabilities used to determine the emergence of the firm from reorganisation in a solvent condition and with reasonable prospects of financial stability and success. the framework has been developed using the south african business rescue reorganisation process in a manner that allows adaptation to various other jurisdictions. this article aims to continue the development of the lol for its eventual use in practice. to do so, the study (1) identifies key indicators for the nine liabilities, then (2) investigates the relative importance of each liability/indicator, and finally (3) proposes anchor scale values for each indicator. the indicators were derived from a strong and widely used managerial tool known as the delphi method. the relative importance of each element was allocated using a powerful mathematical model known as the analytic hierarchy process (ahp). the enhanced framework is expected to provide some indication of the reasonable prospect of a firm prior to the commencement of business rescue proceedings. if effective, this framework stands to reduce the number of economically distressed firms from abusing proceedings and ultimately preserve firm value. the likelihood of liquidation framework the lol consists of nine liabilities that were derived from existing turnaround literature. for example, the liability of creditor composition is a construct drawn from ayotte and morrison (2009), bergström, eisenberg and sundgren (2002) and campbell (1996). each liability represents an acute vulnerability of a firm during the formal turnaround process. the framework consolidates all these liabilities to assess the prospect of the firm succumbing to liquidation. under the evidence of absence, lol removes the intrinsic variables associated with failure to assume a reasonable prospect at the commencement of business rescue for the recovery of a firm. this however assumes the value maximisation principle remains valid. the framework allows decision-makers to consider the relevant factors before commencing reorganisation proceedings given the limited information and data accuracy associated at that point in time. the nine liabilities include functional business model, reorganisational slack, creditor composition, stakeholder influence, liability of smallness, liability of data, liability of leadership, liability of obsolescence and external legitimacy. each liability contributes to the overall likelihood of liquidation. in some circumstances, a liability may be unlikely, while in others it may serve as a ‘fatal liability’ thereby suggesting liquidation is almost certain. the intensity of each liability is determined by its indicators which were derived using the delphi study. research methods and design the study utilised a mixed method research design that assisted in completing the lol framework. in line with creswell (2012:543), an exploratory sequential mixed methods design, or two-phase model, is best suited for the task. this method involves the procedure of first gathering qualitative data to explore a phenomenon and then collecting quantitative data to explain relationships found in the qualitative data. therefore, the researchers were able to identify measures actually grounded in the data obtained from study participants. the study consisted of two primary research techniques, delphi and ahp, which fell into a sequence of steps as depicted in figure 1. the use of these two methods in exploratory sequential mixed methods design was reinforced by khorramshahgol and moustakis (1988) when they termed the methodology the delphic hierarchy process. figure 1: an overview of the research process used. an initial set of between five and seven indicators were derived for each liability by the researchers from the literature. each indicator was given a title and definition that were presented to the participants in the first round of the delphi study. the participants consisted of 11 experts who were purposefully selected based on their knowledge and experience in the field of business turnaround. the sample size was also considered acceptable for both studies as it remains exploratory in nature (cheng & li 2002:197; okoli & pawlowski 2004:18; wong & li 2008:12). these experts were considered eligible to be invited to participate in the delphi study as they shared related backgrounds and experiences concerning the target issue, were capable of contributing helpful inputs, and were willing to revise their initial or previous judgments for the purpose of attaining consensus. the researchers closely examined and seriously considered the qualifications of participants in addition to their acclaim and respect within the target groups of experts. the participants ranged from academics, business rescue practitioners to corporate recovery consultants. the methodology and findings from the two primary research techniques are described next. the delphi method the delphi method is a widely used and accepted method for attaining convergence of opinion regarding real-world knowledge solicited from experts in certain fields. the technique can be mostly attributed to dalkey, brown and cochran (1969), who maintained that ‘two heads are better than one, or…n heads are better than one’ (dalkey et al. 1969:6). according to dalkey, there are three features of delphi: (1) anonymity; (2) controlled feedback and (3) statistical group response. anonymity is preserved by using a questionnaire and thereby lessening the impact of dominant individuals. controlled feedback is ensured by conducting the study in a sequence of rounds where the results thereof are shared with the participants at the end of each round to promote objectivity. finally, a broad definition of the response aims to decrease group pressure for conformity as towards the conclusion of the rounds there may still be a significant spread in individual opinions. keeping this in mind, the inclusive group response is designed to assure that the opinion of every participant is incorporated in the final response. linstone and turoff (2002) outline the process of a conventional delphi study as firstly: [d]esigning a questionnaire which is sent to a larger participant group. after the questionnaire is returned, the researcher summarises the feedback and, based upon the results, develops a new questionnaire for the participant group. the participant group were given at least an opportunity to re-evaluate its original answers based upon examination of the group response. to a degree, this form of delphi is a combination of a polling procedure and a conference procedure which attempts to shift a significant portion of the effort needed for individuals to communicate from the larger participant group to the smaller monitor team. (p. 5) this study made use of an online questionnaire for the first and second round that ran participants through a video tutorial explaining the lol framework, objective of the study and what their role is in the delphi process. the participants were asked to evaluate and add indicators in consideration of the smart criteria (specific, measurable, attainable, realistic, time-sensitive). smart the smart criteria assisted the participants in assessing and suggesting indicators that were relevant in relation to the study’s objective. each of the smart elements is defined as follows: specific: indicators should be detailed and as specific as possible. loose, broad or vague indicators are not desirable. measurable: in order to clearly determine a value, indicators should not be ambiguous but rather as clear and concrete as possible. it is important that an indicator can be measurable. the measure may be quantitative or qualitative, but measurement should be against a standard of performance and a standard of expectation understood by an industry professional. attainable and aggressive: success or failure is only fairly attributed against practical indicators. indicators should not be out of reach. they should be reasonable and attainable within the typically hostile and chaotic environment experienced in business rescue. however, setting indicators is a balance between this degree of ‘attainability’ and challenge and aspiration. realistic and result-oriented: extending the concept of attainability, a goal should be realistic. it is possible that a goal could be set that is attainable, but not realistic in the particular working conditions. being realistic in the choice of indicators is helpful in examining the availability of resources and selecting indicators. time-sensitive: indicators should be selected in view of the strict timelines afforded in business rescue. success is dependant on finding information within a few days. during the first-round, participants were obligated to suggest two of their own indicators before being presented with the initial set compiled by the researchers. participants then had the opportunity to accept, reject or modify each indicator while providing their reasoning as well. participants could add new indicators at any point during all three rounds. to assist the participants the researchers compiled the first set of indicators that were derived from the literature and the researchers’ knowledge and experience. these initial indicators ranged from standard to controversial in nature. they aimed to trigger innovative thinking and provide critical mass for the delphi process to work from. during each round, the participants were asked to accept, modify or reject each indicator with reasoning and with a confidence level. new indicators could be suggested at any point during the study. after each round, the researchers reviewed all the indicators and incorporated all the participants’ input based on the sound reasoning and level of confidence. a new set of indicators then emerged and were presented to the group with any modifications being clearly highlighted. thereafter, each round offered individuals an opportunity to modify or refine their judgments based on their reaction to the collective views of the group. a satisfactory level of consensus was defined in this study when the participants no longer could add new indicators and accepted the remaining indicators. minor modifications or rejections with low confidence levels and weak reasoning were regarded insufficient to warrant changes in the last round. ethical considerations this article followed all ethical standards for research without direct contact with human or animal subjects. results the first round of the delphi study resulted in the most significant amount of changes and additions by the participants. synthesising new indicators proved difficult because of the varying perspectives of the participants; however, this brought new and intriguing views to the fold. the number of indicators ranged from 56 in round one, 67 in round two and 41 in round three. the first round focused less on consensus and more on exposing all the differing positions advocated and the principal pro and con arguments for those positions. the average level of confidence increased progressively through the rounds as consensus emerged. a satisfactory consensus level was reached, by incorporating agreement and importance aspects, in round three with the final indicators emerging from the study listed in table 1. table 1: final indicators and definitions from round three of the delphi study. table 1a (continues...): final indicators and definitions from round three of the delphi study. during the study, participants questioned indicators in their entirety as well as more detailed aspects of the definitions. the inclusion of the smart criteria certainly helped the participants build consensus faster as it was often referenced during all three rounds. in an interesting turn of events, the participants took a preference to non-financial metrics in describing indicators. this may be the result of data integrity issues, time constraints and data lead times that are typically prone to information at commencement. the 41 indicators in table 1 provided a non-exhaustive list obtained from numerous experts with domain knowledge that asses the likelihood of liquidation of a firm before commencing with reorganisation proceedings. analytic hierarchy process the ahp was developed by thomas l. saaty as a decision-making theory. it is a structural method that helps to elicit preference of expert opinion from decision makers using a multi-criteria decision-making method. analytic hierarchy process allows decision makers to rank, select, evaluate and benchmark a wide variety of decision alternatives using the systematic procedure (forman & gass 2001; golden, wasil & harker 1989; saaty & vargas 2012). the model utilises a hierarchical structure which consists of an objective, criteria, sub-criteria and alternatives. based on pairwise comparison judgments, ahp integrates both criteria importance and alternative preference measures into a single overall score for ranking decision alternatives (saaty 1990). the versatility of the ahp method can incorporate both qualitative and quantitative approaches to solve complex decision problems (cheng & li 2002). analytic hierarchy process, therefore, offers a holistic analysis of complex relationships inherent in a problem and assists the decision maker in assessing whether the evaluation criteria are of the same order of importance so that the decision maker can compare such homogeneous alternatives accurately. analytic hierarchy process harnesses domain knowledge from experts and forms a systematic framework for conducting structured group decisions for a large number of both quantitative (financial ratios) and qualitative (non-financial) criteria (park & han 2002:3). this study applies the ahp methodology to exploit domain knowledge in acquiring weights from domain experts. the ahp approach has been applied to a variety of complex decisions in the business domain, including the problem of granting corporate credit, portfolio management and the assignment of sovereign debt ratings, among other business decision problems (bolster, janjigian & trahan 1995; clark et al. 1997; lee, kwak & han 1995; levary & wan 1999). this study used the ahp method to specify numerical weights representing the relative importance of each liability and indicator in the lol framework. participants were asked to consider the importance of one element over the other in consideration of the following objective: ‘it’s importance in increasing the likelihood of liquidation of a firm on commencement of business rescue’. the lol framework was integrated within ahp by using the liabilities as criteria and the indicators identified by the delphi process as sub-criteria. pair-wise comparison judgments were made concerning the attributes of one level of hierarchy given the attribute of the next higher level of hierarchy – ahp consists of three principles namely, decomposition, comparative judgment and priority synthesis (saaty 1990). using the ahp method for group decision making involves merging responses using geometric means (lee et al. 1995:4; saaty 2008:95). dyer and forman (1992) highlight three benefits for ahp in group decision making namely, (1) it accommodates both tangible and intangible characteristics, individual values and shared values in the group decision process, (2) assists in structuring a group decision so that the discussion centres on objectives rather than on alternatives and (3) enables the discussion to continue until all available and pertinent information have been considered. analytic hierarchy process is also able to solicit consistent subjective expert judgment using a consistency test. the consistency of the results is measured using a consistency ratio (actually ‘inconsistency ratio’). the liabilities and indicators were regarded as highly interrelated and therefore a high consistency ratio was allowed. the consistency ratio of less than 10% is considered adequate to interpret the results (carnero 2005:546). saaty and vargas (2012) recommend using a normalised eigenvector approach, which is best implemented by computer software such as ahp-os. the group consensus indicator quantifies the level of agreement on the outcoming priorities between participants. the consensus indicator is a derivative from the concept of diversity based on shannon alpha and beta entropy (jost 2006). the measure reflects the homogeneity of priorities between the participants and can also be interpreted as a measure of overlap between priorities of the group members. note though that group decision-making aims to obtain consent, not necessarily the agreement of the participants by accommodating views of all parties involved to attain a decision that will yield what will be beneficial to the entire group (herrera-viedma et al. 2014:4). the consensus indicator, however, should be strictly distinguished from the consistency ratio. the relative importance of the criteria and sub-criteria were rated by the nine-point scale proposed by saaty (1990:15), as listed in table 2. the scale distinguishes the levels of relative importance from equal, moderate, strong, very strong, to an extreme level by 1, 3, 5, 7 and 9, respectively. the intermediate values between two adjacent arguments are represented by 2, 4, 6 and 8. table 2: the analytic hierarchy process pairwise comparison scale. a comparison matrix is created by comparing pairs of criteria and sub-criteria (saaty 1990:12). the pairwise comparison assists in judging independently the contribution of each criterion to the objective. the priority synthesis computes a composite weight for each alternative, based on preferences ascertained through the comparison matrix. alternatives in this study took the form of various variables obtained from a distressed firm. using the composite weight, the relative priority of each alternative can be obtained. a sensitivity analysis is applied to show how criteria weighting deviations can affect the changes of ranks of alternatives. a questionnaire-based field survey was used to collect the participants’ ratings. through individual interviews with participants the data was concurrently transferred into an online application to test, in real time, the consistency of the data (goepel 2017). this was done for several reasons, first, to reduce the time burden on participants as the number of pairwise comparisons were substantial. secondly, the participant was alerted to when they exceeded the maximum consistency ratio and could make the necessary alterations without being influenced by the software’s recommendations. during the interview, participants were allowed to re-examine their comparisons, calculated weights and the final results derived from their initial and subsequent responses. they were also allowed to assess the results and inspect the reasonableness of the rankings until they were completely satisfied with the outcomes. finally, the interview also allowed the researchers to capture deeper insights into the participant’s choices which lead to some fascinating findings. discussion the output showcased in table 3, table 4 and table 5 represent the final judgments of the group. obviously, these tables were the results of many debates, persuasions and discussions. for example, there were occasions when some participants debated the meaning of their high inconsistency of choices which gave researchers deeper insight. it became obvious early on that ahp could contribute significantly more than just prioritising elements. table 3: consolidated group weightings and ranking for the liabilities from analytic hierarchy process. table 4: consolidated priorities for the sub-criteria with respect to liability of leadership. table 5: likelihood of liquidation framework indicators with relative priorities and anchor scale values. to analyse the survey findings, the judgment matrices were pair-wise compared and computed using the use of a software package (goepel 2017). the ahp calculations therefore have been omitted in line with the recent articles (chen et al. 2017; herrera-viedma et al. 2014; okwir et al. 2017; raviv, shapira & fishbain 2017). the local priority weights of all the liabilities and indicators were first calculated and then combined with all successive hierarchical levels in each matrix to obtain a global priority vector. a list of the global priorities for each indicator is presented in table 3. the higher the mean weight of global priority vector, the greater the relative importance. therefore, this serves to distinguish the more important indicators from the less important ones. beyond the global priorities, the ahp survey revealed a number of interesting and unexpected results. surprisingly, participants considered external legitimacy (6.6%) to be the least important liability. the external legitimacy concerns the perceived integrity of the business by its external stakeholders. the low ranking of this liability may stem from the fact that the participants considered direct stakeholders of the firm to be more significant and influential in increasing the likelihood of liquidation. the ahp group consensus of 43.2% across the liabilities is regarded by goepel (2013) as very low signifying a high diversity of judgments. although participants were not able to add or remove any liability, the indicators selected in the delphi process ultimately defined each liability. this probably explains the broad range of indicators that evolved from the delphi process. the consolidated group weightings for the liabilities (main criteria) are listed in table 3. participants reported that the liability of obsolescence (16.1%) is the most important liability in increasing the likelihood of liquidation of a firm on commencement of business rescue. the liability carried by reorganisational slack (14.7%) and liability of leadership (14.5%) weighed in slightly less respectively. the consolidated priorities for the indicators concerning liability of leadership are listed in table 4. this liability seems to be mostly influenced by the management lower-case is perfect. (43.8% local priority) indicator which emerged with one of the highest global priorities as well. during the interviews, participants reiterated this by affirming that the competency of management plays a significant role in ensuring the firms’ success. while the business rescue practitioner can substitute the leadership of a firm this indicator may suggest that in practice this is unlikely to happen fast enough. this supports the work of lohrke, bedeian and palmer (2004:79) and smith and graves (2005:306) in that top management competency will directly affect the likelihood of reversing organisational decline. the weightings for the liabilities ranged between 16.1% and 6.6%, which suggest a relatively even distribution. the strongest liability being liability of obsolescence (16.1%) is mostly made-up of urgency of decline and product relevance indicators. two indicators that emerged the most influential within the lol framework were management competencies (6.3%) and product relevance (6.3%). the latter indicator shares a close resemblance to the customer demand (2.2%) indicator; however, it exhibits a key distinction that the researchers suspect accounts for its prevalent status. customer demand focuses on diminishing demand for a firm’s product resulting from internal factors such as a breakdown in communication, distribution and sales channels with its customers. while product relevance is orientated around changes in the external environment that may result in the product becoming obsolete. the distinction highlights an important feature of the lol framework in that it is more concerned with factors that will have a certain impact on the outcome of liquidation rather than factors that could be rehabilitated in rescue. remaining within the liability of obsolescence, the third most influential indicator was the urgency of decline (5.1%). francis and desai (2005) echo this finding by explaining when the erosion of resources is severe (magnitude) and rapid (time), turnaround becomes exceedingly difficult. interestingly participants with a predominately business background favoured this indicator. the urgency of decline at the commencement of proceedings can indicate the time and resources available to attempt any rehabilitation efforts. this study reported a positive overall consistency ratio of 2.4%, which is far below the recommended 10% acceptable margin (carnero 2005:546) and can be regarded as reasonably consistent. although the participants individually pushed the limits of the ratio the consolidated matrix ratio was more than acceptable. miller (1956) warns about the human limits on the capacity for processing information while dealing with several criteria and as the study involved numerous interrelated indicators this was a difficult task for participants. a group consensus of 54.8% across all the indicators indicates a high diversity of judgments (100% refers to absolute consensus). this was a particularly interesting finding considering all the indicators emerged from delphi study that involved the same group of participants. this finding may suggest that the perception of reasonable prospect of a firm varies between experts and could account for the conflict that arises around this term. the consensus indicator allows for deeper analysis of sub-groups (clusters) of participants with high consensus among themselves, but with a low consensus to other sub-groups. bard and sousk (1990:227) remind, however, that ‘from the standpoint of consensus building, the ahp provides an accessible data format and a logical means of synthesising judgment. the consequences of individual responses are easily traced through the computations and can be quickly revised when the situation warrants’. group consensus was highest in the liability of leadership (74.6%), stakeholder influence (74.1%) and creditor composition (71.1%). curiously, participants from financial backgrounds weighted operational status of the firm far higher than the other participants. conversely, the chosen business rescue practitioners signalled indicators such as secured creditors proportion and dangerous stakeholders proportionally more. analytic hierarchy process accommodated each participant’s views in order to attain a decision that yielded what will be beneficial to the entire group and not necessarily to the particular individuals involved. the global priorities listed in table 5 reflect the views of a balanced group of experts on the importance of each indicator in increasing the likelihood of liquidation of a firm on commencement of business rescue. proposed framework to recap, the objective of this study is to continue the development of the lol framework for its eventual use in practice. the results from the delphi process identified 41 key indicators for the nine liabilities. analytic hierarchy process investigated the relative importance of each liability/indicator from which weights were derived. finally, to complete the lol framework, the study proposes anchor scale values for each indicator. assigning values to the likelihood of liquidation framework indicators to transform the qualitative indicators into a form more suited to computing the likelihood of liquidation the study adopted a five-point scale to assess the magnitude of an indicator. for each indicator, the researchers have recommended anchor values listed in table 5. the anchor values aim to provide a standardised approach to assessing the magnitude of an indicator in a firm. the popular likert scale (1–5) was applied between the two values in equal intervals to measure the proportionality of severity of the indicator. the scale values are anchored with one contributing significantly to the outcome of liquidation and five indicating an unlikely impact on the eventuality of liquidation. the unlikely anchor value (5) reflects the position where the indicator has no contributing effect to the lol score. therefore, the indicator is measured on a monotone increasing semantic differential scale consisting of five negative adjectival statements (see table 5). the anchor scale value chosen to best describe an indicator’s manifestation in a firm is referred to as an indicator’s value (a). likelihood of liquidation framework score the lol score is a closed unit interval [0, 1] that signals the firms’ likelihood of liquidation at the commencement of reorganisation proceedings. a value of 0 will indicate a high likelihood of liquidation while a value of 1 will indicate that liquidation is unlikely. it is important to note that the lol score is not a prediction of failure but an indication at a particular point in time of the likelihood of liquidation and should be used to determine if reorganisation is suitable for the value maximisation of the firm. the lol score can be calculated using the following formula: where n is the number of indicators (41), ai is the value for each indicator with i and ai (1, 2, 3, 4, 5) and wi is the weight for each indicator i. the lol score is calculated from the sum of the weighted values of all the indicators. as the lol score diminishes in value from 1 to 0, so the higher the likelihood of the firm conceding to liquidation there is during reorganisation. the lol framework, in addition, considers the notion of a ‘fatal liability’ which refers to resources (or the absence thereof) that pose an imminent threat to a firm’s survival. should any indicator be deemed significant enough in its totality to induce liquidation then it may be deemed a fatal liability. the identification of a fatal liability therefore results in an lol score of 0. conclusion it has been a stated desire for academics and practitioners to assess the turnaround potential of a firm prior to any sort of formal restructuring procedure is initiated. the task, however, remains highly complex, and although turnaround research has made significant strides over the past years, there is still little consensus on the matter. as reorganisation grows in popularity within an environment prone to rapid and radical discontinuous change, so the need to screen out severely economically distressed firms becomes more urgent. this article has presented a value weighted assessment framework that estimates the likelihood of the firm entering liquidation. the important features of the framework are that it is timely in its application, considers the availability of accurate data, inexpensive to implement and easy to interpret. practitioners, judges or directors can use the framework as a decision aid when developing an expert opinion regarding the likelihood of liquidation of a firm intending to commence with reorganisation proceedings. the aim is to speed up the liquidation of economically inefficient firms that attempt to seek shelter in reorganisation. prior studies have concentrated on predicting the insolvency filing event or discriminating between healthy and financially distressed firms. this study utilises a robust new liquidation identification methodology that links collective expert decision-making with both financial and non-financial metrics. the lol framework does not limit the firm’s turnaround potential but rather works on the reverse assumption that removes the likelihood of liquidation. therefore, a commencement decision can be determined without knowledge of the possible turnaround strategies that may be deployed. there is no guarantee in any reorganisation attempt that when a reasonable prospect exists at commencement it will necessarily translate into successful turnaround of the firm. limitations and future research this study does have limitations that should be revisited in future studies. firstly, the sample size of the study was limited because of the intensive contribution required by experts in the field. future research may wish to isolate various liabilities and gather data from more experts. secondly, during ahp analysis there seems to be the notion that experts may exhibit unique perspectives on reasonable prospects that are stereotypical of their organisation. future research may want to explore this phenomenon further. non-financial indicators seem to be more useful for practitioners, creditors and judges in assessing reasonable prospect. this relates to another important public policy issue of the relevance of accounting disclosure. it is recommended that the indicators identified be allowed to inspire new perspectives on the going concern qualification. lastly, the lol framework lacks statistical evidence of its effectiveness in assessing the likelihood of liquidation. the researchers strongly suggest that the framework is expanded on in future studies. the lol score has the potential to assist in estimating the recovery rate in reorganisation. it is therefore hoped that this research will provide a stimulus for further work that will help increase the understanding of this highly complex yet intriguing aspect of insolvency. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions w.r.s. wrote and conceptualised the article, and m.p. acted as the supervisor. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references ayotte, k.m. & morrison, e.r., 2009, ‘creditor control and conflict in chapter 11’, journal of legal analysis 1(2), 511–551. https://doi.org/10.1093/jla/1.2.511 bard, j.f. & sousk, s.f., 1990, ‘a tradeoff analysis for rough terrain cargo handlers using the ahp: an example of group decision making’, ieee transactions on engineering management 37(3), 222–228. https://doi.org/10.1109/17.104292 bergström, c., eisenberg, t. & sundgren, s., 2002, ‘secured debt and the likelihood of reorganization’, international review of law and economics 21(4), 359–372. https://doi.org/10.1016/s0144-8188(01)00075-8 bolster, p.j., janjigian, v. & trahan, e.a., 1995, ‘determining investor suitability using the analytic hierarchy process’, financial analysts journal 51(4), 63–75. https://doi.org/10.2469/faj.v51.n4.1922 campbell, s.v., 1996, ‘predicting bankruptcy reorganization for closely held firms’, accounting horizons 10(3), 12. carnero, m.c., 2005, ‘selection of diagnostic techniques and instrumentation in a predictive maintenance program. a case study’, decision support systems 38(4), 539–555. https://doi.org/10.1016/j.dss.2003.09.003 chen, l., ng, e., huang, s.-c. & fang, w.-t., 2017, ‘a self-evaluation system of quality planning for tourist attractions in taiwan: an integrated ahp-delphi approach from career professionals’, sustainability 9(10), 1751. https://doi.org/10.3390/su9101751 cheng, e.w. & li, h., 2002, ‘construction partnering process and associated critical success factors: quantitative investigation’, journal of management in engineering 18(4), 194–202. https://doi.org/10.1061/(asce)0742-597x(2002)18:4(194) clark, c.e., foster, p.l., hogan, k.m. & webster, g.h., 1997, ‘judgmental approach to forecasting bankruptcy’, the journal of business forecasting 16(2), 14–18. creswell, j.w., 2012, educational research: planning, conducting, and evaluating quantitative and qualitative research, pearson, boston, ma. dalkey, n.c., brown, b.b. & cochran, s., 1969, the delphi method: an experimental study of group opinion, rand corporation, santa monica, ca. deakin, e.b., 1977, ‘business failure prediction – an empirical analysis’, in e. altman & a. sametz (eds.), financial crises: institutions and markets in a fragile environment, pp. 117–138, john wiley & sons, new york, ny. dyer, r.f. & forman, e.h., 1992, ‘group decision support with the analytic hierarchy process’, decision support systems 8(2), 99–124. https://doi.org/10.1016/0167-9236(92)90003-8 forman, e.h. & gass, s.i., 2001, ‘the analytic hierarchy process – an exposition’, operations research 49(4), 469–486. https://doi.org/10.1016/0167-9236(92)90003-8 francis, j.d. & desai, a.b., 2005, ‘situational and organizational determinants of turnaround’, management decision 43(9), 1203–1224. https://doi.org/10.1108/00251740510626272 franks, j.r. & torous, w.n., 1992, ‘lessons from a comparison of us and uk insolvency codes’, oxford review of economic policy 8(3), 70–82. https://doi.org/10.1093/oxrep/8.3.70 goepel, k.d., 2013, ‘implementing the analytic hierarchy process as a standard method for multi-criteria decision making in corporate enterprises – a new ahp excel template with multiple inputs’, in proceedings of the international symposium on the analytic hierarchy process, creative decisions foundation kuala lumpur, kuala lumpur, malaysia, vol. 2, no. 10, pp. 1–10. goepel, k.d., 2017, ahp online system – bpmsg, viewed 06 september 2017, from https://bpmsg.com/academic/ahp.php. golden, b.l., wasil, e.a. & harker, p.t., 1989, ‘the analytic hierarchy process’, in b.l. golden, e.a. wasil, p.t. harker (eds.), applications and studies, p. 265, springer science & business media, berlin. herrera-viedma, e., cabrerizo, f.j., kacprzyk, j. & pedrycz, w., 2014, ‘a review of soft consensus models in a fuzzy environment’, information fusion 17(1), 4–13. https://doi.org/10.1016/j.inffus.2013.04.002 jost, l., 2006, ‘entropy and diversity’, oikos 113(2), 363–375. https://doi.org/10.1111/j.2006.0030-1299.14714.x khorramshahgol, r. & moustakis, v.s., 1988, ‘delphic hierarchy process (dhp): a methodology for priority setting derived from the delphi method and analytical hierarchy process’, european journal of operational research 37(3), 347–354. https://doi.org/10.1016/0377-2217(88)90197-x lee, h., kwak, w. & han, i., 1995, ‘developing a business performance evaluation system: an analytical hierarchical model’, engineering economist 40(4), 343–358. https://doi.org/10.1080/00137919508903159 levary, r.r. & wan, k., 1999, ‘an analytic hierarchy process based simulation model for entry mode decision regarding foreign direct investment’, omega 27(6), 661–677. https://doi.org/10.1016/s0305-0483(99)00032-8 linstone, h.a. & turoff, m., 2002, the delphi method: techniques and applications, addison-wesley, boston, ma. lohrke, f.t., bedeian, a.g. & palmer, t.b., 2004, ‘the role of top management teams in formulating and implementing turnaround strategies: a review and research agenda’, international journal of management reviews 5(2), 63–90. https://doi.org/10.1111/j.1460-8545.2004.00097.x miller, g.a., 1956, ‘the magical number seven, plus or minus two: some limits on our capacity for processing information’, psychological review 63(2), 81–97. https://doi.org/10.1037/h0043158 okoli, c. & pawlowski, s.d., 2004, ‘the delphi method as a research tool: an example, design considerations and applications’, information & management 42(1), 15–29. https://doi.org/10.1016/j.im.2003.11.002 okwir, s., ulfvengren, p., angelis, j., ruiz, f. & guerrero, y.m.n., 2017, ‘managing turnaround performance through collaborative decision making’, journal of air transport management 58(c), 183–196. https://doi.org/10.1016/j.jairtraman.2016.10.008 pandit, n.r., 2000, ‘some recommendations for improved research on corporate turnaround’, m@n@gement 3(2), 31–56. park, c.-s. & han, i., 2002, ‘a case-based reasoning with the feature weights derived by analytic hierarchy process for bankruptcy prediction’, expert systems with applications 23(3), 255–264. https://doi.org/10.1016/s0957-4174(02)00045-3 pearce, j.a. & robbins, k., 1993, ‘toward improved theory and research on business turnaround’, journal of management 19(3), 613–636. https://doi.org/10.1177/014920639301900306 raviv, g., shapira, a. & fishbain, b., 2017, ‘ahp-based analysis of the risk potential of safety incidents: case study of cranes in the construction industry’, safety science 91(c), 298–309. https://doi.org/10.1016/j.ssci.2016.08.027 saaty, t.l., 1990, ‘how to make a decision: the analytic hierarchy process’, european journal of operational research 48(1), 9–26. https://doi.org/10.1016/0377-2217(90)90057-i saaty, t.l., 2008, ‘decision making with the analytic hierarchy process’, international journal of services sciences 1(1), 83–98. https://doi.org/10.1504/ijssci.2008.017590 saaty, t.l. & vargas, l.g., 2012, models, methods, concepts & applications of the analytic hierarchy process, springer, norwell, massachusetts. smith, m. & graves, c., 2005, ‘corporate turnaround and financial distress’, managerial auditing journal 20(3), 304–320. https://doi.org/10.1108/02686900510585627 trahms, c.a., ndofor, h.a. & sirmon, d.g., 2013, ‘organizational decline and turnaround a review and agenda for future research’, journal of management 39(5), 1277–1307. https://doi.org/10.1177/0149206312471390 wong, j.k. & li, h., 2008, ‘application of the analytic hierarchy process (ahp) in multi-criteria analysis of the selection of intelligent building systems’, building and environment 43(1), 108–125. https://doi.org/10.1016/j.buildenv.2006.11.019 wu, y., gaunt, c. & gray, s., 2010, ‘a comparison of alternative bankruptcy prediction models’, journal of contemporary accounting & economics 6(1), 34–45. https://doi.org/10.1016/j.jcae.2010.04.002 footnote 1. the word ‘reorganisation’ is occasionally used in a general sense to denote the rehabilitation of a distressed business, but it may also be used more narrowly to refer only to the process of rehabilitation under a formally recognised legal insolvency procedure, whose statutory titles may vary from administration, business rescue or reorganisation. abstract introduction literature review conclusion acknowledgements references about the author(s) jeremiah madzimure centre for academic development, vaal university of technology, vanderbijlpark, south africa citation madzimure, j., 2020, ‘enhancing supplier integration through e-design and e-negotiation in small and medium enterprises’, southern african journal of entrepreneurship and small business management 12(1), a300. https://doi.org/10.4102/sajesbm.v12i1.300 original research enhancing supplier integration through e-design and e-negotiation in small and medium enterprises jeremiah madzimure received: 18 nov. 2019; accepted: 11 feb. 2020; published: 23 apr. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the effects of globalisation, e-procurement and supply chain integration have become paramount to the success of supply chain management, especially to small and medium enterprises (smes) in a developing country context such as south africa. most studies on e-procurement and supplier integration have focused on large firms. aim: the aim of this study was to investigate how smes can enhance their supplier integration through e-design and e-negotiation. setting: this study was conducted in the sedibeng region of the gauteng province, south africa. method: a quantitative research methodology was adopted in which the survey questionnaire was used to gather data from 283 sme owners and managers. a non-probability sampling employing convenience method was used. a structural equation modelling and the path modelling techniques were undertaken for this study. results: the principal finding of this study reveals that e-design has a positive and significant linear relationship with supplier integration. the findings further reveal that e-negotiation has a positive and significant linear relationship with supplier integration. conclusion: this study added practical value by developing an integrative model which might be used by sme practitioners in south africa. the study recommended that sme owners and managers must effectively implement e-design and e-negotiation systems to increase the chance of integrating with their suppliers, thereby increasing the chance of improving performance and cutting supply chain costs. keywords: e-procurement; supplier integration; e-design; e-negotiation; configuration theory; smes; gauteng province. introduction the effects of globalisation, e-procurement and supply chain integration have become paramount to the success of supply chain management especially to small and medium enterprises (smes) in a developing country context such as south africa. to initiate the growth of smes, infrastructures such as e-procurement systems, together with supply chain integration, have been increasingly embedded in most firms (vaast & walsham 2017:547). therefore, the usage of various e-procurement systems and integration with suppliers timeously is considered as ‘an innovation strategy action’ (mishra & agarwal 2010:249) and a firm’s competitive advantage (boehmke & hazen 2017:163). most studies on e-procurement and supplier integration have focused on large firms (chang, tsai & hsu 2013:38). current knowledge involving smes in relation to e-procurement and supplier integration in developing countries such as south africa is still limited, which creates a need for further research to occupy this research gap (boehmke & hazen 2017:163). furthermore, the south african government is increasingly adopting and encouraging e-procurement in smes. this is in line with the objectives of the national development plan (ndp) vision 2030, which include innovation, employment creation and the adoption of technology as mechanisms for the economic development of the country (zarenda 2013:5). the south african government is eager to develop and streamline sme operations because smes make an important contribution to the economy. the relationship between e-procurement and supplier integration in smes in south africa has not been fully investigated (zheng et al. 2016:290). small and medium enterprises in developing countries face a myriad of challenges ranging from technology, globalisation, liberalisation and poor networking amongst the important players in the market, stiff competition from established firms to finances (gumboh & gichira 2015:225). these challenges inhibit collaboration among supply chain partners and consequently affect sme performance. lack of appropriate technology has been cited as impediment to sme collaboration, innovation and growth. therefore, the most persistent challenge to greater supplier integration is lack of adequate information systems. insufficient information system support is a barrier because collaboration is essentially information-based. therefore, in the current climate of global supply chain competition, supplier integration is regarded as a prerequisite for winning performance (njagi & ogutu 2014:191). in the past decade (2009–2019), integrating suppliers and implementation of e-procurement systems has grown interest in major firms. the empirical investigation of the impact of e-procurement (e-design and e-negotiation) on sme supplier integration has received little attention (georgise, thoben & seifert 2014:1; pooe & mahlangu 2017:238), and thus this study was conducted to fill this research gap. the aim of this study was to investigate how smes can enhance their supplier integration through e-design and e-negotiation in the gauteng province of south africa. the literature review of the research constructs (e-procurement, smes in south africa and supplier integration) is discussed in the next section. thereafter, the conceptual framework and hypothesis development follow. the research methodology, as well as results and discussion, is elaborated. finally, conclusion, managerial implications, limitations of the study and directions for future research are explored in this article. literature review theoretical framework the theoretical rationale underpinning this study is the configuration theory (miller 1986:233). according to miller (1986) and sinha et al. (2005:389), the configuration theory allows for detailed examination of the dimension of supply chain integration and information technology (it). this theory is appropriate because it can handle complicated organisational phenomena from a holistic perspective. the configuration approach involves dominant gestalts or configurations of observable characteristics or behaviours that may lead to an outcome (ward, bickford & leong 1996:599). the configuration theory indicates the need to consider organisational arrangements, that is, configurations, to obtain high performance. therefore, this study considers the combination of e-procurement systems as the configuration of organisational resources to obtain better supplier integration. e-procurement e-procurement is one of the developments in the contemporary supply chain management (chirchir, ngeno & chepkwony 2015:26). e-procurement refers to ‘an information technology (it) based business model that facilitates the necessary processes conducted between business parties in a procurement transaction’ (smart 2010:423; tai 2011:5398). similarly, mccue and roma (2012:58) define e-procurement as ‘the use of information technology to facilitate business-to-business purchase transactions for materials and services’. it is clear from these two definitions that e-procurement is not merely a system for making purchases online but a link between customer and supplier. e-procurement activities include ‘enterprise resource planning (erp); e-maintenance, repair and operations (e-mro); e-sourcing; e-tendering; e-reverse auctioning; e-informing and e-market-places’ (smuts 2008:38). according to mccue and roma (2012:62), tools such as ‘e-notice, e-auction, e-catalogue, e-dossier, e-submission and e-signatures’ are components of e-procurement. in this study, e-design and e-negotiation are considered as the e-procurement systems. for this study, e-design refers to the ‘setting of purchasing requirements on an electronic procurement system’ (chang et al. 2013:35). e-negotiation is defined as ‘the process of conducting negotiations between business partners using electronic means’ (rinderle-ma 2005:2). thus, e-negotiation is used to make significant savings in the purchase of goods and services through the internet (scot & morrison 2007:332). therefore, e-procurement if maintained properly will allow the company to establish and maintain competitive advantages and reduce staff time and paperwork (tai 2011:5397). small and medium enterprises in south africa the national small business act no. 26 of south africa 1996, as amended in 2003, defines an sme as: [a] separate and distinct entity including co-operative enterprises and non-governmental organisations managed by one owner or more, including its branches or subsidiaries if any, is predominantly carried out in any sector or subsector of the economy mentioned in the schedule of size standards and can be classified as an sme by satisfying the criteria mentioned in the schedule of size standards (government gazette 2003:8). according to the national small business act no. 26 of south africa 1996, as amended in 2003, in the government gazette (2003): [a] small enterprise in south africa is one that employs 50 people or less and has a total turnover of up to r19m, with a total asset value of r3m. a medium enterprise employs from 50 up to 200 people and has a total turnover of r39m with a total asset value of r6m. (p. 8) supplier integration supplier integration refers to the process of interaction and collaboration between the firm and its suppliers to ensure effective flow of supplies (flynn, hou & zhao 2010:58; zhao et al. 2011:372). zhao et al. (2008:371) state that many organisations across the globe are creating co-operative, mutually beneficial partnerships with supply chain partners because of increasing global competition (zhao et al. 2008:371). these authors further state that ‘companies need to implement supply chain integration to meet the new challenges of the global competitive environment’. small and medium enterprises constantly face the problem of on-time delivery (zhao, feng & wang 2015:166). through integration with suppliers, smes can share order and inventory information with suppliers. furthermore, supplier integration, which includes proper communication, sharing information and working together with suppliers, can reduce upstream complexity (zhao et al. 2015:167–168). the benefits of supplier integration are that it enhances responsiveness, flexibility and time-saving. supplier integration also plays a role in reducing transaction costs through the reduction of uncertainties and reducing of production costs (flynn et al. 2010:58). therefore, supplier integration has a positive impact on operational performance (yu et al. 2014:683). in supplier integration, opportunistic behaviours are greatly reduced under shared visions and cooperative goals (prajogo, oke & olhanger 2015:102; wong, tjosvold & yu 2005:782). the conceptual framework and hypotheses development the conceptual framework is provided in figure 1. this highlights the proposed linkage between the constructs under investigation in this study. figure 1: the conceptual framework. e-design and supplier integration e-design refers ‘to the setting of purchasing requirements on an online procurement system’ (chang et al. 2013:35). e-design ‘facilitates supplier involvement in the specification development process of a product. it also facilitates reduced time-to-market cycles by overcoming the silo effect of the traditionally sequential design activities’ (presutti 2003:220). this means that suppliers are involved in the design process. thus, e-design is an important function in the e-procurement system as it enables collaboration of suppliers as well as enabling the purchasing process to be quick and efficient. on the basis of the above, the first hypothesis is derived: h1: e-design positively influences supplier integration in the sme sector. e-negotiation and supplier integration e-negotiation refers to business partners negotiating over internet or it platforms. e-negotiation is a key tool in e-procurement because it enables the collaboration of various key stakeholders particularly the suppliers. thus, for e-negotiation to be successful, supplier integration is key in the process. therefore, on the basis of the above, the second and last hypothesis is derived: h2: e-negotiation positively influences supplier integration in the sme sector. research methodology in this study, a quantitative research methodology was adopted and considered more appropriate because addressing the research problem depended on the analysis of quantitative data collected on many survey questions around e-procurement and supplier integration in smes. data were collected through a survey questionnaire. a total of 350 questionnaires were distributed to respondents, 294 were returned and 11 were discarded because of incomplete responses to different parts of the questionnaire. a total of 283 questionnaires were finally used in the study. data were analysed with statistical package for the social sciences (spss) version 24 and analysis of a moment structures (amos) software version 24 for the structural equation modelling (sem). measuring instrument and operationalisation the questionnaire used in this study consisted out of three sections. section a consists of four items and sought general demographic information about the respondents and sme profile. section b consisted out of eight items, which covered all the two e-procurement systems (e-design and e-negotiation), adapted from chang et al. (2013:39) and ombat (2015:718). section c seeked respondents’ views on supplier integration, using eight items adapted from zhao et al. (2013:130). all measurement scales are measured using 5-point likert-type scales, where 1 = strongly disagree and 5 = strongly agree. the likert-type scale was adopted mainly because it was easy to analyse the quantitative information and draw conclusions. reliability tests reliability in this study was ascertained using cronbach’s alpha coefficient, the average variance extracted (ave), item-to-total values and composite reliability (cr). table 1 presents the results of the reliability tests. table 1: accuracy analysis statistics: reliability tests. in this study, the results of the cr range from 0.77 to 0.94 as shown in table 1 and thus confirm the existence of internal reliability for all constructs of the study. the measurement items used in this study were reliable because all the cronbach’s alpha coefficients were above the recommended 0.7 threshold. validity tests validity is the extent to which the instrument that was selected reflected the reality of the constructs that were being measured (newsome 2016:58). to ensure validity, the research study used three experts in supply chain management to judge the questions independently (schindler 2010:65). also, an extensive literature review was conducted to ensure that the instrument is related to previous studies. thereafter, previous studies were consulted to construct the research instrument. to further ascertain validity in this study, a pilot study was conducted with a conveniently selected sample of 42 sme owners and managers in the vaal triangle region of gauteng province, south africa. input from the pilot sample was used to improve the questionnaire in terms of its wording and technical layout. ethical consideration participants were not forced to participate. participants were also told that participation might be terminated at any given time with no adverse consequences should they wish not to continue with the study (completing the questionnaire). information provided by participants or respondents was treated with utmost confidentiality and anonymity. the data were securely stored by the researcher and no one else had access to the data. results and discussion the results of gender and experience of sme owners and managers are shown in table 2 and figure 2. this section covers the sample characteristics, testing for the unidimensionality of scales and hypothesis testing results. figure 2: experience in the industry. table 2: gender of respondents. sample characteristics table 2 presents a graphical representation of the gender distribution of the sample. males constitute 54.0% (n = 153) and females constitute 46.0% (n = 130) of the sample. nieman and nieuwenhuizen (2009:143) found that there are few women owning or managing businesses because of start-up capital problems. the study revealed that 2.8% (n = 8) of respondents had served their organisations for less than 1 year. approximately 9.2% (n = 26) of respondents served their organisation between 1 and 5 years, while 22.3% (n = 63) served the organisation between 5 and 10 years. approximately 28.3% (n = 80) of the sample had served their organisation between 10 and 15 years, while 37.5% (n = 106) of the respondents served their organisation for more than 15 years. regarding the race or ethnicity, the african race constituted 201 (72%), while coloureds were 18 (6%). the white people were 62, representing 21% of the sample, with other category with two respondents reflecting a 1%. the qualifications of sme owners and managers were as follows: matric/no qualifications were 13, degree/diploma were 259, while those who hold master’s degree were 8 and finally with phd/d-tech were 3. testing for the unidimensionality of scales the different scales used in the study were tested for unidimensionality through exploratory factor analysis. prior to the factor analysis, the bartlett’s test of sphericity and the kaiser–meyer–olkin (kmo) measure of sampling adequacy were computed to establish whether the data were suitable for factor analysis (see table 3). table 3: kaiser–meyer–olkin measure of sampling adequacy and barlett’s test. according to chinomona (2012:341), the sampling is adequate if the value of kmo test is greater than 0.5. for this study, as indicated in table 2, the kmo value is 0.753, exceeding the recommended minimum of 0.5 (cerny & kaiser 1977:43; kaiser 1974:35). this shows that the feasibility of factor analysis is fulfilled. the factor extraction through principal component analysis for each construct is reported in table 4, indicating that only one factor was extracted for each variable. the principal component analysis was used to: [c]ompress the maximum amount of information into first two columns of the transformed matrix known as the principal components by neglecting the other vectors that carries the negligible information or redundant data. (pallant 2007:153; pooe & mahlangu 2017:112) table 4: factor component matrix. table 4 shows that the factor loadings for e-design were all were close to 0.7 except one statement which reads as follows: ‘there is a design of the purchase requirement’ and has a factor loading of 0.605. e-negotiation factor loadings were all above the 0.7 threshold. in supplier integration, only one statement was below 0.7. the hypotheses testing stage and results structural equation modelling was used in this study to estimate the relationship between the constructs. therefore, sem seeks to understand the relationships between latent variables and the observed variables, which form the structural framework from which they are derived. path analysis allows path coefficients (the relationship between variables) to be determined. in addition, path analysis requires recursivity (that the path direction is one way with no feedback loops) (chinomona 2012:10 135). the advantage of path analysis is that the researcher can see which variables exert effects on others. structural equation modelling conceptual model fit assessments table 5 describes the sem model fit indices results for this study. table 5: structural equation modelling model fit indices results. as shown in table 5, this study reports a chi-square/degree of freedom value of 1.46 as indicative of a good model fit. table 5 further shows ifi, cfi and tli values (0.94, 0.92 and 0.95, respectively) that are above the recommended threshold of 0.9 or above (chinomona 2011:302, 2013:342). these results further confirm that the estimated model fits the sample data in this study well, which provides a good model fit. table 4 also depicts a root mean square error of approximation (rmsea) value of 0.04, which provides a very good model fit (chinomona et al. 2010:47; pallant 2007). overall, the model fit indices provide a good fit. e-design positively influences supplier integration in the small and medium enterprises sector (hypothesis 1) a linear relationship (positive and significant) was hypothesised between e-design and supplier integration. this hypothesis was formulated from the objective that aimed to investigate the influence of e-design on supplier integration. results are shown in table 6. table 6: hypothesis 1 structural equation modelling results. as shown in table 6, e-design has a positive and significant linear relationship with supplier integration. h1 is therefore supported. this study posited a positive influence of e-design on supplier integration and the results of this study confirmed it. a positive path coefficient (β = 0.33; p < 0.05) validates the hypothesised positive influence that e-design has on supplier integration. these findings mean that smes that effectively implement e-design systems, integrating with their suppliers, increase their chances of improving performance and cutting supply chain costs. these findings are consistent with those of chang and wong (2012:342), who posit that e-design is the infrastructure aspect that brings in higher levels of partnerships and improved supply chain performance. this notion is also supported by shank and brown (2007:190), who found that successful companies or firms using e-design systems effectively ultimately lead to greater supplier integration. therefore, superior e-design systems are associated with greater supplier integration. thus, validation of a positive influence of e-design on supplier integration means that if smes effectively implement e-design systems they increase their chances of collaborating with their key supply chain members and this may result in minimisation of costs such as supply chain costs, thus consequently improving supply chain performance. these findings further suggest that supply chain member firms that invest in and use e-design tools for their buying and selling with each other can learn collectively and create a strong supplier integration. e-negotiation positively influences supplier integration in the small and medium enterprises sector (hypothesis 2) a positive and significant influence of e-negotiation on supplier integration was posited. the sem results that validate or invalidate this hypothesis are shown in table 7. table 7: hypothesis 2 structural equation modelling results. as shown in table 7, e-negotiation has a positive and significant relationship with supplier integration. h2 is therefore supported. this study posited a positive influence of e-negotiation on supplier integration. a positive path coefficient (β = 0.175; p < 0.1) validates the hypothesised positive influence that e-negotiation has on supplier integration. a positive path coefficient may be because suppliers collaborate more often when they do their contract agreements electronically. these contract agreements will, in turn, improve their relations in business, and thus contribute to higher levels of engagement and consequently improve supply chain performance. as posited in h2, the findings of this study suggest that in the firms surveyed there are some contract negotiations taking place with suppliers through technology. conclusion to achieve the first hypothesis, the sem test was conducted to examine the effect of e-design on supplier integration. the test revealed a statistically positive and significant relationship. these findings mean that firms that effectively implement e-design systems, integrating with their suppliers, increase their chances of improving performance as well as cutting supply chain costs. to achieve the second hypothesis, the sem test was conducted to examine the effect of e-negotiation on supplier integration. the test revealed a statistically positive and significant relationship. thus, the findings of this study suggest that in the firms surveyed there are some contract negotiations taking place with suppliers through technology. therefore, this study concludes that firms can use e-design and e-negotiation systems to enhance supplier integration. managerial implications the results of this study showed that e-design has a positive influence on supplier integration. this serves as an implication that sme owners and managers should begin to work towards developing a deeper understanding of e-design tools and systems – so that they can develop strategies that will contribute to the improvement of supplier integration, which will, in turn, positively influence supply chain performance. therefore, it means that the sme owners and managers should invest more in e-design systems for their buying and selling as this will create further collaborations. the results also showed that e-negotiation has a positive influence on supplier integration. therefore, it is recommended that sme owners and managers recognise e-negotiation as an important e-procurement element to foster ongoing relationships with supply chain member firms. sme owners and managers must also enrol for e-procurement training workshops or courses. this training should emphasise the importance of e-procurement functions such as e-design and e-negotiation as the key drivers of supplier integration. contribution of the study firstly, a contribution is made to the existing literature on smes in south africa, which was noted to be scant. the study developed an integrative model, which might be used by sme practitioners in south africa, thus contributing to the existing literature. because the model paid attention to e-procurement (e-design and e-negotiation) and supplier integration, possible strategies such as investing in supplier collaborations through e-procurement could be derived from the model. thus, sme owners and managers will be in a better position to increase the levels of supply chain performance within their firms. overall, the findings reveal that by investing in e-procurement functions such as e-design and e-negotiation, smes can improve their own performance through good supplier collaborations. the findings of this study are also important to other smes in south africa. they may use these findings as a benchmark for the best practices in supply chain management (scm) and e-procurement practices. limitations and directions for future research the use of only sme owners and managers as chief informants in the survey could be a limitation. data were collected only from sme owners and managers; future research could broaden the scope to include customers, manufacturers (suppliers) and low-level subordinates. e-procurement is a multidimensional concept and the study investigated only two important dimensions, namely, e-negotiation and e-design. there are many other e-procurement functions, such as e-sourcing, e-evaluation, e-informing, e-payment, e-catalogue, e-tendering, e-tailing, e-purchasing and e-transportation, among others. future research should investigate the relationship between other e-procurement functions, supplier integration and supply chain performance. because this study adopted only the quantitative approach, another study involving a qualitative approach or a mixed-method approach is recommended as this will provide an in-depth analysis. acknowledgements the author is grateful to almighty god and his beloved family. this research was drawn from a thesis submitted by the author at vaal university of technology in 2018. competing interests the author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article. author’s contributions i declare that i am the sole author of this article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references boehmke, b.c. & hazen, b.t., 2017, ‘the future of supply chain information systems: the open source ecosystem’, global journal of flexible systems management 18(2), 163–168. https://doi.org/10.1007/s40171-017-0152-x cerny, c.a., & kaiser, h.f. 1977, ‘a study of a measure of sampling adequacy for factor-analytic correlation matrices’, multivariate behavioral research 12(1), 43–47. https://doi.org/10.1207/s15327906mbr1201_3 chang, h.h. & wong, k.h., 2012, ‘adoption of e-procurement and participation of e-marketplace on firm performance: trust as a moderator’, information & management 47(5–6), 262–270. https://doi.org/10.1016/j.im.2010.05.002 chang, h.h., tsai, y.c. & hsu, c.h., 2013, ‘e-procurement & supply chain performance’, international journal of management 18(1), 34–51. https://doi.org/10.1108/13598541311293168 chinomona, r., 2011, ‘non-mediated channel powers and relationship quality: a case of smes in zimbabwe channels of distribution’, unpublished phd thesis, national central university, taiwan. chinomona, r. 2012, ‘the influence of dealers’ referent power and legitimate power in guanxi distribution networks: the case of taiwan’s smes firms’, african journal of business management 6(37), 10125–10137. https://doi.org/10.5897/ajbm11.1494 chinomona, r., 2013, ‘dealers’ legitimate power and relationship quality in gaunxi distribution channel: a social rule system theory perspective’, international journal of marketing studies 5(1), 42–58. https://doi.org/10.5539/ijms.v5n1p42 chinomona, r., lin, j., wang, m. & cheng, j. 2010, ‘soft power and desirable relationship outcomes in zimbabwe distribution channels’, african journal of business 11(2), 20–55. https://doi.org/10.1080/15228916.2010.508997 chirchir, e.k., ngeno, v. & chapkwony, j., 2015, ‘relationship between e-procurement adoption & supply chain management practices in tea firms’, international journal of managerial studies & research 3(2), 25–36. flynn, b.b., hou, b. & zhao, x., 2010, ‘the impact of supply chain integration on performance: a contingency & configuration approach’, journal of operations management 28, 58–71. https://doi.org/10.1016/j.jom.2009.06.001 georgise, f.b., thoben, k. & seifert, m. 2014, ‘supply chain integration in the manufacturing firms in developing country: an ethiopian case study’, journal of industrial engineering, article no. 251982, 1–13. https://doi.org/10.1155/2014/251982 government gazette, 2003, no 26 national small business amendment act, parliament of the republic of south africa 461, pp. 1–10, cape town. gumboh, j. & gichira, r., 2015, ‘supply chain collaboration among smes in kenya: a review of collaboration barriers’, international journal of humanities and social science 5(9), 223–229. kaiser, h. 1974, ‘an index of factor simplicity’, psychometrika 39, 31–36. https://doi.org/10.1007/bf02291575 mccue, c. & roma, a., 2012, ‘e-procurement: myth or reality?’, journal for public procurement 5(1), 54–72. miller, d., 1986, ‘configuration of strategy and structure: towards a synthesis’, strategic management journal 7(3), 233–249. https://doi.org/10.1002/smj.4250070305 mishra, a.n. & agarwal, r., 2010, ‘technological frames, organizational capabilities, and it use: an empirical investigation of electronic procurement’, information systems research 21(2), 249–270. https://doi.org/10.1287/isre.1080.0220 newsome, b.o., 2016, an introduction to research, analysis and writing: practical skills for social science students, sage, thousand oaks, ca. nieman, g.h. & nieuwenhuizen, c., 2009, entrepreneurship: a south african perspective, van schaik publishers, pretoria. njagi, m.m. & ogutu, m., 2014, ‘role of supply chain integration on supply chain performance in kenyan state corporations’, international journal of current business and social sciences 1(2), 188–204. ombat, k.o., 2015, ‘the relationship between procurement systems and performance of procurement function in commercial banks in kenya’, international journal of economics, commerce and management 3(12), 697–723. pallant, j., 2007, spss survival manual: a step by step guide to data analysis using spss for windows, 3rd edn., mcgraw-hill open university press, new york, ny. pooe, r.i.d. & mahlangu, d., 2017, ‘enhancing sme performance through supply chain integration, collaborative planning, and supply chain capabilities’, journal of contemporary management 14, 238–269. prajogo, d.i., oke, a. & olhager, j., 2015, ‘supply chain processes: linking supply logistics integration, supply performance, lean processes and competitive performance’, international journal of operations & production management 30(3), 312–335. presutti, w.d., 2003, ‘supply management and e-procurement: creating value added in the supply chain’, industrial marketing management 32(3), 219–226. https://doi.org/10.1016/s0019-8501(02)00265-1 rinderle-ma, s., 2005, towards the automation of e-negotiation process based on web services – a modeling approach’, journal of procurement management 6, 1–12. schindler, p., 2010, business research methods, mcgraw-hill, london. scot, m. & morrison, p., 2007, towards a structured design of electronic negotiations, wardsworth cengage learning, new york. shank, j. & brown, d., 2007, ‘procurement: the missing link in innovation’, supply chain management review 10(1), 22–28. sinha, k., kingshuk, k., van de ven, h. & andrew, h., 2005, ‘designing work within and between organisations’, organisational sciences 16(4), 389–408. https://doi.org/10.1287/orsc.1050.0130 smart, a.f., 2010, ‘e-procurement and its impact on supply management – evidence from industrial case studies’, international journal of logistics: research and applications 13(6), 423–440. https://doi.org/10.1080/13675567.2010.486760 smuts, h., 2008, ‘determinants of supplier-retailer collaboration: evidence from an international study’, international journal of operations and production management 26(1), 24–49. https://doi.org/10.1108/01443570610637003 tai, y.m., 2011, ‘exploring the performance impact of web based direct procurement systems’, international journal of production research 48(18), 5397–5414. https://doi.org/10.1080/00207540903117915 vaast, e. & walsham, g., 2017, ‘trans-situated learning: supporting a network of practice with an information infrastructure’, information systems research 20(4), 547–564. https://doi.org/10.1287/isre.1080.0228 ward, p.t., bikford, d.j. & leong, g.k., 1996, ‘configurations of manufacturing strategy, business strategy, environment and structure’, journal of management 22(4), 597–626. wong, a.s.h., tjosvold, d. & yu, z.y., 2005, ‘organisational partnerships in china: self-interest, goal independence & opportunism’, journal of applied psychology 90(4), 782–791. https://doi.org/10.1037/0021-9010.90.4.782 yu, w., chavez, r., feng, m., & wiengarten, f., 2014, ‘integrated green supply chain management and operational performance’, supply chain management: an international journal 19(5/6), 683–696. https://doi.org/10.1108/scm-07-2013-0225 zarenda, h., 2013, south africa’s national development plan and its implications for regional development, pp. 1–7, tralac, stellenbosch. zhao, g., feng, t. & wang, d., 2015, ‘is more supply chain integration always beneficial to financial performance?’, industrial marketing management journal 45, 162–172. https://doi.org/10.1016/j.indmarman.2015.02.015 zhao, x., huo, b., selen, w. & yeung, j.h.y., 2011, ‘the impact of relationship commitment on the integration between manufacturers and customers in a supply chain’, journal of operations management 29(1–2), 368–388. https://doi.org/10.1016/j.jom.2007.08.002 zhao, x.b., huo, b.b., flynn, b. & yeung, l., 2008, ‘the impact of power and relationship commitment on the integration between manufacturers and customers in a supply chain’, journal of operations management 26(3), 368–388. https://doi.org/10.1016/j.jom.2007.08.002 zheng, j., bakker, e., knight, l., gilhespy, h., harland, c. & walker, h., 2016, ‘a strategic case for e-adoption in healthcare supply chains’, international journal of information management 26, 290–301. https://doi.org/10.1016/j.ijinfomgt.2006.03.010 abstract introduction literature review research methodology results and findings conclusion acknowledgements references about the author(s) mahlatse m. mogashoa department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa olebogeng selebi department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa citation mogashoa, m.m. & selebi, o., 2021, ‘innovation capacity: a perspective on innovation capabilities of consulting engineering firms’, southern african journal of entrepreneurship and small business management 13(1), a372. https://doi.org/10.4102/sajesbm.v13i1.372 original research innovation capacity: a perspective on innovation capabilities of consulting engineering firms mahlatse m. mogashoa, olebogeng selebi received: 14 sept. 2020; accepted: 12 oct. 2020; published: 03 mar. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: small and medium-sized enterprises (smes) play a significant role in job creation and bridging the widening gap between the rich and the poor in south africa. several factors determine the success of smes. one largely-overlooked factor is innovation capacity, which is made up of different capabilities. aim: the aim of this study is to investigate the degree of innovation capacity in south african consulting engineering firms and to identify the differences in the innovation capabilities across firm size. setting: the target population for the study was consulting engineering firms operating in south africa. methods: the study followed a quantitative methodology. the survey was distributed using an email invitation to participate in the study, which contained a link to access the questionnaire online. results: the results show that south african engineering consulting firms reported an ‘average’ to ‘high’ innovation capacity, where medium and large-sized firms performed similarly, and small firms lagged. the study found that there exists a significant hierarchy in performance for entrepreneurial capabilities, risk management capabilities and capabilities for market and customer knowledge: larger firms reported a higher scoring than smaller firms. it also found that small firms sharply lagged behind medium and large-sized firms regarding risk management capabilities and capabilities for market and customer knowledge. conclusion: the results intend to assist policymakers in prioritising lagging capabilities as the point of departure for capability-building efforts. in addition, the results should assist entrepreneurs in being mindful of the potential blind spots that could be hindering growth. keywords: innovation; innovation capacity; innovation capability; small, medium and large-sized enterprises; consulting engineering firms; survey; south africa. introduction since 2008, the construction industry has contributed approximately 9% to gross domestic product and 9% to formal and informal employment in south africa (construction industry development board 2015:2). however, ever since the soccer world cup projects in the year 2010, the construction industry has been in decline (pwc 2015:3). despite small and medium-sized enterprises (smes) collectively being responsible for 56% of the turnover in the private sector construction industry during the december 2015 quarter, jobs are being shed in the same industry (mhlanga 2016:45; statistics south africa 2016). small and medium-sized enterprises that grow have been considered as key contributors to job creation, poverty alleviation, equity and participation, wealth creation and social stability (nieman & pretorius 2004:3; olawale & garwe 2010:729). consequently, these small, medium and micro-sized enterprises (smmes) have a considerable positive effect on south africa’s sustainable economic growth (nieman & pretorius 2004:3; olawale & garwe 2010:729). this positive impact stems from the fact that smmes increase stability within society, lead to a rise in personal savings, encourage prosperity in rural communities and increase the public’s degree of economic participation (cronje, du toit & motlatla in chimucheka 2013:784). all this is achieved whilst causing less damage to the environment compared to larger organisations (cronje et al. in chimucheka 2013:784). according to baets (cape argus 2015), much of south africa’s hopes for job creation are pinned on smmes with the national development plan estimating that 90% of jobs would be created by this sector by 2030. there exists a disconcertingly widening gap between south africa’s total early-stage entrepreneurial activity (tea) and that of other sub-saharan african countries (gem 2014:22). south africa’s tea remains low but has increased marginally each year over the last decade; however, from 2013 to 2014, south africa’s tea dropped a staggering 34% (gem 2014:18). in addition, the level of business discontinuance in south africa is still high in comparison to the number of business start-ups and surpasses the established business rate (gem 2014:28). in essence, there is a net loss of small business activity in south africa, and consequently, smes are unable to fulfil their developmental role in south africa’s sustainable economic growth (gem 2014:28). statistics show that, on average, 71% of all south african smmes will be out of business by the fifth year of operation (willemse 2010). in addition, 75% of all new smmes in south africa does not exist for more than 42 months; as a result, these smes do not become established enterprises (olawale & garwe 2010:730). a developing nation like south africa has many challenges such as an increasing unemployment rate, skills shortages, a high illiteracy rate, amongst others, and smmes should be empowered to contribute to solving these problems (chimucheka 2013:783). more recent statistics show that the rate of established businesses in south africa is as low as 2.2%, which is a difference of only 0.9% from the lowest rate globally – qatar reported the lowest rate of established business at 1.3% (gem 2018:37). most of these enterprises cite a lack of finance and poor profitability as the key reason for business exit – this was cited in 2014, 2015, 2016 and 2017 (gem 2014:4, 2018:37). the reasons for failure can be further attributed to a low entrepreneurial culture within the country, which manifests in low levels of business-related skills amongst south african entrepreneurs, inefficient and prohibitive support structures and infrastructure and entrepreneurs who are active in over-traded sectors that are populated with low-profit margin businesses within highly competitive and limited markets (gem 2014:28). entrepreneurial smes have been identified as those ventures that contribute to employment and sustainable economic growth (nieman & pretorius 2004:4). in recent years, more attention has been paid to the role of entrepreneurs in south africa contributing substantially to economic growth and job creation (chimucheka 2013:784). entrepreneurial ventures are distinguished from small enterprises as being innovative, having the potential for growth and possessing strategic objectives within their business models (ates & bititci 2011:5603; nieman & pretorius 2004:6). innovation is defined as creating, developing and adapting new ideas, processes or even products with the objective of amplifying the competitiveness of the enterprise. innovation is therefore essential in a competitive environment. according to chimucheka (2013:788), from a strategic standpoint, understanding competitors is key to smmes surviving the competitive business environment. larger organisations are able to remain competitive by reducing prices, increasing their investment in advertising, improving product quality, etc. (hellrigiel et al. in chimucheka 2013:788). this increases rivalry, which may lead to a decline in industry profits and make the industry unattractive to investors and other stakeholders (david in chimucheka 2013:788). smaller businesses may not be able to compete in the same ways but can innovate to remain competitive. in addition to this, innovation is an essential tool for the 4th industrial revolution (4ir). according to kruger and steyn (2019:2), the introduction of 4ir has come with certain benefits for businesses that are able to make use of new-generation technologies, which are an important source of innovation. this is further emphasised by schwab’s (in kruger & steyn 2019:3) statement that ‘the scale and breadth of the unfolding technological revolution will usher in economic, social and cultural changes of such phenomenal proportions that they are almost impossible to envisage’. innovation and 4ir go hand in hand. fourth industrial revolution is important for entrepreneurs because it exposes them to technologies that, if correctly leveraged, can allow them to better compete in the marketplace (kruger & steyn 2019:3). this would enable smmes to compete more effectively. according to the global innovation index (gii), south africa’s ranking went down from 54th in 2016 to 57th in 2017 and 58th in 2018 (dutta, lanvin & wunsch-vincent 2016:281, 2017; dutta et al. 2018:321). it is clear from the net loss of small business activity that developmental needs are considerable, and without locating the cause, the net loss may only be exacerbated (gem 2014:29). given the significance of the innovativeness of smes and the multiple studies that have been conducted on the innovativeness of large united states enterprises, or even small european enterprises and the like, there remains minimal available literature that has explored and measured the innovation capacity and innovation capabilities of south african smes – particularly within the construction industry (forsman 2011:739–750; forsman & rantanen 2011; gemünden & rohrbeck 2010). innovation capacity is defined as the ability to take advantage of opportunities to better satisfy customer needs through the deployment of resources (forsman 2011:740; sok, o’cass & miles 2015:2). these resources can be described as the supply of features owned by the enterprise, which contribute to the enterprise’s competitive advantage (forsman 2011:740; park & ryu 2015:340). the innovation process takes place both internally and externally to the enterprise (cantner, conti & meder 2010:1939; radas & božić 2009:439). the internal factor of a firm’s innovation capacity is innovation capability which is based on absorptive capacity; the external factor is social capital (forsman 2011:740; vicente, abrantes & teixeira 2015:30). social capital theory considers the manner in which relationships develop for organisational benefit as well as the influence they have on decision-making (toth 2006:514). in the quest for innovation, enterprises are immersed in networks of relationships with a miscellaneous range of competitors, agents, suppliers and research centres which assist the enterprise’s innovation (cantner et al. 2010:1939). the benefits of being in such networks are in the ‘spillovers’ of knowledge and technology (cantner et al. 2010:1940). however, the internal process of absorptive capacity influences the degree to which these spillovers benefit the enterprise (cantner et al. 2010:1940). specific innovation capabilities drive the innovation capacity of an enterprise which, according to forsman (2011:740), takes form through the internal and external factors of the innovation capacity. these capabilities are knowledge manipulation, collaboration, risk susceptibility, customer orientation, market knowledge and management capabilities, which are used to capitalise on opportunities and to apply the changes from spillovers (forsman 2011:740). it has been found that smaller firms do not necessarily have an innovation advantage but that the type of innovation depends on the dynamics of the industry and the economy in which it operates (forsman 2011:741; vicente et al. 2015:3). consulting engineers south africa (cesa) defines smes based on only the total annual turnover. consulting engineers south africa’s definition of smes was adopted for the purpose of this study (consulting engineers south africa [cesa] 2017): a small consulting engineering firm has an annual turnover equal to or less than r11.5 million. a medium consulting engineering firm’s annual turnover exceeds r11.5m but not r35m. a large consulting engineering firm’s annual turnover exceeds r35m. this study is conducted to enhance the body of knowledge available to academics on the topic of innovation development within the construction industry. the findings are to assist practitioners in identifying discrepancies in innovation capabilities in order to bridge these discrepancies and build their firms’ innovation capacity. the results would also be useful to the sector education and training authority’s (seta). sector education and training authority’s ‘primary function is to facilitate skills development by establishing learning programmes such as learnerships, skills programmes, internships and other strategic learning initiatives’ (services seta 2020). sector education and training authorities are sector-specific and provide skills training to individuals who are employed or want to be employed in a specific sector (national skills authority [nsa] 2020). they are valuable in that they provide people with skills needed by industry (nsa 2020). the construction education and training authority (ceta) is the seta that focuses on developing skills within the construction sector. its mission ‘is to create a solid skills base as a foundation for infrastructural development and economic empowerment’ (national government of south africa 2020). in addition, the results of the study will assist policymakers in identifying which innovation capabilities are lagging amongst consulting engineering firms within the construction industry and, therefore, require a more enabling environment. the purpose of the study is to investigate the innovation capacity of small and medium-sized south african consulting engineering firms and to identify the differences in the innovation capabilities of these smes. the proposed study aims to answer the following research questions: what is the degree of innovation capacity of small, medium and large-sized south african consulting engineering firms? are there significant differences in the innovation capabilities of small, medium and large-sized south african consulting engineering firms? literature review innovation capacity innovation capacity is a broad concept that highlights both the internal and external aspects of an enterprise (smith et al. 2011:9). the authors define innovation capacity as the propensity of an enterprise to spot new developments and technologies and to attain and capitalise on this knowledge and information. if one takes a standpoint from a resource perspective, innovation capacity is defined as the human and interpersonal efforts as well as the intermediate reframing of assets that facilitate an enterprise to participate in activities needed for innovation (jørgensen & ulhøi 2010:399). innovation is both a process (‘how’ to innovate) and an outcome (‘what’ to innovate) (crossan & apaydin in oura, zilber & luiz lopes 2015:924). according to forsman (2011:740), innovation capacity is an enterprise’s capability to progress its resources and capabilities to discover and take advantage of opportunities to better satisfy customer needs; thus, innovation capacity is driven by resources and different capabilities. for the purposes of this study, forsman’s (2011:740) definition was adopted because this conceptualisation incorporates an enterprise’s internal and external aspects, and it describes innovation capacity as being necessary for the innovation process that satisfies customer needs. the literature has pointed out that innovation capacity differs from industry to industry, depending on the firm size (enkel & heil 2014:244; forsman 2011:741; spithoven, clarysse & knockaert 2011:13; vicente et al. 2015:30). the stronger a firm’s innovation capacity, the better the innovation process and performance (kostopoulos et al. 2011:1335; smith et al. 2011:8). smith et al. (2011:8) link human capital and technological capital as incentives that develop innovation capacity – of which learning plays a role in the innovation process. in emphasising innovation capacity, the 2014 gii focuses on human capital as a contributor to the increase in innovation capacity (bernard et al. 2014:4). bernard et al. (2014:6) describe human capital as the ‘stock of knowledge or skills’ of educated people. bernard et al. (2014:6) further view education as a mechanism to hasten the technological process of an enterprise. an enterprise’s innovation capacity increases through the acquisition of knowledge by the human capital of the enterprise, through the building of networks and through collaboration across borders in the form of social capital (bernard et al. 2014:7). social capital is an enterprise network which directly and indirectly provides the enterprise with knowledge for innovation (cantner et al. 2010:1940). it investigates the social structures that are valuable to organisations and supports the actions of individuals and organisations that form part of it (seibert, kraimer & liden 2001:220). smith et al. (2011:24) further tie human capital with social capital through knowledge management in the form of collaboration, networks, knowledge sharing and learning. to conclude, innovation capacity makes use of different capabilities of an enterprise to progress its resources and take advantage of the opportunities that better satisfy customer needs (forsman 2011:740). forsman (2011:740) observed research and development (r&d) investment, innovation capabilities and external input to measure the degree of innovation capacity. however, for the purpose of this study, innovation capacity was measured by the degree of innovation capabilities alone. these capabilities are discussed in detail in the section ‘innovation capabilities’. innovation capabilities the term capability brings to the surface many conceptual definitions. however, there is consensus on capability being a capacity for the deployment of resources (forsman 2011:740; sok et al. 2015:2). for this reason, capability is a sub-dimension that affects the overarching construct of innovation capacity (forsman 2011:740; sok et al. 2015:2). sok et al.’s (2015:3) definition of capabilities goes on to describe them as ‘bundles of interrelated processes and routines’. this statement, therefore, suggests that capabilities are embedded within the enterprise. this view is consistent with vicente et al.’s (2015:30) view, which conceptualises capabilities as being entangled, multi-dimensional and embedded in organisational routines and practices. innovation capabilities, therefore, describe the deployment of resources through embedded, multi-dimensional organisational practices, processes and routines – in so far as it transforms an enterprise’s resources into the enterprise’s innovation objectives (forsman 2011:740). resources are conceptualised as being a supply of features owned by the enterprise and are, therefore, controlled by that enterprise (forsman 2011:740). this definition concurs with park and ryu (2015:341), as well as sok et al. (2015:3), who conceptualise resources as being controllable assets entrenched within the enterprise’s culture and/or are protected by law through legal property rights. in line with the resource-based view, to the extent that resources are valuable, rare, inimitable, non-substitutable and exploitable, resources determine the competitiveness of enterprises (park & ryu 2015:340; sok et al. 2015:2). therefore, resources contribute to an enterprise’s performance through its ability to contribute to innovativeness (park & ryu 2015:339; sok et al. 2015:18; vicente et al. 2015:30). small, medium and micro-sized enterprises are most likely to have limited tangible resources compared to their larger counterparts (ates & bititci 2011:5602; park & ryu 2015:340). because of this, smmes are urged to possess intangible resources as these can supply a much greater contribution towards competitive advantage (park & ryu 2015:340). intangible resources are embedded within the enterprise and are difficult to point out. these resources are, therefore, more difficult to imitate and because they contribute to overall innovative performance, they are valuable (alegre, sengupta & lapiedra 2011:464; park & ryu 2015:340). in fact, alegre et al. (2011:464), as well as halme and korpela (2014:547548), have found that limited resources can be advantageous for innovation development. the authors attribute this to the different resource combinations that exist for the creation of innovative offerings. therefore, the size of an enterprise has an insignificant bearing on the enterprise’s innovation development. park and ryu (2015:341), sok et al. (2015:17) and vicente et al. (2015:42) conclude that innovation capabilities and their ability to bring competitive advantage should not be viewed in isolation. the authors further explain that resources are to be deployed in such a way that they strategically leverage an enterprise’s capabilities and are complementary to those capabilities. therefore, the ability to deploy a resource is more important than the actual resource. innovation capabilities are peculiar attributes of enterprises, which should be linked to their dimensions and seen as a whole to explain an enterprise’s competitiveness (vicente et al. 2015:42). it is this characteristic of interdependence that dictates an enterprise’s competitiveness (park & ryu 2015:341). the dimensions of innovation capabilities are discussed in detail in the section ‘dimensions of innovation capabilities’. dimensions of innovation capabilities forsman’s (2011) study identified dimensions as being reflective of the degree of innovation capability possessed by small and medium manufacturing and service enterprises. the items generated for forsman’s study were based on concepts introduced in previous studies that identified innovation typologies (forsman 2011:739). the seven items generated are capabilities for knowledge exploitation, entrepreneurial capabilities, risk management capabilities, networking capabilities, development capabilities, change management capabilities, and market and customer knowledge capabilities (forsman 2011:744; forsman & rantanen 2011:35), which are discussed as follows. knowledge exploitation knowledge exploitation refers to the ability to be aware of external knowledge relevant to current practice, to internalise and assimilate this new knowledge and to exploit it for innovation purposes as needed (alegre et al. 2011:457; forsman & rantanen 2011:49). knowledge exploitation was formed from the need for an enterprise’s employees to assimilate information and knowledge from external association in r&d (forsman 2011:740; kostopoulos et al. 2011:1336; spithoven et al. 2011:11). this term was extended to include the ability to use capabilities to absorb innovation stimuli of technology and humans (smith et al. 2011:10). cohen and levintha (in forsman 2011:740; forsman & rantanen 2011:32; kostopoulos et al. 2011:1335; lewin, massini & peeters 2014:1346; spithoven et al. 2011:12) conceptualise absorptive capacity as ‘the ability of a firm to recognise the value of new, external information, assimilate it, and apply it to commercial ends’. it is further argued that absorptive capacity promotes the speed, frequency and magnitude of innovation (kostopoulos et al. 2011:1336; spithoven et al. 2011:12). entrepreneurial capabilities entrepreneurial capabilities describe the ability to be aware of new opportunities to seize the new opportunity for developing new solutions and to exploit opportunities for creating new profit (forsman & rantanen 2011:49). in accordance with entrepreneurial capabilities and absorptive capacity, dynamic innovation capabilities consist of the ability to transform knowledge into a competitive advantage (forsman 2009:503). dynamic capabilities can be further disaggregated into the capacity to sense and shape opportunities and threats, to seize opportunities and to maintain competitiveness through the enhancement, combination, reconfiguration and protection of the enterprise’s intangible and tangible resources (forsman & rantanen 2011:32; teece 2007:1319). risk management capabilities risk management capabilities describe the ability to assess risk, being willing to take risk and the actual ability to take risk (forsman & rantanen 2011:49). smaller enterprises are often more agile than their larger counterparts; however, they are also highly vulnerable to major shocks stemming from the external environment (forsman & rantanen 2011:29; smit & watkins 2012:6324). it is imperative that smmes make risk management a priority if they are to identify and buffer against risk and be better equipped to utilise their existing resources in times of uncertainty to ensure survival (smit & watkins 2012:6324). networking capabilities networking capabilities refer to whether or not the enterprise adopts a networking orientation, and whether the enterprise is able to create collaborative relationships and exploit the networks in the existing enterprise (forsman 2011:740; forsman & rantanen 2011:49). the social capital network of an enterprise refers to the macro-components of the enterprise, such as its suppliers, competitors and agents, which directly and indirectly provide the enterprise with knowledge for innovation (cantner et al. 2010:1940). smith et al.’s (2011:23) conceptualisation of social capital network concurs with that of cantner et al. (2010:1940), and it is described as embedded knowledge from interactions amongst individuals through their networks of interrelationships. these social relationships are considered an asset for organisations and can be ‘banked, analogously to financial capital’ (toth 2006:514). for an organisation to be conducive to emerging relationships, it should contain the following dimensions (hazelton & keenan in toth 2006:514): a system of networks that impact on relationship outcomes people have opportunities to send and receive information and have knowledge of the correct communication channels the timing is appropriate referral is allowed and encouraged it has appropriate social organisation. social capital is beneficial when the society is diverse because enterprises learn from each other and collaborate and assist each other in the achievement of goals (martínez-fernández & molina-morales 2010:261). social capital in the form of cross-industry collaboration is based on the approach of analogical thinking, where the transfer of applications and technology takes place from one industry to another (enkel & heil 2014:243). an important factor to note in social capital is geography because proximity intensifies the exchange of knowledge (cantner et al. 2010:1940). furthermore, cognitive distance affects the perception and interpretation of knowledge, which influences collaboration between social networks; therefore, high cognitive distance results in exploratory innovation (enkel & heil 2014:244). exploratory innovation is a radical innovation developed from the necessary synthesis of new knowledge and the enterprise’s existing knowledge base to create an offering that is, essentially, a new product (enkel & heil 2014:242). the benefits of networking are categorised into two classes, namely, tangible and intangible benefits (forsman 2011:740). improved returns and market share, along with competitive advantage, are some of the tangible benefits of social networking, whereas the formations of capabilities are the intangible benefits of social networking (forsman 2011:740). social capital networks help smmes access the market and resources lacking in the enterprise because of its size and age (ates & bititci 2011:5602; jørgensen & ulhøi 2010:397; park & ryu 2015:340). networks are a means of gaining knowledge for sustainable innovation because knowledge sharing enhances an enterprise’s innovation capacity (jørgensen & ulhøi 2010:397). development capabilities development capabilities refer to the ability to create new innovations that are different from what the competition is offering customers, being able to improve on existing products and services offered by the enterprise and being able to exploit the innovations that have been developed by others (forsman & rantanen 2011:49). forsman (2009:502) and forsman and rantanen (2011:30) state that innovations have been studied as a typology that makes the distinction between incremental and radical innovation. the authors go on to describe incremental innovation as the enhancement of the existing processes, making operations more effective and improving quality or reducing cost. on the other hand, radical innovations are characterised as discontinuations in technology and the market. this typology can be further analysed based on market-driven innovations and driving-market innovation (zortea-johnston, darroch & matear 2012:146). the authors exemplify market-driven innovations as being customer-focused and unlikely to produce radical ideas. because customers often perceive their needs from a frame of the known and familiar, it limits their ability to thoroughly articulate their needs and wants. conversely, the authors describe driving-market innovations as those innovations that create new customers, redefine the market, lead existing customers and meet the concealed needs and wants of customers. enterprises that adopt a market-driven innovation orientation, as opposed to a driving-market innovation orientation, are likely to strain their competitive advantage and, therefore, their long-term survival because of their inability to create radical change in the market (zortea-johnston et al. 2012:146). small, medium and micro-sized enterprises are said to be more flexible than their larger counterparts and should, as a result, be able to adapt and conform to the market more easily (smit & watkins 2012:6324). according to shahbazi, eraditifam and heydarabadi (2018:3), there is a direct connection between organisational flexibility and competitiveness. flexibility adds to competitive advantage and is therefore essential for the growth of smmes. change management capabilities and market and customer knowledge capabilities change management capabilities, which also include market and customer knowledge capabilities, are the abilities to implement change quickly. market and customer knowledge is the capability to acquire new customers, expand into new markets and increase sales to current customers (forsman & rantanen 2011:49). according to ates et al. (2013:47), as well as ates and bititci (2011:5614), internal and external change initiatives should be implemented with careful consideration given to planning and communication. the authors explain that in implementing critical change steps, owner-managers tend to neglect the soft aspects of change, such as culture, leadership and vision. the authors advise that smmes should adopt a strategic and long-term perspective of change, as opposed to treating change as the management of a project that is short-term and more operational in nature. in addition, owner-managers are urged to proactively manage change and not wait for external features in the environment, such as customer complaints, to impose the changes. research methodology the purpose of the study is to explore the innovation capacity of small, medium and large-sized south african consulting engineering firms. basic (pure) research is undertaken with the primary objective of producing new knowledge and understanding specific phenomenon. this study is basic in nature as it is undertaken to produce new knowledge and understanding of the degree of innovation capacity present in south african consulting engineering firms. this is achieved by observing and measuring the innovation capabilities of south african consulting engineering firms as is, without manipulating these variables. these capabilities are, namely, knowledge exploitation, entrepreneurial capabilities, risk management capabilities, networking capabilities, development capabilities, change management capabilities, and market and customer capabilities. through the observation and measurement of the capabilities, the degree of innovation capacity has been gauged. this research is non-experimental (ex post facto) because of its quantitative descriptive status, which compels the researcher to simply observe and measure without intervening and manipulating variables to test the cause–effect relationships. this cross-sectional study created a snapshot of the reality of innovation capacity at the point in time when the survey was conducted. therefore, the study does not intend to examine changes in the degree of innovation capacity over time as a longitudinal study would. the study was conducted in field conditions; no artificial environments were created for the study. participants’ completed questionnaires that generated raw, unanalysed quantitative data. the researcher collected this primary data and analysed it to deduce the degree of innovation capacity of small, medium and large-sized south african consulting engineering firms. the rationale for using a quantitative research approach is based, predominantly, on other leading researchers having used a similar approach. forsman and rantenan (2011:27) used a quantitative research approach to explore the differences in innovation capacity and the diversity of developed innovations across four enterprise categories within small manufacturing and service enterprises. forsman (2011:739) used the same quantitative approach to explore the kinds of innovations developed in small manufacturing and service enterprises and to explore the degree of innovation capacity of those small enterprises. sampling design the target population for the study was consulting engineering firms operating in south africa. consulting engineers south africa defines smes based on only the total annual turnover. consulting engineers south africa’s definition of smes has been adopted for the purpose of this study (cesa 2017): a small consulting engineering firm has an annual turnover equal to or less than r11.5m. a medium consulting engineering firm’s annual turnover exceeds r11.5m but not r35m. a large consulting engineering firm’s annual turnover exceeds r35m. the study made use of a probability sampling method because every participant had a known and equal chance of being included in the sample. in order to provide adequate data for uncovering and analysing differences in the innovation capabilities of the sub-populations or strata – namely small, medium and large-sized consulting engineering firms – a comparison of these two categories of firms was required (cooper & schindler 2014:351). stratified random sampling was used as the probability sampling method to increase the sample’s statistical efficiency and to provide adequate data for analysing the two strata (cooper & schindler 2014:351). ethical consideration ethical approval to conduct the study was obtained from the university of pretoria (ethical clearance number: ems041/71). results and findings univariate descriptive statistics composite score for innovation capacity composite scores were calculated for overall innovation capacity by calculating the average scores of innovation capabilities, which are sub-dimensions of innovation capacity (table 1). the results indicate that innovation capacity scored a mean of 3.655 on a five-point rating scale of innovation capabilities. this value lies between ‘average’ and ‘high’. individual composite scores were calculated for individual innovation capabilities. the results further indicate that innovation capacity scored a mean of 3.499, 3.707 and 3.752 for small, medium and large firms, respectively. large firms have the highest innovation capacity, whereas small-sized firms have the lowest capacity. the capability that scored highest amongst the respondents is networking capabilities (m = 3.759, sd = 0.658), and the capability that scored the lowest is market and customer knowledge (m = 3.560, sd = 0.534). table 1: innovation capacity and sub-dimension composite scores. firmographic profile of respondents’ enterprises a total of 94 responses were collected, of which 42.6% consisted of medium-sized firms which reported an annual turnover of ‘less than r35 million, but greater than r11.5 million’. the second-largest pool of respondents is small firms which reported an annual turnover of ‘equal to or less than r11.5 million’, representing 30.9% of respondents. large firms represented 26.6% of respondents and reported an annual turnover of ‘greater than r35 million’. furthermore, 86.2% of small firms has fewer than 20 employees, almost 50% of medium-sized firms has 5–19 employees and 60% of large firms have more than 50 employees. the majority of all small, medium and large enterprises have been in operation for more than 10 years, almost 40%, 45% and 80%, respectively. the respondents indicated that most of their operations are in civil engineering for small, medium and large-sized firms, as the respondents reported 51%, 37% and 27%, respectively. the results show that small, medium and large-sized firms operate mostly in the gauteng province, as the respondents reported 40%, 43% and 40%, respectively. responses show larger firms across the country, even operating outside south africa, whereas smaller firms were not represented in each province. demographic profile of respondents the respondents comprised 92.5% men and 7.5% women. the share of respondents aged ‘up to 45 years old’ (36.6%) is the same share of respondents who were between the ages of ‘46 and 55’. the rest of the respondents reported being ‘+56 years old’, which represented 26.9% of the responses. the education levels of respondents indicate that ‘post-graduate degrees’ (39.8%) have the highest incidence. ‘bachelor’s degrees’ have the second highest incidence with 38.7% and ‘up to diploma’ has the lowest incidence amongst respondents (21.5%). bivariate descriptive statistics chi-square test of independence for research and development and firm size the results of the chi-square test for independence (table 2) show that the size of a firm is associated with the amount of r&d the firm invests in itself (χ2 = 20.483; p = 0.009). table 2: chi-square test for association between external input and size of firm. spearman correlation between external input and innovation capabilities and research and development investment a medium-strength positive correlation was found between market and customer knowledge capability and external input (r = 0.46, p < 0.01) (table 3). the other six capabilities showed only a mild correlation with external input. table 3: spearman’s correlation coefficient innovation capabilities and external input. non-parametric tests investment in r&d, entrepreneurial capabilities, risk management capabilities and market and customer knowledge capabilities were significantly affected by the firm size (table 4). for these observed variables, the jonckheere-terpstra test revealed a significant trend in the data at a significance level of 0.05%: the larger the size of the firm, the higher the scoring on the specified capabilities. table 4: kruskal–wallis test and jonckheere–terpstra test for ordered alternatives. the study results suggest that respondents’ engineering consulting firms have an ‘average’ to ‘high’ innovation capacity; medium(m = 3.707, sd = 0.536) and large-sized firms (m = 3.752, sd = 0.614) have a similar capacity, but small firms (m = 3.499, sd = 0.638) are lagging. results further indicate that there exists a significant difference in entrepreneurial capabilities, risk management capabilities and capabilities for market and customer knowledge: larger firms have a higher scoring than smaller firms. in particular, the results for risk management capabilities and capabilities for market and customer knowledge show small firms in the lower range of ‘average’ to ‘high’, medium firms just over the midpoint for ‘average’ to ‘high’ and large firms in the upper range of ‘average’ to ‘high’. this finding prompts the need to explore why small consulting engineering firms are lagging in their innovation capabilities and, particularly, in their risk management capabilities and their capabilities for market and customer knowledge. as mentioned, innovation capacity is the capability of an enterprise to progress its resources and capabilities to discover and take advantage of opportunities to better satisfy customer needs; thus, innovation capacity is driven by resources and different capabilities (forsman 2011:740). this study observed small, medium and large firms’ internal and external resources as r&d and external input, respectively, to identify opportunities to improve the overall innovation capacity. the findings show that the size of the firm is associated with the amount of r&d investment – larger firms invested more financial assets into their r&d efforts. therefore, the larger the firm, the more r&d investment they are likely to invest in the firm. however, there was no significant difference across firm size for external input. in addition, a significant moderate-strength positive correlation was found between external input and capabilities for market and customer knowledge. this suggests that there is an opportunity for smaller-sized firms to invest in external input and directly improve their capabilities for market and customer knowledge to bridge the gap in capability between itself and larger sized firms. managerial implications the study suggests that there is room for improvement with regard to engineering consulting firms’ innovation capacity, particularly with small and medium-sized firms. capability building efforts of entrepreneurs, policymakers and associations or industry groups should prioritise capabilities that are lagging, namely, entrepreneurial capabilities, risk management capabilities and capabilities for market and customer knowledge. special focus should be given to small firms with regard to risk management capabilities and the capabilities for market and customer knowledge. smith et al. (2011:8) offer investments in human and technological capital as an approach to improving innovation capabilities. however, a more practical and, seemingly, equally effective approach is the former, given that small and medium-sized firms are often financially constrained and would, therefore, be unlikely to make significant strides in technological advancements. investments in human capital come in the form of training and enhancing skills within the firm (bernard et al. 2014:4). the latter, however, should not be completely dismissed, and technological investments should be evaluated on their own merit. given that investments in r&d improve innovation capacity, it is suggested that policymakers invest in more financial assistance for small and medium firms which also support innovation (forsman & rantanen 2011:41). small and medium-sized firms often have limited financial resources and cite lack of finance as a primary reason for failure. if the institutions can provide an environment where smes are more likely to be innovative, then smes will be more likely to fulfil their developmental role in the economy (gem 2014:4; nieman & pretorius 2004:3; olawale & garwe 2010:729). furthermore, because the r&d activities of smmes are often informal, it is of paramount importance that entrepreneurs are mindful of daily business developments and are constantly seeking opportunities to collaborate in their efforts to be a more innovative firm (forsman 2011:740). conclusion this study investigated the innovation capacity of consulting engineering firms operating in south africa and identified the differences in innovation capabilities across these firms (i.e. small, medium and large-sized). innovation capacity is an overall construct that generates capabilities for knowledge exploitation, entrepreneurial capabilities, risk management capabilities, networking capabilities, development capabilities, change management capabilities and market and customer knowledge capabilities (forsman 2011:744; forsman & rantanen 2011:35). there remains minimal available literature exploring and measuring the innovation capacity and innovation capabilities of south african smmes, let alone consulting engineering firms operating in south africa (forsman 2011:739–750; forsman & rantanen 2011:27–50; gemünden & rohrbeck 2010). this study was conducted to enhance the body of knowledge, available to academics, on the topic of innovation development of consulting engineering firms operating in south africa. recommendations for future research this study adopted the precedent of forsman (2011) and measured the internal, transformative and external inputs of innovation capacity as r&d investment, innovation capabilities and external input. however, given the research objectives of the study, which were to measure the innovation capabilities of the consulting engineering firms and identify differences in capabilities across firm size, the study did not focus on internal and external input factors to innovation capacity. as such, the literature investigated was constrained primarily to understanding innovation capacity as an overall construct and to understanding the innovation capabilities. the differences that were found, by this study, in innovation capabilities across firm size prompt the need for future research to explore why small consulting engineering firms are lagging in their innovation capabilities, and particularly in their risk management capabilities and their capabilities for market and customer knowledge. given that innovation capabilities provide a view on the transformative capabilities of the firms, future research should expand this view to include internal and external inputs to innovation capacity, even in the literature. perhaps the differences in innovation capabilities across firm size can be explained by the internal and external inputs to innovation capacity, which the gii has alluded to as being critical to the innovation process. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this research article. authors’ contributions m.m.m. contributed to the introduction, literature review, research methodology, results and findings, and conclusion; o.s. contributed to the introduction and literature review. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the data that support the findings of this study are available from the corresponding author, o.s., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references alegre, j., sengupta, k. & lapiedra, r., 2011, ‘knowledge management and innovation performance in a high-tech smes industry’, international small business journal 31(4), 454–470. https://doi.org/10.1177/0266242611417472 ates, a. & bititci, u., 2011, ‘change process: a key enabler for building resilient smes’, international journal of production research 49(18), 5601–5618. https://doi.org/10.1080/00207543.2011.563825 ates, a., garengo, p., cocca, p. & bititci, u., 2013, ‘the development of sme managerial practice for effective performance management’, journal of small business and enterprise development 20(1), 28–54. https://doi.org/10.1108/14626001311298402 bernard, a.l., dutta, s., reynoso, r.e. & wunsch-vincent, s., 2014, the global innovation index 2014: the human factor in innovation, viewed 10 june 2015, from https://www.globalinnovationindex.org/userfiles/file/reportpdf/gii-2014-v5.pdf. cantner, u., conti, e. & meder, a., 2010, ‘networks and innovation: the role of social assets in explaining firms’ innovative capacity’, european planning studies, 18(12), 1937–1956. https://doi.org/10.1080/09654313.2010.515795 cape argus, 2015, ramaphosa states case for the government, viewed 07 july 2019, from https://reference-sabinet-co-za.uplib.idm.oclc.org/document/samargus201509102_3408. cesa, 2017, become a cesa member, viewed 17 september 2017, from http://www.cesa.co.za/membership. chimucheka, t., 2013, ‘overview and performance of the smmes sector in south africa’, mediterranean journal of social sciences 4(14), 783–795. cooper, d.r. & schindler, p.s., 2014, business research methods, mcgraw-hill, new york, ny. construction industry development board, 2015, construction monitor – employment quarter 3 – 2015. october 2015, viewed 17 june 2016, from http://cidb.org.za/publications/documents/construction%20monitor%20-%20october%202015.pdf. dutta, s., lanvin, b. & wunsch-vincent, s., 2016, the global innovation index 2016: winning with global innovation, viewed 31 october 2017, from https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2016.pdf. dutta, s., lanvin, b. & wunsch-vincent, s., 2017, the global innovation index 2016: innovation feeding the world, viewed 31 october 2017, from https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2017.pdf. dutta, s., reynoso, r.e., guadagno, f., lanvin, b., leon, l.r., saxena, k. et al., 2018, global innovation index 2018: energizing the world with innovation, viewed 30 september 2018, from https://www.globalinnovationindex.org/gii-2018-report. enkel, e.l. & heil, s., 2014, ‘preparing for distant collaboration: antecedents to potential’, technovation, 34(4), 242–260. https://doi.org/10.1016/j.technovation.2014.01.010 forsman, h., 2009, ‘balancing capability building for radical and incremental innovations’, international journal of innovation management 13(4), 501–520. https://doi.org/10.1142/s1363919609002492 forsman, h., 2011, ‘innovation capacity and innovation development in small enterprises. a comparison between the manufacturing and service sectors’, research policy 40(5), 739–750. https://doi.org/10.1016/j.respol.2011.02.003 forsman, h. & rantanen, h., 2011, ‘small manufacturing and service enterprises as innovators: a comparison by size’, european journal of innovation management 14(1), 27–50. https://doi.org/10.1108/14601061111104689 gem, 2014, 2015 gem south african report, viewed 22 july 2015, from http://www.gemconsortium.org/country-profile/108. gem, 2018, gem 2017/18 global report, viewed 30 september 2018, from https://www.gemconsortium.org/report. gemünden, h.g. & rohrbeck, r., 2010, ‘corporate foresight: its three roles in enhancing the innovation capacity of a firm’, technological forecasting and social change 78(2), 231–243. https://doi.org/10.1016/j.techfore.2010.06.019 halme, m. & korpela, m., 2014, ‘responsible innovation toward sustainable development in small and medium-sized enterprises: a resource perspective’, business strategy and the environment 23(8), 547–566. https://doi.org/10.1016/j.techfore.2010.06.019 jørgensen, f. & ulhøi, j.p., 2010, ‘enhancing innovation capacity in smes through early network relationships’, creativity and innovation management 19(4), 397–404. https://doi.org/10.1111/j.1467-8691.2010.00577.x kostopoulos, k., papalexandris, a., papachroni, m. & ioannou, g., 2011, ‘absorptive capacity, innovation, and financial performance’, journal of business research 64(1), 1335–1343. https://doi.org/10.1016/j.jbusres.2010.12.005 kruger, s. & steyn, a.a., 2019, enhancing technology transfer through entrepreneurial development: practices from innovation spaces, viewed 09 october 2020, from https://www.researchgate.net/publication/340022583_enhancing_technology_transfer_through_entrepreneurial_development_practices_from_innovation_spaces/link/5e731e71299bf1571848c482/download. lewin, a.y., massini, s. & peeters, c., 2014, ‘sources of variation in the efficiency of adopting management innovation: the role of absorptive capacity routines, organizational legitimacy’, organisation studies 35(9), 1343–1371. https://doi.org/10.1177/0170840614539311 martínez-fernández, m.t. & molina-morales, f.x., 2010, ‘social networks: efforts of social capital on firm innovation’, journal of small business management 48(2), 258–279. https://doi.org/10.1111/j.1540-627x.2010.00294.x mhlanga, i., 2016, ‘fm economic indicators’, financial mail, 31 march–06 april, p. 45. national government of south africa, 2020, construction education and training authority (ceta), viewed 09 october 2020, from https://nationalgovernment.co.za/units/view/209/construction-education-and-training-authority-ceta. national skills authority (nsa), 2020, setas: what do setas do, viewed 09 october 2020, from https://www.nationalskillsauthority.org.za/roles-and-functions/setas/. nieman, g. & pretorius, m., 2004, managing growth: a guide for entrepreneurs, juta, cape town. olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738, viewed n.d., from https://academicjournals.org/article/article1380715803_olawale%20and%20garwe.pdf. oura, m.m., zilber, s.n. & lopes, e.l., 2015, ‘innovation capacity, international experience and export performance of smes in brazil’, international business review 25(4), 921–932. https://doi.org/10.1016/j.ibusrev.2015.12.002 park, t. & ryu, d., 2015, ‘drivers of technology commercialization and performance in smes: the moderating effect of environmental dynamism’, management decision 53(2), 338–353. https://doi.org/10.1108/md-03-2014-0143 pwc, 2015, highlighting trends in the south african construction industry, viewed 17 june 2016, from https://www.pwc.co.za/en/assets/pdf/sa-construction-2015.pdf. radas, s. & božić, l., 2009, ‘the antecedents of sme innovativeness in an emerging transition economy’, technovation 29(6–7), 438–450. https://doi.org/10.1016/j.technovation.2008.12.002 seibert, s.e., kraimer, m.l. & liden, r.c., 2001, ‘a social capital theory of career success’, academy of management journal 2(44), 219–237. https://doi.org/10.2307/3069452 services seta, 2020, what we do, viewed 09 october 2020, from https://www.servicesseta.org.za/page?&site=what_we_do. shahbazi, a., eradatifam, m. & heydarabadi, s., 2018, the impact of two information technology resources on organizational agility and competitive advantage, viewed 10 september 2020, from https://www.researchgate.net/publication/329150946_the_impact_of_two_information_technology_resources_on_organizational_agility_and_competitive_advantage. smit, y. & watkins, j.a., 2012, ‘a literature review of small and medium enterprises (sme) risk management practices in south africa’, african journal of business management 6(21), 6324–6330. http://doi.org/10.5897/ajbm11.2709 smith, a., courvisanos, j., tuck, j. & mceachern, s., 2011, building innovation capacity: the role of human capital formation in enterprises – a review of the literature, viewed 31 march 2015, from https://library.bsl.org.au/jspui/bitstream/1/2752/1/fostering%20enterprise.pdf#page=105. sok, p., o’cass, a. & miles, m.p., 2015, ‘the performance advantages for smes of product innovation and marketing resource-capability complementarity in emerging economies’, journal of small business management 54(3), 1–22. http://doi.org/10.1111/jsbm.12172 spithoven, a., clarysse, b. & knockaert, m., 2011, ‘building absorptive capacity to organise inbound open innovation in traditional industries’, technovation 30(2), 10–21. https://doi.org/10.1016/j.technovation.2009.08.004 statistics south africa, 2016, finding a home in a big pond, viewed 17 june 2016, from http://www.statssa.gov.za/?p=6367. teece, d.j., 2007, ‘explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance’, strategic management journal 28(13), 1319–1350. https://doi.org/10.1002/smj.640 toth, e.l., 2006. ‘building public affairs theory’, in c.h. botan & v. hazleton (eds.), public relations theory ii, lawrence erlbaum associates, mahwah, nj. vicente, m., abrantes, j.l. & teixeira, m.s., 2015, ‘measuring innovation capability in exporting firms: the innovscale’, international marketing review 32(1), 29–51. willemse, j., 2010, sme failure statistics, viewed 14 july 2015, from https://www.theforumsa.co.za/forums/showthread.php/7808-sme-failure-statistics. zortea-johnston, e., darroch, j. & matear, s., 2012, ‘business orientations and innovation in small and medium-sized enterprises’, international entrepreneurship management journal 8(2), 145–116. http://doi.org/10.1007/s11365-011-0170-7 abstract introduction literature review methodology research results discussion acknowledgements references about the author(s) nhamo mashavira department of business management, faculty of management sciences, central university of technology, bloemfontein, south africa citation mashavira, n., 2021, ‘the perceived impact of agency control on the performance of zimbabwean small-to-medium enterprises’, southern african journal of entrepreneurship and small business management 13(1), a356. https://doi.org/10.4102/sajesbm.v13i1.356 original research the perceived impact of agency control on the performance of zimbabwean small-to-medium enterprises nhamo mashavira received: 19 july 2020; accepted: 02 nov. 2020; published: 28 ju 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: agency control has been studied in the context of large public listed businesses and is linked to business performance. however, very limited studies have validated such a role in small-to-medium enterprises (smes), especially in a developing economy. aim: the current study aimed at ezstablishing the perceived impact of agency control on performance, as measured by return on investment (roi) and innovation in smes in harare province, zimbabwe. setting: primary research was conducted amongst owners or managers of smes in harare province, zimbabwe. methods: the final sample consisted of 106 owners or managers of smes. the study was purely quantitative and adopted the survey design. structured questionnaires were used for data collection. results: the study established that the most used control mechanisms were frequent monitoring and face-to-face deliberations with subordinates. weak and statistically insignificant relationships were found to exist between agency control and business performance measured by both roi and innovation. conclusion: it is best to solicit expert advice to coach owners or managers on how best agency control mechanisms could be formally instituted and managed to leverage on them. keywords: agency control; performance; smes; manager; zimbabwe. introduction small-to-medium enterprises (smes) dominate the international business platform numerically (ayyagari, demirgüç-kunt & maksimovic 2011; ramukumba 2014). they are the major types of businesses that contribute about 60% of the gross domestic product (gdp) of the countries, providing employment to about 70% of the population, and create value beneficiation in the range of 50% – 60% (organisation for economic cooperation and development 2017). japan has the biggest share of smes amongst the developed countries, making above 99% of total businesses (economist intelligence unit 2010), and in india, smes account for approximately 45% of output in the manufacturing sector and 40% of the total exports (ghatak 2010). in zimbabwe, smes comprise 70% of all businesses; employ 60% of the country’s labour force; and contribute above 50% to zimbabwe’s gdp (dhliwayo 2019). however, about 60% of smes in zimbabwe perform poorly and often fail during their first year, whilst 25% of them fail to survive beyond the first 3 years (mudavanhu et al. 2011). business performance, especially amongst smes, is often attributed to factors such as government support and management competencies, ignoring other factors such as agency relationships prevailing in the businesses; yet, they create a unique business environment and a complexity (kallmuenzer 2015) that has the potential to compromise business performance. agency relationships are ubiquitous in business operations because they are a fundamental concept upon which business relationships are built (eisenhardt 1989). agency relationships were conceptualised in the seminal work by jensen and meckling (1976) as a contract whereby one or more individuals (the principal) employ another individual (the agent) to execute some task on their behalf, involving the delegation of decision-making to the agent. agency relationships can also be understood as legal relationships in which the agent is authorised by the principal to perform on their behalf and is empowered to do what the principal could lawfully perform in person (baze 2009). although issues of corporate governance and agency control, in particular, have been studied in the context of large public listed businesses and linked to business performance (bendickson et al. 2016; schulze et al. 2001; yahya, ali & ghazali 2016), few studies have confirmed their role in smes, especially in a developing economy (yahya et al. 2016). yet, sound corporate governance plays a key role in improving the financial performance of smes (mazikana 2019). proper implementation of agency control mechanisms has the potential to create a business framework of attitudes and processes that not only add value to the business but also assist in building its reputation, thereby ensuring continuity and success of the business in the long run (radebe 2017). according to magaisa, duggal and muhwandavaka (2013), a trend exists amongst many zimbabwean smes where the owner or manager is in control of everything, making it difficult for the business to have a board of directors who run separately from the stakeholders and are capable to account for the running of the business. chrisman, chua and litz (2004) and yahya et al. (2016) also show that agency relationships and their associated information asymmetries may exist between principals and agents in small businesses, making it problematic for principals to regulate the agents’ behaviour, subsequently affecting business performance. furthermore, the seminal work by chrisman et al. (2004) underscores that separation of ownership and management (as is likely to prevail in most non-family-owned smes) generates costs that may be non-existent where ownership and management are combined, such as in family-owned smes. the separation of ownership and management creates a conflict of interest that earlier proponents like ross (1973) formalised as a principal-agent problem, in addition to obvious agency costs. it is against this background and also compounded by the fact that limited comprehensive studies on corporate governance and agency control, in particular, amongst zimbabwean smes have been conducted (mazikana 2019), that the current study is premised. problem background the fact that smes are the main forms of business in zimbabwe poses interesting agency relationship issues worth investigating. the separation of ownership from control in businesses may lead to the loss of appropriate monitoring by the owners on the managers and other employees who may use business assets for their private purpose to maximise their welfare (panda & leepsa 2017), with obvious implications on business performance. monitoring agent behaviour is a core issue in the agency theory (madison et al. 2015). monitoring systems help the principal to systematically collect information on the agent’s dealings. the agent is prone to serve the principal’s interests, if the principal has the capacity to monitor agent behaviour (boshkoska 2015). from its early formulation, jensen and meckling (1976) remarked that monitoring mechanisms were meant to control deviancy by the agent, which included controls such as budget limitations and operating guidelines – beyond merely detecting and assessing the agent’s performance. monitoring involves the principals’ ability to decide whether the agents have complied with the contract’s provisions and that managers would not promote self-interest in decision-making (boshkoska 2015). however, with relatively minimal or even inaccurate information because of asymmetrical information, the principal’s ability to direct agent behaviour towards set agendas may be inhibited. for example, managers may take advantage of their principals’ ignorance to advance their own interests by making false promises, on agreements or changing the terms of deals to benefit themselves. this creates ‘unfavourable take off’ – a sort of opportunism that is possible when the principal cannot identify the productivity of the employee until the conclusion of the contract (popov & simonova 2006). related to the possibility of unfavourable take off is the fact that agents may simply not exert the agreed-upon effort (shirking) as they may attend to personal business during working hours. the conflict of interest emanating from the separation of management and ownership makes the likelihood of theft and other kinds of opportunistic behaviour common in small businesses, which are likely to have less formal mechanisms of control than their larger counterparts (chrisman et al. 2004). however, as the survival of such small businesses often depends on the actions and decisions of a handful of managers and owners, the effect of any opportunistic behaviour by them is proportionally higher (chrisman et al. 2004; martin & butler 2017). good examples of opportunistic behaviour are fraud, falsehood and larceny. opportunistic behaviour by either party has the potential to impact parties outside the immediate principal–agent relationship, as well as direct and indirect stakeholders in society (zardkoohi, harrison & josefy 2015) – but with far-reaching consequences to the business. besides the financial implications of opportunistic behaviours, opportunism may also affect mutual trust and commitment, thus creating serious threats in the area of quality of social embeddedness (yaqub 2009). opportunism, if not put to check, is likely to cause reduced cooperation, reputation wear-outs and increased defections (yaqub 2009). opportunistic behaviours within cooperative arrangements may increase transaction costs as principals have to put in place expensive control mechanisms like complex and more explicit contracts to minimise opportunistic hazards. examples of such costs include costs incurred when processing information to craft contracts, monitoring contractual promises, administering contractual provisions and legal and business costs incurred when coordinating and ensuring desirable behaviours (yaqub 2009). therefore, controlling the problem of either principal or agent opportunism becomes so crucial to the sustainable performance of smes and the strategic networks that come along with doing so. however, regarding zimbabwean smes, studies (magaisa et al. 2013; musanzikwa 2014) established that there was rather a need to separate ownership from control of business affairs to ensure accountability. another study on smes in the manicaland province of zimbabwe by guruwo (2018) established a lack of proper governance frameworks amongst entrepreneurs. the study also found out that most owner-managed enterprises had family governance systems that promoted conflict of interest. it was also established that many smes had no management advisory board and that the division of responsibilities and authority was not clear as spouses and children were actively involved (guruwo 2018). the above evidence provides a scope for further extending research on the perceived impact of agency control on the performance of zimbabwean smes. few studies on business performance and agency control (whose results are mixed) have been conducted to date. it should be noted that studies investigating performance (by using different measures of performance) present mixed results and conflicting opinions (maalu et al. 2013; sciascia & mazolla 2008). some of the studies (chirico & bau 2014; de massis et al. 2015) were conducted in developed countries with different contextual realities than those in zimbabwe. research investigating on how agency relationships in zimbabwean smes are linked to business performance is still in its infancy. moreover, as principal–agent relationships apply in practice to relationships between shareholders and top management, as well as to that between managers and employees at all levels, it is interesting to explore how such relationships manifest themselves and influence agency control within the context of smes in zimbabwe. research purpose and objectives the agency theory, often applied to how the shareholders or owners (principals) of a business relate to their managers (agents), can also be applied to the relationship between managers and employees (bartol 1999). according to the theory, when managers are remotely involved in the activities of employees and make no deliberate effort to ensure that the interests of a business are protected, agency problems tend to manifest themselves because of divergent interests between principals and agents. one of its assumptions is that both employers and employees are basically driven by self-interest. the theory perceives humans as being opportunistic and as utility maximisers (hendry 2002) – implying goal conflict between principals and agents. its second assumption pertains to the rationality exhibited by human behaviour (selten 1998) – known as bounded rationality. according to simon (1997), the term ‘bounded rationality’ is used to label rational choice, which considers that rationality is bounded because of limits in ones thinking capacity, available information and time. incomplete contracting is optimal that can be attained because of bounded rationality; hence, contractual completeness would remain elusive. contractual completeness is likely to remain elusive in smes. it may be impossible to completely regulate the whole relationship, as all relevant matters such as the employee’s effort may not be foreseen and understood at the time of contracting. as a result of bounded rationality, many employment contracts are likely to be incomplete in that they do not specify accurately the duties of the contracting parties under all conceivable circumstances (zheng & deakin 2016). this is even made worse by the fact that for zimbabwean smes in the manufacturing industry, the owner or manager does almost everything, making it difficult for the enterprise to have board members who are separate from the stakeholders (magaisa et al. 2013). the third assumption is that the agent is presumed to have reserved information accessible to the principal at a cost – known as information asymmetry (balago 2014). information is, therefore, perceived as a purchasable commodity. information asymmetry is entrenched in that the employee knows his or her own skill, capabilities and their own behaviour (cousins et al. 2008), as well as job-specific information, better than the manager. however, classical agency theorists (daily & dollinger 1992; fama & jensen 1983b) document that the mutual coordination and communication amongst family members within family businesses help to mitigate information asymmetry between the two parties. finally, the other assumption is that the agent is expected not only to be risk-averse but also to be work-averse (baiman 1990). agency problems could emanate from a minimal effort by the agent (e.g. agents may resort to tardiness, flubbing or other such shirking behaviours). agents may simply not exert the agreed-upon effort (shirking) as they may attend to personal business during working hours. as it is virtually impossible to eliminate shirking regardless of the degree of supervision, the goal should be to minimise it to a level, which warrants that the principal’s goals are achieved. this could be achieved through the use of boards of directors particularly designed to bring new ideas, which is meant to assist in both the crafting and implementation of policies, as well as accounting for the way the enterprises are run. however, this has been found to be lacking in zimbabwean smes (magaisa et al. 2013); yet, sound corporate governance practices have been found to play a crucial role in increasing the financial performance of smes in zimbabwe (mazikana 2019). in view of the above, the purpose of the current study was to determine the perceived impact of agency control on the performance of smes in zimbabwe measured by return on investment (roi) and innovation (both process and product innovation), and is guided by the following objectives: to examine the nature of agency control in zimbabwean smes to evaluate the impact of agency control on the performance of smes in zimbabwe. literature review agency theory the agency theory was originally formulated in an impersonal context, specifically the fiduciary relationship between a business’ distant shareholders (principals) and chief executive officer (agent), where there is a great geographical and emotional distance between the two (cruz, gómez-mejia & becerra 2010). this makes it very applicable to non-owner-managed family and non-family businesses, where fiduciary relationships exist, and information asymmetry exists between principals and agents, and where it may be too hard for the principals to control agent behaviours. the theory applies in practice to both relationships between shareholders and top management as well to that between administrators and workers at all levels. the fact that the agency theory can be applied extensively (ahmad, farley & naidoo 2012) and in a variety of settings (kivisto 2007) makes it a leading theoretical perspective in the current study. from its origins in information economics, the agency theory advanced along two strands, namely principal–agent and positivist strands (eisenhardt 1989). these two strands have a shared unit of analysis, the contract that binds both the principal and the agent. the current study is more aligned with the positive-agency strand, because it has been widely used as a foundation for empirical and theoretical work by organisation theorists and management academics (e.g. eisenhardt 1989; jensen 1998; tosi & gomez-mejia 1989). it is thus rooted in scientific realism. in view of this, unlike the mathematically complex principal–agent strand, it is the more practical orientation of the positive-agency strand (shapiro 2005) that situates this view as the principal concern of this study. it is appropriate to consider how the agency theory could be applied in zimbabwean smes, where approximately 80% of the businesses are family-owned and are mainly owner-managed smes without an advisory management board (guruwo 2018; mbetu 2016). family-owned smes are a good example where the chief executive officer may be a member of the founding family, with most employees coming from the immediate and extended families. the assumption that the interests of family member employees are already aligned reduces the likelihood of both formal contracting and management systems (brawley 2016). although the family and business values may not always align, managers in family-owned smes may nonetheless prefer to use personalised, social forms of control, rather than official, objective methods (brawley 2016). in addition, the emotional attachment coming from close family ties within family-owned smes may, but not always, put agent opportunism to check, especially when the chief executive officer is a member of the founding family and most employees are from the immediate and extended families (cruz et al. 2010). the positivist strand researchers taking the positivist strand (fama 1980; fama & jensen 1983a; jensen & meckling 1976) concentrated on detecting situations where the agent and principal are prone to pursue contradictory goals and then explain the mechanisms of governance that may put the agent’s self-interest to check (eisenhardt 1989). two main propositions summarise the governance mechanisms acknowledged in the positivist stream. the first is that, when contracts between principals and agents are outcome-based, agents tend to conduct themselves in the principals’ interest. the second is that, when principals have evidence to verify agents’ behaviour, agents are more prone to pursue the principals’ interest (eisenhardt 1989). regarding the first proposition, the argument is that contracts co-align the inclinations of agents to those of principals as rewards for both are subject to the same actions, and consequently, conflict of self-interest between agents and principals is minimised (eisenhardt 1989). however, considering the obscured roles of principals and agents, especially in the family-owned smes, contracts might not be necessary (although they should be preferred to eliminate future disagreements), or may not be that enforceable. in this regard, most zimbabwean smes are violating major provisions enshrined in the country’s labour laws. uzhenyu and marisa (2017) established that a majority of those employed in the smes entered into verbal contracts of employment and that a lot of smes made no statutory contributions for pension, medical cover, income tax and insurance. regarding the second proposition, agent opportunism is mitigated as they (agents) cannot cheat the principal because of information systems, which serve to update the principal on the actions of the agent. in the case of family businesses, the compassion of family owners towards their family members always shows in their being placed in senior managerial roles – and as a way of returning the favour, family managers often manifest exceptional loyalty and commitment to the business (zhang & cao 2016). this allegiance is likely to alleviate agent opportunism. agent opportunism and conflict of interest between principals and agents are the main assumptions of the positivist strand of agency theory. the positivist strand therefore assumes conflict of interests between principals and agents such that principals wish to increase their fortune subject to risk constraints, and agents strive to maximise their personal gain as they attempt to reduce personal risk and effort (cuevas-rodríguez, gomez-mejia & wiseman 2012). this is often the case in non-family-owned businesses where there is a separation of ownership and management. the separation may not solicit altruistic behaviours, which may well be the basis of competitive advantage in their family-owned counterparts (madison et al. 2015). altruistic behaviours reduce information asymmetries and promote communication, fostering a commitment to family and a sense of belonging to the business (eddleston, kellermanns & sarathy 2008). in addition, promises of familial succession and/or future ownership in family businesses are prone to encourage continued support from family employees and board members and thus help in minimising agent opportunism and risk-aversive behaviours (eddleston et al. 2008; pagliarussi & costa 2017). on the contrary, the performance of zimbabwean family businesses has been affected by difficulties attributable to a lack of formal organisational and corporate structures and includes the complexities of family business dynamics – such as ownership, succession, family harmony and solidarity (sikomwe et al. 2012). interestingly, some studies (bammens, voordeckers & van gils 2011; siebels & knyphausen-aufseβ 2012) even caution that altruism may be causal to self-discipline challenges that could further expose family businesses to even more types of agency costs. these issues, however, lie beyond the scope of the current investigation. agency relationships in small-to-medium enterprises the conflict of interest caused by the separation of ownership from management makes the likelihood of theft and other kinds of opportunistic behaviour common in small businesses, which are likely to have less formal mechanisms of controls than larger businesses (chrisman et al. 2004). in addition, most smes are closely run and managed by owners who have direct insights into the internal processes of the business (visser & chiloane-tsoka 2014). the control function of the board may not be necessary, and many of their boards exist on paper only (visser & chiloane-tsoka 2014). the business would therefore be indistinguishable from the owner-manager, upon whom its failure or success depends (stokes & wilson 2010). monitoring agent behaviour is a core issue in the agency theory (madison et al. 2015). monitoring systems help the principal to systematically collect information on the agent’s dealings. agents are prone to act in the interests of principals, if the principals have the capacity to monitor the agent’s behaviour (boshkoska 2015). from its early formulation, jensen and meckling (1976) remarked that monitoring mechanisms were meant to control deviancy by the agent, which included controls such as budget limitations and operating guidelines – beyond merely detecting and assessing the agent’s performance. monitoring involves the principals’ ability to decide whether the agents have complied with contract provisions, and that managers would not promote self-interest in decision-making (boshkoska 2015). however, given the relatively minimal or even inaccurate information because of asymmetrical information, the principal’s ability to direct agent behaviour towards set agendas may be put to check. the above literature suggests a relationship between agency control and sme performance, and consequently, the following hypotheses are proffered: h1: there is a statistically significant relationship between agency control and business performance as measured by innovation. h2: there is a statistically significant relationship between agency control and business performance as measured by roi. the above indicators of performance (innovation and roi) were chosen because, generally, the measures to be used to either compare or assess the performance of different small enterprises should be balanced through the inclusion of both financial and non-financial measures (bititci, firat & garengo 2013). return on investment becomes a very important measure that entrepreneurs can use, as it tells them the extent to which their investment has been a success (lee 2012). return on investment, a crucial balance sheet ratio, therefore helps in assessing the efficiency of the use of resources of a business, as well as in providing an indication of how effective one’s investment in the business is (lee 2012). in addition, because of the daunting challenge linked with gathering and interpreting financial data gathered from privately owned smes, researchers have little choice but to contend with subjective information on business performance (dekker et al. 2015). consequently, the overwhelming evidence regarding the importance of innovation in enhancing an enterprise’s ability to adapt to dynamic business environments (shouyu 2017) contributed to its choice as a subjective measure of performance in this study. methodology research design the study employed the survey design. the chosen design allows for the collection of sizeable data from a significant population in a very economical way (saunders, lewis & thornhill 2015). quantitative data are usually collected by using a survey, and such data can be analysed quantitatively by using either descriptive or inferential statistics. furthermore, data collected by using the survey strategy are useful when suggesting possible reasons behind certain relationships between variables and for producing models of the relationships (saunders et al. 2015). through the use of sampling, the survey design can also generate findings representative of the whole population at a very low cost. research approach the two general approaches, qualitative and quantitative, are associated with subjectivity and objectivity, respectively (hughes 2006). the current study adopted a quantitative approach for the reason that it has the potential to deal with questions about relationships between measured variables with the purpose of controlling, predicting and explaining phenomena (leedy & omrod 2005). it is more suitable for examining the magnitude of an issue, phenomena or problem (kumar 2014). research participants as harare province has a higher concentration of smes (madzivanzira 2011), sme owners or managers in the province were chosen. however, because of lack of a comprehensive database of smes in the province, it became impracticable to come up with a comprehensive sampling frame of the enterprises. consequently, convenience sampling had to be used. convenience sampling is sometimes called opportunity or accidental sampling. it entails choosing the nearest individuals to serve as participants and continuing the process until the required sample size has been attained (cohen, manion & morrison 2011). for non-probability sampling methods, the issue of sample size is unclear, and, unlike probability sampling, no rules exist (saunders et al. 2015). a well-ordered non-probability sample often gives satisfactory results, such that researchers may not even consider probability sampling (cooper & schindler 2014). to mitigate the weaknesses related to convenience sampling, a reasonably large sample was used to increase its statistical power. a total of 106 questionnaires were completed. research instruments the researcher used a self-constructed forced-choice questionnaire to collect data for the period 2015–2016. items on such a questionnaire are usually easier and quicker to answer, as they involve less writing (saunders et al. 2015). it is also easy to compare responses as they have been preset. the self-constructed items measure the nature of agency relationships, roi and innovation. the items had to be pre-coded for statistical analysis. section a on demographic information contained closed questions, dichotomous questions and open questions demanding two-phrased responses at most. the remaining part of the instrument contained five-point questions on a likert-scale, where respondents showed their extent of agreement or their attitude concerning the degree to which certain phenomena were used (de vos et al. 2011). fieldworkers only availed themselves when clarifications were needed. ensuring reliability and validity reliability enables the researcher to estimate error, the larger the reliability, the smaller the error, and conversely, the smaller the reliability, the larger the error (punch 2005). reliability is concerned with whether a questionnaire produces similar results on repeated trials and under different conditions (saunders et al. 2015). as internal consistency, reliability demonstrates that the instrument is run once only through the split-half method (cohen et al. 2011). cronbach’s alpha measured split-half reliability by estimating the average correlation that would be obtained by considering every possible way to split the test in half (gravetter & forzano 2016). it produces values between 0 and 1.00, and a higher value shows a better degree of internal consistency or reliability. a value above 0.7 suggests good reliability (hair et al. 2014). table 1 shows the results of the reliability statistics. table 1: reliability statistics results. a cronbach’s alpha of 0.816 (α = 0.816) is a good reliability measure. it means that all the items were internally consistent and reliable. the questionnaire was also subjected to a pilot test on five smes that did not take part in the study. pilot testing provided some idea on the questionnaire’s face validity – that is, whether the questionnaire appeared to make sense (saunders et al. 2015). responses from pilot testing provided the researcher with an idea of both the reliability and suitability of the items, allowing for necessary amendments to be performed. the content validity of a measuring instrument is the extent to which it provides adequate coverage of the investigative questions guiding the study (cooper & schindler 2014). if the data collection instrument adequately covers the topics that have been defined as the relevant dimensions, it can be concluded that the instrument has good content validity (cooper & schindler 2014). to ensure content validity, questions were given to hr experts and experts in smes to be examined for bias, sequence and clarity. research procedure trained research assistants were enlisted for data collection. they assisted in hand-delivering questionnaires. this raised response rates because of the individual contact and because research assistants did not disturb participants during working hours (de vos et al. 2011). data for the years 2015 and 2016 were collected. statistical analysis the statistical package for social sciences (spss) version 20 was used for both descriptive and inferential statistics. bivariate correlation analysis in the form of spearman’s correlation coefficient was used to examine the perceived impact of agency control on business performance (statistics solutions 2020). spearman’s correlation has the advantage that unlike pearson’s correlation, it can evaluate a monotonic relationship between two ordinal or continuous variables (minitab 2019). research results demographic details of respondents and small-to-medium enterprises the demographic details of the respondents were as follows: 86.8% of the sme owners or managers were male, whilst 13.2% of the respondents were female. of the smes involved in the survey, only 6.6% were medium-sized (employing between 31 and 75 employees), whilst the rest were small enterprises (employing between 6 and 30 employees). the current study adopted the more comprehensive 2011 amended definition of smes by the small enterprises development corporation (sedco). small enterprises development corporation defines them by the number of employees, where individual entrepreneurs have zero employees, micro-enterprises have 1–5 and small enterprises have 6–30/40 employees, whilst medium enterprises include 30/40–75 employees (finscope msme survey zimbabwe 2012). of the smes under study, only 3% of the medium enterprises were run by a board of directors, whilst the rest had no such arrangement. ninety-three per cent of the smes had no hr department – the owners, managers or owners who doubled as managers had to put on many hats. it was also established that 69% of the respondents had either primary or secondary education qualifications, and the rest had either diplomas or degrees and that, on average, most smes had been operating for 7 years. the nature of agency control table 2 shows the nature of agency controls prevailing in the smes. table 2: the nature of agency control. average mean scores ranging between 3.85 and 4.13 (ar4; ar5; ar6; ar11; ar12) on a likert scale, ranged from 1 (strongly disagree) to 5 (strongly agree), suggest agreeability. however, a mean score of 2.43 (ar3) suggested disagreeability, whilst the remaining items suggested respondent indecision (ar1; ar2; ar7; ar8; ar9). impact of agency control on performance spearman’s correlation coefficient analysis was applied to examine the relationship between agency control and business performance measured by innovation. the following hypothesis was tested: h1: there is a statistically significant relationship between agency control and business performance as measured by innovation. table 3 shows spearman’s correlation on agency control versus performance measured by innovation. table 3: spearman’s correlation on agency control versus innovation. the results displayed in table 3 show a weak positive relationship of 0.117 between agency control and business performance measured by innovation in the smes. furthermore, the relationship is insignificant because of a p-value of 0.234, which is above 0.05 (i.e. 5% significance level). this suggests the acceptance of the null hypothesis, which states that there is no statistically significant relationship between agency control and business performance measured by innovation. spearman’s correlation coefficient was again used to examine the nature and strength of the relationship between agency control and business performance measured by roi. the test was conducted under the following hypothesis: h2: there is a statistically significant relationship between agency control and business performance as measured by roi. table 4 shows spearman’s correlation on agency control versus performance as measured by roi. table 4: spearman’s correlation on agency control versus return on investment. according to the results displayed in table 4, there is a weak positive relationship between agency control and business performance as measured by roi indicated by a coefficient value of 0.184. the relationship is statistically insignificant at 5%, as a p-value of 0.059 is >0.05. the results suggest the acceptance of the null hypothesis, which states that there is no statistically significant relationship between agency control and business performance as measured by roi. discussion the nature of agency control results in table 2 show that owners or managers agreed with the items ar4, ar5, ar 6, ar11 and ar12. item ar 4 enquired whether performance-related pay helped align employee job behaviours with owner or manager goals. the agency theory makes prescriptions regarding the circumstances under which fixed pay (salary) and variable pay (e.g. commission and bonus) should be used to foster efficient alignment of principal and agent interests (bartol 1991). variable pay such as performance-related bonuses does not increase base pay permanently and must be re-earned to be received again. it is in this sense that the performance-related pay helped align employee job behaviours. however, this runs contrary to the stewardship theory perspective, which holds that managers are stewards whose performance is built around an inherent aspiration to serve the business and will, as a result, naturally support the interests of their principals (hernandez 2008; zahra et al. 2008). item ar5 asked whether frequent monitoring of delegated enables owners or managers to keep track of operations, whilst ar6 solicited if frequent face-to-face talks with subordinates over delegated tasks kept them in control. the agency theory assumes that both the agent and principal are self-regarding and boundedly sensible, resulting in individual utility-maximising behaviour if appropriate incentives and controls to harmonise the goals of the agent with the principal are not enacted. owners or managers agreed on the need for frequent monitoring. from a structural viewpoint, the agency theory suggests governance mechanisms that monitor and control agents to prevent agent opportunism and better align the goals of both principals and agents. performance management is one such tool that allows for goal alignment between the two parties, thereby arresting one assumption of agency theory, which claims that both principals and agents pursue personal objectives (van puyvelde et al. 2013). owners or managers also agreed on items ar11 and ar12. item 11 enquired whether clear documentation of tasks and outcomes were essential for effective delegation, and item 12 enquired whether entrepreneurs train first before considering whom to delegate to. delegation of monitoring is more likely to generate commitment. however, to avoid agency slippage (which may stimulate the agent to adopt a position different from that of the principals) as a result of the delegation structure (da conceição 2010), principals often resort to training first before the delegation. an analysis by kräkel (2004) shows that delegating decisions to managers may be favourable despite the managers’ inclinations over the company’s resources and despite their risk-aversive behaviours. the strategic advantages from delegation may be realised if the preferences of managers over resources and their moderate risk-aversive behaviours do not offset the benefits from the delegation. regarding ar3 (owners’ or managers’ family members value relationships at the expense of performance), a mean of 2.43 suggests disagreeability. according to chrisman et al. (2012), particularism emanates from the personalisation of authority and derives from the fact that the control rights of family cause a personalistic application of authority that permits family members to pursue varied objectives other than pure profit or business value maximisation. it is the result of the discretion of a family business to act as the family members see fit. whilst managers in family-owned smes are expected to implement rational-calculative decisions, family control rights authorise the family to interfere with the matters of the business to replace other ‘particularistic’ benchmarks of their choosing (carney 2005). alternatively, the fact that family smes are likely to be entrenched in family relationships, such as the parent–child relationship (schulze, lubatkin & dino 2003), parents may be excessively liberal to their kids, resulting in children taking advantage of the liberality by free-riding or shirking (dawson 2012; eddleston et al. 2008). even though the current study did not separate family from non-family smes, its results could not sustain the aforementioned tendencies. in fact, in line with a recent study by adjei et al. (2019), spouses and children showed a positive relationship with business performance. impact of agency control on performance according to table 3 and table 4, there was a weak positive relationship between agency control and business performance measured by both roi and innovation in the smes. furthermore, the relationships were found to be statistically insignificant because of p-values >0.05 in both cases. this suggested the acceptance of the null hypotheses, meaning that no statistically significant relationships existed between agency control and business performance as measured by both roi and innovation. such atypical results could be explained by the fact that agency control has a bearing on the professionalisation and formality, or a lack thereof obtaining in the businesses (chu 2009). the fact that 93% of the smes involved in this survey had no hr department and that 93.4% were small enterprises (employing relatively fewer employees) suggests a lot of informalities on how human resource issues are handled. whilst such informality is often praised (as it allows decisions to be made with minimal red tape), the same informality could lead to inconsistencies in the manner in which people are treated. this is likely to have a bearing on performance. as enterprises grow, informal systems cannot be relied on, as more structure will be required. legal issues also emerge, as businesses need to comply with employment laws as they add staff (lorenzet, cook & ozeki 2006). the other reason for the results could be that employees in smaller businesses often have to perform a greater variety of tasks than those in larger businesses, and specialists are less likely to be found in these businesses (dalotă &grigore 2010). this could lead to poor performance despite the level of agency control prevailing in the enterprises. regarding agency control and business performance, there is a dearth of studies in africa and zimbabwe in particular, and hence, there is a need for more research. despite the aforesaid dearth of literature, panda and leepsa (2017) observe that, generally, the separation of ownership from control in businesses may lead to loss of appropriate monitoring by the owners on the managers, who may use business assets for their private purpose to maximise their welfare, with obvious implications on business performance. opportunistic behaviour by either party has the potential to impact parties outside the immediate principal–agent relationship, as well as direct and indirect stakeholders in society (zardkoohi et al. 2015) – but with far-reaching consequences to the business. besides the financial implications of opportunistic behaviours, opportunism may also affect mutual trust and commitment, thus creating serious threats in the quality of social embeddedness (yaqub 2009; zardkoohi et al. 2015). a study by li, armstrong and clarke (2014) provided fresh indications that the corporate governance bundle (measured by constructs emanating from the literature on big businesses) obstructs the financial performance of small businesses. these findings confirm results from the current study. furthermore, the aforesaid study is related to the current one because it admits that the agency theory functions as the basis for corporate law and for regulations and principles of corporate governance. the study also established that prevailing theory failed to acknowledge differences between large businesses and their small counterparts, and that small businesses are yet to include governance practice for them to perform better financially if regulatory bodies are able to design small business-tailored corporate governance-guiding principles (li et al. 2014). the study also found out that the same governance, like the board of directors, may serve different roles in small businesses compared with their larger counterparts. the seminal work by chrisman et al. (2004) established that agency problems in american small family businesses were less severe than in their non-family counterparts. the study established that agency relationships obtaining in a business may either increase or decrease performance because of agency costs. contrarily, although the current study did not take a comparative approach, and that its conceptualisation of an sme could be different from the american one, a weak relationship between agency control and business performance measured by both roi and innovation in the smes was established. their results also suggested that, excluding the effect of agency cost control mechanisms, family and non-family businesses investigated showed comparable economic performance when measured by short-term sales growth (chrisman et al. 2004). thus, in line with the arguments of founding agency theorists, their results suggest that the involvement of family has the capacity to reduce overall agency problems (fama & jensen 1983a; jensen & meckling 1976). however, this is an area that requires more research because the family setting provides a variant to the impersonal setting implied by the agency contract (kotlar & sieger 2018; madison et al. 2015), thus presenting confounding scenarios. utilising agency theory, an enquiry by hussain and hadi (2018) found that ownership concentration had a considerable negative relationship with the performance of businesses. the study also concluded that the mechanisms of corporate governance had a significant effect on the smes’ performance in the construction industry development board (cibd) in malaysia. these results disagree with those from the current one in that no statistically significant relationships existed between agency control and business performance. the differences could be explained by the fact that the study focussed on cidb-registered businesses, most of which (above 99.9%) were run by a board of directors; yet, only 3% of the medium enterprises in the current study had a board of directors. the control function of the board may not be necessary, and many family-owned sme boards exist on paper only (visser & chiloane-tsoka 2014). the business would, therefore, be indistinguishable from the owner or manager, upon whom its failure or success depends (stokes & wilson 2010), but whose competency in all areas pertaining to the business may be questionable. however, it should be noted that research on agency control and its impact on the performance of smes is in its infancy, and results are mixed. conclusions and managerial implications this study aimed to establish the perceived impact of agency control on sme performance as measured by innovation and roi in smes in harare province, zimbabwe. it was established that the most used control mechanisms were frequent monitoring and face-to-face deliberations with subordinates. a weak relationship between agency control and business performance measured by both roi and innovation in the smes was established. no statistically significant relationships were found to exist between agency control and business performance measured by both roi and innovation. given the number of items owners or managers showed indecision (five in total), it is recommended that expert advice be enlisted to coach owners or managers on how best principal–agent relationships could be managed. it is also recommended that apart from formalising principal–agent relationships, monitoring mechanisms, incentives and strategic planning systems be formally instituted. it is again recommended that medium enterprises, because of their size, may need to run under governance structures like oversight boards because compromised corporate governance or not adhering to its codes can result in fraud, misuses and the poor performance of the businesses (solomon 2010). in view of the above, agencies like the sedco need to be recapitalised through deliberate government funding for them to offer mentorship and learnership to owners or managers. limitations and directions for future studies apart from the accuracy of the agency theory and that it has been the dominant paradigm in corporate governance for the past 40 years or so, considering it alone in this study gave the current study a narrower view to corporate governance, which is but a broad area (armstrong & sweeney 2002). other predominant theoretical perspectives such as the stewardship theory or the resource-based view (rbv) could be used to support agency theory, as none on its own could successfully address all the complexities associated with smes and their various modes of ownership. whilst the study made use of cross-sectional data, forthcoming studies should strive to gather longitudinal data involving nationwide samples to validate and enhance the generalisability of findings of the current study. the other challenge arose from the reluctance by owners or managers of most privately owned businesses to share objective financial data. this challenge was mitigated by including a subjective measure (innovation) in the measurement of performance. finally, given that the parameters of generalisability for convenience sampling are negligible (cohen et al. 2011), more robust samples could be used in a nationwide survey in future. contributions of the study this study validated the agency theory and the relationship or a lack thereof between agency control and smes’ profitability and innovative potential. furthermore, studies linking agency relationships to performance have been studied in the context of large public listed businesses (bendickson et al. 2016; yahya et al. 2016). very limited studies have explored the role played by agency in smes, especially in a developing economy (yahya et al. 2016). this study is one of the very few contributing to the growing literature in the area and could be the first of its kind in zimbabwe. in addition, the study employed a hybrid approach to performance measurement, making use of both an objective and more subjective measure – a departure from the thinking that prefers the use of objective measures only (yildiz & karakas 2012). therefore, the current study’s contribution in the area of performance measurement lies in its ability to adopt balanced measures of business performance by including a more recent, intangible and externally focussed measure (innovation) to complement a more traditional financial measure (bititci et al. 2013). acknowledgements the author acknowledges the role played by the former human resource management students of great zimbabwe university in data collection. competing interests the author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article. author’s contribution n.m. is the sole author of this article. ethical considerations research ethics help prevent research abuses by placing emphasis on the sensitive and humane treatment of participants, who may be exposed to some hazards by research processes (bless, higson-smith & sithole 2013). typically, participants were informed about the research purpose and its basic procedures, the researcher’s identity, the sponsor and how the data might be used (de vaus 2012). they were also provided with a description of the likely benefits of the study, a description of how they were selected, an offer to answer any questions, a statement that participation was voluntary (this was contained in the cover page) and that each participant could pull out at any time or decline to respond to any particular question (de vaus 2012). the researcher had to seek for clearance from the faculty research ethics committee as well. to ensure confidentiality, data were stored in cabinets, and all information that could lead to the identification of respondents was removed. funding information this study was funded by the research board, great zimbabwe university, and the university research and innovation committee, central university of technology, free state, south africa. data availability the author confirms that the data supporting the findings of this study are available within the article. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references adjei, k.e., eriksson, r.h., lindgren, u. & holm, e., 2019, ‘familial relationships and firm performance: the impact of entrepreneurial family relationships’, entrepreneurship & regional development 31(5–6), 357–377. https://doi.org/10.1080/08985626.2018.1514074 ahmad, r.a., farley, a. & naidoo, m., 2012, ‘analysis of government-university relationship from the perspective of agency theory’, journal of education and practice 3(6), 12–21. armstrong, a. & sweeney, m., 2002, ‘enhancing corporate governance: demonstrating corporate social responsibility through social reporting’, in governance and corporate social responsibility in the new millennium, conference proceedings, deakin university, victoria, australia, december 04-07, 2002, pp. 1–15. ayyagari, m., demirgüç-kunt, a. & maksimovic, v., 2011, ‘small vs. young firms across the world: contribution to employment, job creation, and growth’, world bank policy research working paper 5631, viewed n.d., from http://documents1.worldbank.org/curated/en/478851468161354807/pdf/wps5631.pdf. baiman, s., 1990, ‘agency research in managerial accounting: a second look’, accounting, organization and society 15(4), 341–371. https://doi.org/10.1016/0361-3682(90)90023-n balago, g.s., 2014, ‘a conceptual review of agency models of performance evaluation’, international journal of finance and accounting 3(4), 244–252. https://doi.org/10.5923/j.ijfa.20140304.04 bammens, y., voordeckers, w. & van gils, a., 2011, ‘boards of directors in family businesses: a literature review and research agenda’, international journal of management reviews 13(2), 134–152. https://doi.org/10.1111/j.1468-2370.2010.00289.x bartol, k., 1999, ‘refraining sales force compensation systems: an agency theory-based performance management perspective’, the journal of personal selling and sales management 19(3), 1–16. baze, d., 2009, common law of agency, a supplemental chapter for oklahoma real estate principles, b & b publishing, oklahoma, tx. bendickson, j., muldoon, j., liguori, e. & davis, p., 2016, ‘agency theory: the times, they are a-changing’, management decision 54(1), 174–193. https://doi.org/10.1108/md-02-2015-0058 bititci, u., firat, s.u.o. & garengo, p., 2013, ‘how to compare performances of firms operating in different sectors?’, production planning and control 24(12), 1–18. https://doi.org/10.1080/09537287.2011.643829 bless, c., higson-smith, c. & sithole, s.l., 2013, fundamentals of social research methods: an african perspective, 5th edn., juta & company ltd, cape town. boshkoska, m., 2015, ‘the agency problem: measures for its overcoming’, international journal of business and management 10(1), 204–209. https://doi.org/10.5539/ijbm.v10n1p204 brawley, a.m., 2016, ‘performance management in family microbusinesses’, phd dissertation, graduate school of clemson university. https://tigerprints.clemson.edu/all_dissertations/1748. carney, m., 2005, ‘corporate governance and competitive advantage in family-controlled firms’, entrepreneurship theory and practice 29(3), 249–265. https://doi.org/10.1111/j.1540-6520.2005.00081.x chirico, f. & bau, m., 2014, ‘is the family an “asset” or “liability” for firm performance? the moderating role of environmental dynamism’, journal of small business management 52(2), 210–225. https://doi.org/10.1111/jsbm.12095 chrisman, j.j., chua, j.h. & litz, r.a., 2004, ‘comparing the agency costs of family and non-family firms: conceptual issues and exploratory evidence’, entrepreneurship theory and practice 28(4), 335–354. chrisman, j.j., chua, j.h., pearson, a.w. & barnett, t., 2012, ‘family involvement, family influence, and family-centered non-economic goals in small firms’, entrepreneurship theory and practice 36(2), 267–293. chu, w., 2009, ‘the influence of family ownership on sme performance: evidence from public firms in taiwan’, small business economics 33(3), 353–373. cohen, l., manion, l. & morrison, k., 2011, research methods in education, 7th edn., routledge, london. cooper, d.r. & schindler, p.s., 2014, business research methods, 12th edn., mcgraw-hill, boston, ma. cousins, p., lamming, r., lawson, b. & squire, b., 2008, strategic supply management, pearson education, london. cruz, c.c., go´mez-mejia, l.r. & becerra, m., 2010, ‘perceptions of benevolence and the design of agency contracts: ceo-tmt relationships in family firms’, academy of management journal 53(1), 69–89. https://doi.org/10.5465/amj.2010.48036975 cuevas-rodríguez, g., gomez-mejia, r.l. & wiseman, m.r., 2012, ‘has agency theory run its course? making the theory more flexible to inform the management of reward systems’, corporate governance: an international review 20(6), 526–546. da conceição, e., 2010, ‘who controls whom? dynamics of power delegation and agency losses in eu trade politics’, journal of common market studies 48(4), 1107–1126. https://doi.org/10.1111/j.1468-5965.2010.02086.x daily, c.m. & dollinger, m.j., 1992, ‘an empirical examination of ownership structure in family and professionally managed firms’, family business review 5(2), 117–136. https://doi.org/10.1111/j.1741-6248.1992.00117.x dalotă, m. & grigore, s., 2010, ‘successful implementation of knowledge management in small and medium enterprises’, business review 5(1), 132–138. dawson, a., 2012, ‘human capital in family businesses: focusing on the individual level’, journal of family business strategy 3(1), 3–11. https://doi.org/10.1016/j.jfbs.2011.12.001 dekker, j., lybaert, n., steijvers, t. & depaire, b., 2015, ‘the effect of family business professionalization as a multidimensional construct on firm performance’, journal of small business management 53(2), 516–538. https://doi.org/10.1111/jsbm.12082 de massis, a., frattini, f., pizzurno, e. & cassia, l., 2015, ‘product innovation in family versus non-family firms: an exploratory analysis’, journal of small business management 53(1), 1–36. https://doi.org/10.1111/jsbm.12068 de vaus, d., 2012, research design in social research, 1st edn., sage, london. de vos, a.s., strydom, h., fouché, c.b. & delport, c.s.l., 2011, research at grassroots: for the social sciences and human services professions, 4th edn., van schaik publishers, cape town. dhliwayo, b., 2019, ‘smes transition critical in steering the economy’, the herald, viewed n.d., from https://www.herald.co.zw/smes-transition-critical-in-steering-the-economy/. economist intelligent unit, 2010, towards the recovery: challenges and opportunities facing asia’s smes, viewed 18 march 2018, from http://www.eiu.com/site_info.asp?info_name=eiu_fedex_recovery&page=noads&rf=0. eddleston, k.a., kellermanns, f.w. & sarathy, r., 2008, ‘resource configuration in family firms: linking resources, strategic planning and technological opportunities to performance’, journal of management studies 45(1), 26–50. https://doi.org/10.1111/j.1467-6486.2007.00717.x eisenhardt, m.k., 1989, ‘agency theory: an assessment and review’, the academy of management review 14(1), 57–74. https://doi.org/10.2307/258191 fama, e.f., 1980, ‘agency problems and the theory of the firm’, journal of political economy 88(2), 288–307. fama, e.f. & jensen, m., 1983a, ‘separation of ownership and control’, journal of law and economics 26(3), 301–325. https://doi.org/10.1086/467037 fama, e.f. & jensen, m.c., 1983b, ‘agency problems and residual claims’, journal of law and economics 26(2), 327–349. finscope msme survey zimbabwe, 2012, fin mark trust, viewed 02 november 2017, from https://finmark.org.za/finscope-msme-survey-zimbabwe-2012/. ghatak, s., 2010, micro, small and medium enterprises (msmes) in india: an appraisal, viewed 02 november 2017, from www.legalpundits.com/content_folder/smearti150610.pdf. gravetter, f.j. & forzano, l.a.b., 2016, research methods for the behavioural sciences, 5th edn., cengage learning, belmont, ca. guruwo, p.t., 2018, ‘corporate governance issues in smes and their impact on financial performance: evidence from manicaland’, research journali’s journal of entrepreneurship 3(3), 1–9. hair, j.f., black, w.c, babin, b.j. & anderson, r.e., 2014, multivariate data analysis, 7th edn., pearson education, edinburgh. hendry, j., 2002, ‘the principal’s other problems: honest incompetence and the specification of objectives’, academy of management review 27(1), 98–113. https://doi.org/10.2307/4134371 hernandez, m., 2008, ‘promoting stewardship behaviour in organizations: a leadership model’, journal of business ethics 80(1), 121–128. https://doi.org/10.1007/s10551-007-9440-2 hughes, c., 2006, qualitative and quantitative approaches to social research, viewed 24 february 2014, from http://www2.warwick.ac.uk/fac/soc/sociology/staff/hughes/researchprocess/quantitative_and_qualitative_approaches.docx. hussain, m.a. & hadi, a.r.a., 2018, ‘corporate governance, small medium enterprises (smes) and firm’s performance: evidence from construction business, construction industry development board (cidb) malaysia’, international journal of business and management 13(2), 14–28. https://doi.org/10.5539/ijbm.v13n2p14 jensen, c.m. & meckling, m., 1976, ‘theory of the firm: managerial behaviour, agency costs and ownership structure’, journal of financial economics 3(4), 305–360. https://doi.org/10.1016/0304-405x(76)90026-x jensen, m., 1998, ‘foundations of organizational strategy’, harvard university press, cambridge, ma. kallmuenzer, a., 2015, ‘agency theory and the family business’, in m. nordqvist, l. melin, m. waldkirch & g. kumeto (eds.), theoretical perspectives on family businesses, edward elgar publishing, cheltenham. kivisto, j., 2007, ‘agency theory as a framework for the government-university relationship’, doctoral dissertation, faculty of economics and administration, tampere university press. kotlar, j. & sieger, p., 2018, ‘bounded rationality and bounded reliability: a study of non-family managers’ entrepreneurial behaviour in family firms’, entrepreneurship theory and practice 43(2), 251–273. https://doi.org/10.1177/1042258718796085 kräkel, m., 2004, ‘managerial versus entrepreneurial firms: the benefits of separating ownership and control’, schmalenbach business review 56(1), 2–19. https://doi.org/10.1007/bf03396683 kumar, r., 2014, research methodology: a step by step guide for beginners, 4th edn., sage, los angeles, ca. lee, b., 2012, financial guide for small and medium enterprises, cpa australia ltd, singapore. leedy, p.d. & ormrod, j.e., 2005, practical research, prentice hall, upper saddle river, n.j. li, y., armstrong, a. & clarke, a., 2014, ‘the relationship between corporate governance and financial performance of small corporations in australia’, journal of business systems, governance and ethics 9(2), 25–39. https://doi.org/10.15209/jbsge.v9i2.716 lorenzet, j.s., cook, g.r. & ozeki, c., 2006, ‘improving performance in very small firms through effective assessment and feedback’, education + training 48(8/9), 568–583. https://doi.org/10.1108/00400910610710010 maalu, j., mccormick, d., obonyo, p.k. & machuki, v., 2013, ‘succession strategy and performance of small and medium family businesses in nairobi, kenya’, international journal of education and research 1(6), 1–22. madison, k., holt, d.t., kellermanns, f.w. & ranft, a.l., 2015, ‘viewing family firm behavior and governance through the lens of agency and stewardship theories’, family business review 29(1), 65–93. https://doi.org/10.1177/0894486515594292 madzivanzira, a., 2011, ‘smes key to economic recovery’, the patriot, viewed 01 june 2016, from http://www.thepatriot.co.zw/old_posts/smes-key-to-economic-recovery/. magaisa, g.m., duggal, s. & muhwandavaka, r., 2013, ‘corporate governance perspectives for zimbabwean smes’, international journal of economy, management and social sciences 2(8), 616–619. martin, j.a. & butler, f.c., 2017, ‘agent and stewardship behaviour: how do they differ?’, journal of management & organisation 23(5), 633–646. https://doi.org/10.1017/jmo.2016.72 mazikana, a.t., 2019, corporate governance and financial performance in smes: a case of the kapenta industry in kariba, viewed 22 october 2020, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3452912. mbetu, k.c., 2016, succession plan in black family business: myth or reality?, viewed 29 october 2020, from http://www.africanexecutive.com/modules/magazine/article_print.php?article=74. minitab, 2019, a comparison of the pearson and spearman correlation methods, viewed 23 october 2020, from https://support.minitab.com/en-us/minitab-express/1/help-and-how-to/modeling-statistics/regression/supporting-topics/basics/a-comparison-of-the-pearson-and-spearman-correlation-methods/. mudavanhu, v., bindu, s., chigusiwa, l. & muchabaiwa, l., 2011, ‘determinants of small and medium enterprises failure in zimbabwe: a case study of bindura’, international journal of economic research 2(5), 82–89. musanzikwa, m., 2014, ‘managing small to medium enterprises suppliers in developing countries – a case of smes in harare, zimbabwe’, science journal of business and management 2(1), 35–43. https://doi.org/10.11648/j.sjbm.20140201.15 organisation for economic cooperation and development, 2014, corporate governance of small and medium-sized enterprises (smes), viewed 06 november 2016, from http://www.oecd.org/daf/ca/corporategovernanceofstateownedenterprises/corporategovernanceofsmallandmedium-sizedenterprisessmes.htm. pagliarussi, m.s. & costa, c., 2017, ‘identity in family firms: a theoretical analysis of incentives and contracts’, bar rio de janeiro 14(3), 1–25. https://doi.org/10.1590/1807-7692bar2017170004 panda, b. & leepsa, n.m., 2017, ‘agency theory: review of theory and evidence on problems and perspectives’, indian journal of corporate governance 10(1), 74–95. https://doi.org/10.1177/0974686217701467 popov, v.e. & simonova, v.l., 2006, ‘forms of opportunism between principals and agents’, international advances in economic research 12(1), 115–123. https://doi.org/10.1007/s11294-006-6140-0 punch, k.f., 2005, introduction to social research: quantitative and qualitative approaches, 2nd ed., sage, los angeles, ca. radebe, m.s., 2017, ‘the benefits of good corporate governance to small and medium enterprises (smes) in south africa: a view on top 20 and bottom 20 jse listed companies’, problems and perspectives in management 15(4), 271–279. https://doi.org/10.21511/ppm.15(4-1).2017.11 ramukumba, t., 2014, ‘overcoming smes challenges through critical success factors: a case of smes in the western cape province, south africa’, economic and business review 16(1), 19–39. ross, s., 1973, ‘the economic theory of agency: the principal’s problem’, american economic review 63(2), 134–139. saunders, m., lewis, p. & thornhill, a., 2015, research methods for business students, 7th edn., pearson, london. schulze, w.s., lubatkin, m.h. & dino, r.n., 2003, ‘exploring the agency consequences of ownership dispersion among the directors of private family firms’, academy of management journal 46(2), 179–194. https://doi.org/10.5465/30040613 schulze, w.s., michael, h., lubatkin, m.h., dino, r.n. & buchholtz, a.k., 2001, ‘agency relationships in family firms: theory and evidence’, organization science 12(2), 99–116. https://doi.org/10.1287/orsc.12.2.99.10114 sciascia, s. & mazolla, p., 2008, ‘family involvement in ownership and management: exploring nonlinear effects on performance’, family business review 21(4), 331–345. https://doi.org/10.1111/j.1741-6248.2008.00133.x selten, r., 1998, ‘features of experimentally observed bounded rationality’, european economic review 42(3–5), 413–436. https://doi.org/10.1016/s0014-2921(97)00148-7 shapiro, s.p., 2005, ‘agency theory’, in k.s. cook & d.s. massey (eds.), annual review of sociology, annual reviews, vol. 31, pp. 263–284, online review in advance, palo alto, ca. shouyu, c., 2017, ‘the relationship between innovation and firm performance: a literature review’, advances in computer science research 82(1), 648–652. https://doi.org/10.2991/snce-17.2017.132 siebels, j.f. & knyphausen-aufseß, d., 2012, ‘a review of theory in family business research: the implications for corporate governance’, international journal of management reviews 14(3), 280–304. https://doi.org/10.1111/j.1468-2370.2011.00317.x sikomwe, s., mhonde, c., mbetu, k.c., mavhiki, s. & mapetere, d., 2012, ‘critical perspectives on succession planning in the commuter transport sector in zimbabwe’, international journal of business and social science 3(5), 230–241. simon, h., 1997, models of bounded rationality: empirically grounded economic reason, vol. 3, mit press, cambridge, ma. solomon, j., 2010, corporate governance and accountability, 2nd edn., wiley, hoboken, nj. statistics solutions, 2020, correlation (pearson, kendall, spearman), viewed 26 october 2020, from https://www.statisticssolutions.com/correlation-pearson-kendall-spearman/. stokes, d. & wilson, n., 2010, entrepreneurship and small business management, 6th edn., cengage learning emea, andover. tosi, h.l. & gomez-mejia, l.r., 1989, ‘the decoupling of ceo pay and performance: an agency theory perspective’, administrative science quarterly 34(2), 169–190. https://doi.org/10.2307/2989894 uzhenyu, d. & marisa, j., 2017, ‘non-compliance with labour legislation by registered small to medium enterprises in harare jeopardising industrial and labour relations’, iosr journal of business and management 19(10), 67–73. https://doi.org/10.9790/487x-1910096773 van puyvelde, s., caers, b., dubois, c. & jegers, m., 2013, ‘agency problems between managers and employees in non-profit organizations: a discrete choice experiment’, non-profit management & leadership 24(1), 63–85. https://doi.org/10.1002/nml.21081 visser, t. & chiloane-tsoka, e., 2014, ‘an exploration into family business and smes in south africa’, problems and perspectives in management 12(4), 427–432. yahya, f., ali, s.a. & ghazali, z., 2016, ‘the relevance of agency conflicts in small and medium enterprises’, international journal of advanced and applied sciences 3(7), 41–45. https://doi.org/10.21833/ijaas.2016.07.007 yaqub, m.z., 2009, ‘antecedents, consequences and control of opportunistic behaviour in strategic networks’, journal of business & economics research 7(2), 15–32. https://doi.org/10.19030/jber.v7i2.2258 yildiz, s. & karakas, a., 2012, ‘defining methods and criteria for measuring business performance: a comparative research between the literature in turkey and foreign’, procedia – social and behavioral sciences 58, 1091–1102. zahra, s.a., hayton, j.c., neubaum, d.o., dibrell, c. & craig, j., 2008, ‘culture of family commitment and strategic flexibility: the moderating effect of stewardship’, entrepreneurship: theory & practice 32(6), 1035–1054. https://doi.org/10.1111/j.1540-6520.2008.00271.x zardkoohi, a., harrison, j.s. & josefy, m.a., 2015, ‘conflict and confluence: the multidimensionality of opportunism in principal-agent relationships’, journal of business ethics 146(2), 405–417. https://doi.org/10.1007/s10551-015-2887-7 zhang, w. & cao, l., 2016, ‘family involvement, internal control and agency costs-evidences from china’s listed family firms’, perspectives in sciences 7(c), 45–51. https://doi.org/10.1016/j.pisc.2015.11.009 zheng, e. & deakin, s., 2016, ‘pricing labour capacity: the unexpected effects of formalising employment contracts in china’, centre for business research, working paper no. 479: university of cambridge, pp. 1–38, viewed 09 october 2019, from https://ideas.repec.org/p/cbr/cbrwps/wp479.html. abstract introduction methodology results discussion conclusion acknowledgements references about the author(s) larysa botha graduate school of business leadership, school of business leadership, university of south africa, midrand, south africa renier steyn graduate school of business leadership, school of business leadership, university of south africa, midrand, south africa citation botha, l. & steyn, r., 2020, ‘psychological contract breach and innovative work behaviour: systematic literature review’, southern african journal of entrepreneurship and small business management 12(1), a333. https://doi.org/10.4102/sajesbm.v12i1.333 original research psychological contract breach and innovative work behaviour: systematic literature review larysa botha, renier steyn received: 30 apr. 2020; accepted: 28 sept. 2020; published: 11 dec. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: innovative work behaviour (iwb) is central to organisational success and occurs despite psychological contract breaches (pcbs), which are the norm, rather than the exception. aim: the aim of the article is to present a comprehensive review of the conceptualisation of iwb and pcb, specifying the manner in which the concepts are defined and assessed. consistency in conceptualisation and the standardisation of measurement should contribute to the development of the unified body of knowledge. setting: the ways concepts are defined and assessed differ across studies, which challenges researchers and managers as no standard definitions or measurement techniques are available. methods: a systematic literature review methodology was followed to gather data, which were analysed by focusing on broad adoption, theoretical coherency and, in the case of measurement, psychometric properties. results: in total 14 articles were retrieved that measured the pcb-iwb link. psychological contract breach is most often defined and measured in terms of robinson and morrison’s (2000) and robinson and rousseau’s (1994) conceptualisations, whilst janssen’s (2000) framework is applied to iwb. reliability information is reported for these measures. conclusion: whilst many definitions and measures of the constructs are used, some are theoretically more comprehensive and some are applied more than others, and these are now stipulated. managers, consultants and researchers are now empowered to enter the academic debate on the pcb-iwb link and to test substantial and complementary hypotheses that will contribute meaningfully to the existing body of knowledge. keywords: psychological contract breach; innovative work behaviour; systematic literature review; conceptualisation; psychometric assessment. introduction organisations rely on innovation as a key source of competitiveness and overall organisational success (bos-nehles, renkema & janssen 2017; sanz-valle & jiménez-jiménez 2018; veenendaal 2015). in order for innovative strategies to be successful, employees’ behaviours must be aligned with such strategies (bos-nehles et al. 2017); therefore, ‘one option for organisations to become more innovative is to encourage their employees to be innovative’ (agarwal 2014:43). of note here is that a large part of the needed innovation is achieved beyond research and development departments, with organisations relying on ordinary employees for creativity and innovative thinking (janssen 2000; scott & bruce 1994). these individuals, operating ‘close to the ground’, are an invaluable source of information on trends in the market, changes in competition dynamics, opportunities for operational improvements and other important insights. for organisations to benefit from these insights, employees must be willing to engage in innovative work behaviour (iwb; akhtar, bal & long 2016; milliken, morrison & hewlin 2003; morrison 2011; zagenczyk et al. 2015). as iwb denotes discretionary actions that go beyond the prescribed and are often not directly or explicitly recognised by the formal reward system (janssen 2000:288), managers have the important task of facilitating such behaviour, which already forms part of the recognised management practices (bos-nehles et al. 2017; sanz-valle & jiménez-jiménez 2018; veenendaal 2015). however, understanding of iwb and how it can be influenced and shaped is fragmented and limited (bos-nehles et al. 2017). when studying innovation, the general literature reports many factors that prevent employees from engaging in iwb. firstly, organisational constraints, including lack of organisational support and leadership as well as bureaucracy and the limited availability of resources. secondly, individual or group constraints, including individual’s unwillingness and resistance to change, job stress, destructive competition between group members and interpersonal conflicts (caniëls & rietzschel 2015; hon & lui 2016). psychological contract breach (pcb) – the construct of interest in this study – was not mentioned in the sources consulted in the preliminary literature review. the pc concept assumes that employees expect their organisation to meet a large number of obligations as part of the explicit and implicit conditions within the employee–employer relationship (deery, iverson & walsh 2006; morrison & robinson 1997; rousseau 1989). psychological contract breach occurs when employees believe that the organisation or its agent has failed to uphold its obligations (morrison & robinson 1997). several studies report findings confirming the critical role of met expectations in affecting employee behaviours (flood et al. 2001). whilst the pc literature often uses the term pcb and violation interchangeably, morrison and robinson (1997) clearly distinguish between the two constructs. authors argue that breach is a cognitive evaluation that one’s organisation has failed to fulfil its obligations, whereas violation is the emotional and affective state that may follow from the individual’s perception of breach. in their meta-analysis, zhao et al. (2007) further report that pcb and violation display characteristics, which suggest that they are distinct, and as such it would be important to pay a specific attention to which construct is studied and measured. the focus of this article is explicitly on breach, not violation. perceived as the norm, rather than the exception (robinson & rousseau 1994), a significant amount of research literature is dedicated to pcb and its adverse effects on organisations. in their meta-analysis, zhao et al. (2007) posit that pcbs are associated with attitude-related (job satisfaction, turnover intention and organisational commitment) and behaviour-related work outcomes (organisational citizenship behaviour and in-role performance). similarly, as reported by another stream of research (hartmann & rutherford 2015; paillé, raineri & valeau 2016; raja, johns & ntalianis 2004; rigotti 2009; suazo 2009; vander elst et al. 2016), job satisfaction, decreased organisational commitment, diminished customer-orientated and co-worker-orientated citizenship behaviours, increased absenteeism and actual employee turnover add to a broad range of negative consequences of pcb. although studies on the effects of pcb on iwb are scant, nearly all researchers report that pcb correlates negatively with iwb (li et al. 2014; ng, feldman & lam 2010; vander elst et al. 2016), which is consistent with the findings reported in the extant literature. some studies, however, show that negative situations can foster innovation and encourage employees’ innovative behaviours. yang and hung (2015) found that (negative) emotions such as anger or hostility can foster idea generation, which forms part of iwb. innovation is also triggered when employees experience personal confrontations or organisational uncertainty (van de ven 1986). despite the negative outcomes generally associated with pcb, it may also lead to positive outcomes such as employees’ creativity in search for organisational improvements (zhou & george 2001). zhou and george (2001), however, assert that the organisational context is a key to determine the nature of employees’ perceptions; and as such, managers, who have an influence on context, may be instrumental in linking breach with innovation. the possibility of pcb resulting in positive employee outcomes, specifically of a behavioural nature, suggests two scenarios – one is probable and the other exceptional. it is apparent that pcb generally results in negative organisational outcomes, and this is well supported by literature. however, there is also a small number of research reports which advocate that pcb may have positive consequences (kiazad, seibert & kraimer 2014; van de ven 1986), including innovation (niesen et al. 2018b; zhou & george 2001). as pcbs seem to be omnipresent and tend to become a norm (agarwal 2014; dulac et al. 2008; jiang, probst & benson 2017; robinson & rousseau 1994; tziner, felea & vasiliu 2017), identifying the circumstances under which pcb has positive effects, thus, warrants further investigation. this will allow for the development of interventions to manage the environments in which pcb occurs and innovation is needed. the aim of this article is to comprehensively conceptualise and operationalise iwb and pcb as variables central to organisational survival and employer–employee interactional dynamics. without clarity on how these variables are defined and measured, researchers will be unable to contribute to the present body of knowledge and, thus, will fail to manage the interaction between these variables scientifically. methodology in order to ensure that the most important literature is captured in the analysis, a systematic literature review (slr) methodology was followed: a systematic review is a review of a clearly formulated question that uses systematic and explicit methods to identify, select, and critically appraise relevant research, and to collect and analyse data from the studies that are included in the review. (moher et al. 2009:332) following such a process increases ‘methodological rigour’ and provides a ‘reliable knowledge base by accumulating knowledge from a range of studies’ (tranfield, denyer & smart 2003:220). the procedure proposed by nightingale (2009) was followed, in which the aims and objectives of the review, the inclusion–exclusion criteria, how data were identified as well as the plan of the analysis are reflected. research objective the objective of the slr was to comprehensively conceptualise and operationalise (through an analysis of measurement) pcb and iwb, given articles in which both constructs are measured. scope of the study only articles published from 1994 onwards were selected. this is the year of publication of the seminal paper of scott and bruce (1994) on iwb, after which research on iwb gained momentum (bos-nehles et al. 2017). this date also corresponds with the publication of the longitudinal and definitive study of robinson and rousseau (1994) on pcb, which concluded that the prevalence of pcb is (very) high; and it has a significant impact on workplace behaviour. inclusion criteria studies included in this review were academic articles published in peer-reviewed journals, published in english, investigating and reporting on the relationship between pcb and iwb and the product of the search terms ‘psychological contract breach’, ‘innovative work behaviour’, ‘pcb’, and ‘iwb’. search process the following keywords were used and combined with the boolean ‘and’ operation: ‘psychological contract breach’, ‘innovative work behaviour’, ‘pcb’ and ‘iwb’. it was specified that the keywords needed to be included in the title, abstract and/or keywords of the articles. all retrieved articles were firstly inspected for relevance, including articles that studied close proxies to the search terms. for example, studies used terms ‘psychological contract fulfilment’ (pcf) rather than pcb and aspects of iwb such as ‘idea generation’ were included in the analysis. the next step was to ascertain whether the constructs of pcb and iwb were defined and measured independently as variables. this implies that only quantitative research studies were considered. as an additional step, the reference lists of selected articles were scrutinised to identify more articles that met the requirement of studying both pcb and iwb as separate variables. ethical consideration ethical clearance was granted by the university of south africa. ethical clearance number: 2019_sbl_001_ca. results in the ebscohost boutique, using the ‘smarttext search’ option, the search yielded 25 articles. following the same search procedure in the proquest databases, 16 articles were retrieved. the scopus database yielded five articles. the search in google scholar yielded 132 results. after screening all the abstracts and removing all duplications, 21 articles remained. following the full-text screening, 13 articles met the criteria. only one article was added following a scrutiny of the references of the 13 found articles. the total yield was thus 14 studies. none of these included a meta-analysis of the pcb-iwb link. presented below are the definitions of pcb and iwb, as presented in studies analysing the pcb-iwb link. following that, the ways pcb and iwb were measured are presented, including the findings on the reliability of these instruments. conceptualising innovative work behaviour and psychological contract breaches presented in table 1 are definitions of iwb and pcb and their proxies, as found in studies addressing both concepts. the definitions are presented chronologically. table 1: definitions of innovative work behaviour and psychological contract breaches and their proxies. in seven of the 14 articles, the authors refer to iwb with reference to the three most recognised authors in the iwb field: farr and west (1990:9), with janssen (2000:288) adding to that, and the work of de jong and den hartog (2007:43). in five papers, proxies of iwb are presented, such as ‘work-role innovation’ (kiazad et al. 2014), ‘innovation-related behaviors’ (ng et al. 2010), ‘creative performance’ (ahmad et al. 2019), ‘innovation management’ (bhatnagar 2014) and ‘service innovation behavior’ (kim et al. 2017). although these substitute terms clearly relate to iwb, theoretically they are most likely distinct. in two papers (li et al. 2014; vander elst et al. 2016), no comprehensive definitions for iwb were presented. aligned with pc and pcb theorists, the definitions of pcb and pcf are consistent. in seven of the 14 articles, authors provide direct definitions of pcb as employees’ perceptions regarding the extent to which the employer has failed to fulfil its promises and obligations, as found in morrison and robinson (1997) and robinson and rousseau (1994). in the other seven articles, the pcb is described as the exchange relationship between two parties in which one party, the organisation, fails to provide reciprocal returns. although cited from various authors, the origin of these definitions again goes back to the conceptualisations of morrison and robinson (1997) and robinson and rousseau (1994). operationalising innovative work behaviour and psychological contract breaches details of the measurement of iwb and pcb and their proxies are presented in table 2. table 2: measurement of innovative work behaviour and psychological contract breaches and their proxies. of the 14 studies, four used the nine-item scale by janssen (2000), three adopted the 10-item scale by de jong and den hartog (2010) and two used the nine-item scale by scott and bruce (1994). three studies utilised the shortened versions of scales by de jong and den hartog (2010) and scott and bruce (1994), stating the motive as practical considerations. in the remainder of the articles the proxies of iwb were measured by instruments developed by other authors. the cronbach’s α values varied between 0.77 and 0.95, with an average of 0.90. the users of janssen’s (2000) instrument report αs varying between 0.92 and 0.94. of the 14 studies cited, in six instances pcb was measured with the robinson and morrison’s (2000) scale, four using the standard five-item scale and two the shortened four-item version. in most of the other studies (seven), the authors adapted scales from other researchers; and in one study (ramamoorthy et al. 2005), the researcher developed his own scale. the cronbach’s α values varied between 0.76 and 0.97, with an average of 0.87. the users of robinson and morrison’s (2000) scale report αs varying between 0.82 and 0.97. discussion definitions the definition of janssen (2000:288) is the most often used to describe iwb and reflects the multistage theorising. most of the other definitions also reflect a multistage sequential conceptualisation of iwb, but researchers differ on the labelling of the stages as well as the number of the stages. although often presented as discrete stages (de jong & den hartog 2010; janssen 2000; kleysen & street 2001; scott & bruce 1994), the empirical verification of this conceptualisation often fails, resulting in researchers settling for describing iwb with fewer stages or as a single construct. scott and bruce (1994) contribute this to the idea that innovation is characterised by discontinued activities, where employees may be involved in several of these stages simultaneously. de jong and den hartog (2010) as well as janssen (2000) support scott and bruce’s (1994) explanation for testing less complex models. some of the studies located during the scrutiny of the literature on the pcb-iwb link define proxies for iwb. being theoretically divorced from the concept, these definitions should not be considered when defining iwb. by example, focusing on innovation (see ahmad et al. 2019), ‘creative performance’ refers primarily to creativity, which represents only the initial stage of iwb. references to these proxies account for subsets of iwb, primarily the creative stage of the construct. given the simplicity, theoretical soundness and adoption as seminal in the field of iwb, the following definition from janssen (2000) is proposed as the standard definition of iwb: iwb is defined as the intentional creation, introduction and application of new ideas within a work role, group or organisation, in order to benefit role performance, the group, or the organisation. (p. 288) unlike the disparity in defining the iwb construct, there is more consistency in defining the pcb. the definition used most often is that of morrison and robinson (1997), which evolved from robinson and rousseau’s (1994) definition, also often referred to. this seems to be the standard definition, and as such the following definition of pcb by robinson and rousseau (1994) is suggested: pcb is the employee’s perception regarding the extent to which the organization has failed to fulfil its promises or obligations. (p. 247) several proxies for pcb are presented as pcf and these are ‘effort–reward fairness’ (janssen 2000), ‘met expectations’, ‘obligations to innovate’ (ramamoorthy et al. 2005) and ‘reward and recognition’ (bhatnagar 2014). the utility of proxies will be explained better when dealing with the global and composite measurement of pcb. operationalisation in general, consistency in conceptualisation and the standardisation of measurement instruments should contribute to the development of the body of knowledge (babbie & mouton 2011). with reference to pcb, conway and briner (2005:94) state that many matters remain unresolved as ‘there are a variety of measures for assessing both breach and the contents of psychological contracts, showing there is no single, agreed upon measure of either of these constructs’. the measurement of iwb should focus on the single construct and not on its discreet stages (scott & bruce 1994). scott and bruce (1994) argue that innovation comprises discontinued activities, which are often performed by employees simultaneously. it is suggested that the measure of iwb, as a single construct, proposed by janssen (2000) should be used as the standard. as presented above, the instrument is used frequently, it is theoretically aligned to most of the other researchers’ thoughts in the field and has sound psychometric properties. the reported reliability of this measure varies between 0.92 and 0.94. researchers are alerted not to use proxies of iwb (e.g. creativity, idea generation and idea implementation), as these often measure only part of the construct. furthermore, iwb does not seem to empirically consist of discrete stages; therefore, total scores rather than stage scores should be included in models (steyn & de bruin 2019). this emphasises the inadequacies of proxies as measurement of iwb. with regard to pcb, the picture is more complex. firstly, it is important to note that pcb and pcf are used as the end point of the same scale, with the naming convention dependent on the hypotheses being tested. secondly, it is important to consider composite or global measures (see zhao et al. 2007). composite measures draw on a collection of questions related to the breach of specific expectations, such as related to training or rewards, compared to global measures, which use questions such as ‘almost all the promises made by my employer during recruitment have been kept thus far’ (reverse scored; robinson & morrison 2000). except for one article (see kiazad et al. 2014), where the authors used a pcf composite measure of kickul et al. (2001), all other studies sampled used the global approach to calculating the pcb score, which is in line with zhao et al.’s (2007) recommendation to focus on these types of measure. given the aforementioned, the five-item pcb measure of robinson and morrison (2000) is proposed, because of its seminal status, the fact that it is a global measure and has acceptable psychometric characteristics. apart from consisting of only five items, the α coefficients reported varied between 0.82 and 0.97. conclusion this research makes a valuable contribution to the present body of knowledge by following the slr methodology to comprehensively summarise and critically evaluate the conceptualisation and operationalisation of two important organisational behaviour constructs. through the analyses of studies involving the pcb-iwb link, the research distilled definitions as well as appropriate measures of each. the adoption of the conceptualisations of janssen (2000; iwb) and robinson and rousseau (1994; pcb) is proposed as well as the measurements provided by janssen (2000) (iwb) and robinson and morrison (2000; pcb). given acceptance of these suggestions, the body of knowledge in the pcb-iwb link should be placed on a solid basis. using the same concepts as well as measurements will facilitate comparisons between studies and improving the quality of meta-analyses. managerial implications managers are now equipped with comprehensive and theoretically sound definitions and, by implication, conceptualisations of concepts central to organisational success (i.e. iwb) and one endemic to the organisational setting (i.e. pcb). this knowledge is foundational to the management of each and, as reported above, both constructs, pcb and iwb, are related. additional to the definitions, managers and, more pertinently, organisational behaviour consultants and researchers are informed on the most used, empirically sound and theory-based instruments available to measure both pcb and iwb. this will not only allow them to measure these constructs in a sound manner but also align their research to the current body of knowledge. limitations and suggestions for future research this slr focused on articles involving the pcb-iwb link. this focus seemed appropriate when the study was conducted and made the amount of information to deal with manageable. however, focusing within an slr on pcb and iwb independently may have yielded more complete results. future researchers are advised to follow that route, should they consider similar studies. finally, researchers are also encouraged to collect data not only through self-reporting perspective but also through perspectives of observers, co-workers and supervisors. acknowledgements competing interests the authors have declared that no competing interests exist. authors’ contributions all authors contributed equally to this work. funding information this research received no specific grant from any funding agency in the public, commercial or non-profit sectors. data availability statement the authors confirm that the data supporting the findings of this study are available within the article. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abbas, m. & raja, u., 2015, ‘impact of psychological capital on innovative performance and job stress’, canadian journal of administrative sciences 32(2), 128–138. https://doi.org/10.1002/cjas.1314 agarwal, u.a., 2014, ‘linking justice, trust and innovative work behaviour to work engagement’, personnel review 43(1), 41–73. https://doi.org/10.1108/pr-02-2012-0019 agarwal, u.a. & bhargava, s., 2014, ‘the role of social exchange on work outcomes: a study of indian managers’, the international journal of human resource management 25(10), 1484–1504. https://doi.org/10.1080/09585192.2013.870316 ahmad, i., donia, m., asadullah, k. & waris, m., 2019, ‘do as i say and do as i do? the mediating role of psychological contract fulfillment in the relationship between ethical leadership and employee extra-role performance’, personnel review 48(1), 98–117. https://doi.org/10.1108/pr-12-2016-0325 akhtar, m.n., bal, m. & long, l., 2016, ‘exit, voice, loyalty, and neglect reactions to frequency of change, and impact of change’, employee relations 38(4), 536–562. https://doi.org/10.1108/er-03-2015-0048 axtell, c.m., holman, d.j., unsworth, k.l., wall, t.d., waterson, p.e. & harrington, e., 2000, ‘shopfloor innovation: facilitating the suggestion and implementation of ideas’, journal of occupational and organizational psychology 73(3), 265–285. https://doi.org/10.1348/096317900167029 babbie, e. & mouton, j., 2011, the practice of social research, 2nd edn., oxford university press southern africa, cape town. bhatnagar, j., 2014, ‘mediator analysis in the management of innovation in indian knowledge workers: the role of perceived supervisor support, psychological contract, reward and recognition and turnover intention’, international journal of human resource management 25(10), 1395–1416. https://doi.org/10.1080/09585192.2013.870312 blau, p., 1964, power and exchange in social life, john wiley & sons, new york, ny. bos-nehles, a., renkema, m. & janssen, m., 2017, ‘hrm and innovative work behaviour: a systematic literature review’, personnel review 46(7), 1228–1253. https://doi.org/10.1108/pr-09-2016-0257 caniëls, m.c.j. & rietzschel, e.f., 2015, ‘organizing creativity: creativity and innovation under constraints’, creativity and innovation management 24(2), 184–196. https://doi.org/10.1111/caim.12123 conway, n. & briner, r.b., 2005, understanding psychological contracts at work. a critical evaluation of theory and research, oxford university press, oxford. de jong, j.p.j. & den hartog, d.n., 2007, ‘how leaders influence employees’ innovative behaviour’, european journal of innovation management 10(1), 41–64. https://doi.org/10.1108/14601060710720546 de jong, j.p.j. & den hartog, d.n., 2010, ‘measuring innovative work behaviour’, creativity and innovation management 19(1), 23–36. https://doi.org/10.1111/j.1467-8691.2010.00547.x deery, s.j., iverson, r.d. & walsh, j.t., 2006, ‘toward a better understanding of psychological contract breach: a study of customer service employees’, journal of applied psychology 91(1), 166. dulac, t., coyle-shapiro, j.a-m., henderson, d.j. & wayne, s.j., 2008, ‘not all responses to breach are the same: the interconnection of social exchange and psychological contract processes in organizations’, academy of management journal 51(6), 1079–1098. farr, j.l. & west, m.a., 1990, innovation and creativity at work: psychological and organisational strategies, j.l. farr & m.a. west (eds.), wiley, chichester. flood, p.c., turner, t., ramamoorthy, n. & pearson, j., 2001, ‘causes and consequences of psychological contracts among knowledge workers in the high technology and financial services industries’, international journal of human resource management 12(7), 1152–1165. https://doi.org/10.1080/09585190110068368 hammond, m.m., neff, n.l., farr, j.l., schwall, a.r. & zhao, x., 2011, ‘predictors of individual-level innovation at work: a meta-analysis’, psychology of aesthetics, creativity, and the arts 5(1), 90–105. https://doi.org/10.1037/a0018556 hartmann, n.n. & rutherford, b.n., 2015, ‘psychological contract breach’s antecedents and outcomes in salespeople: the roles of psychological climate, job attitudes, and turnover intention’, industrial marketing management 51, 158–170. https://doi.org/10.1016/j.indmarman.2015.07.017 henderson, d.j., wayne, s.j., shore, l.m., bommer, w.h. & tetrick, l.e., 2008, ‘leader-member exchange, differentiation, and psychological contract fulfillment: a multilevel examination’, journal of applied psychology 93(6), 1208–1219. https://doi.org/10.1037/a0012678 hon, a.h.y. & lui, s.s., 2016, ‘employee creativity and innovation in organizations’, international journal of contemporary hospitality management 28(5), 862–885. https://doi.org/10.1108/ijchm-09-2014-0454 hu, m.-l., horng, j.-s. & sun, y.-h., 2009, ‘hospitality teams: knowledge sharing and service innovation performance’, tourism management 30(1), 41–50. https://doi.org/10.1016/j.tourman.2008.04.009 jansen, j.j.p., tempelaar, m.p., van den bosch, f.a.j. & volberda, h.w., 2009, ‘structural differentiation and ambidexterity: the mediating role of integration mechanisms’, organization science 20(4), 797–811. https://doi.org/10.1287/orsc.1080.0415 janssen, o., 2000, ‘job demands, perceptions of effort-reward fariness and innovative work behaviour’, journal of occupational and organizational psychology 73(3), 287–302. https://doi.org/10.1348/096317900167038 jiang, l., probst, t.m. & benson, w.l., 2017, ‘organizational context and employee reactions to psychological contract breach: a multilevel test of competing theories’, economic and industrial democracy 38(3), 513–534. https://doi.org/10.1177/0143831x15579288 kiazad, k., seibert, s.e. & kraimer, m.l., 2014, ‘psychological contract breach and employee innovation: a conservation of resources perspective’, journal of occupational and organizational psychology 87(3), 535–556. https://doi.org/10.1111/joop.12062 kickul, j.r. & lester, s.w., 2001, ‘broken promises: equity sensitivity as a moderator between psychological contract breach and employee attitudes and behavior’, journal of business and psychology 16(2), 191–217. https://doi.org/10.1023/a:1011105132252 kickul, j.r., neuman, g., parker, c. & finkl, j., 2001, ‘settling the score: the role of organizational justice in the relationship between psychological contract breach and anticitizenship behavior’, employee responsibilities and rights journal 13(2), 77–93. https://doi.org/10.1023/a:1014586225406 kim, t.t., karatepe, o.m. & lee, g., 2017, ‘psychological contract breach and service innovation behavior: psychological capital as a mediator’, service business 12(2), 1–25. https://doi.org/10.1007/s11628-017-0347-4 kleysen, r.f. & street, c.t., 2001, ‘toward a multi-dimensional measure of individual innovative behavior’, journal of intellectual capital 2(3), 284–296. https://doi.org/10.1108/eum0000000005660 li, h., feng, z., liu, c. & cheng, d., 2014, ‘the impact of relative leader-member exchange on employees’ work behaviors as mediated by psychological contract fulfillment’, social behavior and personality: an international journal 42(1), 79–88. https://doi.org/10.2224/sbp.2014.42.1.79 medina, c. & rufin, r., 2009, ‘the mediating effect of innovation in the relationship between retailers’ strategic orientations and performance’, international journal of retail & distribution management 37(7), 629–655. https://doi.org/10.1108/09590550910964639 milliken, f.j., morrison, e.w. & hewlin, p.f., 2003, ‘an exploratory study of employee silence: issues that employees don’t communicate upward and why’, journal of management studies 40(6), 1453–1476. https://doi.org/10.1111/1467-6486.00387 moher, d., liberati, a., tetzlaff, j., altman, d.g. & the prisma group, 2009, ‘preferred reporting items for systematic reviews and meta-analyses: the prisma statement’, british medical journal 339(7716), 332–336. https://doi.org/10.1371/journal.pmed.1000097 morrison, e.w., 2011, ‘employee voice behavior: integration and directions for future research’, academy of management annals 5(1), 373–412. https://doi.org/10.1080/19416520.2011.574506 morrison, e.w. & robinson, s.l., 1997, ‘when employees feel betrayed: a model of how psychological contract violation develops’, academy of management journal 22(1), 226–256. https://doi.org/10.5465/amr.1997.<strong>9707180265</strong> newton, s.k., blanton, j.e. & will, r., 2011, ‘innovative work and citizenship behaviors from information technology professionals: effects of their psychological contract’, information resources management journal 21(4), 27–48. https://doi.org/10.4018/irmj.2008100102 ng, t.w.h., feldman, d.c. & lam, s.s.k., 2010, ‘psychological contract breaches, organizational commitment, and innovation-related behaviors: a latent growth modeling approach’, journal of applied psychology 95(4), 744–751. https://doi.org/10.1037/a0018804 niesen, w., van hootegem, a., battistelli, a., de witte, h. & handaja, y., 2018a, ‘quantitative and qualitative job insecurity and idea generation: the mediating role of psychological contract breach’, scandinavian journal of work and organizational psychology 3(1), 3. https://doi.org/10.16993/sjwop.36 niesen, w., van hootegem, a., vander elst, t., battistelli, a. & de witte, h., 2018b, ‘job insecurity and innovative work behaviour: a psychological contract perspective’, psychologica belgica 57(4), 174–189. https://doi.org/10.5334/pb.381 nightingale, a., 2009, ‘a guide to systematic literature reviews’, surgery (oxford) 27(9), 381–384. https://doi.org/10.1016/j.mpsur.2009.07.005 oldham, g.r. & cummings, a., 1996, ‘employee creativity: personal and contextual factors at work’, academy of management journal 39(3), 607–634. https://doi.org/10.2307/256657 paillé, p., raineri, n. & valeau, p., 2016, ‘the effects of the psychological contract among professional employees working in non-professional organizations’, relations industrielles/industrial relations 71(3), 521–543, viewed 12 december 2019, from http://eds.b.ebscohost.com/eds/detail/detail?vid=1&sid=67233495-050c-4f5d-a852-0d2bea71dd04%40sessionmgr104&bdata=jkf1dghuexblpwnvb2tpzsxpccx1awqmc2l0zt1lzhmtbgl2zq%3d%3d#an=118456544&db=bth. parker, s.k., williams, h.m. & turner, n., 2006, ‘modeling the antecedents of proactive behavior at work’, journal of applied psychology 91(3), 636–652. https://doi.org/10.1037/0021-9010.91.3.636 raja, u., johns, g. & ntalianis, f., 2004, ‘the impact of personality on psychological contracts’, academy of management journal 47(3), 350–367. https://doi.org/10.5465/20159586 ramamoorthy, n., flood, p., slattery, t. & sardessai, r., 2005, ‘determinants of innovative work behaviour: development and test of an integrated model’, creativity and innovation management 14(2), 142–150, viewed 18 november 2019, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=722247%5cnhttp://www.researchgate.net/profile/patrick_flood2/publication/227922314_determinants_of_innovative_work_behaviour_development_and_test_of_an_integrated_model/links/0fcfd50c22fa132d2f000000.pdf. rigotti, t., 2009, ‘enough is enough? threshold models for the relationship between psychological contract breach and job-related attitudes’, european journal of work and organizational psychology 18(4), 442–463. https://doi.org/10.1080/13594320802402039 robinson, s.l., 1996, ‘trust and breach of the psychological contract’, administrative science quarterly 41(4), 574–599. https://doi.org/10.2307/2393868 robinson, s.l. & morrison, e.w., 1995, ‘psychological contracts and ocb: the effect of unfulfilled obligations on civic virtue behavior’, journal of organizational behavior 16(3), 289–298. https://doi.org/10.1002/job.4030160309 robinson, s.l. & morrison, e.w., 2000, ‘the development of psychological contract breach and violation: a longitudinal study’, journal of organizational behavior 21(5), 525–546. https://doi.org/10.1002/1099-1379(200008)21:5%3c525::aid-job40%3e3.0.co;2-t robinson, s.l. & rousseau, d.m., 1994, ‘violating the psychological contract: not the exception but the norm’, journal of organizational behavior 15(december 1992), 245–259. https://doi.org/10.1002/job.4030150306 rousseau, d.m., 1990, ‘new hire perceptions of their own and their employer’s obligations: a study of psychological contracts’, journal of organizational behavior 11(5), 389–400. https://doi.org/10.1002/job.4030110506 rousseau, d.m., 1989, ‘psychological and implied contracts in organizations’, employee responsibilities and rights journal 2(2), 121–139. https://doi.org/10.1007/bf01384942 rousseau, d.m., 1995, psychological contracts in organizations: understanding written and unwritten agreements, sage, thousand oaks, ca. https://doi.org/10.4135/9781452231594 saks, a.m., 2006, ‘antecedents and consequences of employee engagement revisited’, journal of managerial psychology 21(7), 600–619. https://doi.org/10.1108/joepp-06-2018-0034 sanz-valle, r. & jiménez-jiménez, d., 2018, ‘hrm and product innovation: does innovative work behaviour mediate that relationship?’, management decision 56(5), md-04-2017-0404. https://doi.org/10.1108/md-04-2017-0404 scott, s.g. & bruce, r.a., 1994, ‘determinants of innovative behavior: a path model of individual innovation in the workplace’, academy of management journal 37(3), 580–607. https://doi.org/10.2307/256701 sels, l., janssens, m. & van den brande, i., 2004, ‘assessing the nature of psychological contracts: a validation of six dimensions’, journal of organizational behavior 25(4), 461–488. https://doi.org/10.1002/job.250 steyn, r. & de bruin, g., 2019, ‘the structural validity of the innovative work behaviour questionnaire: comparing competing factorial models’, the southern african journal of entrepreneurship and small business management 11(1), 1–11. https://doi.org/10.4102/sajesbm.v11i1.291 suazo, m.m., 2009, ‘the mediating role of psychological contract violation on the relations between psychological contract breach and work-related attitudes and behaviors’, journal of managerial psychology 24(2), 136–160. https://doi.org/10.1108/02683940910928856 tranfield, d., denyer, d. & smart, p., 2003, ‘towards a methodology for developing evidence-informed management knowledge by means of systematic review’, british journal of management 14, 207–222. https://doi.org/10.1086/167341 turnley, h.w. & feldman, c.d., 1999, ‘the impact of psychological contract violations on exit, voice, loyalty, and neglect’, human relations 52(7), 895–922. https://doi.org/10.1177/001872679905200703 tziner, a., felea, m. & vasiliu, c., 2017, ‘psychological contract breach, leader-member exchange, perceived ethical climate and organisational justice: are they interrelated and how? journal of east european management studies 22(1), 63–82. https://doi.org/10.5771/1862-0019-2017-1-63 van de ven, a.h., 1986, ‘central problems in the management of innovation’, management science 32(5), 590–607. https://doi.org/10.1287/mnsc.32.5.590 van der elst, t., de cuyper, n., baillien, e., niesen, w. & de witte, h., 2016, ‘perceived control and psychological contract breach as explanations of the relationships between job insecurity, job strain and coping reactions: towards a theoretical integration’, stress and health 32(2), 100–116. https://doi.org/10.1002/smi.2584 van yperen, n.w., 1996, ‘communal orientation and the burnout syndrome among nurses: a replication and extension’, journal of applied social psychology 26(4), 338–354. https://doi.org/10.1111/j.1559-1816.1996.tb01853.x van yperen, n.w., 1998, ‘informational support, equity and burnout: the moderating effect of self-efficacy’, jou rnal of occupational & organizational psychology psychology 71(1), 29–33. https://doi.org/10.1111/j.2044-8325.1998.tb00660.x veenendaal, a.a.r., 2015, enhancing innovation at work through human resource management, university of twente, netherlands, viewed 08 april 2020, from http://doc.utwente.nl/95750/1/thesis_a_veenendaal.pdf welbourne, t.m., johnson, d.e. & erez, a., 1998, ‘the role-based performance scale: validity analysis of a theory-based measure’, academy of management journal 41(5), 540–555, viewed 09 march 2020, from http://www.jstor.org/stable/256941 yang, j.s. & hung, h.v., 2015, ‘emotions as constraining and facilitating factors for creativity: companionate love and anger’, creativity and innovation management 24(2), 217–230. https://doi.org/10.1111/caim.12089 zagenczyk, t.j., cruz, k.s., cheung, j.h., scott, k.l., kiewitz, c. & galloway, b., 2015, ‘the moderating effect of power distance on employee responses to psychological contract breach’, european journal of work and organizational psychology 24(6), 853–865. https://doi.org/10.1080/1359432x.2014.961432 zhao, h., wayne, s.j., glibkowski, b.c. & bravo, j., 2007, ‘the impact of psychological contract breach on work-related outcomes: a meta-analysis’, personnel psychology 60(3), 647–680. https://doi.org/10.1111/j.1744-6570.2007.00085.x zhou, j. & george, j., 2001, ‘when job dissatisfaction leads to creativity: encouraging the expression of voice’, academy of management journal 44(4), 682–696. https://doi.org/10.2307/3069410 abstract introduction theoretical foundation and hypotheses development results discussion conclusions and contributions acknowledgements references about the author(s) adele oosthuizen department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa jurie van vuuren department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa melodi botha department of business management, faculty of economic and management sciences, university of pretoria, pretoria, south africa citation oosthuizen, a., van vuuren, j., botha, m., 2020, ‘compliance or management: the benefits that small business owners gain from frequently sourcing accounting services’, southern african journal of entrepreneurship and small business management 12(1), a330. https://doi.org/10.4102/sajesbm.v12i1.330 original research compliance or management: the benefits that small business owners gain from frequently sourcing accounting services adele oosthuizen, jurie van vuuren, melodi botha received: 23 mar. 2020; accepted: 27 may 2020; published: 30 june 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: despite calls by scholars for small business owners (sbos) to seek external consultation from accountants, empirical work demonstrating the relationship between the frequency of various types of services sourced and the perceived benefits obtained remains neglected. aim: the purpose of this article was to determine the benefits that sbos obtain from the frequency by which they source different types of accounting services. setting: survey data were collected from a sample of 422 south african sbos. small business owners are defined as those who own a distinct business entity with no more than 200 employees. methods: the study followed a quantitative research approach. structural equation modelling was used to test the hypotheses. results: overall, the study found that the frequency by which different types of accounting services are sourced influences sbos’ perceptions of the levels of management versus compliance benefits obtained. results show that sbos that frequently source the service of submitting income tax returns perceive the relationship with their accountant to provide significant compliance benefits. small and medium enterprises (smes) that source tax planning services and routine accounting services from their accounting practitioners experience significant compliance and management benefits. results confirm the notion that no significant benefit are gained from year-end accounting services, such as the preparation and audit of annual financial statements. conclusions: the study advises sbos not to limit their perceptions regarding the role of an accountant to that of a compliance officer. the article suggests that by sourcing advisory services more frequently, smes could overcome the difficulties associated with an internal lack of financial skills. keywords: resource-based view; small business accounting; small accounting practitioners; accounting services; advisory services. introduction small and medium enterprises (smes) play a crucial role in any economy as a key generator of employment and income worldwide (davidsson 2018). however, the majority of smes in emerging economies cannot compete effectively because of their internal resource (i.e. human capital) gap (de bruyckere et al. 2018; kamyabi & devi 2011). furthermore, whilst finance is the lifeblood of a business (oseifuah & manda 2017), financial literacy and financial management skills pose a significant challenge to the growth of smes (fraser, bhaumik & wright 2015), particularly in south africa (mamabolo, kerrin & kele 2017). in this regard, accountants are known to be the most commonly used small business advisors. however, previous studies have reported mixed results regarding the economic benefits that smes obtain from this relationship (collis 2012; halabi, barret & dyat 2010). scholars have identified a multitude of inter-related factors affecting the relationship between smes and small accounting practitioners (saps) (blomkvist, johansson & malmström 2016; carey & tanewski 2016). amongst these, the frequency by which smes source different types of accounting services has been suggested as important (kirby & king 1997; marriott & marriott 2000; nandan 2010). it is argued that where internal financial management skills are limited, smes should source a range of different services from their external accounting practitioner to secure both compliance and management benefits (blackburn & jarvis 2010; sarens et al. 2015). yet, the link between the frequency by which these services are sought and the potential benefits is not clear. this article, therefore, develops and tests a model to establish this link. proponents of the resource-based view (rbv) suggest that the resources of a business are fundamental drivers of both performance and competitive advantage (łobacz & głodek 2015:489). it is argued that smaller firms are more vulnerable than their larger counterparts because of lack of necessary resources and capability for survival and growth (kellermanns et al. 2016). because of these mentioned resource gaps, smes are often forced to optimise the use of their external resources to lessen costs and create an advantage. accountants are educated in analytical techniques and are expected to continuously develop their knowledge base and technical skills to maintain their expertise (dyer & ross 2007). according to prauliņš and bratka (2014:98), smes should use an external accountant for advice which directly affects performance. this advice could include help on how to generate higher revenues, or how to improve management control, regulatory compliance, performance reviews, the business’ financial structure or financial planning. similarly, han and benson (2010) concluded that assistance and advice are valuable for small business owners (sbos) and entrepreneurs to compensate for their lack of human capital and thus to facilitate overcoming possible problems in managing their businesses. research evidence suggests that by seeking external advice, sbos could enhance their learning and capabilities for future decision-making (sian & roberts 2009). small accounting practitioners are therefore able to supply a range of competencies that could support smes’ intangible resources and, hence, their competitive advantage (barbera & hasso 2013; kellermanns et al. 2016). drawing on the rbv, this article posits that the role of saps is to assist sbos by offering services that overcome the latter’s lack of financial management skills as well managerial, strategic and operational know-how (kamyabi & devi 2011) from which they should, in turn, derive benefits. whilst extensive research has been conducted on the lack of resources, particularly financial resources, which smes receive from a supply point of view, little work has explored the cognitive resources of sbos and how this impacts sme outcomes (fraser et al. 2015). despite scholars urging sbos to seek external consultation from saps (dyer & ross 2007; hussain, salia & karim 2018) and previous work suggesting that there exist relationships between the types of services sourced from saps and the benefits obtained by sbos (kirby & king 1997; marriott & marriott 2000; nandan 2010), empirical evidence of these relationships is scarce and fails to provide conclusive evidence on which services offer particular benefits. therefore, the objective of this article is to address this gap by postulating and testing a model aimed at understanding how the frequency by which smes source different types of accounting services influences sbos’ perceptions of the benefits they obtain from their accountants. the results that this article contributes are threefold. firstly, by drawing on the rbv, the article contributes to rbv theory from the perspective of smes and how they handle their typical internal resource, knowledge and human capital constraints. whilst it is evident that resources are fundamental drivers of a business in terms of both performance and competitive advantage (łobacz & głodek 2015), current literature fails to account for which of, and how, the various services provided by saps contribute from a human capital resources perspective (bagieńska 2016; łobacz et al. 2016). this article demonstrates which of the various services offered by saps to sbos provide benefits from a compliance as well as a management perspective and, as such, which of these services are beneficial from a rbv of the firm. secondly, from a practical perspective, by informing sbos about the types of services they need to source from their accountants in order to overcome any internal lack of financial and management skills, this article suggests ways for sbos to secure benefits necessary for the survival and future growth of their businesses. for example, it is recommended that sbos that lack the required financial management skills to run and grow their businesses should consider sourcing additional services from their saps. finally, from a pedagogical and policy perspective, educators, training providers, banks and business coaches can use these results to encourage sbos to build a strong relationship with their saps and motivate them to source the right combination of services to secure long-term performance and economic sustainability. theoretical foundation and hypotheses development types of services provided by small accounting practitioners literature has broadly categorised accounting services into two segments: (1) traditional accounting services and (2) advisory services (blackburn & jarvis 2010; carey 2008, 2015; collis 2012; devi & samujh 2010). traditional accounting services are those services that are offered by the external accountant to prepare accounting information, which is either considered necessary to manage a business properly or mandatory for compliance purposes (everaert, sarens & rommel 2007). accounting services of this nature can be classified as bookkeeping, monthly reporting, year-end accounting services consisting of statutory and compliance services, as well as the completion and submission of tax returns. everaert, sarens and rommel (2010) further refined the classification of traditional accounting tasks as routine and non-routine tasks. the former are those tasks that require relatively straightforward or standardised procedures. they need less judgement on the part of the accountant (everaert et al. 2010; oosthuizen 2018) and typically include record-keeping and monthly reporting. on the contrary, non-routine tasks are more complex and require more judgement from the accountant (everaert et al. 2010), such as tax compliance and year-end reporting procedures. in line with these classifications, this article analyses the types of services, according to the frequency by which they are sourced, from the accountant. it specifically investigates the relationship between the frequency of types of services sourced (routine and non-routine traditional accounting services) and the perception of benefits received from the said sourced services. advisory services in this study refer to ‘advice supporting the information needs of management in the operation of the business’ (carey 2015:168). according to bennett and robson (2000), the advisory services offered to sbos are closely linked to the goals, objectives and strategic decisions of the business and usually exclude the provision of basic information. considering these definitions, advisory services in the context of this article refer to the services offered by saps to assist sbos in managing the liquidity, profitability and growth of their businesses. these exclude all bookkeeping, annual financial reporting and compliance-related services. relationship between the frequency by which small business owners source traditional year-end accounting services and the benefits obtained this article proposes that there is a relationship between the types and frequency of services sourced from the sap and the benefits that sbos obtain from this relationship. traditionally, the role of the external accountant was viewed as only to provide monitoring and compliance services to meet audit and tax-related requirements (blackburn, tanewski & carey 2010b; carey 2008). although the accounting profession has witnessed a shift towards the notion that saps are increasingly being used for business advisory and support services (bennett 2007; dyer & ross 2007), evidence suggests that saps are still overwhelmingly used to provide the traditional accounting services (collis & jarvis 2000, 2002; doving & gooderham 2008). devi and sumujh (2010) reported that saps spend 60% of their time on compliance work, consisting mainly of tax filing, compiling annual financial statements (afs), auditing and secretarial services. according to marriott and marriott (2000), the demand for these traditional year-end accounting services is still mainly driven by regulatory requirements. as a result, these services are often referred to as a ‘distress purchase’ (blackburn & jarvis 2010), and their usefulness is questioned. collis and jarvis (2000) reported that sbos perceived their statutory accounts to be useful only if they are viewed in conjunction with other sources of information, to confirm and verify results, or to establish directors’ emoluments. these findings were supported by marriott and marriott (2000), who stated that sbos perceive statutory accounts to have few benefits in supporting decision-making and control. in addition, kirby and king (1997) suggested that when only basic bookkeeping and compliance services are sourced, clients do not obtain appropriate or adequate information to support planning, decision-making and control. these results are however not surprising in that the purpose of statutory accounts is to provide information to a wide range of users, normally external to the organisation (halabi et al. 2010; sian & roberts 2009). it is therefore expected that year-end financial reporting services are intended to primarily provide small businesses with tax and audit compliance benefits (collis & jarvis 2000; everaert et al. 2007; halabi et al. 2010) but very few management benefits (marriott & marriott 2000). nawaz (2012) found that merely one-third of sbos use the financial information prepared by accountants for internal decision-making purposes. the reasons for these minimal decision-making benefits are the following: (1) year-end financial reports were never intended for internal decision-making purposes. for example, where financial statements were produced explicitly for tax purposes, sbos believed that they had limited use because the figures were deliberately kept low to reduce their tax liability (halabi et al. 2010). (2) financial reporting standards were developed for larger organisations, from the viewpoint that capital markets are the most important user group. such standards are therefore not always appropriate for medium and smaller entities as the output is aimed at a different set of users with different needs. the existence of ‘unique sme factors, such as close-knit agency relationships and a tendency to aim for survival and stability over profit maximisation and growth’ (sian & roberts 2009), is not taken into consideration. in addition, because of their complexity, owners often find it hard to follow accounting reports prepared under the generally accepted accounting rules (kirby & king 1997). (3) financial reports are usually outdated by the time they are prepared and presented to sbos (sian & roberts 2009). the annual statements were mainly used to compare income and costs with prior periods or for a confirmatory function. if such an information is to be useful for decision-making and control, it must be timely and produced more frequently (everaert et al. 2007). (4) mcchlery, godfrey and meechan (2005) found that 72.6% of respondents in their study felt strongly that the afs are not useful because they merely replicate their own internal accounts. although the majority of research findings point to the fact that small businesses derive very little or no management benefit from these traditional service offerings, some studies have nonetheless indicated several possible benefits: (1) non-compliance, especially tax compliance, may subject the sbo to severe emotional stress (amoako 2013). owners are responsible for ensuring that their companies remain compliant with relevant legislations (carey 2008; collis 2012; nandan 2010). non-compliance may further result in penalties and fines, putting the organisation under financial pressure (barnardt 2016; wolmarans & meintjes 2015). (2) obtaining contracts from larger companies or government, specifically in south africa, requires organisations to comply with legislation such as possessing tax clearance, submitting up-to-date financial statements to the companies and intellectual property commission (cipc) and complying with broad based black economic empowerment (bbbee) codes (barnardt 2016). non-compliance may, therefore, result in a small business not being awarded lucrative contracts. (3) the value of a business is typically determined on the basis of evidence obtained from the financial records and financial statements of the organisation (nieman & nieuwenhuizen 2014). inaccurate or incomplete financial records may therefore adversely affect the value of the business. (4) compliance further signals a well-controlled environment, resulting in financiers being less willing to grant funding to entrepreneurs who do not adhere to compliance requirements (agyei-mensah 2011; amoako 2013). (5) collis (2012) has suggested that comprehensive financial reporting and insightful financial analysis lead to improved financial and operational control and that this in itself could significantly increase the chances of a small enterprise prospering through growth. indeed, a comparative study conducted on six countries, including south africa, established that by sourcing traditional services from accountants, small businesses are provided with a ‘good deal of generalist advice’ (schizas, jarvis & daskalakis 2012). burke and jarratt (2004) reported saps to be a good source of operational advice but not to be a high-value source of strategic advice. in addition, niemi et al. (2016) stated that small businesses which experience financial distress are more likely to utilise external accountants for voluntary audit services in order to obtain management advice. (6) the research by allee and yohn (2009) and collis and jarvis (2002) indicated that audited financial statements play an agency role in the relationship between small businesses and their banks, resulting in improved access to credit and reduced interest rates. as stated, previous studies have established a relationship between routine and non-routine transactions and frequency of accounting tasks (i.e. whether the task is performed daily, weekly, monthly or annually) (everaert et al. 2010; kamyabi & devi 2011). small and medium enterprises typically source traditional accounting services, such as completing tax returns, monthly reporting and audits or independent reviews, on a monthly or on an annual basis. based on the arguments presented, a commonly accepted view is that sbos mainly derive compliance benefits, but very few management benefits, when sourcing traditional accounting services from their accountants. the evidence, however, is not conclusive regarding the benefits obtained from such accounting services. this article will, therefore, test the following hypotheses: h1: there is a positive relationship between the frequency of routine accounting services sourced by sbos and their perceptions of compliance benefits received from the accounting practitioner. h2: there is a positive relationship between the frequency of routine accounting services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. h3: there is a positive relationship between the frequency of non-routine accounting services sourced by sbos and their perceptions of compliance benefits received from the accounting practitioner. h4: there is a positive relationship between the frequency of non-routine accounting services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. relationship between the frequency of sourcing advisory services and benefits obtained the role of accountants has developed over time from the stereotypical ‘bean counter’ image typically associated with bookkeepers into a role that comprises a much wider range of duties (jones & abraham 2007). it has been argued that a general shift in the accounting role has taken place – from mere information provision to extended information facilitation – (burns & scapens 2000) and that this has resulted in the expectation that saps should progressively move towards being business advisors (jones & abraham 2007). accordingly, these types of practices have expanded their range of services to include different types of advisory services (devi & samujh 2010:1). this shift has sparked a surge in research studies, investigating the advisory role of saps. these studies have suggested that if small businesses want to derive benefits from their external accountants, they should source both compliance and advisory services, because compliance services on their own provide limited benefit (bagieńska 2016; bennett & robson 2010; blackburn et al. 2010b:30; devi & samujh 2010; han & benson 2010; łobacz & głodek 2015; łobacz et al. 2016; nandan 2010). consequently, it is now commonly accepted that sbos that regularly source advisory services from their accountants would obtain more benefits from the relationship than those who do not source (blackburn, carey & tanewski 2010a; carey 2015; devi & sumujh 2010). studies performed by bennett and robson (2010) and carey (2015) have hypothesised a positive relationship between the sourcing of business advice and financial performance. nevertheless, the findings of these studies are mixed and inconclusive, leaving room for further investigation of the benefits derived from advisory services. although there has been an increase in the advisory services offered by accountants, sbos still do not use external accountants for management accounting and/or advisory services to such an extent that they are provided with all the benefits required (blackburn et al. 2010a:4; ciccotosto, nandan & smorfitt 2008; marriott & marriott 2000). research has further indicated that there is a reluctance amongst sbos to actively seek business advice (blackburn & jarvis 2010:18,19; nandan 2010). an international comparative study by schizas et al. (2012:24), which investigated the relationship between sbos and their advisors, found that in developed countries such as canada, italy and the united kingdom, saps were perceived to command a very broad range of expertise, encompassing not only traditional competences (such as financial management or tax) but also less traditional ones (such as regulation, advisory and it operations). unexpectedly, that paper discovered that in emerging economies, specifically in china and south africa, the views regarding the role of accountants were much narrower, with sbos acknowledging just the core skill set of the accountants. the report further indicated that it is possible for practitioners to build a reputation as business experts and, by implication, to survive without relying on compliance work. in south africa, it is therefore crucial that saps focus on promoting advisory services to their clients. professional bodies should also make a deliberate effort to improve the skillsets of their members. in contrast with traditional accounting services, advisory services are classified as non-routine services, that is, they are sourced on an ad hoc basis (everaert et al. 2007). the frequency by which smes source these types of services may therefore have an impact on the benefits obtained. consequently, it is proposed that sbos that more frequently source advisory services from their external accountants would perceive their relationship as being more beneficial than those who do not source. evidence on the benefits obtained from advisory services is nonetheless contradictory and inconclusive, and this article will therefore test the following hypotheses (see figure 1): h5: there is a positive relationship between the frequency of advisory services sourced by sbos and their perceptions of compliance benefits received from the accounting practitioner. h6: there is a positive relationship between the frequency of advisory services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. figure 1: hypothesised model. methods and sampling procedure this article addressed the research problem from a positivistic paradigm and used a cross-sectional, ex post facto design. the unit of analysis in the study comprised south african sbos. the population consists of any person who owns a separate and distinct business entity, including a co-operative enterprise or a non-governmental organisation located in south africa with less than 200 employees. because of the practical restrictions associated with probability sampling, the study used a convenient sampling method to collect data. the survey was administered using both electronic and paper-based questionnaires the survey was manually administered to sbos at two local (gauteng) and one national small business network events. the electronic questionnaire was emailed to the database of approximately 6000 south african sbos. a total of 444 surveys were conducted, of which only 422 responses were usable. the sample population comprised 32.2% women and 67.8% men. the respondents are considered well educated, with the majority (73.5%) of them having a tertiary or professional qualification. just over 15% (17.3%) had a national senior certificate. the majority of respondents (70.7%) considered themselves to have a reasonable to very good knowledge and understanding of accounting. of the respondents, 10% stated to have an expert knowledge and understanding of accounting. surprisingly, only 19.2% of respondents considered themselves to have basic or no knowledge and understanding of accounting. the smes represented in the study consisted of 43.6% micro-enterprises – in other words, enterprises with five or fewer employees. forty-five per cent could be classified as small or very small enterprises, with more than five but up to 50 employees, whilst 11.6% were classified as medium enterprises, with between 50 and 200 employees. the vast majority (96%) of them could be classified as established businesses operating for longer than 3.5 years. fifty-three per cent had been in operation for longer than 15 years, 13.2% had been for 12–15 years and 16.5% had been for 7–12 years. measures two constructs were measured in the study: the frequency by which smes source different accounting services and sbos’ perceptions of the benefits obtained. a list of services that saps offer was compiled from various literature sources (devi & samujh 2010; doving & gooderham 2008; everaert et al. 2007; mcchlery et al. 2005). twelve items measured the frequency by which smes source various accounting services. a five-point direct rating scale was used to measure the frequency (see table 1). options varied from ‘1’ representing never, ‘2’ representing less than once a year, ‘3’ representing once a year, ‘4’ representing more than once a year but not monthly and ‘5’ representing very often (monthly). table 1: accounting service questionnaire items. the list of benefits included in the questionnaire was obtained from literature sources as justified in the literature review. a four-point direct rating scale was used to judge perceptions of benefits, with ‘1’ representing ‘strongly agree’ and ‘4’ representing ‘strongly disagree’. a list of benefits is presented in table 2. table 2: questionnaire items for measuring the perception about benefits. data analysis structural equation modelling (sem) using amos (version 24) with maximum likelihood estimation was used to test the relationships between the frequencies by which smes source different types of accounting services and the sbos’ perceptions of benefits. consistent with recommendations by hair et al. (2010), sem analysis was conducted using a two-step approach: (1) the adequacy of the measurement model was assessed and (2) the structural model was tested. as this article used newly developed scales, confirmatory factor analysis was not deemed appropriate. thus, the reliability, validity and latent factor structure of the scales were determined using exploratory factor analysis (efa). principal axis factoring (paf) with promax rotation was used to assess the validity of the measuring instruments as it is regarded as a more robust form of factor analysis (beaumont 2012:5). for all relevant constructs, the kaiser-meyer-olkin measure of sampling adequacy and bartlett’s test of sphericity were carried out, which indicated that efa was appropriate. the criterion of eigenvalues > 1 was used to determine the number of factors to be extracted. the reliability of these factors was subsequently determined by using cronbach’s alpha (α) and a threshold value of > 0.7 (hair et al. 2010:125). results exploratory factor analysis and reliability of the measurement model the underlying factor structure of the 12 items included for different types of services sourced was first assessed. three items that had a low (< 0.4) or double factor loading were eliminated from the analysis. in this regard, based on efa, the services relating to tax planning and the completion of annual tax returns were excluded because these items did not adequately load onto any factor. however, services relating to taxation are regarded as fundamental offerings by saps. in fact, descriptive analysis conducted in this article revealed that 95% of sbos use these services to ensure that they remain tax compliant. these items were, therefore, treated as separate endogenous variables when performing further analysis. although single-item constructs are not recommended, it is permissible when the construct is simple and lacks nuance and complexity (hair et al. 2010:701). the items indicated adherence to these criteria, as their behaviour is directly observable, and each item is sufficiently different to constitute a single construct. as there were three eigenvalues greater than 1, a three-factor structure was revealed, explaining 73% of the variance in accounting services sourced construct. table 3 presents the efa results, factor loadings and cronbach’s alpha for these factors. table 3: pattern matrix for the frequency of different types of services sourced. the items loading onto factor 1 relate to routine accounting services, that is, services which are normally sourced on a monthly basis. the routine services factor demonstrated a sufficient internal consistency, with an α of 0.851. the items loading onto factor 2 consist of start-up advisory services, operational advisory services and strategic advisory services. the items all relate to advisory services and have an acceptable cronbach’s alpha of 0.878. two items loaded onto factor 3, both relating to year-end accounting services. the cronbach’s alpha was calculated as 0.485, pointing to an insufficient level of internal consistency of the factor items. furthermore, the factor loading for audit and independent review services was low (0.427). the statistical tests therefore provided evidence that using these items as manifest variables to measure year-end services as a latent variable may distort the results of further analysis. although services relating to the preparation of afs and the audit or independent review of afs usually are sourced on an annual basis, it is argued that they should be treated separately. the main reason is that, based on this article’s efa, smes hold very different expectations and perceptions about each of these services. consequently, grouping the services together may lead to distorted findings. thus, these services are considered as separate sub-factors of non-routine accounting services. the article has therefore identified the following latent variables to represent the frequency by which accountants source different types of services: the preparation of afs, audit or independent review of afs, tax planning services, the completion of annual tax returns, routine (monthly accounting services) and advisory services. subsequently, the underlying factor structure of the seven items included for the sbos’ perceptions of benefits obtained was assessed. a two-factor structure was revealed, which explained 77% of the variance in the construct. table 4 presents the efa results, factor loadings and cronbach’s alpha for these two factors: compliance benefits and management benefits. the cronbach’s alpha was 0.908 for the management benefits factor and 0.757 for the compliance benefits factor, both indicating a sufficient internal consistency reliability. table 4: pattern matrix for small business owners’ perceptions about benefits. structural model and hypotheses testing to assess the individual relationships hypothesised in this article, the structural model was assessed to ensure adequate model fit. the structural model demonstrated a good overall fit. the χ2 was 1098.4, with 549 degrees of freedom. as anticipated, the hypothesis of exact fit (root mean square error of approximation [rmsea] = 0) was rejected, based on a statistically significant p-value of 0.000. the minimum value of the discrepancy, c, divided by the degrees of freedom (cmin/df) ratio of 2.001 was well below the threshold of 3. a comparison of the baseline indices indicated an adjusted goodness of fit index (agfi) of 0.844 (> 0.8) and a confirmatory fit index (cfi) of 0.944 (> 0.9). the rmsea is 0.049 and, when assessed at a 90% confidence level, it lies between 0.045 and 0.053, all below the recommended threshold of 0.07. in addition, the close fit (pclose) (0.683) is also well above the threshold of 0.05 (weston & gore 2006). figure 2 illustrates the structural model, along with the statistical significance of path coefficients and adjusted r2 scores. figure 2: structural model results. hypothesis 1 suggests that there is a positive relationship between the frequency of routine accounting services sourced by sbos and their perceptions of the compliance benefits received from their accounting practitioner. support for this hypothesis is evident as reported in figure 2. owners of smes that frequently source routine accounting services perceived a significant compliance benefit from the sap (β = 0.129; p < 0.1). hypothesis 2 suggests that there is a positive relationship between the frequency of routine accounting services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. support for this hypothesis is found as sbos that sourced routine accounting services reported a significant positive relationship with management benefits from the sap(β = 0.129; p < 0.05). hypothesis 3 suggests that there is a positive relationship between the frequency of non-routine accounting services sourced by sbos and their perceptions of compliance benefits received from the accounting practitioner. whilst a significant relationship was not found for the two sub-factors of drafting afs (β = 0.025; p > 0.1) and independent review (ir)/audit (β= 0.023; p > 0.1), a significant relationship was found for the income tax returns service sub-factor (β = 0.126; p < 0.05). therefore, partial support is found for h3 as only one of the sub-factors of non-routine accounting services sourced by sbos significantly increased their perceptions of the management benefits received from the sap. hypothesis 4 suggests that there is a positive relationship between the frequency of non-routine accounting services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. as no significant relationships were found for any of the non-routine services sub-factors (drafting afs, β = 0.065, p > 0.1; ir/audit, β = 0.029, p > 0.1; income tax returns, β = 0.015 p > 0.1), h4 is not supported. interestingly, despite non-routine services such as drafting afs and the audit or review of afs showing positive relationships with compliance benefits, the relationships are not statistically significant in predicting management benefits. hypothesise 5 suggests that there is a positive relationship between the frequency of advisory services sourced by sbos and their perceptions of compliance benefits received from the accounting practitioner. a significant relationship was not found for advisory services and compliance benefits (β = 0.006; p > 0.1). thus, there is no support for h5. however, tax planning services was significantly positively related to sbos’ perceived compliance benefits (β = 0.126; p < 0.05), which suggests that this form of advisory service offers a compliance benefit. hypothesis 6 suggests that there is a positive relationship between the frequency of advisory services sourced by sbos and their perceptions of management benefits received from the accounting practitioner. advisory services (β = 0.235; p < 0.001) and tax planning services (β = 0.129; p < 0.05) reported are significantly positively related to management benefits. thus, support is found for h6. based on the evidence presented, smes that more frequently source tax planning services and routine accounting services from their external accounting practitioners experience significantly more compliance and management benefits. from the comparison of the variance in both compliance and management benefits exhibited by each service, it could be stated that smes which regularly source tax planning services perceive the relationship with their external accountant as most beneficial (β = 0.142), followed by routine accounting services (β = 0.129) and then by the submission of income tax returns (β = 0.126) (see figure 2). as anticipated, tax-related services provide the highest level of compliance benefit, whereas advisory services provide the highest level of management benefits. the perceptions of those sbos that only source services related to the preparation of afs or their independent review/audit are that these services offer limited compliance or management benefits. discussion literature supports the notion that the frequency by which smes source different types of accounting services will affect the benefits of these enterprises obtained from their external accounting practitioners. accordingly, the regression weights reported, indicating that all types of services have contributed positively towards explaining some degree of the variance in at least one of the potential benefits (management or compliance benefits). the results further demonstrate that sbos which source routine accounting services more frequently have a significantly more positive perception about the level of management and compliance benefits they obtain from the relationship with their accounting practitioner than those who use their accounting services less frequently. as indicated, such services include monthly bookkeeping, management accounting and the filing of value added tax (vat) returns. it was anticipated that the filing of vat returns would provide the perception of compliance-related benefits. as bookkeeping is necessary for compiling afs and management accounts, it was anticipated for this service to provide the impression of compliance and management-related benefits. there is abundant literature on the necessity and management benefits that smes could obtain from the use of management accounting information (brijlal, enow & isaacs 2014; devi & samujh 2010; lavia lópez & hiebl 2015; marriott & marriott 2000; nandan 2010). failing to reject the hypotheses that there are significant positive relationships between the frequency by which smes source routine accounting services and sbos’ perceptions of both compliance and management benefits obtained was therefore not surprising. in line with expectations, this article further found that sbos that frequently source services relating to the filing of income tax returns had a significantly higher perception about the level of compliance benefits obtained from the said relationship. the article also reported a weak negative relationship between sbos that frequently used their accountants to file income tax returns and their perceptions of management benefits. to date, there has been an ongoing debate as to whether these types of services provide any form of benefit to sbos. in most jurisdictions, including south africa, drafting of the afs and an independent audit or review of such statements are compulsory, which explains the rate of frequency by which these services are sourced, and compliance benefits are therefore expected. previous studies have suggested that smes could obtain the following benefits from preparing afs: (1) improved operational control (burke & jarratt 2004; collis 2012; schizas et al. 2012), (2) financing benefits (agyei-mensah 2011; allee & yohn 2009; amoako 2013; collis & jarvis 2002) and (3) improved operational management (niemi et al. 2016:169). this article, therefore, hypothesised significant positive relationships between the frequency by which smes source services related to the drafting and audit or review of financial statements and their perceptions of both compliance and management benefits received. however, contrary to these hypotheses, no significant relationship was found. based on the perceptions of sbos, the article therefore supports the views of scholars such as halabi et al. (2010), kirby and king (1997) and sian and roberts (2009) that services relating to the preparation and review of afs offer limited benefit to smes beyond that of compliance. although the south african companies act (2008) requires that companies have to submit audited or reviewed afs to the cipc, this article suggests that sbos do not consider the accountants’ role in fulfilling this requirement as adding significant compliance benefits. in addition to compliance benefits, literature also suggests that these services could offer management benefits in the form of improved operational control and management and financial benefits. however, this article reported no significant relationships between services relating to the preparation and audit or review of financial statements and management benefits. the researcher would however recommend caution when interpreting these results. the results indicate that whilst sbos perceive these services to offer limited benefit, it does not suggest that the preparation and audit or review of afs are not necessary, or that it does not provide any benefit to the sme. what the results do however imply is that smes that source services relating just to the preparation and review of afs from their accountants should not expect to gain benefits relating to enhanced decision-making, operational control or strategic and operational management. a possible explanation for why sbos entertain the perception that they gain significant compliance benefits from the filing of income tax returns, but not from the service related to the preparation and review of afs, may lie in the harsh fines and penalties imposed by the south african revenue service (sars) on individuals and businesses that are found non-tax compliant. in comparison, the implications for those that do not meet the requirements of the companies act are limited. this notion was supported by amoako (2013), who proposed that non-compliance, especially tax compliance, subjects the sbo to severe emotional stress. the severe impact on sbos, when their business was not tax-compliant, was also emphasised by barnardt (2016) and wolmarans and meintjes (2015). niemi et al. (2016), in fact, found that sbos that regularly source tax-related services from their external accountant were less likely to source voluntary audit services. in addition, this article also found a significant positive relationship between the frequency by which smes source tax planning advice and their perceptions about the level of compliance and management benefits obtained. as such, it is suggested that by sourcing tax-related services (tax returns and tax advisory services) smes could gain more compliance and management benefits. it is broadly accepted that sbos that regularly source advisory services from their accountants obtain more benefit from the relationship than those who do not have such relationships (blackburn et al. 2010a; carey 2015; devi & samujh 2010). the hypotheses tested indicate that there is a significant positive relationship between the frequency by which smes source advisory-type services (both general advisory and tax planning) and the perception of the level of management benefits obtained. despite these perceived benefits, the results of this article reveal that the majority of smes (over 50%) have never used the advisory services offered by a sap. this may explain why previous studies have reported mixed results regarding the benefits obtained from the relationship with an external accountant. furthermore, these results suggest that there is much room for more sbos to make use of advisory services given that most do not use these services despite their substantial management benefits. by seeking external business advice, sbos have been documented as having enhanced their learning and capabilities for future decision-making (blomkvist et al. 2016; sian & roberts 2009). previous research has also indicated that as a consequence, additional benefits, such as faster adaption to the environment, optimised resource management, growth and, ultimately, better performance, may occur (carey 2015; lavia lópez & hiebl 2015). this article empirically supports this work. as expected, results from the empirical tests indicated that there is no significant relationship between sourcing advisory services and obtaining compliance benefits. similarly, there is no significant relationship between sourcing compliance-related services and the perception of management benefits obtained. conclusions and contributions according to the rbv, accountants, as skilled professionals, are seen to be excellently positioned to assist smes in overcoming the constraints resulting from inadequate internal financial management skills. the literature is, however, inconclusive as to whether sbos do, in fact, perceive the relationship with their external accounting practitioner as beneficial. however, to ensure that smes obtain the benefits associated with effective financial management from their accountants, it is necessary for them to source a wide range of services from the external accounting practitioner. the results of this paper demonstrate that various significant relationships exist between the frequency by which smes source different types of accounting services and the perception of benefits obtained. the findings present insights into how smes could enhance the benefits they get from their external accountant by sourcing certain types of services more frequently. in so doing, this research offers a number of unique contributions of both theoretical and practical significance. firstly, from a theoretical perspective, by drawing on the rbv, this article contributes to rbv theory through the lens of smes and their financial as well as human capital. whilst it is evident that resources are fundamental drivers of a business in terms of both performance and competitive advantage (łobacz & głodek 2015), until now it was not clear which of, and how, the various services provided by saps contribute from a human capital resources perspective (han & benson 2010). this article demonstrated which of the various services offered by saps to sbos provide benefits from a compliance or management perspective and, as such, which of these services are beneficial from an rbv of the firm. secondly, from a practical perspective, by informing sbos about the types of services they need to source from their accountants to overcome any internal lack of financial and management skills, this article suggests ways for sbos to secure benefits necessary for the survival and future growth of their businesses. for example, it is recommended that sbos that lack the required financial management skills to run and grow their businesses should consider sourcing additional services from their saps. in particular, the article showed that smes that more frequently source routine accounting services (e.g. monthly accounting and bookkeeping) from their saps perceived the relationship as not only providing significant compliance benefits, but also significant management benefits. monthly accounting and bookkeeping services are generally sourced by smes that do not employ an internal accountant. it is therefore recommended that owners of start-up businesses that cannot afford the services of a full-time accountant source routine accounting services from an external accountant. this could assist them in overcoming any difficulties associated with the lack of financial management skills. it is, however, suggested that these services are sourced from a competent professional accountant. in terms of tax-related services (tax returns and tax planning services), this article further suggests that smes which source such services more frequently could obtain more compliance and management benefits than those that source them less frequently. it is therefore advised that smes start by sourcing these services from their accountants. finally, the practical implications of the findings of this study are that it is vital to ensure that these skills are transferred from saps and their services to the smes and sbos. furthermore, it is crucial for smes to source the right combination of services from their saps. based on the empirical results reported in this article, it is advised that sbos, specifically those that lack accounting or financial management skills and who are unable to afford the services of a dedicated accountant, outsource their routine accounting tasks to a professional accountant. this article provides evidence supporting the notion that smes that regularly source advisory services from their external accounting practitioner obtain greater levels of management benefits. it is therefore recommended that sbos more frequently use their accountants as a source of business advice. such advice may be specifically helpful for entrepreneurial ventures when faced with profitability, liquidity, growth or finance-related issues. in addition, from a pedagogical and policy perspective, educators, training providers, banks and business coaches can use these results to encourage sbos to build a strong relationship with their saps and motivate them to source the right combination of services to secure long-term economic sustainability. limitations and future research recommendations whilst the findings of this article offer important insights into the value of saps in the small business context and from an rbv perspective, there are some limitations that should also be acknowledged. firstly, a non-probability sampling method was used in this study. thus, caution should be applied when generalising the results to the entire population of sbos in south africa. at the same time, the data are based on a south african sample and, thus, the findings principally apply to south africa, and similar emerging economy contexts. thus, there is an opportunity for future research to investigate these relationships in the context of an advanced economy. secondly, the sample in this study comprised a significant proportion of well-educated (tertiary qualified) sbos that also had a relatively longer experience as an sbo. thus, future research could compare more experienced and educated subgroups with less experienced and educated sub-groups in terms of their perceived benefits received from the services of a sap. it is indeed likely that these factors will moderate the relationship. finally, moderators were not included in this study, which are acknowledged as a further limitation. there is a future opportunity to examine other contextual moderators of the relationship, for example, by comparing the results of an advanced economy with that of an emerging economy. acknowledgements this article is partially based on the first author’s (a.o.) thesis, entitled ‘predicting the benefits that small business owners obtain from their accounting practitioners’, for the degree of phd in entrepreneurship at the university of pretoria, south africa, with supervisor prof. jurie j. van vuuren and co-supervisor prof. melodi botha. competing interests the authors have declared that no competing interest exists. authors’ contributions all authors contributed equally to this work. ethical consideration ethical clearance was obtained from the research ethics committee of the university of pretoria. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data are available upon request to the corresponding author. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references agyei-mensah, b.k., 2011, ‘financial management practices of small firms in ghana: an empirical study’, african journal of business management 5(10), 3781–3793. https://doi.org/10.5897/ajbm09.285 allee, k.d. & yohn, t.l., 2009, ‘the demand for financial statements in an unregulated environment: an examination of the production and use of financial statements by privately held small businesses’, the accounting review 84(1), 1–25. https://doi.org/10.2308/accr.2009.84.1.1 amoako, g.k., 2013, ‘accounting practices of smes: a case study of kumasi metropolis in ghana’, international journal of business and management 8(24), 73–83. https://doi.org/10.5539/ijbm.v8n24p73 bagieńska, a., 2016, ‘the demand for professional knowledge as a key factor of the development of outsourcing of financial and accounting services in poland’, business, management and education 14(1), 19–33. https://doi.org/10.3846/bme.2016.313 barbera, f. & hasso, t., 2013, ‘do we need to use an accountant? the sales growth and survival benefits to family smes’, family business review 26(3), 271–292. https://doi.org/10.1177/0894486513487198 barnardt, l., 2016, ‘10 steps to engineering financial success’, accountancy sa (june), 32–34. beaumont, r., 2012, an introduction to principal component analysis & factor analysis using spss 19, viewed 17 november 2016, from http://www.floppybunny.org/robin/web/virtualclassroom/stats/statistics2/pca1.pdf. bennett, r.j., 2007, ‘expectations-based evaluation of sme advice and consultancy: an example of business link services’, journal of small business and enterprise development 14(3), 435–457. https://doi.org/10.1108/14626000710773538 bennett, r.j. & robson, p.j.a., 2000, ‘sme growth: the relationship with business advice and external collaboration’, small business economics 15(3), 193–208, viewed 12 january 2012, from http://www.jstor.org/stable/40229107. bennett, r.j. & robson, p.j.a., 2010, ‘the use of external business advice by smes in britain’, entrepreneurship & regional development: an international journal 11(2), 37–41. https://doi.org/10.1080/089856299283245 blackburn, r. & jarvis, r., 2010, the role of small and medium practices in providing business support to smalland medium-sized enterprises, viewed 21 august 2015, from http://web.ifac.org/publications/small-and-medium-practices-committee/information-papers-3#the-role-of-small-and-mediu. blackburn, r., carey, p. & tanewski, g.a., 2010a, business advice to smes: professional competence, trust and ethics, certified accountants educational trust, london. blackburn, r., tanewski, g.a. & carey, p., 2010b, ‘advice seeking strategies: entrepreneurs’ and accountants’ perspectives’, in the conference proceedings of the research in entrepreneurship and small business conference, v. 249, masstricht, holland, pp. 1–29, viewed 26 july 2016, from https://eprints.kingston.ac.uk/18450/. blomkvist, m., johansson, j. & malmström, m., 2016, ‘accounting knowledge in innovative firms – direct contacts with external auditors for strategic actions’, international journal of managerial and financial accounting 8(3/4), 209–229. https://doi.org/10.1504/ijmfa.2016.10002742 brijlal, p., enow, s. & isaacs, e.b.h., 2014, ‘the use of financial management practices by small, medium and micro enterprises: a perspective from south africa’, industry and higher education 28(5), 341–350. https://doi.org/10.5367/ihe.2014.0223 burke, g.i. & jarratt, d.g., 2004, ‘the influence of information and advice on competitive strategy definition in smalland medium-sized enterprises’, qualitative market research: an international journal 7(2), 126–138. https://doi.org/10.1108/13522750410530039 burns, j. & scapens, r.w., 2000, ‘conceptualizing management accounting change : an institutional framework’, management accounting research 11(1), 3–25. https://doi.org/10.1006/mare.1999.0119 carey, p. & tanewski, g., 2016, ‘the provision of business advice to smes by external accountants’, managerial auditing journal 31(3), 290–313. https://doi.org/10.1108/maj-12-2014-1131 carey, p.j., 2008, ‘the benefits of services provided by external accountants to small and medium sized enterprises’, phd thesis, university of new south wales, sydney. carey, p.j., 2015, ‘external acocuntants’ business advice and sme performance’, pacific accounting review 27(2), 166–188. https://doi.org/10.1108/par-04-2013-0020 ciccotosto, s., nandan, r. & smorfitt, d.b., 2008, ‘issues facing small accounting practices in regional north queensland: an exploratory study’, australian accounting review 18(4), 324–333. https://doi.org/10.1111/j.1835-2561.2008.0037.x collis, j., 2012, ‘determinants of voluntary audit and voluntary full accounts in microand non-micro small companies in the uk’, accounting and business research 42(4), 441–468. https://doi.org/10.1080/00014788.2012.667969 collis, j. & jarvis, r., 2000, how owner-managers use accounts, the institute of chartered accountants in england and whales, london. collis, j. & jarvis, r., 2002, ‘financial information and the management of small private companies’, journal of small business and enterprise development 9(2), 100–110. https://doi.org/10.1108/14626000210427357 davidsson, p., 2004, researching entrepreneurship, vol. 5, springer, new york, ny. de bruyckere, s., verplancke, f., everaert, p., sarens, g. & coppens, c., 2018, ‘the importance of mutual understanding between external accountants and owner-managers of smes’, australian accounting review 1–18. https://doi.org/10.1111/auar.12251 de bruyckere, s., verplancke, f., everaert, p., sarens, g. and coppens, c., 2020, ‘the importance of mutual understanding between external accountants and owner–managers of smes’, australian accounting review 30(1), 4–21. devi, s.s. & samujh, h.r., 2010, accountants as providers of support and advice to smes in malaysia, the association of chartered certified accountants, london doving, e. & gooderham, p.n., 2008, ‘dynamic capabilites as antecedents of scope of related diversification: the case of small firm accountance practices’, strategic management journal 841, 12. https://doi.org/10.1002/smj dyer, l.m. & ross, c.a., 2007, ‘advising the small business client’, international small business journal 25(2), 130–151. https://doi.org/10.1177/0266242607074517 everaert, p., sarens, g. & rommel, j., 2007, ‘sourcing strategy of belgian smes: empirical evidence for the accounting services’, production planning & control 18(8), 716–725. https://doi.org/10.1080/09537280701706195 everaert, p., sarens, g. & rommel, j., 2010, ‘using transaction cost economics to explain outsourcing of accounting’, small business economics 35(1), 93–112. https://doi.org/10.1007/s11187-008-9149-3 fraser, s., bhaumik, s.k. & wright, m., 2015, ‘what do we know about entrepreneurial finance and its relationship with growth?’, international small business journal: researching entrepreneurship 33(1), 70–88. https://doi.org/10.1177/0266242614547827 hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2010, multivariate data analysis: a global perspective, 7th edn., pearson education, inc., upper saddle river, nj. hussain, j., salia, s. & karim, a., 2018, ‘is knowledge that powerful? financial literacy and access to finance: an analysis of enterprises in the uk’, journal of small business and enterprise development 25(6), 985–1003. https://doi.org/10.1108/jsbed-01-2018-0021 halabi, a.k., barrett, r. & dyt, r., 2010, ‘understanding financial information used to assess small firm performance: an australian qualitative study’, qualitative research in accounting & management 7(2), 163–179. https://doi.org/10.1108/11766091011050840 han, l. & benson, a., 2010, ‘the use and usefulness of financial assistance to uk smes’, environment and planning c: government and policy 28(3), 552–566. https://doi.org/10.1068/c0985b jones, g. & abraham, a., 2007, ‘education implications of the changing role of accountants: perceptions of practitioners, academics and students education implications of the changing role of accountants: perceptions’, in the quantitive analysis of teaching and learning in business, economics and commerce. forum proceedings, pp. 89–105, university of melbourne, melbourne. kamyabi, y. & devi, s., 2011, ‘using transaction cost economics and resource-based views in management accounting outsourcing: an empirical study of iranian smes’, international journal of business and management 6(3), 87–98. https://doi.org/10.5539/ijbm.v6n3p81 kellermanns, f., walter, j., crook, t.r., kemmerer, b. & narayanan, v., 2016, ‘the resource-based view in entrepreneurship: a content-analytical comparison of researchers’ and entrepreneurs’ views’, journal of small business management 54(1), 26–48. https://doi.org/10.1111/jsbm.12126 kirby, d.a. & king, s.h., 1997, ‘accountants and small firm development: filling the expectation gap’, the service industries journal 17(2), 294–304. https://doi.org/10.1080/02642069700000017 lavia lópez, o. & hiebl, m.r.w., 2015, ‘management accounting in small and medium-sized enterprises: current knowledge and avenues for further research’, journal of management accounting research 27(1), 81–119. https://doi.org/10.2308/jmar-50915 łobacz, k. & głodek, p., 2015, ‘development of competitive advantage of small innovative firm – how to model business advice influence within the process?’, procedia economics and finance 23(october 2014), 487–494. https://doi.org/10.1016/s2212-5671(15)00353-6 łobacz, k., głodek, p., stawasz, e. & niedzielski, p., 2016, ‘utilisation of business advice in small innovative firms: the role of trust and tacit knowledge’, entrepreneurial business and economic review 4(2), 117–138. https://doi.org/10.15678/eber.2016.040210 mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, the southern african journal of entrepreneurship and small business management 9(1), a111. https://doi.org/10.4102/sajesbm.v9i1.111 marriott, n. & marriott, p., 2000, ‘professional accountants and the development of a management accounting service for the small firm: barriers and possibilities’, management accounting research 11(4), 475–492. https://doi.org/10.1006/mare.2000.0142 mcchlery, s., godfrey, a.d. & meechan, l., 2005, ‘barriers and catalysts to sound financial management systems’, journal of applied accounting research 7(iii), 1–26. https://doi.org/10.1108/96754260580001040 nandan, r., 2010, ‘management accounting needs of smes and the role of professional accountants: a renewed research agenda’, journal of management accounting research 8(1), 65–78. nawaz, r., 2012, ‘the impact of financial information on organizing and managing small business’, published dissertation for the degree master of business, auckland university of technology, auckland. nieman, g. & nieuwenhuizen, c., 2014, entrepreneurship: a south african perspective, 3rd edn., van schaik publishers, pretoria. niemi, l., kinnunen, j., ojala, h. & troberg, p., 2016, ‘drivers of voluntary audit in finland: to be or not to be audited?’, accounting and business research 42(2), 169–196. https://doi.org/10.1080/00014788.2012.653742 oosthuizen, a., 2018, predicting the benefits that small business owners obtain from their accounting practitioners, university of pretoria, viewed 17 march 2019, from https://repository.up.ac.za/handle/2263/67864. oseifuah, e. & manda, d.c., 2017, ‘awareness of state facilitated sources of finance among owners/managers of small and medium enterprises in south africa’, the journal of accounting and managment 7(2), 126–139. prauliņš, a. & bratka, v., 2014, ‘the peculiarities of financial management practices in small businesses’, vadyba 2(25), 97–106. sarens, g., everaert, p., verplancke, f. & de beelde, i., 2015, ‘diversification of external accountants serving small and medium-sized enterprises: evidence from belgium’, australian accounting review 25(2), 155–174. https://doi.org/10.1111/auar.12078 schizas, e., jarvis, r. & daskalakis, n., 2012, smes and their advisers: measuring trust and confidence, london, acca. sian, s. & roberts, c., 2009, ‘uk small owner-managed businesses: accounting and financial reporting needs’, journal of small business and enterprise development 16(2), 289–305. https://doi.org/10.1108/14626000910956065 weston, r. & gore jr, p.a., 2006, ‘a brief guide to structural equation modeling’, the counseling psychologist 34(5), 719–751. wolmarans, h. & meintjes, q., 2015, ‘financial management practices in successful small and medium enterprises (smes)’, south african journal of entrepreneurship and small business management 7, 88–116. https://doi.org/10.4102/sajesbm.v7i1.8 abstract introduction, problem statement and the purpose of the study literature overview research design and methodology empirical results results of the t-test: family versus non-family small and medium-sized enterprises discussion of results managerial implications limitations of the study and recommendations for future research conclusion acknowledgements references appendix 1 about the author(s) elmarie venter department of business management, faculty of business and economic sciences, nelson mandela university, port elizabeth, south africa haydn hayidakis department of business management, faculty of business and economic sciences, nelson mandela university, port elizabeth, south africa citation venter, e. & hayidakis, h., 2021, ‘determinants of innovation and its impact on financial performance in south african family and non-family small and medium-sized enterprises’, southern african journal of entrepreneurship and small business management 13(1), a414. https://doi.org/10.4102/sajesbm.v13i1.414 original research determinants of innovation and its impact on financial performance in south african family and non-family small and medium-sized enterprises elmarie venter, haydn hayidakis received: 07 mar. 2021; accepted: 14 june 2021; published: 24 aug. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the importance of innovation for enterprises of all sizes is well documented. however, existing research is ambiguous, with several research gaps concerning the role and nature of innovation in the performance of family and non-family small and medium-sized enterprises (smes), particularly in a south african context. aim: the aim of the study was to identify the determinants of innovation output, the types of innovation that are commonly being utilised and the influence thereof on perceived financial performance. setting: a total of 224 responses from family and non-family smes in south africa were analysed in the study. methods: the statistical analysis included assessing the validity and reliability of the measuring instrument by using an exploratory factor analysis and cronbach’s alpha coefficients, respectively. inferential statistics included calculating the pearson’s product moment correlations, a t-test, analysis of variance tests and multiple regression analyses. results: predictors or determinants of innovation output amongst family and non-family smes in this study are innovation-orientated organisational culture, market orientation and response and risk-orientated entrepreneurial orientation. a significant and positive relationship was also found between innovation output (which included product, process, organisational and marketing innovation) and perceived financial performance. no differences were found concerning the innovation practices of family and non-family smes in this study. conclusion: innovation plays an important role in improving the financial performance of smes. in addition, financial and human resources are not necessarily the main determinants of innovation in south african smes, but rather the creation of an innovationand market-orientated organisational culture, together with a risk-orientated entrepreneurial orientation. keywords: small and medium-sized enterprises; family enterprises; innovation; innovation output; financial performance. introduction, problem statement and the purpose of the study it is well known that small and medium-sized enterprises (smes) make critical economic and social contributions to most national economies (amoah & amoah 2018). what is lesser well known is that most smes are also family-owned and controlled and play a significant role in global (miroshnychenko et al. 2021) and african economies, including south africa (murphy & lambrechts 2015). in this study, an sme is defined as a enterprise that employs between 5 and 250 full-time employees and has been in operation for at least 2 years. family smes are therefore defined by combining the definitions of family enterprises and smes, thus referring to a enterprise in which two or more family members work, or where a single family owns more than 50%of the enterprise and are active in its day-to-day activities, so long as it has been in operation for at least 2 years and employs between 5 and 250 employees. previous research revealed a positive relationship between innovation, enterprise performance and long-term value creation (moses et al. 2011). in addition, innovation has been identified as a key driver of long-term economic growth and as the initiator of competitive strategy in the market (moses et al. 2011). considering south africa’s high (official) unemployment rate, it has become critical for all south african enterprises, including smes, to engage in innovative enterprise practices (rogerson 2018). not only will this allow smes to improve their chances of survival, but will also contribute towards the reduction of unemployment, inequality and poverty in south africa (hauck & prügl 2015; rogerson 2018). moreover, whilst crucial for all smes, innovation is of unique importance to family enterprises, as they rely on it to enhance their generational transition process and maintain the family’s wealth over generations (kellermanns et al. 2012). innovation in this study refers to the introduction of a new or greatly enhanced product, service, process, marketing technique or organisational method incorporated into the internal structure and practices of a particular enterprise. these new products, services, processes or enterprise methods do not need to be entirely new to the market, industry or a country as a whole, but can rather just be novel to a particular enterprise (lodh, nandy & chen 2014). de massis et al. (2016) suggest that the lack of innovation strategies utilised by both family and non-family smes contributes to their high failure rates. family enterprises in particular are often, but not always, considered less innovative than their non-family counterparts, which may influence their poor succession rates (kellermanns et al. 2012). furthermore, research gaps can be identified in the literature pertaining to innovation in both family and non-family smes, leaving our holistic knowledge of the topic incomplete (hauck & prügl 2015). in addition, few observations have been made regarding the determinants of innovation in smes operating in developing countries, particularly in africa (jegede et al. 2012). given the gaps and ambiguity in existing literature regarding the role of innovation in the performance of family and non-family smes, coupled with the high failure rate of smes negatively affecting the south african economy, the purpose of this study was to investigate the nature of innovation in family and non-family smes, by identifying the factors that influence innovation output, the types of innovation that are commonly being utilised and the influence thereof on the perceived financial performance of south african family and non-family smes. literature overview innovation, innovation output and perceived financial performance in this study, innovation output includes the four types of innovation, namely product, process, organisational and marketing innovation. product innovation refers to the creation and introduction of entirely new products and services into the market, or it can involve drastic improvements to existing products and services (gunday et al. 2011; moses et al. 2011). process innovation involves the implementation of a drastically improved method of delivery or production occurring in a enterprise’s methods, software and equipment that allows the enterprise to improve production or delivery times or reduce costs and wastage (bozkurt & kalkan 2014; gunday et al. 2011). organisational innovation can be described as the implementation of a new or improved organisational method or behaviour in a enterprise’s commercial practices, external relations or workplace organisation (bozkurt & kalkan 2014). marketing innovation is a method for enterprises to increase their sales by responding to the consumers’ problems and needs in new and creative ways. this includes creating and implementing new or improved marketing campaigns, pricing strategies, product or service placements and promotional activities (gunday et al. 2011). financial performance is considerably easier to measure than non-financial performance, as it is most commonly assessed by using monetary and economic indicators, such as profitability and growth (gerba & viswanadham 2016:531–532). despite advantages being found for using both financial and non-financial performance measures, many researchers have consistently only utilised financial indictors to measure the overall performance of a enterprise (talib & shafie 2016:65). the reason for this may be because financial measures create a solid foundation from which to draw conclusions regarding the overall performance and success of a enterprise, as all enterprises’ strategies and efforts are often aimed at creating sustainable profits and growth (lotz & van der merwe 2014:190). as such, this study will make use of financial measures to determine the overall performance of the enterprise. when measuring financial performance, empirical studies usually make use of ‘perceived’ measures (talib & shafie 2016:65). the reason for this is because the feedback received from the respondents (owners and/or managers of family and non-family smes) is based on their subjective perspective of their enterprise’s growth and profitability, as opposed to using objective data and financial records that are shared in the public domain (soininen et al. 2012:616; talib & shafie 2016:65). therefore, for the purpose of this study, perceived financial performance refers to the owner and/or manager’s perception that the enterprise has been financially successful and achieved its financial goals by experiencing growth in profits, sales and the number of employees over the past 2 years. independent variables: determinants of innovation in this section, the relationships that exist between the proposed independent variables (financial resources, human resources and leadership, information and knowledge, entrepreneurial orientation [eo], market orientation [mo] and organisational culture [oc]) and innovation output are discussed, together with anecdotal and empirical evidence for their inclusion in the hypothesised model. financial resources financial resources involve the monetary capital and available funds that are acquired through the owner(s) and their family, financial institutions, extended enterprise networks or the enterprise’s own profitability (white, maru & boit 2015). having access to adequate internal financial resources can, however, be a challenge for smes, as they often have to turn to external financiers or risk operating without innovation, which could impede their development and leave them trailing behind their competitors (hottenrott, hall & czarnitzki 2016). some of these external financiers can include, amongst others, financial institutions, banks, government, peer-to-peer, crowdfunding and angel investors. because of risk-averse behaviour and long-term focus, family enterprises may struggle to attain external financing because they avoid sharing equity with non-family stakeholders (de massis, frattini & lichtenthaler 2013; nieto et al. 2015). several empirical studies have found a positive relationship between financial resources and innovation in smes (e.g. lopez-fernandez, serrano-bedia & gómez-lópez 2015; nieto et al. 2015). hence, the following hypothesis is proposed: h1: there is a positive relationship between financial resources and the innovation output of family and non-family smes. human resources and leadership the capabilities of employees and management within a enterprise are important factors that facilitate the successful implementation of innovation (caten et al. 2019; vieites & calvo 2011). when a enterprise’s management is open to innovation and also allows employees to get involved in the decision-making processes and innovation practices, the enterprise tends to exhibit greater innovation outputs (nagy & băbăiță 2016). in addition to the management of the enterprise, leaders play a crucial role in creating an environment for innovations and sustainable development within a enterprise and will significantly affect the innovation process (röd 2016). in family enterprises, family influence, or ‘familiness’, is a key determinant of innovation. family members have an influence on the decision-making processes within the enterprise and subsequently influence the innovativeness of the enterprise either positively or negatively, depending on the family in question (gast et al. 2018; röd 2016). thus, the following hypothesis is proposed: h2: there is a positive relationship between human resources and leadership and the innovation output of family and non-family smes. information and knowledge acquiring reliable information and knowledge, from internal and external sources, is important for smes to identify opportunities in the market and exploit them with relevant innovations (jegede et al. 2012). smes, however, often struggle to generate their own internal information in comparison with large enterprises, as they do not possess the same capacity and resources to notice and effectively process knowledge and information. despite this challenge, jegede et al. (2012) suggest that networking and collaboration with other external enterprises and research entities are ways to overcome this capability shortfall. collaborating with external entities is an important component of open innovation, as information and knowledge can be acquired through various external entities, such as customers, suppliers, competitors, allies, the internet, social media platforms, the media, consultants, scientific research organisations, academic institutions, amongst others (el samra et al. 2019). family enterprises often form strong relationships inside and outside of the enterprise, which create an environment of free and easy communication and information exchanges (de massis et al. 2013). the aforementioned anecdotal evidence is supported by empirical studies that found a positive relationship between information and knowledge and innovation in both family and non-family smes (e.g. el samra et al. 2019; jegede et al. 2012). as a result, the following hypothesis is formulated: h3: there is a positive relationship between information and knowledge and the innovation output of family and non-family smes. entrepreneurial orientation in order for an innovation to be truly successful, it almost certainly requires elements of risk, proactiveness and a willingness to establish newness; thus, establishing a clear link between eo and innovation (covin & wales 2018). in this study, eo is investigated as a multi-dimensional construct (dele-ijagbulu, eresia-eke & moos 2020) and includes three dimensions of eo, namely innovativeness, proactiveness and risk-taking. innovativeness refers to a enterprise’s willingness and capacity to engage in innovation activities (gunawan, jacob & duysters 2016). the proactive element of eo focusses primarily on the readiness of enterprises to seek and engage in innovation, as well as the timing of said innovation in relation to market conditions (covin & wales 2018; nasution et al. 2011). risk-taking, on the other contrary, is the willingness to commit resources to projects with unknown outcomes (hernández-linares et al. 2020). empirical research by mohammed et al. (2020) and nasution et al. (2011) revealed a positive correlation between eo and innovation. based on this evidence, the following hypothesis is proposed: h4: there is a positive relationship between eo and the innovation output of family and non-family smes. market orientation dibrell, craig and hansen (2011) describe mo as a process whereby a enterprise achieves an understanding of the needs and expectations of customers whilst closely monitoring the activities of their competitors. mo is a concept, which is found to be a key determinant of innovation in enterprises (voigt, baccarella & wassmus 2011). studies conducted by riswanto et al. (2020) and ho et al. (2018) found that mo did in fact have a positive influence on the financial performance of enterprises. a recent study conducted by chipunza (2020) in south africa and zimbabwe found that both constructs of mo (customer orientation and competitor orientation) had a positive influence on all four types of innovation (product, process, organisational and marketing innovation). beck et al. (2011) also confirmed the existence of a positive relationship between mo and innovation. against this background, the following hypothesis is proposed: h5: there is a positive relationship between mo and the innovation output of family and non-family smes. organisational culture whilst resources and capabilities are often the focus of research on innovation determinants (vieites & calvo 2011), the oc within the enterprise has been strongly linked with innovation (halim, ahmad & ramayah 2019). instilling an innovative oc in smes provides them with the ability to react in ways that will secure their competitive position, enhance creativity and achieve desired results in a turbulent market (halim et al. 2015). in the context of family enterprises, oc is of particular importance, given that the values displayed within the family enterprise are usually based on the values of the founding family and are maintained throughout the enterprise’s existence (franco & lucas 2016). previous empirical researches have established a positive relationship between oc and innovation (e.g. ali taha, sirkova & ferencova 2016; çakar & ertürk 2010; halim et al. 2019; uzkurt et al. 2013). laforet (2016) states that little research exists that specifically examines the influence of oc on innovation in family enterprises. against this background, the following hypothesis is formulated: h6: there is a positive relationship between oc and the innovation output of family and non-family smes. innovation output and perceived financial performance donkor et al. (2018), in their study amongst smes in ghana, find that the higher an sme’s innovative capacity, the more innovation outputs it produces and the better its financial performance tends to be. in a similar manner, centobelli, cerchione and singh (2019) state that the more innovative smes are, the better their financial performance tends to be, as a result of the positive relationship that exists between these two variables. bozkurt and kalkan (2014), in a study amongst turkish smes, find that smes mainly utilise two specific types of innovation, namely process and marketing innovation. centobelli et al. (2019) find that higher levels of process innovation in manufacturing smes increase product innovation outputs, which further enhance financial performance. similarly, expósito and sanchisllopis (2019) in their study find that product innovation has a positive influence on the sales and overall financial performance of smes. it is important to note that in a study conducted by paula and silva (2018) amongst 2745 european manufacturing enterprises, it was found that some innovation outputs had minimal influence on financial performance in the short term, but rather it took some time to emerge. therefore, the following relationship is hypothesised: h7: there is a positive relationship between innovation outputs and the perceived financial performance of family and non-family smes. innovative differences between family and non-family smes several studies (e.g. fredyna, ruíz-palomo & dieguez 2019; jiménez-jiménez, sanz-valle & perez-caballero 2020; kraus, pohjola & koponen 2012; matzler et al. 2015; price, stoica & boncella 2013) have found innovation differences between family and non-family smes. a study conducted by classen et al. (2014) have found that family enterprises invest less intensively than their non-family counterparts, whilst also tending to operate primarily in less innovation-intensive industries. to investigate whether there are perceived differences between family and non-family smes concerning the variables proposed in this study, the following null hypotheses were formulated: h01–8: there is no difference in perceived financial resources, human resources and leadership, information and knowledge, eo, mo, oc, innovation output and perceived financial performance between family and non-family smes. research design and methodology a positivistic research paradigm and deductive methodological approach was utilised in this study. owing to the nature of this study, an online survey strategy was adopted, which used a closed-ended, structured and self-administered questionnaire to gather primary data for the purpose of this study. measuring instrument design and administration the questionnaire consisted of two sections. section a focussed on acquiring the demographic information of the respondents and their enterprises by means of multiple-choice questions. section b made use of a seven-point likert scale in which the respondents are able to indicate their level of agreement with statements measuring the independent variables (financial resources, human resources and leadership, information and knowledge, eo, mo and oc) and the dependent variables (innovation output and perceived financial performance) of the study. in total, 54 randomised statements sourced from previous studies (see table 1) were posed, which formed the basis for each variable’s operationalisation. a complete list of the items is shown in appendix 1. table 1: operationalisation of variables, scale items and sources. possible respondents were identified by using the sample frame generated for the purpose of this study and selected by using the non-probability sampling technique of convenience and snowball sampling. once selected, family and non-family smes that agreed to participate were able to access the online questionnaire by using the link provided in the email or cover letter. no hard copy questionnaires were used in this study. to obtain ethical clearance, various ethical considerations were taken into consideration when creating and administering the measuring instrument. a formal ethics number was assigned by the relevant ethics committee before the empirical investigation commenced. empirical results response rate and demographic information of the 4575 emails sent, a total of 224 (144 family smes and 80 non-family smes) responses were useable in the statistical analysis. the majority of the respondents who participated in this study were male (71.9%), with female respondents consisting of only 28.1% of the total sample. the majority of respondents were between the ages of 50 to 59 years (26.8%), followed by those between the ages of 40 to 49 years (21.9%) and 20 to 29 years (18.8%). most of the respondents indicated that they were in possession of a tertiary qualification (80.8%), whilst the remaining 19.2% were not. it is interesting to note that there is an almost even spread between the years (duration) that the enterprise has been in operation. many of the enterprises have been operating for between 2 and 5 years (19.6%), followed by those operating for longer than 30 years (17.9%). most of the enterprises in the sample employed between 5 and 10 employees (39.3%), followed by those that employed between 21 and 50 employees (21.9%), then between 11 and 20 employees (17.9%) and between 51 and 100 employees (12.1%). most of the respondents indicated that their enterprise operates in the service industry (35.7%), followed by other (21.9%), retail and/or wholesale (15.2%) and manufacturing (14.3%). validity and reliability results the reliability of the scales measuring the independent and dependent variables was tested by using an exploratory factor analysis (efa) (cooper & schindler 2014). only factor loadings of 0.4 or greater and that loaded onto one factor were considered acceptable. factor loadings that did not meet these requirements were removed from the results and excluded from further statistical analysis (hair et al. 2014). independent variables: determinants of innovation before the efa was performed on the independent variables (determinants of innovation output), the suitability of the data was assessed by using the kmo-msa and bartlett’s test of sphericity. the kmo-msa value was 0.882 and bartlett’s test of sphericity was statistically significant (p < 0.001). hence, the data were deemed suitable to perform the efa analysis, as both of the required conditions were satisfied. the factor structure from the efa performed on the independent variables is displayed in table 2. table 2: factor structure of the independent variables. as seen in table 2, three factors were extracted from the original six by using principal axis factoring with a minimum factor loading of 0.4. three new factors emerged, which were re-named, with new operationalisations formulated for each. the questions (items) that constitute each factor structure were reviewed and labelled. the first factor (factor 1) extracted did not correspond with any of the existing theoretical dimensions. rather, numerous items intended to measure five of the original independent variables loaded onto this factor. three originally intended to measure oc, two items measuring eo, one item intended to measure mo, one item measuring human resources and leadership and one item intended to measure information and knowledge loaded onto this factor. therefore, this factor has been named innovation-orientated oc, which explains 28.25% of the variance in the data. factor loadings ranging between 0.959 and 0.446 were reported for this factor, as well as a cronbach’s alpha coefficient of 0.824. thus, there is sufficient evidence that the scale measuring innovation-orientated oc is valid and reliable. in this study, innovation-orientated oc refers to the enterprise having an innovation-driven internal oc where employees are treated as part of the family and are encouraged to actively think and behave in original ways to generate creative and innovative solutions to problems, whilst using market information and customer feedback to identify new enterprise opportunities. similar to the first factor, the second factor (factor 2) extracted also did not correspond with any of the existing theoretical dimensions. of the eight items that loaded onto this factor, five items were originally intended to measure mo, two items financial resources and one item intended to measure eo. this factor has subsequently been named mo and response, which explains 4.65% of the variance in the data, with factor loadings ranging between 0.845 and 0.459, confirming the validity of this scale. a cronbach’s alpha coefficient of 0.830 is reported, providing evidence of reliability. mo and response refers to the enterprise monitoring customer and competitor behaviour to quickly detect market threats and changes, whilst generating and allocating sufficient financial resources to develop new products, services or processes in response. as with factor 1 and factor 2, the extraction of factor 3 also did not correspond with any of the existing theoretical dimensions. two items intended to measure eo, one item financial resources, one item oc and one item intended to measure information and knowledge loaded onto this factor. based on the nature of these items that loaded together, the new factor that emerged was named risk-orientated eo, which accounts for 4.19% of the variance in the data. factor loadings ranging between 0.763 and 0.480 were reported for the items measuring this factor, providing sufficient evidence of the scale’s validity. a cronbach’s alpha coefficient of 0.735 was calculated, meaning that this scale can be considered reliable. in this study, risk-orientated eo refers to the willingness of the enterprise to commit to and invest in risky entrepreneurial and market initiatives with uncertain outcomes so as to achieve enterprise growth. this implies that the enterprise is prepared to alter its products, services or processes, with these alterations being conducted by experienced employees, funded by friends and communicated by using social media. dependent variable: innovation output all 13 of the items intended to measure innovation output loaded together onto one factor, as anticipated. factor loadings ranging from 0.754 to 0.498 were extracted for the items that loaded onto this factor, providing sufficient evidence of validity. in addition, a cronbach’s alpha coefficient of 0.885 was reported, indicating that this scale is highly reliable. finally, the construct of innovation output explains 38.73% of the variance of the data. it is important to note that according to the results of the efa, all of the items intended to measure innovation output loaded together. this means that the items measuring each of the four types of innovation (product, process, organisational and marketing innovation) were all found to measure innovation output. based on the results of the efa, the operationalisation of innovation output remains unchanged from its original depiction. dependent variable: perceived financial performance as was the case with innovation output, an individual efa was performed together with the calculation of cronbach’s alpha coefficient to ensure that the scale measuring the dependent variable is valid and reliable. each of the seven items that were intended to measure perceived financial performance loaded together and provided evidence of validity by returning factor loadings ranging between 0.842 and 0.474. therefore, perceived financial performance remained the name of this factor, which serves as a dependent variable in this study and explains 53.55% of the variance in the data. moreover, the reliability of the scale was ensured, as a cronbach’s alpha coefficient of 0.874 was calculated. revised hypothesised model and hypotheses the results of the factor analyses that were performed required the formulation of new applicable names and operationalisations for the independent variables. therefore, the null hypotheses have also been reformulated in line with the revised hypothesised model (h01–5). however, the dependent variables (innovation output and perceived financial performance) remain unchanged. the revised hypothesised model is illustrated in figure 1. figure 1: revised hypothesised model: determinants of innovation output and its influence on perceived financial performance. descriptive statistics the descriptive statistics of the data in this study showed that innovation output returned a mean score of 4.10, whilst perceived financial performance returned a mean score of 3.93, with the majority of respondents agreeing with the items measuring these variables. of the independent variables, innovation-orientated oc and mo and response returned the highest mean scores of 4.42 and 4.24, respectively, with most respondents in agreement with the items measuring these variables. alternatively, risk-orientated eo returned a neutral mean score of 3.22, with most respondents remaining neutral regarding the items measuring this variable. inferential statistics the inferential statistics undertaken in this study include the calculation of pearson’s product moment correlations, a t-test, analysis of variance (anova) tests and multiple regression analyses (mras). the results of these statistical procedures will now be discussed in the sections to follow. pearson’s product moment correlations pearson’s product moment correlation coefficients were calculated and used to determine whether any association or correlation exists between the independent variables (innovation-orientated oc, mo and response and risk-orientated eo), innovation output and perceived financial performance. significant positive correlations were reported between all three of the independent variables, whilst each of the independent variables also reported strong positive relationships with innovation output. two of the independent variables, mo and response and risk-orientated eo, were found to have significant positive relationships with perceived financial performance, whilst the relationship between innovation-orientated oc and perceived financial performance was weak. finally, a strong positive correlation was found between innovation output and perceived financial performance. results of the t-test: family versus non-family small and medium-sized enterprises a two-tailed independent sample t-test was conducted to determine whether there was a significant difference in the perception of family and non-family smes concerning the three independent variables (innovation-orientated oc, mo and response and risk-orientated eo) and the dependent variables (innovation output and perceived financial performance). no significant (p > 0.05) differences in the perceptions between family and non-family smes were found concerning the five variables, which is illustrated in figure 1, after the factor analysis was conducted. in other words, there is no difference in the perception of family and non-family smes regarding the mean scores of innovation-orientated oc, mo and response, risk-orientated eo, innovation output and perceived financial performance. as such, h01, h02, h03, h04 and h05 are not rejected. hypotheses testing the first analysis was conducted to determine whether significant positive relationships exist between the independent variables (determinants of innovation), namely innovation-orientated oc, mo and response and risk-orientated eo, and the dependent variable, innovation output. the second mra was performed with innovation output as the independent variable and perceived financial performance as the dependent variable. in both cases, control variables were introduced based on the significant differences of scores identified in the anova tests. these control variables are enterprise size, enterprise age and industry. prior to the commencement of the two mras, several tests were performed (e.g. variance inflation factors and residual analysis) to satisfy the necessary assumptions, with the results confirming that these assumptions were all adequately met. results of the multiple regression analyses: independent variables and innovation output given that the global f-test’s p-value was significant (p < 0.001), at a 5% level of significance, the model was considered adequate for prediction purposes. with an r2 value of 0.800, the results of the mras show that the control variables and the independent variables explain 80% of the variance in innovation output (table 3). table 3: regression results: independent variables and innovation output. table 3 presents the results of the first mra analysing the relationships between the independent variables and innovation output. the first mra reported significant and positive relationships between all three independent variables (innovation-orientated oc, mo and response and risk-orientated eo) and innovation output. the beta coefficients reported for all of these relationships are greater than 0.20, suggesting the presence of interpretable linear relationships (lee 2014). regarding the control variables, a significant positive relationship was reported between the control variable enterprise age and the dependent variable innovation output (β = 0.159; p < 0.05). there is a significant positive linear relationship (β = 0.218; p < 0.05) between innovation-orientated oc and innovation output. however, the mra suggested that innovation-orientated oc (t-value = 4.782) exerts the least influence of the independent variables on innovation output, which corresponds with the results of pearson’s product moment correlations. the strongest significant positive linear relationship (β = 0.534; p < 0.05) was reported between mo and response and innovation output. in addition, it was reported that mo and response (t-value = 12.608) exerts the strongest influence on innovation output. finally, a significant positive linear relationship (β = 0.278; p < 0.05) was also reported between risk-orientated eo and innovation output. with a t-value of 7.844, risk-orientated eo exerts slightly more influence than innovation-orientated oc, but less influence than mo and response, on innovation output. against this background, support is found for the hypothesised relationships between innovation-orientated oc (h1), mo and response (h2) and risk-orientated eo (h3), and the dependent variable, innovation output. results of the multiple regression analyses: innovation output and perceived financial performance given that the global f-test’s p-value was significant (p < 0.001), at a 5% level of significance, the model was considered adequate for prediction purposes. the results of the mra (table 4) show that the control variables and innovation output explain 40.20% (r2 = 0.402) of the variance in perceived financial performance. for the control variables, a significant negative relationship was reported between the control variable enterprise size and the dependent variable perceived financial performance (β = -0.328; p < 0.05). table 4: regression results: innovation output and perceived financial performance. table 4 presents the results of the second mra analysing the relationship between innovation output and perceived financial performance. a significant positive linear relationship (β = 0.791; p < 0.05) exists between innovation output and perceived financial performance. again, the beta coefficient reported for this relationship is greater than 0.20, suggesting the presence of an interpretable linear relationship (lee 2014). this means that the more the innovation output increases, the higher the perceived financial performance of the enterprise. therefore, support is found in this study for the hypothesised relationship (h4) between innovation output and perceived financial performance. discussion of results all of the smes in this study, family and non-family owned, considered innovation as an important activity in their enterprises. this result is in accordance with the findings of price et al. (2013), who found that innovation was a significant factor in both family and non-family smes. in addition, werner, schroder and chlosta (2018) also reported that family smes hold innovation as an important consideration in their enterprises. furthermore, no significant differences were found between the innovation practices of family and non-family smes in this study. these findings are in contrast with most other studies that did report the existence of innovative differences between family and non-family smes (kraus et al. 2012). for example, matzler et al. (2015) found that family enterprises produce greater innovation outputs than non-family enterprises, whilst classen et al. (2014) revealed that when family smes have a higher propensity to invest in innovation, they do so less intensively than their non-family counterparts. however, there is some literary support for the results of the t-test in this study. when comparing thousands of australian and belgian family and non-family smes, smith (2008) found that the proposed differences between family and non-family enterprises may be less significant than many earlier studies had indicated. the study also demonstrated that the underlying theoretical rationale for several predicted differences between family and non-family enterprises appeared to be flawed. moreover, werner et al. (2018), in their research amongst almost 2000 german smes, reported that family smes are just as innovative as their non-family counterparts. the empirical results revealed a significant and positive relationship between the independent variable innovation-orientated oc and innovation output. this result is supported by prior research (e.g. ali taha et al. 2016; uzkurt et al. 2013). in addition, halim et al. (2015) reported that smes with an oc that is focussed on innovation exhibit significantly higher innovation outputs than those that are not. furthermore, the employee element of this variable whereby employees are treated as a part of the family and encouraged to actively think and behave in original ways is supported by çakar and ertürk (2010), who in their study found that when smes provide an oc that promotes employee creativity and freedom to pursue opportunities, the more innovative the enterprise tends to be. therefore, the results of this study support h1. the strongest significant positive relationship was reported between mo and response and innovation output, which confirmed that mo and response is a determinant of innovation output. consequently, h2 is accepted. this result is supported by the research of riswanto et al. (2020) and ho et al. (2018), who reported that the general concept of mo has a positive influence on, and promotes, innovation in enterprises operating in developing economies. moreover, the study by chipunza (2020) reiterated this support in a local setting, as it was reported that smes in south africa and zimbabwe benefit from higher innovation outputs as a result of exhibiting high levels of customer and competitor-focused mo. the same positive relationship was found by beck et al. (2011) amongst family enterprises. finally, a significant positive relationship between risk-orientated eo and innovation output was also found, confirming the acceptance of h3. whilst the general theme of eo was captured in this variable, the dimension of risk-taking was the most prominent feature. the study by fernández-mesa, alegre-vidal and chiva-gómez (2012) supports the findings of this study by reporting a significant positive relationship between eo and innovation output. furthermore, nasution et al. (2011) added that a strong eo and a willingness to take risks when developing new products, services or processes in smes are highly correlated with innovation. similarly, jiménez-jiménez et al. (2020) reported a strong positive relationship between eo and innovation. therefore, existing empirical research supports the findings of this study. in this study, a significant and positive relationship was specifically found between innovation output and perceived financial performance, accepting h4. therefore, as a enterprise increases its innovation outputs – the better it will perform in financial terms. this means that innovation output has a direct influence on the enterprise’s financial well-being by improving profits, increasing sales and increasing employee numbers. the findings of this study are supported by previous research (e.g. ho et al. 2018; vieites & calvo 2011), which found a significant positive correlation between innovation and financial performance. managerial implications in the context of the innovation-orientated oc and innovation output, the owner(s) and/or manager(s) need to ensure that their enterprise creates and maintains an oc, which treats all employees as part of the ‘family’ and that is inclusive of all employees, whether they are family or non-family employees. positive organisational outcomes such as commitment, productivity, adaptability and innovativeness result from the presence of an oc that promotes employees’ sense of family and belonging in the enterprise. family enterprises should make use of this as they already place a strong emphasis on building social binding ties and they are commonly more inclined to build strong social relationships inside and outside of the enterprise. in addition, employees should be encouraged to actively think and behave in original ways to generate creative and innovative solutions to problems, whether it involves the enterprise’s products or services, processes, organisational structure and/or marketing practices. management should provide employees with the freedom to try new things and think outside of the box without fear of serious repercussions, as long as their actions are ethical and responsible. concerning mo and response and innovation output, the owners and/or management and/or leadership of smes should have systems and processes in place to assess customer and competitor behaviour to speedily detect market threats and changes. in other words, and in line with the previous finding, an oc should also be created that values the feedback and opinions of customers. in this way, new opportunities in the market could be identified, and existing products or services, processes, organisational and marketing activities could be improved according to the desires of the consumer market. regular consultations must be conducted with customers to obtain feedback about whether the enterprise is doing well, and more importantly, what it can do to improve. given their size and oc, smes and family enterprises, in particular, often have a closer and more personal connection with the market, which they could utilise in this regard. existing and potential competitors must be monitored to identify gaps in their offering that could be filled by one’s own enterprise; or reveal the competitors’ innovations that may need to be counteracted to retain competitive advantage in the market. furthermore, smes should consider adopting an ‘open’ approach to innovation. by adopting an ‘open innovation’ approach, smes will be able to use external sources of information and knowledge (e.g. universities, the internet, other enterprises, research institutions and government publications) to supplement their own efforts and capabilities. regarding risk-orientated eo and innovation output, smes should ‘invest’ in skilled and trained employees if they want to partake in riskier entrepreneurial and innovative initiatives. pursuing riskier, but more rewarding, innovation ventures or practices often requires experience, knowledge and expertise from employees to reduce risk, whilst also improving the venture’s potential success. financial institutions and traditional sources of financing are not always willing to lend money to small enterprises for the purpose of risky innovative ventures. therefore, smes should consider using personal relations, such as friends, family and professional acquaintances, to acquire the necessary funds. once again, smes could adopt an ‘open’ approach to innovation, whereby enterprises can collaborate with external entities and utilise external information sources to help reduce the risk of innovation ventures. the results of this study confirmed that product, process, organisational and marketing innovation all constitute innovation output and play an important role in improving the competitive advantage of the enterprise. based on a significant positive relationship between innovation output and perceived financial performance in this study, it can be strongly recommended that enterprises seek to innovate in some capacity. this may be through product, process, organisational or marketing innovation, as these types of innovation have all been found to create a competitive advantage and enhance financial performance. therefore, enterprises should aim to deliver the best and most unique product or service offering to best satisfy consumer needs. limitations of the study and recommendations for future research in the literature review, it became clear that innovation is a complex and multi-dimensional concept and construct. as a result, a challenge, more than a limitation, was to identify the dependent variable in this study. future research should take this into consideration when comparing the results of this study that used innovation output as its main dependent variable, with other research findings. another limitation of this study is that it focussed on a selected number of internal determinants of innovation in smes. in particular, this study does not account for external determinants of innovation, such as environmental munificence, national and local governmental laws and regulations and available infrastructure. in the current study, the sample size and sampling techniques used may also be considered as limitations. the non-probability sampling techniques of convenience and snowball sampling used in this study are associated with various disadvantages, such as the potential presence of a sampling bias and the results being less representative of the study population, which limits the accuracy with which generalisations can be made about the research population (mitchell & jolley 2010). conclusion this study investigated the determinants of innovation output, the types of innovation that are commonly being utilised and the influence thereof on perceived financial performance. from the findings, it is evident that innovation plays an important role in increasing the financial performance of smes. in addition, financial and human resources are not necessarily the main determinants of innovation in south african smes, but rather the creation of an innovation and market-orientated oc, together with a risk-orientated eo. no differences were found concerning the innovation practices of family and non-family smes in this study. acknowledgements the authors would like to thank all respondents who took part in the survey as well as the office of research development at the nelson mandela university, south africa. competing interests the authors have declared that no competing interests exist. authors’ contributions both authors contributed equally to the development of the manuscript. h.h. conducted the initial research as part of his master’s dissertation under the supervisor of e.v. ethical considerations ethical approval for this study was obtained from the faculty ethics committee of the faculty of enterprise and economic science (nelson mandela metropolitan university), with ethical clearance number: h20-bes-bma-037. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. funding assistance was received from the office of research development at the nelson mandela university, south africa. data availability the data that support the findings of this study are available from the corresponding author, e.v., upon reasonable request. disclaimer the views and opinions expressed in the article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references ali taha, v., sirkova, m. & ferencova, m., 2016, ‘the impact of organizational culture on creativity and innovation’, polish journal of management studies 14(1), 7–17. https://doi.org/10.17512/pjms.2016.14.1.01 amoah, s.k. & amoah, a.k., 2018, ‘the role of small and medium enterprises (smes) to employment in ghana’, international journal of business and economics research 7(5), 151–157. https://doi.org/10.11648/j.ijber.20180705.14 beck, l., janssens, w., debruyne, m. & lommelen, t., 2011, ‘a study of the relationships between generation, market orientation, and innovation in family firms’, family business review 24(3), 252–272. https://doi.org/10.1177/0894486511409210 bozkurt, o.c. & kalkan, a., 2014, ‘business strategies of sme’s, innovation types and factors influencing their innovation: burdur model’, ege academic review 14(2), 189–198. https://doi.org/10.1177/0894486511409210 çakar, n.d. & ertürk, a., 2010, ‘comparing innovation capability of small and medium-sized enterprises: examining the effects of organizational culture and empowerment’, journal of small business management 48(3), 325–359. https://doi.org/10.1111/j.1540-627x.2010.00297.x calik, e., calisir, f. & cetinguc, b., 2017, ‘a scale development for innovation capability measurement’, journal of advanced management science 5(2), 69–76. https://doi.org/10.18178/joams.5.2.69-76 caten, c.s., silva, d.s., aguiar, r.b., filho, l.c.p.s. & huerta, j.m.p., 2019, ‘reshaping engineering learning to promote innovative entrepreneurial behavior’, brazilian journal of operations & production management 16(1), 141–148. https://doi.org/10.14488/bjopm.2019.v16.n1.a13 centobelli, p., cerchione, r. & singh, r., 2019, ‘the impact of leanness and innovativeness on environmental and financial performance: insights from indian smes’, international journal of production economics 212(1), 111–124. https://doi.org/10.1016/j.ijpe.2019.02.011 chipunza, l.t., 2020, ‘innovation in small accommodation businesses: a comparative study of zimbabwe and south africa’, acta commercii 20(1), 1–10. https://doi.org/10.4102/ac.v20i1.796 classen, n., carree, m., van gils, a. & peters, b., 2014, ‘innovation in family and non-family smes: an exploratory analysis’, small business economics 42(3), 595–609. https://doi.org/10.1007/s11187-013-9490-z cooper, d.r. & schindler, p.s., 2014, business research methods, 12th edn., mcgraw-hill, new york, ny. covin, j.g. & wales, w.j., 2018, ‘crafting high-impact entrepreneurial orientation research: some suggested guidelines’, entrepreneurship theory and practice 43(1), 3–18. https://doi.org/10.1177/1042258718773181 de massis, a., frattini, f. & lichtenthaler, u., 2013, ‘research on technological innovation in family firms: present debates and future directions’, family business review 26(1), 10–31. https://doi.org/10.1177/0894486512466258 de massis, a., kotlar, j., frattini, f., chrisman, j.j. & nordqvist, m., 2016, ‘family governance at work: organizing for new product development in family smes’, family business review 29(2), 189–213. https://doi.org/10.1177/0894486515622722 dele-ijagbulu, o., eresia-eke, c. & moos, m., 2020, ‘dimensions of firm-level entrepreneurial orientation as antecedents to employment growth in smmes’, african journal of business and economic research (ajber) 15(3), 91–114. https://doi.org/10.31920/1750-4562/2020/v15n3a4 dibrell, c., craig, j. & hansen, e., 2011, ‘natural environment, market orientation, and firm innovativeness: an organizational life cycle perspective’, journal of small business management 49(3), 467–489. https://doi.org/10.1111/j.1540-627x.2011.00333.x donkor, j., donkor, g.n.a., kankam-kwarteng, c. & aidoo, e., 2018, ‘innovative capability, strategic goals and financial performance of smes in ghana’, asia pacific journal of innovation and entrepreneurship 12(2), 238–254. https://doi.org/10.1108/apjie-10-2017-0033 el samra, a., anastasakis, l., albores, p. & uren, v., 2019, ‘big data big impact: how firms are using social media for innovation and better performance’, international conference on advances in business management and law icabml 2, 32–42. https://doi.org/10.30585/icabml-cp.v2i1.180 expósito, a. & sanchisllopis, j.a., 2019, ‘the relationship between types of innovation and smes’ performance: a multidimensional empirical assessment’, eurasian business review 9(2), 115–135. https://doi.org/10.1007/s40821-018-00116-3 farrington, s.m., 2009, ‘sibling partnerships in south african small and medium-sized family businesses’, unpublished doctoral thesis, nelson mandela metropolitan university. fernández-mesa, a., alegre-vidal, j. & chiva-gómez, r., 2012, ‘entrepreneurial orientation, organizational learning capacity and innovative performance’, journal of technology management and innovation 7(2), 157–170. https://doi.org/10.4067/s0718-27242012000200013 ferris, g.r., treadway, d.c., kolodinsky, r.w., hochwarter, w.a., kacmar, c.j., douglas, c. et al., 2005, ‘development and validation of the political skill inventory’, journal of management 31(1), 126–152. https://doi.org/10.1177/0149206304271386 fleuren, m.a.h., paulussen, t.g.w.m., van dommelen, p. & van buuren, s., 2014, measurement instrument for determinants of innovations (midi), tno, leiden. flores, l.g., zheng, w., rau, d. & thomas, c.h., 2012, ‘organisational learning: subprocess identification, construct validation, and an empirical test of cultural antecedents’, journal of management 38(2), 640–667. https://doi.org/10.1177/0149206310384631 franco, m. & lucas, m., 2016, ‘family management of smes: an organisational culture perspective’, international journal of globalisation and small business 8(1), 18–38. https://doi.org/10.1504/ijgsb.2016.076442 fredyna, t., ruíz-palomo, d. & dieguez, j., 2019, ‘entrepreneurial orientation and product innovation. the moderating role of family involvement in management’, european journal of family business 2019(9), 128–145. https://doi.org/10.24310/ejfbejfb.v9i2.5392 gast, j., filser, m., rigtering, j.c., harms, r., kraus, s. & chang, m.l., 2018, ‘socio-emotional wealth and innovativeness in small and medium-sized family enterprises: a configuration approach’, journal of small business management 56(1), 53–67. https://doi.org/10.1111/jsbm.12389 gerba, y.t. & viswanadham, p., 2016, ‘performance measurement of small-scale enterprises: review of theoretical and empirical literature’, international journal of applied research 2(3), 531–535. gunawan, t., jacob, j. & duysters, g., 2016, ‘network ties and entrepreneurial orientation: innovative performance of smes in a developing country’, international entrepreneurship management journal 12(1), 575–599. https://doi.org/10.1007/s11365-014-0355-y gunday, g., ulusoy, g., kilic, k. & alpkan, l., 2011, ‘effects of innovation types on firm performance’, international journal of production economics 133(1), 662–676. https://doi.org/10.1016/j.ijpe.2011.05.014 hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2014, multivariate data analysis, 7th edn., pearson, hoboken, nj. halim, h.a., ahmad, n.h. & ramayah, t., 2019, ‘sustaining the innovation culture in smes: the importance of organisational culture, organisational learning and market orientation’, asian journal of business research 9(2), 14–33. https://doi.org/10.14707/ajbr.190059 halim, h.a., ahmad, n.h., ramayah, t., hanifah, h., taghizadeh, s.k. & mohamad, m.n., 2015, ‘towards an innovation culture: enhancing innovative performance of malaysian smes’, academic journal of interdisciplinary studies 4(2), 85–93. hauck, j. & prügl, r., 2015, ‘innovation activities during intra-family leadership succession in family firms: an empirical study from a socioemotional wealth perspective’, journal of family business strategy 6(1), 104–118. https://doi.org/10.1016/j.jfbs.2014.11.002 hernández-linares, r., kellermanns, f.w., lópez-fernández, m.c. & sarkar, s., 2020, ‘the effect of socio-emotional wealth on the relationship between entrepreneurial orientation and family enterprise performance’, enterprise research quarterly 23(3), 174–192. https://doi.org/10.1177/2340944420941438 ho, k.l.p., nguyen, c.n., adhikari, r., miles, m.p. & bonney, l., 2018, ‘exploring market orientation, innovation, and financial performance in agricultural value chains in emerging economies’, journal of innovation & knowledge 3(3), 154–163. https://doi.org/10.1016/j.jik.2017.03.008 hottenrott, h., hall, b.h. & czarnitzki, d., 2016, ‘patents as quality signals? the implications for financing constraints on r&d’, economics of innovation and new technology 25(3), 197–217. https://doi.org/10.1080/10438599.2015.1076200 jegede, o.o., ilori, m.o., sonibare, j.a., oluwale, b.a. & siyanbola, w.o., 2012, ‘factors influencing innovation and competitiveness in the service sector in nigeria: a sub-sectoral approach’, management 2(3), 69–79. https://doi.org/10.5923/j.mm.20120203.03 jiménez-jiménez, d., sanz-valle, r. & perez-caballero, j.a., 2020, ‘entrepreneurial orientation and innovation success in family firms’, international journal of entrepreneurship and small business 40(1), 114–127. https://doi.org/10.1504/ijesb.2020.106941 kellermanns, f.w., eddleston, k.a., sarathy, r. & murphy, f., 2012, ‘innovativeness in family firms: a family influence perspective’, small business economics 38(1), 85–101. https://doi.org/10.1007/s11187-010-9268-5 kraus, s., pohjola, m. & koponen, a., 2012, ‘innovation in family firms: an empirical analysis linking organizational and managerial innovation to corporate success’, review of managerial science 6(3), 265–286. https://doi.org/10.1007/s11846-011-0065-6 laforet, s., 2016, ‘effects of organisational culture on organisational innovation performance in family firms’, journal of small business and enterprise development 23(2), 379–407. https://doi.org/10.1108/jsbed-02-2015-0020 lee, g., 2014, ‘seeking rigor in south african business research: aspirational principles in contrast to a recent publication’, south african journal of economics and management sciences 17(4), 501–514. https://doi.org/10.4102/sajems.v17i4.935 lodh, s., nandy, m. & chen, j., 2014, ‘innovation and family ownership: empirical evidence from india’, corporate governance: an international review 22(1), 4–23. https://doi.org/10.1111/corg.12034 lopez-fernandez, m., serrano-bedia, a.m. & gómez-lópez, r., 2015, ‘determinants of innovation decision in small and medium-sized family enterprises’, journal of small business and enterprise development 23(2), 408–427. https://doi.org/10.1108/jsbed-02-2015-0028 lotz, h.m. & van der merwe, s.p., 2014, ‘an assessment of selected organisational-based factors on the perceived success of agrienterprises: a corporate entrepreneurship perspective’, southern african business review 17(3), 187–217. matchaba-hove, m.t.m., 2013, ‘the entrepreneurial orientation of small businesses in the eastern cape’, unpublished master’s dissertation, nelson mandela metropolitan university. matzler, k., veider, v., hautz, j. & stadler, c., 2015, ‘the impact of family ownership, management, and governance on innovation’, journal of product innovation management 32(3), 319–333. https://doi.org/10.1111/jpim.12202 miroshnychenko, i., de massis, a., miller, d. & barontini, r., 2021, ‘family business growth around the world’, entrepreneurship theory and practice 45(4), 682–708. mitchell, m.l. & jolley, j.m., 2010, research design explained, 7th edn., cengage learning, belmont, ca. mohammed, s., bint, n., talib, a., hayat, u. & kohar, a., 2020, ‘small and medium enterprises in the emerging economies: does entrepreneurial orientation matter?’, international journal of psychosocial rehabilitation 24(5), 1065–1074. https://doi.org/10.37200/ijpr/v24i5/pr201781 moses, c., sithole, m.m., blankley, w., labadarios, d., makelane, h. & nkobole, n., 2011, ‘the state of innovation in south africa: findings from the south african national innovation survey’, south african journal of science 108(7), 15–20. https://doi.org/10.4102/sajs.v108i7/8.1320 murphy, l. & lambrechts, f., 2015, ‘investigating the actual career decision of the next generation: the impact of family business involvement’, journal of family business strategy 6(1), 33–44. https://doi.org/10.1016/j.jfbs.2014.10.003 nagy, a. & băbăiță, c., 2016, ‘factors influencing the orientation towards innovation in the hospitality industry – the case of romanian hotels’, annals of faculty of economics, university of oradea 1(1), 584–595. nasution, h., mavondo, f., jekanyika, m. & oly, n., 2011, ‘entrepreneurship: its relationship with market orientation and learning orientation and as antecedents to innovation and customer value’, industrial marketing management 40(1), 336–345. https://doi.org/10.1016/j.indmarman.2010.08.002 nieto, m.j., santamaria, l. & fernandez, z., 2015, ‘understanding the innovation behavior of family firms’, journal of small business management 53(2), 382–399. https://doi.org/10.1111/jsbm.12075 oliveira, p. & roth, a.v., 2012, ‘service orientation: the derivation of underlying constructs and measures’, international journal of operations and production management 32(2), 156–190. https://doi.org/10.1108/01443571211208614 paula, f.d.o. & silva, j.f.d., 2018, ‘balancing internal and external r&d strategies to improve innovation and financial performance’, brazilian administration review 15(2), 1–26. https://doi.org/10.1590/1807-7692bar2018170129 price, d.p., stoica, m. & boncella, r.j., 2013, ‘the relationship between innovation, knowledge and performance in family and non-family firms: an analysis of smes’, journal of innovation and entrepreneurship 2(14), 1–20. https://doi.org/10.1186/2192-5372-2-14 rahman, m.p. & kavida, v., 2019, ‘factors determining the innovation types of manufacturing smes in india’, asia-pacific journal of management research and innovation 14(3), 94–110. https://doi.org/10.1177/2319510x18817647 riaz, h., akhtar, c. & aslam, r., 2018, ‘total rewards and employee performance: investigating the mediating role of employee motivation in telecom sector’, pakistan administrative review 2(3), 342–356. riswanto, a., rasto, r., hendrayati, h., saparudinc, m., abidin, a. & primafira, a., 2020, ‘the role of innovativeness-based market orientation on marketing performance of small and medium-sized enterprises in a developing country’, management science letters 10(1), 1947–1952. https://doi.org/10.5267/j.msl.2020.2.019 röd, i., 2016, ‘disentangling the family firm’s innovation process: a systematic review’, journal of family business strategy 7(1), 185–201. https://doi.org/10.1016/j.jfbs.2016.08.004 rogerson, c.m., 2018, ‘innovation-driven local economic development: in search of best practice implementation for south africa’, euro economica 37(1), 21–34. smith, m., 2008, ‘differences between family and non-family smes: a comparative study of australia and belgium’, journal of management & organization 14(1), 40–58. https://doi.org/10.1017/s1833367200003461 soininen, j., martikainen, m., pumaonen, k. & kylaheiko, k., 2012, ‘entrepreneurial orientation: growth and profitability of finnish small and medium-sized enterprises’, international journal of production economics 140(2), 614–621. https://doi.org/10.1016/j.ijpe.2011.05.029 talib, s.a. & shafie, m.f., 2016, ‘the influence of entrepreneurial orientation on restaurant business performance’, in s.a. jamal, s.m. radzi, n.c.t. sumarjan, n.s. chik & m.f.b. bakhtiar (eds.), hospitality and tourism 2015: proceedings of htc 2015, pp. 63–66, taylor and francis group, london. uzkurt, c., kumar, r., kimzan, h.s. & eminoğlu, g., 2013, ‘role of innovation in the relationship between organizational culture and firm performance’, european journal of innovation management 16(1), 92–117. https://doi.org/10.1108/14601061311292878 vieites, a.g. & calvo, j.l., 2011, ‘a study on the factors that influence innovation activities of spanish big firms’, technology and investment 2(1), 8–19. https://doi.org/10.4236/ti.2011.21002 voigt, k.i., baccarella, c. & wassmus, a., 2011, ‘the effects of customer orientation on the product performance of technological innovations: a comparison between smes and large companies’, 31 july–04 august 2011 in 2011 proceedings of picmet ‘11: technology management in the energy-smart world (picmet), ieee, portland. werner, a., schroder, c. & chlosta, s., 2018, ‘driving forces of innovation in family and non-family smes’, small business economics 50(1), 201–218. https://doi.org/10.1007/s11187-017-9884-4 white, m., maru, l. & boit, r.j., 2015, ‘financial resource as drivers of performance in small and micro enterprises in service retail sector: a case of eldoret municipality, uasin gishu country, kenya’, global journal of human-social science: economics 15(4), 4–15. appendix 1 table 1-a1: items used in the questionnaire. abstract introduction literature review conceptual model and hypothesis development methodology results discussion of the results practical implications conclusion limitations areas for future research acknowledgements references about the author(s) watson munyanyi department of business management, college of business and economics, university of johannesburg, johannesburg, south africa shallone munongo department of business management, college of business and economics, university of johannesburg, johannesburg, south africa david pooe department of business management, college of business and economics, university of johannesburg, johannesburg, south africa citation munyanyi, w., munongo, s. & pooe, d., 2021, ‘spurring entrepreneurial intensity through social capital and relationship quality’, southern african journal of entrepreneurship and small business management 13(1), a425. https://doi.org/10.4102/sajesbm.v13i1.425 original research spurring entrepreneurial intensity through social capital and relationship quality watson munyanyi, shallone munongo, david pooe received: 06 apr. 2021; accepted: 08 oct. 2021; published: 17 dec. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the rapid increase in the pace of globalisation has been met with increased calls for sustainability as a means to entrepreneurship development. as entrepreneurship and sustainability continue to gain recognition, entrepreneurial intensity has emerged as a critical component of the ecosystem. the entrepreneurial intensity notion conceptualised the extent and frequency of innovation, risk taking, and proactiveness within an organisation. aim: this study investigated how social interaction and relationship quality, referred to as social capabilities, influences entrepreneurial intensity. setting: the population comprised all small and medium enterprises (smes) in zimbabwe. an online questionnaire constructed using google docs was posted on masvingo centred facebook and whatsapp groups from 15 october 2018 to 19 december 2018. methods: based on an extensive review of the theoretical and empirical literature, hypotheses were formulated and then tested using the structural equation modelling framework. the study was based on a sample of 312 smes selected through convenience sampling, and data were collected through a self-administered questionnaire based on a five-point likert scale. results: the study results back the propositions that social interaction and relationship quality are strongly and positively related to entrepreneurial intensity. conclusion: in light of the findings, several recommendations are made, but generally, to promote superior innovativeness, risk taking and proactiveness, firms must concentrate on steering up and refining their social capabilities. keywords: social interaction; relationship quality; entrepreneurial intensity; social capabilities formation; sociability; social presence; online social interactions; smes. introduction notwithstanding the avalanche of diversity that characterises its definition, entrepreneurship has long been viewed as a global tool for stimulating economic growth and a pointer of economic vigour (adusei 2016; kamakula & patro 2019). in most sub-saharan countries, the population has grown faster than employment growth, obliging the emergence of productive entrepreneurship to deal with unemployment and poverty (napitupulu et al. 2018; niebel 2018; zafar & mustafa 2017). consequently, there has been a general shift in policy, emerging from this growth in the insight that entrepreneurship and small and medium enterprises (smes) are proxies for successful economic growth and development (dimova & pela 2018; dzisi, odoom & gligah 2018). governments and policymakers actively support entrepreneurial ventures’ creation and growth through financial incentives, business incubators, relaxation of administrative barriers and educational programmes (auzoult, lheureux & abdellaoui 2016). in zimbabwe, although somehow ambivalent towards informal entrepreneurship, government policy has supported the growth of small businesses (mujeyi & sadomba 2019; nyoni & bonga 2018). however, despite these efforts, entrepreneurial activity has remained generally low, especially in developing countries (eijdenberg et al. 2018; fischer, queiroz & vonortas 2018), signalling that different approaches are still needed to enhance entrepreneurship. new strategies and setups are being explored to assist smes and entrepreneurs in developing business ideas and growing (stephens, partridge & faggian 2013). there is also an extensive acceptance that extraordinary performance and growth amongst smes depends heavily on the entrepreneur’s capabilities (mitchelmore & rowley 2013). according to boada-grau et al. 2016), governments must not only focus on providing small businesses with resources such as capital and easy financing but should also strive to assess their socio-psychological skills, motivations and experiences. in developing economies like zimbabwe, smes have proved to be the panacea to economic challenges. hence, to ensure sustainable economic transformation, superior entrepreneurial intensity (ei) levels are indispensable (siddiqui & jan 2017). building on the social exchange theory (set), scholars believe that inter-organisational capital, obtainable through social and other capabilities formation has the potential to influence ei amongst firms and entrepreneurs and consequently an enduring competitive advantage (cao, duan & cadden 2019; huo et al. 2019). social networking is progressively becoming more imperative to entrepreneurs because of its ability to help firms recognise valuable opportunities (shu, ren & zheng 2018). social capabilities generally refer to particular skills that enable entrepreneurs to use their interpersonal skills to achieve economic benefits. in today’s commercial environment, it has become essential that entrepreneurs develop and exploit valuable dynamic managerial capabilities (huy & zott 2019), and modern businesses continuously revamp, reorganise and reconstruct their competencies in order to deal with extreme competition and ensure safe market positioning (wang 2016). however, despite the theoretical and empirical significance of social capabilities, there is an odd absence of conclusive research on the critical influence of entrepreneurship research’s social capabilities. although individually the levels may vary, entrepreneurs generally require a high-intensity level to drive them towards business success. therefore, this study seeks to investigate the influence of social capabilities on ei, integrating two significant but disconnected research streams. entrepreneurial intensity has generally been studied at the firm level (morris, kuratko & covin 2010; scheepers, hough & bloom 2007), and there is a great need for this construct to be studied at an individual level in order to empirically assess the altitude and rate of recurrence of entrepreneurship amongst entrepreneurs. although there has been substantial progress so far in clearing the social capital notion, knowledge of how social capital affects ei remains unclear. in fact, there is a limited understanding of the dimensions of social capital that entrepreneurs should focus on. more scholarly, work is required on the role social capital play in fostering ei, particularly in developing economies contexts, as it remains poorly explored. in addition, the surge in social media platforms has revived scholarly interest in social capital as these platforms afford new ways to interact and build relationships. drawing from the set, the article develops an ei model relevant to the developing country context in the general and zimbabwean context. since 2000, zimbabwe’s economy has been underperforming, spurring the cost of living and unemployment rates (mazhambe 2017). this study outlines the dimensions of social capabilities that entrepreneurs should develop to foster their ei. literature review informal sector and entrepreneurship in zimbabwe in most developing economies, the informal sector is growing remarkably, claiming a significant share of economic activity. likewise, in zimbabwe, the sector accounts for an estimated 60.6% of the total gross domestic product (gdp) and 90% of the national labour force (medina & schneider 2018). although most of the businesses are largely unregistered and some operating in illegal premises, there is significant evidence of entrepreneurship and innovation flourishing in the informal sector of zimbabwe. according to muzurura (2019), zimbabwe’s entrepreneurial ecosystem remains very fertile, owing to the high literacy levels in the country and the high levels of resilience and ability to identify opportunities, incubate new startups and take up calculated risks. the government has responded by embracing informality and making it a policy priority and top of the inclusive growth and sustainability agenda (mujeyi & sadomba 2019). although commendable efforts have been made by the government in this regard, cumbersome bureaucracy, stringent regulations and corruption rentals have slowed down the pace of entrepreneurship growth in zimbabwe. muzurura (2019) states that corruption is amongst the impediments to entrepreneurship in zimbabwe, which tends to have a sanding instead of greasing ‘effect on the wheels of entrepreneurship growth’. social capital social capital, defined as a set of socio-structural resources derived from social relationships that enable individuals, groups or teams, coordinates action to desired outcomes (carrillo álvarez & riera romaní 2017) has increased in understanding social and business relations. according to suseno (2018), the underlying idea behind social capital is that actors’ relationships and ties with others matter, as they help provide resources or benefits to create value and positive outcomes for the organisation. social capital has helped explain firm growth, success and resilience, sparking overwhelming interest amongst practitioners and scholars. in this sense, social interaction, social presence and relationship quality will positively impact an organisation’s wealth by reducing transaction costs and enabling collective actions (andriani & christoforou 2016). building on the work of kreijns and kirschner (2002), social capital can be measured in terms of sociability and social presence of the entrepreneur and their level of online social interaction. sociability according to kreijns et al. (2007), sociability relates to the extent to which an individual or an environment facilitates the emergence of a sound social space characterised by trust, a strong sense of belonging and good working relationships. henriksson (2019) expands on the above definition by stating that sociability relates to the informal interaction between individuals without the influence of any subject matter external to the current situation. it is the kind of interaction that foregoes the creation of a group to maintain the situation open to all forms of interaction. in this context, sociability can be said to relate primarily to fitting in and adapting oneself to the situation and foregoing one’s personal motivations for being present (henriksson 2019). evidently, the type and superiority of connections between stakeholders will influence the business’s nature and quality performance outcomes (mcleod & macdonell 2011). sociability is thus a critical element in enhancing relationship building and collaboration amongst entrepreneurs. in the current world of the covid-19 pandemic, sociability has been identified as a critical factor in shaping disease susceptibility and how fast actors respond to its spread (borgonovi & andrieu 2020). the development of new technologies has presented entrepreneurs and firms with a greater opportunity to create emotional connections with stakeholders and safeguard consumer loyalty (olavarría-jaraba et al. 2018). social presence social presence has been described as the feeling of being socially present even though one is not physically in a particular space (kim, song & luo 2016). the operationalisations of social presence have been expanded to include social interaction, immediacy, intimacy, emotion and connectedness. scholars like short, williams and christie (1976:65) have conceptualised social presence as the ‘degree of salience of the other person in the interaction and the consequent salience of the interpersonal relationships’. thus, the degree of social presence relates to the subjective experience of presence by the natural person, both in terms of thoughts and emotions (lowenthal & snelson 2017). the capacity to identify social interactions is embedded in humans and is manifested in the primary stages of development, affecting both cognition and behaviour (choi & luo 2015; hamlin et al. 2011; tatone, geraci & csibra 2015). there is a growing consensus that social interactions play a vital role in influencing human behaviour (crawford & harris 2018). the informal connection amongst individuals plays a significant role in promoting engagement and social presence. it is believed that significant social interactions transversely across a cognitive space are made possible by the existence of trust (hoffmann & söllner 2014; ojansivu & alajoutsijärvi 2015; park & lee 2014), which enables the parties to make a clear understanding of each other’s perceptions (grabher & ibert 2014; mueller 2015). furthermore, mcleod and macdonell (2011) argue that the prerequisite to understanding the explanatory organisational and individual parameters like social interactions management may not be overemphasised. online social interactions in recent years, online social media interaction, through social networking sites (snss), has evolved to become an integral part of people’s daily lives worldwide, altering the way people communicate and socially interact (moretta & buodo 2018). the general increase and expansion in information and communication technologies have significantly improved the way individuals and businesses interact, team up and network (de choudhury et al. 2010). these snss facilitate the culmination and continuance of social interactions online, and they have become entrenched ways in which people communicate today (khalis & mikami 2018). firms have also started using social media platforms like facebook and twitter to smoothen the advancement towards social interaction amongst customers and employees beyond the context of corporate emails and memos (burrus 2010). social interaction refers to the process of behaving and conversing with one another, predominantly in an informal way (choi & kim 2004). firms that can organise resources such as information and social influence potentially benefit these resources depending on the firm’s ability to mobilise these resources in its favour (herrero 2015). relationship quality relationship quality relates to the strength of a relationship between parties, including the satisfaction, trust, assurance and social benefit between the parties involved (japutra, molinillo & wang 2018). relationship quality has been theorised as a higher-order construct consisting of several distinct dimensions, including trust and satisfaction, which are considered an ‘emotional state that occurs in response to an evaluation of these interaction experiences’ (huntley 2006; liu, guo & lee 2011; su, swanson, & chen 2016). relationship quality is considered a factor in developing loyal consumers, employees and suppliers (walsh et al. 2010; lo et al. 2018) and tourists’ environment-related conduct (he et al. 2018). empirical studies show that relationship quality is valuable in predicting customer behaviour (hyun 2010; jin et al. 2013) and is central to organisational decision-making (morgan & hunt 1994). other scholars have indicated that relational quality is developed by enhancing stakeholder experience (hyun 2010). whilst the central view is that business relationships are determined by legislative limits and measures such as partnerships and alliances, hands-on management of relationships is of tactical and strategic importance (jelodar, yiu & wilkinson 2016). in addition, as stated by feeney and fitzgerald (2018), lack of emotional attachment, insecurity and connected conflict behaviours wear down relationship quality. therefore, at the core of relationship quality is recognising and fulfilling the needs of parties in a relationship, and relationship quality theory suggests that satisfied stakeholders reward with continuing value over time (he et al. 2018). entrepreneurial intensity the notion of ‘entrepreneurial intensity’ (morris, kuratko & covin 2010) was developed to evaluate the overall altitude of entrepreneurship amongst firms and individuals, and it captures the degree and frequency of entrepreneurship. it has been defined by morris and sexton (1996) as the amalgamation of the frequency of entrepreneurial activities and the degree of entrepreneurship, measured in terms of innovation, risk taking and proactivity. there are three dimensions of entrepreneurship in ei: innovativeness, risk taking and proactiveness (covin & slevin 1989; miles & arnold 1991). the innovativeness dimension entails the tactical pursuit of creative and novel solutions to problems and needs within a particular context (prakash, jain & chauhan 2015). the risk-taking subconstruct entails the entrepreneur’s readiness to commit a considerable amount of resources to the opportunities that arise although such opportunities have a reasonable chance of failure (morris 2015). the risks taken by the entrepreneur are, however, calculated and manageable. the proactiveness dimension relates to the considerable determination, flexibility and capacity to look into the future (prakash et al. 2015). frequency in ei is understood as the number of entrepreneurial events that an entrepreneur undertakes. the term ei, therefore, refers to the variable nature of entrepreneurship within an individual. the ei notion is derived from the postulation that entrepreneurial conduct varies in its innovativeness, proactiveness and risk-taking characteristics (prakash et al. 2015). market irregularities provide the potential for entrepreneurs to create monetary returns by introducing new goods and services, markets, processes and raw materials previously unavailable (kirzner 1979; shane 2003). according to shu et al. (2018), opportunity recognition is generally modeled as the outcome of a wide-ranging search that is targeted in a particular direction where an opportunity is to be discovered, and by occupying a central position, an entrepreneur is more likely to make sense of ambiguous situations and validate the information from different sources. conceptual model and hypothesis development grounding theory this study’s theoretical underpinnings draw inspiration from the set, an influential theoretical paradigm that promotes the idea of two-sided relationships and reciprocal resources exchanging behaviours (miles 2012). the set has been understood as ‘a general sociological theory concerned with understanding the exchange of resources between individuals and groups in an interaction situation’ (ap 1992:668). according to the set, an entrepreneur’s ability to establish high-quality business and social relationships are critical. it ensures that they benefit when the other party reciprocates the relationship by providing favours, helping the entrepreneur in market sensing and developing a cognitive structure for selecting and developing opportunities (shu, ren & zheng 2018). within set, parties are engaged in an exchange relationship because of the anticipated benefits expected where economic (product, service and knowledge) and social (friendship and reputation) resources are likely to be exchanged amongst different actors (miles 2012). conceptual model based on the set, this study suggests that social capabilities derived from business sociability, the entrepreneur’s sociability, social presence and online social interactions will influence the firm’s relationship quality whilst influencing ei. the underlying proposition is that to increase the entrepreneurs’ ei, they must improve their social capabilities. the direct and indirect relationships between social capabilities and ei are represented in figure 1. figure 1: conceptual model. there is proof in the existing literature that there is a relationship between social and psychological dimensions and organisational decision-support systems. these dimensions aid in the decision-making processes (liberatore & quijano-sanchez 2017; quijano-sanchez, díaz-agudo & recio-garcía 2014), hence the above pictorial representation. hypothesis development the improvement in social capabilities achieved by the sustainable growth of interactions and relationship management is believed to enable the identification, organisation and resolution of socio-economic social challenges (lee 2018). the recent development of smartphone technology has enabled instant interactions with friends and business partners, thereby potentially allowing improved benefits of social interactions (dwyer, kushlev & dunn, 2018). it has been empirically proven that social interactions and high-quality relationships are significant in many facets. o’sullivan and walker (2018) and gonzalez et al. (2018) came to a similar conclusion that employment opportunities in developed economies are significantly found through informal contacts with colleagues, family or job service providers. empirical research has proved that strong social relationships are valuable for individuals in providing social support (zellweger et al. 2018) and comfort (dunn 2018; joly & connolly 2019), connections (whelan, hingston & thompson 2019), in supporting a positive mind-set and regularity in behaviour (farrow & yuan 2011). in essence, the development network and social relationships are key factors influencing firms’ and entrepreneurs’ efficient performance (prashantham et al. 2019; smith, smith & shaw 2017). based on the arguments and empirical evidence, this study predicts that entrepreneurs who nurture their social capabilities are associated with high ei levels. hence: h1 there is a positive and significant relationship between sociability and relationship quality. h2 there is a positive and significant relationship between social presence and relationship quality. h3 there is a positive and significant relationship between online social interactions and relationship quality. h4 there is a positive and significant relationship between sociability and ei. h5 there is a positive and significant relationship between online social interactions and ei. h6 there is a positive and significant relationship between relationship quality and ei. methodology research approach and design this study on the relationship between social capabilities and ei adopted a positivistic paradigm and a quantitative approach. the positivist paradigm choice was influenced by the need to objectively and hence quantitatively analyse data to confirm the proposed relationships. according to burns and grove (1993), a quantitative approach is a formalised, objective process of describing and testing relationships amongst variables of interest. in terms of the research design, this study adopted a cross-sectional survey design to confirm the relationship’s direction and magnitude without experimental manipulation. development of measurement instrument based on the conceptual model, a survey questionnaire was designed to measure the proposed constructs that contribute to ei. to ensure both validity and reliability of the measurement instrument, the items used to operationalise each construct were adapted from the previous literature. the questionnaire’s measurement items were subjected to intensive review by three research experts to ensure reasonable consistencies, simplicity and contextual significance before distribution. based on the reviewers’ comments, the items were slightly modified. furthermore, a pilot test was conducted involving 13 smes owners and managers, and also, based on their observations and suggestions, the items were modified accordingly. the questionnaire had four sections: the first section (section a) looked at the respondent’s biographic data, section b solicited information on the social interaction construct and its three subconstructs, namely sociability, social presence and online social interaction. sections c and d looked at relationship quality and ei, respectively. all construct items were assessed using a five-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). sampling and data collection the population of interest in this study was smes, and to make the group manageable and feasible, the sampling frame was confined to those smes’ owners and managers who are part of an online social group like whatsapp or facebook group. theoretically, the population to be studied should comprise all smes in zimbabwe but access to information, cost and time constraints, and privacy concerns make it difficult to include all smes. therefore, a non-probabilistic sampling procedure (convenience sampling) was used to collect the data. an online questionnaire constructed using google docs was posted on masvingo-centred facebook and whatsapp groups from 15 october 2018 to 19 december 2018. to eliminate repeated responses, responses with duplicate ip addresses were deleted, and this was done with the help of information systems experts and following the recommendations of zhao et al. (2016). of the 523 questionnaires retrieved in this web-based survey, 312 questionnaires were valid, giving an estimated response rate of 59.66%. the demographic characteristics of the participants are presented in table 1. table 1: characteristics of the sample. the study results indicate that most of the respondents were aged between 26 and 50 years (40%), followed by those below 25 with 33%. the general thrust towards entrepreneurship in zimbabwe could explain why there is a sizable number of entrepreneurs below 50. in addition, most of the respondents are fairly educated. seventy per cent of the respondents have an undergraduate degree although a small number of them have moved on to acquire a postgraduate qualification (10%). the businesses that these respondents represent have generally low levels of turnover. most of the firms are below $9000 in annual turnover, with only a small number (29%) scoring above $9000. this could be a result of the fact that smes are generally undercapitalised. data analysis in this study, data analysis was conducted using the co-variance based structural equation modelling technique (sem). structural equation modelling is a statistical and multivariate technique that uses pictorial representations to hypothesise complex relationships between independent constructs and the dependent variables. it allows the empirical assessment of hypothesis with or without latent variable structures, using statistical measures such as coefficient of determination r2 (mostafa & roorda 2019). this technique is growing in recognition, and several studies have adopted this technique across different disciplines demonstrate (hair, babin & krey 2017; ringle, sarstedt & straub 2012). the self-developed questionnaire was validated through confirmatory factor analysis (cfa), whilst the interrelationships amongst all variables were determined by using path analysis. ethical considerations this article followed all ethical standards for a research without direct contact with human or animal subjects. results confirmatory factor analysis a cfa was conducted using amos 25.0 to validate the measurement items for both reliability and validity. reliability was examined using cronbach’s alpha (α), composite reliability (cr) and average variance extracted (ave) for each construct. all constructs had cronbach α values greater than 0.7, which is regarded as the minimum value for confirming reliability in social studies (taber 2018). the results presented in table 2 indicate that cronbach α ranged between 0.741 and 0.927, indicating the acceptable reliability of constructs. a cfa was applied to assess the constructs’ construct validity with amos 25.0. according to campbell and fiske (1959), there are two key construct validity dimensions: convergent and discriminant validity. in assessing convergent validity, three criteria recommended by fornell and larcker (1981) were applied, namely all factor loadings should exceed 0.7, cr should exceed 0.7 and the ave for each construct should exceed 0.5. all three conditions for convergent validity were met, as presented in table 2. table 2: confirmatory factor analysis results. according to gefen and straub (2005:92), ‘discriminant validity is shown when each measurement item correlates weakly with all other constructs except for the one to which it is theoretically associated’. discriminant validity was assessed following the recommendations of fornell and larcker (1981). remarkably, the fornell–larcker criterion is regarded as a benchmark approach in assessing discriminant validity in covariance-based sem (shah & goldstein 2006; shook et al. 2004). in this study, as indicated in table 3, the square root of the aves exceeded all other cross-correlations between the constructs in the model, indicating acceptable discriminant validity. table 3: the correlation coefficient and average variance extracted. the goodness of fit indicates how well the model fits the data acceptably, and in this study, this was evaluated using the recommendations of hu and bentler (1999). the χ2/df was lower than 2 (1.951), whilst the root mean residual (rmr) and the root mean square error of approximation (rmsea) were both below 0.08 (0.056 and 0.059, respectively). acceptable model fit is indicated by an rmsea value of 0.06 or less (hu & bentler 1999). the comparative fit index (cfi) for the model was 0.964, and the acceptable model fit is indicated by a cfi value of 0.90 or greater (hu & bentler 1999). overall the model fitted well with the data, allowing for path analysis and hypothesis testing. structural model assessment and path analysis a structural model path analysis was conducted to evaluate the hypothesised relationships amongst the constructs of interest. in line with the criteria suggested by hu and bentler (1999), the findings suggest good model fit (χ2/df = 1.950, rmr = 0.072, rmsea = 0.066, gfi = 0.925, agfi = 0.889, nfi = 0.945, rfi = 0.936, ifi = 0.961, tli = 0.955, cfi = 0.964). according to the results stated in table 4, sociability has a positive and significant relationship with relationship quality and so is social presence with relationship quality (β = 0.586 and β = 0.624 respectively) at p < 0.001 level of significance. this implies that both h1 and h2 are fully supported. the other hypothesis h3 proposed is a positive and significant relationship between online social interactions and relationship quality. the results indicate that the β coefficient for the path was 0.798, p < 0.001, which others support for h3. sociability and online social interactions both had results supporting their respective hypotheses (β = 0.456, p > 0.001 and β = 0.542, p < 0.001), implying that both were found to be positively influencing ei and upholding h4 and h5. like all the other hypotheses, h6 was supported at β = 0.340, p > 0.001, implying a positive and significant relationship between relationship quality and ei. table 4: outcomes of path analysis and hypothesis tests. discussion of the results based on the set and previous literature, the present research established and evaluated an integrated model on the influence of social capabilities, measured in terms of social interactions (sociability, social presence, online social interactions) and relational quality on ei. the results derived from sem provide evidence that social capital and relational quality are empirically significant in enhancing ei. the social interaction dimensions affect relationship quality, positively influencing ei, measuring innovativeness, risk taking and proactiveness. these findings have several implications for sme owners and managers and entrepreneurs, who, in general, seek to understand how they might influence their ei. in addition to the above, it is evident from the results that whilst offline social capital, as previously theorised in the literature, continues to be significant, the results of this study suggest that the use of online platforms has also grown in significance to affect the benefits derived from relationships. these results are in line with he and li (2020) and hutchins et al. (2021) on the significance of online social interaction in the current social and business environment. practical implications the findings from this study have practical implications for entrepreneurs. firstly, whilst entrepreneurs may find significance in infrastructure and capital investment, it has emerged that it is equally important to invest in technology and mechanisms that allow for improved social interactions and relationship quality. it is broadly accepted that entrepreneurship is future oriented, and it ‘works by making new connections’ (anderson, drakopoulou dodd & jack 2012:962) and because the future requires firms to be innovative, innovation demands that firms come up with a diverse system of network relationships (partanen, chetty & rajala 2014) that evolve around emergent and strategic interactions. secondly, entrepreneurs and their senior management must support employees and technical staff initiatives to interact with stakeholders outside the confines of the workplace and official setups. this will improve the sociability and social presence, thereby promoting both relationship quality and ei. policymakers seeking to enhance the growth in the number and quality of entrepreneurs can also use this study’s results. it is also imperative that government and policymakers pay particular attention to enhancing access to information and communication technology (ict) systems by smes. this could be achieved by reducing duties and levies on ict gadgets imported for business purposes and subsidising broadband internet services providers’ business packages. this will improve the accessibility of online services and social media and enhance social interactions and relationship quality. thirdly, by accepting the significance of social capital in enhancing the ei dimensions, entrepreneurs can enhance their access to critical resources that are necessary for growth and development. sociability, offline and online interactions have proved viable alternatives for entrepreneurs seeking to increase their social capital. kabonga, zvokuomba and nyagadza (2021) have noted the daunting challenge that entrepreneurs in zimbabwe face in the resources necessary to ensure business growth. to assist in this process, these entrepreneurs need to be encouraged to create offline and online interaction platforms to help provide interconnections for sharing information and resources. initiatives such as the zimbabwe informal sector association formed around 1996 in harare (mupedziswa & gumbo 2001) to coordinate the informal sector should be revived. these will enhance networking and coordination, thus building a culture that allows for entrepreneurs’ social capital growth. conclusion despite the aforementioned research limitations, this study provides relatively strong evidence to support the notion that social capital and relationship quality predict ei. the findings suggest that to positively influence ei, entrepreneurs and smes should focus on social capabilities and relationship quality. particularly, entrepreneurs should focus on online social interactions, which give the greatest direct and indirect effect on ei. arguably, entrepreneurs who seek to improve on the frequency of entrepreneurial activities and the degree of entrepreneurship, measured in terms of innovation, risk taking and proactivity, should align themselves towards social capital and relationship quality. this study provides a valuable framework to understand how social connectedness and relationships can alter zimbabwean entrepreneurs’ circumstances to experience business growth and development. limitations despite the practical significance, these results are limited in several important ways. firstly, although the cross-sectional data used during sem in this study establishes a causal order regarding the relationship between social capital and ei, there was no robust control for all the potential confounding variables. thus, there is a need for research that is more inclined towards the experimental design to reinforce this study’s results. in a nutshell, although this study posits social capital and relationship quality as antecedents of ei, the causal relations linking these constructs need to be distinctly demonstrated by relevant research methodologies. secondly, although the measurement instruments for all the constructs in this study were adopted from previously validated items and based on prior literature, this may not give adequate results because of failure to reflect the specific affordances, diversities and dynamism in the current business environment. thirdly, this study focused on the city of masvingo, which has a relatively small population compared to the whole zimbabwean population. it is possible that different target groups could exhibit different patterns in relation to social capital, relationship quality and ei. moreover, a non-probability sampling technique was used in this study, limiting the generalisability of the results to the entire zimbabwean population. in light of the above limitations, this study provides recommendations for further research. areas for future research by breaking the social capabilities construct into dimensions and subcontracts, this study provides a platform for future studies that employ techniques to determine the cause–effect relationships amongst constructs. whilst the current research supports the significance of social capital in enhancing ei, entrepreneurs’ initiative and commitment cannot be ignored as critical drivers of performance. for the benefit of entrepreneurship growth in zimbabwe, future research can fuse these aspects in the model to explain the determinants of ei. further research can also evaluate how cultures can influence the construction of social capital and relationship quality. future research should consider extending the current study by examining the extent to which entrepreneurial orientation will mediate the relationship between social capital and ei using a geographically broader population. one of the limitations of the current study is that it was carried out in a single country context. as such, there is a need for cross-country research that will boost the theoretical model explaining the predictor and the outcome variables. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions w.m. and s.m. conceived of the presented idea. s.m. developed the theory and performed the computations. w.m. and d.p. verified the analytical methods. w.m. and d.p. did the final write up of the article. all authors discussed the results and contributed to the final manuscript. funding information the authors received no financial support for the research, authorship and/or publication of this article. data availability the data that support the findings of this study are available from the corresponding author, d.p., upon the reasonable request. the data are not publicly available because of restrictions, for example, their containing information that could compromise the privacy of research participants. disclaimer the views expressed in the submitted article are his or her own and not an official position of the institution or funder. references adusei, m., 2016, ‘does entrepreneurship promote economic growth in africa?’, african development review 28(2), 201–214. https://doi.org/10.1111/1467-8268.12190 anderson, a.r., drakopoulou dodd, s. & jack, s.l., 2012, ‘entrepreneurship as connecting: some implications for theorising and practice’, management decision 50(5), 958–971. https://doi.org/10.1108/00251741211227708 andriani, l. & christoforou, a., 2016, ‘social capital: a roadmap of theoretical and empirical contributions and limitations’, journal of economic issues 50(1), 4–22. https://doi.org/10.1080/00213624.2016.1147296 ap, j., 1992, ‘residents’ perceptions on tourism impacts’, annals of tourism research 19(4), 665–690. https://doi.org/10.1016/0160-7383(92)90060-3 auzoult, l., lheureux, f. & abdellaoui, s., 2016, ‘are entrepreneurial intentions self-regulated? self-consciousness, core self-evaluations and entrepreneurial intentions of higher education students’, the spanish journal of psychology 19, e38. https://doi.org/10.1017/sjp.2016.42 bentler, p.m., 1999, ‘rites, wrongs, and gold in model testing’, structural equation modeling 7(1), 82–91. boada-grau, j., sánchez-garcía, j.c., viardot, e., boada-cuerva, m. & vigil-colet, a., 2016, ‘adaptation of an entrepreneurial motivation scale into spanish’, anales de psicología 32(2), 571–577. https://doi.org/10.6018/analesps.32.2.217341 borgonovi, f. & andrieu, e., 2020, ‘bowling together by bowling alone: social capital and covid-19’, social science & medicine 265, 73–116. burns, n. & grove, s.k., 1993, the practice of nursing research: conduct, critique and utilization, 2nd edn., w.b. saunders, philadelphia. burrus, d., 2010, ‘social networks in the workplace: the risk and opportunity of business 2.0’, strategy & leadership 38(4) 50–53. campbell, d.t. & fiske, d.w., 1956, ‘convergent and discriminant validation by the multitrait-multimethod matrix’, psychological bulletin 56(2), 81–105. https://doi.org/10.1037/h0046016 cao, g., duan, y. & cadden, t., 2019, ‘the link between information processing capability and competitive advantage mediated through decision-making effectiveness’, international journal of information management 44, 121–131. https://doi.org/10.1016/j.ijinfomgt.2018.10.003 carrillo álvarez, e. & riera romaní, j., 2017, ‘measuring social capital: further insights’, gaceta sanitaria 31, 57–61. https://doi.org/10.1016/j.gaceta.2016.09.002 choi, d. & kim, j., 2004, ‘why people continue to play online games: in search of critical design factors to increase customer loyalty to online contents’, cyberpsychology & behavior 7(1), 11–24. choi, y.j. & luo, y., 2015, ‘13-month-olds’ understanding of social interactions’, psychological science 26(3), 274–283. covin, j.g. & slevin, d.p., 1989, ‘strategic management of small firms in hostile and benign environments’, strategic management journal 10(1), 75–87. crawford, i. & harris, d., 2018, ‘social interactions and the influence of “extremists”’, journal of economic behavior & organization 153, 238–266. de choudhury, m., sundaram, h., john, a. & seligmann, d.d., 2010, ‘analyzing the dynamics of communication in online social networks’, in handbook of social network technologies and applications, pp. 59–94, springer, boston, ma. dimova, r. & pela, k., 2018, ‘entrepreneurship: structural transformation, skills and constraints’, small business economics 51(1), 203–220. https://doi.org/10.1007/s11187-017-9916-0 dunn, k., 2018, ‘communicating corporate social responsibility in a social world: the effects of company-generated and user-generated social media content on csr attributions and scepticism’, journal of marketing management 34(17–18), 1503–1529. dwyer, r.j., kushlev, k. & dunn, e.w., 2018, ‘smartphone use undermines enjoyment of face-to-face social interactions’, journal of experimental social psychology 78, 233–239. https://doi.org/10.1016/j.jesp.2017.10.007 dzisi, s., odoom, f.d. & gligah, b., 2018, ‘entrepreneurship training and skills development in africa: evidence from koforidua technical university, ghana’, international journal of economics and business research 15(4), 509–523. https://doi.org/10.1504/ijebr.2018.092154 eijdenberg, e.l., thompson, n.a., verduijn, k. & essers, c., 2018, ‘entrepreneurial activities in a developing country: an institutional theory perspective’, international journal of entrepreneurial behavior & research 25(3), 414–432. https://doi.org/10.1108/ijebr-12-2016-0418 farrow, h. & yuan, y.c., 2011, ‘building stronger ties with alumni through facebook to increase volunteerism and charitable giving’, journal of computer-mediated communication 16(3), 445–464. https://doi.org/10.1111/j.1083-6101.2011.01550.x feeney, j. & fitzgerald, j., 2018, ‘attachment, conflict and relationship quality: laboratory-based and clinical insights’, current opinion in psychology 25, 127–131. https://doi.org/10.1016/j.copsyc.2018.04.002 fischer, b.b., queiroz, s. & vonortas, n.s., 2018, ‘on the location of knowledge-intensive entrepreneurship in developing countries: lessons from são paulo, brazil’, entrepreneurship & regional development 30(5–6), 612–638. https://doi.org/10.1080/08985626.2018.1438523 fornell, c. & larcker, d.f., 1981, ‘structural equation models with unobservable variables and measurement error: algebra and statistics’, journal of marketing research 18(3), 382–388. https://doi.org/10.1177/002224378101800313 gefen, d. & straub, d., 2005, ‘a practical guide to factorial validity using pls-graph: tutorial and annotated example’, communications of the association for information systems 16(1), 5. https://doi.org/10.17705/1cais.01605 gonzalez, j.a., ragins, b.r., ehrhardt, k. & singh, r., 2018, ‘friends and family: the role of relationships in community and workplace attachment’, journal of business and psychology 33(1), 89–104. https://doi.org/10.1007/s10869-016-9476-3 grabher, g. & ibert, o., 2014, ‘distance as asset? knowledge collaboration in hybrid virtual communities’, journal of economic geography 14(1), 97–123. hair, jr., j.f., babin, b.j. & krey, n., 2017, ‘covariance-based structural equation modeling in the journal of advertising: review and recommendations’, journal of advertising 46(1), 163–177. https://doi.org/10.1080/00913367.2017.1281777 hamlin, j.k., wynn, k., bloom, p. & mahajan, n., 2011, ‘how infants and toddlers react to antisocial others’, proceedings of the national academy of sciences 108(50), 19931–19936. he, j. & li, q., 2020, ‘can online social interaction improve the digital finance participation of rural households?’, china agricultural economic review 12(2), 295–313. https://doi.org/10.1108/caer-11-2019-0213 he, x., hu, d., swanson, s.r., su, l. & chen, x., 2018, ‘destination perceptions, relationship quality, and tourist environmentally responsible behavior’, tourism management perspectives 28, 93–104. henriksson, a., 2019, ‘singles’ activities: sociability and the ambiguities of singledom’, families, relationships and societies 8(1), 37–52. https://doi.org/10.1332/204674317x15015138368221 herrero, c.e., 2015, ‘the credibility of social media in journalism’, transinformação 27(2), 165–171. hoffmann, h. & söllner, m., 2014, ‘incorporating behavioral trust theory into system development for ubiquitous applications’, personal and ubiquitous computing 18(1), 117–128. https://doi.org/10.1007/s00779-012-0631-1 hu, l.t. & bentler, p.m., 1999, ‘cutoff criteria for fit indexes in covariance structure analysis: conventional criteria versus new alternatives’, structural equation modeling: a multidisciplinary journal 6(1), 1–55. huntley, j.k., 2006, ‘conceptualization and measurement of relationship quality: linking relationship quality to actual sales and recommendation intention’, industrial marketing management 35(6), 703–714. huo, b., tian, m., tian, y. & zhang, q., 2019, ‘the dilemma of inter-organizational relationships: dependence, use of power and their impacts on opportunism’, international journal of operations & production management 39(1), 2–23. https://doi.org/10.1108/ijopm-07-2017-0383 hutchins, n., allen, a., curran, m. & kannis-dymand, l., 2021, ‘social anxiety and online social interaction’, australian psychologist 56(2), 142–153. https://doi.org/10.1080/00050067.2021.1890977 huy, q. & zott, c., 2019, ‘exploring the affective underpinnings of dynamic managerial capabilities: how managers’ emotion regulation behaviors mobilize resources for their firms’, strategic management journal 40(1), 28–54. https://doi.org/10.1002/smj.2971 hyun, s.s., 2010, ‘predictors of relationship quality and loyalty in the chain restaurant industry’, cornell hospitality quarterly 51(2), 251–267. japutra, a., molinillo, s. & wang, s., 2018, ‘aesthetic or self-expressiveness? linking brand logo benefits, brand stereotypes and relationship quality’, journal of retailing and consumer services 44, 191–200. jelodar, m.b., yiu, t.w. & wilkinson, s., 2016, ‘a conceptualisation of relationship quality in construction procurement’, international journal of project management 34(6), 997–1011. jin, l., chen, y., wang, t., hui, p. & vasilakos, a.v., 2013, ‘understanding user behavior in online social networks: a survey’, ieee communications magazine 51(9), 144–150. joly, l.e. & connolly, j., 2019, ‘it can be beautiful or destructive: street-involved youth’s perceptions of their romantic relationships and resilience’, journal of adolescence 70, 43–52. https://doi.org/10.1016/j.adolescence.2018.11.006 kabonga, i., zvokuomba, k. & nyagadza, b., 2021, ‘the challenges faced by young entrepreneurs in informal trading in bindura, zimbabwe’, journal of asian and african studies 56(8), 1–15. https://doi.org/10.1177/0021909621990850 kamakula, m.k.r.r. & patro, c.s., 2019, ‘entrepreneurship as the vantage point’, in d.b.a. mehdi khosrow-pour (ed.), advanced methodologies and technologies in digital marketing and entrepreneurship, pp. 445–456, igi global, pennsylvania. khalis, a. & mikami, a.y., 2018, ‘talking face-to-facebook: associations between online social interactions and offline relationships’, computers in human behavior 89, 88–97. kim, j., song, h. & luo, w., 2016, ‘broadening the understanding of social presence: implications and contributions to the mediated communication and online education’, computers in human behavior 65, 672–679. https://doi.org/10.1016/j.chb.2016.07.009 kirzner, i.m., 1979, perception, opportunity and profit, university of chicago press, chicago. kreijns, k. & kirschner, p.a., 2002, ‘group awareness widgets for enhancing social interaction in computer-supported collaborative learning environments: design and implementation’, in 32nd annual frontiers in education, vol. 1, pp. t3e–t3e, ieee, champaign, illinois. kreijns, k., kirschner, p.a., jochems, w. & van buuren, h., 2007, ‘measuring perceived sociability of computer-supported collaborative learning environments’, computers & education 49(2), 176–192. https://doi.org/10.1016/j.chb.2016.07.009 lee, i., 2018, ‘social media analytics for enterprises: typology, methods, and processes’, business horizons 61(2), 199–210. liberatore, f. & quijano-sanchez, l., 2017, ‘what do we really need to compute the tie strength? an empirical study applied to social networks’, computer communications 110, 59–74. https://doi.org/10.1016/j.comcom.2017.06.001 liu, c.t., guo, y.m. & lee, c.h., 2011, ‘the effects of relationship quality and switching barriers on customer loyalty’, international journal of information management 31(1), 71–79. lo, s.m., zhang, s., wang, z. & zhao, x., 2018, ‘the impact of relationship quality and supplier development on green supply chain integration: a mediation and moderation analysis’, journal of cleaner production 202, 524–535. lowenthal, p.r. & snelson, c., 2017, ‘in search of a better understanding of social presence: an investigation into how researchers define social presence’, distance education 38(2), 141–159. https://doi.org/10.1080/01587919.2017.1324727 mazhambe, a., 2017, ‘assessment of the contribution of street vending to the zimbabwe economy. a case of street vendors in harare cbd’, iosr journal of business and management (iosr–jbm) 19(9), 91–100. mcleod, l. & macdonell, s.g., 2011, ‘factors that affect software systems development project outcomes: a survey of research’, acm computing surveys (csur) 43(4), 24. https://doi.org/10.1145/1978802.1978803 medina, l. & schneider, f., 2018, shadow economies around the world: what did we learn over the last 20 years? imf working paper no 18/17, international monetary fund, new york. miles, j.a., 2012, management and organization theory: a jossey-bass reader, vol. 9, john wiley & sons, hoboken, nj. miles, m.p. & arnold, d.r., 1991, ‘the relationship between marketing orientation and entrepreneurial orientation’, entrepreneurship theory and practice 15(4), 49–66. mitchelmore, s. & rowley, j., 2013, ‘entrepreneurial competencies of women entrepreneurs pursuing business growth’, journal of small business and enterprise development 20(1), 125–142. https://doi.org/10.1108/14626001311298448 morgan, r.m. & hunt, s.d., 1994, ‘the commitment-trust theory of relationship marketing’, journal of marketing 58(3), 20–38. moretta, t. & buodo, g., 2018, ‘modeling problematic facebook use: highlighting the role of mood regulation and preference for online social interaction’, addictive behaviors 87, 214–221. https://doi.org/10.1016/j.addbeh.2018.07.014 morris, m.h., 2015, ‘dimensions of perceived risk in organizational buying decisions’, in proceedings of the 1984 academy of marketing science (ams) annual conference, pp. 42–46, springer, cham. morris, m.h., kuratko, d.f. & covin, j.g., 2010, corporate entrepreneurship & innovation. cengage learning, cengage learning emea, hampshire. morris, m.h. & sexton, d.l., 1996, ‘the concept of entrepreneurial intensity: implications for company performance’, journal of business research 36(1), 5–13. https://doi.org/10.1016/0148-2963(95)00158-1 mostafa, t.s. & roorda, m.j., 2019, ‘a structural equation model of commercial vehicle ownership’, in h. briassoulis, d. kavroudakis & n. soulakellis (eds.), the practice of spatial analysis, pp. 203–218, springer, cham. mueller, m.l., 2015, ‘hyper-transparency and social control: social media as magnets for regulation’, telecommunications policy 2015, 39(9), 804–810. https://doi.org/10.1016/j.telpol.2015.05.001 mujeyi, k. & sadomba, w.z., 2019, ‘unemployment and informal entrepreneurship in zimbabwe: implications for regional integration’, in s.o. oloruntoba & m. muchie (eds.), innovation, regional integration, and development in africa, pp. 251–266, springer, cham. mupedziswa, r. & gumbo, p., 2001, women informal traders in harare and the struggle for survival in an environment of economic reforms, nordic africa institute, uppsala. muzurura, j., 2019, ‘does corruption really affect the growth of entrepreneurship in zimbabwe?’, international journal of emerging trends in social sciences 5(1), 33–46. https://doi.org/10.20448/2001.51.33.46 napitupulu, d., adiyarta, k., syafrullah, m. & sutabri, t., 2018, ‘socio-technology analysis of smes readiness in quality management system implementation’, in iop conference series: materials science and engineering, vol. 420(1), p. 012117, iop publishing, bristol. niebel, t., 2018, ‘ict and economic growth – comparing developing, emerging and developed countries’, world development 104, 197–211. https://doi.org/10.1016/j.worlddev.2017.11.024 nyoni, t. & bonga, w.g., 2018, ‘what determines economic growth in nigeria?’, drj–journal of business and management 1(1), 37–47. o’sullivan, s. & walker, c., 2018, ‘from the interpersonal to the internet: social service digitisation and the implications for vulnerable individuals and communities’, australian journal of political science 53(4), 490–507. https://doi.org/10.1080/10361146.2018.1519064 ojansivu, i. & alajoutsijärvi, k., 2015, ‘inside service-intensive projects: analyzing inbuilt tensions’, international journal of project management 33(4), 901–916. https://doi.org/10.1016/j.ijproman.2014.11.001 olavarría-jaraba, a., cambra-fierro, j.j., centeno, e. & vázquez-carrasco, r., 2018, ‘relationship quality as an antecedent of customer relationship proneness: a cross-cultural study between spain and mexico’, journal of retailing and consumer services 42, 78–87. https://doi.org/10.1016/j.jretconser.2018.01.011 park, j. & lee, j., 2014, ‘knowledge sharing in information systems development projects: explicating the role of dependence and trust’, international journal of project management 32(1), 153–165. partanen, j., chetty, s.k. & rajala, a., 2014, ‘innovation types and network relationships’, entrepreneurship theory and practice 38(5), 1027–1055. https://doi.org/10.1111/j.1540-6520.2011.00474.x prakash, d., jain, s. & chauhan, k., 2015, ‘supportive government policies, locus of control and student’s entrepreneurial intensity: a study of india’, journal of global entrepreneurship research 5(1), 26. https://doi.org/10.1186/s40497-015-0042-7 prashantham, s., kumar, k., bhagavatula, s. & sarasvathy, s.d., 2019, ‘effectuation, network-building and internationalisation speed’, international small business journal 37(1), 3–21. https://doi.org/10.1177/0266242618796145 quijano-sanchez, l., recio-garcia, j.a., diaz-agudo, b. & jimenez-diaz, g., 2013, ‘social factors in group recommender systems’, acm transactions on intelligent systems and technology (tist) 4(1), 8. https://doi.org/10.1145/2414425.2414433 ringle, c.m., sarstedt, m. & straub, d., 2012, ‘a critical look at the use of pls-sem in mis quarterly’, mis quarterly 36(1), iii–xiv. https://doi.org/10.2307/41410402 scheepers, m.j., hough, j. & bloom, j.z., 2007, ‘entrepreneurial intensity: a comparative analysis of established companies in south africa’, south african journal of economic and management sciences 10(2), 238–255. https://doi.org/10.4102/sajems.v10i2.585 shah, r. & goldstein, s.m., 2006, ‘use of structural equation modeling in operations management research: looking back and forward’, journal of operations management 24(2), 148–169. https://doi.org/10.1016/j.jom.2005.05.001 shane, s.a., 2003, a general theory of entrepreneurship: the individual-opportunity nexus, edward elgar publishing, cheltenham, united kingdom shook, c.l., ketchen, jr., d.j., hult, g.t.m. & kacmar, k.m., 2004, ‘an assessment of the use of structural equation modeling in strategic management research’, strategic management journal 25(4), 397–404. https://doi.org/10.1002/smj.385 short, j., williams, e. & christie, b., 1976, the social psychology of telecommunications, wiley, toronto. siddiqui, s. & jan, s., 2017, ‘strategic entrepreneurship amongst business women of jammu & kashmir: scale development and validation’, global business review 20 (2), 387–404. smith, c., smith, j.b. & shaw, e., 2017, ‘embracing digital networks: entrepreneurs’ social capital online’, journal of business venturing 32(1), 18–34. https://doi.org/10.1016/j.jbusvent.2016.10.003 stephens, h.m., partridge, m.d. & faggian, a., 2013, ‘innovation, entrepreneurship and economic growth in lagging regions’, journal of regional science 53(5), 778–812. https://doi.org/10.1111/jors.12019 su, l., swanson, s.r. & chen, x., 2016, ‘the effects of perceived service quality on repurchase intentions and subjective well-being of chinese tourists: the mediating role of relationship quality’, tourism management 52, 82–95. suseno, y., 2018, ‘disruptive innovation and the creation of social capital in indonesia’s urban communities’, asia pacific business review 24(2), 174–195. https://doi.org/10.1080/13602381.2018.1431251 shu, r., ren, s. & zheng, y., 2018, ‘building networks into discovery: the link between entrepreneur network capability and entrepreneurial opportunity discovery’, journal of business research 85, 197–208. taber, k.s., 2018, ‘the use of cronbach’s alpha when developing and reporting research instruments in science education’, research in science education 48(6), 1273–1296. https://doi.org/10.1007/s11165-016-9602-2 tatone, d., geraci, a. & csibra, g., 2015, ‘giving and taking: representational building blocks of active resource-transfer events in human infants’, cognition 137, 47–62. https://doi.org/10.1016/j.cognition.2014.12.007 walsh, g., hassan, l.m., shiu, e., andrews, j.c. & hastings, g., 2010, ‘segmentation in social marketing: insights from the european union’s multi-country, antismoking campaign’, european journal of marketing 44(7/8), 1140–1164. wang, y., 2016, ‘investigating dynamic capabilities of family businesses in china: a social capital perspective’, journal of small business and enterprise development 23(4), 1057–1080. https://doi.org/10.1108/jsbed-12-2015-0175 whelan, j., hingston, s.t. & thomson, m., 2019, ‘does growing up rich and insecure make objects seem more human? childhood material and social environments interact to predict anthropomorphism’, personality and individual differences 137, 86–96. https://doi.org/10.1016/j.paid.2018.08.015 zafar, a. & mustafa, s., 2017, ‘smes and its role in economic and socio-economic development of pakistan’, international journal of academic research in accounting, finance and management sciences 4(6), 1–16. https://doi.org/10.6007/ijarafms/v7-i4/3484 zellweger, t.m., chrisman, j.j., chua, j.h. & steier, l.p., 2018, ‘social structures, social relationships, and family firms’, entrepreneurship theory and practice 43(2), 207–223. https://doi.org/10.1177/1042258718792290 zhao, x., xu, t., liu, q. & guo, h., 2016, ‘exploring the choice under conflict for social event participation’, in international conference on database systems for advanced applications, pp. 396–411, springer, cham. abstract introduction literature review theoretical framework research methodology the research instrument the sample data collection and analysis results hypotheses discussion of results conclusion acknowledgements references about the author(s) margaret d.m. cullen nelson mandela university business school, faculty of commerce, nelson mandela university, port elizabeth, south africa andre p. calitz computing sciences, faculty of science, nelson mandela university, port elizabeth, south africa mary-ann chetty † nelson mandela university business school, faculty of commerce, nelson mandela university, port elizabeth, south africa citation cullen, m.d.m., calitz, a.p. & chetty, m-a., 2020, ‘factors affecting researcher participation in technology commercialisation: a south african university case study’, southern african journal of entrepreneurship and small business management 12(1), a329. https://doi.org/10.4102/sajesbm.v12i1.329 note: †, 1980–2016. original research factors affecting researcher participation in technology commercialisation: a south african university case study margaret d.m. cullen, andre p. calitz, mary-ann chetty received: 21 mar. 2020; accepted: 28 sep. 2020; published: 14 dec. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: research universities in south africa are well-recognised sources of new knowledge, and their contributions to innovation are manifested through the creation, transfer and commercialisation of new technologies originating from academic research. research collaboration between universities, industry and the community offers various benefits that include funding for students and researchers and third-stream income for universities. additionally, the industry can gain access to new technologies to incorporate in improved products and services. aim: the aim of this study was to identify the factors that encourage academic researchers’ involvement in technology commercialisation. setting: the growth in university technology transfer in south africa can be attributed to the south african intellectual property rights from the publicly financed research and development act (act 51 of 2008). the establishment of technology transfer offices at universities across south africa aims to involve researchers in commercialisation activities, champion the innovation conversation within universities and to progress innovations from concept to application in the society. methods: the study followed a positivistic research philosophy and a deductive approach. researchers (n = 38) in two faculties at the nelson mandela university participated in this exploratory study and completed an online survey. the respondents were selected through purposeful sampling. results: the findings indicated that a combination of incentives is necessary to enable and to encourage researcher involvement in the commercialisation of research. a set of recommendations based on the findings and implementation suggestions was proposed. conclusion: a combination of monetary and non-monetary incentives was required to enable academics’ involvement in commercialisation activities. keywords: technology transfer; commercialisation; university; researcher involvement; incentives. introduction universities have traditionally been places of higher learning and research, where the dissemination of new knowledge was limited to producing new graduates and research publications (rasmussen, moen & gulbrandsen 2006). universities are presently expected to play a distinct role in uplifting social and economic conditions through the direct transfer of innovative knowledge products and artefacts to the private sector (bercovitz & feldman 2006; guerrero & urbano 2019). to address this transformed role from a research university to a more entrepreneurial one and to emphasise the boldness of this progression, etzkowitz (2003a:109) coined the term ‘entrepreneurial university’. a definition of an entrepreneurial university is any university taking on activities to improve regional or national economic performance as well as the university’s financial advantage and that of its faculty (etzkowitz et al. 2000), which differs from the definition proposed by baldini et al. (2014), which is academic entrepreneurship, which encompasses formal and informal mechanisms to commercialise research. the terms are inter-related and the entrepreneurial university concept applies at the institutional level, whereas academic entrepreneurship refers to the activities and roles undertaken by individuals (baldini et al. 2014). academic entrepreneurship effectively reflects the orientation and involvement of researchers in activities that lead to more significant interaction of the university with industry and the commercialisation of research outputs and artefacts. the process by which universities can contribute is known as technology transfer and is directly linked to the extent of involvement of researchers in commercialisation activities (bansi & reddy 2015; o’shea et al. 2005). the commercialisation of research has become a priority for many research organisations and universities, which has resulted in structural transformation to address the growing interest of governments in demanding universities to be more proactive in technology transfer (munari et al. 2016). the ease with which knowledge is transferred depends on the characteristics of knowledge, similarities in knowledge background and knowledge management capabilities (de wit-de vries et al. 2019). however, a lack of understanding remains in the private sector about the role of innovative activity in public sector universities (demircioglu & audretsch 2019). several universities all over the world have started to invest in the creation of internal mechanisms (organisational procedures, incentives and regulations) and structures to support technology transfer in its different forms (giuri et al. 2018). technology transfer is the process by which intellectual property (ip) developed within a research environment is shared with businesses and society for application and use. the transfer of technology and knowledge from research institutions is important for stimulating economic growth in a country by increasing industry competitiveness and establishing new businesses (martinez sanchez & pastor tejedor 1995). the definition of research commercialisation or technology transfer refers to the transfer of knowledge products and artefacts from a university to society for social or commercial benefit. the definition is drawn from the south african intellectual property rights (iprs) from the publicly financed research and development act (act 51 of 2008; bansi & reddy 2015). the involvement of researchers in commercialisation activities is considered entrepreneurial within the higher education and research environment and thus, whilst reference is made to commercialisation activities, the phenomenon of researcher involvement in such activities is considered entrepreneurial (mars & rios-aguilar 2010; trencher et al. 2014). universities play a significant role in providing knowledge-intensive environments to support the exploration, exploitation and commercialisation of innovative and entrepreneurial ideas, especially in emerging economies, such as south africa (guerrero, urbano & herrera 2019). universities that have been successful in the commercialisation of research activities have used financial support from government and industry, provided university management support, established successful university technology transfer offices (ttos), promoted an innovation climate and implemented a reward system to promote innovation and technology transfer (bansi & reddy 2015). university–industry collaboration funding has been directly instrumental in universities’ technological innovation (tseng, huang & chen 2018). this exploratory study aims to determine the factors that influence the commercialisation of research and encourage academic researchers’ involvement in research commercialisation. it is important for university management to understand the factors that encourage researchers to participate in research commercialisation activities, in collaboration with the university’s tto. at the time of the study, limited research had been conducted on the commercialisation of research at south african universities. specific factors investigated include managerial support, the role of the tto and incentives for researchers involved in research commercialisation. the article proceeds as follows: the next section discusses the literature review, to be followed by the research methodology. the results and discussion sections are presented, and finally the conclusions, recommendations and future research are presented. literature review innovation and technology transfer innovation and entrepreneurship are described as key drivers for economic development (mamabolo, kerrin & kele 2017). an innovation is an idea perceived as new. it can be described on four different levels with increasing novelty according to the guidelines provided by the organisation for economic co-operation and development (oecd): innovations that are only: (1) new to the organisation, (2) market and the organisation, (3) country and (4) the world first (oecd/eurostat 2005). universities are facing growing pressure to contribute towards innovation and entrepreneurship, which has commercial value and social impact and contributes to economic development. legislative frameworks can stimulate the development of local practices for the management and exploitation of ip (weckowska et al. 2015). the implementation of the ipr from publicly financed research and development act 51 of 2008 (ip act) granted south african universities the right to register ip. public-funded universities are expected to play a distinct role in uplifting social and economic conditions through the direct transfer of innovative knowledge products to industry and the private sector (bercovitz & feldman 2006). this contrasts with egypt, for example, which is also an emerging economy. they have no broad, national co-ordinating policy that encourages universities and industry to collaborate, particularly on research and to engage in the transfer and commercialisation of technology (kirby & el hadidi 2019). the process by which universities make this contribution is known as technology transfer and is directly linked to the extent of involvement of researchers in commercialisation activity (o’shea et al. 2005). technology transfer at universities effectively reflects the orientation and involvement of researchers in activities that lead to more significant interaction of the university with industry and the commercialisation of research outputs. industry evaluates potential university partnerships based on factors such as the comprehensiveness and knowledge of researchers (johnston & huggins 2018). de wit-de vries et al. (2019) indicate that partner selection should be taken into account as similarity in knowledge background is important for collaboration. this involvement, in turn, positions the university as a critical partner with industry, contributing to economic and social developments and not just a generator of knowledge (de wit-de vries et al. 2019; etzkowitz 2003b). the process of technology transfer is described as a series of events from the discovery or development of an innovation to the use of the innovation or practice of the technology by consumers. to facilitate and enable the process of commercialisation of knowledge, universities worldwide and specifically in south africa have established ttos to manage the legal protection, as well as the formulation of strategies, which lead to the commercialisation of promising technologies. south african ttos, in terms of the ipr act (act 51 of 2008), are responsible for the identification, protection, management and commercialisation of ip. the components that enable technology transfer include technological innovations, scientific knowledge and ip. the involvement of researchers is critical in the process, and the extent of involvement can determine the success of the transfer (colyvas et al. 2002). the primary agent for technology commercialisation in universities is the tto. they have implemented key performance indicators, such as disclosures, patents, licenses, licensing revenue and the number of spinoff companies to measure the innovation-based contributions of research universities (gulbrandsen & rasmussen 2012). academic entrepreneurship academic entrepreneurship includes formal and informal mechanisms to commercialise research and refers to the activities and roles undertaken by individuals (baldini et al. 2014). the concept of academic entrepreneurship has arisen from the process of entrepreneurship as defined by shane (2000) with several widely recognised characteristics as follows: the activity involves bearing risks on the part of the entrepreneur as risk implies uncertain outcomes; it involves an organising effort in that it involves creating a new way of exploiting an opportunity and the activity must have some inherent aspect of novelty or innovation that has not been done before. shane (2000:4) narrowly defines academic entrepreneurship almost exclusively related to university spin-offs as ‘a new company founded to exploit a piece of ip created in an academic institution’. sharma and chrisman’s (1999:18) definition of entrepreneurs ‘as individuals or groups of individuals, acting independently or as part of a corporate system, who create new organisations, or instigate renewal or innovation within an existing organisation’ is appropriate for academic entrepreneurship. there are two main elements of an emergent entrepreneurial university; the first is the development of organisational mechanisms to progress commercialisable research across institutional borders and the second is the integration of academic and non-academic elements in a common framework (klofsten & jones-evans 2000). etzkowitz (1998) first described the entrepreneurial scientist as someone with an entrepreneurial perspective where results are examined for commercial and intellectual potential. income benefits do not always motivate academic entrepreneurs, who often define their success in terms of technology diffusion, technology development, public service and peer motivations, which result in a mismatch between the motivations for participating in university–industry knowledge exchange and the outcomes typically assessed (hayter, rasmussen & rooksby 2018). creativity and innovation are also not explicitly taught in faculties at universities in south africa (pitso 2019). technology transfer office commercialisation activities in studying academic entrepreneurship, wood (2011) describes a process of activities involving researchers and the tto in identifying, protecting and ascertaining the commercial potential (which includes social and financial return) and licensing of research artefacts. whilst wood’s process model of academic entrepreneurship supports the technology transfer process, developed by rogers, takegami and yin (2001), academic entrepreneurship literature has considered researcher involvement in these stages as commercialisation activities. the process of progressing innovative research outcomes from the laboratory to practical use by an industry partner, society or a newly formed company involves a complex process of diverse activities performed by various role players. however, it definitively starts with the researcher disclosing the innovative findings or output to the tto. methods to assess the innovation and exploitation perspectives of university research have been used in recent years to select commercially viable projects (cartalos, rozakis & tsiouki 2018). research universities are well-recognised sources of new knowledge, and their contributions to innovation are manifested through the creation, transfer and commercialisation of new technologies originating from academic research (hayter et al. 2018). the role players include the researchers, the tto, the licensee or entrepreneur of a new spin-off company, funders and other peripheral role players such as intermediaries, consultants, business incubators and science parks (guerrero et al. 2019). the provision of government and university institutional management support can influence researchers’ involvement in commercialisation activities. critical impediments to better technology transfer performance tend to be organisational in nature. these include incentive mechanisms, cultural differences between universities and firms and staffing and compensation practices in ttos (siegel 2018). each component of a university technology transfer strategy must be established and committed to at an institutional level. a defined mission statement is critical for the alignment of the tto (necoechea-mondragón, pineda-domínguez & soto-flores 2013). technology transfer office activities should be coordinated alongside and integrated into the core missions of education and research of the university. successful tto office business models can further assist a university’s tto to increase their impact on society. the business models that leverage high-quality research and business start-up creation are associated with higher economic performance (baglieri, baldi & tucci 2018). university leadership should provide the tto with the necessary level of governance autonomy, strategic flexibility and financial autonomy within the university structures. the low rate of academic start-ups and low levels of commercialisation in south africa has been attributed to a lack of institutional and organisational factors. as a result, scientists’ and academics’ intentions to start a business are often negative, as they perceive inadequate organisational support mechanisms and institutional constraints (haeussler & colyvas 2011). urban and chantson (2019) hypothesised that perceptions of institutional barriers in terms of capital availability, government regulations and the national ip regime will negatively influence research scientists and academics to have lower levels of entrepreneurial intentions in the south african context. technology transfer office’s support is critical for successful commercialisation activities. the mission of a tto should also be defined, or at least supported, at the top levels of the institution’s administration. the alignment of ttos’ activities with the broader goals of the institution justifies the investment of resources required to achieve the expected returns (pitso 2019; warren, hanke & trotzer 2008). the tto staff must have a thorough, in-depth understanding and experience of the academic environment. in addition, a profound understanding of the needs of industry and business is an absolute necessity (debackere 2018). the autonomy, structure and experience of the tto trigger creativity and tto strategies (pitso 2019; pitsakis & giachetti 2019). monetary and non-monetary incentives can have a positive effect on researcher’s involvement in commercialisation activities. necoechea-mondragón et al.’s (2013) study on mexican academic researchers revealed that one of the reasons why technology transfer is limited in mexico is that mexican public universities do not consider providing more significant rewards for faculty involvement in technology transfer. mexican researchers can choose between allocating time to publishing, to patenting or to teach. perhaps these activities complement each other, but if not, then the current reward system may be giving fewer incentives to those activities that produce a higher social payoff (gonzalez-brambila & veloso 2007). research scientists working at universities, which explicitly allocate rewards for entrepreneurial endeavours, were found to possess higher levels of a spin-off and patenting or licensing intentions (huyghe & knockaer 2015). university–industry collaboration programmes in south africa financial support for university–industry collaboration directly affects universities’ technological innovation (tseng et al. 2018). the south african government has established many initiatives, organisations and programmes to enable commercialisation activities between universities and industry. notable organisations and programmes in south africa include the following: the council for scientific and industrial research (csir) was established to address the scientific and technological needs of state-owned entities (such as eskom, the south african power supplier), large industry (such as the mining sector) as well as new or established enterprises by undertaking state-funded research programmes in specific areas of importance. the csir now undertakes contract research for the industry as part of its mandate and administrates certain funds to sustain enterprises in key economic sectors (csir 2011). national intellectual property management office (nipmo) functions as an agent within the department of science and innovation (dsi) and the primary function is to protect ip and ipr that are created with public funds. technology and human resources for industry programme (thrip). the department of trade and industry in partnership with the national research foundation (nrf) operates the thrip fund to leverage the projects undertaken by university–industry collaborations financially. this programme has been successful in its model – where the fund matches or exceeds the contribution by the industry partner to the project to support the development of technology and graduates (nrf 2013). technology station programme is by the dsi. technology stations were designed to engage with industry and small enterprises to assist with technical problem solving. many of the technology stations were housed or located near existing universities. each technology station specialised in a particular field; generally, the most prominent and innovative research area that was a specific university competence. many of these have failed because of a lack of entrepreneurial skills required to promote services and attract business, but the few that remain are relatively prosperous and continue to be supported by the dsi. factors impacting the involvement of researchers in commercialisation activities the enablers of academic entrepreneurship include factors that contribute to encouraging and improving commercialisation activities. this can be analysed at three levels as follows: national policy level: these are incentives at the national level, for example, the discontinued patent incentive fund that was operated by the dsi and government policies and legislation, such as the ipr from publicly financed research and development act 51 of 2008 (ip act) managing ip at universities (bansi & reddy 2015; sibanda 2009). institutional level: institutional policies play an important role in communicating the institution’s principles, values and philosophies (bansi & reddy 2015). institutional incentives can be monetary, such as percentage of revenues paid to the inventor, percentage of revenues paid to the work group of the inventor(s) and non-monetary incentives, for example inclusion of patent counts in academic performance assessments and awards for granted patents and commercialised research. individual level: universities generally allocate a portion of the funds received for publications and inventions from the government to the researchers responsible for the development of artefact. monetary rewards such as once-off payments for granted patents and revenue share from the commercialisation of research outputs impact researchers at the individual level. research in the fields of technology transfer and research policy emanates mostly from developed countries, such as the united states, the united kingdom and european countries. in these developed countries, programmes exist to educate researchers on the process and implications, and thus awareness is not a need or a challenge amongst researchers (urban & chantson 2019). these countries have also been commercialising research outcomes for a much more extended period compared to emerging economies, such as south africa where the oldest tto is about 15 years old. alessandrini, klose and pepper (2013) reported that there was a distinct lack of awareness of ip, the function of the tto and benefits of commercialisation amongst researchers in south africa. this article suggests that the factors can be actively managed by an institution to encourage the desired direct effect on the involvement of researchers in commercialisation activities. therefore, the organisational incentives and individual motives need to be congruent. understanding what researchers perceive as the important factors for their involvement in commercialisation activities will inform a strategy that can be applied to an academic institution. universities in south africa identify researchers involved in commercialisation activities in the following ways: formal publications such as the annual research report, which is distributed internally and nationally to other universities and national stakeholders and national reports submitted to the department of higher education and the nrf; informal publications such as newsletters, websites and local news articles; formal award ceremonies such as research, teaching and engagement awards; and recognition by the tto awarding small honours, such as certificates of recognition for their contribution to innovation (chetty 2016). in emerging economies, university transformation is slow, because there is no strong base to build upon and obtain high-quality research outcomes, whilst enterprises interested in partnerships usually face challenges in terms of communication, expectations and agreements (guerrero et al. 2019). the factors investigated in this study are institutional support, management support, tto support and monetary and non-monetary incentives (alessandrini et al. 2013; siegel 2018; urban & chantson 2019). theoretical framework universities are positioning themselves favourably with potential commercial partners to convert research opportunities into funded projects that may ultimately lead to long-term, sustainable collaborations (philbin 2010). this positioning requires an assessment of resources and capabilities. the theory of resource-based view (rbv) argues that when an organisation’s resources are valuable, rare, non-substitutable and non-copyable, they can create competitive advantage, which adds to the value of the organisation (mata, fuerst & barney 1995). the focus of rbv is on an organisation’s internal resources as a means of organising processes and obtaining competitive advantage. resources are defined as anything that could be thought of as a strength for an organisation and may be tangible (infrastructure, equipment and materials) or intangible (ip, culture, skills and abilities, knowledge, professional integrity, contracts and efficient procedures and processes). the rbv measures the business value derived from a resource in contributing to creating competitive advantage (ruivo, oliveira & neto 2015). in addition, they must be difficult to replicate because they are either tacit or socially complex (dutta 2008). from the university perspective, the ability to collaborate with industry will also be dependent on the resources that can be accessed. these include the academic and scientific records of accomplishment of the faculty member as well as other resources, including physical ones such as laboratories and experimental equipment as well as organisational processes such as those related to research administration (philbin 2010). the theory of rbv provides a theoretical framework to analyse technology transfer and university–industry collaborations. the rbv provides a means of evaluating potential factors that can be deployed to create competitive advantage. in the rbv, a strategy or competitive position is identified that best exploits the internal resources and capabilities. in an academic environment, these factors or resources could include human resources, knowledge, organisational processes and financial incentives. in this study, managerial support, researcher knowledge, the role of the tto and financial incentives were considered as potential factors. research methodology this research is conducted in the positivistic paradigm using a deductive approach where the hypothesised relationships between selected independent factors and researchers’ involvement in commercialisation activities were tested. south africa presently has 26 public universities and conducting research amongst academics and students requires ethics approval from each institution. the decision was made to conduct an exploratory research study using a single case study strategy at the nelson mandela university in south africa. the research instrument to explore the relationship between selected factors and researchers’ involvement in commercialisation activities, a survey was conducted amongst the identified target population. a semi-structured questionnaire (chetty 2016), which was operationalised from the literature, was used to measure the independent factors in this study. the questionnaire included seven sections that captured the 38 respondents’ profile, their research activity characteristics, their involvement in commercialisation activities, perception of tto support, perception of the university’s institutional support for involvement in commercialisation activities, perception of personal incentives for involvement in commercialisation activities and perception of interventions, which could increase researcher involvement in commercialisation activities. the following hypotheses were formulated for the study: h1: there is a significant positive relationship between institutional support provided and researchers’ involvement in commercialisation activities. h2: there is a significant positive relationship between management support and researchers’ involvement in commercialisation activities. h3: there is a significant positive relationship between tto support and researchers’ involvement in commercialisation activities. h4: there is a significant positive relationship between researchers’ monetary incentives and researchers’ involvement in commercialisation activities. h5: there is a significant positive relationship between institutional non-monetary incentives and researchers’ involvement in commercialisation activities. the questionnaire made use of a five-point likert scale (1 = strongly disagree to 5 = strongly agree) and included open-ended questions. a pilot study was conducted amongst five academics to test for content validity, and the university statistician checked the questionnaire for face validity. the sample urban and chantson’s (2019) study recognised that research on academic entrepreneurship and commercialisation was mainly conducted on western studies and they thus performed their study in an under-researched emerging market context, such as south africa. this study also focuses on an emerging market context with the sampling frame consisting of researchers resident in the faculty of science and the faculty of engineering, built environment and information technology (ebeit) at a comprehensive university in south africa. the two faculties host approximately 137 academics across several disciplines at the university. the faculties of science and ebeit constitute disciplines most likely to give rise to new inventions and, as such, were chosen as suitable for the target population. the study used a non-probability sampling, specifically purposive sampling, also known as judgmental, selective or subjective sampling, in which the researchers rely on their judgment when choosing members from the population to participate in their study. the deans of the faculties were approached by email to offer their support for the distribution of the link to the electronic questionnaire. a request to participate in the study was distributed to all 137 academics in the science and ebeit faculties at the nelson mandela university. in total, 36 researchers agreed to participate in the study; 20 researchers involved in commercialisation activities and 16 researchers were not involved in commercialisation activities. data collection and analysis data collection for this study was conducted by desktop research and an online survey. the literature review informed the items developed for the questionnaire. the questionnaire was distributed through an email, containing an url link and a cover letter, captured on questionpro. the questionnaire link was open and accessible for responses for 2 weeks. descriptive statistics and inferential statistics were used for the data analysis. pearson’s product moment correlations analysis was conducted in this study. correlations are statistically significant at the 0.05 level for n = 36 if |r| ≥ 0.329 and practically significant if |r| ≥ 0.300 (gravetter & wallnau 2009:534). thus significant (both statistically and practically) if |r| ≥ 0.329 (gravetter & wallnau 2009:534). thus, for the sample size of 36, a result will be deemed both statistically and practically significant if |r| ≥ 0.329 (gravetter & wallnau 2009:534). the reliability of the questionnaire was tested using cronbach’s alpha values; however, because of the small sample size (n = 36), these values must be interpreted with caution. the cronbach’s alpha coefficients for the factors were all in the range 0.60–0.69 (fair), 0.70–0.79 (good) and 0.80+ (excellent). to determine whether there was a statistical difference between the two groups, namely, staff members involved and not involved in commercialisation activities at the university, the kruskal–wallis test was used to compare two or more independent samples of equal or different sizes. the kruskal–wallis test was used to determine whether there were statistically significant differences between two or more groups of the independent factors on the dependent factor (zar 1999). ethical consideration ethical approval for the study and distribution of the research questionnaire was granted by the university’s ethics committee (h15-bes-bus-028). results participants’ demographic statistics the majority of the respondents (44%, n = 16) were in the age category of 45–54 years. just over two thirds (69%, n = 25) of the respondents were male. of the respondents, 61% (n = 22) stated that they had previous employment in industry and 78% (n = 28) said that they were employed on a full-time permanent basis by the university. it was important to ensure that a significant portion of the sample held permanent full-time positions because short-term contract positions are generally assigned larger teaching loads and, therefore, have limited time left for research. of the respondents, 53% (n = 19) indicated that they have worked in the research environment for over 14 years. table 1 summarises the key demographic information of the respondents. table 1: summary of demographic findings from the respondents (n = 36). the academic activities the respondents were involved in included teaching, research, research supervision and academic administration. twenty respondents were involved in commercialisation activities and 16 stated that they were not involved. of the respondents, 11% stated that their research had no relevance to external stakeholders, 44% stated that their research can be applied commercially and 17% stated that their research is applied commercially. twenty respondents were involved in commercialisation activities and 14 of them reported that they spend up to 75% of research time on commercialisation activities. in the following section, the categories agree/strongly agree and disagree/strongly disagree have been combined for reporting purposes. the responses were categorised into institutional and management support, the tto support and financial and personal involvement. institutional and management support of the researchers, 75% (n = 27) perceives that faculty management should support involvement in commercialisation activities. of the respondents, 61% agreed that university line manager support, for example the head of department (hod), would improve involvement in commercialisation activities. however, only a third of the respondents (n = 12) agreed that the university environment is generally enabling for research activities and promotes the involvement in commercialisation activities. technology transfer office support a lack of tto awareness can be a barrier to involvement in commercialisation activities (alessandrini et al. 2013). only 20% of the respondents (n = 7) who are involved in commercialisation activities stated that they were aware that the tto performs a service of filing of ip and provides funding for the construction of prototypes. two of the respondents stated that they were not aware that the tto provides support for new company formation, licensing of research outputs and the negotiation of commercialisation contracts. it can be concluded that the involved researchers are mostly aware of the functions of the tto. researchers not involved in commercialisation activities displayed a significant lack of awareness of tto services, specifically services such as negotiating research contracts and administration process of the institution. the effectiveness of the tto can be viewed as an enabler or a barrier to involvement of researchers in commercialisation activities. it was important to assess the perception of the respondents as to whether the tto functions effectively as an enabler for involvement or a barrier. in effect, it can be deduced directly from the response that the tto functions effectively in offering enough support for researchers and can be considered an enabler consistent with findings by jensen and thursby (2001) and jensen, thursby and thursby (2003). it is important for the relationship between the tto and researchers who are involved with commercialisation activities to be good. these findings support the research conducted by debackere and veugelers (2005) and jensen et al. (2003). the dissemination of relevant information on the process of commercialisation is essential for researchers to perceive that the tto is there to support them. understanding the process of commercialisation within the statutory legal framework is important together with the commercial options. financial and personal involvement the university commercialisation revenue share for inventors, presently 30%, was generally seen as a sufficient incentive. the majority of involved respondents (70%) agreed that a patent incentive fund should be created to incentivise and reward researchers for patent activity. the results further indicated that 89% of all researchers indicated that an increased share of commercialisation revenue share (more than 30% of net commercialisation revenue received) would incentivise researchers to be involved in commercialisation activities. of all the respondents, 87% agreed that the availability of funding for proof of concept demonstration would improve the likelihood of research involvement. the majority of involved researchers (80%) and 50% of not involved researchers agreed that growing their wealth was one of their motives for involvement in commercialisation activities. of all the researchers, 45% agreed that research provided an improved chance of promotion and was a motivating factor for involvement in commercialisation activities. an overwhelming 94% of all respondents indicated that intrinsic satisfaction is a motivating factor for involvement in commercialisation activities. the respondents’ perceptions of the influence of commercialisation activity involvement on traditional research activities, such as publication of research findings, supervision of postgraduate students and teaching commitments, resulted in more than half of all respondents indicating that involvement does affect traditional research activities. they further indicated that the involvement in commercialisation activities leads to increased collaborations with external organisations and industries. this indicates the perception that involved researchers engage with industry and derive benefits through their engagement, such as the growth of technical and scientific knowledge and sources of additional funding for collaborative projects. the majority of all respondents (82%) agreed that patents granted in foreign territories should hold equal weight as journal publications in internationally accredited journals during performance valuation. the majority of all respondents (84%) agreed that a training intervention would increase the involvement of researchers. additionally, most respondents (72%) agreed that the establishment of a science park or a business incubator would improve the likelihood of involvement of researchers in commercialisation activities. hypotheses to test the hypotheses, a pearson product-moment correlation coefficient was computed to assess the relationship between factors. five hypotheses (table 2) were evaluated in this study. the results indicate that there is a good positive correlation between institutional support, management support, the tto support and monetary incentives and researchers’ involvement in commercialisation activities. no significant relationship was found between non-monetary incentives and researchers’ involvement in commercialisation activities. table 2: hypotheses to determine significant relationships. the 36 researchers in this study were grouped into researchers involved and researchers not involved in commercialisation activities. respondents were asked to state whether they are involved or had been involved in commercialisation activities at the university. twenty respondents (56%) were involved in commercialisation activities and 16 (44%) stated that they were not involved. seventy per cent of the respondents involved in commercialisation activities reported that they spend up to 70% of research time on commercialisation activities. this indicated the level of involvement of involved researchers in commercialisation activities. to determine whether there was a statistical difference between the two groups, namely, staff members involved and not involved in commercialisation activities at the university, the kruskal–wallis test was used to compare two independent samples of different sizes. a significant positive statistical difference (h:18.581, df 5, p < 0.05) was found between the perceptions held by researchers involved and researchers not involved with respect to institutional support provided to enable involvement in commercialisation activities at the university (h1). no statistical differences were recorded between the two groups for h2–h5. specifically, no statistically significant difference (h:3.138, df 2, p < 0.247) was found between the perceptions held by researchers involved in commercialisation activities and monetary incentives at the university. discussion of results the key findings indicated that institutional support (top management), faculty support and line management support are critical for researcher involvement in commercialisation activities. researchers may be reluctant to be involved in commercialisation activities, but managers should encourage it (bercovitz & feldman 2006). the results indicated that all researchers agreed (60%) that management support proved to be an enabler in encouraging involvement in commercialisation activities. eighty per cent of the involved researchers at the university perceived that there is insufficient recognition given to researchers involved in commercialisation activities. recognition of research groups for their contribution and involvement in commercialisation activities would also prove useful to sustaining research groups. to sustain research groups, researchers indicated that none of the research entities has received commercial income from commercialised inventions significant enough to sustain partial operations of entities. the reputational enhancement for the entity because of commercially relevant research may prove beneficial to attract industry-related contract research projects and grant funding from public funders. technology transfer office support and efficiency are critical for researchers’ involvement in commercialisation activities (bansi & reddy 2015). the support received from the tto by researchers involved in research activities (70% agreed) appeared to be sufficient, whilst researchers (12%) not involved felt that there was insufficient information on the process of commercialisation provided by the tto. this result is supported by previous studies on the impact of a dedicated tto on the progression of commercial initiatives at an institution. siegel and phan (2005) pointed out that the tto can propel commercialisation activity and significantly reduce the cost to the faculty in terms of time spent on ip administration. monetary incentives were identified as enablers to involvement in commercialisation activities, which is consistent with the findings by lach and schankerman (2008). researchers generally agreed that a patent incentive fund would increase the likelihood of involvement in commercialisation activities. the majority of researchers agreed that the current state of 30% of commercialisation revenues paid to the inventors should be increased. issues regarding researchers’ self-motivation and intrinsic satisfaction indicated that the researchers felt that they had strong personal motives including career progression, wealth creation and reputational enhancement for being involved in commercialisation. enhancing institutional involvement in commercialisation activities at an institutional level, a combination of monetary and non-monetary incentives is necessary to enable involvement in commercialisation activities. the following recommendations are made: increasing the commercialisation revenue share from 30%: university researchers generally agreed that the percentage of revenue allocated to inventors, which currently stands at 30%, should be increased. the policy has been in place since 2011 and precedents have been set in terms of how commercialisation revenue is managed. the university’s ip policy should be revised following a process of stakeholder engagement. a benchmarking exercise should be undertaken to establish which universities offer a more significant percentage than the legislatively prescribed minimum of 30%. institutional culture and management support: management support is critical to enable the involvement of researchers in commercialisation activities. the majority of respondents stated that management generally supported and encouraged their involvement in commercialisation activities. education: urban and chantson (2019) indicated that academic entrepreneurship education, which is mainly concerned with attitudes, intentions and the business start-up creation process, is important. this study found that involved researchers stated that a formal education and training programme would be an enabler to encourage greater involvement amongst researchers. the tto, through its collaboration with sarima (southern african research and innovation managers association), currently provides access to ip wisetm, a 1-day short course designed to improve researchers’ understanding of ip and its role in research. a programme of local and international speakers can be devised and planned to match the needs of researchers. lack of tto awareness: it was clear from the response that researchers involved in commercialisation activities were not aware of the full spectrum of support services offered by the tto. this represents one of the more significant barriers to commercialisation of research (siegel & phan 2005). the tto needs to provide additional material on the operations and services carried out by the office to researchers, particularly those not involved. marketing of tto: comprehensive marketing strategy is required to enhance the awareness of the tto. establishment of a science park or business incubator: researchers perceived that the establishment of such facilities would enable involvement. perception of insufficient institutional support: researchers perceived that the university committee structures were not supportive. the tto is required to champion the innovation agenda and needs of the research community within the university. involved researchers generally agreed that the tto provides sufficient support to enable involvement. investigating the specific aspects through a qualitative study would prove useful specifically to identify why researchers perceive that there is insufficient support and what can be done to improve their perception. conclusion universities are facing growing pressure to contribute towards innovation, which has social impact and which contributes to economic development. researchers mainly in the science and engineering fields are the primary sources of innovation outputs from universities, and as such, their involvement in commercialisation activities directly adds to the growth of innovative outputs from publicly financed research. this study focused on understanding the factors that influence the involvement of researchers in commercialisation activities at a university in south africa. the key elements examined in this study include the researchers’ perception of factors they perceive to influence their involvement in commercialisation activities at institutional and individual levels. the results of the exploratory study indicate that the factors that affect researcher involvement in technology commercialisation at the nmu include national level support, specifically from government institutions, such as the nrf, thrip and nipmo, and specifically institutional management support. the awareness of tto support, commercialisation activities and processes are important factors that need to be strategically addressed. other factors include personal incentives, such as promotion and monetary and non-monetary rewards. the establishment of science parks and participation in national award events are also important factors. the study proposed several recommendations to improve researcher involvement in commercialisation activities at a national and at an institutional level. the following are the key recommendations by researchers from this exploratory study: patent incentive fund: a national patent incentive fund that operates on an equal basis as the publication incentive fund should be re-established to reward and incentivise researchers for patents granted. the research publication incentive, operated by the nrf and paid to the institution, should ideally pay approximately two thirds per article published in an accredited journal to the individual (www.nrf.gov). technology showcase events: events where technology innovations can be showcased provide recognition to institutions for their innovative outputs by highlighting the innovative capabilities within specific research fields to the attention of large industries, for example the annual sa innovation summit. national innovation awards and competitions: recognising innovators and institutions on a national stage for their contribution to innovation in the country is important. currently, there are the nstf awards that honour and celebrate outstanding contributions to science, engineering and technology innovations in south africa. individual universities, through their websites and local publications, attempt to highlight the innovative achievements and the impact innovation makes on society. the prestige of national innovation awards would play an important role in giving not only local recognition but also international recognition. the following limitations of this study were identified: only researchers of two faculties in one higher education institution (hei) were targeted because these are the faculties that use the tto services the most and are the most likely research fields, which give rise to innovation and commercialisation activities. expanding the survey to other faculties such as health sciences may be advisable in the future. using purposive sampling could have introduced a bias in the sample. repeating the study using non-probability sampling including all academics and researchers in the faculties is suggested. the research was only undertaken at one university. ethics approval should be applied for at the other 25 public universities in south africa and the research study extended. the nipmo is responsible for the establishment of ttos in relevant academic institutions. universities in south africa, in collaboration with the nipmo, should implement assessment methods and support structures to improve the efficiency of ttos and the identification of viable entrepreneurial projects, as suggested by cartalos et al. (2018). continued future research will aim to explore the factors that affect stakeholders’ decisions to be involved in commercialisation activities at other universities in south africa. future research will also investigate how senior post-graduate students can become the driving force for academic entrepreneurship with faculty as mentors and advisors. universities have tangible assets (infrastructure, equipment and materials) and intangible assets (ip, culture, skills and abilities, knowledge, professional integrity, contracts and efficient procedures and processes), which in terms of the rbv theory can create competitive advantage if properly managed. this article has highlighted the areas where university management need to improve to create that advantage, supporting the rbv theory. in addition, this can be achieved by leveraging a network of relationships that are valuable for both individuals and organisations, which have built up the social capital of the institution. acknowledgements this paper is based on the master business administration (mba) research conducted by the late mary-ann chetty. competing interests the authors have declared that no competing interests exist. authors’ contributions m-a.c. planned and conducted the mba research. m.d.m.c. supervised the mba research project of m-a.c. m-a.c. passed away after graduation. a.p.c. and m.d.m.c. were responsible for writing this research paper. funding information this research did not receive any specific grant from funding agencies in public, commercial or not-for-profit sectors. data availability statement data are stored securely and can be made available from the corresponding author, upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references alessandrini, m., klose, k. & pepper, m.s., 2013, ‘university entrepreneurship in south africa: developments in technology transfer practices’, innovation: management, policy & practice 15(2), 205–214. https://doi.org/10.5172/impp.2013.15.2.205 baglieri, d., baldi, f. & tucci, c.l., 2018, ‘university technology transfer office business models: one size does not fit all’, technovation 76–77, 51–63. https://doi.org/10.1016/j.technovation.2018.05.003 baldini, n., fini, r., grimaldi, r. & sobrero, m., 2014, ‘organisational change and the institutionalisation of university patenting activity in italy’, minerva 52(1), 27–53. https://doi.org/10.1007/s11024-013-9243-9 bansi, m. & reddy, k., 2015, ‘intellectual property from publicly financed research and intellectual property registration by universities: a case study of a university in south africa’, procedia – social and behavioral sciences 181, 185–196. https://doi.org/10.1016/j.sbspro.2015.04.880 bercovitz, j. & feldman, m., 2006, ‘entrepreneurial universities and technology transfer: a conceptual framework for understanding knowledge-based economic development’, the journal of technology transfer 31(1), 175–188. https://doi.org/10.1007/s10961-005-5029-z cartalos, o., rozakis, s. & tsiouki, d., 2018, ‘a method to assess and support exploitation projects of university researchers’, journal of technology transfer 43(4), 986–1006. https://doi.org/10.1007/s10961-016-9519-y chetty, m., 2016, ‘enablers and barriers to involvement in commercialisation activities’, mba treatise, business school, nelson mandela university, port elizabeth, viewed 06 november 2020, from http://vital.seals.ac.za:8080/vital/access/services/download/vital:20657/source1?view=true colyvas, j., crow, m., gelijns a., mazzoleni, r., nelson, r.r., rosenberg, n. et al., 2002, ‘how do university inventions get into practice?’, management science 48(1), 61–72. https://doi.org/10.1287/mnsc.48.1.61.14272 csir, 2011, profile of the csir, viewed 14 november 2019, from https://www.csir.co.za/ debackere, k., 2018, ‘the tto, an organizational innovation to facilitate technology transfer’, in d. siegel (ed.), university technology transfer and academic entrepreneurship, pp. 23–41, world scientific publishing co. pte. ltd., singapore. debackere, k. & veugelers, r., 2005, ‘the role of academic technology transfer organizations in improving industry science links’, research policy 34(3), 321–342. https://doi.org/10.1016/j.respol.2004.12.003 demircioglu, m.a. & audretsch, d.b., 2019, ‘public sector innovation: the effect of universities’, the journal of technology transfer 44(2), 596–614. https://doi.org/10.1007/s10961-017-9636-2 de wit-de vries, e., dolfsma, w.a., van der windt, h.j. & gerkema, m.p., 2019, ‘knowledge transfer in university–industry research partnerships: a review’, journal of technology transfer 44(4), 1236–1255. https://doi.org/10.1007/s10961-018-9660-x dutta, s.k., 2008, intangible assets as a source of competitive advantage, effective executive, viewed 08 november 2019, from https://ssrn.com/abstract=1885266 etzkowitz, h., 1998, ‘the norms of entrepreneurial science: cognitive effects of the new university–industry linkages’, research policy 27(8), 823–833. https://doi.org/10.1016/s0048-7333(98)00093-6 etzkowitz, h., 2003a, ‘innovation in innovation: the triple helix of university-industry-government relations’, social science information 42(3), 293–337. https://doi.org/10.1177/05390184030423002 etzkowitz, h., 2003b, ‘research groups as “quasi-firms”: the invention of the entrepreneurial university’, research policy 32(1), 109–121. https://doi.org/10.1016/s0048-7333(02)00009-4 etzkowitz, h., webster, a., gebhardt, c. & terra, b., 2000, ‘the future of the university and the university of the future: evolution of ivory tower to entrepreneurial paradigm’, research policy 29(2), 313. https://doi.org/10.1016/s0048-7333(99)00069-4 giuri, p., grimaldi, r., kochenkove, a., munari, f. & toschi, l., 2018, ‘the effects of university-level policies on women’s participation in academic patenting in italy’, the journal of technology transfer 45, 122–150. https://doi.org/10.1007/s10961-018-9673-5 gonzalez-brambila, c. & veloso, f.m., 2007, ‘the determinants of research output and impact: a study of mexican researchers’, research policy 36(7), 1035–1051. https://doi.org/10.1016/j.respol.2007.03.005 gravetter, f.j. & wallnau, l.b., 2009, statistics for the behavioral sciences, 8th edn., wadsworth, belmont, ca. guerrero, m. & urbano, d., 2019, ‘effectiveness of technology transfer policies and legislation in fostering entrepreneurial innovations across continents: an overview’, the journal of technology transfer 44(5), 1347–1366. https://doi.org/10.1007/s10961-019-09736-x guerrero, m., urbano, d. & herrera, f., 2019, ‘innovation practices in emerging economies: do university partnerships matter?’, journal of technology transfer 44(2), 615–646. https://doi.org/10.1007/s10961-017-9578-8 gulbrandsen, m. & rasmussen, e., 2012, ‘the use and development of indicators for the commercialization of university research in a national support programme’, technology analysis & strategic management 24(5), 481–495. https://doi.org/10.1080/09537325.2012.674670 haeussler, c. & colyvas, j.a., 2011, ‘breaking the ivory tower: academic entrepreneurship in the life sciences in uk and germany’, research policy 40(1), 41–54. https://doi.org/10.1016/j.respol.2010.09.012 hayter, c.s., rasmussen, e. & rooksby, j.h., 2018, ‘beyond formal university technology transfer: innovative pathways for knowledge exchange’, the journal of technology transfer 45(1), 1–8. https://doi.org/10.1007/s10961-018-9677-1 huyghe, a. & knockaer, m., 2015, ‘the influence of organizational culture and climate on ei among research scientists’, journal of technology transfer 40(1), 138–160. https://doi.org/10.1007/s10961-014-9333-3 jensen, r. & thursby, m., 2001, ‘proofs and prototypes for sale: the tale of university licensing’, american economic review 91(1), 240–259. https://doi.org/10.1257/aer.91.1.240 jensen, r., thursby, j.g. & thursby, m.c., 2003, the disclosure and licensing of university inventions: the best we can do with the s**t we get to work with, viewed 26 november 2019, from https://www3.nd.edu/~rjensen1/research/disclosure.pdf johnston, a. & huggins, r., 2018, ‘partner selection and university-industry linkages: assessing small firms’ initial perceptions of the credibility of their partners’, technovation 78, 15–26. https://doi.org/10.1016/j.technovation.2018.02.005 kirby, d.a. & el hadidi, h.h., 2019, ‘university technology transfer efficiency in a factor driven economy: the need for a coherent policy in egypt’, the journal of technology transfer 44(5), 1367–1395. https://doi.org/10.1007/s10961-019-09737-w klofsten, m. & jones-evans, d., 2000, ‘comparing academic entrepreneurship in europe – the case of sweden and ireland’, small business economics 14(4), 299–309. https://doi.org/10.1023/a:1008184601282 lach, s. & schankerman, m., 2008, ‘incentives and invention in universities’, the rand journal of economics 39(2), 403–433. https://doi.org/10.1111/j.0741-6261.2008.00020.x mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, southern african journal of entrepreneurship and small business management 9(1), article 111. https://doi.org/10.4102/sajesbm.v9i1.111 mars, m.m. & rios-aguilar, c., 2010, ‘academic entrepreneurship (re) defined: significance and implications for the scholarship of higher education’, higher education 59(4), 441–460. https://doi.org/10.1007/s10734-009-9258-1 martinez sanchez, a. & pastor tejedor, a.c., 1995, ‘university-industry relationships in peripheral regions: the case of aragon in spain’, technovation 15(10), 613–625. https://doi.org/10.1016/0166-4972(95)99329-e mata, f.j., fuerst, w.l. & barney, j.b., 1995, ‘information technology and sustained competitive advantage: a resource-based analysis’, mis quarterly 19(4), 487–505. https://doi.org/10.2307/249630 munari, f., rasmussen, e., toschi, l. & villani, e., 2016, ‘determinants of the university technology transfer policy-mix: a cross-national analysis of gap-funding instruments’, journal of technology transfer 41(6), 1377–1405. https://doi.org/10.1007/s10961-015-9448-1 necoechea-mondragón, h., pineda-domínguez, d. & soto-flores, r., 2013, ‘a conceptual model of technology transfer for public universities in mexico’, journal of technology management and innovation 8(4), 24–35. https://doi.org/10.4067/s0718-27242013000500002 nrf, 2013, thrip programme, viewed 02 july 2018, from www.thrip.nrf.ac.za.oecd/eurostat, 2005, oslo manual, oecd publishing, viewed 16 september 2019, from http://www.oecd-ilibrary.org/science-and-technology/oslo-manual_9789264013100-en o’shea, r.p., allen, t.j., chevalier, a. & roche, f., 2005, ‘entrepreneurial orientation, technology transfer and spinoff performance of us universities’, research policy 34(7), 994–1009. https://doi.org/10.1016/j.respol.2005.05.011 philbin, s.p., 2010, ‘developing and managing university-industry research collaborations through a process methodology/industrial sector approach’, journal of research administration 41(3), 51–68. pitsakis, k. & giachetti, c., 2019, ‘information-based imitation of university commercialization strategies: the role of technology transfer office autonomy, age, and membership into an association’, strategic organization 18(4), 573–616. https://doi.org/10.1177/1476127019850098 pitso, t., 2019, ‘invigorating innovation and entrepreneurship: insights from selected south african and scandinavian universities’, the southern african journal of entrepreneurship and small business management 11(1), article 187. https://doi.org/10.4102/sajesbm.v11i1.187 rasmussen, e., moen, ø. & gulbrandsen, m., 2006, ‘initiatives to promote commercialization of university knowledge’, technovation 26(4), 518–533. https://doi.org/10.1016/j.technovation.2004.11.005 rogers, e.m., takegami, s. & yin, j., 2001, ‘lessons learned about technology transfer’, technovation 21(4), 253–261. https://doi.org/10.1016/s0166-4972(00)00039-0 ruivo, p., oliveira, t. & neto, m., 2015, ‘using resource-based view theory to assess the value of erp commercial-packages in smes’, computers in industry 73, 105–116. https://doi.org/10.1016/j.compind.2015.06.001 sibanda, m., 2009, ‘intellectual property, commercialization and institutional arrangements at south african publicly financed research institutions’, the economics of intellectual property in south africa, world intellectual property organisation, geneva, viewed n.d., from https://www.wipo.int/export/sites/www/ip-development/en/economics/pdf/wo_1013_e_ch_5.pdf siegel, d.s., 2018, ‘academic entrepreneurship: lessons learned for technology transfer personnel and university administrators’, in d. siegel (ed.), university technology transfer and academic entrepreneurship, pp. 1–21, world scientific publishing co. pte. ltd., singapore. https://doi.org/10.1142/9789813149045_0001 siegel, d.s. & phan, p.h., 2005, ‘analyzing the effectiveness of university technology transfer: implications for entrepreneurship education’, in g.d. libecap (ed.), university entrepreneurship and technology transfer (advances in the study of entrepreneurship, innovation & economic growth), vol. 16, pp. 1–38, emerald group publishing limited, bingley. https://doi.org/10.1016/s1048-4736(05)16001-9 shane, s.a., 2000, a general theory of entrepreneurship: the individual-opportunity nexus, edward elgar publishing, cheltenham. https://doi.org/10.4337/9781781007990 sharma, p. & chrisma, j.j., 1999, ‘toward a reconciliation of the definitional issues in the field of corporate entrepreneurship’, entrepreneurship theory and practice 23(3), 11–28. https://doi.org/10.1177/104225879902300302 trencher, g., yarime, m., mccormick, k.b., doll, c.n. & kraines, s.b., 2014, ‘beyond the third mission: exploring the emerging university function of co-creation for sustainability’, science and public policy 41(2), 151–179. https://doi.org/10.1093/scipol/sct044 tseng, f., huang, m. & chen, d., 2018, ‘factors of university-industry collaboration affecting university innovation performance’, journal of technology transfer 45, 560–577. https://doi.org/10.1007/s10961-018-9656-6 urban, b. & chantson, j., 2019, ‘academic entrepreneurship in south africa: testing for entrepreneurial intentions’, journal of technology transfer 44(3), 948–980. https://doi.org/10.1007/s10961-017-9639-z warren, a., hanke, r. & trotzer, d., 2008, ‘models for university technology transfer: resolving conflicts between mission and methods and the dependency on geographic location’, cambridge journal of regions, economy and society 1(2), 219–232. https://doi.org/10.1093/cjres/rsm009 weckowska, d.m., molas-gallart, j., tang, p., twigg, d., castro-martínez, e., kijeńska-dąbrowska, i. et al., 2018, ‘university patenting and technology commercialization – legal frameworks and the importance of local practice’, r&d management 48(1), 88–108. https://doi.org/10.1111/radm.12123 wood, m.s., 2011, ‘a process model of academic entrepreneurship’, business horizons 54(2), 153–161. https://doi.org/10.1016/j.bushor.2010.11.004 zar, j., 1999, biological statistics, pp. 214–219, prentice hall, upper saddle river, nj. abstract introduction literature review method findings discussion conclusion acknowledgements references about the author(s) nthabeleng tsoai department of business support studies, faculty of management sciences, central university of technology, bloemfontein, south africa crispen chipunza department of business support studies, faculty of management sciences, central university of technology, bloemfontein, south africa citation tsoai, n. & chipunza, c., 2022, ‘relationship between personality of owner-managers and performance of internet cafes in free state, south africa’, southern african journal of entrepreneurship and small business management 14(1), a485. https://doi.org/10.4102/sajesbm.v14i1.485 original research relationship between personality of owner-managers and performance of internet cafes in free state, south africa nthabeleng tsoai, crispen chipunza received: 18 oct. 2021; accepted: 11 feb. 2022; published: 04 aug. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: although small businesses, including internet cafes, contribute to the country’s economy, the majority of internet cafes fail to survive for more than 2 years after their first year of operation. aim: the main aim of this article was to promote the growth and survival of small businesses in the telecommunication industry through profiling owner–managers and the business performance of internet cafés in the free state province, south africa. setting: the study focuses on the relationship between the personality of owner–managers and the performance of internet cafés. methods: this study draws on a quantitative approach in line with the positivist paradigm, with a participation of 88 owner–managers who completed the questionnaires. results: the findings of the study showed that conscientiousness, agreeableness and openness to experience traits are positively related to the performance of internet cafes. conclusion: despite most studies investigating the relationship between the performance of internet cafes and the personality traits of owner–managers, this study concludes that there is a relationship between the two variables. this informs institutions that provide funding for small and medium-sized enterprises (smes) to encourage people with conscientiousness, agreeableness and openness to experience personality traits to pursue businesses in the technology industry. keywords: personality; business performance; telecommunication industry; internet cafes; owner–managers. introduction this study investigated the relationship between the personality of owner–managers and the performance of internet cafes in free state province, south africa. internet cafes fall under the telecommunication service industry, which is one of the fastest growing industries, that is driven by growth in mobile telephony and broadband connectivity (beschorner 2019). this industry consists of big companies, such as vodacom, telkom and mtn, and small businesses, such as internet cafes. internet cafes, just as any other small businesses in south africa, contribute to the country’s economy. however, despite this contribution, eva financial solutions (2019) found out that the majority of these businesses fail to survive for more than 2 years after their first year of operation because of stiff competition within the telecommunication sector. several factors lead to the performance and, therefore, the failure of many small businesses. these include low skill levels of managers (hashim, raza & minai 2018) and the personality of owner–managers (ng & kee 2018). personality is defined by costa, mccrae and löckenhoff (2019) as a person’s character that describes consistent patterns of feelings, cognition and behaviour. it is famously described by using the five-factor model (ffm) of personality (widiger & crego 2019) which divides personality into neuroticism, extraversion, openness and conscientiousness. ncube and chimucheka (2019) found that the personality of the small, micro and medium enterprise (smme) owner is one of the critical factors that affect smmes’ ability to overcome barriers to survival and the achievement of sustainable growth. additionally, sari, william and tina (2018) believed that owners with high levels of extraversion, openness and conscientiousness to experience are likely to have prosperous small businesses. therefore, the link between personality and business performance cannot be over emphasised and ignored in understanding small business performance. it is evident from the above that personality influences business performance. however, the challenge is that previous studies on personality traits (hikkerova, ilouga & sahut 2016; woo et al. 2016) focused more on how the construct is related to outcomes such as career success, occupation choice, leadership style and large business performance. there are no known studies that have investigated how personality is linked to the performance of internet cafes, especially in the free state province in south africa. accordingly, the concentration of previous studies on personality and performance in other sectors (dollimore & page 2016) at the expense of the telecommunication sector provides an opportunity for further investigation of personality and performance in this sector. the choice of the telecommuting sector, especially internet cafes, is given impetus by reports that with the advent of fourth industrial revolution (4ir revolution), the production of sophisticated handy technology tools, the proliferation of other role players in providing internet services, plus the most recent coronavirus disease 2019 (covid-19) pandemic, internet cafes are slowly losing business and face imminent closures in large numbers in the next few years (xaba, fang & mthembu 2021). the need for alternative strategies to remain in business, therefore, becomes imperative. current studies on internet cafes in africa have concentrated on their evolution (leblanc & shrum 2017) and structural and demographic variables (rambe & mokgosi 2016) such as age of the owner and government policies, respectively, to explain how these small businesses can maximise performance and remain competitive. what is void of these studies is failure to consider the psychological aspects of the owner–managers. actually, to date, there is dearth of empirical evidence linking the owner–managers’ personality and business performance of the internet cafes in south africa. problem statement the south african economy needs small businesses as they are part of the driving forces of the economy. however, just like small businesses in other sectors, small businesses in the telecommunication sector, such as the internet cafes, are facing competition from other role players with the advent of the 4ir. these small businesses are also facing challenges with the advent of the covid-19 pandemic which has resulted in lockdowns and prevented people from visiting internet cafes. previous studies in and outside south africa attest that small businesses (internet cafes included) fail within 2 years of inception because of lack of access to finances (nikolaou et al. 2016) and, in some cases, proper management competencies (gumel 2017). researchers (neneh 2019; papa et al. 2018) have shown that personality can play an important role in mitigating small businesses’ failure. nonetheless, there is no known study that has been conducted within the south african context to establish the link between personality and business performance, particularly among the internet cafes. the rest of this article is structured as follows: firstly, a brief review of related personality and business performance literatures is presented; secondly, research methodology, empirical results and discussions are provided; and finally, the conclusions of this article are provided. theory of the study the study draws on strategic leadership, which focuses on the executives who have overall responsibility for an organisation – their characteristics, what they do, how they do it and, particularly, how they affect organisational outcomes (cannella et al. 2009). thus, this study was guided by the strategic leadership theory (finkelstein, hambrick & cannella 1996). the theory is guided by the idea that social science explains human actions through finding its prior determinants. it is also an antecedent of the upper echelon theory by hambrick and mason (1984), which states that outcomes of a business are, to some extent, predicted by the background of managerial characteristics of the top level management team. in addition, the strategic leadership theory is situated within child’s (1972) strategic choice concept (finkelstein et al. 1996), which suggests that top management is responsible for shaping, designing, comparing and choosing the best idea for solving an organisation’s problems. objective the study’s objective is to establish the nature of the relationship between the personality of the owner–managers and the performance of internet cafes in the free state province, south africa. literature review personality and personality traits personality is defined by akbar et al. (2020) as temperament and behavioural patterns that a person is born with. handoko, nugroho and sembel (2021) also defined it as expressions of a person’s mental preferences. both definitions show that personality is a person’s expression, approach or attitude towards things that happen. these definitions also indicate that personality is related to patterns of how people think and the way they feel and behave, which remain the same during their lifetime and differentiate them from others. the first researchers to describe personality in 1936 were allport and odbert (1936). they identified set of words which described personality characteristics in the english language. this identification was followed by the emergence of 16 personality traits that were derived by using factor analysis and other related statistical procedures that were established by cattell in 1946. consequent to the emergence of 16 personality traits, controversy on how personality develops started; some researchers believe it is inborn, while others believe it is something people learn. for example, thomas, chess and birch (1970) found that personality is inborn. this is supported by researchers such as akbar et al. (2020) who are of the belief that personality is a foundation of temperaments and temperaments are inborn. similarly, trevarthen (2016) also believed that personality can be spotted as early as on infants because it is inborn. the belief that personality is inborn is emphasised in a study by maung (2021) who also believed that personality can be spotted as early as after birth because people are born with their personalities. be that as it may, different researchers such as satpathy (2021) have different views regarding the origin of personality. the main controversy is between whether personality is inborn or whether personality is developed through the influence of factors such as the environment (hernandez duran et al. 2021). this is indicated through studies conducted by researchers such as eysenck (1952) who found that personality is a person’s character that develops and is influenced by the environment. granted that personality can either be inborn or influenced by the environment, it is evident that personality is a complex variable that needs more investigation in order to be understood better. to try and put more clarity on the concept, many approaches to personality including but not limited to psycho dynamic, behaviourist/learning, cultural, trait and the big five personality approaches were explored by researchers such as boundles (2016). the big five personality traits approach divides people’s behaviour into the following segments: neuroticism, extraversion, openness to experience, agreeableness and conscientiousness (babajide 2015). each of these is described in the following section, and reference is made on how they relate to the study neuroticism neuroticism is a personality trait that generally describes a person who is moody (naik & yadav 2017). it relates to a person who lacks emotional stability and has a certain degree of negative emotions (irritability and being commonly sad). these types of people always want the reassurance that everything is well as they constantly worry that something could go wrong. within the business context, one would argue that neurotic owner–managers may have a negative impact on business performance. their irritable nature, lack of emotional stability and the above-mentioned negative characters may make it difficult to manage employees and the business as a whole. neurotics, however, also have positive characters such as being highly cautious which may make them good managers in business (brooker 2020). this is supported by cilliers and strydom (2016) who advocated that being a cautious entrepreneur reduces the risk of failing and increases chances of succeeding in business. consistent with previous author, avanzi et al. (2020) hold the view that neurotics can be hard workers even without expecting to be rewarded. avanzi and colleagues further stated that neuroticism can be an asset if worries are channelled into an individual’s work. conversely, there is also a premise that supports that, because a person with this personality trait easily falls into depression, they would, therefore, as a business owner–manager, not do well (adegbuyi et al. 2018). adegbuyi and colleagues further argued that neurotics prefer stress-free jobs because they are prone to stress. the controversy on whether neurotics are good entrepreneurs or help business performance seems to be on-going and inconclusive as evidenced above. what this study is contributing to the debate is a shift away from conceptualising firm performance in its totality, by identifying some of its influences such as establishing whether personality of owner–managers affects business performance in the telecommunications sector. extraversion extraversion is a dimension of the big five personality traits that describe a person who is intensely social (tov, nai & lee 2016). it relates to people who are talkative and have a high amount of emotional expressiveness (jensen 2016). these types of people are referred to as extroverts. according to van den berg et al. (2016), extroversion is a trait characterised by the tendency to experience positive emotions such as being active, energetic, talkative and enjoying social interactions. to further clarify, extroverts are observed to get their energy from interacting with others. they are classified as those with the ability to create an energetic atmosphere (hwang, han & hyun 2018). in line with this, baluku, kikooma and kibanja (2016) found that individuals with this personality trait are more likely to have successful small businesses. this is because being talkative, outgoing and sociable works in their advantage as they can use it to promote their businesses. considering the above, one can suggest that such individuals would make good owner–managers of internet cafes as they would be able to market their businesses through social links while out socialising with either business associates or consumers. additionally, extroverts are generally known to be risk takers. correspondingly, this is seen by baluku et al. (2016) to be advantageous for small businesses as they hold the view that risk takers have the ability to drive and have successful small businesses. risk taking has also been found to be an advantage in the technology industry. this is according to mukarram, ajmal and saeed (2018) who found that this industry constantly has developments and therefore requires a person with a will to take a risk and make bold decisions. the advantages of being sociable and taking risks as outlined above may create an impression that extroverts may manage to have successful businesses. this study investigates if this is likely to be accurate for internet cafes in the study context. openness to experience openness to experience is a dimension of the big five personality trait that describes a person who likes to learn new things. it is characterised by a person who has a broad range of interests and enjoys new experiences (schwaba et al. 2018). people with this personality trait are artistic (in areas such as music, art and poetry), highly curious, imaginative and insightful (escolas, ray & escolas 2016). examples of people with this character are those who generally try new things, intelligent and imaginative (khan, ahmed and abid 2016). because of their interest in new and different things, it can be speculated that such people would attempt opening businesses. correspondingly, openness to experience has been found to be advantageous in small business because people with this trait are highly creative and innovative (franco & prata 2019). as noted on the first chapter, because of a high rate of failure of small businesses, they need highly innovative owner–managers in order to succeed. with this in mind, openness to experience can be perceived to be beneficial for small business in the technology industry too. with the intention of testing feasibility of this idea, the relationship between openness to experience and performance of internet cafes in the proposed study context is being investigated. agreeableness agreeableness is a dimension of the big five personality traits that describes a person who is commonly friendly. it relates to people who are compassionate, kind and affectionate (crowe, lynam & miller 2018). it is used to describe a person who is likeable, pleasant, considerate, warm and harmonious (tang & lam 2017). furthermore, li et al. (2016) found that agreeableness is characterised by people who are good-natured, trustful, and cooperative. as per the term ‘agreeableness’, an example of this personality trait would be people who are generally willing to agree with others. in the business world, people with this personality trait often have a determination to start new businesses (leonelli, ceci & masciarelli 2016). they are, however, unable to provide frank feedback to their subordinated and, therefore, tend to be ineffective managers (xia liu, li & xu 2021). agreeableness would therefore not be favourable in small businesses in the technology industry because in this industry, new technological ways of doing business need to be thought about seriously in terms of how they would benefit the business, before adopting them. this is critical for small business in the sector, considering that they generally operate on small budgets, and therefore, decisions made need not be costly to the business. conscientiousness conscientiousness is also a dimension of the big five personal traits, and it describes a person who is very careful. their traits include being organised, methodical and thorough (roberts, hill & davis 2017). these types of people are very mindful of details, and they have goal-directed behaviours (bieleke, keller & gollwitzer 2021). arora and rangnekar (2016) discovered that this personality trait reveals itself in three faces: orderliness (planful and organised), dependability (responsible and careful) and achievement orientation (hardworking and persistent). people with this personality trait have the desire to succeed and are therefore long-term planners and have a good technical expertise. arora and rangnekar (2016) defined conscientiousness as a person’s tendency to make plans, being organised and effective in goal setting. research indicates that conscientiousness constantly leads to general success because people with this trait work hard in the face of challenges and can control their impulses (setia 2018). with that said, one can conclude that conscientiousness would be an ideal personality trait for small business including those in technology industry. this is verified by setia (2018) who found that despite challenges faced by small businesses, conscientiousness entrepreneurs are successful in starting, maintaining and expanding businesses. internet cafes and performance the performance of small business, specifically internet cafes, is affected by internal factors such as attitudes of staff members which affect customer service (syahnur & basalamah 2019) and the speed of their server (harris 2016). at the same time, the performance of an internet cafe can also be influenced by numerous additional external factors including the location of the business (montero & balacuit 2018) and better rates offered by bigger organisations (abdullah et al. 2018). assessing the number of customers, financial targets, increase in net profit, increase in number of employees, increase in business units and the increase in number of diversification of services offered can be used as tools of evaluating the performance of small internet businesses against the mentioned influenced (wibowo, udasmoro & noviani 2020). the mentioned influences of the performance of internet cafes seem to be applicable across small businesses including those in the technology industry in order to increase their competition. according to rambe and mokhosi (2016), competition has an influence on the performance of internet cafes in the south african context. personality and performance measures the performance of business has been found to be influenced by a number of factors. in addition to the factors that have been identified above, watson et al. (2020) acknowledged personality. research by asbari et al. (2021) advocated that a person’s personality (their energy, the effort they put in and how hard they generally work) is bound to influence the results of whatever they work on. consequently, michael, saban and abdurahman (2016) suggested that personality is the main stimuli for business initiation, business drive, business performance and its success. with that being said, it is important to note that businesses have challenges such as competition, technology and finances; they therefore require to be owned and managed by certain characters in order for them to succeed. in accordance with this, one may assume that certain personalities may start businesses and, therefore, make a success of them. correspondingly, baluku et al. (2016) found that some personalities can make businesses successful. consequently, it can be assumed that only certain personalities can start and therefore maintain successful internet cafes. although the above may be true, baluku et al. (2016) differed from this assumption and further explained that although some personalities rate high in starting businesses, they do not make successful businesses. therefore, there are personalities that do not have a positive relationship with successful entrepreneurship even though they have a positive relationship with the initiation thereof. at the same time, there are personality traits that have a positive relationship with starting and maintaining successful businesses. correspondingly, some personality traits do not have a relationship with either starting up or maintaining a successful business. to demonstrate, leonelli et al. (2016) found that agreeableness personality trait has a relationship with starting up businesses, while people with neuroticism personality have no interest in starting new businesses. additionally farradinna and fadhlia (2018) identified openness to experience, conscientiousness, extraversion and agreeableness to have a relationship with entrepreneurship, while neuroticism does not. moudry and thaichon (2020) concurred with these findings and added that extraversion, agreeableness and openness to experience are personalities that make successful businesses. this is because people with personality traits such as extraversion and openness to experience are viewed to be risk takers and can therefore endure through challenges faced by businesses (franzer et al. 2020). as can be seen, there seem to be a positive relationship between extraversion and business success. this is emphasised by hwang et al. (2018) who also share the same view. conversely, extraversion has been found not only to have a positive relationship with big organisations’ success but also have the same impact for small businesses. to demonstrate, authors such as ayoade et al. (2018) advocate that small business entrepreneurs with extraversion personality trait can build successful businesses. equal to extraversion, research by franco and prata (2019) indicated that openness to experience also has a positive relationship with business performance. as previously mentioned, people with openness to experience personality trait have been found to have the drive to initiate businesses (laguna & purc 2016). in addition to this, sarwoko and nurfarida (2021) suggested that openness to experience is good for business because it is associated with innovativeness and creativity. furthermore, runst and thoma (2020) proposed that innovativeness is good for small businesses too and thus suggested that similar to big organisations, openness to experience has a positive relationship with small businesses too. among the big five personality traits, it is evident that both extraversion and openness to experience are good for both big and small businesses. observing the above, one, however, wonders if conscientiousness could have the same effect on business performance. according to awwad and al-aseer (2021), conscientiousness is indeed good for both big and small businesses. based on this, it would be reasonable to assume that the three personality traits (conscientiousness, extraversion and openness to experience) are positively related with small business performance just as with big businesses’ performance. this is re-affirmed by baluku et al. (2016) who hold the view that conscientiousness, extraversion and openness to experience personality traits have a relation to small business success and the relationship is positive as these traits lead to successful small businesses. moreover, researchers including mhlanga (2019) share the same view as above. they justify this view by indicating that individuals with conscientiousness, extraversion and openness traits are very sociable and therefore have good networking skills; they are also very driven and competent; and they are generally very creative. correspondingly, one may well believe that these characters are, therefore, beneficial for both big businesses and small businesses which include internet cafes. in addition to the three mentioned personality traits, there is also neuroticism and agreeableness. although the other three personality traits seem to have a positive relationship with business performance, these two seem not to. neuroticism is commonly associated with being anxious and pessimistic (bech et al. 2016), and agreeableness with being warm and kind (crowe et al. 2018). in addition to other researchers mentioned earlier in this chapter, gridwichai et al. (2020) advocated that being warm and kind does not correlate well with business performance. this study will investigate if the relationship between business performance in the study context and neuroticism and agreeableness is also negative. in addition to this, the study investigates whether there is a positive relationship between openness to experience, extraversion, conscientiousness and business performance in the free state province. the studies cited above on the relationship between traits such as conscientiousness, extraversion and openness to experience and business performance were, however, done in tourism and other sectors but not in technology. in contrast, the focus of this study is in the technology sector. within this sector, rambe and mokgosi (2016) believed that small internet cafe businesses are important for the economy of south africa because of reasons such as job creation. studies that examined the success of technology industries indicate that their success is influenced by innovation (pan et al. 2018), software process improvement (wu et al. 2017) and personality of owner–managers (kerr et al. 2017). although evidence that personality influences the success of technology industries is available, there is lack of literature on the relationship between personalities of owner–managers of small businesses in technology-orientated sector and the performance of their businesses, especially in the south african context. in this study, specific big five personality traits and their relation with small business performance in this industry (especially internet cafes) is, therefore, explored. method the objective of this study was to establish the relationship between the personality of the owner–manager, and the performance of internet cafes in the free state province. the said relationship was more likely to be demonstrated through statistics. accordingly, the study adopted the quantitative approach in line with the positivist paradigm. hypotheses were generated, and a statistical analysis was performed to explain the predicted relationships between the investigated variables, which are personality and business performance. population and sampling this study’s population was 110 owner–managers of all registered and paying tax internet cafes in the free state province. the major towns in which these internet cafes are allocated are bloemfontein, theunissen, brandfort, welkom, qwaqwa, bethlehem, senekal, botshabelo, kroonstad and sasolburg. using the sample size calculator, with 95% confidence level and the population of 110, the determined sample size was 86. accordingly, 110 questionnaires were distributed; however, only 88 were returned. this represented 80% response rate which has an appropriate confidence level. data collection procedure the study’s data were collected through the use of questionnaires. the questionnaires, which were self-administered, had items measured on a likert type scale ranging from 1 ‘strongly disagree’ to 5 ‘strongly agree’. (chen et al. 2020). the questionnaire was administered by the researcher among owner–managers of internet cafes in the free state province. numerical data were statistically analysed in order to explain the hypothesised relationship. data were cleaned and captured using the statistical package for social science (spss) version 21. both descriptive statistics, such as frequency distributions, averages and percentages, and inferential statistics, such as logistics regression, were used to analyse data. this data collection process took a period of 6 months, with only 88 questionnaires returned, out of the 110 distributed – this represented an 80% response rate. instrument the study used self-administered questionnaires as a measuring instrument. validity and reliability a cronbach’s alpha coefficient was used to test the reliability of the variables in this study. in order to ensure validity of the study, the following measures were taken: content validity – the researcher made use of experts such as psychologists and experts in human resources to check if all content in all areas of the questionnaire related to the aimed purpose of the study. construct validity – in this study, the construct validity was assured through an extensive literature review. the review assisted in the process of defining and explaining the key concepts under investigation, which was also done in line with furr and heuckeroth (2019) suggestions for insuring construct validity. face validity – the researcher ensured this by giving the questionnaire to a few fellow students to determine the appropriateness of the font size, language, clarity of instructions, how long it takes to complete the questionnaire, availability of adequate workspace for participants to complete and whether questions were not ambiguous. the responses provided were positive in that they affirmed the face validity of the questionnaire. ethical considerations the following ethical standards were adhered to throughout the study: firstly, all participants were informed about the study being undertaken. accordingly, participants were informed about the purpose of the study in order to ensure that they make an informed decision on whether to participate or not. secondly, the researcher clarified to participants that their participation was anonymous. thus, participants were not requested to complete any detail that could identify them. lastly, the researcher highlighted the issue of confidentiality to each and every participant by explaining that the information provided was not going to be disclosed to any external parties and would solely be used for academic purposes. the researcher further assured that only information agreed to be disclosed was included in the final study. in addition, the researcher assured the participants that access to the questionnaires was limited to the data analyst, the supervisor and the researcher only. the masters project was approved by the faculty research and innovation committee (fric) at the central university of technology, free state (fmsec05/18). findings the descriptive statistical results for the sample are demonstrated in table 1. the response rates are demonstrated on table 1. table 1: sample statistics of the respondents. as shown in table 1, there was a fair balance in representation by both male respondents (53.4%) and female respondents (46.6%). only 9.1% of the respondents were below 24 years of age with the other age groups above 24 years. most of the respondents had less than 5 years of operating as owner–manager of an internet cafe as only 38.6% had more than 5 years’ experience. the majority of the respondents also had education to the certificate level (46.6%) with 35.2% being holders of diplomas. most of the respondents has been operating their internet businesses for up to 4 years with those with 2 years of operating having the highest frequency of 30 (34.1%). there is a fair distribution across the other periods of operation. as far as the construct of openness to experience is concerned, while most respondents indicated that they are thoughtful and imaginative (84.1%) and are open to new ideas (94.3%), most lack a sense of arts as only 29.5% indicated that they liked poetry and only 30.7% like art. the items of this construct had low percentages of those agreeing or strongly agreeing meaning that the trait of neuroticism was not a dominant trait in the sample. although this may be the case, as can be seen, ‘q16: i doubt things easily’ scored the highest. this may be attributed to the popular belief that neurotics are generally sceptical. to explain, maciantowicz and zajenkowski (2018) hold the view that there is a strong correlation between neuroticism and narcissism. maciantowicz and his colleague further explained that narcissism is a disorder that makes a person very doubtful, and therefore, neurotics are highly sceptical people, and in this study, this means that the owners–managers of internet cafes in the free state are generally people who doubt things easily. the construct of conscientiousness had high percentages of respondents who were agreeing or strongly agreeing. as far as paying attention to details is concerned, 95.5% were positive with all the other items having at least 73% agreeing or strongly agreeing. this later turned out to be a very strong driver of business performance as the sections that follow will show. table 4 indicates that most owner–mangers paid attention to details. the construct of agreeableness had moderate percentages of respondents who were agreeing or strongly agreeing. a fairly high 78.4% of the sample indicated that they do not avoid contacts with others with 62.5% saying that they make friends easily and 72.7% feeling comfortable around people. the lower percentages were on items that relate to talking and drawing attention to oneself. the construct of introversion is one of the two negative traits covered in this study, and as with neuroticism, it also garnered low percentages on its items. this means that it is not a dominant trait in the sample, hence in the population studied. the only item that had a high percentage-agreeing is the fact that some had small group of close friends (70.5%). the construct of business performance indicated that, generally, the respondents were happy with the performance of their businesses as indicated by the percentages of who were happy with matters around customers, that is, 79.5% had good to excellent customer growth, 84.1% had increase in customer compliments, 96.6% were able to solve customer complaints on time, 85.2% had fast servers and 79.5% had increases in sales. moderate percentages also indicated that they had profit before tax (62.5%) and profit after tax (53.4%). in general, business performance was not bad. with these results, one can assume that good business performance may be attributed to the fact that a business like internet cafe relies on customers, and every effort is put in place to ensure loyalty of patronage. discussion the research objective of the study was to determine whether there is a relationship between personality and business performance. the results in statistical analysis, indicated on table 1 to table 4, show that there is a relationship between the personality of owner–managers and the performance of internet cafes in the free state province. this is demonstrated through findings of a strong positive correlation between personality traits such as conscientiousness, openness to experience and agreeableness and business performance, while business performance was found to be significantly and negatively correlated with neuroticism. table 2: descriptive statistics for the construct of openness to experience. table 3: descriptive statistics for the construct of neuroticism. table 4: descriptive statistics for the construct of conscientiousness. table 5: descriptive statistics for the construct of agreeableness. table 6: descriptive statistics for the construct of introversion. to clarify the above, the results show that agreeableness (mean = 3.78) and openness to experience (mean = 3.64) are not significantly different (t = 1.246, df = 174, p = 0.214), while all other pairwise comparisons of the other traits are significantly different at the 5% level of significance (p < 0.05). to some extent, research shows similar behaviour in people with agreeableness and openness to experience. for example, a study by van scheppingen et al. (2019) found that people with agreeableness and openness to experience personality traits have similar interaction styles. in addition, israr and saleem (2018) found that there is a positive correlation between agreeableness, openness to experience and the intention to become an entrepreneur. moreover, dimitriadis et al. (2017) found that these traits trigger creativity in the entrepreneurial context. it is, therefore, not surprising that data collected from respondents showed no significant difference in the study’s context as well. table 7: descriptive statistics for the construct of business performance. additionally, a correlation and regression analysis was used in order to evaluate the effects of the personality traits of owner–managers on the performance of internet cafes. the results show that business performance is significantly and negatively correlated with neuroticism (corr = -2.67, p = 0.012) and with conscientiousness (corr = 0.539, p < 0.001) and agreeableness (corr = 0.219, p = 0.041). here, conscientiousness has the highest effect size (corr = 0.539), while openness to experience and introversion do not have a significant impact on business performance (p > 0.05). the significant negative correlation between neuroticism and business performance in the study’s context is not surprising. this may be attributed to a finding by harb and alhayajneh (2019) that neurotics do not find technology to be useful. accordingly, neurotics would not have much interest in pursuing a business in a technology sector. nevertheless, conscientiousness and agreeableness, as reflected in this study’s findings, have been found to influence business performance in a positive way (wang & chen 2020). in addition, studies show that people who score high on agreeableness and conscientiousness influence business performance positively in areas such as marketing (caliskan 2019). implications for further research the purpose of this study was to investigate a relationship between the personality of owner–managers and the performance of internet cafés. however, the study was only done on internet cafés in the free state province. future studies could investigate the relationship between personality and small business performance in other small businesses and not only internet cafes in the free state province but other provinces as well. future studies could also use the pragmatic research approach in order for respondents to provide more insightful, detailed and meaningful responses, especially on performance of business. lastly, future studies could also focus on large organisations as the constructs under investigation could manifest themselves more in such businesses. recommendations this article seeks to promote the growth and survival of small businesses in the telecommunication industry through profiling owner–manager personalities and business performance of internet cafes in the free state province, south africa. based on the findings, it is recommended that people with conscientiousness, agreeableness and openness to experience be encouraged to pursue businesses in the technology industry. the results indicated a positive relationship between owner–managers of internet cafes and the three stated traits, especially conscientiousness as it is a dominant trait. thus, funders of entrepreneurs in the internet cafes business should profile the potential owner–managers to ensure that the entrepreneurs possess these traits. conclusion the existing literature focusing on the study was reviewed in order to theorise the proposed relationships based on previous studies. it was also meant to contextualise the study in a particular chosen theory and provide a justification thereof. the literature review outlined different aspects of personality, and different ways of measuring business performance were reviewed. the review led to the establishment of the relationship between personality and business performance in general. the review also indicated that, in general, there is dearth of empirical evidence on the relationship between all two variables, especially in the study’s context. although there was not enough literature on the relationship between personality and business performance, it is reasonable to conclude that, for the purpose of this study, there is a relationship between the stated variables. this is because the reviewed literature revealed that conscientiousness emerged in literature as an ideal personality trait for small businesses including those in the technology industry. therefore, it was noted that there could be a relationship between conscientiousness and the performance of the internet cafes. on the contrary, literature also proved that there are personality traits that lead to negative relationships. for example, agreeableness was found not to be favourable to the performance of businesses in the technology industry and the conclusion was that it would not have an effect on business performance. in addition to the above stated conclusions, the results of the study revealed that the most dominant personality traits of owner–managers of internet cafes were the positive traits, namely, conscientiousness, agreeableness and openness to experience. the most dominant trait was conscientiousness, which was found to be significantly positively correlated with business performance together with agreeableness. however, openness to experience and introversion did not have a significant impact on business performance. it can therefore be concluded that conscientiousness influences business performance. moreover, this research examined two objectives using quantitative analysis techniques. each of the objective is presented below with a summary of findings and conclusions related to it. objective one: to determine the dominant personality traits of owner–managers of internet cafes in the free state province results show that the most dominant personality traits of owner–manager of internet cafes were the positive traits, namely, conscientiousness, agreeableness and openness to experience. the most dominant trait was conscientiousness with a mean of 4.24 and a standard deviation of 0.6. conscientiousness was the trait with the highest minimum score among the respondents (min = 2.80). as can be seen, most owner–managers have the same personality traits, which could mean that it takes a certain kind of people to own or manage an internet cafe. therefore, it can be concluded that the three personality traits are dominant among the owner–managers of internet cafes in the free state province. objective two: to determine the extent to which dominant personality traits of owner–manager correlate or predict with the performance of internet cafes in the free state province the results show that business performance is significantly and negatively correlated with neuroticism (corr = -2.67, p = 0.012), significantly positively correlated with conscientiousness (corr = 0.539, p < 0.001) and agreeableness (corr = 0.219, p = 0.041), with conscientiousness having the highest effect size (corr = 0.539). however, openness to experience and introversion did not have a significant impact on business performance (p > 0.05). it can be concluded that conscientiousness influences business performance. acknowledgements the authors thank the lord for giving them the strength to see this project through and the university for providing them with funding. competing interests the authors declare that they have no financial or personal relationships that may have influenced the writing of this research article. authors’ contributions n.t. was responsible for the conceptualisation and writing of literature review. c.c. assisted with the methodology and construction of the questionnaire. funding information this research received support from the institutional postgraduate research grant, reference: 39168. data availability the data that support the findings of this study are available from the corresponding author, n.t., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abdullah, a., thomas, b., murphy, l. & plant, e., 2018, ‘an investigation of the benefits and barriers of e-business adoption activities in yemeni smes’, strategic change 27(3), 195–208. https://doi.org/10.1002/jsc.2195 adegbuyi, o., ayoade, e.o., ogunnaike, o.o., adegbuyi, a.a. & binuomote, m.o., 2018, ‘the impact of neurotic entrepreneurship on business performance of small and medium scale enterprises’. akbar, h., khanam, a. & manzoor, m.s., 2020, ‘relationship among personality traits, extraversion & agreeableness with students preferred learning styles at higher education’, sjesr 3(1), 1–8. https://doi.org/10.36902/sjesr-vol3-iss1-2020(1-8) allport, g.w. & odbert, h.s., 1936, ‘trait-names: a psycho-lexical study’, psychological monographs 47(1), 1–171. https://doi.org/10.1037/h0093360 arora, r. & rangnekar, s., 2016, ‘moderating mentoring relationships and career resilience: role of conscientiousness personality disposition’, journal of workplace behavioral health 31(1), 19–36. https://doi.org/10.1080/15555240.2015.1074052 asbari, m., purwanto, a., santoso, p.b., wijayanti, l.m. & hyun, c.c., 2021, ‘does genetic personality and parenting style influence students’ character building’, international journal of evaluation and research in education 10(2), 23–35. avanzi, l., perinelli, e., vignoli, m., junker, n.m. & balducci, c., 2020, ‘unravelling work drive: a comparison between workaholism and overcommitment’, international journal of environmental research and public health 17(16), 5755–5769. https://doi.org/10.3390/ijerph17165755 awwad, m.s. & al-aseer, r.m.n., 2021, ‘big five personality traits impact on entrepreneurial intention: the mediating role of entrepreneurial alertness’, asia pacific journal of innovation and entrepreneurship 15(1), 87–100. https://doi.org/10.1108/apjie-09-2020-0136 babajide, d., 2015, ‘business enterprises and entrepreneurial practices in nigeria’, research gate 7(18), 22–31. baluku, m.m., kikooma, j.f. & kibanja, g.m., 2016, ‘does personality of owners of micro enterprises matter for the relationship between startup capital and entrepreneurial success?’, african journal of business management 10(1), 13–23. https://doi.org/10.5897/ajbm2015.7738 bech, p., carrozzino, d., austin, s.f., møller, s.b. & vassend, o., 2016, ‘measuring euthymia within the neuroticism scale from the neo personality inventory: a mokken analysis of the norwegian general population study for scalability’, journal of affective disorders 193(1), 99–102. https://doi.org/10.1016/j.jad.2015.12.039 beschorner, n., 2019, ‘pacific telecommunications 2008 and beyond: changes and challenges’, pacific economic bulletin, viewed 15 february 2020, from file:///c:/users/27736/downloads/233_pacific.pdf. bieleke, m., keller, l. & gollwitzer, p.m., 2021, ‘if-then planning’, european review of social psychology 32(1), 88–122. https://doi.org/10.1080/10463283.2020.1808936 boundles, 2016, freudian psychoanalytic theory of personality’ boundless psychology, viewed 15 april 2019, from https://www.boundless.com/psychology/textbooks/. brooker, k.m., 2020, ‘assessing the relationship between narcissism, neuroticism, and leadership skills’, doctoral dissertation, san jose state university. caliskan, a., 2019, ‘applying the right relationship marketing strategy through big five personality traits’, journal of relationship marketing 18(3), 196–215. https://doi.org/10.1080/15332667.2019.1589241 cannella, s.f.b., hambrick, d.c., finkelstein, s. & cannella, a.a., 2009, strategic leadership: theory and research on executives, top management teams, and boards, oxford press, new york, ny. cilliers, o. & strydom, j., 2016, ‘women owners of smmes: finding their place in the sun’, international business & economics research journal (iber) 15(5), 241–258. https://doi.org/10.19030/iber.v15i5.9782 costa, jr, p.t., mccrae, r.r. & löckenhoff, c.e., 2019, ‘personality across the life span’, annual review of psychology 70(1), 423–448. https://doi.org/10.1146/annurev-psych-010418-103244 crowe, m.l., lynam, d.r. & miller, j.d., 2018, ‘uncovering the structure of agreeableness from self-report measures’, journal of personality 86(5), 771–787. https://doi.org/10.1111/jopy.12358 dimitriadis, e., anastasiades, t., karagiannidou, d. & lagaki, m., 2017, ‘creativity and entrepreneurship: the role of gender and personality’, international journal of business and economic sciences applied research (ijbesar) 11(1), 7–112. dollimore, d. & page, n., 2016, measuring cognitive and behavioural habit systems of entrepreneurs, viewed 13 february 2020, from https://ssrn.com/abstract=2713486. escolas, h.d., ray, l.n. & escolas, s.m., 2016, ‘personality traits and family styles of combat medics in training’, military medicine 181(6), 546–552. https://doi.org/10.7205/milmed-d-15-00165 eva financial solutions, 2019, south africa: why do small businesses fail? viewed 05 february 2022, from https://www.mondaq.com/southafrica/corporate-governance/869762/why-do-small-businesses-fail. eysenck, h.j., 1952, ‘the effects of psychotherapy: an evaluation’, journal of consulting psychology 16(5), 319–324. https://doi.org/10.1037/h0063633 farradinna, s. & fadhlia, t.n., 2018, ‘entrepreneurial personality in predicting self-regulation on small and medium business entrepreneurs in pekanbaru, riau, indonesia’, j. mgt. mkt. review 3(1), 34–39. https://doi.org/10.35609/jmmr.2018.3.1(5) finkelstein, s., hambrick, d. & cannella, a.a., 1996, strategic leadership, st. paul: west educational publishing, new york, ny. franco, m. & prata, m., 2019, ‘influence of the individual characteristics and personality traits of the founder on the performance of family smes’, european journal of international management 13(1), 41–68. https://doi.org/10.1504/ejim.2019.096498 gridwichai, p., kulwanich, a., piromkam, b. & kwanmuangvanich, p., 2020, ‘role of personality traits on employees job performance in pharmaceutical industry in thailand’, systematic reviews in pharmacy 11(3), 185–194. hambrick, d.c. & mason, p.a., 1984, ‘upper echelons: the organization as a reflection of its top managers’, academy of management review 9(2), 193–206. https://doi.org/10.5465/amr.1984.4277628 handoko, l., nugroho, v.c. & sembel, s., 2021, ‘intention to invest in financial product of older pre-retirees with financial self-efficacy as an intervening variable’, journal ultima management 12(1), 2085–4587. https://doi.org/10.31937/manajemen.v12i1.1539 harb, y. & alhayajneh, s., 2019, ‘intention to use bi tools: integrating technology acceptance model (tam) and personality trait model in 2019 ieee’, jordan international joint conference on electrical engineering and information technology (jeeit) 1(1), 494–497. https://doi.org/10.1109/jeeit.2019.8717407 harris, s.c., 2016, wireless network having multiple communication allowances, patent application publication, vol. 15, no. 1, pp. 253–465, viewed 16 august 2017, from http://www.google.com/patents/us20160373933. hashim, n.a.b., raza, s. & minai, m.s., 2018, ‘relationship between entrepreneurial competencies and small firm performance: are dynamic capabilities the missing link?’, academy of strategic management journal 17(2), 1–10. hernandez duran, l., wilson, d.t., briffa, m. & rymer, t.l., 2021, ‘beyond spider personality: the relationships between behavioral, physiological, and environmental factors’, ecology and evolution 11(7), 2974–2989. https://doi.org/10.1002/ece3.7243 hikkerova, l., ilouga, s.n. & sahut, j.m., 2016, ‘the entrepreneurship process and the model of volition’, journal of business research 69(5), 1868–1873. https://doi.org/10.1016/j.jbusres.2015.10.071 hwang, j., han, h. & hyun, s.s., 2018, ‘the antecedents and consequences of visitors’ participation in a private country club community: the moderating role of extraversion’, journal of destination marketing and management 7(1), 89–100. https://doi.org/10.1016/j.jdmm.2016.09.002 israr, m. & saleem, m., 2018, ‘entrepreneurial intentions among university students in italy’, journal of global entrepreneurship research 8(1), 1–14. https://doi.org/10.1186/s40497-018-0107-5 jensen, m., 2016, ‘personality traits and nonverbal communication patterns’, international journal of social science studies 4(5), 57–70. https://doi.org/10.11114/ijsss.v4i5.1451 khan, b., ahmed, a. & abid, g., 2016, ‘using the “big-five” for assessing personality traits of the champions: an insinuation for the sports industry’, pakistan journal of commerce and social sciences 10(1), 175–191. leblanc, m. & shrum, w., 2017, ‘the evolution of ghanaian internet cafés, 2003–2014’, information technology for development 23(1), 86–106. https://doi.org/10.1080/02681102.2016.1263594 leonelli, s., ceci, f. & masciarelli, f., 2016, ‘the importance of entrepreneurs’ traits in explaining start-ups’ innovativeness’, sinergie italian journal of management 34(1), 71–85. maciantowicz, o. & zajenkowski, m., 2018, ‘is narcissistic anger fueled by neuroticism? the relationship between grandiose and vulnerable narcissism, neuroticism, and trait anger’, current psychology 39(1), 1674–1681. https://doi.org/10.1007/s12144-018-9866-y maung, h.h., 2021, ‘psychopathic personalities and developmental systems’, philosophical psychology 34(4), 502–528. https://doi.org/10.1080/09515089.2021.1916453 mhlanga, o., 2019, ‘identification of personality traits affecting entrepreneurial performance in the hospitality subsector: a five-factor personality model’, acta commercii 19(2), 1–9. https://doi.org/10.4102/ac.v19i2.651 michael, m.s., saban, g. & abdurahman, a.z.a., 2016, ‘factors affecting non-exporting small and medium enterprises’ intention to export: resource based approach’, procedia-social and behavioral sciences 224(1), 199–206. https://doi.org/10.1016/j.sbspro.2016.05.441 montero, j.n. & balacuit, jr, c.v., 2018, ‘effective management strategies for internet café business establishments and its services’, international journal of business and applied social science (ijbass) 4(11), 34–43. moudry, d.v. & thaichon, p., 2020, ‘enrichment for retail businesses: how female entrepreneurs and masculine traits enhance business success’, journal of retailing and consumer services 54, 102068. https://doi.org/10.1016/j.jretconser.2020.102068 mukarram, s.s., ajmal, t. & saeed, a., 2018, ‘women directors’ propensity towards risk in technology firms: corporate governance’, the international journal of business in society 18(2), 353–367. https://doi.org/10.1108/cg-09-2017-0213 naik, d. & yadav, k.v., 2017, ‘gender differences on hope, optimism and neuroticism among engineering students’, indian journal of positive psychology 8(4), 625–627. ncube, m.s. & chimucheka, t., 2019, ‘the effect of managerial competencies on the performance of small and medium enterprises in makana municipality, south africa’, african journal of hospitality, tourism and leisure 8(5), 1–15. ng, h.s. & kee, d.m.h., 2018, ‘the core competence of successful owner-managed smes’, management decision 56(1), 252–272. https://doi.org/10.1108/md-12-2016-0877 pan, x., zhang, j., song, m. & ai, b., 2018, ‘innovation resources integration pattern in high-tech entrepreneurial enterprises’, international entrepreneurship and management journal 14(1), 51–66. https://doi.org/10.1007/s11365-017-0464-5 rambe, p. & mokgosi, b., 2016, ‘the influence of personal, family and social variables on technology-oriented venture creation: theoretical case of internet cafés in bloemfontein, south africa’, journal of applied business research (jabr) 32(4), 1063–1078. https://doi.org/10.19030/jabr.v32i4.9722 roberts, b.w., hill, p.l. & davis, j.p., 2017, ‘how to change conscientiousness: the sociogenomic trait intervention model’, personality disorders: theory, research, and treatment 8(3), 199–205. https://doi.org/10.1037/per0000242 runst, p. & thomä, j., 2020, ‘small business owners as gatekeepers of knowledge?’, in personality traits and modes of innovation, viewed 25 january 2021, from https://www.econstor.eu/handle/10419/215854 sari, p.k., william, r.k. & tina, x., 2018, ‘personality traits of entrepreneurs: a review of recent literature’, foundations and trends® in entrepreneurship 14(3), 279–356. https://doi.org/10.1561/0300000080 sarwoko, e. & nurfarida, i.n., 2021, ‘entrepreneurial marketing: between entrepreneurial personality traits and business performance’, entrepreneurial business and economics review 9(2), 105–118. https://doi.org/10.15678/eber.2021.090207 satpathy, b., 2021, ‘arishadvarga or shadripu personality theory’, the international journal of indian psychology 9(2), 1742–1751. schwaba, t., luhmann, m., denissen, j.j., chung, j.m. & bleidorn, w., 2018, ‘openness to experience and culture-openness transactions across the lifespan’, journal of personality and social psychology 115(1), 118–136. https://doi.org/10.1037/pspp0000150 setia, s., 2018, ‘personality profile of successful entrepreneurs’, journal of economics, business and accountancy ventura 21(1), 13–23. https://doi.org/10.14414/jebav.v21i1.1004 syahnur, h. & basalamah, j., 2019, ‘analysis of the importance degree and performance of internet service providers in makassar city, digital zone’, jurnal teknologi informasi dan komunikasi 10(2), 168–177. https://doi.org/10.31849/digitalzone.v10i2.3247 tang, c.m.f. & lam, d., 2017, ‘the role of extraversion and agreeableness traits on gen y’s attitudes and willingness to pay for green hotels’, international journal of contemporary hospitality management 29(1), 607–623. https://doi.org/10.1108/ijchm-02-2016-0048 thomas, a., chess, s. & birch, h.g., 1970, ‘the origin of personality’, in scientific american, pp. 102–109, viewed 13 february 2020, from http://www.acamedia.info/sciences/sciliterature/origin_of_personality.htm. tov, w., nai, z.l. & lee, h.w., 2016, ‘extraversion and agreeableness: divergent routes to daily satisfaction with social relationships’, journal of personality 84(1), 121–134. https://doi.org/10.1111/jopy.12146 trevarthen, c., 2016, ‘the spiritual nature of the infant self: an imaginative actor in relations of affection’, journal of consciousness studies 23(1), 258–282. van den berg, s.m., de moor, m.h., verweij, k.j., krueger, r.f., luciano, m., vasquez, a.a. et al., 2016, ‘meta-analysis of genome-wide association studies for extraversion: findings from the genetics of personality consortium’, behaviour genetics 46(2), 170–182. van scheppingen, m.a., chopik, w.j., bleidorn, w. & denissen, j.j., 2019, ‘longitudinal actor, partner, and similarity effects of personality on well-being’, journal of personality and social psychology 117(4), 51–70. https://doi.org/10.1037/pspp0000211 wang, s. & chen, x., 2020 ‘recognizing ceo personality and its impact on business performance: mining linguistic cues from social media’, information and management 57(5), 103173. https://doi.org/10.1016/j.im.2019.103173 watson, a., dada, o., lópez-fernández, b. & perrigot, r., 2020, ‘the influence of entrepreneurial personality on franchisee performance: a cross-cultural analysis’, international small business journal 38(7), 605–628. https://doi.org/10.1177/0266242620914520 wibowo, t.o., udasmoro, w. & noviani, r., 2020, ‘configuring the sustainable strategy of internet cafe in yogyakarta, indonesia, to remain popular in nowadays’, entrepreneurship and sustainability issues 8(1), 1122–1132. https://doi.org/10.9770/jesi.2020.8.1(75) widiger, t.a. & crego, c., 2019, ‘the five factor model of personality structure: an update’, world psychiatry 18(3), 271–272. https://doi.org/10.1002/wps.20658 woo, s.e., chae, m., jebb, a.t. & kim, y., 2016, ‘a closer look at the personality-turnover relationship: criterion expansion, dark traits, and time’, journal of management 42(2), 357–385. https://doi.org/10.1177/0149206315622985 wu, t., wu, y.j., tsai, h. & li, y., 2017, ‘top management teams’ characteristics and strategic decision-making: a mediation of risk perceptions and mental models’, sustainability 9(12), 1–15. https://doi.org/10.3390/su9122265 xaba, s.a., fang, x. & mthembu, s.p., 2021, ‘the impact of the 4ir technologies in the works of emerging south african artists’, art and design review 9(1), 58–73. https://doi.org/10.4236/adr.2021.91005 xia liu, a., li, y. & xu, s.x., 2021, ‘assessing the unacquainted: inferred reviewer personality and review helpfulness’, mis quarterly 45(3), 1113–1148. https://doi.org/10.25300/misq/2021/14375 abstract introduction literature review research methods and design discussion limitations of the study theoretical and practical contributions directions for future research conclusion acknowledgements references about the author(s) nomcebo n. cele school of management, information technology and governance, college of law and management studies, university of kwazulu-natal, durban, south africa mervywn k. williamson school of management, information technology and governance, college of law and management studies, university of kwazulu-natal, durban, south africa citation cele, n.n. & williamson, m.k., 2022, ‘investigating students’ perceptions of the university of kwazulu-natal inqubate-enspire programme in developing student entrepreneurs’, southern african journal of entrepreneurship and small business management 14(1), a522. https://doi.org/10.4102/sajesbm.v14i1.522 original research investigating students’ perceptions of the university of kwazulu-natal inqubate-enspire programme in developing student entrepreneurs nomcebo n. cele, mervywn k. williamson received: 25 jan. 2022; accepted: 21 june 2022; published: 26 oct. 2022 copyright: © 2022. the author licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: universities and governments globally are now opting for and enforcing student entrepreneurship policies as a means to curb economic imbalances and address unemployment issues. the university of kwazulu-natal (ukzn) is no exception to this trend as it has now introduced entrepreneurship programmes through course offerings as well as a fully operational programme, known as the ukzn inqubate-enspire that caters for students’ entrepreneurship needs. aim: the aim of this study was to investigate the perceptions of ukzn students of the role and effectiveness of the ukzn inqubate-enspire programme in developing student entrepreneurs as well as the role of the programme in assisting the university to become an entrepreneurial university. setting: this study was conducted at ukzn campuses in durban, which included howard college and westville. methods: a qualitative case study design was embraced. using a convenience sampling approach, a total of nine students who had participated in the ukzn inqubate-enspire programme were selected. data were collected using face-to-face semi-structured interviews and analysed with the use of thematic analysis. results: participants revealed that the programme has sparked an entrepreneurial mindset in them and that they have obtained many skills, which will assist them in their future endeavours. however, participants also encountered a number of challenges such as the inability to balance academic work and running their business and inconsistencies in the mentorship programme. lastly, the participants perceived that this programme made a contribution towards ukzn becoming an entrepreneurial university; however, they averred that this programme still needs much improvement to achieve this. conclusion: it was discovered that although this programme is effective, there are shortcomings that need improvement to make this programme more effective and assist the university towards becoming an entrepreneurial university. the findings will make a significant contribution to entrepreneurship education theory and practice. this study will add to the entrepreneurship education literature and open doors for future studies on this programme or similar entrepreneurship education programmes. keywords: entrepreneurship; entrepreneurship education; business incubator; inqubate-enspire; student entrepreneurs; tertiary education. introduction universities and governments globally are now opting for and enforcing student entrepreneurship policies as a means to curb economic imbalances and address unemployment issues (jansen et al. 2015). some universities have involved incubation as part of their entrepreneurship education programmes. this study seeks to investigate the effectiveness of the inqubate-enspire programme offered at the university of kwazulu-natal (ukzn), an entrepreneurship education programme offering some aspects of a business incubator. the services offered by ukzn inqubate-enspire include: mentorship, business development and market research, networking, provision of infrastructure/office space in a supportive environment, business registration, protection of intellectual property (including patents, trademarks, designs, copyright and know how) among others. (singh 2017:9–10) this research is of paramount importance as it will assist the university to review its policies and programmes offered by the inqubate-enspire programme and enhance those programmes where they need to be enhanced. not only will this study benefit ukzn but it will also benefit other universities in terms of how they can improve their entrepreneurship programme offerings and be more effective towards becoming entrepreneurial universities. according to the extant research, south africa is amongst the countries with the lowest entrepreneurial intentions, as low as 15.4% (malebana & swanepoel 2015). also, it has been observed that there is a high failure rate of small businesses in south africa before they reach maturity (leboea 2017). furthermore, south africa is among the countries with the highest rates of unemployment (jansen et al. 2015). entrepreneurship education has been introduced in many institutions, including ukzn, in order to encourage students to venture into entrepreneurship. the purpose is to curb the high unemployment rates, especially amongst the youth, as well as to overcome the predicament of businesses failing before reaching maturity (massad & tucker 2009 cited in shambare 2013; olufunso, 2010 cited in achchuthan and kandaiya 2013; leboea 2017). however, based on exploratory research carried out in 2018, it was discovered that the entrepreneurship modules offered at ukzn are more theoretical rather than practically oriented (cele 2018). to overcome this predicament, ukzn initiated an entrepreneurship programme called ukzn inqubate-enspire, which seeks to close the gap between theory and practice in its entrepreneurship programme offerings. however, there is a lack of information available to show the effectiveness of this programme. the following key research question guided the study: how do students perceive the role and effectiveness of the ukzn inqubate-enspire programme? accordingly, the study sought to achieve two objectives: (1) to determine the perceptions of ukzn students of the role and effectiveness of ukzn inqubate-enspire programme in developing student entrepreneurs and (2) to examine the role of the ukzn inqubate-enspire programme in assisting the university to becoming an entrepreneurial university. the findings will make a significant contribution to entrepreneurship education theory and practice and will add to the body of knowledge of business incubators in higher education institutions and its effectiveness in developing student entrepreneurs and assisting these institutions in becoming entrepreneurial. the remaining sections of this article include the following: firstly, an overview of the relevant literature is presented; secondly, the research methods and design are discussed; thirdly, the study findings and relevant discussion are provided; and finally, the conclusion. literature review defining student entrepreneurship the words ‘academic entrepreneurship’ and ‘student entrepreneurship’ or ‘entrepreneurship education’ are usually used interchangeably within the research space (marchand & hermens 2014). however, alves et al. (2019) stated that student entrepreneurship is just a branch or a dimension of academic entrepreneurship. student entrepreneurship entails the promotion of entrepreneurship through either the sale of research or through the cultivation of entrepreneurial skills amongst students, as well as exposing the students to the entrepreneurship opportunities (sandip & salve 2016). miranda, chamorro-mera and rubio (2017) defined student/academic entrepreneurship as the situation whereby businesses are formed based on the research conducted by a person from a certain institution. marchand, hermens and sood (2016) defined student entrepreneurs as registered university students who run their small business ventures within or nearby the university. apple, microsoft, dell, facebook and snapchat are said to be a few examples of businesses that were initiated by the students while they were in an institutional environment (alves et al. 2019). bergmann, hundt and sternberg (2016) simply defined student entrepreneurs as individuals that start businesses while they are still registered at higher education institutions. it can be observed from the given definitions that marchand et al. (2016) and bergmann et al. (2016) had similar ideas in defining the concept of student entrepreneurship. there is still incongruity as to whether academic entrepreneurship is the same as student entrepreneurship. marchand and hermens (2014) stated that these terms are used interchangeably, and alves et al. (2019) stated that student entrepreneurship is just a branch or a dimension of academic entrepreneurship. entrepreneurship education theoretical student entrepreneurship education approach versus practical student entrepreneurship education approach there is great controversy in the research field as to whether the theoretical approach to entrepreneurship education is more effective compared with the more practical approach (wright, siegel & mustar 2017). in the theoretical approach, students are taught about the principles and concepts of entrepreneurship. this is in contrast to the more practical approach, where students participate in entrepreneurship activities such as competitions in writing business plans. the field of entrepreneurial education has been of interest amongst different stakeholders as it offers to students the expertise and competencies required to start and manage their own businesses (gimmon 2014). in recent years, higher education institutions have been reviewing their traditional student entrepreneurship curricula as a result of the observed lack of proportional growth in students’ businesses (morris, shirokova & tsukanova 2017). it was highlighted that among the factors that contribute to the lack of growth in these student businesses is a lack of support structures such as capital, mentorship and resources (morris et al. 2017). according to research conducted by din, anuar and usman (2016) on the effectiveness of entrepreneurship education in a malaysian public university (universiti utara malaysia), there is a correlation between the effectiveness of the entrepreneurship programmes offered by the university and entrepreneurship readiness for the learners. research conducted by karimi et al. (2016) proved that the entrepreneurship education offered by the university cultivated the innovative idea generation skills of students who participated in the course compared with those who did not participate. according to albornoz, amorós and pérez-carrón (2011) and peterman and kennedy (2003) cited in gimmon (2014), students’ intentions to become entrepreneurs show an increase when exposed to practical experiences of the entrepreneurial and business world through practical entrepreneurship programmes. a study conducted in a nigerian institution revealed that entrepreneurship education was not sufficient to encourage students to become entrepreneurs as the number of unemployed still persisted after the students were exposed to entrepreneurship courses; hence, there is a need for a more practical approach, such as incubation (ikebuaku & dinbabo 2018). effectiveness of business incubators based in universities business incubators can be defined as mediums that seek to assist small businesses to mature faster through providing the necessary resources and guidance (bone, allen & haley 2017). bennett, yábar and saura (2017) stated that most universities have actually resorted to this approach as means to alleviate small business failure at their nascent phase. the question remains whether these business incubators offered in higher education institutions are effective. according to a study conducted by kolympiris and klein (2017), there are advantages and disadvantages of business incubators in higher education. it was found that business incubators are useful in the sense that they promote profit-oriented innovations and successful business start-ups. however, these incubators result in a cost to the university; there is an observed decrease ‘in the average quality of the university’s patents, controlling for patent-, universityand time-specific characteristics’ (kolympiris & klein 2017:165). culkin (2013) conducted research on the effectiveness of the university incubators in the united kingdom. he discovered that 68% of the participants were pleased with the services they obtained. he also discovered that the university incubators played a crucial role in the success of small businesses and asserted that the start-ups involved in the university incubators have a greater chance of survival compared with their counterparts without incubation; however, it is felt that more research still needs to be carried out in this area (culkin 2013). polónia, cunha and leite (2020) conducted research in portugal on the performance of 64 companies that were in the technology industry. half of these companies had recently graduated from the university incubation programmes and the other half never received any incubation. these companies were of the same age and were based in the same district. polónia et al. (2020:1) discovered that there was minimal difference on the general performance of these companies, however, after a consideration of specific indicators, the companies that underwent incubation ‘behaved differently from non-incubated ones in terms of the productivity of their intangible assets, grant dependency and external markets openness’. lose et al. (2016) conducted a study on the role of business incubators in south africa in 2016 and suggested a need for a study on why south african higher education institutions lack business incubators. this suggests that the introduction of business incubators in south african higher education institutions is still at its infancy. however, according to jackson (2016), most south african higher education institutions are now introducing business incubators with the intention of instilling the culture of entrepreneurship in their institutions; examples include university of cape town, stellenbosch university and university of pretoria (jackson 2016). there are no studies known to the researchers about the effectiveness of the business incubators based in these universities. entrepreneurial university: what is it? peterka and salihovic (2012) and rubens et al. (2017) stated that the concept of entrepreneurial universities was initiated in response to societal, economic and environmental needs and also to address the financial needs of institutions. this concept became popular amongst academic scholars and policymakers in the 20th century as they were trying to find a suitable definition and description to this phenomenon (guerrero & urbano 2012 cited in o’reilly, robbins & scanlan 2019). jameson and o’donnell (2015) argued that entrepreneurial universities positively influence the society through investing and influencing the different stakeholders using its activities. johnston and huggins (2016) concurred with jameson and o’donnell (2015) in their definition and understanding of the entrepreneurial university as they also opined that entrepreneurial universities collaborate with different stakeholders to impact and foster change in society. fayolle and redford (2014), and etzkowitz et al. (2019) stated that there is still uncertainty in the research space about the exact definition of the entrepreneurial university; however, different scholars have come up with different definitions of this phenomenon. according to etzkowitz et al. (2000), cited in pugh et al. (2018), the entrepreneurial university undertakes entrepreneurial pursuits to add value to the financial status of the university and also to the growth of gdp of the country or region in which it is based. mascarenhas et al. (2017) stated that entrepreneurial universities are those universities that foster entrepreneurial intents and entrepreneurial pursuits among its students through availing opportunities and creating a conducive environment for entrepreneurial activities. audretsch (2014) argued that entrepreneurial universities were initiated not for the benefit of the universities only but for the benefit the community as well through conducting research, which seeks to address social predicaments. to guide this research, the ‘three-stage student entrepreneurship encouragement model (seem)’ was employed (jansen et al. 2015:172). this conceptual framework as shown in figure 1 offers feasible methods that universities could employ on the journey towards becoming entrepreneurial universities. the methods are separated into three factors that will be studied in greater detail; these are ‘educate, stimulate and incubate’ (jansen et al. 2015:172). figure 1: three-stage student entrepreneurship encouragement model. the given framework provides plausible ideas or techniques that could improve overall university entrepreneurship education. it also offers techniques that could be employed in incubation to make it more effective at universities. educate kuratko and hoskinson (2017) stated that there has been a notable increase in the number of higher education institutes globally offering entrepreneurial education compared with when they started. according to jansen et al. (2015:172), educating entails ‘providing supportive staff, highlighting role models and success stories and offering introductory entrepreneurship courses’. nowiński et al. (2019) averred that entrepreneurship education plays a significant role in increasing the students’ entrepreneurial intentions. however, other scholars oppose the notion that entrepreneurship is a viable tool to encourage students to be entrepreneurs. dou et al. (2019) argued that the effectiveness of entrepreneurship education depends on environmental factors, and this results in different experiences for different participants. nielsen and gartner (2017) conducted research in a scandinavian university about the role of entrepreneurship education in producing successful entrepreneurs. their findings were that entrepreneurship education causes or brings confusion to students; they become confused about their role, being students or entrepreneurs. in the process, these confused students end up neglecting one or either of the two responsibilities as a result of the workload, stress and lack of time management. the authors stated that most of the businesses started by these students did not mature and become successful. nielsen and gartner (2017) concluded that the university is not a conducive environment to instil entrepreneurial intentions. ramchander (2019:1) observed that south african universities do not have their own structured curricula for entrepreneurship education but use an ‘international best practice approach’. according to nieuwenhuizen et al. (2016), the international best practice entrepreneurship education approach comprises no specific qualification for entrepreneurship at undergraduate level. however, universities offer entrepreneurship modules to cater for entrepreneurship education as well as business incubation programmes. students only get to specialise in entrepreneurship at a postgraduate level as per the international best practice approach (nieuwenhuizen et al. 2016). musetsho and lethoko (2017) concurred with the above-mentioned scholars as they highlighted that the majority of universities offering entrepreneurial education in south africa do not have a specific entrepreneurship degree; however, they have incorporated entrepreneurship modules into certain business management qualifications. stimulate according to jansen et al. (2015:172), stimulating entails ‘support founding formation, providing mechanisms for idea validation, providing pitching opportunities, supporting business plan creation and enabling prototype development’. entrepreneurial stimulation can be defined as factors used to induce or encourage people to become entrepreneurs (shumba 2015). the tunisian government added an entrepreneurship track where students were offered business training and coaching through business plan creation as part of their plan to enhance their entrepreneurial education offerings (premand et al. 2016). the inclusion of this element resulted in overall increased future aspirations from graduates and a slight increase in the number of self-employed students; however, the overall employed remained the same (premand et al. 2016). pallotta and campisi (2018:317) conducted research where they compared the businesses that underwent stimulation processes such as business idea initiation and business concept process, which entails the initial ‘business idea validation, business validation and start-up innogrants’. in their research they discovered that businesses that underwent stimulation grew much healthier compared with those that were not stimulated. cornett (2018) stated that entrepreneurial stimulation programmes play a very crucial and pivotal role in the european continent and thus have also been included in policies. incubate incubation is one of the newest tools that universities are using to become more entrepreneurial and make their entrepreneurship programme offerings more effective. mcadam, miller and mcadam (2016) stated that incubation has become a tool that the universities use to stay competitive, to boost the economy and support start-ups. figure 2 depicts the value that incubators add to the student entrepreneurs. from the figure we can see the initial state of the infant business or the newly initiated business. it can be seen that small businesses usually encounter challenges such as ‘lack of contacts, lack of resources and liability of smallness’, which puts them at a disadvantage in relation to their already established competitors (roseira et al. 2014:14). their participation in the incubation programmes affords them an opportunity to gain skills and resources such as ‘networking, business support infrastructure and legitimacy/credibility’, which assists them to stay competitive (roseira et al. 2014:14). figure 2: potential of value-adding suppport by the business incubator. research methods and design study design a qualitative exploratory and case study design was embraced in this study. a qualitative study aims to uncover an in-depth explanation of participants’ experiences of the phenomena under investigation. this study is exploratory in its nature as it is novel and very little research has been undertaken in this area in the past. this study is a single case study as it focuses on the ukzn inqubate-enspire programme. setting this study was conducted at ukzn, durban campuses that included westville and howard college. study population and sampling strategy the population of this study is based on the pool of students selected when the ukzn inqubate-enspire programme sent out an invitation to the ukzn community to participate in the different entrepreneurial competitions they hosted. these students were part of the programme from 2017 to 2019. the population size of students enrolled between 2017 and 2019 is estimated to be 40 students. the sample size of this study was nine respondents, chosen from the population of ukzn registered students in 2019 who participated in the ukzn inqubate-enspire programme. seven of these participants were from westville campus and two were from howard college. nine participants were selected because it was believed that these would be sufficient to reach a point of saturation. to conduct this study, a non-probability convenience sampling method was used, whereby participants were selected based on their accessibility and willingness. the students who had participated or were participating in the ukzn inqubate-enspire programmes were approached through different mediums of communication, that is, emails, phone calls and social media. data collection to carry out this research, face-to-face semi-structured interviews were conducted. the interviews were held at ukzn westville campus and ukzn howard college. these interviews were carried out in different quiet areas that were identified on these campuses. the interviews were guided by an interview schedule. the researcher started by introducing the study to the participant and then the interview was proceeded by the researcher asking the questions and the participant responding to those questions as per the interview schedule. however, as the interviews were semi-structured in nature, the researcher probed further questions to get clarity where it was needed. interviews were employed to get information on the individual experiences of participants in the inqubate-enspire programme. the interviews were semi-structured to allow for flexibility and clarity during the interviews (mcleod 2014). conducting face-to-face interviews is of great advantage as it allows the researcher and the participant to probe for clarity if there is any misunderstanding in the process of the interview (sekaran & bougie 2016). face-to-face interviews are more effective, cheap and flexible, as they are open-ended, compared with other forms of data collection (sekaran & bougie 2016). data analysis data analysis method refers to the method by which the data are analysed and interpreted after it has been collected (sunday 2018). there are different methods used to analyse data after it has been collected. one method, thematic data analysis, entails deducing themes from the qualitative data collected (braun et al. 2019). the data collected for this research was coded through the use of nvivo 12 software and then analysed through the use of thematic analysis. nvivo 12 is a software or an application used to collect, organise, analyse, code and visualise unstructured or semi-structured qualitative data (la trobe university 2020). the thematic analysis was guided by braun and clarke’s (2006) six-step process that included the authors’ familiarising themselves with the data, generating the initial codes, searching for the relevant themes, reviewing the themes, defining and naming the final themes and completing the write-up of these themes. the data were audio recorded during the interviews then typed verbatim in a microsoft word document. this word document was then exported to the nvivo 12 software. after that, each question was reconstructed to make it shorter and not take much space in the project map. the responses to each question were then summarised into shorter themes and those responses were coded into themes. sub-themes were formulated based on the responses from the themes; for example, if a theme had responses that had different categories, it was then segmented further into sub-themes. lincoln and guba (1985) dimensions of trustworthiness are relevant to qualitative research. these include credibility, conformability, dependability and transferability. therefore, trustworthiness was enhanced by means of the following activities: triangulation of data, member checking of interview transcripts and keeping of copious notes describing various aspects of the research process. ethical considerations to ensure that the ethical requirements are met, the research proposal was drafted and sent to the registrar’s office for the gatekeepers’ letter approval. after the gatekeepers’ letter was obtained, it was then sent to the research office together with the research proposal, interview questions and the informed consent forms, which then granted the researcher permission (ethical clearance reference number: hssrec/00000584/2019) from ukzn to proceed with the collection of data. while conducting the interviews, the participants were given informed consent forms to sign, which ensured the anonymity and confidentiality of their responses. this informed consent form was in line with the ethical requirements of research and was approved by the research office. fictitious names were used instead of actual names to ensure anonymity of the participants. the participants were not forced to participate in this research but were asked to participate voluntarily. this research did not pose any harm to the participants and they were informed that they could withdraw anytime during the interview if they felt like discontinuing. findings table 1 provides a summary of the participants’ profiles. this study comprised eight african male participants between the ages of 19and 25 and one african female participant in the 19–25 age range. the majority (78%) of these participants were from the westville campus. the participants were selected based on accessibility and willingness to participate. fifty-five per cent of the participants for this study had no businesses before participating in this programme, which implies that they had little or no experience running a business prior to participation. only three of the participants had a commerce background: paul, elias and robert were exposed to the introductory entrepreneurship course offered by the university to commerce students in their second year. table 1: profiles of the participants. objective 1: to investigate the perceptions of university of kwazulu-natal students of the role and effectiveness of university of kwazulu-natal inqubate-enspire programme in developing student entrepreneurs theme 1: challenges encountered during participation in the programme sub-theme 1.1: inability to balance academic work and running a business: three participants stated that one of the major challenges they encountered was striking a balance between their academic work and taking care of their businesses. once the students were accepted to be part of this programme, they attended different sessions, held almost every week, on top of having to keep pace with their academic work. some of these sessions were sometimes held close to the examination period, which really affected some of these participants: ‘…. while we were participating in the programme, we were also doing some academic work, so we didn’t have much time to focus on our business idea and our business. the mentorship programme was in june and we were required to submit a business proposal, so, we couldn’t finish our business proposal because of the academic exams, that’s why we pulled out of the programme.’ (john, male, 19–25 years old) running a business comes with a great deal of responsibility, which requires a large amount of time. this then calls for the student entrepreneurs to learn about time management as soon as possible to be able to master the different responsibilities with utmost excellence. however, more systems need to be put in place to ensure that this programme does not end up taking up more time and negatively affecting the students’ academic work. sub-theme 1.2: inconsistencies in the mentorship offerings: participants stated that the programme had inconsistencies in terms of the mentorship offerings. mentorship can be defined as a process whereby one gets assistance and guidance on a particular area from someone who has experience in that particular area (cooke, patt & prabhu 2017). peter stated that they were assigned specific mentors at the beginning of the programme but as the time went by, those mentors did not continue to assist them: ‘… …i have received from them financial support, academic support that they provided and the help of the mentors at the beginning of a programme. however, the mentorship programme is no longer provided. what i can say is a bit of a problem from them is that as the project progresses, as a student entrepreneur, the academic stresses and other stresses exerts pressure on you, you don’t have someone to turn to because we no longer have mentors……’ (peter, male, 19–25 years old) some of the participants had a different view or perspective on the mentorship offerings. these participants showed great appreciation for the help they have received from the mentorship: ‘in terms of how they have assisted us, is that we a had a mentor who was helping us on how we can develop our ideas in terms of looking for business aspects, for example, when you are looking at marketing segments, what to look at. they also prepared us in terms of how to pitch to the investor once you have a business idea and have made a business proposal.’ (john, male, 19–25 years old) mentorship is one of the important aspects in the development of the student entrepreneurs (ahsan et al. 2018). fifty-five per cent of the participants stated that they did not have businesses prior to participation in this programme, hence a need for mentorship. this implies that they had little or no experience of running a business. research has shown that student entrepreneurs encounter a number of challenges, which affects both their academic work and the growth of their businesses; therefore, mentorship is invaluable in overcoming this predicament (ahsan et al. 2018). sub-theme 1.3: less attention and acknowledgment of different business sectors: a few participants stated that this programme mostly caters for a single business sector, that is the technological sector and pays little attention to other sectors. as a result, james stated that they felt that their business sector, which was agricultural in nature, was less acknowledged: ‘we had a problem because our business was more on agriculture and food security. most of the people were not knowledgeable about the agriculture and food security sector; they were more knowledgeable about the innovative and technological sector. if you present the business about agriculture like us, we felt like they didn’t understand like they should, and they didn’t see the way we see things…… that was the major problem for our business; we didn’t get that much acknowledgement and significance.’ (james, male, 19–25 years old) there is currently a paradigm change in the technical sphere or industry globally as we are currently living in the fourth industrial revolution (xu, david & kim 2018). perhaps this accounts for the greater emphasis on highly innovative and technical business ideas. the lack of a broad range of industry experience of staff members responsible for this programme may perhaps account for this. however, it is important that the universities cater for all entrepreneurial spheres in their entrepreneurial programmes. theme 2: impact on the development of student entrepreneurs sub-theme 2.1: offers a range of support services: participants asserted that they received a wide range of support services from the inqubate-enspire programme. this included support services such as networks and financial support that has significantly impacted their entrepreneurial journey: ‘they have given us time to network……our communication is good; it made us to be open to ask questions whenever we like. if we are concerned about something, they made it so easy to come and talk to them and ask them questions.’ (steven, male, 19–25 years old) ‘what i can say is that it is really open to ideas; it is really not easy to find an incubation programme that funds an idea. they help you to grow your idea and they fund your idea…. that’s what i think is the major highlight for me.’ (peter, male, 19–25 years old) finance or capital is a fundamental aspect for starting and successfully running any business (neneh 2016). therefore, financial support, as part of the ukzn inqubate-enspire programme will ensure that the university will produce graduates who have established businesses, resulting in employment creation. networking also plays a pivotal role in the success of entrepreneurs as it opens an opportunity to know people who might be in the same industry and who may be of great benefit at some point (sungur 2015). sub-theme 2.2: promotes entrepreneurship and inspires an entrepreneurial mindset: participants stated that the ukzn inqubate-enspire programme promotes entrepreneurship and has inspired an entrepreneurial mindset in them. these participants mentioned that they gained different entrepreneurial skills such as business plan writing skills, communication skills, business proposal writing skills and many more: ‘my experience is that they bring about that entrepreneurial mindset at ukzn and that’s what i have acquired as well. i did have an entrepreneurial mind before i got to inqubate-enspire but what they have done is that they have sharpened it…. i could look at a concept or the idea that i have and be able to break it down to an extent where i’ll be able to identify if it’s a good or a bad concept.’ (michael, male, 19–25 years old) research has shown that entrepreneurship education programmes do spark an entrepreneurial interest and an entrepreneurial mindset among students (karimi et al. 2016). there are different approaches applied by different higher education institutions to achieve this objective, such as business plan writing competitions, seminars on entrepreneurship and different courses on entrepreneurship, which inspire entrepreneurship skills (sirelkhatim & gangi 2015). participants were also asked for their opinion if this programme was effective or not in the development of student entrepreneurs. a number of participants (33%) asserted that this programme was very effective in the development of the student entrepreneurs: ‘i can say that it is very effective…. for a person who didn’t know anything about business, when you are enrolled into this programme you get to know many aspects of the business because you may have an idea but in terms of how to execute the business, how to make the idea an active business, you don’t have an idea. once you get to this programme you get that kind of full idea of how you are going to plan and execute the idea to be a formal business…’ (james, male, 19–25 years old) these participants were very confident that this programme was effective in their development and asserted that they gained a great deal of skill and knowledge from the programme. the majority (67%) of the participants mentioned that this programme was effective in the development of the student entrepreneurs; however, these participants mentioned that this programme still needs more improvement moving forward: ‘it is effective to a certain degree. they could be better if there were certain things that were made available, in terms of person-to-person contact, be part of your journey in whatever initiative you take or part of any project you do. there should be more face-to-face interaction to help you and guide you even more along whatever project you are taking part in.’ (elias, male, 19–25 years old) ‘although the programme is useful, many people are unaware of it. regarding this, the university has to do something to market the programme so as to increase awareness among students. there are many students who would like to run their own businesses; they don’t know that ukzn provides such a programme.’ (steven, male, 19–25 years old) sub-theme 2.3: uplifts students and boosts the economy: participants stated that the ukzn inqubate-enspire programme plays a pivotal role towards uplifting the students as well as boosting the economy. it inspires the students to be entrepreneurially minded and promotes the production and sale of local brands: ‘it plays an integral role in building a youth culture where we promote goods and services that are produced and sold here in south africa so as to boost our economy. it’s a very integral and important programme to uplift students and the social culture in general.’ (mary, female, 19–25 years old) as mentioned here, based on the responses of the nine participants, it was apparent that these participants had different perceptions and experiences when it comes to the ukzn inqubate-enspire programme. while the researchers found no research on the ukzn inqubate-enspire programme specifically, literature on the similar programmes conducted in other universities also shows that there are mixed feelings when it comes to the perceptions and experiences of student entrepreneurs with regard to these programme offerings. for example, some universities found these programmes to be effective and useful for the development of student entrepreneurs, whereas others found them to be not useful and ineffective in developing student entrepreneurs (dou et al. 2019; kirkwood, dwyer & gray 2014). objective 2: to examine the role of the university of kwazulu-natal inqubate-enspire programme in assisting the university to become an entrepreneurial university theme 3: contribution to becoming an entrepreneurial university six out of nine of participants stated that the ukzn inqubate-enspire programme is sufficient to move ukzn towards becoming an entrepreneurial university. however, four of these participants concurred with the notion that this programme still needs substantial improvement in order to achieve this: ‘yeah the efforts they are making now are sufficient but with slight improvement it could be a lot better in terms of the results that turned out, but the current programmes are moving in the right direction.’ (elias, male, 19–25 years old) the participants also asserted that the university has worked with different stakeholders such as the banks, industry experts (entrepreneurs), investors and the student entrepreneurs to make this programme a success. they asserted that the involvement of such stakeholders in the programme made it more effective, and more effective in preparing or advancing the university towards becoming an entrepreneurial university. three participants said that the ukzn inqubate-enspire programme is not sufficient to move ukzn towards becoming an entrepreneurial university. these participants stated that this programme still needs a lot of improvement and also stated that it only offers introductions about entrepreneurship. a lack of proper marketing of the programme was counted amongst the things that make the programme insufficient. the participants asserted that there are few students who are aware of this programme: ‘no, they just give you the introduction of things, the small amount of knowledge so you have to try to get more information in order to become better.’ (robert, male, 19–25 years old) robert asserted that the knowledge made available to them is basic knowledge about entrepreneurship, which is not sufficient to make the programme effective and insufficient to make the university an entrepreneurial university. discussion objective 1: to investigate the perceptions of university of kwazulu-natal students of the role and effectiveness of university of kwazulu-natal inqubate-enspire programme in developing student entrepreneurs theme 1: challenges encountered during participation in the programme the inability to strike a balance between academic work and being part of the ukzn inqubate-enspire programme was one of the predicaments that the student entrepreneurs encountered. as a result, some of the participants stated that they had to drop out of the programme or miss out on certain opportunities that were offered by the programme. this is in line with results of a study conducted by nielsen and gartner (2017), which revealed that entrepreneurship education causes or brings confusion to students as they end up getting caught up in confusion about being students or entrepreneurs. nielsen and gartner (2017) stated that these confused students end up neglecting one or either of the two responsibilities as a result of the workload, stress and lack of time management. this was supported by research by fatoki (2014) at a university in south africa, as student entrepreneurs asserted during interviews that they faced difficulties in maintaining a balance between academic works and running their businesses. however, a study conducted by osakede, lawanson and sobowale (2017) in nigeria (university of ibadan) contradicted these findings, as the results showed that students’ participation in entrepreneurship did not affect their academic work. participants stated that they also encountered the challenge of inconsistency in the programme, for example in the mentorship offerings, and this had a detrimental effect on the performance of their businesses. mentorship inconsistency meant a lack of people to confide in and a lack of proper guidance from industry experts. this is in line with results of a study by morris et al. (2017), which revealed that some of the factors contributing to the lack of growth in student businesses is a lack of support structures, such as capital, mentorship and resources. a study conducted by gimmon (2014:1) revealed that mentorship played a significant role in the development of students’ entrepreneurial skills. participants also stated that the programme focused on technical and innovative businesses, which meant they received little attention from the programme as they were from the agricultural sector. there is no evidence known to the researchers of such a challenge or barriers from the literature. however, reasons for this could be associated with the global trend of promoting technical and innovative businesses in this era of the fourth industrial revolution. theme 2: impact on the development of student entrepreneurs the participants perceived the programme to be informative and to be a platform where entrepreneurship is promoted. this is in agreement with research conducted at the university of otago on students’ reflections on the value of an entrepreneurship education. this research shows that the students perceived the entrepreneurship course they took to be a platform on which they have acquired entrepreneurial skills, a platform that has inspired confidence in them and a platform that is informative and insightful (kirkwood et al. 2014). these findings are also supported by a study conducted by adeeko, bifarin and umunna (2016) in nigeria on perceptions and attitudes of students towards entrepreneurship in nigeria. this study’s findings asserted that the students perceived the entrepreneurial education as important and beneficial. the students asserted that the skills they have gained from the entrepreneurship education programme would be of great benefit post university (adeeko et al. 2016). the participants also stated that they received financial support from the programme and had an opportunity to network during the programme. these findings are in unison with a study conducted by sirelkhatim and gangi (2015), where they studied the different approaches that different higher education institutions use in entrepreneurship education. these scholars found that financial support and networking were amongst other support structures offered to students in the entrepreneurship education programmes (sirelkhatim & gangi 2015). all the participants stated that this programme was effective in the development of student entrepreneurs. however, some of the participants stated that this programme still needs improvement moving forward to be more effective. this aligns with results obtained by din et al. (2016) on the effectiveness of entrepreneurship education programmes. they found there is a correlation between the effectiveness of entrepreneurship programmes offered by the university and entrepreneurship readiness of the learners. different scholars hold different views or perceptions on the effectiveness of entrepreneurship programmes based at different universities. dou et al. (2019) argued that the effectiveness of entrepreneurship education depends on environmental factors such as the social environment, the regulatory environment and the curricular options offered, and this results in different experiences for different participants. nielsen and gartner (2017) stated that most businesses started by these students do not end up maturing and becoming successful. they also argued that the university is not a conducive environment to foster entrepreneurship, as students become caught between being entrepreneurs and being students and end up neglecting either of the two (nielsen & gartner 2017). it should be observed, however, that it is difficult to compare the ukzn inqubate-enspire programme with other entrepreneurial education programmes from other universities as there may be variances in how they are structured. objective 2: to examine the role of the university of kwazulu-natal inqubate-enspire programme in assisting the university to become an entrepreneurial university theme 3: contribution to becoming an entrepreneurial university the majority of the participants (67%) stated that this programme makes a useful contribution towards ukzn becoming an entrepreneurial university but concurred with the fact that the programme still needs improvement. based on the ‘three-stage seem’ by jansen et al. (2015:172), it is evident that the ukzn inqubate-enspire programme is playing a significant role in assisting the university to move towards becoming an entrepreneurial university. the ukzn inqubate-enspire programme offered students support structures and resources, and these were counted as factors that contribute towards an entrepreneurial university. this programme offered students financial support, mentorship, networking, pitching opportunities, business plan writing skills and supportive staff members. limitations of the study the following limitations of the study are identified: in determining the effectiveness of the inqubate-enspire programme offerings at ukzn, the research examines only one perspective; it only looks at the participants’ point of view, that is the beneficiaries of the programme and not the university’s point of view. only respondents from two ukzn campuses (westville campus and howard college) were used for this study. thus, leading to fewer inqubate-enspire participants participating in this study. this contributed to the lack of generalisation of the results. also, use of the qualitative case study method limits generalisability. theoretical and practical contributions the findings contribute to entrepreneurship education theory by adding to jansen et al.’s (2015:172) ‘three-stage student entrepreneurship model’ by building on its dimensions of ‘educate, stimulate and incubate’. the findings contribute to entrepreneurship education practice in the following ways: firstly, in response to the challenges encountered in higher education institutions of the lack of policies to support business incubation in universities, the government should initiate more policies to support the initiation of university incubators. the initiation of such policies may also assist the university to obtain more sponsors to make the programme more effective and provide a large pool of funding for student businesses. secondly, in planning the programmes for the ukzn inqubate-enspire programme, the organisers should take into account the general university calendar. this will ensure that the organisers minimise the programmes offered during the examination period and ensure that the student entrepreneurs get enough time to focus on their studies for the exams. finally, there should be a more structured approach to the mentorship programme in order to assist aspiring student entrepreneurs. mentorship is a key component of university mentorship programmes. directions for future research future research should look at the impact of factors such as gender and race on student entrepreneurship in the south african context or at ukzn specifically, as eight out of nine participants of this study were african males. study of this nature may give an insight as to whether these factors do have an impact on students’ engagement in entrepreneurial activities. this research only comprised the perceptions of the students in determining the effectiveness of the ukzn inqubate-enspire programme. future research should collect data from both the student entrepreneurs and the staff members to determine the effectiveness of this programme or similar programmes. this research only comprised nine participants from both the ukzn westville and howard college campuses. future research should increase the sample size and try to cover all ukzn campuses to avoid the lack of generalisability. to increase the sample size for this research, mixed methods such as interviews and questionnaires could be used. this research was based only on students who have participated in the programme and did not consider the perceptions of those that have not participated. future research should compare students who have participated in this programme with those who have not participated to determine the effectiveness of the programme. this will provide rich information about how students in general perceive this programme. conclusion the ukzn inqubate-enspire programme is a new programme that became effective in 2017. this programme was initiated with the purpose of instilling a culture of entrepreneurship among students and assisting them in their entrepreneurial endeavours. furthermore, the researchers found no published research specific to this study, which then was a gap that the research sought to fill. this study investigated students’ perceptions of the role and effectiveness of the programme in developing student entrepreneurs. in addition, this study also examined the role of the programme in assisting ukzn in becoming an entrepreneurial university. the findings revealed that the ukzn inqubate-enspire programme triggered an entrepreneurial mindset in the participants and that they acquired a range of skills that would support them in their future accomplishments. notwithstanding these benefits, participants also experienced a number of challenges, which hindered the attainment of the programme outcomes. these included, the inability to balance the academic work required and running their businesses and inconsistencies in the way mentors were assigned and provided support. the participants further perceived that the ukzn inqubate-enspire programme contributed towards ukzn becoming an entrepreneurial university. however, the programme still requires improvement to fully realise its potential as a trailblazer. the findings highlight the importance of university incubators such as the ukzn inqubate-enspire in developing future entrepreneurs and transforming universities into entrepreneurial institutions of higher learning. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions n.n.c. was responsible for the conceptualisation, methodology, formal analysis, the investigation and writing the original draft. m.k.w. supervised the study and both authors contributed toward the reviewing and editing of the manuscript. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the data that support the findings of this study are available from the corresponding author, m.k.w., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references achchuthan, s. & kandaiya, s., 2013, ‘entrepreneurial intention among undergraduates’, european journal of business and management 5(5), 172–186, viewed 12 december 2020, from https://doi.org/core.ac.uk/download/pdf/234624613.pdf. adeeko, a., bifarin, j.o. & umunna, m.o., 2016, perceptions and attitude of students towards entrepreneurship education in nigeria (ondo state as a case study), viewed 07 january 2020, from https://www.academia.edu/31731898/perception_and_attitude_of_students_towards_entrepreneurship_education_in_nigeria_ondo_state_as_a_case_study. ahsan, m., zheng, c., denoble, a. & musteen, m., 2018, ‘from student to entrepreneur: how mentorships and affect influence student venture launch’, journal of small business management 56(1), 76–102. https://doi.org/10.1111/jsbm.12362 albornoz, c.a., amorós, j.e. & pérez-carrón, m., 2011, ‘is it enough just to educate? an international analysis of education and training for entrepreneurship’, in proceedings of the global entrepreneurship monitor research conference, cartagena de indias, colombia, 6th–8th october. alves, a.c., fischer, b., schaeffer, p.r. & queiroz, s., 2019, ‘determinants of student entrepreneurship: an assessment on higher education institutions in brazil’, innovation & management review 16(2), 96–117. https://doi.org/10.1108/inmr-02-2018-0002 audretsch, d.b., 2014, ‘from the entrepreneurial university to the university for the entrepreneurial society’, the journal of technology transfer 39(3), 313–321. https://doi.org/10.1007/s10961-012-9288-1 bennett, d., yábar, d.p.b. & saura, j.r., 2017, ‘university incubators may be socially valuable, but how effective are they? a case study on business incubators at universities’, in m. peris-ortiz, j.a. goméz, j.m. merigó-lindahl & c. rueda-armengot (eds.), entrepreneurial universities, pp. 165–177, springer, london. bergmann, h., hundt, c. & sternberg, r., 2016, ‘what makes student entrepreneurs? on the relevance (and irrelevance) of the university and the regional context for student start-ups’, small business economics 47(1), 53–76. https://doi.org/10.1007/s11187-016-9700-6 bone, j., allen, o. & haley, c., 2017, business incubators and accelerators: the national picture, beis research paper no. 7, pp. 1–76, viewed 07 january 2019, from https://www.gov.uk/government/publications?keywords=&publication_filter_option=research-and-analysis&topics%5b%5d=all&departments%5b%5d=department-for-business-energy-and-industrial-strategy. braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa braun, v., clarke, v., hayfield, n. & terry, g., 2019, ‘thematic analysis’, in p. liamputtong (ed.), handbook of research methods in health social sciences, pp. 843–860, springer, london. cele, n., 2018, ‘the perceptions of social entrepreneurship amongst ukzn management honours studies students’, unpublished honours research project, school of management, information technology & governance, university of kwazulu-natal. cooke, k.j., patt, d.a. & prabhu, r.s., 2017, ‘the road of mentorship’, american society of clinical oncology educational book 37, 788–792. https://doi.org/10.1200/edbk_175193 cornett, a.p., 2018, ‘stimulation of entrepreneurship and innovation as an instrument in regional business development policy’, in u. gråsjö, c. karlsson & i. bernhard (eds.), geography, open innovation and entrepreneurship, pp. 236–256, edward elgar publishing, boston, ma. culkin, n., 2013, ‘beyond being a student: an exploration of student and graduate start-ups (sgsus) operating from university incubators’, journal of small business and enterprise development 20(3), 634–649. https://doi.org/10.1108/jsbed-05-2013-0072 din, b.h., anuar, a.r. & usman, m., 2016, ‘the effectiveness of the entrepreneurship education program in upgrading entrepreneurial skills among public university students’, procedia-social and behavioral sciences 224, 117–123. https://doi.org/10.1016/j.sbspro.2016.05.413 dou, x., zhu, x., zhang, j.q. & wang, j., 2019, ‘outcomes of entrepreneurship education in china: a customer experience management perspective’, journal of business research 103, 338–347. https://doi.org/10.1016/j.jbusres.2019.01.058 etzkowitz, h., germain-alamartine, e., keel, j., kumar, c., kaden smith, n. & albats, e., 2019, ‘entrepreneurial university dynamics: structured ambivalence, relative deprivation and institution-formation in the stanford innovation system’, technological forecasting and social change 141, 159–171. https://doi.org/10.1016/j.techfore.2018.10.019 etzkowitz, h., webster, a., gebhardt, c. & terra, b., 2000, ‘the future of the university and the university of the future: evolution of ivory tower to entrepreneurial paradigm’, research policy 29(2), 313–330. https://doi.org/10.1016/s0048-7333(99)00069-4 fatoki, o., 2014, ‘student entrepreneurs on university campus in south africa: motivations, challenges and entrepreneurial intention’, mediterranean journal of social sciences 5(16), 100–107. https://doi.org/10.5901/mjss.2014.v5n16p100 fayolle, a. & redford, d.t., 2014, ‘introduction: towards more entrepreneurial universities-myth or reality?’, in a. fayolle & d.t. redford (eds.), handbook on the entrepreneurial university, pp. 1–8, edward elgar publishing, cheltenham. gimmon, e., 2014, ‘mentoring as a practical training in higher education of entrepreneurship’, education & training 56(8/9), 814–825. https://doi.org/10.1108/et-02-2014-0006 guerrero, m. & urbano, d., 2012, ‘the development of an entrepreneurial university’, the journal of technology transfer 37(1), 43–74. https://doi.org/10.1007/s10961-010-9171-x ikebuaku, k. & dinbabo, m., 2018, ‘beyond entrepreneurship education: business incubation and entrepreneurial capabilities’, journal of entrepreneurship in emerging economies 10(1), 154–174. https://doi.org/10.1108/jeee-03-2017-0022 jackson, t., 2016, south africa’s universities are taking lead on incubating on-campus entrepreneurs, viewed 26 june 2021, from https://qz.com/africa/796929/south-africas-universities-are-taking-a-lead-on-incubating-on-campus-entrepreneurs/. jameson, j. & o’donnell, p., 2015, ‘the entrepreneurial university: a unifying theme for tu4dublin’, paper presented at the higher education in transformation conference, 31 march–01 april, dublin, viewed 26 june 2021, from https://arrow.tudublin.ie/st1/6. jansen, s., van de zande, t., brinkkemper, s., stam, e. & varma, v., 2015, ‘how education, stimulation, and incubation encourage student entrepreneurship: observations from mit, iiit, and utrecht university’, the international journal of management education 13(2), 170–181. https://doi.org/10.1016/j.ijme.2015.03.001 johnston, a. & huggins, r., 2016, ‘drivers of university–industry links: the case of knowledge-intensive business service firms in rural locations’, regional studies 50(8), 1330–1345. https://doi.org/10.1080/00343404.2015.1009028 karimi, s., biemans, h.j., lans, t., aazami, m. & mulder, m., 2016, ‘fostering students’ competence in identifying business opportunities in entrepreneurship education’, innovations in education and teaching international 53(2), 215–229. https://doi.org/10.1080/14703297.2014.993419 kirkwood, j., dwyer, k. & gray, b., 2014, ‘students’ reflections on the value of an entrepreneurship education’, the international journal of management education 12(3), 307–316. https://doi.org/10.1016/j.ijme.2014.07.005 kolympiris, c. & klein, p.g., 2017, ‘the effects of academic incubators on university innovation’, strategic entrepreneurship journal 11(2), 145–170. https://doi.org/10.1002/sej.1242 kuratko, d.f. & hoskinson, s., 2017, the great debates in entrepreneurship, emerald publishing limited, bingley, viewed 13 february 2021, from http://search.ebscohost.com/login.aspx?direct=true&db=nlebk&an=1577429&site=ehost-live&scope=site. la trobe university, 2020, nvivo 12 for windows, viewed 06 november 2020, from https://latrobe.libguides.com/nvivo12#:~:text=download%20and%20install%20nvivo%2012&text=nvivo%20is%20a%20qualitative%20data,unstructured%20or%20semi%2dstructured%20data. leboea, s.t., 2017, ‘the factors influencing sme failure in south africa’, unpublished master’s dissertation, university of cape town. lincoln, y.s. & guba, e.g., 1985, naturalistic inquiry, sage, thousand oaks, ca. lose, t., nxopo, z., maziriri, e. & madinga, w., 2016, ‘navigating the role of business incubators: a review on the current literature on business incubation in south africa’, acta universitatis danubius. œconomica 12(5), 130–140, viewed 06 november 2020, from https://journals.univ-danubius.ro/index.php/oeconomica/article/view/3422/3579. malebana, m.j. & swanepoel, e., 2015, ‘graduate entrepreneurial intentions in the rural provinces of south africa’, southern african business review 19(1), 89–111. https://doi.org/10.25159/1998-8125/5835 marchand, j., hermens, a. & sood, s., 2016, ‘student entrepreneurship: a research agenda’, the international journal of organizational innovation 8(4), 27–42, viewed 07 january 2020, from https://www.ijoionline.org/attachments/article/48/final%20issue20vol%208%20num%204%20april%2020/6pdf. marchand, j.m. & hermens, a.h., 2014, ‘student entrepreneurship: a research agenda’, in proceedings of the 28th australian and new zealand academy of management conference, 3–5 december, uts business school, sydney, viewed 13 february 2021, from https://opus.lib.uts.edu.au/bitstream/10453/41961/3/student_entrepreneurship_a_research_agenda_v3%20%28with%20corrections%29.pdf. mascarenhas, c., marques, c.s., galvão, a.r. & santos, g., 2017, ‘entrepreneurial university: towards a better understanding of past trends and future directions’, journal of enterprising communities: people and places in the global economy 11(3), 316–338. https://doi.org/10.1108/jec-02-2017-0019 massad, v.j. & tucker, j.m., 2009, ‘using student managed businesses to integrate the business curriculum’, journal of instructional pedagogies 1, 17–29, viewed 13 february 2021, from https://files.eric.ed.gov/fulltext/ej1056324.pdf. mcadam, m., miller, k. & mcadam, r., 2016, ‘situated regional university incubation: a multi-level stakeholder perspective’, technovation 50–51, 69–78. https://doi.org/10.1016/j.technovation.2015.09.002 mcleod, s.a., 2014, the interview method, viewed 14 march 2021, from https://www.simplypsychology.org/interviews.html. miranda, f.j., chamorro-mera, a. & rubio, s., 2017, ‘academic entrepreneurship in spanish universities: an analysis of the determinants of entrepreneurial intention’, european research on management and business economics 23(2), 113–122. https://doi.org/10.1016/j.iedeen.2017.01.001 morris, m.h., shirokova, g. & tsukanova, t., 2017, ‘student entrepreneurship and the university ecosystem: a multi-country empirical exploration’, european journal of international management 11(1), 65–85. https://doi.org/10.1504/ejim.2017.081251 musetsho, t.r. & lethoko, m.x., 2017, ‘an evaluative study on the effect of entrepreneurial education curriculum on students at the university of venda, south africa’, the independent journal of teaching and learning 12(1), 74–89, viewed 07 november 2020, from https://hdl.handle.net/10520/ejc-77dd0cf95. neneh, b.n., 2016, ‘performance implications of financial capital availability on the financial literacy-performance nexus in south africa’, investment management and financial innovations 13(2–2), 354–362. https://doi.org/10.21511/imfi.13(2-2).2016.10 nielsen, s.l. & gartner, w.b., 2017, ‘am i a student and/or entrepreneur? multiple identities in student entrepreneurship’, education & training 59(2), 135–154. https://doi.org/10.1108/et-09-2014-0122 nieuwenhuizen, c., groenwald, d., davids, j., van rensburg, l.j. & schachtebeck, c., 2016, ‘best practice in entrepreneurship education’, problems and perspectives in management 14(3), 528–537. https://doi.org/10.21511/ppm.14(3-2).2016.09 nowiński, w., haddoud, m.y., lančarič, d., egerová, d. & czeglédi, c., 2019, ‘the impact of entrepreneurship education, entrepreneurial self-efficacy and gender on entrepreneurial intentions of university students in the visegrad countries’, studies in higher education 44(2), 361–379. https://doi.org/10.1080/03075079.2017.1365359 olufunso, o.f., 2010, ‘graduate entrepreneurial intention in south africa: motivation and obsctacles’, international journal of business and management 5(9), 87–98. https://doi.org/10.5539/ijbm.v5n9p87 o’reilly, n.m., robbins, p. & scanlan, j., 2019, ‘dynamic capabilities and the entrepreneurial university: a perspective on the knowledge transfer capabilities of universities’, journal of small business & entrepreneurship 31(3), 243–263. https://doi.org/10.1080/08276331.2018.1490510 osakede, u.a., lawanson, a.o. & sobowale, d.a., 2017, ‘entrepreneurial interest and academic performance in nigeria: evidence from undergraduate students in the university of ibadan’, journal of innovation and entrepreneurship 6(19), 1–15. https://doi.org/10.1186/s13731-017-0079-7 pallotta, v. & campisi, d., 2018, ‘starmac: an environment for the stimulation and development of entrepreneurial projects in academic institutions’, industry and higher education 32(4), 269–280. https://doi.org/10.1177/0950422218784880 peterka, s.o. & salihovic, v., 2012, ‘what is entrepreneurial university and why we need it?’, economy of eastern croatia: yesterday, today, tomorrow 1(1), 98–107, viewed 06 november 2020, from https://ideas.repec.org/a/osi/eecytt/vly2012p98-107.html. peterman, n. & kennedy, j., 2003, ‘enterprise education: influencing students’ perception of entrepreneurship’, entrepreneurship theory and practice 28(2), 129–144. https://doi.org/10.1046/j.1540-6520.2003.00035.x polónia, d.f., cunha, j. & leite, t., 2020, ‘incubation: does it make a difference after graduation? analysis from portugal’, in l. farinha, d. santos, j.j. ferreira & m. ranga (eds.), regional helix ecosystems and sustainable growth: the interaction of innovation, entrepreneurship and technology transfer, pp. 159–177, springer nature, cham. premand, p., brodmann, s., almeida, r., grun, r. & barouni, m., 2016, ‘entrepreneurship education and entry into self-employment among university graduates’, world development 77, 311–327. https://doi.org/10.1016/j.worlddev.2015.08.028 pugh, r., lamine, w., jack, s. & hamilton, e., 2018, ‘the entrepreneurial university and the region: what role for entrepreneurship departments?’, european planning studies 26(9), 1835–1855. https://doi.org/10.1080/09654313.2018.1447551 ramchander, m., 2019, ‘reconceptualising undergraduate entrepreneurship education at traditional south african universities’, acta commerci 19(20), a644. https://doi.org/10.4102/ac.v19i2.644 roseira, c., ramos, c., maia, f. & henneberg, s., 2014, understanding incubator value a network approach to university incubators, university of porto-fep-school of economics and management, 1–32, viewed 12 november 2020, from https://wps.fep.up.pt/wps/wp532.pdf. rubens, a., spigarelli, f., cavicchi, a. & rinaldi, c., 2017, ‘universities’ third mission and the entrepreneurial university and the challenges they bring to higher education institutions’, journal of enterprising communities: people and places in the global economy 11(3), 354–372. https://doi.org/10.1108/jec-01-2017-0006 sandip, i. & salve, t.n., 2016, ‘academic entrepreneurship: european model in indian context’, journal of commerce & management thought 7(1), 67–73. https://doi.org/10.5958/0976-478x.2016.00005.7 sekaran, u. & bougie, r., 2016, research methods for business: a skill building approach, john wiley & sons, chichester. shambare, r., 2013, ‘barriers to student entrepreneurship in south africa’, journal of economics and behavioral studies 5(7), 449–459. https://doi.org/10.22610/jebs.v5i7.419 shumba, v., 2015, ‘the role of christian churches in entrepreneurial stimulation’, the international journal of business & management 3(7), 152–156, viewed 12 november 2020, from https://internationaljournalcorner.com/index.php/theijbm/article/view/137824. singh, s., 2017, ukzn student entrepreneurship policy, university of kwazulu-natal, viewed 19 july 2021, from https://innerweb.ukzn.ac.za/regulatorydocuments/all%20policies%20regulatory%20and%20procedure%20and%20guidelin/student%20entrepreneurship%20policy.pdf. sirelkhatim, f. & gangi, y., 2015, ‘entrepreneurship education: a systematic literature review of curricula contents and teaching methods’, cogent business & management 2(1), 1–11. https://doi.org/10.1080/23311975.2015.1052034 sunday, c., 2018, qualitative data analysis (qda), viewed 24 april 2021, from https://docplayer.net/13015704-qualitative-data-analysis-qda.html. sungur, o., 2015, ‘business incubators, networking and firm survival: evidence from turkey’, international journal of business and social science 6(5), 136–149, viewed 13 june 2020, from https://onursungur.com/files/makale/makale-2015-ijbss.pdf. wright, m., siegel, d.s. & mustar, p., 2017, ‘an emerging ecosystem for student start-ups’, the journal of technology transfer 42(4), 909–922. https://doi.org/10.1007/s10961-017-9558-z xu, m., david, j.m. & kim, s.h., 2018, ‘the fourth industrial revolution: opportunities and challenges’, international journal of financial research 9(2), 90–95. https://doi.org/10.5430/ijfr.v9n2p90 sajesbm 10-1_2018_contents.indd http://www.sajesbm.co.za open access table of contents i original research a qualitative approach to the entrepreneurial education and intentions nexus: a case of zimbabwean polytechnic students takawira m. ndofirepi, patient rambe the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a81 | 04 october 2018 original research self-service banking and financial literacy as prognosticators of business performance among rural small and medium-sized enterprises in zimbabwe eugine t. maziriri, miston mapuranga, nkosivile w. madinga the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a180 | 24 october 2018 original research the role of financial management training in developing skills and financial self-efficacy corrinna l. kirsten the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a211 | 25 october 2018 original research a framework for time-driven activity-based costing implementation at small and medium enterprises arthur reynolds, houdini fourie, lourens erasmus the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a194 | 20 november 2018 original research effects of knowledge management on innovation capabilities amongst small and medium enterprises in south africa: the case of buffalo city metropolitan municipality courage gwena, willie t. chinyamurindi the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a177 | 28 november 2018 reviewer acknowledgement the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a221 | 26 november 2018 89 103 113 121 132 142 page i of i table of contents i original research global sourcing risk management approaches: a study of small clothing and textile retailers in gauteng wesley niemann, theuns kotzé, karabo mannya the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a141 | 27 february 2018 original research impact of unemployment and income on entrepreneurship in post-apartheid south africa: 1994–2015 darma mahadea, irrshad kaseeram the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a115 | 22 march 2018 original research the role of entrepreneurship in transforming efficiency economies into innovation-based economies jurie van vuuren, binyam z. alemayehu the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a140 | 18 april 2018 original research logistics outsourcing and performance of manufacturing small and medium-sized enterprises in nairobi joash mageto, gerrie prinsloo, rose luke the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a162 | 13 june 2018 original research coaching as a support function for potential entrepreneurs maddison-lee brinkley, ingrid le roux the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a99 | 30 august 2018 original research using experiential marketing to leverage the small and medium-sized enterprises’ brand repositioning and revitalisation boniface okanga the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a128 | 30 august 2018 original research constraints to growth in informal sector activities and formalisation: a case study of ghanaian slums darma mahadea, luther-king junior zogli the southern african journal of entrepreneurship and small business management | vol 10, no 1 | a130 | 30 august 2018 1 16 25 37 48 80 vol 10, no 1 (2018) issn: 2522-7343 (print) | issn: 2071-3185 (online)the southern african journal of entrepreneurship and small business management 60 abstract introduction literature review research methodology ethical considerations presentation and discussion of findings conclusion and managerial implications acknowledgements references about the author(s) mugove mashingaidze department of management studies, munhumutapa school of commerce, great zimbabwe university, masvingo, zimbabwe maxwell phiri department of marketing and supply chain management, university of kwazulu-natal, pietermaritzburg, south africa mapeto bomani department of business, management and entrepreneurship, botswana international university of science and technology, palapye, botswana citation mashingaidze, m., phiri, m. & bomani, m., 2021, ‘the influence of strategy formulation practices on the perceived financial performance of small and medium enterprises: the zimbabwean experience’, southern african journal of entrepreneurship and small business management 13(1), a343. https://doi.org/10.4102/sajesbm.v13i1.343 original research the influence of strategy formulation practices on the perceived financial performance of small and medium enterprises: the zimbabwean experience mugove mashingaidze, maxwell phiri, mapeto bomani received: 28 may 2020; accepted: 25 mar. 2021; published: 05 may 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the role of strategy formulation in enhancing the performance of small and medium enterprises (smes) has attracted much attention amongst researchers worldwide. however, little research has been conducted on the strategy formulation practices of smes and their implications for the perceived financial performance of these firms, especially in the developing world. aim: this study was aimed at establishing the impact of strategy formulation on the perceived financial performance of smes in zimbabwe. setting: primary research was conducted in harare, the capital city of zimbabwe. methods: the study took a case study design in which the researcher collected data from manufacturing smes in harare, zimbabwe. stratified random sampling was employed to draw 368 questionnaire respondents from the five manufacturing classes that emerged from the population. data were analysed using both descriptive and inferential statistics. results: the study established that strategy formulation is somewhat prevalent amongst smes in zimbabwe. the five strategy formulation activities as put forward by the theory are found in zimbabwean smes. the results revealed that strategy formulation significantly influences both short-term and long-term perceived financial performance of smes in zimbabwe. conclusion: the study has implications at a practical and managerial level. whilst supporting smes is commendable, governments should prioritise the provision of management and entrepreneurial training for smes to foster the adoption of strategy formulation. this study suggests that smes should make strategy formulation a priority, a key ingredient to the success of their enterprises. it is necessary to inculcate the necessary culture, which supports effective strategy formulation. the study proposes suggestions for future research. keywords: strategy formulation; strategy formulation process; financial performance; smes; zimbabwe. introduction the role of strategy formulation in enhancing the performance of small and medium enterprises (smes) has attracted much attention amongst researchers worldwide (majama & magang 2017:75; monday et al. 2016). the terms ‘strategy formulation’, ‘strategic planning’, ‘strategy making’ and ‘strategy development’ can be used interchangeably to mean the same thing (musandiwa 2014:95). according to sandada (2015:59), there is a ‘strong argument from the literature that smes need to engage in strategic planning if they are to maintain their position as key economic players’. strategy formulation is important in strategically positioning firms in changing circumstances (melo et al. 2018:45). mattheeusen and spontak (2018) have further argued that the dynamic nature of the african business environment forces businesses of all sizes to develop and adopt strategic responses to these changes. strategic formulation is thus an indispensable management tool that cushions smes from the volatile operating environment (ralph et al. 2020). considering the growing importance of smes in zimbabwe’s socio-economic structure, they need to understand the value of strategy formulation in the success of their business (sandada & chikwama 2016). although smes are responsible for addressing sustainable development in zimbabwe (tinarwo 2016:148), these enterprises are faced with many challenges that negatively affect their performance and ultimately their growth (mabenge, ngorora-madzimure & makanyeza 2020:2). findings have shown that most smes in zimbabwe close down within the first 5 years of their operation (sibanda, hove-sibanda & shava 2018:555) and a smaller percentage face extermination between the 6th and 10th years (sandada & chikwama 2016:95), whilst only 5% – 10% thrive to maturity (acquaah & agyapong 2015:2; nyamwanza 2015:125). given this background, the need for strategy formulation continues to be on the increase, considering that these small business entities are increasingly threatened by low profit margins and are also plagued with high failure rates (sandada & chikwama 2016:95). existing findings attribute their high failure rate in zimbabwe to poor management (sibanda et al. 2018). existing literature reveals that lack of strategy formulation amongst smes may thwart them from achieving their performance targets and ultimately the potential for survival (donkor, donkor & kwarteng 2018; melo et al. 2018:45). little research has been conducted on the strategy formulation practices of smes and their implications for the perceived financial performance of these firms, especially in the developing world (majama & magang 2017:75). for example, abosede, obasan and alese (2016:331) in nigeria conducted a literature search to examine the strategic management practices of smes and established that academics are yet to agree on the influence of strategic planning on firm performance. in botswana, majama and magang (2017:75) concluded that strategic planning significantly influences firm performance. in malaysia, kee-luen, hiam-yong and seng-fook (2013:437) observed that manufacturing smes who have some form of strategic planning are more likely to perform better in terms of the four perspectives of the balanced scorecard (bsc). donkor et al. (2018) explored the influence of strategy formulation on firm performance of smes in ghana and concluded that strategy formulation significantly enhances performance, whilst in nigeria, nwachukwu, chladkova and fadeyi (2017) established that the strategy formulation–performance relationship is moderated by many environmental factors. the majority of studies examining strategy formulation–firm performance in africa have been conducted with samples of firms in nigeria (abosede et al. 2016; nwachukwu et al. 2017), ghana (auka & langat 2016; donkor et al. 2018) and south africa (dubihlela & sandada 2014; gomera, chinyamurindi & mishi 2018). in zimbabwe, nyamwanza (2015) conducted a study to explore the strategy implementation for survival and growth amongst smes, whilst sandada and chikwama (2016) explored the driving forces for the practice of strategic planning in smes in harare. however, none of these studies dared to investigate the nature of strategy formulation amongst smes and the effect thereof on their financial performance in zimbabwe. galbreath et al. (2020) observed that generalising results from other contexts could be misleading because countries have different cultures and idiosyncrasies and firms respond differently to different contexts. in this regard, shu et al. (2019) called for scholars to research different and new contexts. the article thus takes a zimbabwean perspective. zimbabwe is a sub-saharan african country that has experienced political and economic instability since 2000. the economic turbulence, partly blamed on the land reforms, poor political relations with the west, policy inconsistency and corruption has led some large corporates to either downsize or relocate their facilities (chinakidzwa & phiri 2020; mugozhi & hlabiso 2017). this departure of large corporates has created huge opportunities for smes in the manufacturing sector (chinakidzwa & phiri 2020). in order to enhance their performance, strategy formulation could play an important role. this, therefore, calls for the need to explore the relationship between strategy formulation and financial performance in a turbulent environment. this article provides empirical evidence from a zimbabwean context. moreover, within the zimbabwean sme context, the article extends previous research on strategy formulation practices. we believe our study to be the first to explore the strategy-making process of smes in zimbabwe and its influence on their financial performance. hence, this article is a distinctive contribution to the body of knowledge. this study’s aim was to examine the impact of strategy formulation on sme financial performance in harare, zimbabwe, with the specific objectives of examining the practice of strategy formulation in zimbabwean manufacturing smes and the establishment of the relationship between strategy formulation and the perceived financial performance of smes in this context. the remainder of the article is structured as follows: the next section presents the review of literature, followed by the research methodology, findings of the study and conclusion. finally, the article presents the study’s limitations and directions for future research in the last section. literature review strategy formulation strategy consists of the combination of competitive moves and business approaches that managers employ to please customers, compete successfully, conduct operations and achieve organisational objectives (david & david 2016). monday et al. (2016:138) viewed strategy development as managers’ response to the opportunities and constraints presented by their marketing environment. lynch (2015:20) defined strategy formulation as ‘a process of finding a match between organisational capabilities and opportunities that are present within the competitive environment’, whilst auka and langat (2016:2) defined it as ‘the process of selecting the most appropriate course of action for the attainment of organisational goals and objectives and, thus, facilitating the realisation of both long-term and short-term objectives’. the given definitions emphasise that strategy formulation accords with the organisation’s environment, resources and strategic objectives. musandiwa (2014:112) stressed the need for sme owner-managers to determine how the whole process of strategy formulation should be conducted to ensure that they develop sound and credible strategies. the literature on strategic management has a range of strategy formulation models (musandiwa 2014:115). in his early work, mintzberg (1994) identified three main ways in which strategies are developed: the planning model, the entrepreneurial model and the learning by experience model. he describes the planning model as a fully controlled thought out process for strategy making. mintzberg’s view is shared by many leading scholars such as wheelen et al. (2014), thompson et al. (2016), david and david (2016) and hill and jones (2013). these scholars agree that strategy making is a linear process through many steps (pitt & koufopoulos 2012:15); hence, the first distinguishing factor in the strategy-making process is formalisation (musandiwa 2014). the second strategy-making model is the entrepreneurial model. according to feurer and chaharbaghi (1997:13), this model yields both personal and informal plans. musandiwa (2014:96) claimed that the entrepreneurial model is mostly found in organisations where an owner or entrepreneur owns and controls the business. thus, it is found in entrepreneurial businesses (mintzberg, ahlstrand & lampel 2009:146). the outcome of this model is entrepreneurial strategies that are imposed through the owner-managers’ personal control. the third model is the learning by experience model, in which, according to mintzberg et al. (2009:147), strategies develop from adjustments and dynamics within the business environment. with the learning by experience model, strategy formulation and implementation take place at the same time (david 2015). this is in contrast to the planning model, where a strategy is formulated and the execution takes place at a later stage. musandiwa (2014:115) posited that no one strategy formulation model is superior to any others. cokins (2017) emphasised that what is important is that strategy development must be grounded on thorough situational analysis. mindful of these planning models, papulova and papula (2014:114) claimed that strategy formulation can either be deliberate or emergent. researchers who advocate for the planning process argued that strategy formulation must be seen as an analytical and systematic process (david 2015:45). systematic strategy formulation makes it more likely that breakthrough business strategies are developed. similarly, de wit and meyer (2014:121) believed that strategy development should be a conscious step-by-step process. the following section examines the strategy formulation process in detail. strategy formulation process musandiwa (2014:100) claimed that strategies are intentionally created in the same way as a bridge is designed by a team of engineers. in the same spirit, burugo and owour (2017:925) viewed strategy development as ‘a rational, analytical and deliberate process in which goals are stated; in-depth analysis is conducted; the planner, analyst and executives develop a formal and comprehensive strategy’. hence, this is a process that, when executed effectively, produces a breakthrough strategy enabling smes to fulfill their objectives (david 2015:74). the following section examines the steps followed in the formulation of business strategies in greater detail. development of the strategy purpose the first step in strategy formulation is to develop the strategic purpose that is the mission and vision of the organisation (verreynne, meyer & liesch 2014:6). the mission statement provides the background onto which the strategy is crafted (david & david 2016:344); it gives the unique purpose of an organisation, that is, its business (david 2015:40) and distinguishes one business organisation from another (adeyemi, isaac & olufemi 2017:114). the vision statement establishes what the organisation wants to become in the future (david 2015:75). thus, the two can be combined to produce a strategic mission statement (gates 2013). establishing strategic objectives auka and langat (2016) observed that setting objectives is a key component in the strategy formulation process. adeyemi et al. (2017:110) defined strategic objectives as the performance targets needed to accomplish the organisation’s key purpose. strategic objectives are needed to assess the success of organisations (jones & hill 2010:16). thus, they provide direction on how the organisation fulfills its strategic purpose as specified in the mission statement (dess, lumpkin & eisner 2010:29). however, verreynne et al. (2014:6) emphasised that the strategic objectives need to be consistent with the mission statement. environmental scanning the survival of an organisation is conditioned by its environment (aldehayyat 2015:469). thus, organisations, both small and large, need to monitor their environment to adapt and respond (david 2013:40). successful alignment of marketing strategies with environmental conditions is dependent on effective environmental scanning. according to david (2015:72), a firm’s environment consists of three facets: the internal environment, the industry environment and the macro (mega) environment. changes in each facet present a challenge to organisations to remain relevant (wheelan & hunger 2014:37). ultimately, environmental scanning becomes a necessity for effective strategy formulation (aldehayyat 2015:469). integration of environmental data the analysis of the business environment helps to identify its internal strengths and weaknesses and its external threats and opportunities (melo et al. 2018:45). according to du toit (2016:18), a successful strategy formulation requires firms to integrate both internal and external data from their environment. thus, one strategic tool that can be used by managers to assist in generating practical and reliable strategies is the strengths, weaknesses, opportunities and threats (swot) framework (analoui & karami 2013:129; david & david 2016). the acronym swot stands for strengths, weaknesses, opportunities and threats (thompson et al. 2016). the framework is based on the recognition that effective strategies enable firms to mitigate the adverse impacts of threats and weaknesses (hadighi et al. 2013:38) and also to capitalise on their opportunities and strengths (carlsern & andersson 2011:86). hay and castilla (2006:2) cited in musandiwa (2014:123) posed the following questions that managers should answer in strategy formulation: how can businesses use the strengths they have? how can businesses stop their weaknesses? how can businesses exploit each of their opportunities? how can businesses defend themselves against threats? thus, helms et al. (2011) claimed that the ability of firms to develop swot analysis will allow them to develop well-informed business strategies. strategy analysis and choice singh (2009:265) observed that the ‘analysis and choice stage of the strategy formulation process involves the development of various strategies leading to the selection of the best strategy to pursue’. this stage is essentially a decision-making process involving three main steps: firstly, identifying alternative strategies; secondly, evaluating the alternatives; and, thirdly, selecting the most appropriate strategic option. thus, during this last stage firms ought to examine their own internal or corporate characteristics and capabilities and identify the most important features of the external environment within which they must operate (sami 2016:53). similarly, david (2015:231) asserted that the selection of the ultimate strategy is a negotiated outcome between the organisation’s resources, competencies and the opportunities from the external environment. this section has provided the strategy formulation process informed by strategic management theory (carlsern & andersson 2011; david 2013; david 2015; hill & jones 2013; lynch 2015; mintzberg et al. 2009). the strategy formulation steps, as identified in the literature, are not isolated but are interdependent (mintzberg et al. 2009). researchers are yet to agree on the strategy formulation processes of smes (musandiwa 2014; nwachukwu et al. 2017). some argue that the process does not reveal exhaustive strategic analysis (nyamwanza 2015; sami 2016). this is subject to research in this study. financial performance according to pucci, nosi and zanni (2017:12), the measurement of sme’s financial performance is, unquestionably, one of the critical aspects of management and entrepreneurship research. ordinarily, smes prefer financial indicators in assessing their performance (ahmad 2014; pucci et al. 2017). pucci et al. (2017:13) posited that finance is the corporate heart of any business. this means that decisions should be made according to their financial return. furthermore, users of financial indicators argue that organisational finances are a valuable pool of resources for future growth that assist firms to pursue their growth strategy (salloum et al. 2016:24). according to chong (2008:7), cash generation and profitability are significant aspects in smes’ capacity to attain their long-term non-financial goals such as innovativeness, reputation and quality, and hence the use of financial measures in this study. furthermore, financial performance indicators are regarded as objective and easily interpretable for comparative analysis (raymond et al. 2013:470). this study used the financial performance indicators of sales revenue, profit, cash flows, earnings before interest and tax, return on capital employed and return on total assets. despite their continued use in strategic management research, raymond et al. (2013) posited that they are not readily available in the public domain and most smes do not have the data (salloum et al. 2016:25). however, in this study, the researchers adopted a subjective approach in assessing firm financial performance following the recommendations of harif, hoe and ahmad (2013) and mageto, prinsloo and luke (2018), that in the absence of objective financial data, researchers may use relative and perceived measures of financial performance. thus, in this study, the participants were asked to indicate their financial performance trend for the past 3 years on the seven-point lickert scale. review of empirical studies melo et al. (2018) recommended that businesses of all sizes engage in strategic planning practices in order to survive volatile environments. the empirical evidence on the practice of strategy formulation, as well as its impact on performance in smes, is inconclusive. this section offers a discussion of the findings from previous studies on strategy formulation amongst smes. the finding of abosede et al. (2016) is that not all smes formally plan, but of those that plan formally, the majority tend to do so inconsistently and infrequently. pratiwi et al. (2017:8650) investigated the strategic planning of smes in malaysia and concluded that in instances where strategic planning is adopted, it is often unstructured and irrational. omsa, ridwan and jayadi (2017:77) observed that often the strategy process is based on unreliable and insufficient information, usually gathered through informal means. david and david (2016) concurred and add that when entrepreneurs employ strategic thinking, these activities are rarely rational and logical because of insufficient resources and lack of expertise. however, cheng, kadir and bohari (2014) found conflicting results. they examined the relevance of the deliberate strategic planning to smes and whether the wheelen and hunger (2014) strategic planning model for smes could be applied in the asian context. the results of the study revealed that the majority of smes in asia have strategic planning processes that resemble the wheelen and hunger (2014) model. thus, they concluded that asian smes prefer developing rational strategy formulation. in another study in the united states of america, wang et al. (2015) conducted a quantitative study to interrogate the barriers to planning in smes and observed that ownership motivations are key to understanding strategic planning practices of smes. the study revealed that higher levels of strategic planning are found in smes with owner-managers who are growth orientated and lower levels existed in those smes with owner-managers who pursue personal agendas. in sweden, tell (2010) conducted a study aimed at generating a better understanding of the strategic planning behaviour of top managers in small, fast-growing manufacturing firms. empirical data were collected by both the survey approach and structured observations. the findings indicated that sme managers in fast-growing firms are engaged in many different activities, ranging from operational (production, marketing and sales) to administrative (firm personnel and financial issues). thus, these managers spend very little time on strategic planning. tell (2010) claimed that this could explain why growth in some firms may decline or cease. strategy formulation is considered a fundamental strategic management aspect that enhances firm performance, especially in the unstable and dynamic business world (auka & langat 2016; melo et al. 2018). earlier research work (abosede et al. 2016; burugo & owour 2017; donkor et al. 2018; pucci et al. 2017; sandada & chikwama 2016) showed that successful smes appreciate the role of strategy formulation and make greater use of the strategy formulation tools such as swot analysis. mattheeusen and spontak (2018) investigated the effect of strategy formulation on smes’ financial performance, establishing that it had a significantly positive influence on firm performance. in the emerging economies, kee-luen et al. (2013) concluded that smes practising strategic planning are more likely to perform better on the four perspectives of the bsc, namely, learning and innovation, financial, customer and internal business process perspectives. similarly, pashaa and poisterb (2017) confirmed the overall positive effect of strategy formulation on smes’ long-term and short-term financial performance. in another study, siddique (2015:22) concluded that strategy formulation significantly impacts overall sme performance. in africa, nigeria in particular, nwachukwu et al. (2017) confirmed that strategy formulation significantly increased sme competitiveness and performance. in south africa, gomera et al. (2018:45) investigated the relationship between strategy formulation and financial performance of south african smes in the buffalo city metropolitan and found out that strategy formulation and financial performance were positively and strongly related. donkor et al. (2018) explored the influence of strategy formulation on firm performance of smes in ghana and concluded that strategy formulation significantly enhances sme performance. in nigeria, nwachukwu et al. (2017) established that the strategy formulation–performance relationship is moderated by many environmental factors. the review of literature by dauda, akingbade and akinlabi (2010) established that some studies reported a positive relationship whilst others showed non-existence of a relationship. studies conducted by shrader, mulford and blackburn (1989), birley and westhead (1990) and covin (1991) found insignificant relationship between strategy formulation and firm performance. fulmer and rue cited in musandiwa (2014) conducted a quantitative study in the united states of america to establish the influence of strategy formulation on the performance of smes, but their findings failed to establish any valid relationship between rational long-term planning and financial performance. the study found no differences in sales growth, return on sales and earnings growth between those groups who had formal planning and those who did not plan. in the united kingdom, falshaw, glaister and tatoglu (2006) conducted a survey to investigate the impact of strategy formulation on firm performance. the findings of the study indicated an absence of a relationship between formal strategic planning and firm performance. in the same vein, sarason and tegarden (2003) cited in germanos (2012) also investigated the influence of strategy formulation on the performance. the study was descriptive and found weak support for the relationship. the review of literature is testimony that the majority of researchers have accepted that strategy formulation enhances firm performance, whilst a few still reject the direct and positive relationship. the review found no document on the strategy formulation practices of smes and the relationship between strategy formulation and financial performance in zimbabwe. hence, this study sought to explore the strategy formulation practices of smes in zimbabwe and their impact on financial performance. the study hypothesises that strategy formulation is significantly and positively associated with sme perceived financial performance. research methodology study design a case study design was used in this research. data collection was conducted in harare, the commercial nerve centre of zimbabwe. the researcher adopted the case study strategy by focusing only on manufacturing smes in harare. the overall aim of adopting a case study strategy was to obtain an in-depth understanding of strategy formulation in smes and its influence on their perceived financial performance in zimbabwe whilst focusing only on a single case of study (the manufacturing smes). the selection of this case study was not based on a random choice, but rather a considered decision based on its role in the country’s economy. study population sekaran and bougie (2016) stated that the relevant population may be apparent from the main research question. hence, the main research question guided the researcher to the study’s population. all registered manufacturing smes in harare were targeted. according to the 2012 finscope survey, zimbabwe has 3.4 million smes (bomani 2017). of these, 13% are in harare, and 9242 (2.1%) are found in the manufacturing sector, the target population. the study targeted all manufacturing smes located in both the residential areas and the light industrial areas of harare. sampling and sample size the target population was divided into five manufacturing classes, five mutually exclusive groups emerging from the population: food products, clothing and footwear, wood and furniture, metals and chemicals. yamane’s 1967 formula was used to determine the study’s sample size of 368 from a population of 9242. the formula is most appropriate with stratified sampling (anyanga & nyamita 2016; kowo, sabitu & adegbite 2018). according to yamane, the formula for calculating a sample size is: given the 9242 manufacturing smes in harare, the required sample size was 368, calculated as illustrated here, where: n = population size (9242) e = degree of accuracy (5%), expressed as a proportion (0.05), is the margin of error. the final study participants were proportionally selected from the different sectors using simple random sampling. table 1 shows the sample size from each stratum. table 1: sample size per strata. the sample size in this study is 368 – more than 30 but less than 500. thus, the sample size fits roscoe’s (1975) rule of thumb, which says that where the sample can be classified into subgroups the sample size should be at least 30 for each category (sekaran & bougie 2016:269). data collection and instrumentation data were collected through a self-administered structured questionnaire, distributed to smes for a period of 3 months between february and may 2019. the questionnaire consisted of three sections. section a aimed at soliciting demographic characteristics of both the study participants and the participating firms. section b solicited for strategy formulation activities. section c covered the short-term financial performance. section d covered the long-term financial performance. the items used to measure the constructs were adapted from the literature, that is, items for strategy formulation were borrowed from david and david (2016), lynch (2015), singh (2009), sandada (2015), sandada and chikwama (2016), and wheelen and hunger (2014) cited in nwachukwu et al. (2017). items for financial performance were borrowed from mageto et al. (2018), germanos (2012), wang et al. (2015) and makanyeza and dzvuke (2015). however, the items were modified to suit the present study. based on a five-point likert scale, the respondents were requested to indicate their level of agreement with statements regarding strategy formulation and perceived financial performance. the response points were as follows: 1, strongly disagree; 2, disagree; 3, neither agree nor disagree; 4, agree; and 5, strongly agree. the likert scale made it easier for the researcher to code and analyse data from the questionnaires. data analysis data gathered were cleaned and coded with the help of the statistical package for the social sciences (spss) version 23. data were presented in the form of easy-to-interpret tables. descriptive statistics such as mean and standard deviation were used to summarise the data, whilst inferential statistics allowed the researcher to examine the relationship between study variables. pearson’s product–moment correlation coefficient was computed to determine the strength of the relationship between strategy formulation and perceived financial performance. validity and reliability the researchers ensured validity by asking questions that were in line with the research objectives and backed by theoretical and empirical literature. besides this, some questions used were adapted from questionnaires from previous studies (see the section ‘data collection and instrumentation’ ). the principal researcher sought expert evaluation from the supervisor during the development of the questionnaire. in order to ensure that the questionnaire measured the impact of strategy formulation on perceived financial performance in smes, the researcher carefully planned the research methodology that consisted of sampling, appropriate instrumentation and appropriate statistical treatment of the data (sekeran & bougie 2016). in order to ensure reliability, the questionnaire was pilot tested in chegutu town, located south-west of harare. the internal consistency of the questionnaire was then determined via cronbach’s coefficient alpha. cronbach’s alphas for the measuring instruments are shown in table 2. table 2: cronbach’s alpha for the strategy formulation and perceived financial performance scale. in this study, cronbach’s alpha for each of the scales of the variables was tested and found to range from 0.817 to 0.885, implying that the instrument was highly reliable (saunders, lewis & thornhill 2016:480). ethical considerations the principal researcher applied for an ethical clearance and it was obtained from the university of kwazulu-natal’s research committee (hss/0507/018d) and a letter of permission was also obtained from the ministry of industry, commerce and enterprise development (reference number np/33/448). thus, the researchers proceeded to data collection knowing very well that the respective authorities had consented to the study. throughout the research process, the researchers ensured transparency, honesty, faithfulness and trustworthiness. as such, the study participants were eager to participate and ultimately return the completed questionnaires. presentation and discussion of findings sample composition a total of 368 questionnaires were distributed to respondents, of which 304 were returned and 15 were discarded owing to incomplete responses on different parts of the questionnaire. a total of 289 questionnaires were finally used in the study. therefore, the response rate was approximately 83%. the study results indicate that men (55%) participated more than women (45%). regarding age distribution, the results revealed that the majority (58.8%) of the respondents were aged between 32 and 53 years. mutengezenwa (2018) explained that these economically active people would want to raise their standard of living through operating small businesses, as formal employment opportunities in zimbabwe have shrunk. the results of the study also showed that 65.0% of the respondents had at least a diploma, evidence of a high degree of literacy. thus, the results indicated that most of the entrepreneurs in harare have formal tertiary education, which assists them in managing their ventures (tinarwo 2016:149). these findings complement the general literacy rate of zimbabwe, currently pegged at 92% (mbengo 2016:212). in this study, the majority (88.2%) of the sampled enterprises had been in existence for fewer than 10 years. these results validate bomani’s (2017:273) study of smes in harare, which found that 90% of smes had fewer than 10 years experience in business. this is an indication that smes in zimbabwe are still in their infancy (bomani 2017:273). the results of the study showed that 97.6% of the surveyed enterprises employ between 5 and 20 employees, whilst none employed between 41 and 75 employees. it was also revealed that the majority of the participating firms (68.5%) had an annual turnover of less than $2 000 000. these findings are evidence that most manufacturing enterprises are small and reflect that, generally, smes cannot employ a large number of permanent employees (nyamwanza 2015:08). strategy formulation amongst smes the results from the five aspects of strategy formulation are shown in figure 1. figure 1: summary of strategy formulation amongst small and medium enterprises. figure 1 shows that the majority of respondents (66.0%) indicated that they are involved in setting the strategic purpose and 64.0% have strategic objectives. most of the respondents (66.0%) indicated that they are involved in environmental scanning, whilst 64.0% indicated that they integrate data from all sources to formulate their strategies. an equal number (60.0%) of the respondents held the opinion that they have a systematic method of selecting their best strategy. thus, to a certain extent, smes in zimbabwe practise strategy formulation in their business. the findings of this study resonate well with other studies in the developed world. in their study of strategic process approaches of smes in australia, wiesner and millett (2012) found out that 66.7% of smes are involved in strategy formulation. chen and liu’s (2012) study concluded that 73.0% of smes have well-established business planning systems. however, these results dismiss the allegation that some smes do not engage themselves in strategy formulation (abosede et al. 2016 in nigeria and pratiwi et al. 2017 in malaysia). these findings support the claim by mattheeusen and spontak (2018) that given the volatile nature of the business environment in africa, smes should develop strategic responses to cushion themselves from the changing circumstances. as such, environmental dynamism drives smes to strategy formulation (sandada & chikwama 2016:96). of interest is that the findings do not support the claim by omsa et al. (2017) that sme strategy process is based on unreliable information gathered through informal means. the findings illustrate that the limited resources and expertise on the part of the entrepreneur does not affect the undertaking of important strategic management activities such as strategy formulation. the five activities were analysed for their overall means, as depicted in table 3. table 3: overall means of five activities. table 3 shows that all the means were above the third score of the likert scale, providing further evidence that the sme owner-managers either moderately or strongly agreed that these activities are important in strategy formulation. the dimension of data integration was highly ranked with a mean value of 3.684, followed by setting strategic purpose (mean = 3.674) and environmental scanning (mean = 3.656). the least ranked factors were making strategic choices (mean = 3.601) and strategic objectives (mean = 3.583). this indicates that the sme owner-managers perceived data integration as the most important dimension of strategy formulation. the high mean values of strategic purpose, environmental scanning, making strategic choices and strategic objectives also imply that they had similar views that these activities are also key elements in formulating their business strategies. previous studies have confirmed the importance of integrating both external and internal data in successful strategy making (musandiwa 2014). david and david (2016) claimed that the ability of firms to synchronise internal and external data enables them to develop appropriate breakthrough strategies. research also acknowledges that during environmental scanning, smes discover opportunities and threats that shape their future performance (ralph et al. 2020) and drive their organisation in new directions (david 2015). overall, the results of the study reveal that the strategic planning processes of most smes resemble the wheelen and hunger (2014) strategic planning model. strategy formulation and financial performance tables 4 and 5 show the results of the statistical analysis to determine the relationship between strategy formulation and financial performance. table 4: strategy formulation and short-term financial performance model summary. table 5: strategy formulation and long-term financial performance model summary. the findings of the study revealed that strategy formulation is positively and strongly connected to both short-term and long-term financial performance in manufacturing smes (r = 0.783, r = 0.817, respectively). moreover, the study’s findings illustrate that strategy formulation enhances long-term financial performance much more than short-term financial performance. the findings are consistent with some previous investigations available in the literature (e.g. nwachukwu et al. 2017 in nigeria; gomera et al. 2018 in south africa; donkor et al. 2018 in ghana). the findings also validate the claim by thompson et al. (2016) that: [t]he essence of good strategy making is to build a market position strong enough and an organisation capable enough to produce successful performance despite unforeseeable events, potent competition and internal difficulties. (p. 17) this claim implies that organisations that engage in strategy formulation can enhance their competitiveness and consequently improve their financial performance significantly. the findings do not support earlier findings by falshaw et al. (2006) in the united kingdom, whose study’s findings indicated the absence of a relationship between strategic planning and firm performance. table 6 shows the multiple regression analysis (mra) of the data. the results of the mra show that there is a statistically significant and positive relationship between strategy formulation and perceived financial performance of manufacturing in harare (β = 0.658, t = 3.923, p < 0.05): predictors: (constant), strategy formulation dependent variable: perceived financial performance table 6: strategy formulation and financial performance regression weights model. these results imply that a unit increase in strategy formulation index leads to a 0.658 increase in combined sme perceived financial performance. thus, the hypothesis was accepted. however, as the variables under investigation are only two, the tolerance and vif are normally one (hair et al. 2019). the study’s results are in line with previous findings in both developed and emerging economies (burugo & owour 2017; pashaa & poisterb 2017; pucci et al. 2017; siddique 2015). these studies concluded that successful smes appreciate the role of strategy formulation and make greater use of tools such as swot analysis to enhance their performance. thus, these results entail that strategic planning is a veritable vehicle for improving sme financial performance. these results donate support to the claim that the lack of strategy formulation amongst smes may thwart these enterprises from achieving their performance targets and ultimately their potential for survival (donkor et al. 2018). conclusion and managerial implications the present study sought to enhance an understanding of strategy formulation practices of smes and the influence thereof on their perceived financial performance. it specifically sought to determine the extent of strategy formulation prevalent in smes in zimbabwe, to determine the financial performance implications on these firms. the study concludes that all the sme categories in zimbabwe are somewhat involved in strategy formulation. the five strategy formulation activities, as stipulated by de wit and meyer (2014), musandiwa (2014:100), burugo and owour (2017:925) and david (2015:74) – namely, development of the strategy purpose, establishing strategic objectives, environmental scanning, integration of environmental data and strategy analysis and choice – are somewhat prevalent amongst smes in zimbabwe. the perceived financial performance of smes has increased for the period over which they were formulating strategies. the study also concludes that, overall, strategy formulation positively predicts their financial performance. these results imply that the influence of strategy formulation on a firm’s financial performance differs and is relatively greater in the long term than in the short term. as there has not been any research on the influence of strategy formulation on financial performance in zimbabwe, the present study provides groundbreaking evidence. as such, the empirical findings have important academic and managerial implications. it is generally agreed in the literature that strategy formulation drives the performance of enterprises (david & david 2016; lynch 2015; mattheeusen & spontak 2018; ralph et al. 2020). based on the empirical findings of the present study, smes should make strategy formulation a priority, as a key ingredient to the success of their enterprises. along with this, it is necessary to determine the required culture with which to support effective strategy formulation for enhanced financial performance. according to donkor et al. (2018:63), most governments in developing countries have come up with programmes that support sme training in enterprise management and administration. especially in developing countries such as zimbabwe, smes should take advantage of the efforts of their governments and embrace strategic management principles in their day-to-day activities. governments are encouraged to continue with these policies targeted at providing training and workshops on enterprise management for smes to adopt strategic management fundamentals such as strategy formulation to enhance their performance. moreover, smes in zimbabwe should not wait for government support to augment their performance and growth; instead, they should engage in strategy formulation to establish breakthrough strategies that enhance their performance. this requires a willingness by sme owner-managers to develop a more futuristic and strategic approach. however, particular attention should be given to long-term financial performance, which was found to significantly improve because of strategy formulation. limitations and future research despite the insights gained from this study, it has three major limitations that future research should overcome. instead of using objective measures, the study used subjective measures of financial performance. firstly, the nature of the enterprise studies made it impossible to use objective financial data. secondly, the study adopted a cross-sectional research design. a longitudinal study would have provided more robust conclusions concerning the direct effects of strategy formulation on sme financial performance. lastly, the study used data obtained from zimbabwe, a developing country in southern africa, which obviously may affect the generalisability of the study findings to other african countries in different stages of development. however, the findings may be generalised to several countries in africa with social, economic and institutional environments that are similar to those in zimbabwe. acknowledgements the authors would like to thank the university of kwazulu-natal and the principal researcher’s supervisor for the support they provided to mr m.m. in attending the seminar on phd research writing and article publishing in pietermaritzburg (south africa). the seminar provided important information and knowledge that made the writing of this article a success. competing interests the authors have declared that no competing interests exist. authors’ contributions m.m. conducted literature review and the writing of the article, m.b. analysed the data and m.p. proofread the first draft of the manuscript and gave suggestions. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the authors confirm that the data supporting the findings of this study are available within the article. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abosede, a.j., obasan, k.a. & alese, o.j., 2016, ‘strategic management and small and medium enterprises (smes) development: a review of literature’, international review of management and business research 3(2), 75–86. acquaah, m. & agyapong, a., 2015, ‘the relationship between competitive strategy and firm performance in micro and small businesses in ghana: the moderating role of managerial and marketing capabilities’, africa journal of management 1(2), 172–193. https://doi.org/10.1080/23322373.2015.1025684 adeyemi, i.i., isaac, o.a. & olufemi, a.s., 2017, ‘strategic management: a policy, still, they sustainable business development in small and medium scale enterprises in nigeria’, archives of business research 5(9), 108–118. https://doi.org/10.14738/abr.59.3638 ahmad, k., 2014, ‘the adoption of management accounting practices in malaysian small and medium-sized enterprises’, asian social science 10(2), 236–249. https://doi.org/10.5539/ass.v10n2p236 aldehayyat, j.s., 2015, ‘environmental scanning in business organisations: empirical evidence from a middle eastern country context’, management research review 38(5), 459–481. https://doi.org/10.1108/mrr-02-2014-0032 analoui, f. & karami, a., 2013, strategic management in small and medium enterprises, thomson learning, london. anyanga, s.o. & nyamita, m.o., 2016, ‘the major growth strategies adopted by small and medium enterprises in kenya: a case of kisumu county’, international journal of advanced and multidisciplinary social science 2(1), 11–26. auka, d.o. & langat, j.c., 2016, ‘effects of strategic planning on performance of medium sized enterprises in nakuru town’, international review of management and business research 5(1), 188–203. birley, s. & westhead, p., 1990, ‘growth and performance contrasts between ‘types’ of small firms’, strategic management journal 11(7), 535–557. https://doi.org/10.1002/smj.4250110705 bomani, m., 2017, ‘government policies and strategies in dealing with challenges confronting small and medium enterprises: a case of harare, zimbabwe’, unpublished phd thesis, university of kwazulu-natal, durban. burugo, v.m. & owour, d., 2017, ‘influence of strategic management practices on business profitability in kenya: a case study of chai trading company limited. imperial journal of interdisciplinary research 3(9), 923–947. carlsern, j & andersson, t.d., 2011, ‘strategic swot analysis for public, private and not-forprofit festival organisations’, international journal of events and festival management 2(1), 83–97. https://doi.org/10.1108/17582951111116632 chen, m. & liu, b., 2012, ‘strategic management in chinese manufacturing smes’, unpublished dissertation, master of business administration, jonkoping international business school, jonkoping. cheng, w.h., kadir, k.a. & bohari, a.m., 2014, ‘the strategic planning of smes in malaysia: a view of external environmental scanning’, international journal of business and society 15(3), 437–446. chinakidzwa, m. & phiri, m., 2020, ‘impact of digital marketing capabilities on market performance on small to medium enterprise agro-processors in harare, zimbabwe’, business: theory & practice 21(2), 746–757. https://doi.org/10.3846/btp.2020.12149 chong, h.g., 2008, ‘measuring performance of small and medium scale sized enterprises: the grounded theory approach’, journal of business and public affairs 2(1), 1–10. cokins, g., 2017, strategic business management: from planning to performance, john wiley & sons, new york, ny. covin, j.g., 1991, ‘entrepreneurial versus conservative firms: a comparison of strategies and performance’, journal of management studies 28, 439–462. https://doi.org/10.1111/j.1467-6486.1991.tb00763.x dauda, y.a., akingbade, w.a. & akinlabi, h.b., 2010, ‘strategic management practice and corporate performance of selected small business enterprises in lagos metropolis’, international journal of business and management 5(11), 97–105. https://doi.org/10.5539/ijbm.v5n11p97 david, f.r., 2013, strategic management concepts, 13th edn., pearson education, upper saddle river, hoboken, nj. david, f.r., 2015, strategic management concept and cases: a competitive advantage approach, pearson education inc., nj. david, m.e. & david, f.r., 2016, ‘the quantitative strategic planning matrix: a new marketing tool’, journal of strategic marketing 25(4), 342–352. https://doi.org/10.1080/0965254x.2016.1148763 dess, g.g., lumpkin, t. & eisner, a.b., 2010, strategic management: texts & cases, 5th edn., mcgraw-hill, new york, ny. de wit, r. & meyer, r., 2014, strategy: process, content, context, 4th edn., south-western cengage learning, boston, ma. donkor, j., donkor, g.n.a. & kwarteng, c., 2018, ‘strategic planning and performance of smes in ghana: the moderating effect of market dynamism’, asia pacific journal of innovation and entrepreneurship 12(1), 62–76. https://doi.org/10.1108/apjie-10-2017-0035 dubilihla, j. & sandada, m., 2014, ‘impact of strategic planning on small and medium-sized enterprises’ performance: the role of employee participation, implementation incentives and evaluation and control’, journal of economics 5(1), 45–55. https://doi.org/10.1080/09765239.2014.11884983 du toit, a., 2016, ‘using environmental scanning to collect strategic information: a south african survey’, international journal of information management 36(1), 16–24. https://doi.org/10.1016/j.ijinfomgt.2015.08.005 falshaw, j.r., glaister, k.w. & tatoglu, e., 2006, ‘evidence of formal strategic planning and company performance’, management decision 44(1), 9–30. https://doi.org/10.1108/00251740610641436 feurer, r. & chaharbaghi, k., 1997, ‘strategy development: past, present and future’, training for quality 5(2), 58–70. galbreath, j., lucianetti, l., thomas, b. & tisch, d., 2020, ‘entrepreneurial orientation and firm performance in italian firms: the moderating role of competitive strategy’, international journal of entrepreneurial behavior & research 26(4), 629–646. https://doi.org/10.1108/ijebr-07-2019-0457 gates, l.p., 2013, strategic planning with critical success factors and future scenarios: an integrated strategic planning framework, carnegie-mellon university, pittsburgh, pa. germanos, g., 2012, ‘the process of strategy formulation in small and medium enterprises in greece and the role of accounting information’, unpublished phd thesis, university of birmingham, birmingham. gomera, s., chinyamurindi, w.t. & mishi, s., 2018, ‘relationship between strategic planning and financial performance: the case of small, microand medium-scale businesses in the buffalo city metropolitan’, south african journal of economic and management sciences 21(1), 1–9. https://doi.org/10.4102/sajems.v21i1.1634 hadighi, a.s., sahebjamnia, n., mahdavi, i. & shirazi, m.a., 2013, ‘a framework for strategy formulation based on clustering approach: a case study in a corporate organisation’, kwoledge-based systems 49(2013), 37–49. https://doi.org/10.1016/j.knosys.2013.04.008 hair, j.f., babin, b.j., anderson, r.e. & tatham, r.l., 2019, multivariate data analysis: a global perspective, 8th edn., prentice hall, hoboken, nj. harif, m.a.a.m., hoe, c.h. & ahmed, m.i., 2013, ‘the financial and nonfinancial performance indicators of paddy framers’ organizations in kedah’, world review of business research 3(1), 80–102. https://doi.org/10.2139/ssrn.2130415 hay, g.j. & castilla, g., 2006, ‘object-based image analysis: strengths, weaknesses, opportunities and threats (swot)’, isprs archives 36, 4–5. helms, m.m., martín a., rodríguez, m.a., de los ríos, l. & hargrave, w.b., 2011, ‘entrepreneurial potential in argentina: a swot analysis’, an international business journal incorporating journal of global competitiveness 21(3), 269–287. https://doi.org/10.1108/10595421111134859 hill, c.w.l. & jones, g., 2013, strategic management theory: an integrated approach, 9th edn., cengage learning, mason, oh. jones, g.r. & hill, c.w., 2010, theory of strategic management: with cases, south-western cengage learning, mason, oh. kee-luen, w., hiam-yong, k. & seng-fook, o., 2013, ‘strategic planning and business performance: a study of smes in malaysia’, in proceedings of 3rd asia-pacific business research conference, 25–26 february 2013, kuala lumpur, pp. 1–25. kowo, s., sabitu, o. & adegbite, g., 2018, ‘influence of competitive strategies on corporate performance of small and medium enterprises: a case from nigeria’, agricultural and resource economics: international scientific e-journal 4(3), 14–33. lynch, r., 2015, strategic management, 7th edn., pearson education, edinburgh gate. mabenge, b.k., ngorora-madzimure, g.p.a. & makanyeza, c., 2020, ‘dimensions of innovation and their effects on the performance of small and medium enterprises: the moderating role of firm’s age and size’, journal of small business & entrepreneurship 4(1), 1–26. https://doi.org/10.1080/08276331.2020.1725727 mageto, j., prinsloo, g. & luke, r., 2018, ‘logistics outsourcing and performance of manufacturing small and medium-sized enterprises in nairobi’, southern african journal of entrepreneurship and small business management 10(1), a162. https://doi.org/10.4102/sajesbm.v10i1.162 majama, n.s. & magang, t., 2017, ‘strategic planning in small and medium enterprises (smes): a case study of botswana smes’, journal of management and strategy 8(1), 74–103. https://doi.org/10.5430/jms.v8n1p74 makanyeza, c. & dzvuke, g., 2015, ‘the influence of innovation on the performance of small and medium enterprises in zimbabwe’, journal of african business 16(1–2), 198–214. https://doi.org/10.1080/15228916.2015.1061406 mattheeusen, s. & spontak, t., 2018, ‘strategic planning in small and medium-sized enterprises in sweden’, unpublished master’s research project of lund university. mbengo, p., 2016, ‘marketing mix’s influence on mobile banking adoption by the rural unbanked consumers in masvingo province’, unpublished phd thesis, university of kwazulu-natal. melo, f.m.s., sproesser, r.l., silva, w.l. & souza, r., 2018, ‘business strategy and environmental practices: evidence in the sugarcane energy sector in brazil’, african journal of business management 12(2), 44–57. https://doi.org/10.5897/ajbm2017.8463 mintzberg, h., 1994, ‘the fall and rise of strategic planning’, in harvard business review, january, pp. 107–114, viewed 08 april 2018, from https://hbr.org/1994/01/the-fall-and-rise-of-strategic-planning. mintzberg, h., ahlstrand, b. & lampel, j., 2009, strategy safari: your complete guide through the wilds of strategic management, 2nd edn., prentice hall, harlow. monday, j.u., akinola, g.o., ologbenla, p. & aladeraji, o.k., 2016, ‘strategic management and firm performance: a study of selected manufacturing companies in nigeria’, european journal of business and management 79(2), 176–192. mugozhi, f. & hlabiso, g., 2017, ‘determinants of small to medium enterprises’ success or failure: an ex-post appraisal of start-up business by young entrepreneurs in zimbabwe’, the international journal of humanities & social studies 5(3), 1–18. musandiwa, t.j., 2014, ‘customer orientation in small business marketing mix strategy formulation and implementation’, phd (marketing) unpublished, university of johannesburg. mutengezenwa, m., 2018, ‘financial literacy among small and medium enterprises in zimbabwe’, unpublished dba thesis, university of kwazulu-natal, durban. nwachukwu, c., chladkova, h. & fadeyi, o., 2017, ‘strategy formulation process and innovation performance nexus’, international journal for quality research 12(1), 147–164. https://doi.org/10.18421/ijqr12.01-09 nyamwanza, t., 2015, ‘strategy implementation for survival and growth among small to medium-sized enterprises (smes) in zimbabwe’, phd thesis, midlands state university, gweru. omsa, s., ridwan, m. & jayadi, m., 2017, ‘the effect of strategic management practices on sme performances in makassar, indonesia’, american journal of theoretical and applied business 3(4), 71–80. https://doi.org/10.11648/j.ajtab.20170304.12 papulova, z. & papula, j., 2014, ‘approaches to strategy: practice of slovak enterprises world’, journal of social sciences 4(2), 123–133. pashaa, o. & poisterb, t.h., 2017, ‘exploring the change in strategy formulation and performance measurement practices under turbulence’, public performance & management review 40(3), 504–528. https://doi.org/10.1080/15309576.2016.1276843 pitt, m. & koufopoulos, d., 2012, essentials of strategic management, sage publications, london. pratiwi, a., sutopo, w., zakaria, r. & rasli, a.m., 2017, ‘formulating strategy through qspm based on swot framework: a case study spin-off company in malaysia’, advanced science letters 23(9), 8646–8651. https://doi.org/10.1166/asl.2017.9945 pucci, t., nosi, c. & zanni, l., 2017, ‘firm capabilities, business model design and performance of smes’, journal of small business and enterprise development 24(2), 222–241. https://doi.org/10.1108/jsbed-09-2016-0138 ralph, i., williams, j.r., smith, a., joshua, r., aaron, b., scott, c. et al., 2020, ‘small business strategic management practices and performance: a configurational approach’, economic researchekonomska istraživanja 33(1), 2378–2396. https://doi.org/10.1080/1331677x.2019.1677488 raymond, l., marchand, m., st-pierie, j., cadieux, l. & labelle, f., 2013, ‘dimensions of small business performance from the owner-manager’s perspective: a reconceptualization and empirical validation’, entrepreneurship and regional development 25(5–6), 468–499. https://doi.org/10.1080/08985626.2013.782344 roscoe, j.t., 1975, fundamental research statistics for the behavioural sciences, 2nd edn., holt rinehart & winston, new york, ny. salloum, c., azzi, g., mercier suissa, c. & khalil, s., 2016, ‘the impact of the presence of women in management on the firms’ performance’, international journal of entrepreneurship and small business 27(2–3), 213–246. https://doi.org/10.1504/ijesb.2016.073976 sami, w., 2016, ‘exploring the strategising practices of small business managers in selected small businesses in the accommodation sector in tshwane metropolitan area’, unpublished master of commerce, unpublished thesis, university of south africa, johannesburg. sandada, m., 2015, ‘strategic planning dimensions in small and medium enterprises (smes) in south africa: their relative importance and variations in selected demographic variables’, economic forum journal 4(1), 14–29. sandada, m. & chikwama, r.t., 2016, ‘the driving forces for the practice of strategic planning in smes: evidence from harare metropolitan province, zimbabwe’, acta universitatis danubius 12(6), 95–114. sarason, y. & tegarden, f., 2003, ‘the erosion of the competitive advantage of strategic planning’, journal of business and management 9(1), 1–21. saunders, m., lewis, p. & thornhill, a., 2016, research methods for business students, 7th edn., pearson india education, noida. sekaran, u. & bougie, r., 2016, research methods for business: a skill building approach, 5th edn., hermitage, new york, ny. shrader, c., mulford, c. & blackburn, v., 1989, ‘strategic and operational planning, uncertainty, and performance in small firms’, journal of small business management 27, 45–60. shu, c., de clercq, d., zhou, y. & liu, c., 2019, ‘government institutional support, entrepreneurial orientation, strategic renewal, and firm performance in transitional china’, international journal of entrepreneurial behavior & research 25(3), 433–456. https://doi.org/10.1108/ijebr-07-2018-0465 sibanda, k., hove-sibanda, p. & shava, h., 2018, ‘the impact of sme access to finance and performance on exporting behaviour at firm level: a case of furniture manufacturing smes in zimbabwe’, acta commercii 18(1), a554. https://doi.org/10.4102/ac.v18i1.554 siddique, c.m., 2015, ‘a comparative study of strategic planning practices of smes and large-sized business organizations in emerging economies: the case of uae’, strategic change 24(6), 553–567. https://doi.org/10.1002/jsc.2039 singh, s.p., 2009, corporate strategy, 2nd edn., aitbs publishers, new delhi. tell, j., 2010, ‘managerial strategies in small, fast-growing manufacturing firms’, journal of management development 31(7), 700–710. https://doi.org/10.1108/02621711211243890 thompson, jr. a.a., strickland, a.j., gamble, j.e. & jain, a.k., 2016, crafting and executing strategy: the quest for competitive advantage-concepts and cases, tata mcgraw-hill publishing company limited, new delhi. tinarwo, t., 2016, ‘an investigation into the challenges faced by small to medium enterprises in zimbabwe: a case of gazaland market’, journal of business and management 18(9), 148–153. https://doi.org/10.9790/487x-180902148153 verreynne, m.l., meyer, d. & liesch, p., 2014, ‘beyond the formal–informal dichotomy of small firm strategy-making in stable and dynamic environments’, journal of small business management 54(2), 420–444. https://doi.org/10.1111/jsbm.12143 wang, g., dou, w., zhu, w. & zhou, n., 2015, ‘the effects of firm capabilities on external collaboration and performance: the moderating role of market turbulence’, journal of business research 68(9), 1928–1936. https://doi.org/10.1016/j.jbusres.2015.01.002 wheelen, t.l. & hunger, j.d., 2014, strategic management and business policy, 13th edn., prentice hall inc., new york, ny. wheelen, t.l., hunger, j.d., hoffman, a.n. & bamford, c.e., 2014, strategic management and business policy: globalization, innovation and sustainability, 14th edn., prentice hall inc., new york, ny. wiesner, r. & millet, b., 2012, ‘strategic approaches in australian smes: deliberate or emergent?’, journal of management & organization 18(1), 98–122. https://doi.org/10.1017/s1833367200001097 abstract introduction the funding gap methodology research findings and discussion small and medium enterprises funding risk reduction and mitigation process model blended small and medium enterprises funding model statistical analysis limitations and implications for future research recommendations conclusion acknowledgements references appendix 1 appendix 2 about the author(s) foster baloyi graduate school of business leadership (sbl), university of south africa, johannesburg, south africa moses b. khanyile centre for military studies, faculty of military science, stellenbosch university, saldanha, south africa citation baloyi, f. & khanyile, m.b., 2022, ‘innovative mechanisms to improve access to funding for the black-owned small and medium enterprises in south africa’, the southern african journal of entrepreneurship and small business management 14(1), a578. https://doi.org/10.4102/sajesbm.v14i1.578 original research innovative mechanisms to improve access to funding for the black-owned small and medium enterprises in south africa foster baloyi, moses b. khanyile received: 29 may 2022; accepted: 23 aug. 2022; published: 31 oct. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: small and medium enterprises (smes) in south africa and globally struggle to gain access to external funding. the current lending instruments used by the banks are more suitable for large enterprises than for smes. financially constrained smes are less likely to contribute to economic growth and job creation. small and medium enterprises in south africa are expected to create 90% of the 11 million jobs as per the national development plan. aim: the objective of this study was to deliver innovatively designed funding mechanisms through which improved access to external funding can be achieved. setting: participating stakeholders in this research were entrepreneurs and suppliers of funding, policymakers and experts. methods: the purposive sampling method was used in this study where 24 in-depth interviews were conducted, and 160 survey questionnaires were recorded. mixed-methods approach was used to incorporate both qualitative and quantitative techniques. a literature review related to entrepreneurship and capital structure theories was conducted. thematic and statistical graphical data analyses were applied in both the qualitative and quantitative data, respectively. results: the critical findings of this study are the blended sme funding model and the sme risk reduction model. designing the lending instruments in a way that blends both private and public financial resources increases the risk appetite on the side of the private lending institutions. conclusion: the proposed model requires more improved public–private partnerships. furthermore, the findings include the need for supportive regulatory framework and embracing alternative emerging technology-enabled funding options. keywords: entrepreneurship; small and medium enterprises (smes) funding; blended sme funding model; funding gap; sme financing. introduction the positive relationship between entrepreneurship and economic growth has been confirmed by previous research work (bowmaker-falconer & herrington 2020; saberi & hamdan 2018). in recognising the job creation power of a thriving small and medium enterprise (sme) sector, the south african government has established a dedicated national department of small business development (dsbd) with the aim of fostering sustainability and growth of smes. furthermore, the government has set an ambitious target of creating 11 million jobs by 2030, of which 90% are to be created by the smes (national planning commission 2011). south africa records a higher sme discontinuity rate compared to established enterprises (bowmaker-falconer & herrington 2020), casting a doubt on the feasibility of the job target set by the government. according to statistics south africa (2021), the unemployment rate is recorded at 34%. regrettably, smes in south africa face constraints such as highly competitive market environment, insufficient government support, non-supportive government policy and regulatory framework, funding gaps and corruption (mistra 2020; mutoko et al. 2017; trade & industrial policy strategies [tips] 2017). the lack of access to external funding as a constraint hits hard on black-owned smes (mutoko et al. 2017). bowmaker-falconer and herrington (2020) posit that access to funding for start-ups is a global phenomenon. only well-established older enterprises have a higher bank fundability likelihood (erdogan 2019). the bank’s assessment of the enterprise’s financial performance relies heavily on hard information such as the financial statement (erdogan 2019). the government’s plan to address market failure through the establishment of small enterprise finance agency (sefa) is yet to make considerable impact. some of the government-run sme support programmes provided by the national youth development agency (nyda) are said to be ineffective (bowmaker-falconer & herrington 2020). the objective of this article was to demonstrate how the blended sme funding model provides options to close the already identified funding gap. the rest of the article is structured as follows: literature review, methodology, findings of the study, analysis and conclusion. the funding gap according to omer (2016), smes also fail to access external financing as a result of mismatches between demand and supply. south africa does not have a shortage of funding instruments, but there is a lack of innovation in the development of lending tools (visser 2019). according to visser (2019), the funding gap in south africa is estimated to be between r86 billion and r346bn. although funding is available in south africa (bowmaker-falconer & herrington 2020; visser 2019), smes fail to meet the funder’s requirements given their inability to prove creditworthiness, present collateral and high-failure rate associated with start-up infancy stage (rao et al. 2021). the high prevalence of information asymmetry-related problems in the smes exacerbates the situation (erdogan 2019). existing empirical evidence proves the existence of correlation between lack of access to external finance and lack of sme growth and development (rao et al. 2021). small enterprise finance agency, nyda and other governmental institutions employ inefficient models, and hence they are less impactful on the ground (bowmaker-falconer & herrington 2020; mistra 2020). the lack of access to external funding is said to be the contributor to the high business discontinuity rate in south africa (maduku & kaseeram 2021). this study’s specific objectives were: to identify the factors contributing to sme failure in south africa, to examine smes and entrepreneurship funding models with respect to how the models can address the funding gap in south africa, to identify the factors enabling sme funding in south africa, to propose a new sme funding model with a view of closing the funding gap. addressing the funding gap has the following benefits, namely, increased participation of black south africans in the main economy, hence the achievement of economic transformation, and increased sme gross domestic product (gdp) contribution and employment creation. the blended sme funding model is seen as an option to close the funding gap. literature review this section deals with literature review on entrepreneurship and capital structure theories. entrepreneurship according to hisrich et al. (2019), the word ‘entrepreneur’ originated from the french language, and it means ‘between-taker’ or ‘go-between’. the advancement in the entrepreneurship concept and theory can be attributed to the work of schumpeter as cited by o’boyle (2017). innovation is placed at the centre of schumpeterian entrepreneurship (mehmood et al. 2019). entrepreneurship bears the characteristics of creativeness, risk-taker and growth-orientated individual (schermerhorn & bachrach 2020). the most recent successful global enterprises that are deemed entrepreneurial and innovative include google, apple, telsa, facebook, paypal, netflix and others. the rise of these innovative disruptors reduced the dominance and market share of the former industry giants such as microsoft, nokia, yahoo, kodak, print news papers and others. scholars have always associated entrepreneurship with uncertainty and risk because entrepreneurial value creation takes place within the context of unknowingness (townsend et al. 2018). the association of uncertainty and risk in entrepreneurial endeavours finds true expression in the journey of steve jobs of apple and mark zuckerberg, the co-founder of facebook. steve jobs had been previously fired by apple, and mark zuckerberg was young with no previous success history. the products being delivered by both apple and facebook were new offerings associated with uncertainty. the situation is characterised as uncertain when the outcomes cannot be calculated or measured (townsend et al. 2018). according to townsend et al. (2018), a risk exists when the outcome is uncertain and yet predictable. entrepreneurial endeavours do result in failure, even when the entrepreneuring enterprise and person in-charge have a good track record in business. window’s vista, ford’s edsel, amazon’s fire phone, the apple newton and many others are some of the unsuccessful entrepreneurial efforts (o’boyle 2021). a total elimination of risk and uncertainty in entrepreneurial practice and innovations seems impossible. o’boyle (2017) associates entrepreneurship with a lively active and spontaneous person who has the eagerness to initiate change. beyond profit making and achieving any success of economic value, entrepreneurship attains a greater success in improving social welfare and reduction of poverty (mehmood et al. 2019). small and medium enterprises are central to economic development globally (erdogan 2019). furthermore, erdogan (2019) associates entrepreneurship with national positive contributions such as economic growth, employment creation and innovation. entrepreneurship in developing economies is mostly necessity driven. opportunity-driven entrepreneurship is associated with market conditions whose circumstances are rich in opportunities, and necessity-driven entrepreneurship prevails in circumstances that are poorer in opportunities (baker & welter 2020). entrepreneurial activity that makes a difference in society is purpose driven (opportunity driven) (bowmaker-falconer & herrington 2020). resources such as finance, skills and social networks are critical for entrepreneurial opportunity exploitation (bowmaker-falconer & herrington 2020). resource-based entrepreneurship recognises the importance of resources in detecting and pursuing opportunities. the lack of access to external finance has been described as the most significant factor because it directly influences growth and sustainability (de prijcker et al. 2019). financial resources are the most required for sustaining and growing an enterprise (cummings et al. 2020). entrepreneurship in south africa south africa is the birthplace of one of the world’s greatest entrepreneurs, elon musk. the country has produced many other successful entrepreneurs such as adrian gore (discovery limited), christoffel wiese (pepkor), herman mashaba (black lime me) and others. south africa’s current entrepreneurial performance as reflected by empirical data paints a bleak picture (swartz et al. 2019). the country’s sme discontinuity rate was measured at 4.9% in 2019, and it was found to be higher when compared to 3.5% for established firms (bowmaker-falconer & herrington 2020). entrepreneurs in south africa face a high level of constraints such as inadequate support, lack of access to advisory services, high cost of broadband access, skills shortage, electricity supply and unsupportive regulatory frameworks (swartz et al. 2019). the constraint of lack of access to external finance has been described as the most significant because it directly influences the firm’s growth and sustainability (de prijcker et al. 2019). consequently, the smes’ inability to access external finance regrettably negatively affects the country’s productivity (erdogan 2019). according to bowmaker-falconer and herrington (2020), smes are the main employment creators in many societies, and they further contribute to social cohesion within local communities. the south african society has a historical, economical and social character that needs entrepreneurship’s contribution in reducing the high unemployment rate and fostering social cohesion. small and medium enterprises have an edge in employment creation when compared to large firms (rao et al. 2021). within dsbd, there are support entities such as small business development agency (seda) and small business finance agency (sefa). small business finance agency provides non-collateral funding, while seda provides non-finance support to start-ups, cooperatives and other small businesses. the sme advisory services offered by public institutions require upskilling to be more impactful (bowmaker-falconer & herrington 2020). south africa’s ratings on the national entrepreneurship framework conditions are summarised in table 1. table 1: south africa’s score on entrepreneurial framework conditions in comparison with the global entrepreneurship monitor (gem) in 2019. the majority of smes in south africa face survival-threatening challenges such as lack of access to markets, lack of internal recordkeeping skills and lack of competitiveness (mutoko et al. 2017). the lack of internal recordkeeping and the inability to produce proof of financial performance reduce the sme’s fundability chances. according to erdogan (2019), financial performance is considered more credible by the banks than projected sales and future performance outlook. mutoko et al. (2017) single out the lack of access to external finance as the major challenge and that lack of it prevents smes from pursuing business opportunities. black-owned small and medium enterprises in south africa black-owned smes in south africa are outperformed by well-established white-owned multinational companies (musabayana & mutambara 2022). according to musabayana and mutambara (2022), 90% of the thriving smes in south africa are owned by white people. black-owned smes fail because of constraints such as lack of access to external funding (mutoko et al. 2017). when seeking funding from programmes based on broad-based black economic empowerment (b-bbee) such as that offered by sefa, the black-owned smes regrettably face cumbersome bureaucratic processes (musabayana & mutambara 2022). black-owned smes’ failure continues despite the implementation of the b-bbee policy in south africa (mistra 2020). the b-bbee is the tool to redress the racial and economic imbalances created by both the apartheid era and the colonial legacies. before 1948, the then prime minister of the cape colony, cecil john rhodes, introduced the english economic empowerment (eee) (meredith 2007). according to meredith (2007), the afrikaans economic empowerment (aee) was introduced by the national party government in 1948. the black people were not only prohibited from operating commercial businesses but also deprived of land ownership rights among others. the failure of the b-bbee can be attributed to the fact that black-owned businesses are expected to compete with the well-established white-owned multinationals (tips 2017) and that the b-bbee deals are secured by connected politicians (mistra 2020). access to funding access to external funding has been repeatedly highlighted as a challenge for most smes (bowmaker-falconer & herrington 2020; omer 2016). financial resources’ inadequacy within smes reduces their capacity to create employment, contribute to gdp growth, and be sustainable (mutoko et al. 2017). according to de prijcker et al. (2019), financially constrained smes are weakened in areas of potential growth and sustainability. the inability to provide collateral, present audited financial statements (erdogan 2019) and information asymmetric problems contribute to smes’ lack of access to external funding. the information asymmetry-related problems are less prevalent in larger enterprises (erdogan 2019). such problems lead to credit rationing, adverse selection and moral hazard-related problems (mueller & sensini 2021). small and medium enterprises that can demonstrate profitability and growth are likely to access external financing (erdogan 2019). new and smaller enterprises have a lower fundability likelihood (erdogan 2019). the financial environment support for the smes in south africa is ranked lower than the gem average (see table 1). according to visser (2019), the current funding channels inhibit even the smes that would otherwise qualify for funding. commercial banks: sourcing external finance from the banks remains the most viable option for smes in both developed and developing economies (rao et al. 2021). dealings between private banks and smes confirm that smes are considered a riskier investment asset class (beck 2013). the mechanisms through which banks assess the loan applications are not suitable for small businesses. banks reject sme loan applications because of lack of credit history, lack of collateral, limited owner’s contribution and doubtful loan repayment prospects (cash flow) (erdogan 2019; mutoko et al. 2017). public funding: as a way of addressing the identified market failures within the sme funding space, the government has both direct and indirect funding programmes. direct programmes include funding instruments such as sefa, industrial development corporation (idc) and gauteng entrepreneurship propeller (gep). indirectly, the government has a credit guarantee scheme provided by the credit guarantee insurance corporation (cdic), incentivising private firms funding smes, and the support of idc. small and medium enterprise financial support in south africa is rated lower compared to the gem average (bowmaker-falconer & herrington 2020). institutions such as nyda, sefa and seda are said to be lacking meaningful impact on the ground and that they employ inefficient models (mistra 2020). alternative funding options: apart from the traditional funding options, smes have alternatives such as equity financing, angel investor, venture capital, crowdfunding, and asset-based and technology-influenced funding. equity financing functions by way of exchanging capital with equity (shareholding) for investors (rao et al. 2021). equity investor option does not impose monthly loan repayment obligation as it would be expected in the bank loan scenario. according to rungani and potgieter (2018), it is the lack of external equity that creates more dependency on debt financing. according to deangelo (2022), firms use equity funding for ‘dry powder’, which is to address future funding needs. the equity funding option and other private lending options are among the least preferred in south africa (bowmaker-falconer & herrington 2020). theoretically, the pecking order theory (pot) explains why smes prefer the use of internal resources and debt options over equity (rao et al. 2021). internal earnings remain the default form of equity within the south african smes sector (omer 2016). more assuring and friendly legal and policy frameworks are required for this option to be embraced (tips 2017). the survey results of a study conducted during 2019 showed the private lender funding (including crowdfunding) option receiving the lowest score (3.3 which is lower than 3.9 awarded to government subsidies) among other sources of funding in south africa (bowmaker-falconer & herrington 2020). according to rungani and potgieter (2018), venture capital option is not accessible to newly established smes. regulatory framework in south africa in a free market economic setup, the government plays a regulatory role. south africa was ranked 60 out of 141 economies on the global competitiveness report of 2019 (world bank doing business report 2020). the report showed south africa’s decline in the burden of government regulations (to 101 out of 141) and the time required to start a business (to 129 out of 141) rankings (bowmaker-falconer & herrington 2020). south africa scored 2.7 against the gem average of 4.0 on the entrepreneurial framework conditions measuring government policies: taxes and bureaucracy (see table 1). the south african labour laws are not favourable to the sme sector (tips 2017). the smes must pay the nationally set minimum wage and follow protracted commission for conciliation, mediation and arbitration (ccma) processes when firing employees. furthermore, there are provisions of the public finance management act of 1999 (pfma) that impede b-bbee promotion. section 51 (a) (iii) of the pfma requires that the organs of the state must run a tender process that is fair, equitable, transparent, competitive and cost-effective. lastly, smes find it difficult to comply with the burdensome tax system (tips 2017). capital structure capital structure is defined as the mix of debt and equity in an enterprise to finance projects and operational requirements (hirdinis 2019). the modigliani and miller theory (also known as the ‘mm’ theory), trade-off theory (tot), pot and agency theory are the dominating theories within the capital structure debate. modigliani and miller (‘mm’) theory the ‘mm’ theory was developed in 1958 by modigliani and miller (simiyu et al. 2019). according to simiyu et al. (2019), modigliani and miller made propositions based on assumptions of an existing perfect market environment wherein firms operate without paying any corporate tax fee. furthermore, it assumed the non-existence of information asymmetric and agency-related costs (simiyu et al. 2019). a revision was made during 1963 wherein ‘mm’ acknowledged the corporate tax advantage associated with the debt financing option. leveraged firms enjoy tax deductible benefits on the interests (simiyu et al. 2019). the ‘mm’ theory with its imperfections must be credited for stimulating theoretical arguments and debates which produced other theories such as the tot. trade-off theory the origins of the tot are traced back to the collective theoretical work produced in response to the claims and arguments of ‘mm’ theory. the tot posits that firms in their financing decisions seek to maintain an optimal debt ratio, thereby achieving a balance between debt tax benefits and bankruptcy risk exposure (mueller & sensini 2021). according to siljander (2018), smes have higher bankruptcy risk exposure than it is for larger enterprises. on the tax benefit debate, tot arguments may not apply in the south african context where smes already enjoy tax benefits and that the cost of debt is unreasonably high. still, the reality is that most profitable firms are reluctant to take on debt and use retained earnings for funding (siljander 2018). it is argued in the tot theory that a firm in a weaker financial position is likely to opt for bank debt financing (simiyu et al. 2019). the tot focused primarily on debt-equity ratio and ignored the funding and hold (deangelo 2022). according to deangelo (2022), optimisation of debt-equity ratio is a narrow problem compared to access to funding for purposes such as project financing, operating income shortfalls and distributions to bond holders. furthermore, the tot failed to address the profit and leverage invasive relationship (deangelo 2022). deangelo (2022) provides the profit and leverage invasive relationship explanation in the baseline model – stating that firms prefer to self-fund internally the initial investment outlays. pecking order pecking order theory posits that firms set a hierarchy that follows an order of funding options preference – internal, debt and equity as a last resort (simiyu et al. 2019). according to hirdinis (2019), pot argues that profitable enterprises prefer the use of internal financing resources compared to seeking external finance as a way of averting costs associated with information asymmetry. the firm develops a financial policy setting out the preferred option, hence reducing the information asymmetry-related costs (adair & adaskou 2015). pecking order explains a firm’s general tendency to prefer internal over external financing and to prioritise debt over equity (deangelo 2022). the prioritisation of internal financing is motivated by the need to reduce or avoid information asymmetry-related costs (simiyu et al. 2019). the applicability of the pot theory within the financially constrained sme is questionable. agency theory agency theory argues that owners of the firms appoint managers who act as the owner’s agents in the day-to-day management of the business (simiyu et al. 2019). the conflict of interest results in problems referred to as ‘agency costs’, originating from information asymmetry, moral hazard and adverse selection-related problems (erdogan 2019; mueller & sensini 2021). in smes owned by two persons and more, information asymmetry problems are lower compared to a single person-owned firm (erdogan 2019). agency-related problems can result in credit rationing. methodology a multi-stakeholder integrated view was deemed necessary to achieve the study objectives; hence, an ethnographic design using mixed-methods research approach was adopted. a purposive sampling strategy was employed to collect data using semi-structured in-depth interviews. there is no institution in south africa that has a full database of all smes. therefore, a non-probability sampling method was used to sample about 30 participants representing the identified stakeholders listed in table 2. marshall et al. (2013) recommend a size of between 20 and 30 for grounded theory development studies. qualitative studies are associated with a small sample size (saunders et al. 2016). table 2 represents the interview participation report. table 2: interview participation report. there were 24 interviews conducted, representing 80% of the targeted sample of 30. of the interview participants, 75% were men while 25% were women. the participating entities recommended participants based on their expertise on the subject, and gender representativity was a priority importance. thematic data analysis was applied to the interview transcripts. interviews were digitally recorded. the interview recordings were converted to text (transcripts). the analysis involved repeated readings of the transcripts in order to identify the codes. coding identifies and groups data having similar meanings (saunders et al. 2016). a total of 391 codes were generated, grouped and categorised, which produced the themes presented in the findings section. the themes emerging from the data constituted the elements that were utilised to build the blended sme funding model. a survey questionnaire was designed and administered for the purpose of validating the emerging model. the questionnaire was electronically sent to both entrepreneurs and non-entrepreneurs. small enterprise finance agency and gep distributed the questionnaire to the smes on their database. the questionnaire was also sent to non-entrepreneur participants. it was deemed unethical to collect qualitative data from both the entrepreneurs and non-entrepreneur participants and then only ask the non-entrepreneur participants to validate it. about 160 questionnaire responses were received. statistical analysis was performed on the qualitative data to inform the conclusions of this study (see ‘statistical analysis’ section). this research was conducted in compliance with the conditions set by the unisa school of business leadership research ethics review committee. for both qualitative and quantitative data collection methods applied in this study, pilot tests were conducted as a way of ensuring validity and reliability. ethical considerations ethical clearance to conduct the study was obtained from the unisa graduate school of business leadership research ethics review committee (gsbl crerc), reference number: 2020_sbl_dbl_037_fa. research findings and discussion this section presents the results (themes) emerging from the study. the themes are, namely, the causes of sme failure in south africa, factors enabling sme funding in south africa and factors enabling sme success in south africa. theme 1: causes of small and medium enterprises failure in south africa the semi-structured interview-collected data revealed the following sme constraints: non-availability or inadequate sme support structures, high dominance of survivalist entrepreneurial culture, entrepreneurial skills shortage, poor public–private partnerships and unsupportive policy regulatory framework. in the extract below, an interview respondent mourns about the unsupportive regulatory framework: ‘what preferential procurement policy framework act (pppfa) says is that when you want to issue a tender, you need to go to the open market – you need to be fair and transparent … give everyone a fair opportunity. even those who were not part of the enterprise development programme must be given a fair chance. what happens is that the smes do not have a network, a consortium where they can get the goods cheaper. the big companies buy the goods cheaper. smes lose out on tenders because the price is used [as] a determining factor.’ (p15, female, soe official) both public and private institutions provide b-bbee-inspired support programmes and opportunities to smes aimed at addressing the constraints. the respondents viewed the current non-financial support programmes as generic, less impactful and implemented just to fulfil the requirements. despite being under-resourced and inadequate, the current sme support structures are mainly centred in urban and developed towns and cities. start-ups and entrepreneurs require access to support and advisory services from the infancy stages and through the entrepreneurial journey. the following excerpt provides evidence regarding this: ‘the support services must be prescribed and provided on case to case basis. for an example, an entrepreneur from a family that has never had a million rands is likely to require serious financial management support and mentorship in financial decision-making.’ (p9, male, private equity and academia) the support services also include mentorship, advisory services, product licensing and registration, accounting services and access to funding. currently, the private enterprises implement b-bbee policies and programmes, such as enterprise supplier development (esd) programmes just for compliance and not in the spirit of achieving the intended objectives of empowerment and transformation. a lack of real success in implementing support programmes leaves the sme sector dominated by survivalists. the high dominance of survivalist entrepreneurial culture is associated with non-business formalisation and non-recordkeeping. the study data revealed a low level of entrepreneurial spirit in south africa. mainly, skills deficiency is reported in areas such as technology, business management, recordkeeping, market research, marketing, and general operations that require interventions. the entrepreneurial and sme support programmes offered by government and its entities are poorly collaborated. because of the lack of skills and practical business experience, entrepreneurs are unable to communicate identified profitable business opportunities and exploitation strategies in the business plans when applying for funding. the rejection of smes’ funding applications is largely owing to their failure in meeting the funder’s requirements, presenting a unbankable business case and high risk associated with the enterprise and/or the owners. small and medium enterprises find it costly to commission professional firms to produce the enterprise’s audited financial statement as well as the business plan. even when the business plan has been compiled by a professional, some entrepreneurs fail to internalise and articulate the content of the document during the interview with the funding institution investment official. the low level of opportunity-based entrepreneurs contributes to the submission of non-bankable business plans that are rejected by the funding institutions. theme 2: factors impeding small and medium enterprises funding in south africa as revealed in the interview data, the three key reasons why suppliers of external funding decline the sme funding applications are failure to meet the requirements, non-bankable business case and high-risk profile. further, there are underlying factors on both the demand and supply sides. on the demand side, the prevailing survivalist entrepreneurial practice is associated with non-recording of the enterprise’s financial and operational information. the entrepreneurs are, therefore, unable to adequately complete the business loan/funding application. on the supplier side, the sme’s loan applications are subjected to similar loan assessment measures applied to large enterprises, the government funding institutions lack capacity and employ lengthy loan assessment processes, and the banks are more strict and less flexible when applying the rules: ‘a practical case is the group of medical doctors in the province of gauteng who came together and created a warehouse and distribution centre. in this initiative, the group of medical doctors were not satisfied with the transformation happening at their medical suppliers and therefore created their own medical supply warehouse distribution centre. at the time of the application, the warehouse did not meet all requirements to attract funding. key mandatory requirements included being operations, licensed and meeting cooling (air-conditioning) requirements… a decision to fund the initiative was taken on the bases that the doctors themselves were both the distributors (suppliers) as a group and market (customers) as individual doctors. if strict rules for business loan application were followed without the willingness to analyse the application differently, the opportunity to support transformation would have been missed. entrepreneurs/sme business loan application come in different shapes and forms, when rules are applied, it is easy to disqualify cases with great potential. smes are diverse and require flexibility in handling their loan applications.’ (p18, male, bank official) the participants lack developmental and transformation mindset within the private lending institutions. public funding institutions lack the capacity to timeously assess loan applications and conduct monitoring and evaluation of contracts: ‘government agencies do not only lack practical impact on the ground, they yield characteristics of strategic deficiency. while it is being said that the success of entrepreneurship in the country is negatively affected by lack of entrepreneurial skills within the entrepreneurs, it must be admitted as a reality that the lack and mismatch of skills in the operations of government agency bears equal blame.’ (p12, male, dfi official) the survey results revealed that about 63% of sme funding applications are submitted to public funding institutions, while 37% are submitted to private funding institutions. it must be declared that the numbers may be skewed given the fact that the participation sample was sourced from a government funding institution. the survey results revealed that 63% of the smes applied for 250 000 while 37% applied for r250 000 and less. in terms of processing funding applications, only 13% submitted at public funding institutions are processed within a month. in contrast, the banks complete 56% of the submitted applications within a week. public funding institutions deal with the bulk applications that are not filtered through a pre-qualification computer system applied by the banks. further, public funding institutions centralise approval delegation for funding application to the central committee. this is consistent with the survey results of a study conducted in 2019 where respondents with previous dealings with the nyda rated it as an ineffective method (bowmaker-falconer & herrington 2020). theme 3: factors enabling small and medium enterprises funding in south africa factors that enable sme funding were found to be influential to sme’s success. according to rao et al. (2021), financially leveraged sme’s growth translates into the broader societal economic growth. the interview-collected data revealed the sme success factors as being improved access to entrepreneurship and sme value chain support structures, competent entrepreneurs, formalised partnerships between private and public role-players, flexible and accessible business loan application processes, compelling business case documents, blended funding programmes, efficient and capacitated government agencies, better contract conditions, dedicated sme banking services and alternative funding options and effective communication on the side of the agencies. access to market and easily accessible sme support services enable smes to meet the funder’s requirements, thereby presenting contracts with the clients and audited financial statements. non-financial support services incorporated within the collaborated partnerships between private and public partnerships such as mentorship and business incubation are also very critical success and funding enabling factors. the success of the credit guarantee schemes (cgs) and the proposed blended sme funding model depends on improved public–private collaborations. on the establishment of sme support structures, the survey results indicate support of 58.8% strongly agree, 36.3% agree and 5% neutral. the support for the establishment of structures is consistent with bowmaker-falconer and herrington (2020). according to them, entrepreneurs in urban, townships and rural areas need improved access to networks, mentorship services and other related advisory services. most support structures are currently located in urban and developed towns in south africa, leaving the rural communities isolated. according to saberi and hamdan (2018), the gulf cooperation council (gcc) countries established business incubation centres to afford entrepreneurs with new business ideas support to turn ideas into profitable projects. even as the entrepreneurial skills improve as a result of tailor-made training, mentorship and business incubation services, entrepreneurs need dedicated funding institutions focusing on smes. in their funding application, the smes need to clearly demonstrate how they will create and capture value from the identified business opportunity, and the ability to service the loan. the interview extracts below provide evidence: ‘it is within this “prospective test” that the issue of commercial viability of the business is scrutinised to the detail. because the first line of defence is unfortunately not the precious cash and income generation capacity and asset-base (which can be offered as security), however, it is the prospective “probability” of the business idea that would generate future income and cashflows which the funder can rely on for the repayment of loans advanced.’ (p10, male, private equity) the respondents further suggested that government funding institutions should be capacitated and that the loan approval delegation for r250 000 (requested amounts) should be decentralised to the provinces and regions. central credit database for smes should be created for ease of credit rating. paperwork for small amount loans should be reduced to a 10-page document. theme 4: factors enabling small and medium enterprises success the theme of sme success factors theme highlights the need for improved access to external funding, locally based accessible entrepreneurship/sme value chain ecosystem, formalised collaborative and partnerships, and the supportive policy and regulatory framework. this is evidenced by the following excerpt: ‘we need to have structured incubation hubs in every province and every township. the incubators must have a number of pillars that govern and dictate the support of survives that they support to young people. infrastructure that you would not have access to such as office space, broadband, accounting services and other support services.’ (p8, male, private equity expertise) data collected in this study exposed how unfriendly the policy and regulatory framework are to the sme community. other previous research works had similar conclusions about the policy and regulatory framework in south africa (domeher et al. 2016; mistra 2020; tips 2017). according to tips (2017), the south african labor laws are not favourable to the sme sector, and labour laws and the tax system are burdensome. to create a conducive environment for the alternative funding options discussed earlier in this article, fundamental changes and strengthening of the laws are required, hence embracing crowdfunding, non-fixed assets recognition as collateral and improved collaboration between private and public institutions. small and medium enterprises funding risk reduction and mitigation process model literature on entrepreneurship associates entrepreneurial practice with uncertainty and risk (townsend et al. 2018), and a tailor-made risk reduction and mitigation model is proposed. the provision of non-financial support services through private–public partnerships leads to the reduction of sme risk rating and improved skills levels (saberi & hamdan 2018). therefore, risk must be regarded as the ever-present factor in entrepreneurship. this article proposes the sme funding risk reduction and mitigation process (see figure 1). the sme high-risk proposition emanates from asymmetric information problems, low entrepreneurial skills, previous business history and others. figure 1: small and medium enterprises risk reduction process. figure 2: blended small and medium enterprises funding model. flexible funding approach requires that sme funding requests should be assessed differently from the approach applied to large enterprises. this research encountered sme success stories that would have been otherwise not possible if it was not for developmental mindset and flexible and innovative funding approaches. technology offers the opportunity to monitor the performance of smes and business account 24/7. therefore, traditional agency costs associated with monitoring get reduced significantly. furthermore, the government’s commitment and allocation of cgs budget enable the private sector lending institutions to extend funding to smes with a high-risk profile. working with the broad business community, the grant can be used to provide tailor-made training, business incubation and mentorship programmes. furthermore, technology enables mentorship engagements to be conducted virtually and reduces costs significantly. blended small and medium enterprises funding model generally, blended finance is an instrument for attaining developmental objectives through the use of public and private funding (odi 2019). through this approach, successes in asia and sub-saharan africa have been realised, where either public or private funding would not have succeeded individually (convergence 2019). the risk would be too high for private funding to invest and the public (government) would have insufficient budget to achieve the project. according to havemann et al. (2020), the funds committed by the government overturn risk–return perception and appetite for private funding suppliers. according to odi (2019), blended finance is only possible where there are compelling measurable developmental goals to be achieved, government-allocated concessionary budget and commercial risk–return-oriented funding. commercial funding is only attracted to the blended setup by the concessionary capital provided by public funding (odi 2019) in this regard, blended funding is the structuring of capital in a way that offers an option to close the funding gap for the purpose of meeting south africa’s developmental goals. instead of only having the mix of debt and equity in the equation, the model brings in the third element, which is ‘grant’. grant covers funding for technical skills upgrading, mentorship and business incubation. in a traditional blended finance arrangement, it would only be debt and equity in the mix (havemann et al. 2020). the south african government has already established seda to provide non-financial support programmes to smes. small business development agency can be regarded as the ‘grant’ element of the blended funding model, except that the support services offered by seda are not tailor made. the reasons why smes are declined funding have already been reported earlier in this article. the blended funding model presents an opportunity to eliminate and mitigate the risk significantly, hence providing funding access for smes. government-provided cgs can be regarded as the traditional collateral as requested by the banks. some business ideas are not profitable almost immediately, and government grant will certainly assist with cashflow requirement to sustain the business. small and medium enterprises doing business with government in south africa often complain about non-payment of invoices even after 30 days which the government has committed to pay within. grants will aid smes when cashflow streams dry while they wait for payments. the measurable objectives to be achieved through the blended sme funding model include increased sme fundability, cashflow stability, increased profitability, low-risk profile and improved sme success rate. south africa needs a thriving sme sector that creates jobs and contributes to both gdp growth and inclusive economic growth. collaborative partnerships between the government and the private sector are important for the success of the blended sme funding model. figure 3 demonstrates the overwhelming support of the blended sme funding model by the survey participants. combined responses between strongly agree and agree responses make up 87%. strongly agree responses account for 54% of the responses, while agree responses constitute 33%. figure 3: blended small and medium enterprise (sme) funding model will improve both access to funding and enterprise success. survey results – blended sme funding model support 1. further analysis on the responses of both entrepreneurs and non-entrepreneur survey respondents is demonstrated in figure 4. figure 4: survey results – blended sme funding model support 2. the combined strongly agree and agree responses for both entrepreneurs and non-entrepreneurs are 85% and 95%, respectively. the survey results show strong support for the blended sme funding model. statistical analysis by design, the data collected in this study would not suit the full statistical analysis. a likert-scale questionnaire was designed and administered for the purpose of validating the results of the qualitative phase of the study. specific questions targeted certain responses. for example, questions regarding loan application assessment and approval procedures within the government funding institutions would not be responded to by the entrepreneurs. three factors emerged from the rotated factor loading statistical package for social sciences (spss) software results depicted in appendix 2. factor 1 found relatedness in the instruments measuring the use of contracts with the intention to foster fundability in the absence of collateral and encourage the sme to make monthly savings, confirming that most entrepreneurs require upskilling in financial, operational competency and others, linking collaborative partnerships between private and public sector institutions with the establishment of entrepreneurship support structures in all the nine provinces of south africa. furthermore, the need for internal technological capacity building for account monitoring at the public funding institutions is also associated with the instrument measuring the validity of the blended funding model. factor 2 found relatedness in the introduction of a common business plan, decentralising the delegation of authority to the regions and provinces for the approval of sme loan applications asking for r250 000 and less at the public funding institutions and the need to introduce virtual training. the final factor comprises instruments measuring the need to reduce paperwork for the sme loan applicants asking for r250 000 and the confirmation that smes find it difficult to meet the requirement of submitting audited financial statements during the loan application. individual likert scale results for these instruments are covered in appendix 1. the statistical analysis results further confirm the elements of the blended funding model as proposed in this article. limitations and implications for future research this study was conducted during the time when the government had imposed coronavirus disease 2019 (covid-19) lockdown restrictions. twenty-three interview sessions were conducted virtually. furthermore, the impact of covid-19 restrictions negatively affected smes the most. therefore, the participation of smes may have been influenced. the use of english language in the survey part of the study may have limited or affected the participation level. this study has both theoretical and practical implications. the funding risk reduction and mitigation model acknowledges the embeddedness of risk and uncertainty in the entrepreneurial process, brings into the equation training, mentorship and other skills development support inputs and technologically enabled monitoring mechanisms. according to mamabolo et al. (2017), entrepreneurship education and training targeted on certain skills will improve entrepreneurial success. the study recommends for the development of africa-based sme business school education programmes. business school education is expensive and mostly has a large enterprise-inspired training content. the successful implementation of the blended sme funding model depends on the improved public–private partnerships, capacity and skills adequacy within the government sme supporting institution, and the review of certain regulatory provisions impeding sme success as discussed. recommendations public funding institutions regional and provincial offices of sefa and idc should have delegated powers to make decisions on grant and loan applications up to a specific amount as may be determined by these institutions. based on the observations of this study, such an amount should ideally not be less than r250 000 and could reach a reasonable ceiling of around r2 million. the implementation of bank-like information technology systems in order to improve accessibility, efficiencies and monitoring. review orientation and training programmes with the aim of achieving a paradigm shift and embracing a developmental approach for employees recruited from commercial banks. private funding institutions commercial banks to adopt a developmental and flexible approach when assessing sme loan applications. support public–private partnership collaborative programmes such as the credit guarantee schemes and others in order to improve sme capitalisation, sustainability and growth. collaboration of fin-techs and other commercial funding institutions in establishing a central database for sme credit scoring. future studies the average percentage of the loan amount to be considered as the grant portion for the blended sme model to be objective. standard business plan template to be accepted by both public and private institutions. interest rate to be earned by the smes on invoices that remain unpaid after 30 days for the work completed and acknowledged. conclusion south africa’s desired economic development and transformation can be achieved through a thriving sme sector. entrepreneurship offers a more fair and equitable economic transformative approach where people accumulate wealth as a reward of the value creation contribution as opposed to race, gender or any other orientation. this article has presented a diagnostic report covering the sme success impediment, sme success enablers and the factors enabling sme funding. finally, the article proposes the blended sme funding model as an option for reducing the funding gap in south africa. the technological advances witnessed in recent years significantly reduce the costs of monitoring sme performance and enable mass training programmes through virtual platforms. acknowledgements the authors would like to thank the participating institutions, interview respondents and survey participants (entrepreneurs and non-entrepreneurs) for their participation in this study. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions f.b. who is a doctoral student at the university of south africa (unisa) graduate school of business leadership (sbl) wrote this article. m.b.k. supervised the research and the writing of the article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability interview and survey data used in this study will be made available according to the unisa research ethics policy. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adair, p. & adaskou, m., 2015, ‘trade-off-theory vs. pecking order theory and the determinants of corporate leverage: evidence from a panel data analysis upon french smes (2002–2010)’, cogent economics & finance 3(1), 1006477. https://doi.org/10.1080/23322039.2015.1006477 baker, t. & welter, f., 2020, contextualizing entrepreneurship theory, p. 188, taylor & francis, new york, ny. beck, t., 2013, ‘bank financing for smes – lessons from the literature, national institute economic review 225(1), r23–r38. https://doi.org/10.1177/002795011322500105 bowmaker-falconer, a. & herrington, m., 2020, igniting start-ups for economic growth and social change, global entrepreneurship monitor south africa (gem sa) 2019/2020 report, stellenbosch university, cape town. convergence, 2019, the state of blended finance 2019, viewed 12 october 2020, from https://assets.ctfassets.net/4cgqlwde6qy0/58t9bhxexlnh2rilxwxsne/ba56fa36c81349640179779ddd68cc99/convergence_-_the_state_of_blended_finance_2019.pdf. cummings, m.e., rawhouser, h., vismara, s. & hamilton, e.l., 2020, ‘an equity crowdfunding research agenda: evidence from stakeholder participation in the rulemaking process’, small business economics 54(4), 907–932. https://doi.org/10.1007/s11187-018-00134-5 deangelo, h., 2022, ‘the capital structure puzzle: what are we missing?’, journal of financial and quantitative analysis 57(2), 413–454. https://doi.org/10.1017/s002210902100079x de prijcker, s., manigart, s., collewaert, v. & vanacker, t., 2019, ‘relocation to get venture capital: a resource dependence perspective’, entrepreneurship theory and practice 43(4), 697–724. https://doi.org/10.1177/1042258717739003 domeher, d., abdulai, r. & yeboah, e., 2016, ‘secure property right as a determinant of sme’s access to formal credit in ghana: dynamics between micro-finance institutions and universal banks’, journal of property research 33(2), 162–188. https://doi.org/10.1080/09599916.2016.1160948 dorin, c. & alexandru, g.s., 2014, ‘dinamics of the entrepreneurship concept. literature review’, the annals of the university of oradea 23(1), 443–451. erdogan, i.a., 2019, ‘determinants of perceived bank financing accessibility for smes: evidence from an emerging market’, economic research-ekonomska istraživanja 32(1), 690–716. https://doi.org/10.1080/1331677x.2019.1578678 havemann, t., negra, f. & werneck, f., 2020, ‘blended finance for agriculture: exploring the constraints and possibilities of combining financial instruments for sustainable transitions’, agriculture and human values 37(7), 1281–1292. https://doi.org/10.1007/s10460-020-10131-8 hirdinis, m., 2019, ‘capital structure and firm size on firm value moderated by profitability,’ international journal of economics and business administration 8(1), 174–191. https://www.um.edu.mt/library/oar/bitstream/123456789/43966/1/capital%20structure%20and%20firm%20size%20on%20firm%20value%20moderated%20by%20profitability.pdf hisrich, r., peters, m. & shepherd, d., 2016, entrepreneurship, 11th edn., pp. 6–7, mcgraw hill, new york, ny. maduku, h. & kaseeram, i., 2021, ‘success indicators among black owned informal small micro and medium enterprises’(smmes) in south africa’, development southern africa 38(4), 664–682. https://doi.org/10.1080/0376835x.2021.1913997 mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, southern african journal of entrepreneurship and small business management 9(1), a111. https://doi.org/10.4102/sajesbm.v9i1.111 marshall, b., cardon, p., poddar, a. & fontenot, r., 2013, ‘does sample size matter in qualitative research?: a review of qualitative interviews in is research’, journal of computer information systems 54(1), 11–22. https://doi.org/10.1080/08874417.2013.11645667 mehmood, t., alzoubi, h.m. & ahmed, g., 2019, ‘schumpeterian entrepreneurship theory: evolution and relevance’, academy of entrepreneurship journal 25(4), 1–10. meredith, m., 2007, ‘the fate of africa: a history of fifty years of independence’, african security review 16(1), 126–129. mistra, m., 2020, beyond tenderpreneurship: rethinking black business and economic empowerment, african books collective. modigliani, f. & miller, m.h., 1958, ‘the cost of capital, corporation finance and the theory of investment’, the american economic review 48(3), 261–297. musabayana, g.t. & mutambara, e., 2022, ‘the implementation of the broad-based black economic empowerment (b-bbee) policy in south africa a myth or a reality – a focus on smes’, australasian accounting, business and finance journal 16(1), 1–13. https://doi.org/10.14453/aabfj.v16i1.5 mueller, a. & sensini, l., 2021, ‘determinants of financing decisions of smes: evidence from hotel industry’, international journal of business and management 16(3), 117–127. https://doi.org/10.5539/ijbm.v16n3p117 mutoko, w.r. & kapunda, s.m., 2017, ‘factors influencing small, medium and micro-sized enterprises’ borrowing from banks: the case of the botswana manufacturing sector’, acta commercii 17(1), a426. https://doi.org/10.4102/ac.v17i1.426 national planning commission (npc), 2011, national development plan: vision for 2030, viewed 30 july 2018, from http://www.npconline.co.za o’boyle, e.j., 2017, ‘schumpeter and economic man’, international journal of social economics 14(1), 141–150. o’boyle, e.j., 2021, schumpeter man of action: precursor of person of action, viewed 04 march 2020, from https://mayoresearch.org/wp-content/uploads/2021/07/man-of-action-jul-10-2021.pdf odi, 2019, blended finance in the poorest countries – the need for a better approach, viewed 10 october 2021, from https://www.odi.org/sites/odi.org.uk/fles/resource-documents/12666.pdf. omer, n.a.e., 2016, ‘the moderating effect of microfinance on the financial constraints to smme growth in south africa’, doctoral dissertation, university of the western cape. rao, p., kumar, s., chavan, m. & lim, w.m., 2021, ‘a systematic literature review on sme financing: trends and future directions’, journal of small business management 1–31. https://doi.org/10.1080/00472778.2021.1955123 rungani, e.c. & potgiter, m., 2018, ‘the impact of financial support on the success of small, medium and micro enterprises in the eastern cape province’, acta commercii – independent research journal in the management sciences 18(1), 1–12. https://doi.org/10.4102/ac.v18i1.591 saberi, m. & hamdan, a., 2018, ‘the moderating role of governmental support in the relationship between entrepreneurship and economic growth: a study on the gcc countries’, journal of entrepreneurship in emerging economies 11(2), 200–216. https://doi.org/10.1108/jeee-10-2017-0072 saunders, m., lewis, p. & thornhill, a., 2016, research methods for business students, pearson education limited, edinburgh, england. schermerhorn, j.r., bachrach, d.g. & wright, b., 2020, management, john wiley & sons, toronto. schwab, k., 2019, ‘the global competitiveness report 2019’, in world economic forum 9(10), https://www3.weforum.org/docs/wef_theglobalcompetitivenessreport2019.pdf siljander, r., 2018, capital structure theory and determinants with reference to finnish smes, olun yliopisto university of oulu, finland, http://jultika.oulu.fi/files/nbnfioulu-201805312310.pdf. simiyu, m., wafula, d. & otuya, d., 2019, ‘a critical literature review of capital structure theories’, american based research journal 8(11), 53–57. https://doi.org/10.5281/zenodo.3565454 stats sa, 2021, quarterly labour force survey – quarter 2: 2021, viewed 17 november 2021, from http://www.statssa.gov.za/publications/p0211/p02112ndquarter2021.pdf. swartz, e.m., amatucci, f.m. & marks, j.t., 2019, ‘contextual embeddedness as a framework: the case of entrepreneurship in south africa’, journal of developmental entrepreneurship 24(03), 1950018. https://doi.org/10.1142/s1084946719500183 trade & industrial policy strategies (tips), 2017, final report regulatory burdens on small business: options for improvement, viewed 12 july 2020, from http://www.dsbd.gov.za/sites/default/files/reports/regulatory-burdens-on-smes.pdf townsend, d.m., hunt, r.a., mcmullen, j.s. & sarasvathy, s.d., 2018, ‘uncertainty, knowledge problems, and entrepreneurial action’, academy of management annals 12(2), 659–687. https://doi.org/10.5465/annals.2016.0109 visser, a., 2019, ‘sme funding remains elusive’, finweek 2019(12), 48–49. appendix 1 questionnaire responses appendix 2 rotated factor loading abstract introduction conceptual model research design and methods results discussion conclusion study’s limitations acknowledgements references about the author(s) adrian von maltitz department of engineering and technology management, faculty of engineering, built environment and it, university of pretoria, pretoria, south africa elma van der lingen department of engineering and technology management, faculty of engineering, built environment and it, university of pretoria, pretoria, south africa citation von maltitz, a. & van der lingen, e., 2022, ‘business model framework for education technology entrepreneurs in south africa’, southern african journal of entrepreneurship and small business management 14(1), a472. https://doi.org/10.4102/sajesbm.v14i1.472 original research business model framework for education technology entrepreneurs in south africa adrian von maltitz, elma van der lingen received: 09 sept. 2021; accepted: 18 jan. 2022; published: 28 feb. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: education technology (edtech) has been proven to make a positive impact on education outcomes in developed economies. there is an immense untapped opportunity to introduce more edtech into the basic education ecosystem to help with the education crisis in south africa. aim: this study aimed to develop a framework that can be used to identify key considerations for edtech entrepreneurs to create sustainable ventures. setting: the south african government issued a clear e-education policy white paper in 2004, but not enough progress has been made to improve education. the edtech entrepreneur is the entity in the education ecosystem with the highest level of agility to take on this opportunity, if properly positioned and supported. methods: a multi-case study approach explored inputs from small business edtech entrepreneurs. qualitative analysis compared empirically based results, as identified themes with three predicted propositions. results: four themes emerged: mature product, complex support network, multiple infrastructure considerations and multiple sources of revenue. the findings confirmed teacher distrust as having the greatest impact on value creation, mobile networks as only one of the key impacts on value delivery and both private and public sectors providing value capture opportunities. conclusion: education technology entrepreneurs should develop mature products that teachers can endorse; build a support network, which would include an advisory board and low-cost infrastructure providers; and source multiple revenue streams from the private and public sectors. better government policy and procurement implementation would also enhance the provision of simpler and predictable revenue streams to edtech providers. keywords: basic education; k-12; education technology; edtech; e-learning; entrepreneurship; business model framework; sustainable ventures; south africa. introduction education quality is a vital input for economic growth (hanushek & woessmann 2010). south africa is an emerging economy with a low quality of basic education (department of basic education [dbe] 2019; spaull 2013; world economic forum [wef] 2017), where an improvement in the quality of education along with rapid investment in entrepreneurship potentially has a major positive transformational impact (naudé 2017). while an improvement in tertiary or higher education is very important, and is linked to creating a higher level of skills to drive economic growth, the foundation is laid with basic education. the term fourth industrial revolution was introduced to describe the latest era of rapid technological change in the world (schwab 2017), bringing with it the opportunity of harnessing technology to support education with proven positive outcomes (mihai 2017; pandey & tiwari 2014; tamim et al. 2011). the global education technology (edtech) market has a market capitalisation of more than us$220bn, which includes an investment in basic education, or k-12, of more than us$68bn over the last decade (holoniq 2020). solving the education crisis in south africa requires much more than just an edtech intervention. while this is acknowledged, it does not detract from the opportunity for edtech to contribute positively to this direly needed improvement, especially as the demand for education continues to outgrow the creation of teacher capacity. the south african dbe recognised the opportunity, and as a result released a white paper on e-education entitled transforming learning and teaching through information and communication technologies (icts) (dbe 2004) that identified various capacity constraints that limit ict delivery, and called for the public and private sectors to work together. entrepreneurship drives economic growth in africa (adusei 2016), and is increasingly defined as acting on an opportunity (eckhardt & shane 2003; eisenmann 2013) using innovation as its instrument (drucker 1993:30). these innovation opportunities can have multiple sources, including process need and changes in market structure (drucker 1993:35) and are often fostered through new knowledge in science and engineering (beckman et al. 2012). the edtech entrepreneur is the entity in the ecosystem with the highest level of agility to take on such an opportunity, if properly positioned and supported. by developing a framework that identifies key considerations for sustainable edtech entrepreneurship in an emerging economy, this study seeks to answer the question: ‘how can south african edtech entrepreneurs be better supported in the edtech value network?’ conceptual model business model frameworks provided the foundational construct for developing the conceptual model to guide this study, as ‘business models emphasize a system-level, holistic approach to explaining how firms do business’ (zott, amit & massa 2011:1019). in recent years, companies have increasingly needed to cope with rapid change to be successful, which has led to the use of the shorter version business model canvas (bmc), with ladd (2018) confirming that the use of the bmc drives venture success. the bmc of osterwalder and pigneur (2010) has a simple structure and is widely used, but lacks the ability to map relationships between the nine blocks in their model and the external environment. the lean bmc by maurya (2010) has similar strengths to those of the osterwalder and pigneur’s bmc, although the replacement of partners and customer relationships blocks exacerbates the weakness of not mapping all relationships in the stakeholder or value network. petheő and vecsenyi (2018) introduced a business concept map in 2011 as an alternative to the 2010 canvases, and noga (2015) extended the canvas with two additional components, investors and exits. both models have the strength of being more comprehensive, specifically in adding funding and financing information directly into the model; but both have the weakness that they can be overly complex. joyce and paquin (2016) developed a triple-layered bmc with layers for economic, environmental and social aspects. this model has the strength that it adds non-economic dimensions to consider – something that is particularly relevant for the edtech industry; but, like the previous two models, it has the weakness that these additional layers make the overall model more complex. models focused on e-learning include that of nagle and golden (2007), based on the osterwalder and pigneur 2005 bmc, and adding the specific view that one of the core competencies to consider as an e-learning provider is pedagogical method and knowledge. di valentin, werth and loos (2014) built a complex model that covers detailed business model element categories that are specific to e-learning companies for value offering, partnerships, market, strategy and financials. another view on business models is the value-based perspective of rezazadeh and carvalho (2017), in which five types of business model innovation are proposed that are focused on value creation, value proposition, value delivery, value capture and value network. badhani and mut (2017) built a business model innovation framework that follows a very similar categorisation, and focuses on building a map of the overall value network. the strengths of this model are that it simplifies the core business model components even more, and focuses on the relationships of stakeholders in the value network. its weakness is that it oversimplifies the business model components, which could detract from detailed insights into business model element challenges. the main gap in the literature relates to testing the models focused on edtech with empirical data (barzak 2017; di valentin et al. 2014): the barzak study is not focused on the basic education customer segment, and these models have not been tested in an emerging economy such as south africa. however, the study by badhani and mut (2017), and that by mattsson and andersson (2019), which followed to include public sector inputs, do test their models with empirical data, and so provide a key input into the model for this study. they relate the business model to the value network by grouping components from the bmc into four value constructs – that is, value proposition, value creation (partners, activities and resources), value delivery (channels, customer relationships and segments) and value capture (cost structure and revenue streams). the conceptual model in this study adds ‘funding’ to the value capture construct, and investigates value proposition under the value capture construct, simplifying the model to three value constructs. the conceptual model in figure 1 combines the principles of the existing models not only with a specific focus on the value network, but also with sufficient insight into the company business model. the three propositions are represented in this model by p1 to p3. the edtech entrepreneur is at the centre of the model. figure 1: conceptual model for education technology entrepreneurship. the dotted lines in this model (figure 1) represent the interactions or value flows. the investigation into these interactions was constructed in such a way that insights into the dynamics in the value network would emerge and also provide insights into the business model challenges for edtech ventures. the value network was explored by identifying the complete set of stakeholder relationships and then focusing on the main stakeholders in each of the value constructs. at the time of constructing the conceptual model, the key stakeholders were understood to be mobile networks in ‘value delivery’, teachers in ‘value creation’ and government, as well as investors, in ‘value capture’. three propositions were formulated to cover the three value constructs, with a focus on the key stakeholders in each of these areas. proposition 1: teacher distrust has the greatest impact on value creation. the relationship between the edtech entrepreneur and the educators or teachers in the value network was one of the key aspects to investigate, as educators can have a direct impact on the most relevant edtech being applied in order to have a sustainable impact (kanthawongs & kanthawongs 2013; social 2009; vandeyar 2013). addressing teacher distrust in edtech forms part of the culture transformation challenge listed by the government’s white paper (dbe 2004). proposition 2: investor scepticism and government revenue streams have the greatest impact on value capture. in south africa, a large percentage of schools are fully funded by government, which leads to the argument that the suggested business model for edtech should consider revenue from government or other revenue streams to subsidise the bulk of this customer segment with low revenue potential. a wider customer landscape should be investigated (taran, boer & lindgren 2015) to feed into diverse revenue stream opportunities (gundry & welsch 2001; pretes 2002). when revenue streams are not very clear, then investors are typically quite sceptical about investing in related ventures, as there is no clear monetary return on investment. proposition 3: mobile network zero rating has the greatest impact on value delivery. a telecommunications provider, especially a mobile network operator, can provide the underlying technology enablement for edtech in an emerging economy that has a lack of infrastructure. education technology is more accessible to learners over mobile networks (walls et al. 2015) – even more so if data usage is not charged. studies have shown benefits and improved results from having access to mobile technologies to support learning (sandberg, were & sutherland 2011; west 2013). these networks offer alternative opportunities for payment collection (mpala 2019), especially when the provider offers low transaction fees. research design and methods a literature review was used to formulate the conceptual model, followed by a qualitative case study approach. a qualitative research approach for ‘exploring and understanding the meaning individuals or groups ascribe to a social or human problem’ (creswell 2014:4) was selected to gather a rich set of data to gain detailed insights into the challenges for edtech entrepreneurs. the case study is a valid data-gathering technique because of the exploratory nature of the research questions (yin 2014). specific propositions were developed from the conceptual model to focus on the scope of the study (baxter & jack 2015). data gathering and case selection the data gathering was primarily driven by semi-structured interviews, as the covid-19 pandemic hampered the effective use of alternative qualitative instruments like participant observations and focus group interviews. the cases that were selected were south african edtech entrepreneurial companies that were serving a basic education segment, that had been in existence for at least five years, and that were small to medium enterprises (10 to 100 employees). the reason for selecting companies that were older than five years was that they had been able to sustain themselves somehow, and would also have valuable insights based on their experience over a longer period of time than new start-ups. it was not viable to consider a longitudinal study over multiple years because of the time constraints of this research. a multi-case study approach was chosen to improve the certainty of the results. although there are multiple stakeholders in the edtech value network, the data collection was aimed at edtech entrepreneurs, as they are central to the value network and so should be able to provide data on all the value flows in the network. a company search of ‘e-learning south africa’ on linkedin returned 214 results. each of these results was scanned, but with almost none found in the target population – that is, the results included educational institutions, tutors, resellers of international edtech, etc. a subset of these results alongside a further extensive search on the internet of conference proceeding notes, trade show agendas, news feeds and incubator websites resulted in fewer than 20 edtech companies with a basic education customer segment, of which at least three were focused on devices such as smart whiteboards, which did not fit the focus of this study. five companies participated in the study, with two having been identified through the snowball technique (saunders, lewis & thornhill 2019:323). data analysis a pattern-matching analytic generalisation technique was used on the primary data by comparing empirically based results as identified themes with predicted propositions. this was done by capturing all the data in a qualitative analysis tool called atlas.ti, coding the data and inferring themes from the coded data via a thematic analysis process (braun & clarke 2006). the findings of this exploratory research provided conclusions based on comparing identified themes with three predicted propositions, and provided input to the development of a framework. ensuring quality and trustworthiness trustworthiness in qualitative research includes dependability, credibility, transferability and authenticity (saunders et al. 2019:217). recording and transcribing the interviews enhanced dependability and credibility. construct validity was improved by using triangulation – in this case, by comparing interview responses from multiple respondents where possible. internal validity was less of a concern, as the aim of this study was not to explain causal relationships. nonetheless, pattern matching was used to confirm the validity of the empirical results. replication logic was used across multiple case studies to confirm external validity, or transferability. by strictly adhering to the answers and comments of the participants, authenticity was ensured. ethical considerations ethical clearance was obtained from the ethics committee of the faculty engineering, built and information technology, university of pretoria (ebit/132/2020), 24 july 2020. results four themes emerged from the thematic analysis of the coded data, as shown in figure 2: mature product, complex support network, multiple infrastructure considerations and multiple sources of revenue. figure 2: thematic analysis outcome: coded data relating to themes. theme 1: mature product student and parent product endorsements play an important role; however, multiple respondents commented on teacher endorsement as being most important. as one respondent said: ‘they can be quite critical, and rightfully so, of anything new coming into their environment. … so if they endorse something that’s poor quality that will reflect on them. … once schools trust your product, they typically embrace it quite rigorously.’ (participant 1, ceo, 2020-08-31) a mature product will not only be a key consideration for the teachers, but, if endorsed, it will also open doors for it to be widely embraced. the alternative view on how things can go wrong when teachers are not ‘on board’ with a product is supported by a respondent from another edtech company: ‘but [if] we don’t engage with teachers, and they are not on board for this journey, it’s going to fail. and likewise, we can have one teacher that is very keen on the technology, but they’re not the one that actually signs off the cheques. so you really need to work with every single one of those [stakeholders].’ (participant 2, ceo, 2020-09-09) this comment argues that teacher endorsement does not provide the full picture – that is, you still need to consider the other stakeholders who are linked to the actual payment for the product. having a product that is mature enough that it can be offered as a freemium option (where content is provided freely and additional services are charged for) does help to get teachers to ‘test’ the product ahead of financial commitments. related to innovative ways to get teachers on board, another company introduced this interesting approach: ‘we started looking at holistic development of support of teachers so things like financial education’ (participant 4, ceo, 2021-01-13). offering supplementary support services to the teachers helped to create a sense of community. once again, this type of supporting function could only be delivered with a mature product. another respondent commented on product maturity being a key consideration to work with government: ‘it’s very difficult for a startup that’s still trying to figure out exactly how everything works … to go to work with government because they’re just going to throw scale at you. but if you’ve built things out, the value proposition is understood, and you’re mature … they can bring you the scale that now allows you to enjoy the economies of scale, then it’s a win-win everywhere.’ (participant 2, ceo, 2020-09-09) this comment makes a clear reference to product, process and value proposition maturity, but perhaps also just the maturity of the company in working at scale. another view on working with government – ‘so we can’t go do a 3-year study to prove the efficacy of our online offering, for example’ (participant 5, ceo, 2021-02-10) – referred to a barrier to entry. another company mentioned offering different ‘packaged’ versions of the product, which is only possible with a mature product. from a company that has been developing its product over many years, one respondent commented plainly: ‘we need to build a much more mature product to engage with schools’ (participant 3, ceo, 2020-11-30). previous studies have suggested the following considerations, which correlate very well with this theme of a mature product when developing a business model for edtech entrepreneurship: innovation to develop a unique value proposition, based on ‘radicality’ that contributes to venture success (taran et al. 2015) and on business model innovation (chesbrough 2010; dasilva et al. 2013; geissdoerfer, savaget & evans 2017; mansour & barandas 2017; tongur & engwall 2014; trimi & berbegal-mirabent 2012; yang et al. 2017). technology acceptance, including perceived usefulness, based on one of the main factors impacting the adoption of edtech in a set of us public k-12 schools (davis 2019). open models to encourage collaboration with various stakeholders (doganova & eyquem-renault 2009; taran et al. 2015). impact measurement (joyce & paquin 2016; sanderse 2014). the collaboration is, especially, true for working with teachers to build the mature product, and impact measurement is only possible with a mature product. theme 2: complex support network questioning at the start of the interviews, which was intended to establish background, ended up providing very valuable insights into this theme for all the respondents. when asked about existing support structures, the first respondent commented: ‘we have partnered with the “societyxyz”. and one of their members is one of the members on the board. and then in addition to that, we are also a part of the “foundationxyz” programme. and as a result, we get mentorship from them.’ (participant 1, ceo, 2020-08-31) this response was encouraging, as there was an advisory type function on the company board, and there was a vehicle for mentorship via a foundation. when exploring support from investors, the respondent commented: ‘there have been two major prerequisites for us. the first one is that the investor is investing in the company, not in their ip only. … the second one is that they in some or other way have some mentorship component, … being able to support us, taking us to the next level. for instance, pure cash injections are not really that enticing. it’s got to come with those other two factors. and we walked away from a few offers over the years because of that.’ (participant 1, ceo, 2020-08-31) exploring whether finding an investor was something that the company still planned for the future, the response to not having an investor was: ‘i would say it’s an obstacle to growth’ (participant 1, ceo, 2020-08-31). it was clear that the respondent saw investment as a vehicle to scale more quickly, but only if the investor offered the necessary support structures, such as mentorship. this view was shared by at least two other respondents, who added that fit on culture and supporting the edtech purpose was also important. one company did not get incubator support, but still managed to get the required investors on board, with a focus on strategic support to expand into the rest of africa. an interesting comment on investors followed from another respondent: ‘i don’t think they’re going to get very high returns in the sector … you need investors who’ve got a really long-term view on it’ (participant 3, ceo, 2020-11-30). one respondent commented that they had been part of multiple incubation programmes. a respondent from another company went on to discuss their experience with getting support, commenting that, for the first few years, they had no success, until one support programme started opening doors, which led to key partnerships for this company. a third respondent mentioned that, even though they had not been part of a formal incubation programme, they had had support in their early days. the same respondent went on to comment on the impact of not having an advisory board support structure: ‘and to this day our board is comprised only of the minimum number of representatives we have to have on the board from the shareholders. … we don’t have an advisory board, we never have had one. … there are a couple of occasions where i think if we had an advisory board, we might have made some decisions differently.’ (participant 3, ceo, 2020-11-30) theme 3: multiple infrastructure considerations investigating ‘mobile network as foundational component’, a more complex than anticipated view of ‘multiple infrastructure considerations’ emerged. one respondent indicated the importance of mobile telecommunications networks, but also suggested that relationship-building with them was complex, and went on to suggest that edtech companies could be seen as their competitors. the comment about being seen as competition was supported by another respondent. a third respondent indicated how the barrier to the mobile networks (referred to as ‘telcos’ in the quotation below) was breached when the covid-19 pandemic hit: ‘during covid now there was such massive adoption of our tech, a lot of the telcos came to the party and we’ve been zero-rated by a number of them. so it’s free to use our platform. so the telcos generally are being very supportive and sincere.’ (participant 2, ceo, 2020-09-09) another respondent supported the positive impact of the mobile networks, especially for poorer schools and learners: ‘whatever edtech offering you’ve got over phones, mobile network infrastructure is more prevalent than any other kind of infrastructure at the moment, and the mobile networks play a really big role in delivery. and we’ve seen that [with] our zero ratings … we don’t have an independent study, but we are utterly convinced that those have been instrumental in allowing us to get to the reach that we’ve got.’ (participant 3, ceo, 2020-11-30) a respondent from another company, however, explained a very interesting constraint with zero rating, especially as it pertains to edtech video content, commenting: ‘and it’s an interesting one, because [of] the cost basis. … the zero rating is quite a tricky thing, both from getting approval, but then also the actual it infrastructure.’ (participant 5, ceo, 2021-02-10) it turns out that, to get the zero rating, the edtech company has to serve the content from its own servers, meaning that it incurs all the content distribution costs. this dilemma can go as far as having to reconsider the product content format – for example, a more mature product with multiple content formats – or having to consider alternative infrastructure components. this also depends on how much infrastructure is implemented by government and/or the schools; as one respondent commented, some provinces or schools ‘… buy their own hardware and infrastructure for the school’ (participant 3, ceo, 2020-11-30). another very interesting infrastructure consideration emerged about where the edtech content is hosted. more than one company referred to their content being hosted by cloud providers, with one respondent commenting: ‘from an infrastructure point of view we host our platform on “cloudplatformxyz”. i don’t think we would be able to have built our platform, and been able to build the infrastructure, … it would not be feasible. … but because of “corporatexyz” and their infrastructure cloud solutions, we’ve been able to build the solution, and it’s built now for scale.’ (participant 4, ceo, 2021-01-14) at least two respondents also indicated that they received discounted access to cloud services because of their registration as social enterprises in the edtech space. theme 4: multiple sources of revenue this theme is critical to answering how ‘value capture’ provides input to making these ventures sustainable, while still fulfilling their social impact purpose. it very quickly became evident that a multitude of structures existed and were being used by these edtech companies to survive, and even to grow. as one of the respondents said, most companies were only successful with the required social impact when considering multiple sources of revenue: ‘because you want to have impact, you cannot ignore the under-resourced part of south africa. so you have to try [to] create a model that allows you to get through to those people, but at the same time, balancing the costs of doing so with some sources of revenue, whether that be grants or sponsorships of some sort. and then if you try [to] go the direct-to-customer route, you’re going to find a relatively small market there. so, i’d say that, in a nutshell, the biggest challenge going into edtech in south africa is that you have to diversify your revenue streams.’ (participant 1, ceo, 2020-08-31) in respect of government funding, the first respondent commented that the relationship with government was complex and was not something that was established overnight, and that the relationship in the overall eco-system would need to be quite mature before accessing government funds. this view was shared by another respondent, who commented: ‘we’ve strategically decided not to focus on having government as a customer’ (participant 4, ceo, 2021-01-13), as they felt this was too complex a relationship. a third respondent from another company also commented on the challenges of getting revenue from government: ‘it’s not relationships, it’s … we can’t step through the bureaucracy layer yet, because we don’t have enough critical mass’ (participant 5, ceo, 2021-02-10), but then added: ‘i am hopeful that at some point government will be a customer of ours … because i do think that is one of the fastest ways to close the [education] divide.’ (participant 5, ceo, 2021-02-10) for one of the respondents in a company that already had a solid relationship with government, the following comment suggests that it is still not that simple to get income from this entity: ‘we’ve been unable to navigate procurement with any of the provinces so far, but we would like to’ (participant 3, ceo, 2020-11-30). from all of the companies interviewed, only one had been successful with generating revenue from government, based on a mature product. one other potential revenue stream from government that was mentioned was a social impact bond, which exists in south africa for early childhood development, and might be an option to consider in the edtech sector. some companies were surviving purely on grants, and in some cases on competition funding. one respondent commented: ‘where we have found funding is, yes, grant money. it is a big thing in education. and we have sourced funds through that route over the years’ (participant 1, ceo, 2020-08-31). a second respondent from another company commented: ‘[we] focused largely on grant money, competition money …’ (participant 4, ceo, 2021-01-14). a respondent from a third company commented on two possible business models to create alternative revenue streams – one from government and the other from private schools – indicating that, until these worked, they would rely on grant funding: ‘neither of those business models is yet working well enough that we could just double down on that. so we still have to do other projects with grant funders, and things like that, to keep going.’ (participant 3, ceo, 2020-11-30) it was clear that at least three of the five companies interviewed were still relying quite heavily on grant funding. when looking into corporate companies as a source of funding or revenue, there is the possibility of an edtech company pivoting completely to this customer segment, as in this comment from one of the respondents: ‘there’s a lot more money in corporate. i know quite a few people that have pivoted into corporate training’ (participant 3, ceo, 2020-11-30). the same respondent went on to argue that once you get part of your revenue from corporates, ‘it really distracts you … [e.g.] after about one year, generating 90% of your revenue from corporate training with a lot less effort, you would end up shutting down the schools business’. but at least two of the companies interviewed had created revenue streams from corporates without losing sight of their basic education social impact purpose. the first company generated income by operating a component of its business as a non-profit to gain access to corporate social investment, but was also investigating advertisement revenue by targeted advertisements on the edtech platform, as well as building a marketplace for content delivery. the second company that was already generating revenue from corporates commented: ‘to pay the bills we’ve actually served corporates, so we built learning management systems for corporates’ (participant 5, ceo, 2021-02-10). the same respondent elaborated on further plans for value exchange – that is, revenue and brand alignment for the edtech company in exchange for corporate offering advertisements. one of the respondents summarised well how multiple sources of revenue help to fund the high staff cost: ‘i think, if you’re playing in one market, you’re very exposed … so for us, diversification means not only playing in south africa; we need to look north, we need to look international, … but it also means diversifying your [delivery] competencies … now your unit economics are even more powerful, because now what you’re creating with that big expense line is now serving multiple channels.’ (participant 5, ceo, 2021-02-10) multiple sources of revenue not only provide the necessary income, but also minimise the risk of complete income loss. previous studies suggested the following possible considerations for multiple sources of revenue when developing a business model for edtech entrepreneurship: diverse funding sources (gundry & welsch 2001; pretes 2002). delivery to a broad customer base, based on ‘reach’ that contributes to venture success (taran et al. 2015). simple and focused revenue streams (chikoto & neely 2014; eurich, mettler & stanoevska-slabeva 2011). the empirical findings from most cases reported funding from multiple sources, even if it was a similar type of funding – for example, getting grants from multiple entities. simple and focused revenue streams could be misinterpreted as getting revenue from only one source; in fact, however – along with the broad customer base – it suggests that even if the revenue stream structure is simple, it makes sense to source revenue from multiple sources for the venture to be sustainable. additions to the value blocks in the ‘value creation’ area, partnering with other edtech entrepreneurs, as indicated in the original model, especially when the offerings were complementary, was supported by one respondent referring to it in these terms: ‘… because the landscape is quite sparse in south africa. it’s almost like finding a friend on a desert island’ (participant 1, ceo, 2020-08-31). three new entities were identified for the value creation area: non-governmental organisations (ngos), incubators or accelerators and academia. the ngo business model (sanderse 2014) and, more specifically, how the edtech entrepreneur should consider the ‘not for profit’ and social impact construct (joyce & paquin 2016) was considered. however, the ngos were not added to the original model, as they provide grants as social impact funders, which is not necessarily associated with a sustainable business model. one of the respondents commented: ‘ngos play such a big part in education in the developing countries. they’re quite a big funder of edtech in certain areas where the need is high, but the addressable market is very small. and the ngos do play quite a big role, especially the big organisations, unicef and things like that, in trying to advise and change government policy.’ (participant 2, ceo, 2020-09-09) this response made it clear that ngos should be added to the model, as they typically have an international mandate, and can be social impact funders and/or policy advisors. other than the typical support from incubators and accelerators, one of the respondents commented: ‘i think the highlight of it was access to networks’, and even more interestingly: ‘they specifically focus on entrepreneurship development, and so i met their founder, … and from there [they are] now a partner in our business’ (participant 5, ceo, 2021-02-10). so the incubator entity provided access to and created value networks. when exploring the role of mobile networks, a broader set of infrastructure considerations came up, such as ict connectivity and infrastructure projects (dbe 2019), which was listed as ‘infrastructure’ in the model, and included everything other than mobile networks – for example, fibre connectivity, cloud computing and computers in schools. media outlets were added to the model, based on the comment: ‘media outlets, radio, television, newspaper, magazines. they can have a very powerful effect on pushing the value of your edtech products to people’ (participant 1, ceo, 2020-08-31). aggregators were the third entity added to the ‘value delivery’ area of the model. in the ‘value capture’ area of the model, after a discussion in more than one interview, it was clear that the actual learners or students should also be listed. the other two entities that were added were foundations and corporates. foundations were originally also omitted from the model for reasons similar to those for not adding ngos – that is, they typically provide grants. one respondent summarised very well why corporates should be in the model: ‘… the typical south african is not going to be able to afford a subscription service to get access to our platform. so, when i looked at who’s going to pay for that access, corporate south africa is where the money sits.’ (participant 4, ceo, 2021-01-13) it was clear that at least one respondent was generating income from corporates. an even more interesting finding was a situation in which a corporate was providing incubator support in the value creation area, infrastructure in the value delivery area, and income – initially as a grant via the corporate foundation – in the value capture area. another comment worth mentioning here relates to a corporate company that goes beyond just fiscal value: ‘they’re a strong, powerful professional brand, being married to that is very powerful for our brand’ (participant 5, ceo, 2021-02-10). in summary, nine new entities were identified and added in black text to the value blocks (see figure 3). one of the respondents indicated that the absence of such a stakeholder map was one of the biggest edtech challenges in this environment: ‘the big problem in education is that you’re trying to produce this map of stakeholders. in other verticals it would just be less complicated. it is more complex, and more fragmented than most.’ (participant 2, ceo, 2020-09-09) figure 3: business model framework for education technology in south africa. this challenge extends from just the high-level stakeholder map to what the stakeholder structures look like in each of the blocks and, even more specifically, who these people are in the south african ecosystem. discussion the three propositions that were set in this study as they related to the themes identified from the data collection and analyses are summarised in table 1. although theme 2 can be related to all three propositions, it has the strongest correlation with proposition 2. the four themes were added to the framework in figure 3. table 1: propositions related to themes. teachers have the greatest impact on value creation the findings of theme 1 support proposition 1, with the qualifier being ‘mature’ product. teachers do distrust the impact of the edtech product unless it is mature, at which point there is a much higher likelihood that they would trust it, and even endorse and support it. at least four of the five case studies had a mature product or value proposition, and the fifth case was busy expanding the scope of the value proposition. the findings in theme 1 argued for the importance of the teacher’s endorsement as being even greater than the endorsement from parents. theme 1 also identified multiple strategies that edtech companies use to get teacher endorsement, which includes offering a freemium version of the product for teachers to try out ahead of a commercial commitment, and creating a community in which teachers can collaborate. where the product is offered directly to learners or as an alternative to mainstream schooling, collaborating with teachers to create the product is still important. it can be argued that teachers have the greatest impact on value creation; but it is worth also mentioning incubator and accelerator impact because they help to establish the relationships between all the stakeholders. government and corporate revenue streams have the greatest impact on value capture theme 2 identified multiple stakeholders in a complex support network, including investors. most edtech companies in this study were still largely funded by grants. where the edtech companies considered using investors to scale more rapidly, it was clear that support that extended beyond financial input was critical to the partnership, such as networks and experience to expand into the rest of africa. these findings support the first part of proposition 2 that investors are sceptical of a return on investment in the south african basic education edtech sector. only one of the five cases had successfully partnered with mainstream investors. the broader set of results from theme 2 addresses many of the other ‘support’ functions that exist in the edtech value network, such as incubators, accelerators, foundations, company advisory boards, ngos, academia and corporates. these other stakeholders offer alternatives to formal investment arrangements. proposition 2 also argued that government revenue streams have the greatest impact on value capture, with findings from all the cases confirming that government has a major influence. even without a direct impact via a revenue stream, the influence is driven by curriculum control and product endorsement. theme 4 identified multiple sources of revenue, driven by a mature product and complex support network. most companies had more than one source of income, or were actively planning for additional sources of income. these included income from grants, investors, private users, top quintile schools, corporates and government. only one of the five cases confirmed a revenue stream from government. foundations and corporates arguably have a greater impact on value capture than investors and government at the moment: at least three of the five cases depended on grants, and at least two cases were building revenue streams from corporates. sourcing revenue from corporates does not mean that the edtech venture needs to pivot completely to the corporates as a customer segment, but rather that an additional revenue stream from corporates can help to support the venture in delivering to the basic education customer segment. multiple infrastructure providers have the greatest impact on value delivery theme 3 identified multiple infrastructure considerations, which included mobile networks, specific constraints for serving video over zero-rated mobile networks, broader infrastructure initiatives by government and schools, and content-hosting options in the cloud. the findings from theme 3 do not fully support proposition 3. of the five cases investigated, only two relied strongly on content delivery over mobile networks. the other three cases mentioned challenges in engaging with the mobile networks, which included being seen as a competitor, but also having to navigate a complex infrastructure that puts constraints on serving video over zero-rated mobile networks. even with these challenges, the edtech companies were interested in expanding their offerings over mobile. mobile networks do have an impact, but perhaps not to the extent that they impact the economic sustainability of these ventures, other than perhaps cash-strapped companies that depend only on grants. this was true for only one of the five cases that were investigated. another case that also relies on mobile network delivery does have other sources of income, making it less reliant on mobile network zero-rating. the broader results from theme 3 do, however, point to other infrastructural considerations and related costs. for these edtech ventures, their typical main cost is people; as one respondent commented: ‘we’re knowledge businesses, … your overheads are enormous because you put in people’ (participant 5, ceo, 2021-02-10); but the cost of infrastructure is not negligible, especially if not all of its parts have been discounted or zero-rated. at least two of the cases indicated that they had discounted cloud hosting costs. conclusion in this study, a framework that identifies key considerations for sustainable edtech entrepreneurship in south africa was developed, and is presented in figure 3. four themes, along with a more comprehensive list of stakeholders, were identified and added to the framework. this framework, thus, provides a blueprint for existing and new edtech ventures in an emerging economy to evaluate their business plans and models in the edtech value network. providing a mature product as part of the value proposition opens up the rest of the opportunities in the value network. getting to this point seems to be best achieved by starting with what you have, or being means-driven (read et al. 2016) and partnering with teachers and other edtech companies to enhance the value proposition with bootstrapping, competition or grant funding. one of the key relationships is with the south african dbe, even if only to align with the curriculum or receive product endorsement. once the mature product is ready, which includes alignment with the country’s curriculum and languages, multiple streams of revenue can be accessed via a complex support network. this support network includes negotiations with infrastructure providers to provide free or discounted access, as the edtech offering for basic education has a major social impact that provides positive brand alignment. edtech ventures should find the right support structures, which include finding incubator and accelerator support, as well as an advisory board. the edtech ventures should actively search for multiple sources of revenue, including those from corporates and government, which come from building multiple meaningful relationships. the government has recently reported on partnerships with the private sector as funding sources and providers of connectivity and infrastructure (dbe 2019). government could consider extending and improving the partnerships with small to medium-sized edtech companies in the private sector. this could be done through even more clear and updated policy guidelines, as well as consistent implementation at the provincial level, which includes a clear policy-to-budget-to-procurement alignment. another key partnership is between edtech providers and corporates, which could extend to a partnership between these two parties and government. corporates should continue to support edtech companies with social impact grants, but ultimately only as a steppingstone to a more sustainable arrangement that includes value for the corporate in exchange for revenue streams to the edtech companies. an incubator support system has significant value: apart from building a business plan and getting mentorship on how best to pitch to investors, it could provide access to a broader set of stakeholders in the value network. some of the key relationships that could be built on the back of this incubator support are long-term coaching and mentorship arrangements, access to infrastructure providers and access to funding. it is promising to see support systems such as injini in south africa focused on edtech in africa. incubator and accelerator support functions should support edtech ventures, even if they do not exactly fit the entry profile into their programmes. building a sustainable edtech venture in an emerging economy is a major challenge, as one of the edtech companies responded during the interviews: ‘some of the challenges that we have with poverty or financial inclusion are the same challenges we have for edtech; they’re not education problems really, they are societal problems and human problems. … it’s not about how do we transform an industry, it’s how do we transform a society; and those are really big things.’ (participant 2, ceo, 2020-09-09) we have a major societal challenge, and education can make a difference. with better support, more edtech companies would become sustainable, and so would help to improve the quality of education in south africa. study’s limitations this research was limited mainly by the number of cases that could be covered. the cases represented a good sample of the target population, but there were still only five of them. the case study method by its very nature does not provide for generalisation to the population. the covid-19 pandemic created additional challenges for this study, as businesses were trying to survive or ramp up rapidly to meet the demands of e-learning. this put additional pressure on the edtech companies, which meant that it was even harder to get input from them. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions both the authors contributed to the development and writing of the article. a.v.m. conducted the research as part of his masters dissertation under the supervision of e.v.d.l. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability raw data were generated at the university of pretoria. derived data supporting the findings of this study are available from the corresponding author, e.v.d.l., on request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adusei, m., 2016, ‘does entrepreneurship promote economic growth in africa?’, african development review 28(2), 201–214. https://doi.org/10.1111/1467-8268.12190 badhani, s. & mut, j., 2017, ‘business model innovation in edtech – an exploratory study of business model innovation in a complex market environment’, master’s thesis, stockholm school of economics. barzak, a., 2017, ‘defining optimized business models of online education platforms in the edtech market’, master’s dissertation, ibs moscow ranepa. baxter, p. & jack, s., 2015, ‘qualitative case study methodology: study design and implementation for novice researchers’, the qualitative report 13(4), 544–559. https://doi.org/10.46743/2160-3715/2008.1573 beckman, c., eisenhardt, k., kotha, s., meyer, a. & rajagopalan, n., 2012, ‘technology entrepreneurship’, strategic entrepreneurship journal 6(2), 89–93. https://doi.org/10.1002/sej.1134 braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa chesbrough, h., 2010, ‘business model innovation: opportunities and barriers’, long range planning 43(2–3), 354–363. https://doi.org/10.1016/j.lrp.2009.07.010 chikoto, g.l. & neely, d.g., 2014, ‘building nonprofit financial capacity: the impact of revenue concentration and overhead costs’, nonprofit and voluntary sector quarterly 43(3), 570–588. https://doi.org/10.1177/0899764012474120 creswell, j., 2014, research design: qualitative, quantitative and mixed methods designs, sage, thousand oaks, ca. dasilva, c., trkman, p., desouza, k. & lindic, j., 2013, ‘disruptive technologies: a business model perspective on cloud computing’, technology analysis & strategic management 25(10), 1161–1173. https://doi.org/10.1080/09537325.2013.843661 davis, d.d., 2019, ‘a study of the commercialization, use, adoption of edtech in public k-12 school’, in proceedings of the 30th annual conference of the society for information technology and teacher education, las vegas, nv, march 18–22, 2019, pp. 1153–1159. department of basic education (dbe), 2004, transforming learning and teaching through information and communication technologies (icts), south african government printing works, pretoria. department of basic education (dbe), 2019, a 25 year review of progress in the basic education sector, viewed april 2020, from https://www.education.gov.za/resources/reports.aspx. di valentin, c., werth, d. & loos, p., 2014, ‘towards a business model framework for e-learning companies’, in the 20th americas conference on information systems, savannah, august 7–10, 2014, pp. 1–11. doganova, l. & eyquem-renault, m., 2009, ‘what do business models do? innovation devices in technology entrepreneurship’, research policy 38(10), 1559–1570. https://doi.org/10.1016/j.respol.2009.08.002 drucker, p.f., 1993, innovation and entrepreneurship, harpercollins, new york, ny. eckhardt, j.t. & shane, s.a., 2003, ‘opportunities and entrepreneurship’, journal of management 29(3), 333–349. eisenmann, t.r., 2013, entrepreneurship: a working definition, harvard business review, brighton, ma. eurich, m., mettler, t. & stanoevska-slabeva, k., 2011, ‘revenue streams of cloud-based platforms: current state and future directions’, in the 17th americas conference on information systems, detroit, august 4–8, 2011, paper 302, pp. 1–10, viewed n.d., from http://aisel.aisnet.org/amcis2011_submissions/302. geissdoerfer, m., savaget, p. & evans, s., 2017, ‘the cambridge business model innovation process’, procedia manufacturing 8, 262–269. https://doi.org/10.1016/j.promfg.2017.02.033 gundry, l.k. & welsch, h.p., 2001, ‘the ambitious entrepreneur: high growth strategies of women-owned enterprises’, journal of business venturing 16(5), 453–470. https://doi.org/10.1016/s0883-9026(99)00059-2 hanushek, e.a. & woessmann, l., 2010, ‘education and economic growth’, international encyclopedia of education 2, 245–252. https://doi.org/10.1016/b978-0-08-044894-7.01227-6 holoniq, 2020, 20 years of global education stocks, viewed august 2021, from https://www.holoniq.com/notes/20-years-of-global-education-stocks. joyce, a. & paquin, r.l., 2016, ‘the triple layered business model canvas: a tool to design more sustainable business models’, journal of cleaner production 135, 1474–1486. https://doi.org/10.1016/j.jclepro.2016.06.067 kanthawongs, p. & kanthawongs, p., 2013, ‘perception of primary school students, parents and teachers toward the use of computers, the internet and social networking sites’, procedia – social and behavioral sciences 88, 282–290. https://doi.org/10.1016/j.sbspro.2013.08.507 ladd, t., 2018, ‘does the business model canvas drive venture success?’, journal of research in marketing and entrepreneurship 20(1), 57–69. https://doi.org/10.1108/jrme-11-2016-0046 mansour, d. & barandas, h., 2017, ‘high-tech entrepreneurial content marketing for business model innovation: a conceptual framework’, journal of research in interactive marketing 11(3), 296–311. https://doi.org/10.1108/jrim-03-2016-0022 mattsson, l. & andersson, p., 2019, ‘private-public interaction in public service innovation processesbusiness model challenges for a start-up edtech firm’, journal of business & industrial marketing 34(5), 1106–1118. https://doi.org/10.1108/jbim-10-2018-0297 maurya, a., 2010, running lean, o’reilly media, inc., sebastopol, ca. mihai, m.a., 2017, ‘success factors and challenges of an information communication technology network in rural schools’, africa education review 14(1), 155–170. https://doi.org/10.1080/18146627.2016.1224569 mpala, m., 2019, here’s why african edtech startups are struggling to find a viable business model, viewed 06 march 2020, from https://ventureburn.com/2019/02/african-edtech-startups-model. nagle, t. & golden, w., 2007, ‘the examination of a business model framework within the e-learning industry’, in the proceedings of the 15th european conference of information systems, june 7–9, 2007, st. gallen, switzerland, pp. 239–250. naudé, w., 2017, entrepreneurship, education and the fourth industrial revolution in africa, iza institute of labour economics, bonn. noga, m., 2015, business model canvas for startups: investors & exits, viewed august 2019, from https://www.linkedin.com/pulse/business-model-canvas-startups-investors-exits-markus-noga. osterwalder, a. & pigneur, y., 2010, business model generation: a handbook for visionaries, game changers, and challengers, john wiley & sons, hoboken, nj. pandey, s. & tiwari, s., 2014, ‘education and prosperity through technology – case of virtual education limited, nigeria’, procedia – social and behavioral sciences 157, 55–62. https://doi.org/10.1016/j.sbspro.2014.11.009 petheő, a. & vecsenyi, j., 2018, ‘the business concept map compared to other canvas models’, in proceedings of the 6th international conference on innovation management, entrepreneurship and sustainability, prague, may 31 – june 1, 2018, pp. 878–889. pretes, m., 2002, ‘microequity and microfinance’, world development 30(8), 1341–1353. https://doi.org/10.1016/s0305-750x(02)00044-x read, s., sarasvathy, s., dew, n. & wiltbank, r., 2016. effectual entrepreneurship, 2nd edn., abingdon, oxon, new york, ny. rezazadeh, a. & carvalho, a., 2017, ‘advancing a typology of business model innovation: a value-based perspective’, in c. loué & s.b. slimane (eds.), proceedings of the 12th european conference on innovation and entrepreneurship, paris, september 21–22, 2017, pp. 758–766. sandberg, j., were, e., & sutherland, r., 2011, ‘computers & education mobile english learning: an evidence-based study with fifth graders’, computers & education 57(1), 1334–1347. https://doi.org/10.1016/j.compedu.2011.01.015 sanderse, j., 2014, ‘the business model canvas of ngos’, master’s dissertation, open universiteit netherlands. saunders, m., lewis, p. & thornhill, a., 2019, research methods for business students, 8th edn., pearson, london. schwab, k., 2017, the fourth industrial revolution, first u.s. edition, crown business, new york, ny. social, p., 2009, ‘teachers’ effect on ict use in education: the turkey sample’, procedia – social and behavioral sciences 1(1), 1285–1294. https://doi.org/10.1016/j.sbspro.2009.01.228 spaull, n., 2013, south africa’s education crisis: the quality of education in south africa 1994–2011, centre for development & enterprise, johannesburg. tamim, r.m., bernard, r.m., borokhovski, e., abrami, p.c. & schmid, r.f., 2011, ‘what forty years of research says about the impact of technology on learning: a second-order meta-analysis and validation study’, review of educational research 81(1), 4–28. https://doi.org/10.3102/0034654310393361 taran, y., boer, h. & lindgren, p., 2015, ‘a business model innovation typology’, decision sciences 46(2), 301–331. https://doi.org/10.1111/deci.12128 tongur, s. & engwall, m., 2014, ‘the business model dilemma of technology shifts’, technovation 34(9), 525–535. https://doi.org/10.1016/j.technovation.2014.02.006 trimi, s. & berbegal-mirabent, j., 2012, ‘business model innovation in entrepreneurship’, international entrepreneurship and management journal 8, 449–465. https://doi.org/10.1007/s11365-012-0234-3 vandeyar, t., 2013, ‘technology in society practice as policy in ict for education: catalysing communities of practice in education in south africa’, technology in society 35(4), 248–257. https://doi.org/10.1016/j.techsoc.2013.10.002 walls, e., santer, m., wills, g. & vass, j., 2015, ‘the dreams plan: a bluepoint strategy for e-education provision in south africa’, electronic journal of information systems in developing countries 70(1), 1–24. https://doi.org/10.1002/j.1681-4835.2015.tb00507.x west, d., 2013, mobile learning: transforming education, engaging student, and improving outcomes, center for technology innovation, the brookings institution, washington, dc. world economic forum (wef), 2017, g lobal competitiveness report 2017–2018, viewed 09 january 2019, from https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018. yang, m., evans, s., vladimirova, d. & rana, p., 2017, ‘value uncaptured perspective for sustainable business model innovation’, journal of cleaner production 140(part 3), 1794–1804. https://doi.org/10.1016/j.jclepro.2016.07.102 yin, r., 2014, case study research design and methods, 5th edn., sage, thousand oaks, ca. zott, c., amit, r. & massa, l., 2011, ‘the business model: recent developments and future research’, journal of management 37(4), 1019–1042. https://doi.org/10.1177/0149206311406265 abstract introduction research methods and design results discussion contribution acknowledgements references about the author(s) inger b. pettersen mohn centre for innovation and regional development, faculty of engineering, western norway university of applied sciences, bergen, norway elin kubberød school of economics and business, the norwegian business school, norwegian university of life sciences, ås, norway elma van der lingen department of engineering and technology management, faculty of engineering, built environment and it, university of pretoria, pretoria, south africa adolph c. neethling department of business management, faculty of economic and management sciences, stellenbosch university, stellenbosch, south africa citation pettersen, i.b., kubberød, e., van der lingen, e. & neethling, a.c., 2023, ‘students’ entrepreneurial learning through an internship abroad: a cross-cultural experience’, southern african journal of entrepreneurship and small business management 15(1), a678. https://doi.org/10.4102/sajesbm.v15i1.678 original research students’ entrepreneurial learning through an internship abroad: a cross-cultural experience inger b. pettersen, elin kubberød, elma van der lingen, adolph c. neethling received: 30 nov. 2022; accepted: 09 may 2023; published: 24 aug. 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: cross-cultural learning provides students with the opportunity for improved self-awareness when they are placed in unfamiliar situations where their understanding of who they are and what they can do is challenged or expanded. this paper built on the concepts of experiential learning in rich contexts and self-image shocks and explored the research question on how cross-cultural learning in entrepreneurship exchange programmes offered students unique personal learning possibilities and outcomes. aim: the aim was to build new theoretical and empirical knowledge on the influence and importance of cross-cultural learning in entrepreneurship education (ee). setting: the study involved south african (sa) students taking part in an internship programme in the vibrant entrepreneurial ecosystem of bergen, norway. methods: adopting a longitudinal design and purposive sampling, four sa students were included in the study. data were acquired from two reflective group sessions, on two separate instances, and a final student reflection report. the interviews were transcribed and coded along with the written reflection reports and these data sources were subjected to thematic analysis. results: four themes were uncovered: learning about the entrepreneurial culture triggers comparison with own culture, embracing uncertainty and developing entrepreneurial capabilities, transformational learning through self-image shocks, can i become a future entrepreneur? where am i going? conclusion: the research highlighted the importance of cross-cultural experience and foreignness as powerful triggers in stimulating students’ introspection and development of self-image. contribution: the research combines two research streams, hence advancing our theoretical conceptualisation of cross-cultural learning in ee. keywords: cross-cultural learning; student internship; experiential learning; entrepreneurial self-efficacy; transformational learning; entrepreneurship education; self-image shocks. introduction international cross-cultural experience in higher education is known to offer students unique possibilities to develop and grow as individuals (clapp-smith & wernsing 2014; pidduck 2022). this paper explores how cross-cultural learning in entrepreneurship exchange programmes can offer students unique personal learning possibilities and outcomes. the paper aims to merge insights from morris’s (2020) understanding of experiential learning in rich contexts with entrepreneurship education (ee) (pittaway & cope 2007; pittaway et al. 2011; pittaway & thorpe 2012) and cross-cultural learning theory (adler 1987; adler & aycan 2018; pidduck 2022; yamazaki & kayes 2004), to empirically investigate south african students’ cross-cultural experiences in an internship in bergen, norway. international exchange programmes are becoming highly relevant as we are living in a globalised world (meld.st.7 2020–2021; pidduck 2022; roy et al. 2019). with entrepreneurship as a strong engine of sustainable development and growth, it is of interest for universities worldwide to invest in cross-cultural experiences and equip students with adaptable skillsets to collaborate across borders and cultures (caligiuri & tarique 2012; williams 2005). university entrepreneurship programmes that appraise entrepreneurial learning in a cross-cultural setting have therefore emerged in recent years (kubberød & pettersen 2017, 2018a; pipitone & raghavan 2017; roy et al. 2019). this conjoins with the increasing interest in multicultural professionals in international business literature. several studies have demonstrated the importance of cross-cultural intelligence, particularly in the driving of entrepreneurial intentions and capabilities (pidduck 2022; yang & yang 2022) and born global career intentions (pidduck & zhang 2021). cross-cultural learning experiences are recognised as powerful and highly personalised learning processes, encompassing both experimental and learning-by-doing elements (pidduck 2022; yamazaki & kayes 2004). in entrepreneurship exchange internship programmes, students perform entrepreneurial tasks in close interaction with an entrepreneurial team and start-up (maaravi et al. 2021). in the ee literature, internships are seen as a specific way of experiential learning or learning-by-doing (maaravi et al. 2021). internships can provide students with an exceptional opportunity to practice theories and to develop skills beyond the classroom, build networks and strengthen employability (galloway, marks & chillas 2014). with entrepreneurship becoming an important driver in economies worldwide, universities now strive to provide entrepreneurship programmes, whereby students are exposed to real-life entrepreneurial tasks in startup internships. internship research indicates that students by observing and performing in startups can enhance their awareness about entrepreneurship as a career path, strengthen entrepreneurial intensions and develop entrepreneurial mindsets, skills and competences (maaravi et al. 2021). when immersed in an internship in a foreign country, students will additionally need to adapt their learning to the contextualised cultural norms and practices (kubberød & pettersen 2017, 2018b). prior research reveals cross-cultural learning to offer transformational personal development of ‘hidden’ skills and expansion of the repertoire of entrepreneurial behaviours, which ultimately may inspire future entrepreneurial ambitions (kubberød & pettersen 2018a). a central feature that is transferable across studies is that those who overcome the ambiguity of foreign exposure can achieve meaningful learning outcomes in terms of long-term personal growth (pidduck 2022; yamazaki & kayes 2004). cross-cultural learning can therefore provide students with the opportunity for improved self-awareness when they are placed in situations where their understanding of ‘who we are’ and ‘what we can do’ (self-image) (pidduck 2022) is challenged or expanded (adler 1987; adler & aycan 2018) through a ‘rich experiential learning’ process (morris 2020). for example, cultural contrasts and comparative learning can render students’ own values more explicit and add a richer repertoire of entrepreneurial behaviours that could be experimented with and internalised in a future possible self as an entrepreneur (farmer, yao & kung-mcintyre 2011; kubberød & pettersen 2018a). inspired by this backdrop, we set out to explore the role of cultural immersion for personal growth in terms of self-image and entrepreneurial self-efficacy (ese) (mcgee et al. 2009) for students taking part in an internship programme across south africa and norway. the research adopts a longitudinal study design, using students’ reflections on their learning journey over a three-month internship. we argue that the cultural dimension is often overlooked in rich experiential (entrepreneurial) learning like cross-cultural internships, which deviate substantially from the mother culture. we adopt the theoretical lens of self-image shocks delineated by pidduck (2022) to explore cross-cultural learning experiences more in-depth. this concept offers a suitable theoretical lens on ‘how the temporary turbulence of experiencing foreign cultures can prompt reflection and fluidity across self-images – mental maps’ (pidduck 2022:270). by embracing the foreignness in the experiential process and rich experience, internal reflection and heightened awareness can be fueled, thereby enhancing the development of entrepreneurial capability (pidduck 2022). the following research questions guided the research. what are the individual learning opportunities and outcomes of rich cross-cultural learning experiences for students in terms of: personal growth (who am i, where am i going) and future entrepreneurial ambitions (ese)? this paper seeks to build new theoretical and empirical knowledge on the influence and importance of cross-cultural learning in ee. it further seeks to provide contextual evidence to contribute towards the conceptual contributions by morris (2020) and pidduck (2022) to advance conceptual understanding of cross-cultural learning and its subsequent outcomes. conceptual framework international practice as a rich context for learning opportunities experiential learning theory (elt) takes a fundamentally different view of the learning process in comparison to behavioural learning theory. experiential learning theory places life experience as a central and necessary part of the learning process, where ‘knowledge is created through the transformation of experience’ (morris 2020:1064). kolb’s experiential learning cycle represents the most influential model in elt in general and as the basis for entrepreneurial learning in ee (pittaway & cope 2007; pittaway et al. 2011). however, cross-cultural learning represents a particular variant of experiential learning (yamazaki & kayes 2004) taking place in especially rich learning contexts for the student (kubberød & pettersen 2017, 2018a; pipitone & raghavan 2017; roy et al. 2019). from a rich experiential learning perspective (morris 2020), new entrepreneurial knowledge is gained by a physical placement in real-world concrete experiences of the entrepreneurial ecosystem through immersions in the -start-up, the network and the industry surrounding it (rae 2005). in this immersion, individuals must learn to decode the ‘hidden dimensions’ in the new culture (hall 1973, 1976) to operate efficiently (kubberød & pettersen 2017). in entrepreneurship exchange internship programmes, students perform entrepreneurial tasks in close interaction with an entrepreneurial team in a start-up, in a foreign country and will need to adapt their learning to the contextualised cultural norms and practices (kubberød & pettersen 2017, 2018a). the richness in the experience offers multiple engagements and heightens the need for critical reflection (reflective observation), at the expense of ordinary reflection. furthermore, morris (2020) argues that the sensemaking (abstract conceptualisation) must be context specific, because context-indifferent sensemaking can in fact limit an individual’s potential for learning and personal growth. contextualised reflection ultimately allows for a more informed active experimentation in future concrete experiences. deviated from kolb (2015), morris’ (2020) model suggests that active experimentation needs to consider the conditions in which problems are situated. this challenges the learner and deliberately pushes the individual’s comfort zones, which the learner must embrace, to learn efficiently from the experience and complete the learning cycle. ‘… [l]earners may learn to appreciate that conditions change, sometimes very discretely, across time and place’ (2020:1072–1073). personal growth through self-image shocks the inspiration and most of what we know on the theme of individual effects and growth of cross-cultural experiences comes from the expatriation research field (lorenz, ramsey & richey 2018; pidduck 2022). scholars have investigated expatriates and identified factors important for cross-cultural learning and adaptation (adler & aycan 2018; li, mobley & kelly 2013). cross-cultural learning is recognised as transformational and highly personalised learning processes. such learning processes can be confusing or ambiguous in the beginning. students will typically experience emotionally loaded encounters and critical incidents that differ from familiar settings, forcing them to behavioural experimentation, trying out new attitudes and behaviours, influencing students’ entrepreneurial ambitions and self-efficacy (kubberød & pettersen 2017, 2018a, 2018b). bandura (1997) defines self-efficacy as people’s beliefs in their capabilities to produce desired effects by their own actions. moreover, ese (e.g. mcgee et al. 2009) refers to the individual’s belief in their ability to take on the role and tasks associated with being an entrepreneur. entrepreneurial self-efficacy is assumed to play an important role in determining whether an individual will engage in entrepreneurial behaviour and consider an entrepreneurial career (chen, greene, & crick 1998). more, ese is considered a critical outcome of ee and training as it has aroused as an important psychological construct that influences entrepreneurial intention and behaviour (miao, qian & ma 2017) and has therefore become increasingly relevant to educators, career researchers and policymakers (wilson et al., 2009). moreover, the phenomenon of ese is in one study on students in international internships found to be ‘culturally anchored and culturally sensitive’ (kubberød & pettersen 2017:275). a central feature that is transferable across studies is that those who overcome ambiguity of foreign exposure from shocks to the system can achieve meaningful learning outcomes in terms of long-term personal growth (pidduck 2022). indeed, the shocks to the system, in this context, refer to the self-image system. culture-induced shocks to the self-image trigger sensemaking and reflection upon one-self, through heightened awareness of oneself in a foreign setting. these are not necessarily huge cultural shocks, which might explain the first step in cultural adaptation, but more small eureka insights that disturb the existing self-image, triggering one’s values ‘who am i’ (value image) and ‘where i am i going’ (trajectory image) (pidduck 2022:274). these small culture-induced pushes to the self-image thus create an opportunity to view oneself and one’s potential in new ways and experiment with new behaviours because of the tensions created by cultural elements different from the mother culture, moving individuals from their original reference point of who they are and might become (pidduck 2022). the exposure creates enhanced cognitive flexibility and behavioural experimentation, developing capabilities to absorb and utilise the experience for personal growth. building on the argument of pidduck (2022) that self-image shocks facilitate the development of entrepreneurial ambitions and skills, we also explore the individual development of ese. the ideas of self-image in the cross-cultural learning literature cohere well with theories about entrepreneurial identities, aspirational self-images and possible selves (farmer et al. 2011). students’ personal identity aspirations can have a major impact on how they see the future and their interest in becoming an entrepreneur. possible selves represent what the individual should become and can be perceived as a counterpart of the current selves as signified by what the individual is. the possible selves manifest cognitively in enduring aspirations, goals, motives, threats and fears (farmer et al. 2011). the key elements of our approach are summarised into a conceptual model where we illustrate a cycle of personal growth through cross-culturally rich experiential learning. the model is inspired by morris’ ‘rich’ experiential cycle of learning (2020) and pidduck’s (2022) conceptualisation of self-image shocks in cross-cultural learning (see figure 1). figure 1: conceptual model. research methods and design interpretivism, a research philosophy that pursues richer understandings and interpretations of social worlds and contexts, is adopted for this study. interpretivism emphasises that humans create ‘meanings’ and that such ‘meanings’ need to be studied (saunders et al. 2019). differences in meaning result from different social realities and can arise when comparing different experiences, people of different cultural backgrounds, under different circumstances and at different times. the research approach phenomenology, a strand of interpretivism, which focuses on participants’ lived experiences, is followed, whereby the recollections and interpretations of the lived experiences of the participants in the internship programme are studied. the internship programme and learning context the internship programme is situated in bergen, the second-largest city in norway. the internship programme is run by western norway university of applied sciences, campus bergen, in close collaboration with entrepreneurial ecosystem actors, incubators and cluster organisations. the internship programme places approximately 50 norwegian students and a few international students in internships, mainly startups. the city is well known for its dynamic and rich startup ecosystems as well as the coexistence of many globally oriented industry clusters in areas such as ocean technology, seafood and aquaculture, renewable technologies, maritime tech and media technologies (marineholmen.com). the internship programme is part of the intpart programme (forskningsradet.no), which is a partnership between three norwegian and two south african universities. the internship programme enrols master students with diverse educational backgrounds (engineers and business administration). the main content is a three-month internship in a startup firm/innovative organisation. during the internship, the students interact closely with the entrepreneurial team and perform entrepreneurial tasks: market research, investor analysis, pitching for investors, prototyping and business model development, etc. through practice-based learning, the students experience real entrepreneurial tasks and commercialisation of technology and as such develop entrepreneurial competences and skills. in parallel with the internships, students also attend afternoon innovation seminars with guest lecturers from industry, closely organised with the regional clusters. the internship programme provides internships and a special programme for international students, including seminars on entrepreneurial learning, clusters, norwegian history and institutional trust, as well as three innovation seminars together with the norwegian students. during 2022, four south african students and one polish master student were enrolled. each international student is placed with a norwegian intern. the students are assigned entrepreneurial tasks, which they perform in close interaction with the entrepreneurial team. the students are exposed to a wider entrepreneurial ecosystem, involving encounters with entrepreneurs, industry, universities, investors and others. students will therefore need to adapt their learning to the entrepreneurial team and wider entrepreneurial ecosystem (shwetzer, maritz & nguyen 2019). we conceptualise that students’ learning is culturally anchored on several levels (in interaction with the entrepreneurial team and the wider ecosystem) and scrutinise how this interaction may influence their personal growth and ese. sampling strategy and student cohort purposive sampling was employed whereby data from the four south african (sa) students were used for analysis purposes (harsh 2011). the logic of the sampling is selecting information-rich cases. the learning journey from these four students provided rich data revealing their cross-cultural experience and reflections of it. we purposely choose to explore the learning of only sa students because of the high cultural distance between south africa and norway. the students came from two different universities and had varied backgrounds regarding education, work–life experience and prior international cultural exposure. see information in table 1, describing the students background and internships and tasks. table 1: the students background, internships and tasks. cultural distance between norway and south africa, enabling cross-cultural experience pidduck (2022) argues the cultural distance between the countries needs to be moderate and sufficiently large: ‘to temporarily remove someone from their normative reference point’ stimulating cross-cultural comparisons and new patterns. roy et al. (2019) do also suggest the same (2019:1641): ‘… [s]tudents may develop greater cultural awareness and adaptability where there is a greater cultural distance between home and host culture’. we describe the cross-cultural experience to be moderately complex, with respect to breadth, depth and type (pidduck 2022:276–277), incorporating work in internships, leisure time and university education over 3 months. the cultural distance between norway and south africa is found to be significant according to hall’s classification of lowand high-context cultures, where norway is classified as low context. south africa has a complex culture and has a high-context culture predominant among the black community, whereas white south africans have a low-context culture. in low-context cultures, the communication style is explicit, straightforward and relies mainly on verbal and written messages (cardon 2008). norway has a relatively homogeneous culture with two official languages, whereas south africa represents a more diverse culture with 11 official languages and a population with various ethnic groups. although south africa is one of the leading economies in africa, it is a developing country with various social-economic challenges and rates relatively low on the global innovation index with a position of 61 compared to norway on 20 out of 132 countries (wipo 2021). hence, we see the country-level difference, the perceived cultural distance or psychic distance between norway and south africa as sufficiently large. reflective sessions as pedagogy, research design and data collection the students participated in two reflective sessions as a group and critically reflected on their entrepreneurial learning and cross-cultural experiences. three of the authors did also participate actively in the reflective sessions. the questions in the reflective sessions were inspired by the experiential learning cycle (morris 2020) and grounded in entrepreneurial learning literature (pittaway & cope 2007; pittaway & thorpe 2012). the reflective sessions aimed to function as a supportive pedagogy (neergaard, robinson & jones 2020) to enhance students’ entrepreneurial learning experience, inducing students’ critical reflective observations, abstract conceptualisation and their narratives about their experiences and behavioural experimentation. the assessment at the end of the internship is a reflection report about their entrepreneurial and cross-cultural journey. adopting a longitudinal study design, whereby a phenomenon is studied over an extended period (saunders et al. 2019), we collected data via two reflective sessions with the students (in group) and a written (individual) reflection report, to understand each student’s entrepreneurial cross-cultural experience, their personal growth and entrepreneurial learning and gained capabilities. the reflective sessions functioned also as a semi-structured interview with research-based questions as an interview guide. to ensure consistency in the data collection approach, the guide was based on a theoretical approach capturing entrepreneurial learning and cross-cultural experience. the first interview or reflective session took place within a month after starting the internship, where early cultural difference encounters as well as work tasks and experiences were captured. the second interview focused on personal growth through mastery and ese, entrepreneurial learning that took place plus a review of any critical incidents that challenged them to respond and act. the reflective report required the students to reflect on the learning experience, lessons learnt, their individual entrepreneurial cross-cultural experiences, their personal growth and entrepreneurial capabilities gained and relating the experience to theory. each interview lasted about 2 h and was recorded with the consent of the respondent and transcribed. the transcribed data were shared for coding and thematic analysis. prior to reporting the results, student names were removed and substituted with fictitious references, to protect the identity of the participant in accordance with the institutional ethical conditions governing the research process. by collectively engaging in multiple interviews and reflective engagement, the researchers established validity and claimed that the data collection process and analysis have accurately captured the participants’ realities of the social phenomenon (creswell & miller 2000). data analysis process we conducted a thematic analysis inspired by a phenomenological approach (smith, jarman & osborn 1999). two reflective sessions were the primary source of data. as mentioned, the questions in the reflective sessions were research based and reflected central concepts in the literature. the first coding of data was mainly deductive coding, combined with inductive coding, as new themes were discovered in the analysis process. we initially analysed each student separately to develop intra-case themes of individual students’ learning journey. thereafter, we analysed across students to develop inter-case themes. the last step involved an iterative and comparative process of tacking back and forth, coming up with the four central themes structuring the analysis chapter. the inductive research process stimulated the authors to search for new literature/concepts explaining the data, such as pidduck (2022). the four authors separately read the data scripts and developed initial themes. the authors then together completed a final analysis, based on discussion of the material and emerging themes, which enhanced inter-rater reliability and research validity. three authors followed the students learning process to varying degrees, allowing for several encounters and observations, cross-validating the findings. in addition to data from the reflective sessions/reports, we also validated students’ accounts with data from other perspectives, such as faculty and internship mentors who observed the students’ learning and performance, to avoid the biases of using only students’ self-reported data. see the triangulation of data and respondents in table 2. table 2: triangulation – other data sources/perspectives. ethical considerations ethical clearance to conduct this study was obtained from the university of pretoria faculty committee for research ethics and integrity (no. ebit/74/2020). results four overarching themes were uncovered from the thematic analysis. below, we elaborate on these with selected quotes from the students. learning about the entrepreneurial culture triggers comparison with own culture the students were welcomed and rapidly integrated in the entrepreneurial startup team and immersed in the ecosystem culture, as reflected in the following quote: ‘what i have most enjoyed is how the cofounders have transferred their passion of the start-up to the rest of the organisation. we all come together as a team for the general wellbeing of the organisation. right after this meeting – i’m attending the career fair and i’m not attending it as a student, but as a representative of the company.’ (zandile, female, intern, masters in management related programme) through observations, interaction and performance of entrepreneurial tasks, as well as through several encounters and eye-opening incidents, they experienced how foreignness pushed them towards behavioural experimentation, leading to new attitudes and behaviours (kubberød & pettersen 2017, 2018a), reflected in the following quotes, when george and magda understand that their perspectives and contributions are expected at the office: ‘in terms of cultural differences, in south africa, it’s a lot more of discipline structure, rigidity and i think old fashioned kps. whereas here it’s a lot more open and creative space. i guess it is an industry that allows and encourage bringing new ideas to the table. to bring your own perspective to management is often not very favorable or seen as a very good thing until now in south africa. but here they encourage anyone to sort of speak up – which is quite nice. i do enjoy the culture and the atmosphere in the office. like i don’t find anything like that in south africafrica.’ (george, male, intern, masters in management related programme) ‘regarding the cultural differences that i saw – there’s a lot of autonomy in the workspace. they delegate a lot, which i like. observing the attitudes, they trust the employees a lot and there is a lot of collaboration.’ (magda, female, intern, masters in management related programme) the immediate cultural and entrepreneurial immersion allowed the students to perform entrepreneurial task in close interaction with the team, which induced critical reflective observation about the ecosystem culture and cross-cultural learning. the experience of foreignness induced various degrees of small self-image shocks, with the resulting introspection of own self-image and identity, comparing with own culture and society: ‘they sit together in an open floor, engaging in a lot of open communication, which i was warmly welcome to cheer. i’m sitting next to the project manager, whom i’m communicating instantly. it’s a way more trusting culture and i think that carries through accountability and responsibility, i think it originates from a collective culture. and my perspective, at least south africans, are way more individualistic.’ (lori, female, intern, masters in management related programme) these accounts reveal that the students experienced heightened awareness of oneself in a foreign setting, induced by the situated uncertainty and ambiguity associated with being abroad. the small cultural self-image shocks of having a lot of autonomy and also being responsible as a trusted team member were stimulating and challenging. embracing uncertainty and developing entrepreneurial capabilities the sa students were all given challenging and novel tasks developing their knowledge base. they worked both independently and interactive in teams, having mentors and team members available for questions and emotional support: ‘they work tasks are characterized by uncertainty, but i can cope because i have the team support. embracing uncertainty, forces you to go a little bit out of your comfort zone and i think i learn so much more. sometimes we would get tasks and i don’t really know what i’m supposed to do, but then we just end up jumping in – and then once we started it becomes clearer, like what direction are we supposed to go. and this is when you can also bring in your creativity and develop new skills.’ (magda, female, intern, masters in management related programme) the close collaboration and team spirit in the internships lowered the negative emotions of handling uncertainty and ambiguity in the entrepreneurial process. however, the expectations from the start-up also challenged the students in new ways that they have never experienced in their home culture: ‘the work tasks are definitely new. i’ve never been allocated to marketing and sales or doing business development tasks, so for me, it’s a big shift. i’m more of an introvert, but this has required me to step outside of my introversion and being allocated to contact potential customers personally. so, part of my work is building the need for this product in industry using green technology, by creating the market demand and selling it. i must be able to make them realize the need and benefits, which has been the most uncertain and risky part – to channel my thinking into something innovative.’ (zandile, female, intern, masters in management related programme) over time, the students gradually developed an entrepreneurial mindset of working agile as this learning account reveals: ‘to summarize my business environment – everything is fast paced, but that’s great for me. having new problems thrown at you every day, is barely stimulating. i’ve also found that the complete interaction absolutely fuels me. as well as running this early startup development program, we are problem solvers. if anything comes up, we solve it. i have a background with finance, marketing, and management strategy and get to employ each one of those parts of myself every single day. it’s constantly unusual, and i like to be challenged.’ (george, male, intern, masters in management related programme) for lori, the entrepreneurial aspect was at some point in the learning process more challenging than she could handle, reflected in this quote: ‘the task of helping the company to expand to an international market, was challenging because it’s very entrepreneurial. thinking of how they could expand? that was very difficult for me. i didn’t even know what to look for. i was assigned somebody to assist me, a helpful and nice guy, but unfortunately, he was very busy. i overcame by doing market research to try and find out what is the best option from google. i felt a heavy responsibility, the company isn’t a big company. this is a big deal for them – and could have a significant impact.’ (lori, female, intern, masters in management related programme) the students performed challenging entrepreneurial tasks individually and together with the team constantly overcoming personal barriers. new and unfamiliar situations induced by cultural differences enhanced their repertoire of behaviours creating new possibilities to learn more about one’s potential but also limits. transformational learning through self-image shocks all students faced to varying degrees ‘self-image shocks’ and went through a transformative learning experience during the internships in bergen, norway. the cross-cultural experience of immersing themselves in a foreign environment hence triggered a personally transformational experience, which pidduck (2022) denotes; ‘shocks to the system’, assumed to trigger reflection and change in self-image. this push stimulated a critical introspection about themselves, increasing self-awareness and developing an understanding of how things work, what they could do (capabilities, ese) and who they were as a person or had transformed to be (self-image), through how zandile reflects on the new perspectives she obtained from contrasting and embracing two cultures: ‘my internship has also made me more conscious of my culture and my background. i’ve been able to recognize my own culture as well as knowing the norwegian culture and being able to embrace both. i’ve also grown in embracing that i can keep learning – no one can ever know everything at any point. and it’s just a matter of you keeping that consistent mindset – that in any situation that i find myself in, i need to open myself even more to learning and just finding opportunity and challenges. i think working in the internship has been that highlight to say – how do we convert what other people perceive as challenges into opportunities? so that’s been my personal growth.’ (zandile, female, intern, masters in management related programme) the personal growth and transformation related to very deep personal reflections about their personal identity, ‘who am i’ (value image) and ‘where am i going’ (trajectory image). the experience did also transformed them as an entrepreneurial person, being capable of working entrepreneurially, developing self-efficacy in new and unexpected areas: ‘i think i have grown, particularly in the situation of teamwork. i’ve learned to be a bit more of a team player, which – in retrospect – i needed to. i often consider myself a little bit of a lone wolf. i have run off with tasks by myself or felt i work better on my own. sitting down with everyone and speak – would frustrate me in the past, slowing down the process as i could do things faster – just by myself. in sa i’ve been taught all my life that it’s you alone and you got to run with it. no one’s going to support you. now, i have learned to sit with people and really consider their perspectives, i’ve learned to be part of a team.’ (george, male, intern, masters in management related programme) going through the process also opens for new discoveries about oneself as a citizen not only in sa but in the world and how transformational this process can be in terms of personal development, which this account pinpoints: ‘i have grown personally. it is strange coming from south africa with all the various cultures and diverse perceptions there. but you kind of grew up with it. so just realizing, there are other people and systems out there, my stay here did help me to see the value of being even more open minded about perceptions. what i learned in terms of entrepreneurial activity, and society i learned the value of informal collaboration, stepping outside of your boundaries, being creative. i received very positive feedback, and that was very encouraging for the general confidence. i became more confident.’ (lori, female, intern, masters in management related programme) can i become a future entrepreneur? where am i going? being immersed and being capable of performing entrepreneurially in a vibrant and competitive entrepreneurial ecosystem in a foreign country did also stimulate to reflections about becoming an entrepreneur in the future. the observations of others and themselves, as active participants in high-performing innovative startups – enhanced their confidence of being capable of establishing a company in the future. experiencing, understanding and coping with the uncertainties inherent in a startup venture did also reinforce their beliefs of own entrepreneurial capability: ‘i have developed confidence of my skills and knowledge in the entrepreneurial environment, which i really appreciate, and have become accustomed to uncertainty and risk. i can deal with uncertainty a bit more now and can rather just go with the flow and learn to identify what risks and uncertainties are acceptable and which risks and uncertainties need to be addressed. after this internship i’ve realized that i would and can undertake an entrepreneurial venture in the future, perhaps not only by myself, but with other people as well.’ (lori, female, intern, masters in management related programme) the internship experience did also spur their motivation and passion for entrepreneurship. in the quote below, zandile reflects about ‘where am i going’? and do they see themselves as entrepreneurs in the future (trajectory image), as zandile’s account reveals: ‘initially i started my master’s to grow in my professional career as an x engineer, but i have now learned to apply theory and analysis tools from my master’s in an entrepreneurial setting. and i have learned to cope in terms of risks and uncertainty. i’ve always had business ideas, but always shied away from exploring them. but now i can see myself as an entrepreneur. from this experience i have more zeal dealing with uncertainty and risk.’ (zandile, female, intern, masters in management related programme) not all trajectory images are entrepreneurial, and entrepreneurial experiences can have the opposite effect and spur alternative career aspirations: ‘i see myself less as an entrepreneur now. i see myself more as a manager. i can see the entrepreneurs’ vision, but i’m not creative and i hate risk. if you’re entrepreneur, you should be creative. you should be taking risk and coming up with crazy ideas and i don’t do that. but i can take an idea, a vision, analyze the process and help with implementation. so, ese went down the drain, but managerial self-efficiency has been strengthened.’ (lori, female, intern, masters in management related programme) being part of an entrepreneurial environment had all in all a positive effect on the students’ aspirations, whether they were more clearly entrepreneurially oriented or not. still, the last account really pinpoints other aspirations for future support and manager roles that are valuable in the innovation ecosystem. discussion this study explored students’ learning opportunities and outcomes of rich cross-cultural learning experiences for students, firstly in terms of personal growth (who i am and where i am going to) and secondly students’ ese and future entrepreneurial ambitions. the south african students were immediately immersed in a contextually rich learning setting, working in internships in a vibrant ecosystem, imbued with foreignness in terms of cultures, language, histories and economies. through this immersion, the students experienced new concepts, worldviews and systems – referred to as the big cs (pidduck 2022) and more specifically phenomena such as institutional trust (martela et al. 2020), industry clusters (kuah 2002), social norms motivating collaboration and innovation and teamwork. although the differences were experienced as an adventure with time, comparison between the homegrown well-known country and unknown of a foreign country started to take place from start, resulting further in introspection of identity and self-image. the south african students came from different backgrounds, different ethnic groups and culture within south africa. whereas hofstede’s culture refers to elements that are collectively shared by members of a particular group (hofstede, hofstede & minkov 2005), ghauri and usunier (eds. 2003) found that cultural programing is limited by the distinct nature of individuals as they have different ways of perceiving, thinking, feeling and acting. however, despite the differences in ethnical backgrounds of the south african students, all of them were captivated by the culture of trust and openness within the norwegian startups. the students experienced power distance, one of hofstede’s cultural dimensions, by how the startup individuals perceived power to be distributed among employees even to the newly joined students and interns. this also draws onto hofstede’s individualism-collectivism dimension. the collectivism, exemplified by teamwork and collaborative norms, experienced in the work environment by the students contributed to building their self-esteem by overcoming uncertainty and ambiguity in the entrepreneurial process. the sense of being worth and becoming more confident in the foreign startup enhanced their entrepreneurial learning capabilities. moreover, the students performed challenging entrepreneurial tasks individually and together with the team, stimulating their own creativity and skills. personal growth further took place by embracing both the norwegian and south african cultures and identifying new opportunities by building on the students’ diverse background. the personal growth achieved by overcoming the initial uncertainties and fears resulting from working in a foreign environment and tasked with novel assignments increased the ese of the students. being part of an entrepreneurial environment within the startup did also have a positive effect on the students’ entrepreneurial identity aspirations. this article contributes to the criticism raised against kolb’s conceptualisation of experiential learning (morris 2020) with regard to kolb’s failure to stipulate that learning is situated in context (fluidity of place and time) and the failure to consider the social context of learning. moreover, the research highlights that the cross-cultural experience and foreignness can represent a powerful situated learning arena stimulating to students’ introspection of self-image and the building of an entrepreneurial identity. our research, therefore, contributes to research emphasising identity-based motivation for entrepreneurial behaviours (donnellon, ollila & middleton 2014; farmer et al. 2011; middleton 2013), by highlighting cross-cultural experiences to be particularly powerful in inducing identity developments and aspirations. the research also impacts by combining two research streams: the revised experiential learning cycle (morris 2020) and cross-cultural learning through self-image shocks (pidduck 2022), showing how students in internships abroad can grow and develop their ese. the international and cross-cultural dimension in ee is to our knowledge overlooked and hence neglected as a rich situated learning context to develop entrepreneurial mindsets, skills and competences, as well as entrepreneurial identities and aspirations. furthermore, the cross-cultural experience is found to be powerful in inducing personal growth and self-awareness, as well as cognitive complexity and cross-cultural skills for students in international internships, adding to existing research on expatriates/managers (adler & aycan 2018; pidduck 2022; yamazaki & kayes 2004). the research specifically investigates students in one internship programme in startups that explicitly aims to build entrepreneurial learning and capabilities. hence, the relationship between foreignness and entrepreneurship is evident, referring to pidduck (2020) and assumptions about the connection between the cross-cultural experience and entrepreneurial capabilities. besides, this study confirmed that critical reflective observation was an essential component of the experiential learning process, whereby students realise through critical reflection, the learning that took place (morris 2020). yet, the reflective sessions, as a pedagogic tool, did also assumingly spur and strengthen students’ reflections and hence the experiential learning. scholars in ee have also demonstrated the usefulness of pedagogic tools supporting students’ entrepreneurial and transformational learning (e.g. neergard et al. 2021). this article discusses the experiential learning of south african students during an internship experience in norway. in many ways, the students’ experiences are in alignment with established theory, and the degree of contrast was more an enlightening experience, as opposed to a cultural shock, and the experiences were generally positive, given the high level of engagement from an early stage, the support and mentoring and recognition of the contribution the interns could make. hence, the research underscores the high value and learning effects for students going abroad in internships, equipping students with critical competences in a globalised world (pidduck 2020). the research has several limitations. it is generally challenging for universities to organise and provide high-quality internships (maaravi et al. 2021), and extra challenging in countries lacking a culture for appreciating student internships in companies and startups (meld.st.7 2020–2021). therefore, one research limitation could be that the findings are difficult to generalise as rich cross-cultural learning contexts in internships are difficult to replicate. universities may also have varying experience and resources to provide such a learning experience (maaravi et al. 2021). besides, it can be challenging globally to find vibrant and appreciating entrepreneurial ecosystems willing to integrate student interns in their teams and startup environment. the research only investigated the cross-cultural entrepreneurial learning of four south african students in one internship programme in norway, which limits the external validity of the findings. scholars also assume cross-cultural entrepreneurial learning to be highly individual, powerful and emotional (kubberød & pettersen 2018a, 2018b). students therefore may cope differently with the cross-cultural entrepreneurial experience. moreover, it is difficult for educators to facilitate/design for individual students’ development of entrepreneurial capabilities and personal growth. contribution to further test the assumptions and findings in this research, it is recommended to conduct similar studies in other countries and with different nationalities, comparing the international experiences of interns from different countries, to better understand the nature of culture shocks and cross-cultural experiences, assuming also that the cultural distance between countries may impact the learning outcomes of students (pidduck 2022; roy et al. 2019). most research on student mobility is done on american and european students (roy et al. 2019). our research therefore adds to existing studies, by investigating south african students in an international internship in norway. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions i.b.p., e.k., e.v.d.l. and a.c.n., all contributed towards the conceptualisation, methodology, analysis, visualisation, writing review and editing of the article, with the first two authors focusing on the original draft of the introduction and conceptual section of the paper. funding information the authors disclose receipt of financial support for the publication of this article from the research council of norway through the intpart project. data availability the data that support the findings of this study are available from the corresponding author, a.n., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adler, n.j. & aycan, z., 2018, ‘cross-cultural interaction: what we know and what we need to know’, annual review of organizational psychology and organizational behavior 5(1), 307–333. https://doi.org/10.1146/annurev-orgpsych-032117-104528 adler, p. s., 1987, ‘culture shock and the cross-cultural learning experience’, in l.f. luce & e.c. smith (eds.), toward internationalism, newbury house, cambridge, ma. bandura, a., 1997, self-efficacy: the exercise of control, freeman, new york, ny. caligiuri, p. & tarique, i., 2012, ‘dynamic cross-cultural competencies and global leadership effectiveness’, journal of world business 47(4), 612–622. https://doi.org/10.1016/j.jwb.2012.01.014 cardon, p.w., 2008, ‘a critique of hall’s contexting model: a meta-analysis of literature on intercultural business and technical communication’, journal of business and technical communication 22(4), 399–428. https://doi.org/10.1177/1050651908320361 chen, c.c., greene, p.g. & crick, a., 1998, ‘does entrepreneurial self-efficacy distinguish entrepreneurs from managers?’, journal of business venturing 13(4), 295–316. https://doi.org/10.1016/s0883-9026(97)00029-3 clapp-smith, r. & wernsing, t., 2014, ‘the transformational triggers of international experiences’, journal of management development 33(7), 662–679. https://doi.org/10.1108/jmd-05-2012-0063 creswell, j.w. & miller, d.l., 2000, ‘determining validity in qualitative inquiry’, theory into practice 39(3), 124–130. https://doi.org/10.1207/s15430421tip3903_2 donnellon, a., ollila, s. & middleton, k.w., 2014, ‘constructing entrepreneurial identity in entrepreneurship education’, the international journal of management education 12(3), 490–499. https://doi.org/10.1016/j.ijme.2014.05.004 farmer, s.m., yao, x. & kung-mcintyre, k., 2011, ‘the behavioral impact of entrepreneur identity aspiration and prior entrepreneurial experience’, entrepreneurship theory and practice 35(2), 245–273. https://doi.org/10.1111/j.1540-6520.2009.00358.x galloway, l., marks, a. & chillas, s., 2014, ‘the use of internships to foster employability, enterprise and entrepreneurship in the it sector’, journal of small business and enterprise development 21(4), 653–667. https://doi.org/10.1108/jsbed-09-2014-0150 ghauri, p.n. & usunier, j.c. (eds.), 2003, international business negotiations, elsevier ltd, oxford. hall, e.t., 1973, the silent language, anchor books, doubleday, new york. hall, e.t., 1977, beyond culture, anchor books, doubleday, new york. harsh, s., 2011, ‘purposeful sampling in qualitative research synthesis’, qualitative research journal 11(2), 63–75. https://doi.org/10.3316/qrj1102063 hofstede, g., hofstede, g.j. & minkov, m., 2005, cultures and organizations: software of the mind, vol. 2, mcgraw-hill, new york, ny. kolb, d.a., 2015, experiential learning: experience as a source of learning and development, pearson, upper saddle river, nj. kuah, a.t., 2002, ‘cluster theory and practice: advantages for the small business locating in a vibrant cluster’, journal of research in marketing and entrepreneurship 4(3), 206–228. https://doi.org/10.1108/14715200280001472 kubberød, e. & pettersen, i.b., 2017, ‘exploring situated ambiguity in students’ entrepreneurial learning’, education + training 59(3), 265–279. https://doi.org/10.1108/et-04-2016-0076 kubberød, e. & pettersen, i.b., 2018a, ‘entrepreneurial identity matching through cross-cultural learning’, uniped 41(1), 54–67. https://doi.org/10.18261/issn.1893-8981-2018-01-05 kubberød, e. & pettersen, i.b., 2018b, ‘the role of peripherality in students’ entrepreneurial learning’, education & training 60(1), 2–15. https://doi.org/10.1108/et-06-2016-0106 li, m., mobley, w.h. & kelly, a., 2013, ‘when do global leaders learn best to develop cultural intelligence? an investigation of the moderating role of experiential learning style’, academy of management learning & education 12(1), 32–50. https://doi.org/10.5465/amle.2011.0014 lorenz, m.p., ramsey, j.r. & richey, r.g., jr., 2018, ‘expatriates’ international opportunity recognition and innovativeness: the role of metacognitive and cognitive cultural intelligence’, journal of world business 53(2), 222–236. https://doi.org/10.1016/j.jwb.2017.11.004 maaravi, y., heller, b., hochman, g. & kanat-maymon, y., 2021, ‘internship not hardship: what makes interns in startup companies satisfied?’, journal of experiential education 44(3), 257–276. https://doi.org/10.1177/1053825920966351 martela, f., greve, b., rothstein, b. & saari, j., 2020, ‘the nordic exceptionalism: what explains why the nordic countries are constantly among the happiest in the world’, in j.e.d. neve, j. helliwell, r. layard, & j.d. sachs (eds.), world happiness report, pp. 129–146, sustainable development solutions network, new york. mcgee, j.e., peterson, m., mueller, s.l. & sequeira, j.m., 2009, ‘entrepreneurial self–efficacy: refining the measure’, entrepreneurship theory and practice 33(4), 965–988. https://doi.org/10.1111/j.1540-6520.2009.00304.x meld. st.7, 2020–2021, melding stortinget, a world of opportunities. international student mobility in higher education (translated from norwegian), viewed 30 november 2022, from https://www.regjeringen.no/no/dokumenter/meld.-st.-7-20202021/id2779627/ miao, c., qian, s. & ma, d., 2017, ‘the relationship between entrepreneurial self-efficacy and firm performance: a meta-analysis of main and moderator effects’, journal of small business management 55(1), 87–107. https://doi.org/10.1111/jsbm.12240 middleton, k.l.w., 2013, ‘becoming entrepreneurial: gaining legitimacy in the nascent phase’, international journal of entrepreneurial behavior & research 19(4), 404–424. https://doi.org/10.1108/ijebr-04-2012-0049 morris, t.h., 2020, ‘experiential learning – a systematic review and revision of kolb’s model’, interactive learning environments 28(8), 1064–1077. https://doi.org/10.1080/10494820.2019.1570279 neergaard, h., robinson, s. & jones, s., 2021, ‘transformative learning in the entrepreneurship education process: the role of pedagogical nudging and reflection’, international journal of entrepreneurial behavior & research 27(1), 251–277. https://doi.org/10.1108/ijebr-04-2020-0235 pidduck, r.j., busenitz, l.w., zhang, y. & ghosh moulick, a., 2020, ‘oh, the places you’ll go: a schema theory perspective on cross-cultural experience and entrepreneurship’, journal of business venturing insights 14, e00189. https://doi.org/10.1016/j.jbvi.2020.e00189 pidduck, r.j., 2022, ‘the entrepreneurial advantages of experiencing foreignness: leveraging shocks for capability clusters’, cross cultural & strategic management 29(2), 268–296. https://doi.org/10.1108/ccsm-10-2020-0211 pidduck, r.j. & zhang, y., 2021, ‘entrepreneurial sensing capabilities: the stimulating role of cross-cultural experience’, international journal of entrepreneurial behavior & research 28(1), 203–230. https://doi.org/10.1108/ijebr-05-2020-0329 pipitone, j.m. & raghavan, c., 2017, ‘socio-spatial analysis of study abroad students’ experiences in/of place in morocco’, journal of experiential education 40(3), 264–278. https://doi.org/10.1177/1053825917709823 pittaway, l. & cope, j., 2007, ‘simulating entrepreneurial learning: integrating experiential and collaborative approaches to learning’, management learning 38(2), 211–233. https://doi.org/10.1177/1350507607075776 pittaway, l., rodriguez-falcon, e., aiyegbayo, o. & king, a., 2011, ‘the role of entrepreneurship clubs and societies in entrepreneurial learning’, international small business journal 29(1), 37–57. https://doi.org/10.1177/0266242610369876 pittaway, l. & thorpe, r., 2012, ‘a framework for entrepreneurial learning: a tribute to jason cope’, entrepreneurship & regional development 24(9–10), 837–859. https://doi.org/10.1080/08985626.2012.694268 saunders, m.n.k., lewis, p., thornhill, a. & bristow, a. (eds.), 2019, research methods for business students, pearson education, harlow. shwetzer, c., maritz, a. & nguyen, q., 2019, ‘entrepreneurial ecosystems: a holistic and dynamic approach’, journal of industry-university collaboration 1(2), 79–95. https://doi.org/10.1108/jiuc-03-2019-0007 smith, j.a., jarman, m. & osborn, m., 1999, ‘doing interpretative phenomenological analysis’, in murray, m. & chamberlain, k., (eds.), qualitative health psychology: theories and methods, pp. 218–241, sage, london. rae, d., 2005, ‘entrepreneurial learning: a narrative-based conceptual model’, journal of small business and enterprise development 12(3), 323–335. https://doi.org/10.1108/14626000510612259 roy, a., newman, a., ellenberger, t. & pyman, a., 2019, ‘outcomes of international student mobility programs: a systematic review and agenda for future research’, studies in higher education 44(9), 1630–1644. https://doi.org/10.1080/03075079.2018.1458222 williams, t.r., 2005, ‘exploring the impact of study abroad on students’ intercultural communication skills: adaptability and sensitivity’, journal of studies in international education 9(4), 356–371. https://doi.org/10.1177/1028315305277681 wipo, 2021, the global innovation index 2021: tracking innovation through the covid-19 crisis, s.n., geneva. wilson, k.e., vyakarnam, s., volkmann, c., mariotti, s. & rabuzzi, d., 2009, educating the next wave of entrepreneurs: unlocking entrepreneurial capabilities to meet the global challenges of the 21st century, world economic forum: a report of the global education initiative, viewed 30 november 2022, from at https://ssrn.com/abstract=1396704 or http://dx.doi.org/10.2139/ssrn.1396704. yamazaki, y. & kayes, d.c., 2004, ‘an experiential approach to cross-cultural learning: a review and integration of competencies for successful expatriate adaptation’, academy of management learning & education 3(4), 362–379. https://doi.org/10.5465/amle.2004.15112543 yang, f. & yang, m.m., 2022, ‘does cross-cultural experience matter for new venture performance? the moderating role of socio-cognitive traits’, journal of business research 138(suppl. 1), 38–51. https://doi.org/10.1016/j.jbusres.2021.08.073 abstract introduction research problem and question literature review research design and methods key findings discussion of key findings study strengths and limitations conclusions and implications of the study acknowledgements references about the author(s) welcome kupangwa department of business management, faculty of business and economic sciences, nelson mandela university, gqeberha, south africa shelley m. farrington department of business management, faculty of business and economic sciences, nelson mandela university, gqeberha, south africa elmarie venter department of business management, faculty of business and economic sciences, nelson mandela university, gqeberha, south africa citation kupangwa, w., farrington, s.m. & venter, e., 2023, ‘the role of values in enhancing longevity among indigenous black south african family businesses’, southern african journal of entrepreneurship and small business management 15(1), a555. https://doi.org/10.4102/sajesbm.v15i1.555 original research the role of values in enhancing longevity among indigenous black south african family businesses welcome kupangwa, shelley m. farrington, elmarie venter received: 28 mar. 2022; accepted: 22 nov. 2022; published: 27 jan. 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: values play a fundamental role in the longevity of family businesses. however, not fully understanding these roles threatens their long-term survival. given their potentially large numbers and subsequent ability to reduce unemployment and poverty, it is critical that black-owned south african businesses achieve entrepreneurial success. while much research exists on family business values in a western and european context, research on family business values in an indigenous black south african (ibsa) context is nonexistent. aim: the aim of this research is to determine the role that family business values play in enhancing the longevity of ibsa family businesses. setting: the study focused on ibsa family businesses that are independently owned and managed by one or more ibsas and which are located in various major cities of south africa. methods: a qualitative methodological approach following a multiple–case study design was adopted. semistructured interviews were conducted with several key participants using a combination of face-to-face, telephone and online interviews. the six steps of reflexive thematic analysis were used to analyse the data. results: four themes describe the role of family business values in enhancing longevity among the ibsa family businesses. family business values were found to guide the behaviour of family business members, build the identity of the business-owning families and their businesses and build a sense of community in both the family and the family business. the continuity and success of their family businesses were also attributed to these underlying family business values. conclusion: family business founders and/or current leaders should articulate the value set they uphold and use it as a resource to build the identity of both their families and family businesses while moderating the behaviours of family business members. contribution: the study responds to several research calls to investigate family businesses in african cultural settings and provides practical guidance to scholars, entrepreneurs and practitioners on how family businesses can use values as strategic resources to enhance business longevity and success. keywords: black; family business; indigenous; longevity; south africa; values. introduction globally, family businesses are recognised for their economic importance and high prevalence (basly & hammouda 2020:326; hernandez-perlines, ribeiro-soriano & rodríıguez-garcía 2020:2; kumar & dubey 2022:802). they provide 50% – 80% of global employment (hsueh 2020:185; maloni, hiatt & astrachan 2017) and contribute to more than 70% of the world’s gross domestic product (gdp) (osunde 2017:1; robertsson 2021). in south africa, the old mutual group (2022) estimates that about 80% of south african businesses are family businesses. in fact, about 60% of listed businesses on the johannesburg stock exchange (jse) are family businesses (rabenowitz et al. 2018). while the longevity of family businesses in south africa is important for economic growth, the majority experience high rates of failure and are not sustainable, especially among indigenous black south african (ibsa) family businesses (nheta et al. 2020:1). there is a view that most indigenous black african businesses in south africa lack the necessary strength to live longer or to be competitive and sustainable, both locally and internationally, complicating the prosperity and sustainability outlook of these businesses (ssekitoleko & du plessis 2021:2). in fact, several authors highlight that in south africa, 1 in 4 family businesses survive into the second generation, and only 1 in 10 make it into the third generation (sifolo & henama 2019:287; urban & nonkwelo 2022:268). various reasons are put forward for these high failure rates, including poor leadership (venter & farrington 2016:35), a lack of succession planning (gomba & kele 2016:9; tengeh & phikiso 2021:332) and the lack of clear value sets (van aardt et al. 2016:13), all of which lead to conflict and disagreements among family business members and business stakeholders (venter, van der merwe & farrington 2012:69). the important role that values play in the long-term survival of businesses in general is well documented (kaplan et al. 2016), and their role in contributing to the longevity of family businesses is noted (rau, schneider-siebke & günther 2019:195). although there has been research on values in general in the context of family businesses (marquès, presas & simon 2014; parada et al. 2020; picone et al. 2021; simon et al. 2012), studies that focus on the role of family business values in an indigenous african family businesses context are nonexistent. given the importance of family businesses to the south african economy and the increasing number of ibsa family businesses (osunde 2017:1; ssekitoleko & du plessis 2021:2; urban & nonkwelo 2022:266), as well as the importance of values to the longevity of these businesses (fletcher, melin & gimeno 2012:127; rau et al. 2019:195), this study sought to identify the roles that family business values play in contributing to the longevity of ibsa family businesses. this study contributes to the extant family business literature on values by explaining the important role of values and providing a greater understanding of family business behaviours (parada et al. 2020:640; ruf et al. 2021:48) from an indigenous african perspective. additionally, this study has the potential to contribute to ibsa family business owners’ and leaders’ understanding of how family business values, as a distinct organisational resource, can be utilised to guide the behaviours of both internal and external stakeholders so as to contribute to the longevity of their businesses. to demonstrate the important role of values in this study, the remainder of the article is structured as follows: firstly, the research problem and question of the study, as well as a brief review on the nature of values, are presented; secondly, the research design and methods, as well as the findings and discussion of key findings, are provided. finally, the article discusses the strengths and limitations, as well as the conclusions and implications of the study. research problem and question much research exists on values in family businesses in general. examples include the studies of maung et al. (2020), rau et al. (2019), ogbechie and anetor (2015) and olejniczak (2014). however, research on the role of values in an indigenous african family business context is nonexistent. furthermore, most research on values in family businesses has been done in western and european countries. studies include those of gavriel-fried and shilo (2016), strese et al. (2016), zwack et al. (2016), marquès et al. (2014), as well as cruz, hamilton and jack (2012), where different cultural and value perspectives exist. to date, several family business scholars have alluded that more research on indigenous african family businesses needs to be conducted to fully capture the richness, complexity and diversity of entrepreneurial activities in the african context (agyapong & acquaah 2021:413; farrington 2016:37; matchaba-hove 2020:4). undertaking research on african family businesses assists researchers and practitioners to understand the cultural and economic differences that exist in these contexts (acquaah 2013:145). kaunda and nkhoma (2013:159) point out that values, structures and relationships differ across societies and countries. investigating family businesses from different institutional contexts may reveal differences and commonalities that exist between different ethnic groups (arregle et al. 2021:1188). furthermore, despite the strategic importance of family business values in family businesses, several family business founders and owners fail to utilise these values to contribute to the uniqueness and longevity of their businesses (alderson 2011:5). most recently, parada et al. (2020:639) and rau et al. (2019:209) highlight that not fully understanding the role that family business values play in family businesses may result in stakeholders acting in ways inconsistent with those values, threatening the survival of family businesses. murithi, vershinina and rodgers (2020:159) assert that there is a need to further explore the nature and role of institutional logics, such as the values in other institutional contexts. furthermore, investigating the important role of family business values in family businesses may provide further insights into how values can be utilised effectively to enhance the longevity of family businesses (binz et al. 2017:43; fletcher et al. 2012:127), including ibsa family businesses. values play a fundamental role in the longevity of family businesses (osei et al. 2012:15; tàpies & fernándezmoya 2012:136). the question that this study seeks to answer is: what role do family business values play in enhancing this longevity, or more specifically, the longevity of ibsa family businesses? by responding to this question, this study provides rich information which allows for a greater understanding on how family business values enhance the longevity of ibsa family businesses. in this study, an ibsa family business refers to a family business that is independently owned and managed by one or more ibsas, excluding south africans from the mixed race and indian population groups. literature review conceptualisation of values values have been a central concept in the social sciences for over a century (schwartz & cieciuch 2022:9). since the inception of social sciences, studies on values have been crucial in illuminating the social and personal organisation as well as the changes that exist in peoples’ lives and communities. more recently, researchers have studied values in relation to human behaviour (eds. roccas & sagiv 2017), attitudes (boer & fischer 2013), personality (parks-leduc, feldman & bardi 2015), well-being (schwartz & sorteix 2018) and several other management concepts (barrett 2017). in the literature, several definitions of the concept of values are evident, and these can generally be regarded as consistent in some of their global meanings (bardi & schwartz 2003:1207). for example, from his seminal study on values, rokeach (1973:5) defines values as ‘an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence’. schwartz (1996:2) defines values as ‘desirable trans-situational goals, varying in importance, that serve as guiding principles in people’s lives’. in a recent study, ikin and mcclenaghan (2019:206) define values as the ‘general standards or principles considered intrinsically desirable ends’. in the current study, values refer to the beliefs about the importance of desirable goals that serve as standards and principles for evaluating human behaviour in a particular community (schwartz 2016), such as a family business. values reflect what is imperative in people’s lives and represent a motivational construct through which people strive to attain desirable goals (benish-weisman, oreg & berson 2022:844; schwartz 2012:3). as explained by winter and jackson (2016:2000), values bind different stakeholders together and prompt them to act and behave in a certain way. that is, values as beliefs and principles tend to motivate action or a desirable end state of behaviour (grigoryan & schwartz 2021:1) and are considered instrumental in the behaviour formation of individuals and their communities (ebniya 2020). values in general are often and immediately equated to traditional, family and religious values (heinich 2020:225). this notion is supported by ebniya (2020), who asserts that there is a strong connection between religion and values, because religion is seen as a source of values that significantly influence the behaviours of individuals, communities and nations. in their study, chakraborty and sadachar (2022) evaluate the connection between indigenous cultural values and sustainable apparel consumption by assessing values as a single-dimensional concept, being of both a traditional and religious nature. they further demonstrate the fluid nature of values, as the characteristics and descriptions they use tend to apply to all types of values, making it difficult to distinguish one value from another (schwartz 2016). therefore, owing to the fluid nature of values, values in the current study are conceptualised as a single-dimensional concept. studies on values in family businesses have often been conducted using a generic approach to values. for example, rau et al. (2019) examine the role of generic family business values in explaining heterogeneity among german family businesses. furthermore, de groote and bertschi-michel (2021) investigate how the family business value of trust serves as a key factor in the relationship between family businesses and their advisors in switzerland. parada et al. (2020) investigate how values influence the way spanish family businesses behave over time to perform virtuous acts. from these studies, it is evident and possible that scholars may investigate common family business values using a generic approach. similarly, in the current study, common family business values are examined from a generic approach. for the purpose of the current study, family business values are defined as ‘explicit or implicit conceptions of the desirable [standards and principles] in both family and business life’ (koiranen 2002:177). values as resources in family businesses over the years, several family business scholars such as ruf et al. (2021), dieleman and koning (2020), zwack et al. (2016) and mahto, davis and khanin (2014) have investigated how family business values influence behaviour in business-owning families and in their businesses. family business values tend to be visible and well defined in family businesses (hall & nordqvist 2008:55; short & payne 2020:342). within a family business, family business values provide a sense of community, especially in times of uncertainty (fletcher et al. 2012:127; hall & nordqvist 2008:55), and play a fundamental role in both the family and the family business (ganguli & krishnan 2005:19). tàpies and fernández-moya (2012:139) identify family business values as resources and capabilities that contribute to sustainable competitive advantages among family businesses because they are not easily imitated by other businesses. family business values act as a strategic resource and unique capability, define and shape the identities of family businesses (parada & viladás 2010:167) and are considered the glue that holds the culture together in both the family and the family business (cameron & quinn 2006:27). as highlighted by aronoff (2004), a strong value set permeates the business-owning family and the business, creating a unique business culture. family business values as strategic resources and capabilities determine the long-term objectives of a family business (neff 2015:3) and influence its strategic decisions (tàpies 2008; yuan & wu 2018:287). several scholars argue that a clear value set is a source of family business success and sustainability (parada, nordqvist & gimeno 2010:358; zapatero & jiménez 2013:13). family business values are credited with being a keystone in business-owning families because they contribute to the business performance (parada et al. 2020:641; rau et al. 2019:209). tàpies and fernández-moya (2012:136) assert that values such as family unity, sacrifice, generosity and entrepreneurial spirit contribute to the longevity of family businesses. zapatero and jiménez (2013:10) found that the existence of ethical values in a family business leads to high levels of integrity and confidence in the business. family business values also facilitate ethical family business conduct and contribute to an ethical business environment (dieleman & koning 2020:675). furthermore, family business values are central to successful leadership and the succession process (zwack et al. 2016:594). it is the presence of family business values in family businesses that plays a fundamental role in their longevity as they help to preserve the heritage of the business-owning family across generations (osei et al. 2012:15). research design and methods a qualitative methodological approach following a multiple–case study design was adopted to investigate a real-life setting where neither the phenomenon nor the participants under investigation could be manipulated (ed. salkind 2010:1258). the use of multiple case studies enabled the researchers to explore, understand and interpret the meaning of the lived experiences, as well as the perceptions of individual participants (eisenhardt & graebner 2007:25), in relation to the role of family business values in ibsa family businesses. case selection and data collection a nonprobability purposive sampling method, namely criterion sampling, was used to identify and select information-rich cases related to the phenomenon under investigation (palinkas et al. 2015:533). indigenous black south african family businesses that met certain criteria based on the global successful transgenerational entrepreneurship practices (step) project were identified. these criteria were that the business-owning family must see their business as a family business; they should be involved in the main operations of the family business with at least 50% voting rights or shares; they must have at least one active operating business; and they should have a transgenerational intention (habbershon, nordqvist & zellweger 2010:2). several scholars consider step the leading project on investigating entrepreneurship and longevity within the context of family businesses (habbershon et al. 2010:2). in addition, the family business must also be independently owned and managed by one or more ibsas, excluding members of the mixed race and indian populations. the exclusion of the other population groups is justified in that their value and cultural systems are vastly different from those of the black african population (du plessis, saccaggi & de bruin 2015:27). once the cases were identified, the researchers identified several key participants within each business with whom to undertake interviews. key participants were one or more of the following: (1) a member of the most senior generation of the family business, (2) the business founder and/or current controlling family business leader, (3) a family member working in the family business, (4) a nonactive family member or (5) a nonfamily member. while there is no specified sample size for qualitative studies (kuper, lingard & levinson 2008:688; saunders, lewis & thornhill 2016:297; eds. venter & van zyl 2017:113), the concept of information power was used. this posits that the larger the information power that the sample holds, the lower the sample size needs to be and vice versa (malterud, siersma & guassora 2015:2). given the aim of the research, the specificity of the sample, the use of established theory, the quality of the interview dialogue and the analysis strategy adopted in this study, a relatively smaller sample size was considered to have high information power. that is, the sample holds high levels of information power, which allowed the researchers to use a small sample size of seven family business cases and interviewing at least one key participant in each case. semistructured interviews were conducted using a combination of face-to-face, telephone and online interviews, allowing the researchers to cover a wide range of contexts, to use a series of questions (eds. bryman & bell 2014:216) and to vary the sequence of questions when necessary (ed. maree 2016:93). using semistructured interviews also enabled the researchers to maintain consistency when asking the interviewee questions (bryman 2012:472). interviews were conducted mainly in the english language and were audio-recorded after receiving the participants’ full consent. during the interview sessions, the participants were also encouraged to reflect, elaborate and extend, rather than provide short, direct and closed answers. a total of 17 key participants were interviewed, comprising three family business founders who constituted the first generation, seven from the second generation and two from the third generation. twelve of the participants were family members, while five were nonfamily members. the interviews ranged from 30 min to 137 min (see table 1). table 1: list of family business cases and participants. the researchers ensured the credibility of the data and research findings by using triangulation to add depth, breadth and richness to the data and findings (saunders et al. 2016:207). after the data were collected and transcribed, the researchers utilised member checking to ensure the credibility of the data. the researchers requested the participants to check the accuracy, completeness and interpretation of the data. data analysis all interviews were transcribed verbatim, and a computer-aided qualitative data analysis software program, atlas.ti version 9 (atlas.ti scientific software development gmbh, berlin, germany), was used to manage the coding and theme development process. the study followed the six steps of reflexive thematic analysis as suggested by braun and clarke (2020:4). in the first step, the researchers read the transcriptions in detail to get a sense of what was going on (bengtsson 2016) and to become familiar with the data (braun, clarke & hayfield 2022). this was followed by the second step, which involved systematically coding the data. the coding process started by defining the coding units and organising the data into manageable chunks (du plooy-cilliers, davis & bezuidenhout 2014). during the different phases of data coding, both inductive and deductive codes were relied upon. both the familiarisation and coding processes prepared the researchers to conceptualise initial themes. in the third step, the researchers constructed the initial themes based on the codes developed in step two. the construction of the initial themes occurred through identifying the shared meanings underpinned by a central meaning-based concept. as suggested by braun and clarke (2019:594), the researchers actively conceptualised and developed themes as ‘interpretive stories’ about the data using their theoretical assumptions as well as analytic resources and skills. in step four, the researchers reviewed the potential themes, and in some cases, the researchers had to go back to recode the data after making more sense of the codes. new codes were then assigned to the data. as suggested by vaismoradi and snelgrove (2019), the reviewing of themes in this study relied on the continuous analytical examination of data. this enabled the researchers to continuously shape and refine the initial themes to ensure that themes tell a distinctive and meaningful story that answers the research question. in the fifth step, the researchers defined and named the themes. as suggested by terry et al. (2017), the researchers took an ‘interpretative orientation’, which helped them to tell a story that is based on, and about, the data. themes were given definitions to help provide clarity and scope for each theme. in the last step, the researchers focused and refined their range of writings, including their familiarisation notes, field notes and memos into a single output that answered the research questions (terry et al. 2017). table 2 shows the final data structure and how the researchers moved from raw data to the aggregate themes. when analysing the data, family business values were inferred from the raw data based on what was perceived as important, as well as by the behaviour of participants, rather than by a direct reference to values themselves. table 2: data structure. ethical considerations ethical clearance to conduct this study was obtained from the nelson mandela university research ethics committee (ref. no. h19-bes-bma-004). key findings from the data coding and analysis process, four themes were developed to describe the role of family business values in enhancing the longevity of the participating family businesses. these themes are: providing behaviour guidance, identity building, building a sense of community and contributing to continuity and success, each of which are described with examples in the sections that follow. theme 1: providing behaviour guidance the findings of this study revealed that family business values play an important role in providing guidelines for human behaviour. babalwa zauka explained: ‘it [values] is like a guideline, it’s like a framework. i will never want to do something that would go against my family values.’ (family member, female, ceo) family business values help to establish the boundaries of what is acceptable and what is not acceptable within both the family and the family business. thozama maswana commented: ‘there are things that you know, that these things at my home we do not do them and these things we do them – this is allowed, this is not allowed […] i try to be strict as well […]. because if you do not have those boundaries for them, they are always testing, trying to see how far they can go.’ (family member, female, nonactive member) through being strict, parents reinforce the family business values in their children and in this way provide guidelines for behaviour that uphold the values of their families. it is the values they learn at home from the family that influence how they behave in the family business. for example, babalwa zauka said: ‘if we do not respect each other as a family, how do i respect my employees? if i am not fair with my family, how am i going to be fair on the other side?’ (family member, female, ceo) family business values also provide guidelines for behaviour in the context of the family business. daluxolo ntubane pointed out: ‘values are there for drawing the line. you must toe the line, and you get people who want to negate that, and you tell him “boetie [brother], this is the line that we are drawing, if you want to be rude to customers this is not where you are supposed to be.”’ (nonfamily member, male, operations manager) in the context of the family business, the findings specifically suggested that family business values provide guidelines for interacting with others, including customers and employees. xola ngada explained: ‘yes, i think they [values] are very important and i will tell you that we respect each other, we respect the customer […] even if the customer comes [to the family business] drunk, we do not chase them away; we wait for them to do all the drunk things and then you deal with them as if you are dealing with a normal person.’ (nonfamily member, male, operations manager) the role of family business values when interacting with others was also highlighted by pamela cube, who explained: ‘i think embracing those values, because you’re not an island when you’re in a business. so, those values actually enable you to be embraced by the outside world because if you are not, you don’t respect people, no one will want to do business with you. if you are not honest – i am talking even about your clients.’ (founder, female, ceo) pamela cube further pointed out: ‘if you look at it, these values they are not just about you, it is about your relationship with the community – be it the family, be it the business, be it the employees.’ (founder, female, ceo) through living their values and setting an example, family members are also able to reinforce their family business values among those working in the family business, specifically those not related to the family. patricia bhengu commented: ‘i think they [values] have a positive effect. i have this belief that things have a ripple effect. if people see you do something, they also do it. so, you cannot expect people to work hard when you, yourself you are not a hard worker.’ (family member, female, operations manager) it is from seeing what constitutes acceptable behaviour in the actions of their employers that family business employees have an example to follow. in addition, when they see their employers live out values that are consistent with their own, it is easier to believe in what they are doing. xola ngada explained how values: ‘help people [employees] believe in what they are doing […] because if they [employees] don’t believe in what they are doing, or if they [employees] don’t even believe in the person they are working for, then you will have in a long distance, you will have a challenge.’ (nonfamily member, male, operations manager) theme 2: identity building the findings of this study reveal that family business values play an important role in building the identity of individual family members, the family as a whole and the family business. participants emphasised that family business values help build their identity as a person and help them to be accepted and welcomed into the community in which they live. according to kabelo mothiba: ‘the importance of values is that i always believe they build you as an adult, especially from young, they build you up to who you are going to be when you are out there in the real world by yourself.’ (family member, male, branch manager) similarly, siboniso bhengu pointed out: ‘but then those [values] are what builds a person but what’s left is that you must do your work properly and ask yourself whether you will be welcomed in the community.’ (founder, male, retired) family business values influence the identity of individual family members, and the identities of individual family members contribute towards building the identity of the family as a whole. in the context of the family, values represent what the family as a whole stands for. thozama maswana remarked: ‘it is telling them [about the family values], as she said you know, that when you are out there in the world you should be representing your family and who you are. and who you are is your family values.’ (family member, female, nonactive member) in the same way that values underlie the identity of the family as a whole, values underlie the identity of the family business and influence how the family business is run. kabelo mothiba explained: ‘i believe that this company was built on those values and that is what is holding this company up. the importance of them [values] is to keep us; to remind us [of] where we are coming from. that is why we are here and to remind us why we are doing this.’ (family member, male, branch manager) babalwa zauka commented: ‘because if your family values are sort of warped or distorted, you can’t go into business. because your values are who you are. everything that you do and how you run your business, how you treat people, i believe that is impacted by your own internal family value system.’ (family member, female, ceo) some participants highlighted that family business values help establish the reputation of the family business. as a consequence of their values, participants strived to protect their integrity among the communities in which they live and their standing in the business community. pamela cube commented: ‘again, i will put it in the context of the business in terms of clients. you know my fear and anxiety is that i would hate when a person x meets person y and they happen to talk about mathebula marketing and mathebula marketing is pamela cube and then person x says “i don’t want anything to do with mathebula marketing”, you know. so, that’s how i will protect my identity, my integrity.’ (founder, female, ceo) theme 3: building a sense of community the findings of this study revealed that family business values play an important role in building a sense of community among family members as well as in the family business. a community can be described as a group of people who have something in common and who feel a sense of belonging or interpersonal connection (simon 2018). the families participating in this study showed high levels of closeness, support and warmth (familism) between family members. a sense of community was evident in the time they spend together and the manner in which this time together is spent (open and engaging) and in the love they showed for and the support they gave to each other. this sense of community was evident in how relationships are fostered between members and in the social gatherings that occur. patricia bhengu noted: ‘and i think this is what i love about my family that there isn’t anybody pushing each other, and this one wants that, and that one doesn’t want this and this one is not speaking to that one.’ (family member, female, operations manager) similarly, some participants concurred that the values they uphold assist in bringing them together, as they want to do things as family. participants emphasised how these values foster long-lasting relationships among family members and across different generations. for example, thozama maswana explained: ‘and during the holidays – i remember my aunts, my mother’s sisters, they would always take us to the beach. they would always take us to playland at the beach with our cousins and i loved it – i absolutely loved it and i am trying to have it the same for my kids as well that during the holidays, their cousins are here, we go to the beach, we try to do things together.’ (family member, female, nonfamily member) furthermore, thozama maswana explained: ‘we have braai at home […] yes, we have babysitters. because my kids are younger and hers are older yeah […] and i think with that, if you know, it will help take the [family] business into the next generation. that also would help in that their relationship is also not that of strangers as families.’ (family member, female, nonactive member) family business values are regarded as the source of unity among the family members, especially in times of uncertainty and trials, and provide a support structure to other family members when they need it. patricia bhengu narrated: ‘even with my aunt [thami bhengu], just recently she lost my late uncle – what we did is we then gave her the opportunity to work from home. […] we have been assisting her, however, we can – if she needs any type of help, we are a call away. […] but i think if you have such a support structure, it’s much better.’ (family member, female, operations manager) family business values help build a sense of community among family business members by creating a sense of home and family as well as providing support among those working in the family business. sihle cube explained: ‘they [the values] are extremely important because it makes the working environment a place where you really feel it is your “home away from home” you know what i am saying? it feels like you have got a second family. you are not just there to do a job.’ (family member, female, manager) sihle cube further pointed out: ‘you know because you need to belong to a team – it is not just about the work that we do. it is about caring for each other – supporting each other.’ (family member, female, manager) through building a sense of community, family business values allow all family business members (family and nonfamily employees) to feel a sense of belonging, which leads to the creation of an environment where all members treat and view each other as part of one family. babalwa zauka explained: ‘it makes me feel amazing. there is no better feeling. that is why i always say my staff are like my family. and they get it, yeah. we laugh together, we cry together.’ (family member, female, ceo) similarly, nonfamily members also accept this gesture as they view themselves as part of the family that owns the family business. xola ngada remarked: ‘they call us family – like we take each other as family.’ (nonfamily member, male, operations manager) theme 4: contributing to continuity and success the findings of this study showed that the continuity and success of the participating family businesses is attributed to the underlying values of these businesses. xola ngada said: ‘i think that [values] are a recipe for a strong business, for success, in a way.’ (nonfamily member, male, operations manager) furthermore, kabelo mothiba stated: ‘you know, i always see values as the pillars of this company, right. so, if they are not there, if the values crumble; ultimately, the company would crumble.’ (family member, male, branch manager) the importance of family business values to business success was further highlighted by olwethu cona, who said: ‘aren’t they [the values] important because you should do right by the people like keeping your promises so that the business will grow and succeed – because if you don’t do that then the business will go down.’ (nonfamily member, female, office manager) similarly, sihle cube pointed out that: ‘the success of any business, i think as well [as] one thing i think i have touched on before, you really need integrity as well – honesty and how you go about with your business dealings.’ (family member, female, manager) it was also noted that the institutionalisation of values into the participating business’s operational decisions has led to positive outcomes such as business growth (as a measure of success). at the time of the interviews, participants indicated that their family businesses had been experiencing growth. at bhengu holdings, for example, growth had been experienced since the introduction of kitchens to the fuel-filling stations. according to patricia bhengu: ‘if i show you figures you would not believe, in the last year we have had a tremendous growth in our kitchens […] we have seen our growth sitting at thirty-four to fifty per cent growth as compared to last year.’ (family member, female, operations manager) for daluxolo ntubane, business growth was experienced as a result of competition in the industry. the increase in competition meant that the family business was forced to improve and enhance its customer services to remain relevant in the market. he stated that: ‘the business is still growing now. and every day there are challenges and there are also opposition, competition and it keeps you awake all the time. but basically, we are still climbing.’ (nonfamily member, male, operations manager) for kagisho investments, business growth has been evident in areas such as entrepreneurship. searching for new clients and increasing the customer base has been a priority for kagisho investments over the years. family business values have been critical in sustaining the business growth of the company. according to judith mailula: ‘those clients are growing with us as well. because there is just one thing i have seen – you will start with a customer […] let us say they will just give you small things. they will only give you a route maybe to durban and cape town. and mean whilst they have got all the other routes just to see how you perform and to their surprise we perform very well. […] the person just opens, gives you the whole business. because that is how we have grown with the other clients as well. that’s why i’m saying even trust is one of the values that we really need.’ (nonfamily member, female, financial manager) the findings of this study suggested that the next-generation family members want to ensure that their family businesses succeed and that they want to carry on the legacy of the family and the family business so that future generations can continue enjoying the privileges that owning a family business brings. these family members wish to see their children enjoying the same privileges that they have enjoyed as a result of owning a family business. according to zinhle maswana: ‘i do so wish that we could carry this business, not only for us but also for our children, you know. because i know that it is through the family business that i have managed to be where i am today.’ (family member, female, employee) by carrying on the legacy of the family and the family business, the next-generation family members place value on the continuity of the family business. it is this value placed on continuity that encourages and pushes the next-generation family members to work hard and be committed to ensuring the continuity, longevity and success of their family businesses. the participating family businesses attributed the continuity and success of their businesses to the involvement of the family (children) in the running and operating of the business. it is the value placed on the involvement of the next-generation family members in the management and leadership of the family business that allows them to bring new skills and knowledge into the family business. the involvement of the next-generation family members helps in advancing the family business. as quoted by a local newspaper, the founder of fundiswa funeral parlour, stated: ‘they [children] all work in the funeral parlour business […] i sent them to school to do these degrees […] i would not have managed to do all this without their presence [in the family business].’ (founder, male, retired) similarly, kabelo mothiba explained: ‘and one thing my dad always says is he likes to say, “i am going to start stepping back and let you run, and i am just going to sit at the back because it is time for you guys to make decisions and run with it”.’ (family member, male, branch manager) involving the next generation family members in the business provides them with a sense of belonging and a feeling of being attached to the family business. it is this sense of belonging and attachment that gives them ownership in the family business. thozama maswana remarked: ‘my father said the business belongs to us and that it’s up to us to take it forward.’ (family member, female, nonactive member) the findings of the study suggested that without family involvement in the family business, the participating businesses would not be viewed as family businesses. a family business can only survive if family members remain and are involved in the running of the family business. there is a sense that through family involvement in the family business, values such as family and family ownership are instilled in the next-generation family members, and these values help contribute to the continuity and success of the family business. discussion of key findings the findings of this study show that family business values play several roles in ibsa family businesses. it is through fulfilling these roles that family business values contribute to the longevity of these businesses (see figure 1). figure 1: the roles of family business values in indigenous black south african family businesses. in this study, family business values were found to provide guidance for the behaviour of business-owning family members, as well as for family and nonfamily members working in the family business. as behaviour guidelines, family business values help to establish the boundaries for what is considered acceptable or unacceptable behaviour within both the participating families and their family businesses. the literature supports this finding, highlighting that values motivate people’s actions and behaviours (florea, cheung & herndon 2013:398; schwartz 2012:3, 2013:43) and serve as standards for acceptable and unacceptable behaviour within a community (schwartz & bilsky 1987:551). human behaviour is therefore determined by how individuals perceive and follow their values (zapatero & jiménez 2013:9). in the context of the participating family businesses, the findings specifically suggest that family business values provide guidelines for interacting with others, including interactions between family members and employees, as well as between all family and nonfamily employees in the family business and their interactions with customers. as suggested by reddy (2009:19), in the context of the participating family businesses, values act as informal institutions that influence the way employees conduct and interact with business stakeholders. as observed from the findings, family business values provide important guidelines for behaviour and decision-making and contribute to conducting business operations in an ethical manner. as is the case in the current study, zapatero and jiménez (2013:10) contend that the presence of ethical values in a family business leads to high levels of integrity and confidence in the business. it is the presence of ethical values that enable and facilitate an ethical business environment (astrachan et al. 2020:637; dieleman & koning 2020:675; fathallah, sidani & khalil 2020:657). in the current study, family business values were found to play an important role in building the identities of individual family members, the family as a whole and the family business. this finding concurs with those of duh, belak and milfelner (2010:475), who contend that values serve to convey a sense of identity to family business members. santiago, pandey and manalac (2019:54) point out that the participating business-owning families align their family and business values so as to protect the reputation and identity of the business, which is linked to the family identity. the family and the business identity and reputation are closely interlinked (reck, fischer & brettel 2021), leading to the family businesses strongly focusing on preserving the identity of both the family and the business and vice versa (kashmiri & mahajan 2014:81). the participating family businesses engage in numerous benevolent activities, which enhance the identity and reputation of both the family and the business. as they view themselves as part of the community, they strive to preserve their social identity in the communities they serve. according to tajfel (1978:63), social identity is ‘that part of an individual’s self-concept which derives from his knowledge of his membership of a social group together with the value and emotional significance attached to that membership’. as suggested by schmidts and shepherd (2015:177), the business-owning families want the family and business identity to be favourable in the eyes of their social and/or family business stakeholders. pant and ojha (2017:7) concur, noting that as guiding principles, values are necessary for building organisational identities, as has been the case in the current study. family business values are found to be cornerstones for building a sense of community in the participating families and in their family businesses. upholding values enables both family and family business members to develop interpersonal connections and feelings of belonging to the family and the family business. according to van der merwe, venter and farrington (2012:19), values such as fairness, commitment, trust and openness are drivers of good family relationships. in the current study, values are a source of unity among family members and family business members. most of the participating family business members feel a sense of belonging to the family and/or the family business, suggesting a sense of community in these businesses. as is the case in the current study, it is not uncommon for family businesses to be characterised by higher levels of emotional connection and belonging, participation, trust and better working environments than their nonfamily counterparts (jiménez, martos & jiménez 2015:259; ward 2008:4). it is evident from the empirical findings that the participants attribute the continuity and success of their family businesses to the underlying values of these businesses. family business values have been identified as critical to sustaining the business growth of the participating family businesses. upholding family business values such as innovation and creativity, customer focus and community are also identified by participants as key to the continuity and success of their family businesses. as suggested by rau et al. (2019:198), the presence of values in the participating family businesses creates a unique organisational culture, which contributes to a sustainable competitive advantage for these businesses. the institutionalisation of values into business functions and processes and their influence on operational decisions has led to positive outcomes such as growth for the participating family businesses. the findings of this study also concur with several studies, which have found that family business values contribute to the continuity and success of family businesses (anggadwita et al. 2020:281; ogbechie & anetor 2015:22; rau et al. 2019:209). family business values such as hard work and loyalty, entrepreneurship, family business involvement and continuity of the family business are values that sustain the continuity and success of their businesses. eze et al. (2021:819) found that nigerian business-owning families who value the continuity of their family business are primarily concerned with sustaining and developing the business across generations, which contributes to the continuity and success of the business. it is through the involvement of family members in the participating family businesses that family business values such as familism and continuity of the family business have been instilled into the next-generation family members, and it is these family business values that are contributing to the success and continuity of their family businesses over time. study strengths and limitations by using a qualitative approach and multiple–case study strategy, this study has identified the different roles that family business values play within the context of ibsa family businesses. this approach and strategy have provided rich information about what roles family business values play in enhancing the longevity of ibsa family businesses. the findings provide insights on how ibsa business-owning families and their businesses could use their value set to establish boundaries, guide the behaviours of both family and nonfamily members and build a shared family and business identity while contributing to continuity and success the family business. with a high failure rate among black-owned businesses, understanding how family business values can be used as a resource may assist in building sustainable businesses that are based on values. given that the researchers assume that ibsa family businesses possess multiple and different social meanings and experiences, it would have been difficult to understand these differences if they were to be explored quantitatively. because this study intended to investigate the experiences and feelings of human beings as the subject matter, what constitutes acceptable knowledge on values is subjective (wahyuni 2012:71). this study therefore provided subjective understandings of what constitutes acceptable knowledge on how the ibsa business-owning families and individual family and nonfamily members construct their social world and meanings. in the light of the limitations of this study, it is important to stress that the use of face-to-face interviews as the method of primary data collection could have introduced potential bias into the study. participants’ subjective opinions, experiences and perceptions could have influenced their responses to this subject matter. family businesses are known to be notoriously secretive and have control over what and how much information they are prepared to share with researchers. in the current study, some participants were sensitive to the questions asked and may have withheld certain information or answered in a manner that did not accurately reflect reality, resulting in biased responses. in this study, the researchers used the english language as the main medium of communication when conducting interviews. however, most of the participants were not english native speakers, and some resorted to using their indigenous south african home languages, such as isixhosa and isizulu, when responding to the research questions posed. the use of the english language presented a language barrier in that although explained by the researchers, several business concepts used were not known or understood by participants. in addition, not being able to respond in their home languages possibly limited the ability of participants to effectively describe their feelings and experiences. in the case where participants had responded using their indigenous south african home languages, the researchers used a specialised linguist to translate such responses to the english language for the purpose of transcribing and data analysis. conclusions and implications of the study this study approached family business values as resources and capabilities needed to moderate behaviours of family and nonfamily business members and achieve business success (zapatero & jiménez 2013:13). as highlighted in the findings, family business values were found to play several roles, namely providing behaviour guidance, identity building, building a sense of community and contributing to continuity and success. it is recommended that ibsa family businesses uphold the value set that they want espoused and practised in their businesses to provide guidance to family and nonfamily members. these values should be demonstrated by the founders and/or current leaders so that that they guide the behaviours of other family business members. family business founders and/or current leaders should articulate the value set they uphold and use it as a resource to build the identity of both their families and family businesses. their values should be clearly communicated to all stakeholders to build clear family and business identities that will help them to be accepted and welcomed into the communities they serve. in addition, founders and/or leaders should enact codes of conduct policies and display artefacts of the family business values, which may promote acceptable behaviours among internal and external stakeholders. as suggested by ward (2004:137), values beneficially impact the relationships family businesses have with different stakeholders. as such, the displaying of family business values will ensure that all stakeholders benefit from harmonious relationships, ultimately enhancing the continuity and success of the business. through upholding family business values that enhance relationships and build a sense of community among family and nonfamily business members, ibsa family businesses should create unity and a sense of belonging as well as a shared and common understanding towards achieving their objectives. as suggested by ferro-soto, macías-quintana and vázquez-rodríguez (2018:2), a sense of community encourages the willingness of family business members to work together to achieve business objectives. to build a sense of community, it is recommended that founders and/or current leaders should instil family business values that bring about shared purpose and responsibility among all family and nonfamily business members. in this regard, family business values such as commitment, loyalty, hard work and trust may be crucial in achieving shared purpose and responsibility among members. it is also recommended that family business values be upheld, as the findings of this study show that by upholding these values, the chances of business longevity are increased. the founders and/or current leaders of ibsa family businesses should instil values such as customer focus, innovation and creativity, which will contribute to the increasing the customer base and ultimately enhance business growth. by upholding family business values that promote innovation and creativity among family and nonfamily employees, as well as family business values that foster family involvement and a sense of ownership among all members, the continuity and success and ultimately the longevity of the family business are enhanced. owing to founders’ failure to utilise family business values (alderson 2011:5), it is therefore recommended that ibsa family businesses use their values to contribute to the uniqueness and longevity of their businesses. by communicating a clear value set and setting examples of acceptable behaviours to different stakeholders, founders and/or current leaders can use family business values to guide the behaviour of stakeholders, build identities of the family and family businesses, build a sense of community and contribute to business continuity and success, ultimately enhancing family business longevity. founders and/or current leaders of ibsa family businesses should put values into practice and should preserve the core values of their businesses, but as suggested by agulles, ceja and tàpies (2013:243), values should constantly be revised to ensure that family businesses adapt to the needs and changes in the markets. acknowledgements a huge part of the work in this article emanates from w.k.’s doctoral thesis study, of which s.m.f. and e.v. were the supervisors and mentors. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions w.k. conducted the research, reviewed the literature, collected and analysed the data, made interpretations and finalised the report. s.m.f. and e.v. supervised the research project and provided the necessary advice during the study. the article manuscript was drafted and reviewed by all authors. funding information the nelson mandela university’s research development office partly sponsored this research. all the researchers, w.k., s.m.f. and e.v., privately sourced some of the funds. data availability the data that support the findings of the study are available upon reasonable request from the corresponding author, w.k. the data are not publicly available because they contain information that could compromise the privacy of research participants. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references acquaah, m., 2013, ‘management control systems, business strategy and performance: a comparative analysis of family and non-family businesses in a transition economy in sub-saharan africa’, journal of family business strategy 4(2), 131–146. https://doi.org/10.1016/j.jfbs.2013.03.002 agulles, r., ceja, l. & tàpies, j., 2013, ‘the role of values in family-owned firms’, in p.f. pérez & a. colli (eds.), the endurance of family businesses: a global overview, pp. 224–247, cambridge university press, cambridge. agyapong, a. & acquaah, m., 2021, ‘organizational capabilities, business strategic orientation, and performance in family and non-family businesses in a sub-saharan african economy’, journal of african business 22(3), 411–439. https://doi.org/10.1080/15228916.2021.1907158 alderson, k.j., 2011, understanding the family business, business expert press, new york, ny. anggadwita, g., profityo, w.b., alamanda, d.t. & permatasari, a., 2020, ‘cultural values and their implications to family business succession: a case study of chinese-owned family businesses in bandung, indonesia’, journal of family business management 10(4), 281–292. https://doi.org/10.1108/jfbm-03-2019-0017 aronoff, c.e., 2004, ‘self-perpetuation family organization built on values: necessary condition for long-term family business survival’, family business review 17(1), 55–59. https://doi.org/10.1111/j.1741-6248.2004.00003.x arregle, j., chirico, f., kano, l., kundu, s.k., majocchi, a. & schulze, w.s., 2021, ‘family firm internationalization: past research and an agenda for the future’, journal of international business studies 52(6), 1159–1198. https://doi.org/10.1057/s41267-021-00425-2 astrachan, j.h., astrachan, c.b., campopiano, g. & baù, m., 2020, ‘values, spirituality and religion: family business and the roots of sustainable ethical behavior’, journal of business ethics 163(4), 637–645. https://doi.org/10.1007/s10551-019-04392-5 bardi, a. & schwartz, s.h., 2003, ‘values and behaviour: strength and structure of relations’, personality and social psychology bulletin 29(10), 1207–1220. https://doi.org/10.1177/0146167203254602 barrett, r., 2017, the values-driven organisation: cultural health and employee well-being as a pathway to sustainable performance, 2nd edn., routledge, london. basly, s. & hammouda, a., 2020, ‘family businesses and digital entrepreneurship adoption: a conceptual model’, the journal of entrepreneurship 29(2), 326–364. https://doi.org/10.1177/0971355720930573 bengtsson, m., 2016, ‘how to plan and perform a qualitative study using content analysis’, nursing plus open 2, 8–14. https://doi.org/10.1016/j.npls.2016.01.001 benish-weisman, m., oreg, s. & berson, y., 2022, ‘the contribution of peer values to children’s values and behavior’, personality and social psychology bulletin 48(6), 844–864. https://doi.org/10.1177/01461672211020193 binz, c.a., ferguson, k.e., pieper, t.m. & astrachan, j.h., 2017, ‘family business goals, corporate citizenship behaviour and firm performance: disentangling the connections’, international journal of management and enterprise development 16(1–2), 34–56. https://doi.org/10.1504/ijmed.2017.082549 boer, d. & fischer, r., 2013, ‘how and when do personal values guide our attitudes and sociality? explaining cross-cultural variability in attitude-value linkages’, psychological bulletin 139(5), 1113–1147. https://doi.org/10.1037/a0031347 braun, v. & clarke, v., 2019, ‘reflecting on reflexive thematic analysis’, qualitative research in sport exercise and health 11(4), 589–597. https://doi.org/10.1080/2159676x.2019.1628806 braun, v. & clarke, v., 2020, ‘one size fits all? what counts as quality practice in (reflexive) thematic analysis?’, qualitative research in psychology 18(3), 328–352. https://doi.org/10.1080/14780887.2020.1769238 braun, v., clarke, v. & hayfield, n., 2022, ‘“a starting point for your journey, not a map”: nikki hayfield in conversation with virginia braun and victoria clarke about thematic analysis’, qualitative research in psychology 19(2), 424–445. https://doi.org/10.1080/14780887.2019.1670765 bryman, a., 2012, social research methods, 4th edn., oxford university press, oxford. bryman, a. & bell, e. (eds.), 2014, research methodology: business and management contexts, oxford university press, cape town. cameron, k.s. & quinn, r.e., 2006, diagnosing and changing organizational culture: based on the competing values framework, revised edn., jossey-bass, san francisco, ca. chakraborty, s. & sadachar, a., 2022, ‘can a connection with the indigenous cultural values encourage sustainable apparel consumption?’, journal of fashion marketing and management. https://doi.org/10.1108/jfmm-07-2021-0191 cruz, a.d., hamilton, e. & jack, s.l., 2012, ‘understanding entrepreneurial cultures in family businesses: a study of family entrepreneurial teams in honduras’, journal of family business strategy 3(3), 147–161. https://doi.org/10.1016/j.jfbs.2012.05.002 de groote, j.k. & bertschi-michel, a., 2021, ‘from intention to trust to behavioral trust: trust building in family business advising’, family business review 34(2), 132–153. https://doi.org/10.1177/0894486520938891 dieleman, m. & koning, j., 2020, ‘articulating values through identity work: advancing family business ethics research’, journal of business ethics 163(4), 675–687. https://doi.org/10.1007/s10551-019-04380-9 du plessis, g.a., saccaggi, c.f. & de bruin, g.p., 2015, ‘cross-cultural differences in the character strength of citizenship in south africa’, psychology in society 2015(48), 22–44. https://doi.org/10.17159/2309-8708/2015/n48a2 du plooy-cilliers, f., davis, c. & bezuidenhout, r., 2014, research matters, juta, cape town. duh, m., belak, j. & milfelner, b., 2010, ‘core values, culture and ethical climate as constitutional elements of ethical behaviour: exploring differences between family and non-family enterprises’, journal of business ethics 97(3), 473–489. https://doi.org/10.1007/s10551-010-0519-9 ebniya, z.o., 2020, ‘the impact of religious values in the jordanian political discourses on public opinion (field study on universities students)’, review of economics and political science. https://doi.org/10.1108/reps-08-2019-0116 eisenhardt, k.m. & graebner, m.e., 2007, ‘theory building from cases: opportunities and challenges’, academy of management journal 50(1), 25–32. https://doi.org/10.5465/amj.2007.24160888 eze, n.l., nordqvist, m., samara, g. & parada, m.j., 2021, ‘different strokes for different folks: the roles of religion and tradition for transgenerational entrepreneurship in family businesses’, entrepreneurship theory and practice 45(4), 792–837. https://doi.org/10.1177/1042258720964428 farrington, s.m., 2016, ‘family business: a legitimate scholarly field’, professorial inaugural lecture. delivered at the nelson mandela metropolitan university, south africa. fathallah, r., sidani, y. & khalil, s., 2020, ‘how religion shapes family business ethical behaviors: an institutional logics perspective’, journal of business ethics 163(4), 647–659. https://doi.org/10.1007/s10551-019-04383-6 ferro-soto, c., macías-quintana, l.a. & vázquez-rodríguez, p., 2018, ‘effect of stakeholders-oriented behaviour on the performance of sustainable business’, sustainability 10(12), 4724. https://doi.org/10.3390/su10124724 fletcher, d., melin, l. & gimeno, a., 2012, ‘culture and values in family business: a review and suggestions for future research’, journal of family business strategy 3(3), 127–131. https://doi.org/10.1016/j.jfbs.2012.06.001 florea, l., cheung, y.h. & herndon, n.c., 2013, ‘for all good reasons: role of values in organizational sustainability’, journal of business ethics 114(2013), 393–408. https://doi.org/10.1007/s10551-012-1355-x ganguli, i. & krishnan, v.r., 2005, ‘impact of family values and gender on transformational leadership’, asia-pacific business review 1(1), 18–25. https://doi.org/10.1177/097324700500100103 gavriel-fried, b. & shilo, g., 2016, ‘defining the family: the role of personal values and personal acquaintance’, journal of family studies 22(1), 43–62. https://doi.org/10.1080/13229400.2015.1020991 gomba, m. & kele, t., 2016, ‘succession planning in black-owned family businesses: a south african perspective’, international journal of business administration 7(5), 9–21. https://doi.org/10.5430/ijba.v7n5p9 grigoryan, l. & schwartz, s.h., 2021, ‘values and attitudes towards cultural diversity: exploring alternative moderators of the value-attitude link’, group processes & intergroup relations 24(6), 966–981. https://doi.org/10.1177/1368430220929077 habbershon, t.g., nordqvist, m. & zellweger, t.m., 2010, ‘transgenerational entrepreneurship’, in m. nordqvist & t.m. zellweger (eds.), transgenerational entrepreneurship. exploring growth and performance in family firms across generations, pp. 1–38, edward elgar, cheltenham. hall, a. & nordqvist, m., 2008, ‘professional management in family businesses: toward an extended understanding’, family business review 21(1), 51–69. https://doi.org/10.1111/j.1741-6248.2007.00109.x heinich, n., 2020, ‘ten proposals on values’, cultural sociology 14(3), 213–232. https://doi.org/10.1177/1749975520922173 hernandez-perlines, f., ribeiro-soriano, d. & rodríıguez-garcía, m., 2020, ‘transgenerational innovation capability in family firms’, international journal of entrepreneurial behavior and research 27(1), 1–25. https://doi.org/10.1108/ijebr-08-2019-0497 hsueh, j.w., 2020, ‘virtue ethics, values of the founders, and organizational growth’, in w. wehrmeyer, s. looser & m. del baldo (eds.), intrinsic csr and competition, pp. 185–200, palgrave, london. ikin, k. & mcclenaghan, p., 2019, ‘deep diving into values: a way to enhance empowerment evaluation’, evaluation journal of australasia 19(4), 204–210. https://doi.org/10.1177/1035719x19893057 jiménez, m.c.r., martos, m.c.v. & jiménez, r.m., 2015, ‘organisational harmony as a value in family businesses and its influence on performance’, journal of business ethics 126(2), 259–272. https://doi.org/10.1007/s10551-013-1941-6 kaplan, m., dollar, b., melian, v., van durme, y. & wong, j., 2016, global human capital trends 2016. the new organization: different by design, deloitte university press, london. kashmiri, s. & mahajan, v., 2014, ‘a rose by any other name: are family firms named after their founding families rewarded more for their new product introductions?’, journal of business ethics 124(1), 81–99. https://doi.org/10.1007/sl0551-013-1861-5 kaunda, s. & nkhoma, a., 2013, ‘international survival of family businesses: factors affecting the succession success of family owned businesses in malawi’, european journal of business and management 5(7), 157–164. koiranen, m., 2002, ‘over 100 years of age but still entrepreneurially active in business: exploring the values and family characteristics of old finnish family firms’, family business review 15(3), 175–188. https://doi.org/10.1111/j.1741-6248.2002.00175.x kumar, r.k. & dubey, a.k., 2022, ‘family-owned enterprises and their role in entrepreneurial development: a bibliometric and content analysis of the literature’, journal of asia business studies 16(5), 802–883. https://doi.org/10.1108/jabs-02-2021-0062 kuper, a., lingard, l. & levinson, w., 2008, ‘qualitative research: critically appraising qualitative research’, british medical journal (bmj) 337(7671), 687–689. https://doi.org/10.1136/bmj.a1035 mahto, r.v., davis, p.s. & khanin, d., 2014, ‘continuation commitment: family’s commitment to continue the family business’, journal of family economic issues 35(1), 278–289. https://doi.org/10.1007/s10834-013-9367-y maloni, m., hiatt, m. & astrachan, j., 2017, ‘supply management and family business: a review and call for research’, journal of purchasing and supply management 23(2), 123–136. https://doi.org/10.1016/j.pursup.2016.12.002 malterud, k., siersma, v.d. & guassora, a.d., 2015, ‘sample size in qualitative interview studies: guided by information power’, qualitative health research 26(13), 1–8. https://doi.org/10.1177/1049732315617444 maree, k. (ed.), 2016, first steps in research, 2nd edn., van schaik, pretoria. marquès, p., presas, p. & simon, a., 2014, ‘the heterogeneity of family firms in csr engagement: the role of values’, family business review 27(3), 206–227. https://doi.org/10.1177/0894486514539004 matchaba-hove, t.m., 2020, ‘a framework for enhancing the transgenerational potential of indigenous african family businesses’, doctoral thesis, department of business management, nelson mandela university. maung, m., miller, d., tang, z. & xu, x., 2020, ‘value‑enhancing social responsibility: market reaction to donations by family vs. non‑family firms with religious ceos’, journal of business ethics 163(4), 745–758. https://doi.org/10.1007/s10551-019-04381-8 murithi, w., vershinina, n. & rodgers, p., 2020, ‘where less is more: institutional voids and business families in sub-saharan africa’, international journal of entrepreneurial behavior & research 26(1), 158–174. https://doi.org/10.1108/ijebr-07-2017-0239 neff, j.e., 2015, ‘shared vision promotes family firm performance’, frontiers in psychology 6, 646. https://doi.org/10.3389/fpsyg.2015.00646 nheta, d.s., shambare, r., sigauke, c. & tshipala, n., 2020, ‘entrepreneurship gaps framework model: an early-stage business diagnostic tool’, southern african journal of entrepreneurship and small business management 12(1), a297. https://doi.org/10.4102/sajesbm.v12i1.297 ogbechie, r. & anetor, f., 2015, ‘an investigation into the core values that drive successful family-owned businesses: a case of lagos state, nigeria’, european journal of business and management 7(17), 17–23. old mutual group, 2022, keep your family business safe from these 7 risks, viewed 04 october 2022, from https://www.oldmutual.co.za/articles/keep-your-family-business-safe-from-these-7-risks/. olejniczak, k., 2014, ‘norms and values in family business management’, journal of intercultural management 6(4), 35–47. https://doi.org/10.2478/joim-2014-0055 osei, a., forkuoh, s., akomea-bonsu, c. & asare-kyire, l., 2012, ‘transmission of core family values to family business in ghana for effective management and growth’, international journal of advanced research in management and social sciences 1(5), 9–21. osunde, c., 2017, ‘family businesses and its impact on the economy’, journal of business and financial affairs 6(1), 1–3. https://doi.org/10.4172/2167-0234.1000251 palinkas, l.a., horwitz, s.m., green, c.a., wisdom, j.p., duan, n. & hoagwood, k., 2015, ‘purposeful sampling for qualitative data collection and analysis in mixed method implementation research’, administration & policy in mental health & mental health services research 42(5), 533–544. https://doi.org/10.1007/s10488-013-0528-y pant, a. & ojha, a.k., 2017, ‘managerial values and organizational identities in the developing world: an introduction to the special issue’, journal of human values 23(1), 7–12. https://doi.org/10.1177/0971685816677441 parada, m.j., nordqvist, m. & gimeno, a., 2010, ‘institutionalizing the family business: the role of professional associations in fostering a change of values’, family business review 23(4), 355–372. https://doi.org/10.1177/0894486510381756 parada, m.j., samara, g., dawson, a. & bonet, e., 2020, ‘prosperity over time and across generations: the role of values and virtues in family businesses’, journal of organizational change management 33(4), 639–654. https://doi.org/10.1108/jocm-11-2018-0341 parada, m.j. & viladás, h., 2010, ‘narratives: a powerful device for values transmission in family businesses’, journal of organizational change management 23(2), 166–172. https://doi.org/10.1108/09534811011031346 parks-leduc, l., feldman, g. & bardi, a., 2015, ‘personality traits and personal values: a meta-analysis’, personality and social psychology review 19(1), 3–29. https://doi.org/10.1177/1088868314538548 picone, p.m., de massis, a., tang, y. & piccolo, r.f., 2021, ‘the psychological foundations of management in family firms: values, biases, and heuristics’, family business review 34(1), 12–32. https://doi.org/10.1177/0894486520985630 rabenowitz, p., botha, m., rossini, l., du preez, l., geach, w. & goodall, b., 2018, the south african financial planning handbook, sage, thousand oaks, ca. rau, s.b., schneider-siebke, v. & günther, c., 2019, ‘family firm values explaining family firm heterogeneity’, family business review 32(2), 195–215. https://doi.org/10.1177/0894486519846670 reck, f.s., fischer, d. & brettel, m., 2021, ‘ethical decisions-making in family firms: the role of employee identification’, journal of business ethics 180, 651–673. https://doi.org/10.1007/s10551-021-04774-8 reddy, y.r.k., 2009, ‘the ethics of corporate governance: an asian perspective’, international journal of law and management 51(1), 17–26. https://doi.org/10.1108/17542430910936646 robertsson, h., 2021, how the world’s largest family businesses are proving their resilience, viewed 04 october 2022, from https://www.ey.com/en_gl/family-enterprise/how-the-worlds-largest-family-businesses-are-proving-their-resilience. roccas, s. & sagiv, l. (eds.), 2017, values and behavior: taking a cross cultural perspective, springer international, new york, ny. rokeach, m., 1973, the nature of human values, the free press, new york, ny. ruf, p.j., graffius, m., wolf, s., moog, p. & felden, b., 2021, ‘back to the roots: applying the concept of individual human values to understand family firm behavior’, family business review 34(1), 48–70. https://doi.org/10.1177/0894486520944282 salkind, n.j. (ed.), 2010, encyclopedia of research design, vol. 3, sage, thousand oaks, ca. santiago, a., pandey, s. & manalac, m.t., 2019, ‘family presence, family firm reputation and perceived financial performance: empirical evidence from the philippines’, journal of family business strategy 10(1), 49–56. https://doi.org/10.1016/j.jfbs.2019.02.002 saunders, m., lewis, p. & thornhill, a., 2016, research methods for business students, 7th edn., pearson education, london. schmidts, t. & shepherd, d., 2015, ‘social identity and family business: exploring family social capital’, journal of family business management 5(2), 157–181. https://doi.org/10.1108/jfbm-04-2015-0018 schwartz, m.s., 2013, ‘developing and sustaining an ethical corporate culture: the core elements’, business horizons 56(1), 39–50. https://doi.org/10.1016/j.bushor.2012.09.002 schwartz, s.h., 1996, ‘value priorities and behavior: applying a theory of integrated value systems’, in c. seligman, j.m. olson & m.p. zanna (eds.), the psychology of values: the ontario symposium, pp. 1–24, lawrence erlbaum, new jersey. schwartz, s.h., 2012, ‘an overview of the schwartz theory of basic values’, online readings in psychology and culture 2(1), 1–20. https://doi.org/10.9707/2307-0919.1116 schwartz, s.h., 2016, ‘basic individual values: sources and consequences’, in t. brosch & d. sander (eds.), handbook of value: perspective from economics, neuroscience, philosophy, psychology and sociology, pp. 63–84, oxford university press, oxford. schwartz, s.h. & bilsky, w., 1987, ‘toward a universal psychological structure of human values’, journal of personality and social psychology 53(3), 550–562. https://doi.org/10.1037/0022-3514.53.3.550 schwartz, s.h. & cieciuch, j., 2022, ‘measuring the refined theory of individual values in 49 cultural groups: psychometrics of the revised portrait value questionnaire’, assessment 29(5), 1005–1019. https://doi.org/10.1177/1073191121998760 schwartz, s.h. & sortheix, f.m., 2018, ‘values and subjective well-being’, in e. diener, s. oishi & l. tay (eds.), handbook of well-being, pp. 1–25, def publishers, salt lake city. short, j.c. & payne, g.t., 2020, ‘in their own words: a call for increased use of organizational narratives in family business research’, family business review 33(4), 342–350. https://doi.org/10.1177/0894486520967765 sifolo, p.p.s. & henama, u.s., 2019, ‘the family business’, in g.e. chiloane-tsoka & e.m. rankhumise (eds.), entrepreneurship & small business management, pp. 277–290, van schaik, pretoria. simon, a., marquès, p., bikfalvi, a. & muñoz, m.d., 2012, ‘exploring value differences across family firms: the influence of choosing and managing complexity’, journal of family business strategy 3(3), 132–146. https://doi.org/10.1016/j.jfbs.2012.05.003 simon, n., 2018, how do you define community?, viewed 13 april 2022, from http://www.artofrelevance.org/2018/02/20/how-do-you-define-community/. ssekitoleko, p. & du plessis, y., 2021, ‘unravelling the makings for entrepreneurial success: a case study of the maponya business in south africa’, southern african journal of entrepreneurship and small business management 13(1), a424. https://doi.org/10.4102/sajesbm.v13i1.424 strese, s., adams, d.a., flatten, t.c. & brettel, m., 2016, ‘corporate culture and absorptive capacity: the moderating role of national culture dimensions on innovation management’, international business review 25(5), 1149–1168. https://doi.org/10.1016/j.ibusrev.2016.02.002 tajfel, h., 1978, differentiation between social groups: studies in the social psychology of intergroup relations, academic press, salt lake city. tàpies, j., 2008, ‘conclusion’, in j. tàpies & j.l. ward (eds.), family values and value creation: the fostering of enduring values swithin family-owned businesses, pp. 260–265, palgrave, new york, ny. tàpies, j. & fernández-moya, m., 2012, ‘values and longevity in family business: evidence from a cross-cultural analysis’, journal of family business management 2(2), 130–146. https://doi.org/10.1108/20436231211261871 tengeh, r.k. & phikiso, z., 2021, ‘intra-family succession in south african townships: women’s account of the desirable attributes’, international journal of entrepreneurship and small business 43(3), 332–344. https://doi.org/10.1504/ijesb.2021.115878 terry, g., hayfield, n., clarke, v. & braun, v., 2017, ‘thematic analysis’, in c. willig & w.s. rogers (eds.), the sage handbook of qualitative research in psychology, 2nd edn., pp. 17–37, sage, new york, ny. urban, b. & nonkwelo, r.p., 2022, ‘intra-family dynamics and succession planning in family businesses in south africa: the daughter as a potential successor’, journal of family business management 12(2), 266–279. https://doi.org/10.1108/jfbm-08-2020-0084 vaismoradi, m. & snelgrove, s., 2019, ‘theme in qualitative content analysis and thematic analysis’, forum: qualitative social research 20(3), article 23. https://doi.org/10.17169/fqs-20.3.3376. van aardt, i., clarence, w., van rensburg, l.j., mmako, n., radipere, s., rankhumise, e. et al., 2016, principles of entrepreneurship and small business management, 2nd edn., oxford university press, cape town. van der merwe, s.p., venter, e. & farrington, s.m., 2012, ‘an assessment of selected family business values in small and medium-sized family businesses’, south african journal of business management 43(4), 17–31. https://doi.org/10.4102/sajbm.v43i4.479 venter, e. & farrington, s.m., 2016, ‘investigating value-laden leadership styles among family businesses owners’, south african journal of business management 47(4), 35–46. https://doi.org/10.10520/ejc199803 venter, e., van der merwe, s. & farrington, s., 2012, ‘the impact of selected stakeholders on family business continuity and family harmony’, southern african business review 16(2), 69–96. venter, p. & van zyl, d. (eds.), 2017, economic & management research, oxford university press, cape town. wahyuni, d., 2012, ‘the research design maze: understanding paradigms, cases, methods and methodologies’, jamar 10(1), 69–80. ward, j.l., 2004, perpetuating the family business: 50 lessons learned from long-lasting, successful families in business, palgrave, basingstoke. ward, j.l., 2008, ‘introduction’, in j. tàpies & j.l. ward (eds.), family values and value creation, pp. 1–9, palgrave, basingstoke. winter, r.p. & jackson, b.a., 2016, ‘work values preferences of generation y: performance relationship insights in the australian public service’, the international journal of human resource management 27(17), 1997–2015. https://doi.org/10.1080/09585192.2015.1102161 yuan, w. & wu, z., 2018, ‘commentary: a value perspective of family firms’, entrepreneurship theory and practice 42(2), 283–289. https://doi.org/10.1177/1042258717748934 zapatero, m.r. & jiménez, m.r., 2013, ‘family business values: analysis of its influence on family members’ behaviour’, revista de empresa familiar 3(2), 7–16. https://doi.org/10.24310/ejfbejfb.v3i2.4042 zwack, m., kraiczy, n.d., von schlippe, a. & hack, a., 2016, ‘storytelling and cultural family value transmission: value perception of stories in family firms’, management learning 47(5), 590–614. https://doi.org/10.1177/1350507616659833 abstract introduction literature review methods findings discussion conclusion acknowledgements references footnote about the author(s) kariema price graduate school of business, faculty of commerce, university of cape town, cape town, south africa linda ronnie school of management studies, faculty of commerce, university of cape town, cape town, south africa citation price, k. & ronnie, l., 2021, ‘contextual factors influencing entrepreneurship education at a south african university of technology’, southern african journal of entrepreneurship and small business management 13(1), a394. https://doi.org/10.4102/sajesbm.v13i1.394 original research contextual factors influencing entrepreneurship education at a south african university of technology kariema price, linda ronnie received: 02 jan. 2021; accepted: 15 july 2021; published: 30 sept. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurship education (ee) occupies a particularly critical space in the development strategies of emerging market countries where entrepreneurs and small businesses are required to drive economic growth and job creation. in south africa, universities of technology (uot), which provide vocation-focussed tertiary education, are considered vital vehicles of ee. aim: institutions and educators are challenged by the limited research around ee content and pedagogy, particularly outside of the business school context. this study seeks to address these research gaps within the south african economic context by examining ee courses at a uot. setting: this study examined 14 entrepreneurship courses offered across 11 disciplines at one south african uot. methods: a qualitative study consisting of semi-structured interviews with 10 educators was conducted to explore how they design and deliver their ee courses. results: the study found three contextual factors that influence the way educators design and deliver ee courses: (1) the needs of the student: the systemic nature of their experiences, (2) the quality of teaching materials: the limited relevance of the content, and (3) the background of the educators: their experience with entrepreneurship and industry. conclusion: in examining these key contextual factors, this study highlights the challenges that locally higher education institutions face in designing the courses that are effective at promoting entrepreneurship locally. it also showcases the prominent role that educators play in solving problems, addressing challenges, and ensuring that ee contributes to a broader economic agenda by bringing their own passion, educational expertise, and practical knowledge to the classroom. keywords: entrepreneurship education; entrepreneurship; educators; higher education; university of technology. introduction entrepreneurship is vital to the economic prosperity of any country but is particularly crucial in the developing countries like south africa where small businesses are expected to drive essential economic growth. south africa faces significant developmental challenges, particularly around education and job creation for its youth segment (ages 15–24 years), who hold the highest unemployment of any age group at 63.3% unemployment (statssa 2021). consequently, the strategy of forming and maintaining a strong group of entrepreneurs is often regarded as the solution to such challenges by advocates in both the private and public sectors. entrepreneurship education (ee) in higher education plays a vital role in this regard. yet, challenges in ee prevail around developing content and pedagogies that effectively prepare students to become entrepreneurs. chimucheka (2014) explained that the development of entrepreneurship is preceded by ee. this education is equated with the acquisition of entrepreneurial skills, concepts, and knowledge, followed by the engagement in entrepreneurial activities that benefit not only the individuals, but also organisations and broader society. according to herrington and kew (2016), an educated and appropriately skilled workforce is not only vital to the economic productivity and growth, but also builds self-efficacy and confidence in the individual, thus increasing the chances of starting and sustaining successful businesses. thus, the focus of ee is to be an efficacy enhancer of entrepreneurship as it provides entrepreneurs with the competencies they need to navigate the fluctuations of the business cycle (fayolle 2007). entrepreneurship training and courses present a challenge to the ee research community beyond the regional challenges of the south african context, largely because it is unclear what exactly constitutes ee. in their review of published empirical studies on ee, kamovich and foss (2017) conclude that there is a paucity of research on the teaching objectives, methods, and content of entrepreneurship courses, together with a lack of alignment between the objectives, delivery, and assessment of the course impact. they argue that ee researchers have largely focussed on impact evaluation of entrepreneurship courses on students, neglecting questions about the rationality behind the teaching, delivery mode, and impact assessment mode. this needs to be a consideration because the desired outcomes of ee programmes – the creation of new enterprises – may only appear many years after the course (diegoli, gutierrez & del mar garcia-de los salmones 2018). context is an important element of ee research for gaining insight into how, why, and when entrepreneurship occurs and who is involved. welter (2011:175) therefore offered the view that studies could explore ‘how context factors influence the nature and extent of entrepreneurship and not how entrepreneurship impacts its contexts’. however, little research has been conducted on the antecedents to a supportive context for entrepreneurship (bergmann et al. 2018). in addition, most ee research focusses on courses within a narrow context for entrepreneurship skills building, that of the business school. this oversight is particularly troubling in south africa as other tertiary institutions, such as universities of technology (uots) and comprehensive universities, represent a majority, necessitating further study (ramchander 2019). in particular, the underlying philosophy of uots to provide vocation-focussed tertiary education, combined with its broader accessibility – in terms of cost and years of study – compared with traditional universities, make it a critical site for ee research in the south african context. this exploratory study addresses the various research gaps by focussing on the teaching methods and approaches employed by instructors of ee courses in multidisciplinary programmes at a uot in order to understand the challenges for delivering effective ee in south africa, and the possible solutions emerging within higher education. drawing on kamovich and foss’s (2017) framework, the study explores how instructors design and present ee courses in terms of objectives, delivery mode, and assessment. the study further explores how contextual factors, including the instructor and environment, influence the design of ee courses at a tertiary education institution in south africa. in the absence of detailed investigations of ee pedagogies at uots or the impact of south africa’s context on ee, this study makes a unique contribution by highlighting the granular challenges that higher education institutions face in designing courses that are effective at promoting entrepreneurship locally. it also showcases the prominent, if not singular, role that educators play in solving problems, addressing challenges, and ensuring that ee contributes to a broader economic agenda. consequently, the findings reveal the strategies that can be adopted by the institutions, educators, and other members of the entrepreneurship ecosystem to enhance ee in higher education, and promote entrepreneurship. this article is structured as follows: the following section presents a literature review and conceptual framework, followed by the methods. then, the findings and discussion are presented, along with recommendations. finally, the conclusion presents the study’s limitations and future research. literature review entrepreneurship in south africa driven by an entrepreneurial spirit to create and achieve, small, micro, and medium enterprises (smmes) stimulate competition, improve productivity, and catalyse economic development and job creation (erasmus, strydom & rudansky-kloppers 2013). for any country, ‘accelerating entrepreneurial activities has always been the hallmark of achieving socio-economic development and goals for growth’ (ghafar 2020:218). to underscore its national importance, the coordination, development, and promotion of entrepreneurship is under the umbrella of the south african department of small business development (dsbd), established in 2014, to strengthen the smme sector as part of its strategy to enhance growth and alleviate poverty through job creation (dsbd 2020). yet, south africa has struggled to create programmes that effectively inspire, train, and prepare people to become entrepreneurs. the global entrepreneurship monitor (gem) report identifies ee amongst its 14 entrepreneurship framework conditions that influence entrepreneurial opportunities, capacity, and preferences. in its 2019 assessment of south africa, gem identifies a number of weak conditions in the entrepreneurship ecosystem, three of which were considered critical constraints (below 35% adequacy): government policy and programmes, internal market burdens, research and development transfer, and ee (bosma et al. 2020). the gem considers ee at both the school and post-school level. global entrepreneurship monitor defines post-school ee as the extent to which colleges, universities, and business schools ‘offer effective courses in entrepreneurial subjects, alongside practical training in how to start a business’ (p. 69). universities have a crucial role to play in creating a fertile ecosystem for potential entrepreneurs and fostering an entrepreneurial spirit (gelaidan & abdullateef 2017; ghafar 2020). in developing countries like south africa, institutions of higher learning are often expected to be the vehicles for advancing economic growth (bhorat, cassim & tseng 2016). however, herrington and kew (2016) argue that these institutions are not sufficiently fulfilling their role in ee in terms of facilitating knowledge transfer and stimulating innovation. according to these authors, it is critical for policymakers and institutional leaders to improve ee in south africa and foster positive entrepreneurial attitudes through the education system. in recent years, the south african department of higher education and training (dhet) has partnered with educational institutions to develop ee nationally through the entrepreneurship development in higher education (edhe) programme 2018–2020. the three goals of the edhe are to mobilise students to create enterprises, support educators to transfer entrepreneurial knowledge, and to create entrepreneurial institutions at the universities themselves that they may also create valuable enterprises (dhet 2018). thus, the role of the tertiary institutions in carrying out ee in south africa is both recognised and the subject of current planning. within the broader landscape of higher education, south africa has nine uots, which differ from traditional universities in their emphasis on vocational education (farham 2015). where traditional universities focus more on academic achievement and theoretical training in a specialised field, the teaching focus at a uot is more on helping students technically qualified within a specific field. the 2001 national plan for higher education, which was designed as part of national transformation process following the political democratisation of the country, set forth to use uots as vehicles of real-world problem solving that are closely integrated with society (perumal 2010). conceptual framework the effectiveness of ee programmes depends on the careful construction of the programme in terms of the core components (du toit & kempen 2020). kamovich and foss (2017) identify objectives, delivery mode, and impact, and the alignment of these elements, as the key components of effective ee. in acknowledging the paucity of research on objectives and delivery mode, they suggest that greater focus on improving these components would inevitably lead to better impacts. they also recognise the importance of external context on objectives and delivery modes, and suggest that future research would explore the influence of contextual factors on the core components of ee design. an elaboration of their framework to include key external factors provides the basis for the research framework used in this study: course outcomes, teachers, learning activities, and the teaching context. course objectives although some scholars would define ee as teaching students about entrepreneurs and their role in society, there is a cohort that clearly defines ee as developing students’ entrepreneurial attributes and behaviour, whilst equipping them with business start-up knowledge and skills (chimucheka 2014; fayolle 2007). in this sense, ee programmes and courses should equip students with the necessary knowledge, skills, and characteristics needed to be an entrepreneur in practice (ghina, simatupang & gustomo 2015). entrepreneurship education is regularly subjected to the argument that entrepreneurship cannot be taught and that entrepreneurs cannot be made. lorz, meuller and volery (2013) question the influence of ee alone, arguing that it is mainly students with a pre-existing interest in entrepreneurship who select entrepreneurship as a subject. studies from several ee researchers have taken on this very issue, concluding that not only can entrepreneurship be taught, but certain approaches and pedagogies can enhance learnings (brijlal, naicker & peters 2013; costin, o’brien & slattery 2018; fayolle 2007; mudau & kruger 2014). furthermore, this focus on ee as a skill development tool obscures the other key value offered by ee. beyond transferring knowledge, ee serves to expand exposure to entrepreneurship and help students see entrepreneurship as a viable career path for themselves, thus contributing to the students’ sense of self-efficacy (bux & van vuuren 2019). this study therefore takes the view that entrepreneurship is teachable, that ee is a viable vehicle for teaching, and that ee course objectives can be varied (i.e. fostering entrepreneurial exposure, skills, knowledge, and/or characteristics). teachers entrepreneurship education educators, like parents and entrepreneurs, are people who can influence students’ motivation to pursue entrepreneurship (rahman & day 2014). although educators also play a crucial role in the effective design and delivery of ee courses, the role of teachers remains an under-researched area (bae et al. 2014; diegoli et al. 2018; ruskovaara et al. 2015; san-martín et al. 2021). mudau and kruger (2014) found that the lecturer had a statistically significant influence on the student’s level of interest in entrepreneurship. the educators in their study displayed autonomy and largely influenced the curriculum design of the entrepreneurship courses. according to fayolle and kickul (2007:2), educators in this field need to be ‘more proactive and innovative in how they plan and organise their programs to develop entrepreneurs’. ruskovaara et al. (2015) agree that when teachers are involved in the planning of ee in the school, or in the entrepreneurship curricula in general, it yields positive results in terms of increased teacher commitment. another ee study that included educators as a variable found that the role of educators was not just to teach the course, but to build students’ confidence by fostering creativity, curiosity, and analytical ability (costin et al. 2018). there is ongoing debate about whether teachers require entrepreneurship experience in order to teach it as many educators do not have extensive entrepreneurial experience (maritz 2017). diegoli et al. (2018) found that there was no significant increase in students’ entrepreneurial intentions despite the teachers’ experience in entrepreneurship. in a study conducted in spain, university students agreed that teachers in this field should have previously started a business, whilst the teachers in the study felt that having entrepreneurial characteristics was sufficient to be a role model and inspire entrepreneurialism in students (san-martín et al. 2021). regardless of the degree to which practical experience is essential, in practice, many institutions tend to be reliant on practitioners as educators because of limited formal training in ee (diegoli et al. 2018). this means institutions must place great importance on the course content and delivery to ensure effective ee programmes. delivery mode and teaching context entrepreneurship education in south africa has been described as an uncultivated field where business training is prioritised to strengthen smme success rates. a systematic literature review investigating ee curriculum content and pedagogy in africa more broadly found that ee courses in this region are similar to general business courses, with the content designed to train students to be good employees, rather than entrepreneurs (zegeye & singh 2019). in south africa, this has transpired through educators adopting outdated, teacher-centred approaches, and the absence of practical learning activities in the courses (radipere 2012). as a result, as radipere’s survey of ee courses in south africa found, many courses fail to achieve their intended outcomes. piperopoulus and dimov (2015) found that courses with a more theoretical focus led to higher self-efficacy in students but lower entrepreneurial intentionality, whilst courses with a greater practical focus resulted in both higher self-efficacy and higher entrepreneurial intentionality. therefore, the preferred methods of teaching entrepreneurship include: experiential learning (botha & bignotti 2016), new venture simulations (buchnik, gilad & maital 2018; costin et al. 2018), and mentoring (buchnik et al. 2018). furthermore, these programmes should also be subjected to rigorous evaluation and assessment (fretschner & weber 2013) to ensure that learning outcomes are met. ultimately, the delivery mode of ee programmes should correlate with the programme audience to maximise impact (kamovich & foss 2017). for instance, in their study on entrepreneurship development in botswana, themba and josiah (2015) found that designing ee courses around the student profile can be as much about acknowledging their own experiences of formal education and training, as identifying individuals with entrepreneurial characteristics and supporting them. the learning activities and course content at a south african uot should therefore reflect the local entrepreneurship environment and the common experiences and backgrounds of students. study aim and objective this study seeks to expand the conversation around south african ee and focus on the uots that have the capacity to reach a broader cross-section of the population and disseminate knowledge in the practical ways recommended by other researchers. specifically, the objective of this study was to understand the contextual factors that affect the design and delivery of ee courses offered within multidisciplinary programmes at a south african uot. the study adds to the sparse conversation about the positioning and integration of ee as a discipline of instruction outside the business school context. furthermore, this approach is grounded in the finding that ee programmes must be appropriately tailored to the ground conditions of the entrepreneurial environment. although this study focusses on the unique south african context affecting ee programmes, the relationship between external conditions and the educational environment is a phenomenon experienced globally. methods research approach a qualitative, phenomenological study was conducted where the entrepreneurship courses at a uot were taken as the unit of analysis. a feature of phenomenological research is the exploration of a group of individuals who have experienced the phenomenon, that could vary in size from 3–4 to 10–15 (creswell & poth 2018). given the role of instructors in designing and delivering ee courses, their experiences were considered the best source of data on the topic. purposive sampling was undertaken to intentionally select participants on (1) the basis of their knowledge relevant to the study (babbie 2013), that is, to identify all the entrepreneurship courses on offer and (2) the availability of their instructors for participation. in line with the findings of the literature review and the intended goals of ee, the courses under consideration in the study included any course within the uot that contained ee objectives and content. the key selection criterion for the sample was that the course be offered as part of a multidisciplinary programme. of the 34 ee courses identified from an online prospectus that met the criterion, instructors from 14 of the courses were available and willing to participate and formed the basis of the sample. the sample included 10 full-time and part-time faculty members teaching ee courses across 11 multidisciplinary programmes. eight of the 10 educators in this sample had previously been engaged in entrepreneurial activity, and two were still engaged in consulting practices. data collection and analysis interviews can be used to acquire unique information or interpretations held by the subject during a qualitative research study (stake 2010). semi-structured interviews were therefore conducted with each educator. a pilot study was conducted prior to final data collection using a draft interview questionnaire on a small subset of the target population. this pilot study addressed internal validity concerns by (1) giving the researchers experience with the data collection tool, and (2) testing the adequacy of the interview procedure and questions (bryman & bell 2015). drawing on kamovich and foss’s (2017) framework for effective ee, participants were asked questions about key aspects of the course design, that is, course outcomes, teacher experience, learning activities, and the teaching context. the pilot study helped to refine some interview questions, which proved to be too lengthy or unclear, and also confirmed that the interview data was sufficient to address the aim of the study. interviews were conducted with each faculty member and recorded for later analysis. the recorded data was transcribed and manually coded for emergent themes. ryan and bernard’s (2003) approach to thematic data analysis was used to identify, narrow, order, and match themes to theoretical models. according to these authors, themes originate both from the data (through an inductive approach), and from the investigator’s prior theoretical understanding of the phenomenon under study (an a priori approach). the analysis was conducted manually by colour-coding the themes in the transcripts and then compiling the excerpts for theme consolidation in a spreadsheet. the emergent themes were then categorised by the four a priori themes of the conceptual framework. trustworthiness was sought through the careful selection of experienced and knowledgeable faculty members for the study, and gathering information about their entrepreneurial background and experiences. whilst it is not possible to generalise the findings from a small sample, researchers are encouraged to (1) engage in purposeful sampling – as is the case in this study and (2) produce ‘thick description’, that is rich accounts of the details to enable others to make a judgement about the possibility of transferability possible (bryman & bell 2015). a method of member checking, whereby the interview subjects evaluate the initial findings (miles, huberman & saldaña 2014), was carried out with participants as an external validation measure. as the study objectives and the interview questions were designed to obtain descriptive information about ee courses from faculty members (as opposed to feelings and experiences), minimal interpretation was required on the part of both the participants and the researchers during data collection and analysis, enhancing trustworthiness. ethical considerations this study was approved by the university of cape town, faculty of commerce ethics committee (reference number, rec: 2016/07/010) prior to the data collection and all research procedures were conducted in a manner compliant with the ethics policy. all participant names have been anonymised. findings courses the courses analysed in this study (table 1) were offered as either a core module of a 3-year national diploma programme, a core module of a 4-year bachelor of technology programme, or as an elective within the different programmes. table 1: entrepreneurship education courses included in the study. the courses were also taught at different stages of the programmes, and the objectives varied accordingly. across all disciplines, ee courses in the first year of study were governed by the key objective of exposing students to entrepreneurship, introducing them to the world of business, and presenting entrepreneurship as a feasible career option. courses offered in the second year of study covered more aspects of business management and attention to entrepreneurial skills development was limited. courses offered in the third and fourth years of study placed greater focus on preparing the student for post-graduate employment, both as an employee and an entrepreneur. these courses outlined the aspects of business start-up knowledge and aimed to equip the student with the basic tools needed to take a venture into the south african business environment. course design in their discussion about the process of designing ee courses, some common course objectives emerged that seemed to characterise the underlying goals across all the courses, whether they were offered as an elective or core course. these were as follows: creating awareness of and exposure to entrepreneurship as a possible career path; cultivating a positive perception of entrepreneurship; developing entrepreneurial and business management skills; and encouraging entrepreneurial activity and behaviour. miranda (female educator, health sciences) explained: ‘the aim is to provide students with opportunities to acquire knowledge and develop skills necessary to plan and begin a business. and to understand the role that entrepreneurs play in the country, society, and economy.’ an additional goal was to make students see entrepreneurship as a viable career path. sarah (female educator, business sciences) clarified that: ‘the student mind-set has to change from being an employee to being an employer. that’s a big one – if we are able to change that mind-set on the course.’ similarly, jamal (male educator, engineering) said: ‘apart from giving them the knowledge, we have to develop their attitude towards business.’ beyond the common course objectives, the instructors described other considerations and challenges associated with course design in two areas, namely, course focus and content. course focus all the educators stressed the importance of a learner-centred approach and a focus on practical application starting in the first-year courses. in particular, the courses offered in non-business programmes were designed for students with little to no background in business studies. sarah (female educator, business sciences) explained: ‘first year is a lot more theoretical. we build solid theory, but there’s a strong focus on application. to give it the entrepreneurial flavour, we use case studies of south african small businesses.’ towards this end, another focus was to sensitise students to the role of entrepreneurship in the local economy. abe (male educator, business sciences) highlighted that: ‘in first year we expose the students to all of these different concepts, where they fit into the economic structure, and we create awareness of social problems.’ he said they try to get students: ‘[… t]hinking of the kinds of things that can emerge that would support socio-economic development.’ to do this, the fundamentals of entrepreneurship, entrepreneurial characteristics, and personality traits were emphasised in the first-year courses. it was then that the students were exposed to the concepts of entrepreneurship, including creativity and innovation as the vital drivers of entrepreneurial activity and economic growth. although the courses covered general principles of ee, each department had a discipline-specific focus. abe said: ‘we explore how the student can address these problems within their industry through creative solutions, while empowering themselves financially, creating a job for themselves and others.’ nadine (female educator, design) described using business plans to support practical application in the courses. she said: ‘[… t]hat already makes them think about how they will run their own business. i take them through most of the things that you might encounter when you want to start your own label because i found that this is what students want in their fourth year.’ course content the presence of clear ee objectives was baseline acceptance criterion for the courses included in this study. a further review of the content of the selected courses showed that they included entrepreneurial skills and concepts, but also covered the basics of business management, with a focus on start-ups and small business. the educators believed that they needed to balance the teaching content to address industry requirements, student needs and abilities, theoretical depth to meet higher education standards, and sufficient practicality to expose and engage students with aspects of entrepreneurship. certain aspects of core content were consistently included across courses and programme stages. however, the content tended to progress and narrow with every year in the programme (table 2). table 2: course content by programme year. nadine (female educator, design) noted that although there were guidelines for ee courses, the educators adapted the content in relation to their context. she explained: ‘what they focus on in durban would be different to cape town, will be different to johannesburg, pretoria, port elizabeth, or wherever the fashion school is.’ similarly, robert (male educator, business sciences) said: ‘there is a prescribed textbook, but it’s flexible because i don’t rely on one textbook, as there are different materials that one would come across, that are much more relevant. after all, we are teaching a business subject where everything changes continuously.’ some of the faculties used an industry advisory board to provide advice on the relevance of the course content. robert from business sciences emphasised how he ‘look[s] out for what is happening in the industry, what exactly are they doing’ in order to align course curricula with real-world requirements. accordingly, they revisit the course content and update it on an annual basis. educators also spoke about the challenges associated with the content. all 10 participants spoke about the difficulty of finding suitable teaching material that was relevant to their students’ needs. first, they found the material was not sufficiently focused on the south african context. for example, adele (female educator, design) described a textbook that was: ‘[… n]ot relevant from a south african perspective in terms of our specific company laws, or our tax laws and how cipro1 works, because the textbook is international.’ material was not found to be adequately specific and relevant to start-up requirements and small business management issues. adele (female educator, design) said the entrepreneurship textbooks lacked a practical focus specific to industry requirements. she was concerned that: ‘the textbook might not be small business or practical design orientated enough.’ the last issue was with the imbalance between material with business management focus and material with an entrepreneurial focus. referring to another textbook, raj (male educator, applied sciences) found: ‘[… a]ll the chapter content is based on management and very little on entrepreneurship. there’s actually only one chapter that’s dedicated to entrepreneurship. nothing on overcoming barriers, things like goal setting, innovation and to an extent, maybe networking and time management.’ to supplement the gaps in materials, the educators described how they mostly used their own teaching materials, which they sourced online or through the combination of excerpts from multiple textbooks. eric (male educator, health sciences) shared how he: ‘[… d]esigned my own notes, using my experience of teaching for more than 20 years and augmented my teaching material with information from the radio and news.’ educators were also motivated to take this approach to content by their students. according to nadine (female educator, design), the educators: ‘[… p]refer students going online, as often handbooks become old and it is important for students to keep abreast with the latest trends in their industry.’ adele (female educator, design) agreed that this appealed to her students as: ‘[… t]heir attention spans aren’t very long with the advent of digital technology and constantly getting a facebook update.’ course delivery in their discussion about the process of delivering ee courses, instructors described the considerations and challenges they experienced in two areas, namely, pedagogy and assessment. pedagogy collectively, the educators used pedagogies with two aims in mind: practical application and student engagement. the educators felt strongly that the courses needed to equip students with experience in the nuts-and-bolts activities that would support an entrepreneurial venture. in the ee courses, they wanted to emphasise the ‘how’ more than the ‘what’ of entrepreneurship. educators presented classes on: ‘how to set up your business?’ (nadine, female educator, design) ‘how to do your financial analysis’ (rose, female educator, business sciences) ‘how to do a market analysis if you want to start-up your business’ (eric, male educator, health sciences) this approach helped bridge their other pedagogical goal to engage students by getting them involved in real processes. as raj (male educator, applied sciences) explained: ‘if you transfer the concept too theoretically, then you’re not going to get the traction, focus and attention needed for the student to take the discipline seriously.’ the educators therefore actively encouraged students to experiment with and start their own ventures before graduating. for example, nadine (female educator, design) told her fashion design students: ‘you’ve now learnt enough skills to start sewing for your friends and family, so, you start charging them and making a little bit of money.’ in terms of tools and actual methods to maintain student engagement in class, the educators employed some traditional approaches. according to abe (male educator, business sciences): ‘we can’t be too sure what is the best methodology to use in teaching this, but we can at least rely on the methods we know and that is being used in class, such as audio-visual materials and case studies.’ other approaches included class activities, group work, and projects where students led a collaborative learning process. eric (male educator, health sciences) strongly felt that: ‘student participation is important, not to talk and chalk the whole time.’ business sciences educators also innovated pedagogically towards this goal with the introduction of idea generation workshops to stimulate entrepreneurial thinking at first-year level. their aim was to show students how integrating the entrepreneurship course with other courses in their programme could unlock opportunities for starting new ventures. jamal (male educator, engineering), who was in the building trade prior to his academic career, showed his students how their courses could be combined in order to practise as a group of quantity surveyors. educators found it beneficial to bring in guest speakers from the industry to complement their teaching practice and to expose students to entrepreneurial role models. they therefore invited alumni guest speakers who could both provide a source of inspiration and help students develop their entrepreneurial network, knowledge, and skills. robert (male educator, business sciences) said: ‘we use guest speakers to present their stories, to motivate [the students] and to upscale their spirit.’ industry role players were also recruited to complement and bring to life what was taught in the classroom, exposing the student to entrepreneurs within their own industry and allowing and encouraging them to map out possible career paths. course assessment educators found that traditional assessments were not ideal for evaluating students. to meet the objectives of their ee courses, assessments needed to evaluate both the students’ understanding of theoretical concepts and their practical application of skills and tools. the educators found it challenging to assess the latter, whilst also balancing departmental assessment requirements and the academic goals of themselves. abe (male educator, business sciences) summarised their concerns: ‘if you take entrepreneurship as a subject area, someone may be able to pass that quite easily, but is that person able to start a business after that?’ raj (male educator, applied sciences) strongly maintained that: ‘this is one such subject where, i don’t believe, a sit-down test is really that meaningful.’ instead, educators designed evaluative assignments and projects that would help further the goal of practical application. raj said: ‘assignments are based on going out to real entrepreneurs, to measure some form of activity, whether it is looking at financial or administrative structures, access to finance or determinants of success, but they get to engage with real entrepreneurs.’ some educators even used these assessments to further student’s real-world entrepreneurial journeys. according to nadine (female educator, design): ‘class projects become opportunities for the student to sell and market their products and earn money.’ the approach of using assessments to get students engaged with real businesses had the added effect of strengthening the network between the ee programmes and the business community. robert’s (male educator, business sciences) students had to act as consultants for an assessment where: ‘[… t]hey first have to identify an entrepreneur, sit with that person and see how he runs his business.’ this initiative was positively received by the small businesses who requested that the engagement continue. it therefore allowed the students to learn from the entrepreneur and for the entrepreneur to gain a fresh perspective on their business from the students. discussion key findings the broad characteristics of the ee programming at this south african uot were consistent with many of the hallmarks of ee in higher education described in the literature – educators were very autonomous in setting the course curricula, the course objectives were designed to balance theoretical concepts with practical application, and educators felt some uncertainty around best pedagogical practices. the apprehension educators felt around pedagogy is founded as entrepreneurial knowledge, experience, and skills are not easily attained through conventional teaching practices (radipere 2012), and the research on effective teaching methods for ee is limited (kamovich & foss 2017). however, because the educators had a high degree of agency in shaping their course curriculum, they were able to incorporate teaching methods that would allow them to meet the course objectives, which ultimately hinge on providing the correct balance of theoretical and practical knowledge. other aspects of the educators’ approach to teaching ee courses emerged as responses to the larger system in which prospective entrepreneurs are situated. in particular, the challenges and problem-solving techniques described by the educators illustrate contextual factors that played a large role in their course design and delivery. these contextual factors can be summarised as follows: the needs of students: the systemic nature of their experiences the quality of teaching materials: the limited relevance of the content the experience of educators: their experience with entrepreneurship and industry student needs particularly given the educational journey of most south african uot students, the influence of student needs is impossible for educators to ignore. when the educators observe that some of the content in the textbooks is pitched at too high a level for their students, the educators modify and adapt the content of their courses to bridge the gap. this comes through in the pedagogy they employ to ensure that they deliver course content in the most effective ways. beyond serving as a source of inspiration and real-world application for students, the use of real entrepreneurs as guest speakers in the class served the important additional goal of giving students lasting access to a knowledge community within their fields and outside the uot. the students viewed these guests, who were often alumni, as peers that they could more easily relate to and build relationships with. coupled with the collaborative and interactive projects used by educators, these kinds of less formal learning experiences reflect the elevation of andragogy over pedagogy in teaching method. andragogy is the adult learning approach that places emphasis on what the learner is doing whilst they learn from their peers’ knowledge and experiences (knowles 2015). in a study of south african ee, co and mitchell (2006) found that the small business consulting projects used by the educators for assessment purposes encouraged exposure to the actual problems and experiences of entrepreneurs. this form of teaching entrepreneurship can be described as ‘education for enterprise, about enterprise and through enterprise’ (isaacs et al. 2007:625–626). teaching materials beyond the needs of the students, however, the availability of relevant teaching materials has a significant influence on how the educators deliver the course. the process of finding adequate teaching materials – in terms of regional relevance, industry relevance, and an entrepreneurial focus – emerged as one of the biggest challenges to course development. other researchers have documented similar challenges, as in a study at the university of zimbabwe where the faculty staff reported that the curriculum was not adequate for the purposes of entrepreneurship training (munyanyiwa & mutsau 2015). this issue may be linked to the interrelated and overlapping learning areas of entrepreneurship and business management, where the distinction between the two is an ongoing area of discourse (buchnik et al. 2018; ireland, hitt & sirmon 2003; kuratko 2005). as jack and anderson (1999:113) explain, ‘enterprise is idiosyncratic, and therefore closer to an art than a science’, which makes knowledge on business management alone insufficient. the educators in this study discussed similar concerns and have therefore innovated around the dearth of formal teaching materials by becoming more hands-on in developing their own materials. rather than relying on textbooks or teaching cases that lack a south african or smme focus, educators at the uot drew from their own experience and knowledge communities, and sourced other less formal teaching materials online. this also allowed them to attain alignment between the course objectives, the pedagogy, and the assessment criteria, which kamovich and foss (2017) found was necessary for effective ee instruction. still, the shortage of material on entrepreneurship remains a missing link that instructors cannot compensate for with general management material. educators’ experience given the depth of involvement of the educators in managing each of these three factors, it is clear that the educators themselves form a key part of the teaching context. it is their experience as entrepreneurs and/or small business consultants, and their continued involvement in industry, that makes it possible for the uots to offer ee courses that align the objectives with content and assessments. educators in this study spoke passionately of their earlier experiences as entrepreneurs, which provided them with insight into how their entrepreneurship courses interacted with the teaching context – the programme environment, their own beliefs and experiences of entrepreneurship, and the diverse student population. they spoke with confidence about how they draw on practical examples from their own experiences and translate theoretical concepts to their students. although this study did not assess the efficacy of the educators and their courses on student performance, it raises the question of whether the experienced educators are indeed more effective at ee. certainly, as kuratko (2005) argues, educators of entrepreneurship must have the same innovative drive that is expected of their students. others maintain that it is just a matter of investing more in the development of ee to enhance quality (du toit & kempen 2020; isaacs et al. 2007; munyanyiwa & mutsau 2015). at the very least, this study finds that entrepreneurial experience and positive attitudes toward ee positively influenced the educators’ course delivery as even those educators without entrepreneurial experience were motivated by the belief that ee was a valuable subject for students. across the board, educators’ understanding of the macroeconomic system that entrepreneurs enter in south africa created a sense of meaning and importance around ee beyond just imparting specific knowledge or skills to students. they believed that the creation of more smmes is essential to the country’s economic development and ensured that they shared this purpose with students as a means of motivating them. recommendations the contextual factors influencing ee courses found in this study have implications for institutions and educators. based on the example set by the educators in this study, the institution as a whole would benefit from collaboration with members of industry boards and professional bodies as a standard practice across their programmes. this seems to be key to the development of course content and teaching materials that are relevant to local market requirements. another recommendation for institutions with an innovation orientation is to develop blended learning platforms for ee at the programme level by creating opportunities for accredited learning outside the classroom. this mode of learning could include work-integrated learning, for instance, an apprenticeship module in the smme sector. this would provide students with exposure to their industry at an earlier stage, which may spark interest in creating their own enterprise. in this way, an alternative form of assessment that is well suited to the evaluation of ee concepts, which emphasises effective real-world application can be provided. regarding educators, the findings in this study and in other empirical work have identified that educators’ prior exposure to entrepreneurship contributes to the efficacy of the programme. thus, educators in this field should consider opportunities for their own continued learning in entrepreneurship, either through their own enterprise or academic training. this exposure will enhance their teaching practice through the development of entrepreneurial skills that they can incorporate into their pedagogic practice. conclusion in examining the key contextual factors that influence ee course design at a south african uot, this study highlights the challenges that higher education institutions face in designing courses that are effective at promoting entrepreneurship locally. it also showcases the prominent, if not singular, role educators play in solving problems, addressing challenges, and ensuring that ee contributes to a broader economic agenda by bringing their own passion, educational expertise, and practical knowledge to the classroom. institutions must be made aware of the value of this contribution to their programming, but also ensure that educators are adequately supported to continually improve and advance effective ee. limitations and future research few studies are without methodological drawbacks. the interview data collection approach, which is arguably more demanding on participants than a survey, may have introduced a self-selection bias that limited the views and types of educators represented in the study. representation could have been improved by including a larger percentage of ee educators through a more accessible data collection tool, although the depth of the data may be compromised in the process. based on the findings of this study, future research could focus on the issue of teaching materials in south africa, providing a detailed inventory of the criteria set by educators to effectively deliver their courses. importantly, this research could create future opportunities for collaboration between uots and the local business community to develop materials (e.g. teaching cases, articles, texts, teaching modules) that can be mutually beneficial. another potential ee research strand is to investigate pedagogic practice within a specific ee course. because the educators in this study expressed uncertainty around the best ee pedagogies, a useful study could formalise and pilot different learning approaches to the same ee topic and compare the impact on students in terms of self-efficacy or entrepreneurial attitudes. acknowledgements this article is based on the phd thesis of the first author at the university of cape town, 2018, titled: ‘entrepreneurship education courses across multidisciplinary programmes at a south african university of technology: educator and student perspectives’ by kariema price, available at https://open.uct.ac.za/handle/11427/30142. competing interests the authors have declared that no competing interest exists. authors’ contributions k.p. and l.r. conceptualised the research. k.p. conducted the research. l.r. supervised the study and prepared the manuscript for submission. funding information the authors received no financial support for the research, authorship, and/or publication of this article. data availability the data that support the findings of this study are available on request from the corresponding author, (l.r.). the data are not publicly available because of their containing information that could compromise the privacy of research participants. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references babbie, e., 2013, the practice of social research, 13th edn., wadsworth, london. bae, t.j., qian, s., miao, c. & fiet, j.o., 2014, ‘the relationship between entrepreneurship education and entrepreneurial intentions: a meta-analytic review’, entrepreneurship theory and practice, 38(2), 217–254. bergmann, h., geissler, m., hundt, c. & grave, b., 2018, ‘the climate for entrepreneurship at higher education institutions’, research policy 47(4), 700–716. https://doi.org/10.1016/j.respol.2018.01.018 bhorat, h., cassim, a. & tseng, d., 2016, ‘higher education, employment and economic growth: exploring the interactions’, development southern africa 33(3), 312–327. https://doi.org/10.1080/0376835x.2016.1161501 bosma, n., hill, s., ionescu-somers, a., kelley, d., levie, j. & tarnawa, a., 2015, global entrepreneurship monitor: 2019/2020 global report, global entrepreneurship research association, london. botha, m. & bignotti, a., 2016, ‘internships enhancing entrepreneurial intent and self-efficacy: investigating tertiary-level entrepreneurship education programmes’, the south african journal of entrepreneurship and small business management 8(1), a45. https://doi.org/10.4102/sajesbm.v8i1.45 brijlal, p., naicker, v. & peters, r., 2013, ‘education and smme business growth: a gender perspective from south africa’, international business & economics research journal 12(8), 855–866. https://doi.org/10.19030/iber.v12i8.7983 bryman, a. & bell, e., 2015, business resarch methods, 3rd edn., oxford university press, new york, ny. buchnik, t., gilad, v. & maital, s., 2018, ‘universities’ influence on student decisions to become entrepreneurs: theory and evidence’, journal of entrepreneurship education 21(3), 1–19. bux, s. & van vuuren, j., 2019, ‘the effect of entrepreneurship education programmes on the development of self-efficacy, entrepreneurial intention and predictions for entrepreneurial activity’, acta comercii 19(2), a615. https://doi.org/10.4102/ac.v19i2.615 chimucheka, t., 2014, ‘entrepreneurship education in south africa’, mediterranean journal of social sciences 5(2), 403–416. https://doi.org/10.5901/mjss.2014.v5n2p403 co, m.j. & mitchell, b., 2006, ‘entrepreneurship education in south africa: a nationwide survey’, education + training 48(5), 348–359. https://doi.org/10.1108/00400910610677054 costin, y., o’brien, m.p. & slattery, d.m., 2018, ‘using simulation to develop entrepreneurial skills and mind-set: an exploratory case study’, international journal of teaching and learning in higher education 30(1), 136–145. creswell, j.w. & poth, c.n., 2018, qualitative inquiry and research design: choosing amongst five approaches, 2nd edn., sage, los angeles, ca. dhet, 2018, university capacity development programme: implementation plan for the enterprenership development in higher education (edhe) programme 2018–2020, department of higher education and training, pretoria. diegoli, r.b., gutierrez, h.s. & del mar garcia-de los salmones, m., 2018, ‘teachers as entrepreneurial role models: the impact of a teacher’s entrepreneurial experience and student learning styles in entrepreneurial intentions’, journal of entrepreneurship education 21(1), 1–11. dsbd, 2020, about us, viewed 13 november 2019, from http://www.dsbd.gov.za/. du toit, a. & kempen, e.l., 2020, ‘effectual structuring of entrepreneurship education: guidelines for overcoming inadequacies in the south african school curriculum’, african education review 17(4), 44–55. https://doi.org/10.1080/18146627.2020.1868074 erasmus, b.j., strydom, j.w. & rudansky-kloppers, s., 2013, introduction to business management, 9th edn., oxford university press, oxford. farham, y., 2015, what is the difference between a university, a university of technology and a tvet college? [blog], oxford university press, viewed 15 december 2019, from http://blog.oxford.co.za/what-is-the-difference-between-a-university-a-university-of-technology-and-a-tvet-college/. fayolle, a., 2007, entrepreneurship and new value creation: the dynamic of the entrepreneurial process, cambridge university press, new york, ny. fayolle, a. & kickul, j., 2007, ‘new and emerging perspectives for future research in entrepreneurship education’, in a. fayolle (ed.), handbook of research in entrepreneurship education: volume 2: cultural perspectives, pp. 1–12, edward elgar, cheltenham. fretschner, m. & weber, s., 2013, ‘measuring and understanding the effects of entrepreneurial awareness education’, journal of small business management 51(3), 410–428. https://doi.org/10.1111/jsbm.12019 gelaidan, h.m. & abdullateef, a.o., 2017, ‘entrepreneurial intentions of business students in malaysia. the role of self-confidence, educational and relation support’, journal of small business and enterprise development 24(1), 54–67. https://doi.org/10.1108/jsbed-06-2016-0078 ghafar, a., 2020, ‘convergence between 21st century skills and entrepreneurship education in higher education institutes’, international journal of higher education 9(1), 218–229. https://doi.org/10.5430/ijhe.v9n1p218 ghina, a., simatupang, t.m. & gustomo, a., 2015, ‘building a systematic framework for entrepreneurship education’, journal of entrepreneurship education 18(2), 73–98. herrington, m. & kew, j., 2016, global entrepreneurship monitor 2016/2017, global entrepreneurship research association, london. ireland, r.d., hitt, m.a. & sirmon, d.g., 2003, ‘a model of strategic enterpreneurship: the construct and its dimensions’, journal of management 29(6), 963–989. https://doi.org/10.1016/s0149-2063(03)00086-2 isaacs, e., visser, k., friedrich, c. & brijlal, p., 2007, ‘entrepreneurship education and training at the further education and training (fet) level in south africa’, south african journal of education 27(4), 613–629. jack, s.l. & anderson, a.r., 1999, ‘entrepreneurship education within the enterprise culture: producing reflective practitioners’, international journal of entrepreneurial behaviour and research 5(3), 110–125. https://doi.org/10.1108/13552559910284074 kamovich, u. & foss, l., 2017, ‘in search of alignment: a review of impact studies in entrepreneurship education’, education research international 2017, 1450102. https://doi.org/10.1155/2017/1450102 knowles, m.s., 2015, the adult learner: the definitive classic in adult education and human resource development, 8th edn, routledge, london. kuratko, d., 2005, ‘the emergence of entrepreneurship education: development, changes and challenges’, entrepreneurship theory and practice 29(5), 577–597. https://doi.org/10.1111/j.1540-6520.2005.00099.x lorz, m., meuller, s. & volery, t., 2013, ‘entrepreneurship education: a systematic review of the methods in impact studies’, journal of enterprising culture 21(2), 123–151. https://doi.org/10.1142/s0218495813500064 maritz, a., 2017, ‘illuminating the black box of entrepreneurship education programmes: part 2’, education + training 59(5), 471–482. https://doi.org/10.1108/et-02-2017-0018 miles, m.b., huberman, m.a. & saldaña, j., 2014, qualitative data analysis, 3rd edn., sage, london. mudau, f.n. & kruger, j.w., 2014, ‘students perception on the entrepreneurship curriculum at the university of south africa’s department of agriculture and animal health’, journal of human ecology 46(1), 91–101. https://doi.org/10.1080/09709274.2014.11906710 munyanyiwa, t. & mutsau, m., 2015, ‘an analysis of entrepreneurship curriculum content: a case study of the university of zimbabwe, faculty of commerce’, european journal of business and management 7(20), 2222–2839. perumal, r., 2010, ‘the development of universities of technology in the higher education landscape in south africa’, phd thesis, faculty of management sciences, durban university of technology, durban. piperopoulos, p. & dimov, d., 2015, ‘burst bubbles or build steam? entrepreneurship education, entrepreneurial self-efficacy, and entrepreneurial intentions’, journal of small business management 53(4), 970–985. https://doi.org/10.1111/jsbm.12116 radipere, s., 2012, ‘south african university entrepreneurship education’, african journal of business management 6(44), 11015–11022. https://doi.org/10.5897/ajbm12.410 rahman, h. & day, j., 2014, ‘involving the entrepreneurial role model: a possible development for entrepreneurship education’, journal of entrepreneurship education 17(2), 163–171. ramchander, m., 2019, ‘reconceptualising undergraduate entrepreneurship education at traditional south african universities’, acta commercii 19(2), a644. https://doi.org/10.4102/ac.v19i2.644 ruskovaara, e., pihkala, t., sikkula-leino, j. & järvinen, m.r., 2015, ‘broadening the resource base for entrepreneurship education trough teachers’ networking activities’, teaching and teacher education 47, 62–70. https://doi.org/10.1016/j.tate.2014.12.008 ryan, g.w. & bernard, h.r., 2003, ‘techniques to identify themes’, field methods 15(1), 85–109. https://doi.org/10.1177/1525822x02239569 san-martín, p., fernández-laviada, a., pérez, a., & palazuelos, e., 2021, ‘the teacher of entrepreneurship as a role model: students’ and teachers’ perceptions’, the international journal of management education, 19(1). https://doi.org/10.1016/j.ijme.2019.100358 stake, r.e., 2010, qualitative research: studying how things work, guilford press, new york, ny. statssa, 2021, quarterly labour force survey: quarter 1: 2021, statistics south africa, pretoria. themba, g. & josiah, j., 2015, ‘entrepreneurship development in botswana lessons for other developing countries’, botswana journal of business 8(1), 11–35. https://doi.org/10.1590/s0102-44501999000200014 welter, f., 2011, ‘contextualizing entrepreneurship – conceptual challenges and ways forward’, entrepreneurship: theory and practice 35(1), 165–184. https://doi.org/10.1111/j.1540-6520.2010.00427.x zegeye, b. & singh, m., 2019, ‘the state of entrepreneurship education in higher education institutions of africa’, global journal of management and business research: administration and management 19(6), 26–34. footnote 1. cipro is the companies and intellectual property registration office. the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of the peer reviewer in the overall publication process – not only in shaping the individual manuscript, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank all reviewers who participated in shaping this volume of the southern african journal of entrepreneurship and small business management: in an effort to facilitate the selection of appropriate peer reviewers for the south african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on http://www.sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at http://www. sajesbm.co.za 2. in your ‘user home’ [http://www.sajesbm. co.za/index.php/sajesbm/ user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest. 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the the south african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 fax: +27 21 975 4635 alewyn nel alex j. antonites alex bignotti aloe meintjes boniface okanga cecile nieuwenhuizen dawie bornman elmarie venter jabulile galawe japie kroon jean pierre cronje j. michael smith john hall kerryn a.m. krige liezel alsemgeest linda eskell-blokland mathukhwane a. mamabolo melodi botha menisha n. adams mercy m. adeyeye pierre mostert shelley m. farrington tony matchaba-hove open access page iii of iii reviewer acknowledgementpage 1 of 1 we appreciate the time taken to perform your review successfully. http://www.sajesbm.co.za acknowledgement to reviewers http://www.sajesbm.co.za� http://www.sajesbm.co.za� http://www.sajesbm.co.za� http://www.sajesbm.co.za/index.php/sajesbm/user http://www.sajesbm.co.za/index.php/sajesbm/user http://www.sajesbm.co.za/index.php/sajesbm/user http://www.sajesbm.co.za� abstract introduction literature review research strategy results discussion conclusion management implications for small and medium-sized enterprises limitations future research acknowledgements references about the author(s) sumayah goolam nabee department of transport and supply chain management, college of business and economics, university of johannesburg, johannesburg, south africa elana swanepoel department of transport and supply chain management, college of business and economics, university of johannesburg, johannesburg, south africa citation goolam nabee, s. & swanepoel, e., 2021, ‘exploring supply chain business bullying of small and medium-sized business suppliers by dominant buyers in the apparel retail sector in gauteng’, southern african journal of entrepreneurship and small business management 13(1), a367. https://doi.org/10.4102/sajesbm.v13i1.367 original research exploring supply chain business bullying of small and medium-sized business suppliers by dominant buyers in the apparel retail sector in gauteng sumayah goolam nabee, elana swanepoel received: 08 sept. 2020; accepted: 20 jan. 2021; published: 31 mar. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: issues relating to dominant behaviour and bullying practices in supply chains are mostly not reported. some evidence exists of unfair business practices in the apparel retail sector, but the extent and nature of such practices in south africa, as well as the business implications for small and medium-sized enterprises (smes), have not been researched. the reason could be the sensitive nature of these issues and possible adverse implications for the smes supplying apparel to the retailers in gauteng. aim: the primary research objective is to determine the incidence and type of supply chain dominance experienced by smes in the retail apparel sector in gauteng, as well as the business implications of such dominant behaviour and how smes cope with it. setting: the setting for this study was the business premises of sme apparel suppliers in gauteng. methods: qualitative semi-structured in-depth interviews were conducted with seven smes that were apparel suppliers to the large retailers in gauteng, to obtain the supplier perspective. results: six of the seven smes had experienced some form of bullying behaviour by large retailers in the apparel sector, such as late payments and long payment terms. for some of these smes, it had serious financial implications. meaningful insight is provided into this supplier–buyer relationship between smes and large retailers in the apparel sector in gauteng. conclusion: this is the first study in south africa investigating supply chain dominance, in particular supply chain bullying of sme suppliers through unfair business practices by dominant buyers in the apparel sector. keywords: bullying; collaboration; dominant behaviour; supply chain dominance; smes; unfair business practices. introduction a supply chain is a network made up of several complex activities that involve multiple key members, such as buyers, suppliers, service providers and end-consumers (arshinder, kanda & deshmukh 2011). to ensure the success of the supply chain, a collaboration between these members, especially between buyers and sellers, is emphasised (ryu, soh & koo 2009; vlachos & bourlakis 2006). supply chain management extends beyond the design and management of various logistics activities and principally must include the management of buyer–supplier relationships to ensure its success (ambrose, marshall & lynch 2010). the collaborative nature of supply chain relationships is founded on ‘trust, commitment, and cooperation’ as well as the ‘acceptance and understanding of mutual dependence’ (noémi 2012:131). supply chain member relationships that lack the balance of dependency and inter-dependency cause power variations, eventually contributing and leading to unfair business practices (barber 2011). with a focus on the buyer–supplier relationship, it is observed that contract problems, changes to contracts, ‘unfair contracts’, interpersonal issues and questions of ethical behaviour are often deemed unfair business practices (rogers & fells 2017). these unfair business practices are a catalyst for supply chain dominance, which has previously been explored under different terms such as ‘supply chain power’ (barber 2011; hingley, lindgreen & grant 2015; rahaman, rau & zaman 2020), ‘power regimes’ (cox 2004; cox et al. 2004; lapko & trucco 2018), ‘channel dominance’ (xue, caliskan demirag & niu 2014), ‘relative power’ (chakraborty et al. 2018), ‘asymmetrical relationships’ (talay, oxborrow & brindley 2020), ‘power-driven relationships’ (benton & maloni 2005) and ‘dominant player behaviour’ (li et al. 2010). cox (2004) addressed dominant behaviour in the supply chain as both the power and appropriateness in a buyer–supplier relationship. for a buyer, appropriateness depends on ‘the power and leverage circumstance that they find themselves in’ (cox 2004:346). xue et al. (2014:132) expressed power as an ability, where ‘the dominant party dictates certain decisions of the weaker party’. barber (2011:167) defined dominance in supply chains as ‘the extent of influence one participant in the chain has over one or more participants’. in a definition similar to barber (2011), durocher-yvon et al. (2019) suggested that the influence of one participant on another can be either positive or negative. the retail apparel sector is characterised by powerful retail buyers and small suppliers (talay et al. 2020). in their annual performance plan, the department of small business development in south africa expressed the concerns of its members over big businesses bullying small businesses (parliamentary committee group 2019). in 2017, the competition commission investigated the four big supermarkets – pick n pay, shoprite checkers, woolworths and spar – in the south african retail grocery market and found evidence of unfair business practices towards small and medium-sized suppliers (broembsen 2017). some of these retailers also sell apparel. the south african clothing industry recorded an annual production decline of 4.9% in 2018 as low-cost asian suppliers continued to flood the market (research and markets 2019). the vulnerability of the local market is therefore prone to asymmetrical relationships and relative buyer power. the objective of this research is therefore to explore if small and medium-sized gauteng-based suppliers in the south african apparel sector experience supply chain dominance by large retail buyers. literature review supply chain power relationships in competitive industries such as apparel retail, it is common practice for buyer–supplier relationships ‘to be viewed as win-lose situations’, even when the collaboration between buyers and suppliers is crucial to survival in changing business environments (munyimi & chari 2018:1). cox (2004) maintains that even when given win–win partnering or win–lose outcomes, there is not only one way to manage the buyer–supplier relationship. supply chain relationships are driven by collaboration through high levels of information sharing (emmett & crocker 2006). in this context, three types of collaboration can be identified: type i are collaborative transaction management relationships which focus on standard information exchanges. type ii are collaborative event management relationships that pursue ‘standardised decision-making’ and ‘exchanges of non-transactional information’. type iii are collaborative process management relationships that require ‘building trust, setting joint business goals and designing inter-enterprise processes’ (whipple judith & russell 2007:184). for small and medium-sized enterprises (smes), strategic collaboration and information sharing in the supply chain are essential elements of competitive advantage (kumar, singh & shankar 2016). the assumption, however, that collaboration is voluntary and results in equal power in the supply chain is unfounded (kampstra, ashayeri & gattorna 2006). kampstra et al. (2006) further outline that powerful retailers such as walmart often dictate how collaboration is practiced in a supply chain. financial actions such as pay to stay, long-term payments, late payment, prompt payment discounts and respective discounting are often used to exert dominance (durocher-yvon et al. 2019; the federation of small businesses 2018). barber (2011) identifies five types of supply chain dominance: manufacturer-centric dominance, retail-centric dominance, supplier-centric dominance, distributor-centric dominance and reverse dominance, of which retail-centric dominance is discussed in more detail. a power shift downstream in the supply chain, where customer information is more readily available, has resulted in retail-centric dominance by powerful retailers such as walmart, amazon.com and costco (defee, randall & gibson 2009; dekimpe 2020). the presence of a dominant retailer in a supply chain has many benefits, such as lower total transaction costs (barber 2011), facilitating retail segmentation into discount and speciality shops (dukes, geylani & srinivasan 2009), lower retail prices for consumers (chen 2003) and the ability to lower wholesale prices when the dominant retailer has a large market share (chen & zhuang 2011). dominant retailers tend to focus their efforts on fast-moving consumer goods (fmcg) where product design is simple, high volumes are manufactured, lead times are short and manufacturing processes are reduced (bala & kumar 2011). the relative downstream position of the retailer in the supply chain affords the retailer market size, market sensitivity and retail-processing cost information, which can be used to dominate suppliers as part of achieving their strategic goals (wang, lau & lau 2008). habib, bastl and pilbeam (2015), citing cox (1999) and cox (2001), view the dependent supplier as a construct of dominant buyers, although a dominant position by a retail buyer is not always viewed as negative. seppenwoolde (2019) found that even where supplier squeeze occurs, a supplier may be happy with the relationship if it offers growth opportunities. furthermore, the need for long-term cooperation can lead to more fairness by dominant players (jarratt & morrison 2003). small and medium-sized suppliers can balance out the actions of dominant buyers by customer prioritisation, presenting competitive advantage opportunities and developing specialised knowledge (talay et al. 2020). both buyers and suppliers have sufficient reason for wanting to occupy positions of power. collaboration is a means of managing the relationship even if one party will always exert more influence than the other in the supply chain. it is therefore essential to understand the nature of the relationship between smes and large retailers when the retailer holds the dominant position. relationships between small and medium-sized suppliers and large retailers small and medium-sized enterprises are key economic contributors to aiding innovation and job creation (kaira & rześny cieplińska 2019). in south africa, smes range from formally registered to informal and non-vat registered organisations (bureau for economic research 2016). in 2016, the number of formal smes in south africa was 68 494 and 17 397, respectively (small business institute 2018). furthermore, smes employ 47% of the south african workforce and contribute a respectable 20% to the country’s gross domestic product (liedtke 2019). for purposes of this study, smes are classified by the south african national small business amendment act (26 of 2003) according to the number of employees and the annual revenue of the company (department of small business development 2019). the act states that medium-sized businesses in wholesale trade may not exceed 250 employees or a turnover of more than r220 million per annum (small business institute 2019). small enterprises are defined as having a maximum of 50 employees and in the wholesale trade a maximum turnover of r80m per annum (department of small business development 2019). it is commonplace for small and medium-sized suppliers to specialise in specific product lines or supply retailer brands exclusively (delberghe 2016). with strict competition from major brand manufacturers, market entry for many smes is made easier by concentrating on retailer brands (delberghe 2016). business-to-business smes often overlook the importance of branding and without a powerful own brand, they compete for retail shelf-space (lin et al. 2019; von broembsen 2017). this dependence of smes on retailer buyers has therefore increased the relative power of retailers in the supply chain. as such, smes are subjected to control, quality testing and product and packaging demands by retailer buyers (pepe, musso & risso 2010). other dominant behaviours enforced by retailers include providing cash discounts to themselves, allowing long credit periods (tsao 2011) and setting of wholesale prices (jerath, hoch & zhang 2007). popović, mihailović and simonovic (2018) examined unfair trading practices in the food industry and found that retailers abuse their bargaining power by transferring costs to suppliers, asking suppliers for favours without similar reciprocation, making one-sided changes to a contract, retrospective changes to contracts, unfair termination of contracts and unjustified threats to terminate contracts. schleper, blome and wuttke (2017:97) extend the retailers’ dominant power to include ‘pressuring suppliers for price reductions, non-cost related payments or discounts, extended payment terms, warranty periods and questionable appropriation of innovations and intellectual property’. examples of buyer-dominant behaviour in supply chains the concept of power in the supply chain was first discussed from the perspective of inter-firm dominance where five power bases – legitimate, reward, expert, referent and coercive – were identified (raven & french 1958). in the last few years, buyer dominance was explored in various industries, namely automotive (khan 2018; skeete 2019; wilhelm & sydow 2018), aviation (he et al. 2014; schleper et al. 2017; tang, zimmerman & nelson 2009), consumer electronics (guo et al. 2012; schleper et al. 2017) and fmcg and retail (digal 2015; hingley 2005; knox 2016; palpacuer, gibbon & thomsen 2005). in the automotive industry, the concept of open-book pricing by original equipment manufacturers (oems) has been viewed as dominant behaviour by suppliers (skeete 2019). to counteract competition from china, general motors threatened to outsource production overseas if suppliers did not cut costs (khan 2018). volkswagen (vw) is known, after the start of production, to fuel competition by getting quotes from other suppliers (wilhelm & sydow 2018). as dominant manufacturers in the aviation industry, both boeing and airbus demand lower costs and greater outputs from their suppliers (he et al. 2014; schleper et al. 2017). in the supply chain of the boeing 787 aircraft, the financial risk of development was passed on to their suppliers (tang et al. 2009). as the consumer electronic market grows, incidences of domination by powerful electronic brands are more prevalent. schleper et al. (2017) outline apple’s supplier squeezing strategies where suppliers risk losing business if they produce non-apple-related products. although not a direct result of dominant behaviour, the high-speed production demands of apple, dell and hewlett-packard have led to many suicides at chinese electronics supplier foxconn technology group (guo et al. 2012). dominant behaviour by retail buyers is widespread (durocher-yvon et al. 2019; schleper et al. 2017). as one of the largest retailers in the world, amazon has repeatedly dominated supplier efforts by discouraging customers from buying from a certain supplier (kirkwood 2014) and by infringing on patents, demonstrating unfairness in competition, interfering with contracts and false advertising (greenfield 2011). popsockets, a phone accessory supplier accused amazon of forcing price reductions on their products or risk being replaced (young 2020). similarly, walmart has been accused of forcing contracts, price-fixing, and cost-sharing on its suppliers (cambero 2020; layne 2015). to meet financial targets, the united kingdom’s largest grocer tesco, often underpaid or late-paid suppliers (ram 2016). spanish fashion retailer zara is an intellectual property thief, according to independent artists and designers who have not been paid for their designs but found copy-cat designs in zara clothing and accessory ranges (mallory schlossberg 2016). british retailers fair no better; marks & spencer has asked its suppliers to contribute millions of pounds for store improvements and advertising (gordon 2011), whilst laura ashley imposed a 10% discount on suppliers (neville 2013). amidst the novel coronavirus disease (2019-ncov) pandemic, australian retailers kmart and mosaic brands informed suppliers that they would not meet financial commitments, asked for discounts and pushed back orders whilst still demanding short order lead times (black 2020). competitiveness in the retail apparel industry globally, the apparel retail industry is valued at $1467.7 billion with the south african market valued at $9813.5m (marketline 2020a, 2020b). the market is defined by high sales of womenswear, increased online shopping and more awareness of sustainability by the industry (bertram & chi 2018). the industry is segmented by price controls led by large retailers, brand control by major companies and specialised retailers, and the fashion-sensitive segment which focuses on sustainability (manuel xavier et al. 2015). although offering low barriers to entry, apparel retailers operate in a highly competitive and highly saturated market where buyers demand low prices whilst growth in sales are marginal (watchravesringkan et al. 2010). the competitive landscape today is fuelled by direct purchases from manufacturers, pure online stores, global online shopping, custom-made clothing and second-hand purchases (amed et al. 2019). mergers and acquisitions are common and low pricing or increased sales are insufficient to remain competitive (klemz et al. 2008). maintaining and increasing competitiveness can be successfully achieved through offering a unique brand experience, store experience and customer service experience (mccoll & moore 2013). the south african market trends are driven by strong growth in mobile e-commerce which has seen retailers adopting a multi-channel approach to remain competitive (euromonitor international 2020). other strategies adopted include increasing sales by diversifying product offerings, aggressive pricing methods and complimentary in-store services, such as purchasing of bus tickets or payment of utility bills (euromonitor international 2020). steinhoff (pep stores) and mr price, the two largest players in the market, continue to attract budget-conscious customers through their value for money and mass-market strategies (marketline 2020a). major players in the south african apparel retail sector the south african retail apparel sector is characterised by four major local players of which steinhoff international holdings nv (steinhoff international) commands the largest market share with the pep, ackermans, and dunns brands (marketline 2020a). the mr price group ltd (mr price) considers itself a fashion-value retailer and is the second-largest player in the market. these two are followed by truworths international limited (truworths international) and edcon holdings (proprietary) ltd. (edcon) (marketline 2020a). the market is further fragmented by other global fashion retailers from spain, the united kingdom and australia (douglas 2016). suppliers to the market are made up of both clothing manufacturers and wholesalers that are locally and internationally based (kew 2020). the labour-intensive nature of the industry favours low-wage regions, which together with the drive for more secure supply chains and the ability to cope with changes in demand have all decreased supplier power and kept retailers’ switching costs moderate (marketline 2020a). driven by the need to secure supply chains and the covid-19 pandemic, large local retailers are reducing their dependency on chinese suppliers and are increasingly sourcing from local suppliers (kew 2020). research problem evidence has emerged of unfair business practices in the south african retail sector, but the type and extent of such practices, or their implications for smes, have not been researched (durocher-yvon et al. 2019; von broembsen 2017). a gap therefore exists in the body of knowledge pertaining to such unfair business practices, in particular in the apparel retail supply chain in south africa. research questions the research questions that followed from the literature review and guided the study are listed next: to what extent does supply chain dominance occur in the apparel industry with sme suppliers supplying the large retail industry in gauteng? what forms of supply chain dominance are experienced by sme apparel suppliers and what are the business implications for them? how do sme suppliers in the apparel sector respond or counteract the effects of dominant behaviours from buyers? research strategy explanation of methodology ‘qualitative research is an approach for exploring and understanding the meaning individuals ascribe to a social or human problem’ (creswell 2014:4). owing to the fact that the concept ‘supply chain dominance’ could be foreign to the potential participants, it was necessary to conduct qualitative in-depth interviews to explain the concept and to explore and probe its extent, nature of occurrence and business implications. qualitative in-depth interviews were conducted with the suppliers of apparel to the retail industry to collect primary data using a semi-structured questionnaire. the inclusion criteria for the population were any smes supplying apparel to the retail sector in gauteng. there are numerous importers and distributors in south africa who supply the major retailers (flanders investment & trade 2016). a database of these smes does not exist and was therefore created. all those for whom contact details could be sourced from the internet, were included in the database. data collection over a period of 3 months, 87 phone calls were made to those smes for whom telephone numbers were obtained. although emails were sent frequently (three to four emails each) to secure appointments, only eight responded. according to saunders, lewis and thornhill (2019:317), for a homogenous group the target can be between 4 and 12, and for a heterogenous group between 12 and 30. although the apparel suppliers all supply to the retail industry, and in that respect were homogenous, they varied in size and were considered heterogenous. for this reason, the target was 12–30 participants. even though the focus of the research was explained at the time of making the appointment, five potential participants, who had initially agreed to an interview, chose to withdraw when the interview started. they stated that the risk, of retailers finding out they had participated in the research, was too high. another reason given during a telephonic interview by a potential respondent was: ‘the market is extremely saturated, and the risk outweighs the potential return for me, therefore i would like to refuse the interview for this research.’ (non-participant 1, business owner, june 2018) a non-probability snowballing sampling strategy was applied, relying on the recommendations from one volunteer sme. snowball sampling is used when potential participants are hard to find (saunders et al. 2019). snowballing as a sampling strategy was unsuccessful as many of the participants were not willing to share contact details of other possible participants. the main reason was that potential participants expressed a fear of being found out by the larger retailers. even though they were ensured of strict confidentiality, the risk was too high for these potential participants. a new sampling strategy was devised, by cold calling and reaching out to members outside the industry to provide possible contact details of members in the sme apparel supply sector in gauteng. eventually, seven interviews were secured. characteristics and appropriateness of the sample prior to continuing with interviews, it was necessary to determine the relevance of the participants. six of the seven businesses had been established in the apparel industry for more than 10 years, with one being established for 2 years. the length of time that businesses had been established varied between 2 and 60 years. four participants had even worked in the apparel industry prior to starting their own business, whilst a further two participants had always worked for the family apparel business. it can be deemed that they had the relevant experience to comment on supply chain dominance in the apparel industry in gauteng. all seven participants were smes based in gauteng and sold apparel to major retailers in south africa. two of the smes stated that they had international suppliers but did not supply their own products abroad. according to the national small business amendment act’s (26 of 2003) classification of smes by number of employees, of the seven participating smes, two were medium-sized, two small, one very small and two were micro enterprises (figure 1). it is not possible to provide more detailed information about each supplier as this would risk the identification of the supplier. figure 1: classification of participating enterprises by number of employees. the national small business amendment act (26 of 2003) also classifies smes by annual turnover. according to the annual turnover classification, of the seven smes, two are medium-sized, three are small, one is very small and one is a micro enterprise (figure 2). all seven participants are classified as smes and complied with the inclusive criteria. figure 2: annual turnover of companies interviewed. data collection instrument the data collection instrument, a semi-structured questionnaire, was self-developed from studying literature on supply chain dominance, incorporating the different forms of supply chain dominance in the questionnaire whilst allowing for participants to add other forms of supply chain dominance experienced. being a semi-structured questionnaire, it contained quantitative list questions and two likert-scale question, to guide the probing questions that followed each. the questionnaire has 18 questions divided into four sections: section a: biographic and corporate data (five questions). section b: the extent of dominant behaviour on smes in the apparel retail supply chain in gauteng (five questions). the following were addressed – pay to stay; long payment terms; late payment; discounts for prompt payment; and retrospective discounts. section c: identifying which members in the retail apparel sector supply chain in gauteng display dominant behaviours as experienced by smes (four questions). section d: identifying the methods of dominance used by the members of the retail apparel supply chain in gauteng as experienced by smes (four questions). additionally: some of the questions had listed options from which a participant could choose. through probing, it was possible to expand the lists for some questions. the questionnaire was approved by the departmental ethics clearance committee. it was critical to establish a relationship of trust, so that the participants trusted that their information would not reveal their identity. for this reason, pseudonyms are used for the large retailers. trustworthiness in qualitative research includes dependability, credibility, transferability and authenticity (saunders et al. 2019:217). by recording and transcribing the interviews, dependability and credibility are enhanced. as only seven participants were interviewed, the results are not transferable as the sample size is too small. by strictly adhering to the answers and comments of the participants, authenticity is ensured. the face-to-face in-depth interviews were recorded and transcribed into an ms word document. data analysis the seven transcribed interviews, which included verbatim comments, were analysed using thematic analysis, guided by the 18 questions. no coding was required. the themes were contained in the questions and were decided upon during the design of the semi-structured questionnaire. from the existing literature, in particular the study of durocher-yvon et al. (2019), it was possible to identify the typical supply chain dominance practices, namely long payment terms, late payments, contractual pressures, pay to stay, discounts for prompt payment and retrospective discounts. by including these in the questionnaire, it was possible to deductively determine the extent, type of occurrence and business implications of supply chain dominance amongst the participants and to compare it with existing knowledge and theory. ethical considerations ethical clearance to conduct this study was obtained from the department of transport and supply chain management ethics committee, college of business and economics, university of johannesburg (ethical clearance number: 2018 tscm-014hn). results understanding the concept of dominant behaviour at the outset of the research which focuses on a topic with which participants may not be familiar, it is essential to determine their understanding of the concept to ensure that the responses are within an informed context. five out of the seven participants interviewed understood what dominant behaviour was and could provide examples of dominant behaviour practices. some examples that were provided include the extension of payment terms: ‘take it or leave it’ meetings where no room for negotiation is awarded, over ordering by retailers who returned goods after 60 days and concerns that ‘retailers dictate all terms’. for the two participants who needed clarification, a definition was given and explained with some practical examples. interestingly, one participant whilst familiar with dominant behaviour did not consider or interpret their own similar experiences as dominant behaviour. evidence of dominant behaviour in business practices as shown in figure 3, for the seven participants that experienced dominant behaviour, late payment was the most common. a participant stated: ‘the 90-day late payment forced me to write off the transaction as a bad debt. the cost of this particular transaction was over r500 000 and being a small business, it placed me in financial trouble. it affected my cash flow.’ (participant 2, medium-sized business owner, july 2018) figure 3: dominant behaviour and the manner in which it occurred. the second highest dominant practice identified by five participants was long payment terms. this included extended payment terms which participants stated as common practice when dealing with retailers. a participant explained: ‘when the payment terms were extended to 120 days, we struggled to stay afloat as we could not pay our own suppliers and did not have the same power of negotiation with our suppliers.’ (participant 3, small business owner, july 2018) a further two dominant behaviours experienced were the discount for prompt payments (four participants) and retrospective discounts (one participant). these two forms of dominant behaviour do not seem to have the same financial impact on the business as the first two. the only dominant practice that was not identified by the participants was pay to stay. as the two most prominent dominant behaviour practices are based on the buyer paying the supplier, it is evident that this could have a serious effect on the smes long-term sustainability and business survival. frequency of dominant practices the frequency of dominant practices can be linked to the seriousness of its business implications for smes. the more prevalent dominant practices are, the more likely they are to have a serious impact on smes. all seven participants had experienced some form of dominant behaviour in their business. it can be deduced that having identified the forms of dominant behaviour, participants were able to recognise the occurrence of these practices in their business even if prior to the interview they were not aware of such practices occurring (figure 4). four of the participants had experienced some form of dominant behaviour ‘very often’ (eight or more times per annum), whilst another had experienced it ‘often’ (six to eight times per annum). figure 4: frequency of dominant practices as experienced by participants. the remaining two participants experienced it seldom (three to five times per annum) and rarely (one to two times per annum). dominant behaviours in contractual agreements and their effect five of the seven participants indicated that dominant behaviour could be found in contracts with major retailers. participants were probed to identify dominant practices stipulated in the contract. participants cited the following examples: ‘penalties for late delivery where the shipment was delayed owing to lack of berthing space in the port of durban … [and] uncertainty in regard to contract renewal as retailers had the option to cancel contracts and agreements at any time.’ (participant 2, medium-sized business owner, july 2018) ‘retailers demand discounts for prompt payment.’ (participant 4, micro business owner, july 2018) an example provided by the participants of a penalty for late delivery was of 2% credit on value of outstanding goods exceeding 2 days of contractual lead time, thereafter 2% everyday two days up to a maximum of 10%. five participants stressed that it is difficult to overcome dominant behaviour in contractual agreements owing to the sme suppliers’ low bargaining power in the market. the supplier market for apparel is highly competitive and, thus, ‘take it or leave it’ scenarios are common. the lack of a supplier voice is also echoed in the reluctance of many suppliers to participate in the interviews. it can be concluded that for many smes, the fear of losing business is greater than the will to retaliate against large retailers. the seven participants all stated that they had been affected by dominant behaviour but to different degrees. to determine the degree and to make an objective comparison, participants were asked to indicate on a 5-point likert scale. one participant felt ‘extremely’ affected by dominant behaviour, another ‘mostly’ affected and three participants felt ‘affected’. only two participants felt ‘marginally’ affected by dominant behaviour. when asked in what way they had been affected, they indicated that the dominant practices largely impact the cash flow of the business. this directly relates to the identification of the most commonly used methods of dominance by retailers as identified by the participants, namely late payments and extended payment terms. one participant stated: ‘late payments have the biggest impact as it decreases the available cash flow in the business.’ (participant 2, medium-sized business owner, july 2018) late payment terms make it difficult to pay suppliers on time and decrease cash flow through the business. extended payment terms have a similar effect on the business, making it difficult to expand owing to a decrease in available cash flow. smes are more financially at risk as they do not have the same cash reserves that large enterprises possess. business risk resulting from dominant behaviour four of the seven participants stated that dominant behaviour by retailers put their business at risk. participants stated the following: ‘financially the impact for me as a small business owner is large as i cannot buy new material if i do not have a constant cash flow … [and the] financial risk [was that they had] to borrow money from family members and take out a business loan from the bank.’ (participant 4, micro business owner, july 2018) ‘financial risk, loss of contracts. price negotiation and in some cases had to stop supplying.’ (participant 5, small business owner, july 2018) ‘financial strain, threat of losing contract.’ (participant 6, small business owner, july 2018) ‘financial risk would be the biggest impact: the business has had to take out an overdraft and led from other businesses that are family owned to stay afloat and wait for payments.’ (participant 3, small business owner, july 2018) financial risk was most prevalent with loss of contracts and market share. suppliers were often forced to apply for an overdraft or loan money from family members or banks. a participant added: ‘large retailers are stocking more of their own brands, therefore ordering less from the company and many others like it in the industry.’ (participant 5, small business owner, july 2018) ‘competition in the form of the retailer playing one supplier against another to decrease prices to an almost impossible cost for the business.’ (participant 3, small business owner, july 2018) supplying large apparel retailers has become a competitive risk as retailers prefer to stock their own brands thus adding pressure on suppliers to be more cost effective. there was evidence of legal risk as expenses and losses were incurred in the settling of disputes. participants stressed that continually decreasing their prices to remain competitive decreased their profit margin which in turn affected their operating ability. year-on-year growth of smes was also affected as suppliers were forced to exit some markets owing to unrealistic expectations by retailers. one participant remarked: ‘in some cases, the business recognised the dominance as good because if you can compete at a high level, you will maintain a large market share.’ (participant 3, small business owner, july 2018) another participant, who had previously worked for a major retailer, stated that whilst he recognised dominant behaviour, it had not negatively affected the business as he had established important relationships during his time as an employee at the retailer. supply chain relationships with retailers the extent of time that a supplier and retailer have been in business with one another could play a vital role in determining the strength of such a relationship and the degree of dominance that develops. from a probing question as to the improvement of the supplier–byer relationship over the years, the answers varied. in most cases as the length of time increased, the level of dominance decreased, as relationships were formed and trust grew. an exception is the case of a specific retailer, for whom dominant behaviour increased with an increase in the length of the relationship. the participant noted that the retailer took advantage of the supplier’s dependence and added stricter conditions for delivery and payment terms. surviving the use of dominant practices by retailers in summary, all sme apparel suppliers interviewed concurred that some form of dominance was used by retailers with varying degrees. of the list of 18 different retailers supplied by the participating enterprises, three displayed the greatest degree of dominant behaviour, of which the most common form of dominant behaviour was extended payment terms and late payments. it was found that the larger retailers displayed a greater degree of dominant behaviour than the smaller retailers. participants were asked to comment on their ability to counteract dominant behaviours. they commented as follows: ‘try best to negotiate … [and] reduce customers (refuse some terms that cannot be met and do not supply those retailers).’ (participant 3, small business owner, july 2018) ‘[we] had to exit some of the market places which decreased growth of the business over the past few years. [we] had to branch out into new markets to stay relevant. [we] had to ensure that complete orders were delivered and paid (no partial delivery). [we went] through lots of negotiating and offering favourable business terms.’ (participant 2, medium-sized business owner, july 2018) ‘[we] had to become very effective with pricing strategies.’ (participant 7, medium-sized business owner, july 2018) in summary, five of the seven participants stated that they were to some extent able to overcome these dominant behaviours by setting lower prices compared to competitors, keeping prices as regular as possible, operating on a smaller scale, selling directly to the public, keeping low stock levels, ensuring quick turnovers and negotiating improved business terms. discussion the findings of this study are aligned with previous research indicating the presence of dominant behaviour by buyers in supply chains (bala & kumar 2011; barber 2011; defee et al. 2009; durocher-yvon et al. 2019; habib et al. 2015; kampstra et al. 2006; wang et al. 2008). consistent with talay et al. (2020), the results indicate that large buyers do dominate small suppliers. the enforcement of financial dominant behaviours on weaker members of the supply chain is consistent with that of durocher-yvon et al. (2019). the most common of these behaviours were late payments and long-payment terms. a study conducted by the federation of small businesses indicated that 20% of small businesses in the united kingdom are dominated by the businesses they supply (the federation of small businesses 2018). furthermore, durocher-yvon et al. (2019) and schleper et al. (2017) indicate that globally most incidences of dominant behaviour occur in the retail industry. digal (2015), hingley (2005), knox (2016) and palpacuer et al. (2005) have all investigated dominant buyer behaviour in the retail sector. this study is consistent with prior research on the sme experience of dominant behaviour (talay et al. 2020). four out of seven respondents indicated that dominant behaviour occurred at least eight times a year. dominant behaviour by large and powerful retailers affected the cash flow of most smes that participated in this study. this left them vulnerable to business risks such as loss of contracts, loss of competitiveness and decreased profits, which is consistent with the findings of kirkwood (2014). von broembsen (2017) found that egregious contractual terms by large retailers in south africa increased the supplier’s survival risk. similarly, financial risk arising from a loss of contract or market share was tied to the survival rate of the supplier. consistent with the findings of jarratt and morrison (2003), the results indicate that the management of the relationship over a period of time increased the fairness in the relationship, especially regarding controlling behaviour. some suppliers were willing to work with retailers to counteract dominant behaviour. pursuing a collaborative strategy, even when not in a dominant position, is comparable to the findings of talay et al. (2020). this research has contributed to theory and practice by confirming that supply chain relationships should be examined in the specific context of dominant behaviour by one or more partners ensuring a more balanced perspective. conclusion supply chain dominance is a global phenomenon, and this research attempted to determine the extent and effect of supply chain dominance in south africa, focusing on the apparel supply chain in gauteng. after an intensive effort to find participants, it was possible to conduct in-depth interviews with seven smes. the extent of supply chain dominant behaviour can be extended to smes that refused to grant the researchers an interview, in fear of losing retail customers if they identified unfair business practices. firstly, the extent of dominant behaviour in relation to smes in the apparel retail supply chain in gauteng was investigated. all seven participants with several years of experience in the apparel industry had faced dominant supply chain practices on a frequent basis. the three forms of supply chain dominance most commonly experienced by the participants are late payments, followed by long payment term and then discount for prompt payment. these one-sided adjustments to the payment structure have serious financial consequences for the smes, affecting their cash flow. from the interaction with participants, it seems that it is the larger and well-known retailers that display supply chain dominant behaviours. as these well-known retailers have a large market share, smes want to have a continuous long-term relationship with them to secure a source of stable income. these participating smes do not have the negotiating power to confront the retail giants and consequently resort to cost-cutting measures to increase profit-margin. management implications for small and medium-sized enterprises from the findings, it is only possible to alert all smes to the fact that supply chain dominance does occur, albeit to varying degrees. from the comments of the participating smes, it seems that supply chain bullying is something that smes would have to accommodate in their strategic planning. although building good relationships with the retailers is essential, smes should focus on streamlining operations to allow for larger profit margins. where possible, smes should endeavour to expand their customer base to reduce reliance on a few retail customers. limitations the major limitation to the research conducted was the reluctance of the participants to be interviewed. this resulted from the fear of repercussions for participating in a research study that was investigating uncompetitive actions in the supply chain, in particular stemming from the smes’ largest customers. they feared a breach in confidentiality and a loss of business supplying the large retailers. a loss of such a major customer would result in bankruptcy for some smes, and their fear is justified. future research to overcome the fear of participation of sme suppliers, it would be necessary to shift the focus away from supply chain dominance onto a topic that would be less threatening. the focus could be on payment practices in the supply chain. from the responses to the carefully constructed questions, it should be possible to determine whether buyer dominance does occur and the extent of its occurrence. acknowledgements we acknowledge d.d. scott, k. parag and k. mcgill-mcgowen for their valuable contribution and concerted effort in collecting the data for the manuscript and the preliminary discussion of the findings. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this research article. authors’ contributions s.g.n. and e.s. contributed equally to the writing of this article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability the authors confirm that the data supporting the findings of this study are available within the article. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references ambrose, e., marshall, d. & lynch, d., 2010, ‘buyer supplier perspectives on supply chain relationships’, international journal of operations & production management 30(12), 1269–1290. https://doi.org/10.1108/01443571011094262 amed, i., balchandani, a., beltrami, m., berg, a., hedrich, s. & rölkens, f., 2019, what issues matter for brands and retailers most in the coming months, viewed 15 january 2021, from https://www.mckinsey.com/industries/retail/our-insights/ten-trends-for-the-fashion-industry-to-watch-in-2019#. arshinder, k., kanda, a. & deshmukh, s.g., 2011, ‘a review on supply chain coordination: coordination mechanisms, managing uncertainty and research directions’, in t.-m. choi & t.c.e. cheng (eds.), supply chain coordination under uncertainty, pp. 39–82, springer, berlin. bala, m. & kumar, d., 2011, ‘supply chain performance attributes for the fast moving consumer goods industry’, journal of transport and supply chain management 5(1), a19. https://doi.org/10.4102/jtscm.v5i1.19 barber, e., 2011, strategic approaches to domination in supply chains, intech, united kingdom. benton, w.c. & maloni, m., 2005, ‘the influence of power driven buyer/seller relationships on supply chain satisfaction’, journal of operations management 23(1), 1–22. https://doi.org/10.1016/j.jom.2004.09.002 bertram, r.f. & chi, t., 2018, ‘a study of companies’ business responses to fashion e-commerce’s environmental impact’, international journal of fashion design, technology and education 11(2), 254–264. https://doi.org/10.1080/17543266.2017.1406541 black, z., 2020, ‘bullying’ clothing companies are asking struggling suppliers for discounts, viewed 15 january 2021, from https://thenewdaily.com.au/finance/consumer/2020/05/13/kmart-mosaic-coronavirus/. broembsen, m.v., 2017, suppliers at a huge disadvantage when dealing with supermarkets, viewed 15 january 2021, from https://www.businesslive.co.za/bd/opinion/2017-06-23-suppliers-at-a-huge-disadvantage-when-dealing-with-supermarkets/. bureau for economic research, 2016, the small, medium and micro enterprise sector of south africa, ber, s.l. viewed n.d., from http://www.seda.org.za/publications/publications/the%20small,%20medium%20and%20micro%20enterprise%20sector%20of%20south%20africa%20commissioned%20by%20seda.pdf cambero, f., 2020, walmart chile facing supplier suit over allegations it abused market dominance, viewed 15 january 2021, from https://www.reuters.com/article/us-walmart-chile/walmart-chile-facing-supplier-suit-over-allegations-it-abused-market-dominance-iduskbn27e2ga. chakraborty, a., mateen, a., chatterjee, a.k. & haldar, n., 2018, ‘relative power in supply chains – impact on channel efficiency & contract design’, computers & industrial engineering 122, 202–210. https://doi.org/10.1016/j.cie.2018.05.052 chen, k. & zhuang, p., 2011, ‘disruption management for a dominant retailer with constant demand-stimulating service cost’, computers & industrial engineering 61(4), 936–946. https://doi.org/10.1016/j.cie.2011.06.006 chen, z., 2003, ‘dominant retailers and the countervailing-power hypothesis’, the rand journal of economics 34(4), 612–625. cox, a., 1999, ‘power, value and supply chain management’, supply chain management: an international journal 4, 167–175. cox, a., 2004, ‘the art of the possible: relationship management in power regimes and supply chains’, supply chain management: an international journal 9(5), 346–356. https://doi.org/10.1108/13598540410560739 cox, a., watson, g., lonsdale, c. & sanderson, j., 2004, ‘managing appropriately in power regimes: relationship and performance management in 12 supply chain cases’, supply chain management: an international journal 9(5), 357–371. https://doi.org/10.1108/13598540410560748 creswell, j., 2014, research design: qualitative, quantitative and mixed methods designs, sage, thousand oaks, ca. defee, c., randall, w. & gibson, b., 2009, ‘roles and capabilities of the retail supply chain organization’, journal of transportation management 21(2), 31–48. https://doi.org/10.22237/jotm/1254355440 dekimpe, m.g., 2020, ‘retailing and retailing research in the age of big data analytics’, international journal of research in marketing 37(1), 3–14. https://doi.org/10.1016/j.ijresmar.2019.09.001 delberghe, c., 2016, retailer brands: serving consumers, smes and innovation, eurocommerce, european union. department of small business development, 2019, revised schedule 1 of the national definition of small enterprise in south africa, department of small business development, government printing works, pretoria. digal, l.n., 2015, ‘modern retail food sector in the philippines: dominance of large domestic retailers and their effects on the supply chain’, the international review of retail, distribution and consumer research 25(4), 407–430. https://doi.org/10.1080/09593969.2015.1023214 douglas, k., 2016, ‘are south african fashion retailers feeling pressure from global brands?’, how we made it in africa, viewed 15 january 2021, from https://www.howwemadeitinafrica.com/south-african-fashion-retailers-feeling-pressure-global-brands/55703/. dukes, a.j., geylani, t. & srinivasan, k., 2009, ‘strategic assortment reduction by a dominant retailer’, marketing science 28(2), 309–319. https://doi.org/10.1287/mksc.1080.0399 durocher-yvon, j.-m., tappin, b., goolam nabee, s. & swanepoel, e., 2019, ‘relevance of supply chain dominance: a global perspective’, journal of transport and supply chain management 13(0), a455. https://doi.org/10.4102/jtscm.v13i0.455 emmett, s. & crocker, b., 2006, the relationship-driven supply chain: creating a culture of collaboration throughout the chain, routledge, london. euromonitor international, 2020, retailing in south africa, euromonitor international, london. flanders investment & trade, 2016, south african retail fact sheet apparel, flanders investment & trade, sandton. gordon, s., 2011, retail bully boys must not protect themselves unfairly, viewed 15 january 2021, from https://www.ft.com/content/eb78f00c-f0d5-11e0-aec8-00144feab49a. greenfield, r., 2011, let’s count all the ways amazon’s a big bully, viewed 17 january 2021, from https://www.theatlantic.com/business/archive/2011/12/lets-count-all-ways-amazons-big-bully/333771/. guo, l., hsu, s.-h., holton, a. & jeong, s.h., 2012, ‘a case study of the foxconn suicides: an international perspective to framing the sweatshop issue’, international communication gazette 74(5), 484–503. https://doi.org/10.1177/1748048512445155 habib, f., bastl, m. & pilbeam, c., 2015, ‘strategic responses to power dominance in buyer-supplier relationships: a weaker actor’s perspective’, international journal of physical distribution & logistics management 45(1/2), 182–203. https://doi.org/10.1108/ijpdlm-05-2013-0138 he, s., hipel, k.w. & kilgour, d.m., 2014, ‘a hierarchical approach to study supply chain conflicts between airbus and boeing’, 2014 ieee international conference on systems, man, and cybernetics (smc), san diego, ca, systems, man and cybernetics society, 05–08 october 2014, pp. 1559–1564. hingley, m., lindgreen, a. & grant, d.b., 2015, ‘intermediaries in power-laden retail supply chains: an opportunity to improve buyer–supplier relationships and collaboration’, industrial marketing management 50, 78–84. https://doi.org/10.1016/j.indmarman.2015.05.025 hingley, m.k., 2005, ‘power to all our friends? living with imbalance in supplier–retailer relationships’, industrial marketing management 34(8), 848–858. https://doi.org/10.1016/j.indmarman.2005.03.008 jarratt, d. & morrison, m., 2003, ‘dependence and the application of power and control in major business relationships: a study of manufacturing and service firms in the business-to-business sector’, journal of strategic marketing 11(4), 235–253. https://doi.org/10.1080/0965254032000159054 jerath, k., hoch, s. & zhang, z., 2007, the pursuit of retailing dominance: market dominance, channel dominance or both?, carnegie mellon university, pittsburgh, pa. kaira, z. & rześny cieplińska, j., 2019, ‘innovation strategies in sme’s economic growth and job creation in economy’, wsb journal of business and finance 53(1), 167–173. https://doi.org/10.2478/wsbjbf-2019-0016 kampstra, r.p., ashayeri, j. & gattorna, j.l., 2006, ‘realities of supply chain collaboration’, the international journal of logistics management 17(3), 312–330. https://doi.org/10.1108/09574090610717509 kew, j., 2020, south african retailers turn from china to source local clothes, viewed 15 january 2021, from https://www.moneyweb.co.za/news/companies-and-deals/south-african-retailers-turn-from-china-to-source-local-clothes/. khan, a., 2018, ‘managing risks under highly dependent supplier-producer relation in modern automotive industry’, in i. dovbischuk, g. siestrup & a. tuma (eds.), nachhaltige impulse für produktion und logistikmanagement: festschrift zum 60. geburtstag von prof. dr. hans-dietrich haasis, springer fachmedien wiesbaden, wiesbaden. kirkwood, j., 2014, ‘collusion to control a powerful customer: amazon, e-books, and antitrust policy’, ssrn electronic journal 69(1). https://doi.org/10.2139/ssrn.2399575 klemz, b.r., boshoff, c. & mazibuko, n.-e., 2008, ‘fighting off the big guys: comparing competitive retail services strategies in industrialized and developing world settings’, service business 2, 127–145. https://doi.org/10.1007/s11628-007-0028-9 knox, m., 2016, supermarket monsters: the price of coles and woolworths’ dominance, black inc. redback, victoria. kumar, r., singh, r. & shankar, r., 2016, ‘study on collaboration and information sharing practices for scm in indian sme’, international journal of business information systems 22(4), 455. https://doi.org/10.1504/ijbis.2016.077838 lapko, y. & trucco, p., 2018, ‘influence of power regimes on identification and mitigation of material criticality: the case of platinum group metals in the automotive sector’, resources policy 59, 360–370. https://doi.org/10.1016/j.resourpol.2018.08.008 layne, n., 2015, wal-mart puts the squeeze on suppliers to share its pain as earnings sag, viewed 15 january 2021, from https://www.reuters.com/article/us-wal-mart-suppliers-insight/wal-mart-puts-the-squeeze-on-suppliers-to-share-its-pain-as-earnings-sag-iduskcn0sd0cz20151019. li, j., sheng, z. & liu, h., 2010, ‘multi-agent simulation for the dominant players’ behavior in supply chains’, simulation modelling practice and theory 18(6), 850–859. https://doi.org/10.1016/j.simpat.2010.02.001 liedtke, s., 2019, sme sector ‘critical’ to growing south africa’s economy – pityana, viewed 16 january 2021, from https://www.engineeringnews.co.za/article/sme-sector-critical-to-growing-south-africas-economy-pityana-2019-04-11#:~:text=the%20sme%20sector%20employs%2047,about%206%25%20of%20corporate%20taxes.&text=since%202015%2c%20south%20africa’s%20position,to%20136%20out%20of%20190. lin, f., ansell, j., marshall, a. & ojiako, u., 2019, ‘managing and building b2b sme brands: an emerging market perspective’, psu research review 3(3), 191–214. https://doi.org/10.1108/prr-04-2019-0010 manuel xavier, j., ferreira moutinho, v. & carrizo moreira, a., 2015, ‘an empirical examination of performance in the clothing retailing industry: a case study’, journal of retailing and consumer services 25, 96–105. https://doi.org/10.1016/j.jretconser.2015.04.002 marketline, 2020a, apparel retail in south africa, industry profile marketline, london. marketline, 2020b, global apparel retail, industry profile marketline, london. mccoll, j. & moore, c., 2013, ‘developing a value chain for fashion retailers: activities for competitiveness’, in h. schramm-klein (ed.) european retail research: 2012, volume 26, issue ii, springer fachmedien wiesbaden, wiesbaden. munyimi, t.f. & chari, d.f., 2018, ‘the role of buyer–supplier relationships in achieving economic sustainability in the private telecommunication sector in zimbabwe’, cogent business & management 5(1), 1540917. https://doi.org/10.1080/23311975.2018.1540917 neville, s., 2013, laura ashley boss dismisses accusations of bullying supplier, viewed 15 january 2021, from https://www.theguardian.com/business/2013/mar/28/laura-ashley-boss-dismisses-bullying-suppliers. noémi, v., 2012, ‘members of a supply chain and their relationships’, applied studies in agribusiness and commerce 6(5), 131–134. https://doi.org/10.19041/apstract/2012/5/21 palpacuer, f., gibbon, p. & thomsen, l., 2005, ‘new challenges for developing country suppliers in global clothing chains: a comparative european perspective’, world development 33(3), 409–430. https://doi.org/10.1016/j.worlddev.2004.09.007 parliamentary committee group, 2019, department of small business development 2019/20 annual performance plan, with minister & deputy minister, viewed 15 january 2021, from https://pmg.org.za/committee-meeting/28475/. pepe, c., musso, f. & risso, m., 2010, sme food suppliers versus large retailers: perspectives in the international supply chains. mcgraw-hill, milan. popović, v., mihailović, b. & simonovic, z., 2018, ‘modern food retail and unfair trading practices’, ekonomika poljoprivrede 65(4), 1499–1511. https://doi.org/10.5937/ekopolj1804499p rahaman, m.m., rau, p.r. & zaman, a.a., 2020, ‘the effect of supply chain power on bank financing’, journal of banking & finance 114, 105801. https://doi.org/10.1016/j.jbankfin.2020.105801 ram, a., 2016, tesco probe raises concerns that retailers dominate supply chain, viewed 15 january 2021, from https://www.ft.com/content/03c8b820-c5b3-11e5-808f-8231cd71622e. raven, b.h. & french jr., j.r.p., 1958, ‘group support, legitimate power, and social influence’, journal of personality 26(3), 400–409. https://doi.org/10.1111/j.1467-6494.1958.tb01595.x research and markets, 2019, the clothing industry in south africa 2019, research and markets, dublin. rogers, h. & fells, r., 2017, ‘successful buyer–supplier relationships: the role of negotiations’, journal of strategic contracting and negotiation 3(3), 121–136. https://doi.org/10.1177/2055563618763037 ryu, i., soh, s. & koo, c., 2009, ‘the role of partnership in supply chain performance’, industrial management and data systems 109(4), 496–514. https://doi.org/10.1108/02635570910948632 saunders, m.n.k., lewis, p. & thornhill, a., 2019, research methods for business students, harlow, new york, ny. schleper, m.c., blome, c. & wuttke, d.a., 2017, ‘the dark side of buyer power: supplier exploitation and the role of ethical climates’, journal of business ethics 140, 97–114. https://doi.org/10.1007/s10551-015-2681-6 schlossberg, m., 2016, the top retailer in the world has a dirty little secret – and it’s spiraling out of control, viewed 17 january 2021, from https://www.businessinsider.com/zara-accused-of-copying-artists-and-designers-2016-7?international=true&r=us&ir=t. seppenwoolde, j.j., 2019, ‘the strategic options to counteract power dominance and the opportunities to increase attractiveness by delivering higher value to partners in buyer-seller relationships : a case study to the possibilities of a weaker actor in the transportation sector’, master of science (m.sc.), business administration, purchasing & supply management, university of twente. skeete, j.-p., 2019, ‘concentration of power: a uk case study examining the dominance of incumbent automakers and suppliers in automotive sociotechnical transitions’, global transitions 1, 93–103. https://doi.org/10.1016/j.glt.2019.06.001 small business institute, 2018, the number of formal micro, small & medium businesses in south africa. small business institute, sandton. talay, c., oxborrow, l. & brindley, c., 2020, ‘how small suppliers deal with the buyer power in asymmetric relationships within the sustainable fashion supply chain’, journal of business research 117, 604–614. https://doi.org/10.1016/j.jbusres.2018.08.034 tang, c., zimmerman, j. & nelson, j., 2009, ‘managing new product development and supply chain risks: the boeing 787 case’, supply chain forum 10(2), 74–86. https://doi.org/10.1080/16258312.2009.11517219 the federation of small businesses, 2018, chain reaction: improving the supply chain experience for small firms, viewed n.d., from https://www.fsb.org.uk/resource-report/chain-reaction-improving-the-supply-chain-experience-for-small-firms.html. tsao, y.-c., 2011, ‘managing a retail-competition distribution channel with incentive policies’, applied mathematical modelling 35(9), 4140–4148. https://doi.org/10.1016/j.apm.2011.02.034 vlachos, i.p. & bourlakis, m., 2006, ‘supply chain collaboration between retailers and manufacturers: do they trust each other?’, supply chain forum 7(1), 70–80. https://doi.org/10.1080/16258312.2006.11517159 von broembsen, m., 2017, ‘you can’t bite the hand that feeds you’: contracts between sme suppliers and the large supermarkets, viewed 17 january 2021, from http://www.econ3x3.org/article/%e2%80%98you-can%e2%80%99t-bite-hand-feeds-you%e2%80%99-contracts-between-sme-suppliers-and-large-supermarkets. wang, j.-c., lau, h.-s. & lau, a.h.l., 2008, ‘how a retailer should manipulate a dominant manufacturer’s perception of market and cost parameters’, international journal of production economics 116(1), 43–60. https://doi.org/10.1016/j.ijpe.2008.06.007 watchravesringkan, k., karpova, e., nelson hodges, n. & copeland, r., 2010, ‘the competitive position of thailand’s apparel industry: challenges and opportunities for globalization’, journal of fashion marketing and management 14(4), 576–597. https://doi.org/10.1108/13612021011081751 whipple judith, m. & russell, d., 2007, ‘building supply chain collaboration: a typology of collaborative approaches’, the international journal of logistics management 18(2), 174–196. https://doi.org/10.1108/09574090710816922 wilhelm, m. & sydow, j., 2018, ‘managing coopetition in supplier networks – a paradox perspective’, journal of supply chain management 54(3), 22–41. https://doi.org/10.1111/jscm.12167 xue, w., caliskan demirag, o. & niu, b., 2014, ‘supply chain performance and consumer surplus under alternative structures of channel dominance’, european journal of operational research 239(1), 130–145. https://doi.org/10.1016/j.ejor.2014.04.044 young, i., 2020, is amazon bullying its suppliers?, viewed 17 january 2021, from https://www.etftrends.com/disruptive-technology-channel/is-amazon-bullying-its-suppliers/. abstract introduction literature review research methods and design results discussion conclusion acknowledgements references about the author(s) keshni nana department of visual arts and design, faculty of human sciences, vaal university of technology, vanderbijlpark, south africa hanlie van staden department of visual arts and design, faculty of human sciences, vaal university of technology, vanderbijlpark, south africa nicolene coetzee department of visual arts and design, faculty of human sciences, vaal university of technology, vanderbijlpark, south africa citation nana, k., van staden, h. & coetzee, n., 2021, ‘business skills development for a successful fashion business in peri-urban communities, south africa’, southern african journal of entrepreneurship and small business management 13(1), a401. https://doi.org/10.4102/sajesbm.v13i1.401 original research business skills development for a successful fashion business in peri-urban communities, south africa keshni nana, hanlie van staden, nicolene coetzee received: 16 feb. 2021; accepted: 08 oct. 2021; published: 03 dec. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurs from disadvantaged backgrounds often possess low levels of education, limited qualifications and training. this also applies to survivalist fashion entrepreneurs in the sedibeng district municipality (sdm), gauteng. over a third of these entrepreneurs are not formally educated in business skills and may not possess the adequate knowledge to operate their fashion business successfully. aim: the aim of this research was to investigate the uses and challenges pertaining to business skills amongst fashion entrepreneurs without formal, fashion-related education or training, in order to determine their business skills’ training needs. setting: the sample population included 105 black, adult fashion entrepreneurs, operating micro, survivalist fashion enterprises within peri-urban, resource-poor communities in the emfuleni local municipality (elm) of the sedibeng district. data for this study were collected from the respondents whilst shopping at fabric and haberdashery stores or from their home-business environments. methods: a quantitative study applying non-probability, purposive and snowball sampling was performed. data were collected by means of interviewer-administered questionnaires by trained fieldworkers. results: the results indicated that the respondents lacked skills in developing business plans and possessed only moderate skills in finance and marketing. the respondents indicated training needs for fashion business skills in all areas of investigation, including developing a business plan, conducting basic bookkeeping, determining correct product pricing, drafting quotations and invoices, developing a budget, conducting basic market research and advertising their products and services. conclusion: fashion business skill training programmes should be developed to target and train fashion entrepreneurs without formal fashion-related education or training, contributing to the long-term sustainability of local fashion businesses in south africa (sa). keywords: fashion business skills; peri-urban communities; resource-poor; survivalist enterprise; training needs. introduction the majority of small, medium and micro enterprises (smmes) operating in sa comprise unregistered, informal, survivalist businesses, inferring that it only makes a minor contribution to the overall economic growth, with neither a significant improvement to the standard of living nor the creation of job opportunities, to overcome unemployment (department of trade and industry 2008; eds. erasmus, strydom & rudansky-kloppers 2013; rogerson 2006:69; small enterprise development agency 2019). the ability of individuals to positively contribute to job creation requires a basic education, business skills, industry experience and finances (moloi & nkhahle 2014:225). because of a lack of skills, previously disadvantaged adults have low chances of finding employment and therefore remain unemployed (mavunga & cross 2017:304; mayombe 2017:149). south africa’s greatest limitation in overcoming unemployment is a shortage of local entrepreneurs, which can be resolved through education and training for operating a business (lewis & gasealahwe 2017:6). considering this, one of the challenges faced by sa is the development and improvement of business knowledge and skills. along with an alarmingly high 32.6% unemployment rate (statistics south africa (stats sa) 2021:1), the predominant causes for general business failure amongst smmes in sa include a lack of business skills and training, poor education, cultural and family backgrounds and poverty (malgas & zondi 2020:8; moloi & nkhahle 2014:226; rogerson 2008:71; rwigema & venter 2007). this is experienced especially amongst the previously disadvantaged and marginalised groups of the population (i.e. the older black south african population who may have low levels of education) residing outside of the more advanced suburbs (moloi & nkhahle 2014:226). these individuals operate informal businesses that often struggle to succeed (rwigema & venter 2007). it is important for fashion entrepreneurs to possess relevant business knowledge, financial skills, marketing skills, as well as fashion-related skills (such as designing, pattern drafting and garment construction), in order to operate profitable, sustainable fashion enterprises (fernandes 2019:8; groenewald 2001; ladzani & van vuuren 2002:155). details within this article are derived from a larger study that investigated business skills amongst fashion entrepreneurs without formal fashion-related education or training, within the emfuleni local municipality (elm). the purpose of this article, however, is to explore these fashion entrepreneurs’ own perception of their business skills, in order to make recommendations for business skills training. these business skills are explored in terms of current use of business skills, challenges related to business skills and the need for training in business skills, specifically focused on business plan development skills, financial skills and marketing skills. the following section of this article provides a literature review that discusses the state of smme operation in sa, the challenges imposed on sa’s entrepreneurial performance, and previous research findings that necessitate business skills development for sa by highlighting current practices amongst fashion businesses within the country. the literature review is followed by the research methods and design of this study, its results, discussion and conclusion. literature review the state of small, medium and micro enterprise operation in south africa successful smmes are known to positively contribute to the country’s gross domestic product by promoting entrepreneurship, allowing entrepreneurs to operate competitively, grow exportation, reduce poverty and create employment (coleman 2000:37; department of trade and industry (dti) 2008:xxvii, ramukumba 2014:20; rogerson 2006:66). the growth of sa’s smme economy is mostly because of unemployment and the search for alternative or new forms of income amongst individuals (rogerson 2006:69). rather than pursuing sighted business opportunities, labour market entrants who are unable to find work within the formal sector, resort to establishing unregistered, informal, survivalist businesses as a source of household income and an escape from unemployment (isaacs et al. 2007:616; ligthelm 2008:371; ramukumba 2014:21). south africa’s smme economy has been described as stagnant, being far from generating the wealth and employment that sa needs and less dynamic because of businesses dissolving at very early stages (i.e. less than three and a half years in existence) (dti 2008:xxvii; ramukumba 2014:32). it is reported that micro and small businesses are not expanding for two reasons: (1) employing low-skilled staff or (2) being unable to assist in employment creation because of numerous challenges, resulting in ultimate failure (ligthelm 2008:367; ramukumba 2014:20). there is also a high rate of liquidation, large numbers of registered but inactive businesses and the shifting of business focus within the early stages of existence, concluding that successful business operation in sa is less than average (dti 2008:xxvii). this may be ascribed to several challenges faced by emerging south african smmes, namely a lack of adequate finance, limited market access, crime, repercussions of labour laws, repercussions of being previously disadvantaged, and a lack of adequate education and training. challenges imposed on south africa’s entrepreneurial performance statistics indicate that more than half of sa population who are unemployed have not completed grade 12 (stats sa 2020:13). poor education and training have resulted in low productivity, which has led to minor specialisation within the entrepreneurial field (eds. erasmus et al. 2013:596). the skills shortage experienced amongst sas inadequately educated workforce proves to be a constraint in small business development (bureau for economic research (ber) 2016:9). it is known that a problem with productivity exists within sa as there is a shortage of skilled labour (i.e. properly trained business owners) (ber 2016:5; eds. erasmus et al. 2013:596). the lack of skills and entrepreneurship capacity are hindrances to employment growth within the country and are observed amongst south africans who struggle to initiate and successfully operate their own businesses (ber 2016:9; breward 2010:357; ramukumba 2014:20). entrepreneurial performance is measured against two prominent categories, namely entrepreneurial skills and business skills (ladzani & van vuuren 2002:155), which, in the instance of this study, applies to fashion entrepreneurs. business skills constitute business plan development skills, financial skills, marketing skills, leadership skills and human resource skills, which are crucial within the fashion industry (kamara 2014:121; ladzani & van vuuren 2002:157) for fashion entrepreneurs to operate successful and sustainable fashion ventures. the specific aspects associated within fashion entrepreneurial skills include the fashion entrepreneur’s ability to identify opportunities, their level of creativity and innovation and their ability to take risks (burke 2010:30). for the purpose of this article, the focus is on the fashion entrepreneurs’ own perception of their business skills. a call for business skills development in south africa previous research indicated that smmes within their start-up phases reflected a lack of knowledge within the particular business being operated (rogerson 2006:71). from a study conducted by naidoo in the sedibeng district municipality (sdm), over a quarter of fashion entrepreneurs felt that they did not have adequate levels of business knowledge (2009:130). poor business knowledge and a lack of networks affect the performance of sa’s smmes (ramukumba 2014:25; rogerson 2000:696, 2006:73). entrepreneurs within resource-poor areas have been found to lack the basic financial and accounting skills required to manage various costs in the business (viswanathan, sridharan & ritchie 2009:571). unqualified fashion entrepreneurs may also not have access to, or the skills required, to perform bookkeeping with the assistance of a computer or afford to employ the services of a private bookkeeper. seeking advice from neighbours and surrounding locals are, therefore, common practices of business owners in resource-poor areas (viswanathan et al. 2009:571). clients within resource-poor communities may also not be able to pay for their products upon completion and may expect the fashion entrepreneur to accommodate their needs, resulting in unstable pricing structures for the fashion business (viswanathan et al. 2009:571). businesses situated within resource-poor areas are regarded as network rich because of the social relations amongst members of the community who assist in the transfer of information and the development of consumer and entrepreneurial skills (viswanathan et al. 2009:570). naidoo (2009:138) found that word-of-mouth promotion was predominantly used by fashion entrepreneurs in the sdm to market their business. should customers be satisfied with the quality of the business’ products and services, they will provide word-of-mouth recommendations to their family and friends (ramukumba 2014:33). however, should the business be communicated negatively, it could hinder the survival of the business. as such, starting a fashion business requires education in business studies, amongst others, such as business management, entrepreneurship, human resources and retail merchandising (vaal university of technology 2020). the acquisition of this knowledge generally forms part of the academic curriculum of accredited fashion courses. mayombe (2017:150), however, refers to non-formal education and training as equipping adults of resource-poor communities with skills required for earning an income through self-employment and the operation of a micro enterprise. it has been suggested that the provision for formal business skills education and training be made for fashion entrepreneurs in the sdm, through short entrepreneurial courses (namely business management, business plan development, bookkeeping and marketing) (naidoo 2009; van wyk & van aardt 2011:182). because of the high unemployment rate in resource-poor areas and many small business owners having medium to low forms of formal education (isaacs et al. 2007:626; kugler et al. 2017:44; redmond & walker 2008:698), there is a need to develop strategies for sustaining businesses and ultimately improving economic growth (nheta et al. 2020:5). this is the reason why training directed towards fashion entrepreneurial performance is regarded as highly beneficial (nieuwenhuizen 2008:2). in conclusion to the literature review, figure 1 depicts the conceptual framework used for the empirical research of this study. this article explores fashion entrepreneurs without formal fashion-related education or training’s demographic characteristics, background of their fashion business, current use of business skills, challenges related to business skills, and the need for training in business skills, as reported by respondents, in order to make recommendations for business skills training. figure 1: conceptual framework. research methods and design study design the study was grounded within the post-positivist approach as it involved empirical observation and measurement, deterministic philosophy and reductionist intent (creswell 2014:6). the study employed a quantitative research methodology and a non-experimental, cross-sectional, exploratory survey design to achieve the aim of the study. a needs assessment was performed as business skills training needs of fashion entrepreneurs without fashion-related education or training were investigated, whereby respondents may benefit in the future. in order to fulfil the aim of the study, specific objectives sought to investigate the extent for business skills training, in terms of: demographic characteristics of respondents in order to identify the majority of fashion entrepreneurs who lack business skills to successfully operate their fashion businesses background of the fashion business current use of business skills amongst respondents challenges related to business skills experienced by respondents, and need for training of business skills amongst respondents to overcome their shortfalls. as this study was largely explorative, the findings will contribute to the existing literature and to future research by informing the content on which training programmes directed at fashion business skills should be based. setting the setting of this study was the sdm, which is situated approximately 75 kilometers from johannesburg (google maps 2020) and has an estimated population of more than 1 million people and three local municipalities, namely emfuleni, lesedi and midvaal (department of cooperative governance & traditional affairs 2020). emfuleni has the largest population (77%), with the largest unemployment rate (56.2%) (gauteng provincial treasury 2019). the focus of this study was on black fashion entrepreneurs without formal fashion-related education or training situated within the elm’s peri-urban, resource-poor communities. data collection for this study took place within fabric and haberdashery stores located in vereeniging and vanderbijlpark within the elm, popularly known for the selling of fabrics, haberdashery and miscellaneous items. the option was provided to the respondents for the completion of the questionnaires in their home-business environment (as the fashion entrepreneurs’ business may very likely be operational from their homes) (kugler et al. 2017:44; martins 2005). study population and sampling strategy the study population comprised of fashion entrepreneurs without formal fashion-related education or training who are owners of fashion businesses, in particular micro, survivalist enterprises. the following inclusion criteria were applied for the respondents to be able to participate in the study: fashion entrepreneurial adults (18 years and older, to be able to give consent to partake in the study) no post-school fashion qualification or training operating micro or survivalist fashion businesses, which employ 1–5 employees operating for a minimum of 2 years or more located within a resource-poor, peri-urban community in the emfuleni region of the sdm. whilst the total population of fashion entrepreneurs within the elm is unknown, a total of 140 fashion entrepreneurs were identified in a study conducted by van wyk in 2007. a sample range of between 100 and 120 respondents was suggested to be adequate by the consulting statistical consultation services at the north-west university, as the findings and results generated from a non-probability sampling method cannot be generalised to the entire population (nardi 2006). purposive and snowball sampling was used for contacting the respondents within this study, which are considered as common forms of non-probability sampling methods found within quantitative research (babbie 2010:192; gorard 2013:84). non-probability purposive sampling involved the selection of with whom, where and how the research was to be conducted, in relation to the study’s objectives (palys 2008:697). snowball sampling was used as a further means of identifying respondents as it was assumed that members of the sample population share similar characteristics and therefore able to identify others who share their similar attributes, thus allowing the study to operate on the basis of referrals (daniel 2012:109; nardi 2006:120). the measuring instrument administered consisted of an interviewer-administered questionnaire because of the better quality of data achieved, as the administer could clarify items on the questionnaire, resulting in a greater quantity of data and higher response rates (martins 2005). questionnaires from three different research studies were consulted to assist in compiling the questionnaire for this investigation, including van wyk (2007), kunene (2008) and naidoo (2009). content within these questionnaires closely related to sections within this study in terms of fashion business owners and the sedibeng district. following van wyk (2007) and naidoo’s (2009) focus on fashion businesses within the sedibeng district and kunene’s (2008) study featuring business owners within the textile and clothing industry in gauteng, several questions were adapted to suit the purpose of this study. the questionnaire was developed at a grade level of grade 6 and below (as measured by the flesch-kincaid readability grade-level indicator) as only 28.6% of elm’s population achieved a matriculation pass (gauteng provincial treasury 2019). the questionnaire was therefore developed to better suit respondent’s comprehension and to avoid intimidating respondents if they were unsure as to what a construct was referring to. as sesotho is the most widely spoken language amongst black individuals in the sdm (hunter 2016), accredited language translators translated the study’s consent form and questionnaire into sesotho. once translated, the consent form and questionnaire were back translated by a sesotho speaking person to ensure accuracy during translation. data collection data were collected from a total of 105 respondents over a period of 6 weeks. prior to data collection, a letter requesting permission from the fabric and haberdashery store owners and managers was sent, to use their store as the location to meet respondents for this study. considering the characteristics of the sample population of this study (possible low literacy levels and language barriers) and the actual data collection requiring more than one administer (babbie & mouton 2016), four sesotho speaking fieldworkers were employed. these fieldworkers were trained to assist with the data collection from respondents to complete the questionnaire process. considering the low levels of literacy amongst adult south africans (aitchison 2015:134; posel 2011:39), the completion of the questionnaire was done on a one-on-one basis, in order to reduce the possibility of anxiety or embarrassment if a respondent had reading or writing difficulties (viswanathan, gau & chaturvedi 2008) and to achieve a higher response rate (babbie 2013; babbie & mouton 2016). validity and reliability face validity was applied whereby the statistician and study leaders scrutinised the questionnaire before it was administered (maree 2007). a pilot test was conducted with respondents known to display the similar characteristics as the actual sample group, thus ensuring that the questionnaire measured what it had intended to measure. construct validity was assessed through statistical procedures. exploratory factor analysis was applied to ordinal-scaled questions where many options were provided. cronbach’s alpha was used to measure internal consistency for questions with multiple-scored items. therefore, the closer the alpha co-efficient was to 1.0, the more reliable the questionnaire was (malhotra 2010; nardi 2006). an additional measure, which increased the reliability of the collected data, was through the interviewer-administered questionnaire conducted by trained fieldworkers (babbie 2013; babbie & mouton 2016; malhotra 2015; oishi 2003). the researcher took care in the proper training of the fieldworkers, and each questionnaire was scrutinised before data analysis for discrepancies, persistent responses or patterns. ethical considerations ethical clearance was obtained from the vaal university of technology’s ethics committee in order to conduct the research (permit number: ecn09–2016). ethical standards were maintained whereby responses were recorded with no misrepresentation or deception, informed consent was obtained from respondents and the researcher took all possible measures to ensure confidentiality of information and results. this confidentiality was further extended to all parties handling the data, including the fieldworkers and the translators of the data collection instruments, who signed confidentiality agreements. the researcher, study leaders and the statistician for the study were the only individuals who had access to the data, thereby minimising undue risks. data analysis every completed questionnaire was examined and coded in order to verify the usability of the questionnaires. data were then analysed using the statistical package for the social sciences programme (ibm spss version 23). analyses performed included descriptive analysis that summarised and presented the responses in manageable forms for every section of the questionnaire through statistical computations, which described the characteristics or relationships amongst variables in the sample (babbie 2010). as factors derived from larger samples generalise better than from smaller sample populations (pallant 2010), the results of this study serve merely as an indication rather than a generalisation of the population. results aligning to the objectives of the study, the results were extracted and are presented below. table 1 presents the demographic characteristics of the respondents. this provides vital data to identify the majority of fashion entrepreneurs without formal, fashion-related education or training within peri-urban communities who lack business skills to successfully operate their fashion businesses. the presented results may aid the development and focus of future fashion business skills training programmes. table 1: demographic characteristics of respondents. it is evident that the majority of respondents were female (84.5%) who belonged to the older age group (between 50 and 59 years old with 32.7%). more than half of the respondents were married (52.9%), and grade 12 was reported to be the highest level of education achieved for 46.5% of respondents. the majority of respondents (73.8%) had operated their business for 5 years or more. it may therefore be interpreted that most of the fashion entrepreneurs without formal fashion-related education or training in the elm are middle aged (30–59 years old), married females, who have obtained a grade 12 qualification. similarly, previous research conducted amongst female fashion entrepreneurs in the sdm, indicated that the majority of respondents were married (naidoo 2009:129). it may be said that these entrepreneurs have been operating their business for a sufficient amount of years, as the early stages of a business are defined by less than three and a half years in existence (dti 2008). in table 2, the reliability of five factors through cronbach’s alpha coefficient is depicted. items ≥ 0.4 were considered (stevens 2002), and reliability coefficients with a value ≥ 0.6 were regarded as sufficient (malhotra 2010). table 2: factors and questionnaire items. in terms of the types of motivation to start the business by the respondents, ‘people’ (α = 0.81), ‘education’ (α = 0.71) and ‘employment experience’ (α = 0.60) displayed satisfactory reliability coefficients. with regard to how well the respondents managed with business skills, ‘financial and marketing skills’ (α = 0.84) and ‘business plan development skills’ (α = 0.84) displayed good reliability coefficients. items that did not yield reliable factors are reported in table 3 as individual items. table 3: individual items in relation to associations between variables. practically significant differences in means between demographical data and respondents’ current uses, challenges and training needs were determined with anovas and t-tests. spearman’s correlation coefficients were used to determine correlations between nominal and ordinal variables for sections of the questionnaire and cross-tabulations present associations between two or more variables, described simultaneously (malhotra 2015). low effect sizes are not reported. education and saving money the association between respondents’ highest level of education and saving money after paying expenses is reported. the fashion entrepreneur needs to possess basic numeracy skills to determine how much money to save and how much to re-invest into the business (groenewald 2001). the respondents who completed a grade 8 level of education (3.8%) did not save money after paying their business expenses. however, the respondents with higher levels of education (grade 9 to grade 12) reported to saving money after paying their expenses (cramer’s v = 0.42). based on this result, it may be inferred that the majority of respondents possess basic numeracy skills. literature indicates that higher numeracy skills are known to strengthen entrepreneurial skills (gibb 2007:5). gender, business plan development, financial and marketing skills challenges the differences between gender and challenges with ‘financial and marketing skills’ and ‘business plan development skills’ are discussed. male respondents experienced less challenges than female respondents with ‘financial and marketing skills’ (mean = 2.65; ± sd = 0.33; d = 0.57) and ‘business plan development skills’ (mean = 2.40; ± sd = 0.68; d = 0.71) as the skills were rated between average and good. it may therefore be interpreted that male fashion entrepreneurs possess stronger business skills than female fashion entrepreneurs. unemployment rates tend to be larger amongst females than in males by 2.7% (stats sa 2020), especially amongst black women with below grade 12 qualification (ramukumba 2014:22), indicating that men may have more likely been employed and acquired business skills instead of women. female fashion entrepreneurs constitute the majority of the sample population and are less likely to be empowered, operating less successful fashion businesses than male fashion entrepreneurs. it may therefore be suggested that black female fashion entrepreneurs require business skills training, to successfully operate and sustain their fashion businesses within peri-urban communities. gender and business plan development skills in terms of the correlation between gender and business plan development skills, the majority of the respondents did not have a business plan for their business (76%), which was more prominent amongst female respondents (80%) as opposed to male respondents (53.8%) who did have a business plan (cramer’s v = 0.30). female respondents also reported a poor understanding of the business plan (33.3%), compared to the majority of male respondents (75%) who understood it well (cramer’s v = 0.31). these results are noteworthy as the majority of respondents in the study were female (84.5%), indicating poor usage and understanding of business plans amongst fashion entrepreneurs without formal fashion-related education or training in the elm. as the business plan is a key document (describing every aspect of the business, where it plans to go and how it plans to get there), it should be developed and implemented in order for the growth of the fashion business to take place (burke 2010; eds. erasmus et al. 2013; garavan & o’cinneide 1994:6; groenewald 2001). it would therefore be beneficial to target and train female fashion entrepreneurs with a focus on improving their understanding and development of a business plan to contribute towards empowerment and sustaining of their fashion businesses. age and considering equipment when calculating the selling price the association between the respondents’ age and including equipment to calculate the selling price of fashion-related products is reported. equipment is considered an expense in the business because of its depreciation in value. therefore, it should be considered when calculating the selling price. from all of the age groups, the majority of respondents between 18 and 59 years (mean score ranging from 52% to 69.9%) tend to consider equipment (such as sewing machines) as an expense when calculating the selling price of fashion products. the oldest age group (60 years and older) reported that they did not consider equipment in their selling price (76.9%; cramer’s v = 0.30). it may be likely that older generations do not perform accurate cost-calculations, thereby estimating the selling price of their products. the price at which the fashion entrepreneur sells their product needs to cover the cost of producing the garment, overhead expenses and profit (meadows 2012). as overhead expenses include the equipment in the business, it should be considered (meadows 2012). years in business, business ownership and lowest pricing the association between the number of years the respondents have been in business and trying to have the lowest prices for their fashion-related products and services, along with the business’ form of ownership and trying to have the lowest prices for products and services, are reported. the respondents who have been in business for 2, 3 and 5 years (57.1%, 83.3% and 78.9%, respectively) aimed to have the lowest prices for their products and services. it was not considered important for businesses that had been in operation for 4 years (as only 33.3% of these respondents indicated that they aimed to have the lowest prices; cramer’s v = 0.30). furthermore, regardless of the business’ form of ownership (either sole-proprietorship or partnership), the respondents tried to have the lowest prices in their business (cramer’s v = 0.30) in order to survive and remain competitive. small business regulations increase the business’ operating costs and cause a barrier for the micro business to survive and remain competitive (national treasury 2016), resulting in the respondents lowering their prices in order to retain and gain more clients. however, malgas and zondi (2020:8) suggest competitive pricing strategies to be the key in sustaining and growing small businesses. a need for training is therefore identified on determining correct product pricing for operating a sustainable fashion business. years in business and profit the association between the number of years the respondents have been in business and including profit to calculate the selling price for fashion-related products is reported. from the 87.6% of respondents who reported to consider profit when calculating the selling price of their products, the respondents who have been in business for 2 years and more also reported to consider their profit (mean = 82.9%; cramer’s v = 0.30). as profit is only achieved when the selling price exceeds the costs involved (eds. erasmus et al. 2013), it may be interpreted that the respondents are aware of selling their fashion-related products for more than it cost to produce them. however, this remains questionable because of the poor success reported for the survivalist fashion business (59%). years in business and extra charges the association between the number of years the respondents have been in business and whether they charge extra for pattern alteration and when clients change their mind during or after the production stage, are reported. the respondents who had been in operation for 4 years and more tended to charge extra to alter the size of a pattern (50% and 56.6%, respectively) as opposed to businesses that had been in operation for less than 4 years (93.3% and 66.7%; cramer’s v = 0.36). similarly, the respondents who were in operation for 4 years and more (66.7% and 60.5%), charged clients extra for changing their mind about the garment initially ordered, once production had begun, compared to the respondents who were still in the early stages of operating their business (80% and 60%, respectively; cramer’s v = 0.30). it may be interpreted that the respondents who have been operating their business for longer have more business skills and experience (stafford et al. 2010) and will thereby charge extra for pattern alterations and/or when clients change their minds during or after the production stage. business acquisition and selling price the association between how the business was acquired and whether the respondents included telephone or cell phone expenses and insurance to calculate their selling price are reported. from the majority of respondents who established their own business (89.4%), 64.5% did not consider their telephone and cell phone expenses when calculating the selling price for fashion-related products. the respondents who had acquired their business through other forms (namely bought the business, bought into the business or inherited the business), included telephone and cell phone expenses (81.8%; cramer’s v = 0.30). similarly, from the majority of respondents who did not include insurance when calculating their selling price (84.6%), it was predominant amongst respondents who had established their own business (89.1%; cramer’s v = 0.37). as overhead expenses when calculating the selling price include telephone expenses or airtime and insurance (meadows 2012), these expenses should be included. however, because of the majority of respondents establishing their own business from home (79.6%), the respondents may not consider such expenses, as they are not separate from the home expenses. the respondents may also not consider the importance of having insurance because of the comfort of working within the home environment and the additional expense of insurance. business ownership, business location and selling price considering business ownership, location and selling price, the following associations are reported: the business’ form of ownership and whether respondents include rent and water and electricity to calculate their selling price, and the business’ location and whether rent and water and electricity are included. the respondents who were the sole proprietors of their business did not consider the rent of their house or work area when calculating the selling price of their products (73.7%), whereas the respondents with partners in the business tended to consider rent (58.6%; cramer’s v = 0.30). similarly, the respondents who were the sole proprietors of their business did not consider the cost of water and electricity (59.2%), whereas those with partners in the business did consider their water and electricity (71.4%; cramer’s v = 0.30). the results further indicated that the respondents who operated their business from home also did not consider the rent of their house when calculating the selling price of a product (78%), as opposed to the respondents who had their business next door and away from home (cramer’s v = 0.55). additionally, the respondents operating their business from home did not consider water and electricity for their house or work area (58%), compared to those who had their business next door and away from home (cramer’s v = 0.34). it may be interpreted that because a partner contributes their experience, expertise, skills, capital, resources, time and interest into the business (burke 2010; cloete & marimuthu 2011; groenewald 2001), it would be more likely for the fashion partnership to rent a work space from which to operate the business for a professional work address and a separation between a work and personal life (meadows 2012). a partner may further influence the inclusion of rent and water and electricity under indirect costs (meadows 2012) as expenses of the business are often divided equally between partners (burke 2010; juul 2002; meadows 2012). employees and salaries and wages the association between the number of employees in the business and whether the respondents include employees’ salaries and wages to calculate their selling price is reported. the respondents with one employee tend not to include employees’ salaries and wages when calculating the selling price for fashion-related products (62.9%), as opposed to the respondents with more employees (mean scores ranging from 72.7% to 100% for two to five employees; cramer’s v = 0.45). more employees in the business result in additional expenses. therefore, the respondents will consider their employees’ salaries and wages when calculating the selling price, in order to cover their expenses. however, businesses in resource-poor areas, such as the elm, tend to have less employees; as such, these businesses have a low average payroll (kugler et al. 2017:iv). employees and invoice booklets the association between the number of employees in the business and whether respondents had an invoice booklet is discussed. the respondents operating with one employee (68.3%) were less likely than businesses with two to five employees (mean scores ranging from 58.3% to 100%) to have invoice booklets (cramer’s v = 0.38). it may be inferred that the more employees the business has, the more diverse the set of skills are and the more likely the business is to issue invoices to clients. therefore, businesses with only one employee may lack the skill to draft an invoice for clients, highlighting a need for training on drafting invoices within the daily operations of the fashion business. according to ponelis and britz (2011:15), south african small and medium enterprises need to provide more detail on their invoices, as a lack of information is used as an excuse for delayed payments, affecting the business’ cash flow. employees, business ownership and record keeping the association between the number of employees in the business and keeping a record of money versus the business’ form of ownership and keeping a record of money are reported. in terms of the number of employees per business, for respondents with one employee, more than half of the respondents tended not to keep a record of the money in their business (54%). the respondents who did keep a record of their money, generally had between two and five employees (mean scores ranging from 66.7% and 100%; cramer’s v = 0.33). it may be inferred that the respondents with more employees were better at record keeping. in addition, half of the respondents (50%) who were sole proprietors also kept a record of their money, along with respondents who were in a partnership (79.3%; cramer’s v = 0.30). it is important for sole proprietorships and partnerships to keep a record of all its income and expenses for tax purposes (meadows 2012), and it is suggested that by regularly monitoring the financial records of the business, financial trends, strengths and weaknesses become evident (eds. erasmus et al. 2013). employees, business ownership and bookkeeping the following section reports the association between the number of employees in the business, whether respondents used a computer to assist them with bookkeeping, or had a bookkeeper. the association between the business’ form of ownership and having a bookkeeper is also reported. the respondents with one to three employees were less likely to use a computer for bookkeeping, as opposed to respondents with four and five employees who were more likely to do so (50% and 66.7%, respectively; cramer’s v = 0.38). similarly, the respondents with one to three employees were more likely not to have a bookkeeper, as opposed to respondents with four and five employees who tended to have a bookkeeper for their business (50% and 66.7%, respectively; cramer’s v = 0.44). it was further indicated that the respondents who were sole proprietors did not have a bookkeeper (88.2%), compared to the respondents with partners who tended to have a bookkeeper (51.7%; cramer’s v = 0.43). these results are verified by viswanathan et al. (2009:571) who suggest that entrepreneurs within resource-poor areas (such as those surrounding the elm) have been found to lack basic financial and accounting skills required to manage their business. having more employees in the business may result in larger businesses, thus, allowing for a diverse set of skills (such as using a computer to conduct the business’ bookkeeping). a partner is also known to bring additional knowledge and capital into the business (burke 2010; cloete & marimuthu 2011). it may be further interpreted that larger fashion businesses (implicating more employees) would be more likely to afford a computer or a bookkeeper to ensure accurate bookkeeping practices. this highlights a need for fashion entrepreneurs without formal fashion-related education or training, in peri-urban communities, to be equipped with skills in conducting basic bookkeeping, to successfully understand and operate the finances within the fashion business. employees and marketing the association between the number of employees in the business and respondents’ marketing efforts via advertisements in the newspaper, pamphlets and fashion shows is reported. the majority of respondents reported that they did not market their business through newspaper advertisements, regardless of the amount of employees in the business (mean scores ranging from 83.3% to 100%; cramer’s v = 0.41). in addition, it was indicated that the respondents did not market their business through pamphlets (mean scores ranging from 66.7% to 100%; cramer’s v = 0.42). as fashion promotion includes the traditional marketing tools of advertising (eds. erasmus et al. 2013; groenewald 2001; jackson & shaw 2009), such as newspaper advertising and pamphlets, it may be likely that the respondents are unaware of the advertising avenues available to them. as this study was conducted within the peri-urban, resource-poor communities of the elm, where sesotho is the most widely spoken language (hunter 2016), it may be interpreted that poor fluency in english and the expense of marketing via newspaper advertising and printing of pamphlets, cause barriers to successfully market the fashion business. this indicates a need for training fashion entrepreneurs without formal fashion-related education or training, on cost-effective forms of marketing their fashion business, suitable to their identified target markets. furthermore, the respondents with one to four employees did not market their business through fashion shows; however, respondents with five employees did (66.7%; cramer’s v = 0.46). although fashion shows showcase and promote the fashion business to current and potential consumers (jackson & shaw 2009; meadows 2012), it will incur further costs for the business, may be time consuming and requires additional assistance (such as for fashion models and stage productions), thereby, making it a feasible option to larger fashion businesses who have more employees. years in business, business acquisition and business skills the importance of training in business skills as indicated by the respondents is reported. on average, 90.2% of respondents who have been operating their business between 2 and 5 years, tended to regard training in business skills as very important (cramer’s v = 0.37). regardless of how the respondents obtained their business, the majority of respondents regarded training in business skills as very important (82%; cramer’s v = 0.51). this holds true as training and knowledge in business skills are essential to achieve optimal results within the business (nieuwenhuizen 2008). whilst business skills were found lacking in past research amongst fashion entrepreneurs in the elm (naidoo 2009; van wyk & van aardt 2011:182), the above results indicate that the respondents interpret training in business skills as a necessity. interpreted results indicated that the respondents lacked skills in business plan development and possessed only moderate skills in finance and marketing. the respondents regarded training in business skills to be very important. the specific training needs derived from the results, as indicated by respondents, include developing a business plan for their business (94.3%), developing a budget for their business (90.5%), conducting market research to determine which fashion-related products and service customers require (96.2%), basic bookkeeping (89.5%), advertising products and services (94.3%), finding the correct price for their products and services (92.4%) and drafting a quotation for customers (94.3%). this is in line with the provision of business skills training for fashion entrepreneurs, as previously suggested by naidoo (2009:157). such training should include short business courses that cover business plan development (which will assist fashion entrepreneurs to set up the business, secure finances and determine the long-term viability and success of the business), bookkeeping and marketing (naidoo 2009:157). an absolute 100% of respondents reported that training in business skills could benefit themselves and other fashion entrepreneurs. the most commonly selected language for training to be received was english (50.5%), followed by sotho (32%), zulu (9.7%) and xhosa (7.8%). discussion key findings and discussion because of the explorative nature of the study, the outcome of the study makes suggestions for business skills training programmes for adult fashion entrepreneurs, without formal fashion-related education or training within peri-urban communities of the elm. these suggestions are made according to the specific needs identified from the study, through the respondents’ own perception of their business skills, presented as a list of priorities. future interventions, by government or private training institutions, schools and higher education institutions, should therefore be designed as per the following considerations: training needs in eight specific areas, in terms of business plan development skills, financial skills and marketing skills. these findings are supported by literature from naidoo (2009) and van wyk and van aardt (2007) and include: developing a business plan for a fashion business conducting basic bookkeeping determining correct product pricing drafting quotations drafting invoices developing a budget determining target market needs, and advertising the business’ products and services. preferred languages to receive fashion business skills training in are english and sotho. although english was selected by the majority of respondents to receive training in, literature suggests sesotho is the most widely spoken language within peri-urban, resource-poor communities of the elm (hunter 2016). it could, therefore, be beneficial to have language translators present (with sound fashion knowledge) to further assist participants during english training sessions. word usage during the fashion business skills training should be simplified to colloquial language for a better understanding of concepts for the low-literate fashion entrepreneur, as the majority of adult south africans experience low literacy levels (aitchison 2015:134; posel 2011:39). content of the fashion business skills training should relate directly to the informal, survivalist fashion business, assisting participants in the successful daily operation of their fashion businesses, because of the majority of adult fashion entrepreneurs without formal fashion-related education or training operating within such a business environment (department of trade and industry 2008; eds. erasmus et al. 2013; rogerson 2006:69; small enterprise development agency 2019). fashion business skills training should be offered in small groups of participants, as it may be beneficial for participants to receive specialised, focused attention. a need for training in financial costing exists amongst adult fashion entrepreneurs without formal fashion-related education or training. literature suggests that entrepreneurs within resource-poor areas lack basic financial and accounting skills required to manage various costs in the business and tend to seek advice from neighbours and surrounding locals, thereby having unstable pricing structures (viswanathan et al. 2009:571). as literature suggests word-of-mouth advertising to be the most popular amongst fashion entrepreneurs in the sdm (naidoo 2009), training programmes should also explore the benefits of alternative, cost effective forms of marketing to promote the fashion business and increase consumer satisfaction. literature suggests that the majority of female fashion entrepreneurs in the sdm were married (naidoo 2009:129). thus, there should be a strong focus on business plan development, catered specifically to black, married, female fashion entrepreneurs. this shall lead to empowerment of these fashion entrepreneurs to operate sustainable fashion businesses. limitations there are limitations for this study because of its non-probability sampling method (which were used to include respondents within the elm). therefore, the results could not be generalised towards the entire population of adult fashion entrepreneurs without formal fashion-related education or training. in addition, two of the larger fabric and haberdashery stores in the elm denied permission for data to be collected from there, resulting in limited data collection locations and consequently limited access to possible study participants. the respondents were not asked how they measure the success of their business, nor were the success and failure factors of their fashion businesses investigated. the results were self-reported by the respondents, resulting in the subjectivity of responses. conclusion given the results of the study, the following conclusions can be made: the respondents are unlikely to have a business plan in place as they reported to struggle the most with business plan development. the respondents also rated their business’ success as poor, thereby questioning their skill in finance and marketing. enthusiasm towards receiving training in business skills was noted by the respondents as they believe it will be beneficial to them and other fashion entrepreneurs. suggestions were thus developed for possible fashion business skills training programmes. recommendations the following recommendations are made for future research: as responses were self-reported, therefore, unverified, fashion entrepreneurs without formal fashion-related education or training’s current use of and challenges with financial skills within the survivalist fashion business may warrant further investigation. there is a need to determine the motivation for adult fashion entrepreneurs without formal fashion-related education or training starting their own business, as this aspect remains unclear. the measures of business success and failure according to fashion entrepreneurs without formal fashion-related education or training need to be determined. alternatives to training programmes, the development of translated fashion business skills booklets could be considered to assist fashion entrepreneurs without formal fashion-related education or training in the daily operation of their business (e.g. costing sheet templates available in sotho). whilst this study determined the business skills training needs for adult fashion entrepreneurs without formal fashion-related education or training (in terms of business plan development skills, financial skills and marketing skills), other training needs related to fashion entrepreneurial skills may remain. these training needs may include practical items such as sewing skills, pattern drafting skills, visual communication skills and skills related to literacy and numeracy (mathematics). acknowledgements this manuscript (61%) stems from a published thesis submitted 2019 in fulfilment of the requirements for the degree of magister technologiae in fashion in the vaal university of technology, vanderbijlpark, entitled: ‘uses, challenges and training needs regarding business skills for fashion entrepreneurs in the emfuleni local municipality’ by keshni nana. available here: http://digiresearch.vut.ac.za/xmlui/bitstream/handle/10352. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions k.n. conceptualised the research study that was part of her mtech dissertation. h.v.s. and n.c. were the supervisors who assisted with the conceptualisation of the study and approved the article to be published. funding information the financial assistance of the national research foundation (nrf) towards this research is hereby acknowledged. opinions expressed and conclusions arrived at are those of the author and are not necessarily to be attributed to the nrf. data availability data sharing is applicable to this article as new data were created and analysed. data may be obtained from the corresponding author, k.n., upon reasonable request. disclaimer the views expressed in this article are those of the authors and do not reflect the official position of any affiliated agency of the authors. references aitchison, j., 2015, ‘proxies and perplexities: what is the current state of adult (il)literacy in south africa?’, journal of education 66, 111–138. babbie, e.r., 2010, the practice of social research, 12th edn., wadsworth cengage learning, belmont. babbie, e.r., 2013, the practice of social research, 13th edn., wadsworth cengage learning, belmont. babbie, e.r. & mouton, j., 2016, the practice of social research, oxford university press, cape town. breward, c., 2010, ‘avis charles: aspects of a conversation’, journal of dress, body and culture 14(3), 355–360. https://doi.org/10.2752/175174110x12712411520296 bureau for economic research, 2016, the small, medium and micro enterprise sector of south africa, research note no.1, january 2016, stellenbosch university, stellenbosch. burke, s., 2010, fashion entrepreneur: starting your own fashion business, burke publishing, london. cloete, m. & marimuthu, f., 2011, basic accounting for non-accountants, van schaik publishers, pretoria. coleman, s., 2000, ‘access to capital and terms of credit: a comparison of menand womenowned small businesses’, journal of small business management 38(3), 37–52. creswell, j.w., 2014, research design: qualitative, quantitative, and mixed method approaches, 4th edn., sage publications, london. daniel, j., 2012, sampling essentials: practical guidelines for making sampling choices, sage publications, los angeles, ca. department of cooperative governance and traditional affairs, 2020, sedibeng district municipality, viewed 05 february 2021, from https://www.cogta.gov.za/ddm/wp-content/uploads/2020/07/district_profile_sedibeng-1.pdf. department of trade and industry, 2008, annual review of small businesses in south africa 2005–2007, the department of trade and industry, pretoria. erasmus, b.j., strydom, j.w. & rudansky-kloppers, s. (eds.), 2013, introduction to business management, 9th edn., oxford university press, cape town. fernandes, c.e., 2019, ‘fashion design entrepreneurship: skills and solutions to create a fashion business’, journal of textile science & fashion technology, 3(1), 1–3. https://doi.org/10.33552/jtsft.2019.03.000553 garavan, t.n. & o’cinneide, b., 1994, ‘entrepreneurship education and training programmes: a review and evaluation – part 1’, journal of european industrial training 18(8), 3–12. https://doi.org/10.1108/03090599410068024 gauteng provincial treasury, 2019, socio-economic review and outlook, viewed 05 february 2021, from http://www.treasury.gov.za/documents/provincial%20budget/2019/3.%20estimates%20of%20prov%20rev%20and%20exp/gt/1.%20budget%20overview/gt%20-%20epre%20-%20budget%20overview.pdf. gibb, a., 2007, ‘enterprise in education: educating tomorrow’s entrepreneurs’, paper presented as part of the course in small business management, durham university, durham. google maps, 2020, distance from johannesburg to sedibeng, viewed 25 november 2020, from https://www.google.com/maps/dir/johannesburg/sedibeng+district+municipality/@-26.443438,27.9223798,10z/data=!3m1!4b1!4m13!4m12!1m5!1m1!1s0x1e950c68f0406a51:0x238ac9d9b1d34041!2m2!1d28.0473051!2d-26.2041028!1m5!1m1!1s0x1e94e65788245ed9:0x840e7c0127ce8643!2m2!1d28.2058768!2d-26.6833196. gorard, s., 2013, research design: creating robust approaches for the social sciences, sage publications, london. groenewald, j., 2001, mind your own design business, 2nd edn., flexfin, cape town. hunter, d., 2016, sedibeng, viewed 23 april 2016, from http://www.davishunter.com/home/place/sedibeng. isaacs, e., visser, k., friedrich, c. & brijlal, p., 2007, ‘entrepreneurship education and training at the further education and training (fet) level in south africa’, south african journal of education 27(4), 613–629. jackson, t. & shaw, d., 2009, mastering fashion marketing, palgrave macmillan, hampshire. juul, i., 2002, the small business survival handbook, new africa books, cape town. kamara, y., 2014, challenges for african women entrepreneurs in the performing arts and designer fashion sectors, viewed 14 november 2018, from https://www.researchgate.net/publication/271515276_challenges_for_african_women_entrepreneurs_in_the_performing_arts_and_designer_fashion_sectors. kugler, m., michaelides, m., nanda, n. & agbayani, c., 2017, ‘entrepreneurship in low-income areas’, office of advocacy u.s. small business administration under contract number sbahq-15-m-0150, pp. 1–49. kunene, t., 2008, ‘the training of entrepreneurs and small business owners in the textile and clothing industry in the gauteng province’, phd thesis, university of pretoria. ladzani, w.m. & van vuuren, j.j., 2002, ‘entrepreneurship training for emerging smes in south africa’, journal of small business management 40(2), 154–161. https://doi.org/10.1111/1540-627x.00047 lewis, c. & gasealahwe, b., 2017, ‘lowering barriers to entrepreneurship and promoting small business growth in south africa’, oecd economics department working papers no. 1449. https://doi.org/10.1787/18151973. ligthelm, a.a., 2008, ‘a targeted approach to informal business development: the entrepreneurial route’, development southern africa 25(4), 367–382. https://doi.org/10.1080/03768350802316138 malgas, m. & zondi, w.b., 2020, ‘challenges facing small business retailers in selected south african townships’, southern african journal of entrepreneurship and small business management 12(1), a2020. https://doi.org/10.4102/sajesbm.v12i1.202 malhotra, n.k., 2010, marketing research: an applied orientation, 6th edn., pearson education, upper saddle river, nj. malhotra, n.k., 2015, essentials of marketing research: a hands on orientation, pearson education, london. maree, k. (ed.), 2007, first steps in research, van schaik publishers, pretoria. martins, j.h., 2005, ‘interviewer-administrated primary data collection’, in t.a. tustin, a. ligthelm, j.h. martins & h.d.j. van wyk (eds.), marketing research in practice, pp. 141–183, unisa press, epping. mavunga, g. & cross, m., 2017, ‘the culture of employee learning in south africa: towards a conceptual framework’, journal of education 2017(69), 303–326. mayombe, c., 2017, ‘non-formal adult education for self-employment: the importance of post-training support for micro-enterprise development in south africa’, journal of education 67, 149–178. meadows, t., 2012, how to set up and run a fashion label, 2nd edn., laurence king publishing, london. moloi, k.c. & nkhahle, m.a., 2014, ‘perceived success of entrepreneurs in the vaal region of south africa with special reference to fashion entrepreneurs’, mediterranean journal of social sciences 5(1), 225–233. https://doi.org/10.5901/mjss.2014.v5n1p225 naidoo, r.m., 2009, ‘the job demands and job resources associated with female fashion entrepreneurs of small fashion businesses in the vaal region’, mtech dissertation, vaal university of technology. nardi, p.m., 2006, doing survey research: a guide to quantitative methods, 2nd edn., pearson education, boston, ma. national treasury, 2016, budget review, national treasury republic of south africa, pretoria. nheta, d.s., shambare, r., sigauke, c. & tshipala, n., 2020, ‘entrepreneurship gaps framework model: an early-stage business diagnostic tool’, southern african journal of entrepreneurship and small business management 12(1), a297. https://doi.org/10.4102/sajesbm.v12i1.297 nieuwenhuizen, c. (ed.), 2008, entrepreneurial skills, 2nd edn., juta, cape town. oishi, s.m., 2003, how to conduct in-person interviews for surveys, 2nd edn., sage publications, los angeles, ca. pallant, j., 2010, spss survival manual: a step by step guide to data analysis using the spss program, 4th edn., mcgraw hill, maidenhead. palys, t., 2008, ‘purposive sampling’, in l.m. given (ed.), the sage encyclopaedia of qualitative research methods, pp. 697–698, sage publications, los angeles, ca. ponelis, s.r. & britz, j.j., 2011, ‘an exploratory study of business intelligence in knowledge-based south african smes’, viewed 15 february 2021, from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.688.4642&rep=rep1&type=pdf. posel, d., 2011, ‘adult literacy rates in south africa: a comparison of different measures’, language matters 42(1), 39–49. https://doi.org/10.1080/10228195.2011.571703 ramukumba, t., 2014, ‘overcoming smes challenges through critical success factors: a case of smes in the western cape province, south africa’, economic and business review 16(1), 19–38. https://doi.org/10.15458/2335-4216.1178 redmond, j. & walker, e.a., 2008, ‘a new approach to small business training: community based education’, education and training 50(8/9), 697–712. https://doi.org/10.1108/00400910810917073 rogerson, c.m., 2000, ‘successful smes in south arica: the case of clothing producers in the witwatersrand’, development southern africa 17(5), 687–712. https://doi.org/10.1080/713661433 rogerson, c.m., 2006, ‘developing smmes in peripheral spaces: the experience of free state province, south africa’, south african geographical journal 88(1), 66–78. https://doi.org/10.1080/03736245.2006.9713848 rogerson, c.m., 2008, ‘tracking smme development in south africa: issues of finance, training and the regulatory environment’, urban forum 19(1), 61–81. https://doi.org/10.1007/s12132-008-9025-x rwigema, h. & venter, r., 2007, advanced entrepreneurship, oxford university press, cape town. small enterprise development agency, 2019, smme quarterly update: 1st quarter 2019, viewed 09 february 2021, from http://www.seda.org.za/publications/publications/smme%20quarterly%202019-q1.pdf. stafford, k., bhargava, v., danes, s.m., haynes, g. & brewton, k.e., 2010, ‘factors associated with long-term survival of family businesses: duration analysis’, journal of family and economic issues 31(4), 442–457. https://doi.org/10.1007/s10834-010-9232-1 statistics south africa, 2020, statistical release: quarterly labour force survey: quarter 3: 2020, statistics south africa republic of south africa, pretoria. statistics south africa, 2021, media release: quarterly labour force survey (qlfs) – q1:2021, pretoria. stevens, j.p., 2002, applied multivariate statistics for the social sciences, 4th edn., erlbaum, mahwah, nj. vaal university of technology, 2020, diploma: fashion, viewed 25 november 2020, from https://www.vut.ac.za/wp-content/uploads/2020/10/courses-and-programmes.fhs_.pdf. van wyk, a.w., 2007, ‘small fashion business owners and their businesses in the vaal region’, mtech dissertation, vaal university of technology. van wyk, a.w. & van aardt, a.m., 2011, ‘attributes, skills and knowledge of fashion entrepreneurs: an integrated perspective’, journal for new generation sciences 9(1), 165–188. viswanathan, m., gau, r. & chaturvedi, a., 2008, ‘research methods for subsistence marketplaces’, in p. kandachar & m. halme (eds.), sustainability challenged and solutions at the base of the pyramid, pp. 242–260, greenleaf, sheffield. viswanathan, m., sridharan, s. & ritchie, r., 2009, ‘understanding consumption and entrepreneurship in subsistence marketplaces’, journal of business research 63(6), 570–581. https://doi.org/10.1016/j.jbusres.2009.02.023 microsoft word p160 entrepreneurship in motion 2 mahadea.doc sajesbm volume 6, (2013) www.sajesbm.com article no 160 21 entrepreneurship in motion: towards an interdisciplinary and an eclectic perspective darma mahadea school of accounting, economics and finance, ukzn (pmb campus) e-mail: mahadead@ukzn.ac.za abstract during the past two decades there has been a heightened policy and research interest in the entrepreneur and entrepreneurship in south africa and other countries. the recent focus on entrepreneurship has made an understanding that the nature or role of entrepreneurs is essential for economic growth and business development. without entrepreneurs, there cannot be any entrepreneurship, whether in a large or small venture. it is increasingly realized that smme entrepreneurs and entrepreneurship are critical to the generation of output growth, employment creation, wealth expansion, revenue generation and poverty alleviation for individual and national prosperity, when many large firms are downsizing and retrenching labour, amidst a background of recessionary circumstances and fiscal stress. entrepreneurship has been conceptualized by different schools of thought, stressing different functions, under diverse circumstances in different historical times. this paper critically examines the nature of entrepreneurship by selectively drawing from the economic, management and psychological schools. it then presents an eclectic view of entrepreneurship related to decision-making ability under conditions of uncertainty by individuals who have access to and can control the utilization of resources in response to opportunities. the paper offers some pointers for enhancing the supply of effective entrepreneurship at the national level in south africa, and suggests that an interdisciplinary approach is needed to gain a better understanding of entrepreneurship. introduction although entrepreneurship has always been an integral facet to human and business development (urban, 2008: 27) it has been the focus of heightened interest in the policy and academic circles in the past two decades. against a backdrop of the recent global recession, downsizing by large firms and problems of rising inequality, unemployment and budget deficits in europe, south africa and many developing countries, it is realized that vigorous entrepreneurship is critical for sustainable job creation and economic growth in a society. entrepreneurship is becoming one of the popular undergraduate and post-graduate courses within economics and management at universities and institutions of higher learning in south africa and other countries too. in the economic framework, entrepreneurship is regarded as a prime factor of production that coordinates other inputs and organizes production in the enterprise. social scientists sajesbm volume 6, (2013) www.sajesbm.com article no 160 22 since the days of adam smith and alfred marshall have identified risk-taking as fundamental to the practice of entrepreneurship. others have conceived the entrepreneurial function as managing uncertainty, innovating and exploiting disequilibrium. theodore schultz (1980), a nobel prize-winning economist, regarded entrepreneurship as the ability to reallocate and adjust resources in response to changing circumstances. accordingly, stimulating entrepreneurial ability is necessary to sustain country’s economic growth (schultz, 1980). until recently, developing countries placed considerable efforts on physical capital investment, in their quest for economic expansion, and entrepreneurship was regarded as a residual factor in the neoclassical growth model. however, recently entrepreneurship gained eminence in the endogenous theory, as it is regarded as the engine of growth and development in an economy (lucas, 2009). thus, presently the economics of entrepreneurship is a thriving research field (parker, 2009). further, keynesian policies, in support of an expansionary state allocation of resources, were previously considered necessary for creating and sustaining growth and employment in the economy. however, while government intervention may be beneficial, it also entails costs that can mitigate against the delivery of prosperity to all in the so-called south african rainbow society. indeed, scholars who subscribe to hayekian views of the austrian school, argue that government meddling in the economy inevitably leads to state control over nearly all aspects of society, possibly tending to a switching off or discouragement of entrepreneurial opportunities (kirzner, 2009). others argue that government is not only just inefficient and expensive, but it creates a culture of impunity and dependency that stunts free will and entrepreneurship (ramphele, 2012). despite the frequency with which the term entrepreneurship or entrepreneur is used, there is a lack of consensus on the fundamental attributes underpinning this factor. this is partly because of the complexity and richness of entrepreneurship as a creative phenomenon. while entrepreneurship has its roots in economics, the entrepreneur tends to be an enigmatic factor and it is one of the most intriguing and elusive characters in economic analysis and in the theory of the firm (baumol, 1968; foss and klien, 2012). economists still debate what constitutes entrepreneurship (storey and green, 2010). entrepreneurial activity might be conceived of as the dynamic process of business creation and wealth generation in response to perceived opportunities, with the main agent in this process being the entrepreneur. stevenson and jarillo (1990: 23) consider entrepreneurship as an approach to management, defining it as a process by which individuals, individually or jointly pursue opportunities, without regard to the resources they currently control. in literature, entrepreneurship is also associated with business ownership and self-employment in small and medium-sized enterprises, smes (wenneckers and thurik, 1999; bridge, o’neill and martin, 2009). certain traits are required for individuals to take up the entrepreneurial route and to be successful in that role, such as innovative ability, risk-taking propensity, commitment and the need to achieve, locus of control and leadership capabilities (deakins and freel, 2012). one then needs to draw from the psychological school to gain a better understanding of effective entrepreneurship. the search for a proper understanding of entrepreneurship thus interfaces with different disciplines. as baumol (2012) argues, no single disciplinary framework can explain the entirety of the entrepreneurial phenomena. accordingly, this paper examines the essence of entrepreneurship from an interdisciplinary perspective, on the basis of which an eclectic paradigm is presented. the paper highlights the conceptualization of entrepreneurship and attributes of the successful entrepreneur by selectively drawing from the economic, managerial and psychological schools respectively. these are covered in the next three sections. against this background, an eclectic view of sajesbm volume 6, (2013) www.sajesbm.com article no 160 23 entrepreneurship is developed by integrating the different approaches. this is followed by a conclusion, offering directions for an enhanced understanding of the conceptualization and development of entrepreneurship. some entrepreneurship ideas from the classical economic school according to cantillon, who first introduced entrepreneurship into the economic literature in 1734 in his “essai sur la nature de commerce en general’, the entrepreneur is ‘a go between’, an intermediary or broker. he coordinated the production process, conducts all exchanges and bears risks as a result of buying at certain prices and selling at uncertain ones, when costs may be known but rewards are uncertain. to j. b. say (1803), a french economist, the entrepreneur is an organizer of production, mediating between various service providers and consumers (bridge et al, 2009). for the effective exercise of his function, say’s entrepreneur must possess a combination of moral qualities, judgment, perseverance, knowledge of business and the ‘art of super-intendance and administration’. without these entrepreneurial talents, the success of a business is doubtful. to adam smith, the entrepreneur is the classical owner-manager capitalist who risks his wealth in establishing a business. in the neo-classical economic school, the entrepreneur assumed a shadowy role once the optimal factor combination that maximizes profits or minimises costs has been arrived at. operating under conditions of perfect competition, the management of the firm simply replicates the optimizing processes that maximize return, leaving hardly any dynamic role for the entrepreneur (casson, 2003). marshall’s (1920) view of entrepreneurship is somewhat similar to that of say. he observed that the activities involved in undertaking a business are different from those of superintending a going concern. part of the superintendence or control functions can be delegated to salaried managers. in the exercise of his entrepreneurial functions, as an employer, the business individual must be a ‘natural leader of men’ (marshall, 1920: 248). in the case of a small firm, the founding entrepreneur may undertake almost all the business risks; but in the context of a joint-stock company, the risk-bearers are the shareholders. as the small firm grows, the entrepreneur must grow in his capacities to manage that growth. further, if he is to continue to be successful, he must retain his versatility, perseverance, tact, power of initiation and must rely on his own judgment as to what are likely to be the coming relations of demand and supply (marshall, 1920: 238). the knightian entrepreneur is a person who is prepared to undertake an uninsurable risk by starting up his own business, and in return, if successful, he receives an uncertain income (profit) as a reward for bearing this uncertainty. the function of a manager does not in itself imply entrepreneurship, but a manager becomes an entrepreneur when his performance requires that he exercise judgment involving liability to error (knight, 1921:276). the entrepreneur makes judgments about an uncertain future and in this regard he needs to possess particular attributes. if he is wrong he bears a loss. if he is right in this risk-taking function, profit accrues to the entrepreneur with sound foresight, self-confidence and judgment, usually when he acquires inputs for less than their combined worth. these characteristics are not tradeable, but complementary to other productive assets, thus making it logical for the entrepreneur to own assets and form a business (foss and klein, 2012). sajesbm volume 6, (2013) www.sajesbm.com article no 160 24 some entrepreneurship ideas from the austrian and modern economic schools schumpeter (1934) regards innovation as the essence of entrepreneurship. the entrepreneur is an innovator. the schumpeterian entrepreneur brings about changes in the production function in terms of new combinations, upsetting a steady equilibrium state in which all behaviour from agents is based on mere routines. the consequences of these new combinations are innovation, and individuals whose function is to carry them out are ‘entrepreneurs’ (schumpeter, 1934: 74). he brings about innovation by introducing a new product or improving the quality of existing goods, opening of a new method of production, opening of new markets, the conquest of new sources of supply of raw materials and creating of a new type of organization or reorganizing of an industry. schumpeter viewed the regular management tasks as less entrepreneurial once the start-up phase of a venture has passed. thus, one is only an entrepreneur when one carries out new combinations and subsequently loses that character as soon as he has built up the business and he settles down to running it as a routine management function of a going entity. the schumpeterian entrepreneurs are heroic figures in advancing economic development. they are the creative individuals who perceive profitable opportunities for new combinations and hire the necessary inputs for their exploitation. but they are a relatively scarce class of ‘special people’ (lucas, 1978), and their innovative actions of ‘creative destruction’ requires an act of will, i.e. leadership and not intelligence only. what motivates individuals to embark on an entrepreneurial career? schumpeter (1934: 93-94) suggests three motives. these are: • the dream to found a private kingdom and possibly a dynasty, • the will to fight and conquer and prove oneself superior to others, and to succeed, not for the sake of fruits of success, but of success itself, • the joy of creating or getting things done. for israel kirzner, who also belongs to the australian school of economics, the entrepreneur is an ‘arbitrageur’ who discovers a discrepancy in present prices that can be exploited for profitable exchange opportunities. his function is ‘to notice what other people have overlooked’ (1982: 273) so that he may spring into action within a given set of markets. in the kirznerian framework, there is no necessity for the pure entrepreneur to own resources. the distinguishing attribute of the kirznerian entrepreneur is alertness and vision to identify market gaps and exploit profitable opportunities. the entrepreneur has some additional knowledge or superior cognitive capabilities that others may not possess, enabling him to discover, evaluate and exploit profitable opportunities that others might not have yet noticed. however, kirzner (1976: 121) adds that “we do not clearly understand how entrepreneurs get their flashes of superior foresight”. once an opportunity has been identified, his task becomes that of a manager. “if people know that a gap is to be filled, and that it is worthwhile to fill, the task is no longer entrepreneurial; it can be handled by competent managers through routine production methods” (kirzner, 1982: 276). drawing from the ideas of knight, casson (2003: 23) views an entrepreneur as someone who specializes in taking judgmental decisions about coordination and employment of scarce resources. he emphasizes that the entrepreneur will have different skills from others. the entrepreneur needs to have access to resources to ensure effective exercise of his judgmental decision making function. individuals with entrepreneurial ability but without access to resources are excluded from entrepreneurship. sajesbm volume 6, (2013) www.sajesbm.com article no 160 25 in perfect competitive markets, the supply of and demand for entrepreneurship are assumed to adjust automatically. but in reality as imperfect competition is the norm, we do not have perfect competitive markets. although there is an increase in the demand for entrepreneurs in south africa, as in many other countries, this does not necessarily translate into an increase in supply, partly because of entrepreneurial capacity constraints and environmental limitations, such as crimes, security, red tape or regulations and inadequate skills, education, training and work experience. according to gem reports, south africa’s early-stage entrepreneurial rate was between 7.8 and 9.1 during the period 2008-2011 (herrington, 2012). any environmental circumstances which reduce profit would restrict entrepreneurial roles to exploit opportunities and inhibit the supply of entrepreneurs. extending a human capital approach to entrepreneurship, schultz (1980) argues that entrepreneurial ability can be increased through investment in education, training, experience and health care. just like the case of individuals in other occupations, schultz argues that entrepreneurs too can learn by doing and by training. as such the entrepreneurial function can be potentially performed, not by just an exclusive class of specialists, but by most individuals, if they have the right skills. thus, the supply of entrepreneurship can be elastic, and this can make an impact on reducing south africa’s frightening unemployment problem, which has reached an alarming rate of between 25% and 35% (expanded definition) in 2013 (sarb, 2013). accepting this, there is every merit for south africa to invest in human capital. it is noteworthy, that concerned about human and entrepreneurial development, south africa is spending over 20% of its national budget on education. south african education was historically drafted such that a person would be employed rather than self-employed (van aardt, van aardt, bezuidenhout and mumba, 2008). accordingly, the government of today has intervened with numerous skills programmes through various setas to boost people’s business skills, and specific institutions, such as khula and seda, to assist actual and potential business persons with capital and advice. this is beneficial not only in terms of enhancing south africa’s stock of entrepreneurial ability but also in attaining the millennium development goals of reducing poverty, creating job opportunities and enhancing capacity building, growth and development by 2015 and beyond, in the spirit of the country’s new national development plan. scott shane reasons that entrepreneurship links opportunities to individuals with certain psychological and creative attributes. he defines entrepreneurship as an activity that involves discovery, evaluation and exploitation of opportunities to introduce new goods and services, and organize new markets, processes and raw materials through coordinating efforts of the entrepreneur that previously did not exist (shane, 2003: 4). he adds that entrepreneurship “involves the nexus of entrepreneurial opportunities and enterprising individuals … where a situation in which a person can create a new means-ends framework for recombining resources that the entrepreneur will yield a profit” (shane, 2003: 18). once opportunities have been discovered and evaluated, their exploitation lead to the acquisition of resources, strategy implementation, organizing and performance. taking a resource-based approach to firm capabilities and growth, edith penrose (1995) regards the firm as a collection of productive resources, driven largely by the versatility of the entrepreneur. the management of the firm is a source of both entrepreneurial and managerial services, and these may be provided by the same person in the small venture. however, while managerial versatility is simply a matter of ‘administrative or technical competence’, entrepreneurial versatility is a question of ‘imagination and vision’ (penrose, 1995: 36). the neoclassical school assumes that knowledge, in keeping with the principles of perfect competition, is free and instantly disseminated. but penrose takes an alternative view, arguing that knowledge is not always easy to acquire, while labour, capital and sajesbm volume 6, (2013) www.sajesbm.com article no 160 26 resources are generally available. similarly, stiglitz (2002) contends that the market for information and knowledge is highly imperfect. knowledge as a resource base then becomes a key differentiating factor in the success of a competitive enterprise. although classical and modern economists have made pioneering contributions to entrepreneurship and the role of the entrepreneur in advancing the economic and business development process, in recent decades the study of entrepreneurship has spanned across other disciplines. interesting insights into entrepreneurship are also offered in management literature. this is briefly examined in the next section. drucker and entrepreneurship in management literature the management school associates classical entrepreneurship with new venture creation and entrepreneurs as those individuals who launch a business. accordingly, entrepreneurship is often used in the context of small business (venter, urban, rwigema, 2011: 5). further, nieman and nieuwenhuizen (2009: 9) add that entrepreneurship is the emergence and growth of new businesses. there can be different categories of firms, ranging from subsistence, micro ventures to high-profile ventures. shane and venkataraman (2000: 218) define the field of entrepreneurship as a “scholarly examination of how, by whom and with what effects opportunities to create future goods and services are discovered, evaluated and exploited”. certainly, there is much more to this, as once a business starts up, it needs to be managed well, to ensure its survival and growth. entrepreneurship is practiced in existing and new ventures. it is not the same thing as management. the skills required to launch a business are different from those required to manage a business. the entrepreneur can perform the role of both the promoter and the manager. in the small business, most managerial functions are performed by the owner-manager, founding entrepreneur. if he hires someone to look after operational aspects of the business, then that person is an administrator or trustee-manager. he is likely to operate under a contractual agreement. the entrepreneur-promoter is the individual manager, who views the pursuit of an opportunity as being both desirable and feasible. he feels confident in his ability to seize opportunities, regardless of the resources under his control. he seeks independence, initiates and manages ventures and feels satisfied to be his own boss. on the other hand, the administrator-manager is preoccupied with the effective utilization of existing resources. he takes given materials, people, capital, machines and other resources and orchestrates them into measurable output or production. while the promoter actively seeks change, the trustee-manager responds more passively in terms of rewards offered. he brings ventures to fruition. according to drucker (1997), entrepreneurship rests on management principles. entrepreneurship is defined as doing something innovative in order to obtain better yields on resources and expand markets for a product or service. “entrepreneurs innovate. innovation is the specific instrument of entrepreneurship. it is the act that endows resources with a new capacity to create wealth. innovation, indeed, creates a resource. there is no such thing as a resource until man finds a use for something in nature and then endows it with economic value. until then, every plant is a weed and every mineral just a rock” (drucker, 1997: 27). the entrepreneur, in drucker’s (1997) view, should be opportunity-focused to accommodate, anticipate and initiate change, and introduce innovation in business organizations and sajesbm volume 6, (2013) www.sajesbm.com article no 160 27 public-sector institutions. he regards “innovation as the specific tool of entrepreneurs” (1997: 17). this role of the entrepreneur is similar to those of schumpeter, who also emphasized that the entrepreneur is an innovator, seeking opportunities to carry out new combinations. according to drucker, the opportunities for innovation may arise from various sources, internal and external to the firm. these include: • the unexpected (a success, failure or exogenous event) • incongruities o new approaches to process needs o changes in industry or market structure o changes in demographics o changes in perception, mood and meaning o new knowledge and bright ideas. this role of the entrepreneur is similar to those of schumpeter, who also emphasized the entrepreneur as an innovator, seeking opportunities to introduce new combinations in various forms. an entrepreneurial society is driven by the activities of these innovative entrepreneurs. although ideally entrepreneurial activity is embodied in the creation of new firms, it is necessary for entrepreneurship to flourish within large business organisations, and for this, they need an entrepreneurial management structure with a corporate strategy, reflecting what the firms should be doing. professional managers can only secure their own security if their firms are secure, profitable and innovative. these accrue from responding to opportunities in the environment. “companies that have built entrepreneurial management into their structure ….continue to be innovators and entrepreneurial leaders, irrespective of changes in chief executives or economic conditions” (drucker, 1997: 156). synthesis entrepreneurship as alertness to spot and exploit opportunities was initially championed by both the classical and austrian schools. over the past decade alertness to profit opportunities has featured prominently in the management literature in entrepreneurship (shane and venkataraman, 2000). shane (2003) regards entrepreneurial opportunities in the context of new means-ends frameworks, which is in the kerznerian or schumpeterian spirit. although shane’s “new” means-ends framework is seemingly different from the classical optimizing framework, he seems to be aligning with the schumpeterian thinking on innovation. there seems to be some convergence in thinking between the two schools. while for the modern management scientist, opportunity recognition, evaluation and exploitation are critical aspects of entrepreneurship, for kirzner, recognition is the primary entrepreneurial act, the rest is management (foss and klein, 2012). in systematically exploring and exploiting the above opportunities, the entrepreneur is essentially a risk-taker and a risk manager. he manages risk through preventive measures, such as taking insurance, and through pro-active strategies that enable him to influence or adapt to changing business conditions. so in the druckerian perspective, everyone who can face up to decision-making under conditions of uncertainty can be an entrepreneur and can learn to behave entrepreneurially. this implies that one is not necessarily born as an entrepreneur, but one can be trained and study to become one. in short, for drucker, the practice of entrepreneurship and innovation is not inborn characteristics, but a learnable and doable behaviour. “entrepreneurship, then, is behaviour rather than personality trait” (drucker, 1997: 23). . the ability of the entrepreneur to learn is critical to his behaviour to respond creatively to a constantly changing environment. this suggests that human capital in the form of knowledge, skills and experience acquired by individuals is important in fostering entrepreneurship (becker, 1975). sajesbm volume 6, (2013) www.sajesbm.com article no 160 28 essentially, therefore, in the druckerian view, entrepreneurship is an approach to management to introduce innovation that can be learnt and practiced. earlier, theodore schultz (1979) also viewed entrepreneurship as an aspect of human behaviour that is capable of being exercised by most people with the ability to adjust or reallocate resources in response to changing circumstances, which can be sources of opportunities. as such, entrepreneurship is not simply restricted to businesspersons, but farmers, housewives, students, deans and university top decision makers and research directors form part of schultz’s set of entrepreneurs. further, schultz (1980) argued that entrepreneurship among individuals can also be enhanced through education, training experience and health care. jovanovic (1982) finds that differences in entrepreneurial ability, learned over time, determine a person’s entry or exit. as individuals acquire more business experience, they may formulate better estimates of their ability to expand the firm, and contract the firm if they discover a lower entrepreneurial ability. instead of contracting, some may exit from entrepreneurship. holmes and schmitz (1980) predict that the least able types of entrepreneurs will take over and manage existing firms, while those with more capabilities will specialize in setting up new businesses, perhaps as serial entrepreneurs. accordingly, in many schools of business and management studies, entrepreneurship and enterprise education is offered as part of the curricula. the phenomenon under study is usually small business entrepreneur, business incubation and the effective exercise of entrepreneurial management functions, in the form of organizing, directing, control and leadership, as well as raising finance and drawing up a business plan. n-ach and the psychological school entrepreneurship is difficult to work into formal economic analysis because of its association with the temperament and personal qualities of individuals (penrose 1995). can one identify a trait that allows for the identification of an entrepreneurial personality? this takes us to the psychological school. according to mcclelland (1961) a key feature in the psychological motivation of individuals conducive to entrepreneurial activity is the need for achievement, also known as n-ach. the critical element linking n-ach to economic and business development is the entrepreneur. he organizes the firm, increases its productive capacity and translates n-ach into economic development. n-ach is described as the urge to improve, the motive to succeed competitively with some standards of excellence, and the desire to do well, not so much for the sake of social recognition or prestige but to attain an inner feeling of accomplishment. mcclelland (1961, 1986) associates with high need achievement: • personal effort and self-confidence, • opportunity seeking and pro-activeness to make things happen, • responsibility for solving problems • setting goals that are both challenging and realistic, • moderate risk preferences, • seeking concrete feedback on performance, • capacity to plan ahead, and • effective use of time as a scarce resource. the achievement drive of individuals varies from one person or country to another, and across cultures. at the macro level, mcclelland contends high n-ach levels are associated with above-average economic growth: a society with a generally high level of need achievement tends to produce more energetic entrepreneurs who in turn produce more rapid economic development (mcclelland, 1961: 205). at the micro level, a positive relationship is sajesbm volume 6, (2013) www.sajesbm.com article no 160 29 found between people’s n-ach and their entrepreneurial success in south africa and other countries. individuals high in n-ach attain greater success in business than those low in nach (van der merwe,1984; boschoff and boer, 1988; van daalen, 1992, mahadea, 1994, 2001; bridge et al, 2009). psychological evidence indicates that n-ach is instilled early in life and child rearing practices are critical in developing personalities oriented towards achieving economic success. the influence of parents is thus critical for n-ach, particularly mothers who set reasonably high standards for their children at a time when they can reasonably attain them without excessive interference, overprotection and indulgence (mcclelland, 1986). some individuals might have had difficult childhood experiences, possibly impacting adversely on their potential n-ach and entrepreneurial propensities. however, according to mcclelland, n-ach levels can still be developed or strengthened in adults through appropriate training and potential entrepreneurs can thus be trained to succeed. this implies that latent development motivations of individuals can be stimulated through relevant policy interventions and, over time, these, combined with practical training in management, marketing, finance and project development, the supply of effective entrepreneurs or entrepreneurship can be increased. a high n-ach is an important trait not only for successful entrepreneurs and also for the success of people in many other occupations, including managerial and leadership positions. literature has identified other traits as critical to entrepreneurship. witt (1998), for instance, describes cognitive leadership to be associated with entrepreneurship. entrepreneurs need to have the ability to communicate plans, visions and strategies to others and harness the skills of people and other resources to start and develop a firm. researchers have identified other personality attributes, common among high n ach people that are conducive to entrepreneurship. these include self-confidence, optimism, locus of control, extraversion, tolerance of ambiguity, imagination, leadership and creativity (rotter, 1966; timmons, 2007, shane and barron, 2008; bridge at al, 2009; foss and klein, 2012). acquired or innate attributes some of the above traits are certainly genetic in that some individuals are born with them, making natural entrepreneurs as a scarce breed. indeed, harrison (2005: 49) argues that individuals have certain talents encoded in their dna genes and entrepreneurs have an inborn predisposition to thinking and acting in a certain ways that contribute to their success. to avoid inertia, these talents have to be ‘switched on’ for successful entrepreneurship. however, the presence of one trait does not always guarantee success, but lacking an achievement motivation drive contributes to failure in any entrepreneurial endeavor in the long run. many of the characteristics of successful entrepreneurs are also common to managers. luckily some of these attributes, according to deakins and freel (2012) and others (timmons, 2007; bridge et al, 2009) can be acquired through training, experience and human capital development. after all, personality characteristics are not always stable. these may change over time as individuals are exposed to different learning and resource environments. one can thus criticise research that seeks to develop successful entrepreneurs purely on the basis of personality profiles. concentrating on personality traits implies that we are overlooking the environmental and cultural influences, as well as reducing the importance of education and training on the propensity of an individual to venture into small business entrepreneurship. sajesbm volume 6, (2013) www.sajesbm.com article no 160 30 accordingly, one can argue that some entrepreneurs can be ‘made’ or ‘developed’ to increase the supply of entrepreneurship. however, it is an indisputable fact of life that high profile entrepreneurs are, to some extent, a product of genetics and family or environmental circumstances, and that some of the skills natural to entrepreneurship cannot be taught. indeed, timmons (2007) and casson (2003) describe some attributes which are more innate and cannot be so easily acquired. these include: • vision combined with a capacity to inspire • creativity and innovativeness • conceptual ability • high energy, health and emotional stability • imagination although some entrepreneurial traits are innate and some can be enhanced through education and training, it is reasonable to argue that some of these attributes are scarce and difficult to screen for among individuals prior to their entry into self-employment. accordingly, in the short term, the supply of high profile entrepreneurship can be relatively inelastic. encouragingly, with proper empowerment interventions, such as provision of relevant training, finance and market opportunities, there is always a possibility that latent or dormant entrepreneurial skills in some individuals can develop and flourish in the long run. from the foregoing, it is clear that a high level of n-ach is clearly necessary but not the only key factor in motivating entrepreneurship. people of different personality types, attitudes, cultural backgrounds, motivations and skills can become entrepreneurs and succeed in their roles, if given the opportunities or incentives to evolve. timmons (2007) and penrose (1995) suggest that research should rather study the behaviours, skills and activities of entrepreneurs to isolate the role that they play in enabling viable organizations to come into existence and remain competitive. from this perspective, entrepreneurship is a role that an individual undertakes to create organizations and keep them competitive. so, what distinguishes the entrepreneur from the non-entrepreneur is that the entrepreneur creates firms whereas the non-entrepreneur does not (gartner, 1988; gartner and bellamy, 2009). towards an eclectic view as there is some overlap between different schools of thought on entrepreneurship, there is as yet neither an uncontested understanding of the nature of entrepreneurship nor a universally accepted function of the entrepreneur. different authors define entrepreneurship differently. those who emphasise his organizing role as a higher form of labour, perceive him as a manager or a co-ordinator. to those who stress his creative ability under conditions under uncertainty, he is an innovator and a risk-taker. those who add the effects of superior knowledge that animate entrepreneurial competition, stress the entrepreneur’s role in terms of alertness, perception of and adjustment to disequilibrium (lucas, 2009). the essence of entrepreneurship thus lies not in one specific function but in a range of disparate activities performed by different personality types and capabilities. no matter what role is adopted for entrepreneurship, it is certainly not a routine activity. it is concerned with discovery, evaluation and implementation of actions or ideas to exploit profitable opportunities, in particular circumstances of a new or preferred ends-means framework. this characterization of entrepreneurship comes close to that of shane. these actions need access to resources and co-ordination, and are driven by the entrepreneur and his team. there are as many kinds of change as there are many concepts of the entrepreneurial function associated with different types of firms and individuals as entrepreneurs. this distinguishes entrepreneurship from routine management, which is concerned with the recycling activities of an organization. sajesbm volume 6, (2013) www.sajesbm.com article no 160 31 it is an undoubted fact that no one is an entrepreneur all the time, and that nobody can be only an entrepreneur. equally, once a firm has been established to exploit a perceived opportunity, running it as a going concern will increasingly become a managerial task. individuals high in n-ach and human capital tend to exhibit more organizational skills in the conduct of their ventures, and tend to launch more sophisticated ventures and perform better relative to those low in n-ach (mahadea, 1994, 2001). thus, there is a need for both entrepreneurial and managerial services from the moment of the conception of a business idea to the establishment of a firm which can be described as a going concern. during this period, the mix of entrepreneurial and management services might be thought of as a continuum. the management literature does not seem to have fallen into the economists’ approach of viewing entrepreneurs as performers of functions valuable to the economy rather than as hired people asset to manage the existing resources of the firm and an extension of the existing enterprise. they perform functions like planning, organizing, human resource management, marketing, leading, hiring and controlling. entrepreneurs who are high in need achievement tend to be pro-active and to act fast realising that time is a non-renewable resource and a window of opportunity is unlikely to remain open indefinitely. they take risks and accept responsibility for decisions and provide solutions to business problems. on the other hand, this literature has given little explicit attention to the entrepreneur’s external economic role, such as contribution to gdp and employment. the role referred to here is partly the function of managing an existing venture or the creative function attributable to existing firms under disequilibrium conditions, as partly described by economists. as wickham (2005: 111) succinctly puts it, entrepreneurship is concerned with the economic effects of, and the management practice of entrepreneurs. as a part of strategic management, it is a skill that can be practiced and perfected in a human business setting. what emerges from the management literature’s conception of the entrepreneur, therefore, is a portrait which complements the economists’ conception. both schools associate entrepreneurship with the creation of enterprises and change. in this respect, the entrepreneur’s role can hardly be discounted, since a business firm cannot start itself and opportunities cannot be exploited without the agency of the entrepreneur. while new ventures are created by entrepreneurs, all small businesses are not necessarily entrepreneurial firms. many are started as ‘lifestyle’ ventures, with limited growth ambitions or objectives (venter et al, 2011). however, if analysts are to classify all owner-managers of small non-innovating firms, who are almost exclusively engaged in normal management functions, as entrepreneurs, then they should explicitly be recognized as a qualitatively lower form of entrepreneurs than those in the dynamic firms, who carry out new combinations in the schumpeterian sense. likewise, those who engage in a low value-adding business in the informal sector or street-vending, and who started it by necessity because of lack of alternative employment opportunities, should be regarded as a lower or nascent form of entrepreneurship. over time, with benefits of learning by doing and networks, some of these emerging entrepreneurs may graduate to the formal sector. elements of entrepreneurship in the context of large firms in the context of a large business, some aspects of entrepreneurship are delegated and thus performed by certain managers or employees in the hierarchy, with requisite skills and knowledge. this may be a form of intrapreneurship or corporate venturing. the managers act entrepreneurially, take strategic decisions jointly to bring about innovation within the mainstream activities, from which new products may spun out. however, with regard to the small and micro-enterprises, delegation may be difficult and this makes the owner-manager as the sole entrepreneur with the decision-making authority and main point of accountability. sajesbm volume 6, (2013) www.sajesbm.com article no 160 32 he then takes the ultimate decisions regarding what to produce, for whom to produce, what resources to hire and how these resources are to be deployed or transformed into new forms and perspectives (the means). at times, loans have to be raised from financial institutions through the presentation of a business plan. however, although the small firm entrepreneur makes the ‘ultimate’ decisions regarding resource allocation, this does not imply that he prepares the entire content of the firm’s business plan when it has to raise external finance to supplement his own resources. in this regard, plans may be drawn up by outside managers and consultants. but the implementation of the plan to reflect the mission, direction, strategy and conduct of the firm remains his decision and responsibility. indeed, it is perhaps to the modern major corporations that one should turn to obtain additional insights into the nature and scope of entrepreneurship. in an age of global connectivity, business organizations should undertake a continuing assessment of their strategy and tactics to match the changing environment and reposition themselves to an intended outcome of growth and organizational renewal and steer away from a wrong direction (sunter, 2013; illbury and sunter, 2005). the decisions which flow from this exercise will determine how organizational resources will be used, rearranged or adapted to enter new markets with improved existing products, old markets with new products or new markets with new products. as firms and entrepreneurs are engaged in activities with diverse levels of technical and operational sophistication, and do not possess the same strengths, capabilities and strategies, the resources they use or have access to tend be heterogeneous rather than homogenous. decisions to leave certain product-markets in certain regions or relocate to certain other regions are also taken. new divisions or branches may be structured or downsized within existing corporate identities or new companies may be formed. taxation, rebates, labour unrest, assistance to firms in financial distress, and new labour and broad based black economic empowerment (bee) legislations often dictate how a new venture might be launched or an existing firm be restructured legally. the organizational forms taken and types of activities engaged in, whether manufacturing or agriculture or retailing, are unimportant in the context of entrepreneurship. what is important is that decisions are taken, under conditions of uncertainty, which commit the organisation’s major resources to particular directions for value adding for some years ahead, in recognition of opportunities and threats (mahadea, 2000). the entrepreneurs are often motivated by extrinsic (profit) and intrinsic goals (desire for independence), as well as by unmet social considerations, to address poverty or hiv/aids (social entrepreneurship). elements of entrepreneurship decisions in a small firm in making a decision to take the entrepreneurial route to self-employment in a small business, an individual will compare the uncertain expected utility from self-employment with certain utility from wage-employment. if utility is greater in self-employment, proxied in terms of expected earnings or non-monetary rewards with freedom of being one’s boss, than in wage employment, then he shifts to entrepreneurship. in other words, if the opportunity cost is low and net rewards are high, the subjective decision to take the entrepreneurship route is a preferred option. entrepreneurial decisions are thus continuing decisions that are taken by those who control economic resources or have access to them. decisions are made on the basis of cold facts, with a proper assessment of opportunities and gaps in the market and an alignment of the strength of the entrepreneurs or their firms to exploit and create opportunities. as available information or knowledge is not necessarily perfect under changing environmental conditions because of bounded rationality and ‘brain sajesbm volume 6, (2013) www.sajesbm.com article no 160 33 power’ limitations, decisions made under uncertainty by the entrepreneurial persons are likely to be based on cognitive heuristics rather on optimizing calculus/choices (kahneman, 2011). entrepreneurs with larger stock of human capital, in terms of education, vocational training, and information knowledge and ideas, are better placed to exploit opportunities via new ventures and adapt their enterprises to the constantly changing business environment (parker, 2009; nieman and nieuwenhuizen, 2009; herrington, 2012). as access to resources can be a limitation in certain circumstances, then the entrepreneurial decision leading to the emergence of the firm is through an effectuation process (sarasvathy, 2001). effectuation is described as the logic of entrepreneurial approach, a dynamic and interacting process of creating the new artifact (sarasvathy, 2008). this implies that the constraint entrepreneurs start with an aspirational level with the means available (who i am) and develop creative ideas and courses of action (what can i do) by tapping existing resources at their immediate disposal, possibly interacting with other stakeholders (who i know), to make things happen (outcome) in the context of starting a new business, that is ‘selecting between means to create that effect’ (sarasvathy, 2001: 245; sarasvathy, 2008). the owners of progressive small businesses are generally actively involved in such decisionmaking and they thus usually do control the resources at the disposal of the firm. successful small firms are the seed of medium-sized and large firms. in the larger firms, the institutional shareholders and the board of directors might exercise effective control. the modern entrepreneur is thus someone who effectively controls resources and take strategic decisions to exploit business opportunities. as reekie (1989: 189) argues, decisions “as to what lines of business to employ capital (in) and how much capital to employ …(decisions as to) expansion and contraction of the size of the total business, and its main sections … (decisions as to its) financial structure’ fall upon the entrepreneur alone. entrepreneurship is then the ongoing activity of making and implementing decisions which will govern the marshalling and utilization of resources with a view to the formation and expansion of firms, thus adding value to the satisfaction of consumer and societal needs. the outcomes are wealth creation, production and distribution of goods and services that did not exist before. these economic activities contribute to enhancing the levels of output (gdp), income and employment. the entrepreneur has to exercise judgment under conditions of uncertainty. judgment is the faculty of decision-making about resource uses; it is the act of owning and controlling productive resources (foss and klein, 2012: 237). this is essentially a behavioural approach. when opportunities are combined with entrepreneurs’ and other individuals’ skills and motivation, the outcome is creation of new firms, and consequently economic growth and employment creation (de clercq and crijns, 2007). some top managers of large organizations spend most of their time taking entrepreneurial decisions on an ongoing basis. this has gained more currency with globalization as organisations are under constant pressure to adapt their internal resources, strategies and policies to match the changing external business environment. companies are thus continually having to make almost daily decisions to effect changes in relation to meeting the needs of their customers, suppliers, workforce and other stakeholders. this is to ensure that they have the capacity to exploit present and future opportunities and withstand environmental threat for enhanced competitive advantage and sustainability. the large firms that make good decisions and act on them fast have higher metabolism, enabling them to exploit opportunities and overcome obstacles quickly. in contrast, the initiator of a small business, formal or informal, on the other hand, often commits his major resources in such a way that that no major review or repositioning is possible for years to come. he is more concerned with operational decision-making process. there is one burst of entrepreneurial decision-making followed by years of operating a ‘going sajesbm volume 6, (2013) www.sajesbm.com article no 160 34 concern’ with basic management tasks. however, the role and behavior the entrepreneur may change as the internal situation of the firm becomes more established over time with the prevailing economic, political, social, and technological circumstances, which allow an appreciable measure of freedom of decision. decision-making then becomes more formal, involving a clear process of rules, procedures, tasks delegation, accountability and responsibility. entrepreneurship must accordingly be conceptualized not in terms of function or personality but in terms of decision-making with substantial ownership and commitment of resources on the part of the entrepreneur. this is essentially an eclectic perspective that will probably satisfy the needs of economists as well as management scientists. whatever the strength of these interpretations, it should be stressed that the concepts of entrepreneurship and management alter over time with economic progress and the changing environment in which businesses operate. entrepreneurship as a discipline and as a business decision activity will evolve over time. entrepreneurship is increasingly taking on a multidisciplinary orientation. conclusion entrepreneurship is a complex process, within new and existing firms. as an economic phenomenon, entrepreneurship has been conceptualized under diverse circumstances in different historical epochs. the exercise of entrepreneurship is not confined to small firms exclusively. to the extent that individuals can take ultimate decisions and take responsibility for their actions in their particular circumstances, they are all entrepreneurs to a small or great extent. no matter what specific definition or function one may adopt for entrepreneurship, it is inherently non-routine. entrepreneurship runs parallel with the entrepreneur. the main agent in entrepreneurship is the entrepreneur. modern schools of economic thinking view the entrepreneur as a decision maker responsible for venture creation and economic expansion in response to opportunities. the economic approach positions the entrepreneur as a creative person, driven by the need to produce a good or a service and add value to society. however, entrepreneurship may be allocated to unproductive or destructive activities, when ‘rules of the game’ tend to favour certain activities, such as crime, rape, corruption and gangsterism, if the reward structures from these activities are very high and the culprits unlikely to be caught (baumol, 1990). a favourable social climate is thus a necessary pre-condition for the development of productive entrepreneurship in any society. therefore, to establish the foundations for a successful entrepreneurial economy in south africa, that has a low early stage total entrepreneurial activity (tea) rate of (9.1%) relative to other efficiency-driven economies (14%) in 2012 (herrington, 2012), government must discourage activities that divide the economic pie rather than increase its size. further, government institutions must ensure that winning entrepreneurs and larger businesses have incentives to innovate and grow, and there must be institutions that reward and support useful entrepreneurial activity, through property, credit and contract rights (baumol, 2010), as well as address the education, training and environmental needs in support of individual decision-making propensity towards business entrepreneurship (mahadea and simson, 2011; herrington, 2012). other schools highlight a complementary functional role of the entrepreneur. although the tasks of entrepreneurs cannot be completely defined, certain traits partially indicate their profile. to mcclelland, enhancing n-ach is critical for entrepreneurship. to drucker, the entrepreneur should be opportunity-focused to bring about innovation, and all organizations sajesbm volume 6, (2013) www.sajesbm.com article no 160 35 should behave entrepreneurially and practice entrepreneurship for maximum individual and national prosperity. this cannot happen in a vacuum. the eclectic view associates entrepreneurship with continuing smart decisions under uncertain conditions regarding resource allocation to add value to society by those in control of economic resources of the firm. entrepreneurship is essentially an interdisciplinary subject. there is much to admire in contemporary entrepreneurship theory in management as well as in economics (foss and klein, 2012: 248). clearly, no single disciplinary framework can explain the wholeness of the entrepreneurial phenomena. consequently, “entrepreneurship must be studied in context, from a multidisciplinary perspective and using multiple levels of analysis” (griffiths, kickul, bacq and terjesen, 2012: 623) references baron, r. a. and shane, s. a. (2008): entrepreneurship: a process perspective, southwestern cengage learning, oh, usa. baumol, w. j. (1990): entrepreneurship: productive, unproductive and destructive. journal of business venturing, 11 (1): 3-22. baumol, w. j. (2010): the microtheory of innovative entrepreneurship. princeton university press, princeton, n j. becker, g. (1975): human capital, new york: national bureau of economic research. boschoff, a. b. and boer, j. h. (1988): n-ach training, organizational climate and organizational performance. development southern africa, 5(1): 73-87. bridge, s., o’neill, k. and martin, f. (2009): understanding enterprise, entrepreneurship and small business. palgrave macmillan, london. casson, m. (2003): the entrepreneur: an economic theory. martin robertson, oxford. deakins, d and freel, m. (2012): entrepreneurship and small firms. mcgraw hill, london. de clercq, d. and crijns, h. (2007): entrepreneurship and education in belgium: findings and implications from the gem, in handbook of research in etrepreneurship education, ed a. fayolle, edward elgar, london, 169-184. drucker, p. (1997): innovation and entrepreneurship, oxford: butterworth-heinemann. foss, n. j. and klein, p. g. (2012): organizing entrepreneurial judgment, cambridge university press, cambridge. gartner, w. g. and bellamy, m. g. (2009): creating the enterprise, thomson southwestern, canada. gartner, w. g. (1988): who is an entrepreneur? is the wrong question, american journal of small business, 12 (4): 11-32. griffiths, m. kickul, j., bacq, s. and terjesen, s. (2012): a dialogue with william j. baumol: insight on entrepreneurship theory and education, entrepreneurship theory and practice, 36 (4): 611-626. sajesbm volume 6, (2013) www.sajesbm.com article no 160 36 harrison, t.l. (2005): instinct: tapping your entrepreneurial dna. warner books, new york. herrington, m (2011): entrepreneurship: how can obstacles be overcome?, in advocates for change, ed m. mbeki, picador africa, johannesburg, 115-136. herrington, m (2012): african entrepreneurship lacking!, business brief, 17 (5): 14. holmes, t. j. and schmitz, j. a. (1990): a theory of entrepreneurship and its appication to the study of business transfers, journal of political economy 98 (2): 265-94. illbury, c. and sunter, c. (2005): games foxes play, human and rousseau tafelberg, cape town. kahneman, d. (2011): thinking, fast and slow, penguin, london. kirzner, i. m. (1973): competition and entrepreneurship, university of chicago press, chicago. kirzner, i. m. (1976): equilibrium versus market process, in e. g. dolan, ed. the foundations of modern austrian economics. sheed and ward, kansas city, 115-125. kirzner, i. m. (1982): competition, regulation and the market process: an austrian perspective. cato policy analysis, no 18, september 30. kirzner, i. m. (2009): the alert and creative entrepreneur: a clarification, small business economics, 32 (2): 145-152. kirzner, i. m. (1982): ‘the theory of entrepreneurship in economic growth’ in kent, sexton vespers (eds.), encyclopedia of entrepreneurship, prentice-hall, new york. knight, f. h. (1921): risk, uncertainty and profit. a. m. kelley, new york. lucas, r. e. (1978): on the size distribution of business firms, bell journal of economics, 9 (4): 508-523. lucas, r. e. (2009): ideas ad growth, economica, 76 (1): 1-19. marshall, a. (1890): principles of economics, macmillan, new york. mcclelland, d. c. (1961): the achieving society, van nostrand, princeton, n.j. mcclelland, d. c. (1986): characteristics of successful entrepreneurs. journal of creative behaviour, 21 (3): 219-232. mahadea, d. (1994): need achievement and small business success in transkei. development southern africa, 11 (1): 93-98. mahadea, d. (2000): on the emergence of firms and sick institutions, south african journal of economics and management sciences, 4 (1): 3140. sajesbm volume 6, (2013) www.sajesbm.com article no 160 37 mahadea, d. (2001): similarities and differences between male and female entrepreneurial attributes in manufacturing firms in the informal sector in the transkei. development southern africa, 18(2): 190-199. mahadea, d. and simson, r. (2011): work without workers: what happened to employment in south africa?, in jobs, jobs, jobs (ed. nolutshungu, a.), free market foundation, johannesburg. 182-212. nieman, g. and nieuwenhuizen, c. (eds), (2009): entrepreneurship: a south african perspective. van schaik, pretoria. parker, s. c. (2009): the economics of entrepreneurship, cambridge university press, cambridge. penrose, e. (1995): the theory of the growth of the firm, oxford, london. ramphele, m. (2012): conversations with my sons and daughters, penguin, london. reekie, w. d. (1989): industrial economics: a critical introduction to corporate enterprise in europe and america, edward elgar, aldershot. rotter, j. b.(1966): generalised expectancies for internal versus external control reinforcement, psychological monographs, 80 (9): 609-610. sarasvathy, s. d. (2001): causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency, academy of management review, 26: 243-263. sarasvathy, s. d. (2008): effectuation: elements of entrepreneurial expertise, edward elgar, cheltenham, u.k. schultz, t. w. (1980): investment in entrepreneurial ability, scandinavian journal of economics, 82(4): 436-463. schumpeter, j. a. (1942): capitalism, socialism and democracy. harper and row, ny. schumpeter, j. a. (1939): business cycles: a theoretical, historical and statistical analysis of the capitalist process. mcgraw-hill, new york. shane, s. and venkataraman, s. (2000): the promise of entrepreneurship as a field of research, academy of management, 25 (1): 217-226. shane, s. (2004): a general theory of entrepreneurship, edward elgar, new york. stiglitz, j. b. (2002): globalization and its discontent, new york, norton. storey, d. j. and greene, f. j. (2010): small business and entrepreneurship, pearson, london. sarb (2013): south african reserve bank quarterly bulletin, pretoria (june). sunter, c. (2013): 21 st century megatreds, natal witness, 7 january. timmons, j. a. (2007): new venture creation, mcgrawhill, new york. sajesbm volume 6, (2013) www.sajesbm.com article no 160 38 urban, b. (2008): frontiers in entrepreneurship, heinemann, sandton. van aardt, i., van aardt, c., bezuidenhout, s. and mumba, m. (2008): entrepreneurship and new venture management, 3 rd edition, oxford university press, cape town. van daalen, h. j. (1992): the psychology of third world entrepreneurship. paper presented at the fifth annual conference of the international council for small business – southern africa, johannesburg, 17-19 may. van der merwe, w. g. (1984): achievement motivation and the entrepreneur. inaugural lecture delivered at the university of fort hare, 7 september. wennekers, s. and thurik, r. (1999): linking entrepreneurship and economic growth. small business economics, 13 (1): 27-56. wickham, p. a. (2005): strategic entrepreneurship, prentice hall, london. abstract introduction theoretical framework method results conclusions and implications acknowledgements references about the author(s) bjørn w. åmo business school, faculty of entrepreneurship & innovation, nord university, bodø, norway citation åmo, b.w., 2023, ‘designing internships: student demographics and student motivation’, southern african journal of entrepreneurship and small business management 15(1), a650. https://doi.org/10.4102/sajesbm.v15i1.650 original research designing internships: student demographics and student motivation bjørn w. åmo received: 31 oct. 2022; accepted: 24 apr. 2023; published: 25 july 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: internships as a means for learning and job training are increasingly getting traction among universities and policymakers. still, we do not know what motivates students to undertake such external experimental learning arrangements. aim: this study reveals students’ motivation for engaging in two different internships design. setting: we explore the motivation among norwegian bachelor and master business students for engagement in internships locally and abroad. methods: this is a quantitative study where 244 students responded to our survey. the students themselves provided input on the survey topics. we applied t-tests, correlations, and regressions to analyse the data. results: demographical variables as well as motivational factors influence the student’s preferences regarding internships. conclusion: the complexity and design inherent in the internship are accepted by the student depending on their family situation, their job experience and their learning expectations. contribution: internships are not a one-size-fits-all. the students’ family situation, their previous work experience and their academic achievements give hints to what the student looks for in an internship: a local internship offering future job opportunities or an international internship promising greater learning opportunities. keywords: internship; work practice; entrepreneurship; business student; motivation. introduction there is a call among governments, businesses and students alike to make business educational offerings more applicable and job-relevant (botha & bignotti 2016; mabeba 2021). this, as the environment in which entrepreneurs and enterprises operate, is increasingly more competitive (nabi, walmsley & holden 2013). hence, also established companies hiring fresh business graduates need to be entrepreneurial: intrapreneurship is the new significance of the ‘entrepreneurial imperative of the twenty-first century’ (kuratko 2009). internships are typically considered a specific means of experiential learning or learning-by-doing, and companies see intrapreneurship (or organisational innovation) as a means to survive and prosper in the rapidly changing business environment (baruah & ward 2014). one way the universities reply to this call towards students capable of handling such challenges is by arranging work practice or internships as a part of students’ learning experiences during study. arranging for work practice is then an emergent trend in facilitating students’ learning. it is common to arrange such work practice as a project-based internship programme, being student-focused, encouraging critical thinking, in open-ended situations, and by project-based learning techniques (johari & bradshaw 2008). internships are an experiential learning process that develops students’ ability to identify opportunities, as well as their problem-solving and their action orientation (lu & wang 2018). much research has focused on the many positive outcomes students benefit from doing internships (binder, baguley & miller 2015), that is, we know some regarding the results of students’ engagement in internships. benefits to students include better options for future employment, making their education more relevant, providing professional growth, career preparation, job satisfaction, work-based learning, developing communication skills, developing job-related skills, getting sooner job offers, developing a stronger resume, receiving feedback, enhancing student learning, networking and all this together with valuable real-world experience (divine et al. 2007). internships offer real-world experiences, experiences that are an integral component of an academic programme and provide students with the opportunity to develop not only work skills but also an understanding of the workplace. these outcomes are benefits we as educators think to gain the students. to what extent students share this view is not obvious. what we still do not know fully is the motivation of the student for engaging in internships and how their life situation influences their choice regarding internships. this aspect is important as students differing in demographical and academic characteristics might seek different types of experiences fitting their life situation, their skills and their career aspirations. cannon and arnold (1998:205) recommend that universities offering internship programmes should ensure that such programmes reflect both the reality of the employment market as well as what students expect to gain from enrolling in such programmes. binder et al. (2015) conclude that the academic benefits gained from internships may be because of aspects of the internship situation itself. they also ask for research investigating the student motivation for internships as well as how different designs for internships influence students’ assessments of internships. recent research has highlighted that there is a considerable mismatch between the expectations of companies and students (gerken et al. 2012). hence, understanding differences in stakeholders’ (universities, businesses and students) reasons for engaging in internships may help universities design internship programme guidelines that respond to the call for capable graduates (maaravi et al. 2021). this study replies to this call. this research then represents a shift from investigating what we as educators think the students need, to investigating what the students themselves want regarding experiential education in the form of internships. if we know more about the how and why regarding students’ engagement in internships, universities and we as entrepreneurship educators could make a better fit between need and offer (cannon & arnold 1998). by such allowing more students to gain valuable work practice experience and become guided in how to relate the scholarly theories to their everyday work practice. such students will be more motivated interns and students. we as educators would also benefit from the feedback students would be able to provide from the business realm. an internship could be a key to enhancing educational quality because it invites ‘user’ feedback and experience (bovill, cook-sather & felten 2011). the businesses would gain from engaging with the student and learning their capabilities. the businesses could discover the potential and experience the students contribute to their business practice. this then without employing them and the potential cost of firing them in case the match was not good enough. the student would gain from the ability to build networks and impress a potential employer, to test out learned theories, and to learn new practices as well as to discover potential unsolved issues they would like to study further. then the university will be regarded as more useful in the business community. our research question is then: why would business students want to engage in internships? this study is original as it included students themselves in research on how to improve our entrepreneurship educational offerings. the students themselves gave inputs to understanding the important drivers for engaging in internships and they themselves depicted the different ways such internships could be designed. adding the student perspective to research on designing work practice helps understand what students seek from engaging in internships. the theoretical framework section reveals the theoretical foundations on which this research is built upon and sought to enhance. we start by defining internship and depicting its many forms. then we discuss the gains such arrangements might provide to the student. this theoretical normative discussion allows us to derive some hypotheses regarding what students could gain from an internship as well as how they would like this internship designed. the method section describes the national setting for the study as well as how we engaged our students in researching this topic. we also describe the data we derived together with the students. the result and analyses section displays our findings and allows us to compare our findings with our hypotheses. finally, the conclusion and implication section discusses our revised research model. addressing our revised research model allows for a discussion of the theoretical takeaways that might inform further research and practices on this important issue. we also provide advice to universities, entrepreneurship and business educators as well as students and policymakers. seeing this issue from the student perspective opens other paths of research, and based upon our findings, we point to remaining unresearched areas needing attention. theoretical framework there are different approaches to arranging learning experiences such as internships for students, and such learning arrangements have many labels. some label it work placements (wilton 2012), work practice (buys & casteleijn 2007), work-based practices (crossley et al. 2012), work-integrated learning (patric et al., 2008), experiential education (stansbie, nash & jack 2013) or blended learning platforms (price & ronnie 2021). these concepts share that the student is facilitated with a learning experience outside the traditional classroom, utilising didactics where the student is exposed to real-life problems resembling those that the student will be likely to encounter after graduation. the most used expression for such arranged learning experiences is internships. botha and bignotti (2016:3) then define internship ‘as structured and career-relevant work in an external organisation, occurring in a controlled experiential environment, where a student receives academic credit and/or applicable knowledge’. according to self-determination theory, students put their effort into the activities that promise the most gain for their invested energy (gagné & deci 2005). the gain is then the motivator, and the motivation could stem from within the individual itself, that is, from intrinsic incentives. intrinsically motivated behaviour is propelled by an interest in the activity and is autonomously driven by the individual’s own self-selected goals. activities that the individual does not find interesting or useful, need external motivation, that is, extrinsic motivation. hence, non-interesting activities need to be motivated by a reward, a reward other than the pleasure or the experience of the activity itself to be deemed relevant. universities provide a diversity of educational offerings to their students. students enrol in these educational offerings voluntarily. some elements of these educational programmes could be regarded as more or less relevant for the student even if the overall educational programme is evaluated as relevant. hence, students select educational offerings that the students find interesting to explore or that the students perceive will provide them later benefits. the academic discussion regarding internships and similar educational offerings posits that the students will gain several present and subsequent benefits. internship programmes allow students to develop important skills, apply theories and methods learned in the classroom to real-world problems, and become familiar with the daily routines and rhythms of professional life (wolinsky-nahmias & auerbach 2022). moreover, internships have been found to improve students’ academic understanding, their marketability and to allow students to establish contacts with potential employers (renganathan, karim & li 2010). hence, we could presume that also students believe internships pay off in the long run. we then propose the following hypothesis: h1: students believe internships pay off in the long run. the value of internships could take different forms. internships offer other learnings than traditional classroom lectures. the interest in the internship experience could be rooted in an inner motivation for learning. an internship offers opportunities for the application of academic knowledge, that is hands-on learning to complement academic learning (hora, parrot & her 2020). the intrinsic, more present, motivation for deeper learning might include the possibility to test out academic knowledge in a practical situation, learn more on an issue not covered by textbook teaching or apply academic knowledge in a practical setting to build job-relevant confidence. johari and bradshaw (2008) find that firms accepting interns sometimes allow interns to engage in everyday routines as ordinary employees, while some firms prefer the intern to do tasks that do not distract ongoing operations, but develop options and pursue opportunities through project-based work. increasingly, interns are assigned to project teams that focus on a single project for the duration of the internship so that they become part of a tangible deliverable from start to finish (hurst & good 2010). internships represent an experiential learning design, inviting the student to encounter entrepreneurial learning events. work practice, or internship, is a means for learning-by-doing and is a way to foster entrepreneurial learning among students (pittaway et al. 2015; lu & wang 2018; rae 2006). what distinguishes experiential learning from traditional education is the focus on the process of learning as opposed to the outcome of learning (kolb & kolb 2008). internships are such experimental learning, and results indicate that internships bring theory to practice (johnson 2019). stansbie et al. (2013) argue that a learning situation where the student wants to learn, where the student takes ownership in the learning goals and the learning process, situations that involve hands-on practice evidencing the learning, where the learning process is facilitated and adjusted to the cognitive capacity of the student, and where the student is assisted in reflecting on the achievements, provides good conditions for learning. hence, it is important that such learning experiences include elements that offer value and importance for the learner (hackman et al. 1975). learning is a key motivation for participating in internships in the first place (daugherty 2000; wasonga & murphy 2006). also, alon (2003) noted internships develop skills as a result of experiential learning, skills including communication, teamwork, problem-solving and critical thinking. by working with an entrepreneurial learning approach in professional practice, students reported an enhanced reflective understanding of learning outcomes and the theory-practice gap and developed an ability for opportunity identification (ramsgaard & østergaard 2018). this leads to hypothesis 2: h2: students want an internship to provide learning opportunities. the latter, subsequent and extrinsic benefits could be better chances for a well-paid and interesting job, or a relevant network leading to such job opportunities. an internship could be career-relevant. the career relevance could also be that the student is able to test out different job positions that their education might lead to, or rule this option out or to strengthen their competitive position for such job options later. maertz, stoeberl and marks (2014) find that one major purpose of an internship, as seen by the student, is to investigate such different career paths. they see that interns experience what they want and do not want from work, realising this earlier in their job search process than non-interns. an internship could offer an opportunity to test out different job elements or job positions the education might lead to. hora et al. (2020) find that the most important issue regarding students’ motivation for partaking in an internship is to be competitive in the job market. as educators, we strive towards such benefits for our students. the major role of an internship is to offer a planned transition from the classroom to the job, and it is a natural bridge between universities and the labour market (coco 2000). gault, redington and schlager (2000) report significant early career advantages for undergraduates with internship experience. research also shows that students view internships less as a vehicle for learning, and more as a tool for getting a job (cannon & arnold 1998). we then suggest hypothesis 3: h3: students want an internship to be relevant to their career. blended learning platforms, such as internships, could be a means for providing students with lasting networks within their academic field outside the university (price & ronnie 2021). such increased competitiveness could then relate to internships being a ‘door-opener’ to potential employers (hora et al. 2020). either as it is a relevant job experience raising employers’ interest, or directly as the internship itself could serve as a long job application. hence, hypothesis 4: h4: students want an internship to extend their professional network. there are a wide variety of designs for internships. research indicates that even the internship design itself has an influence on the experienced student learning and motivation (hora et al. 2020). the type of firm as well as the physical arrangement influence the student learning situation. some universities make an internship mandatory for their students. such an approach might prevent the student even from enrolling in the programme offered by the university if the fit is poor. other universities offer internships as a voluntary option. students then do not need to do internship courses. alternatively, then the student could select another theoretical course instead of stepping into the unknown territory of adult work life. a required internship programme with poor student fit may not be suited for universities that have a large percentage of part-time or non-traditional students, as compared to universities that are predominantly populated with traditional students (divine et al. 2007). the learning outcomes from internships can vary a great deal and depend on both the workplace context and assignments set in the given internship as well as the commitment of the students in the internship (varghese et al. 2012). walmsley, thomas and jameson (2012) find that internships in small and medium sized enterprises (sme) could be more troublesome for students than an internship in larger firms. o’higgins and caro (2021) find better results regarding employment offers if the student had an internship in larger firms. on the other end, degravel (2011) reports positive results from internships in smes. rigsby et al. (2013) ask for research on firm size and firm type related to internships. hora et al. (2020) recommend avoiding one-size-fits-all approach to internship design as they find in their study that internships can serve different purposes for different students. based upon the argument from divine et al. (2007), varghese et al. (2012) as well as hora et al. (2020), we then propose that different internship locations and designs will attract different students based on their capacity and career aspirations. we suggest hypothesis 5 in that regard: h5: demographical variables as well as motivational factors influence the student’s preferences regarding internship design. we then expect that students’ motivation for engaging in internships abroad or locally depends on how the student perceives internships to pay off in the long run, if they think the internship will provide an interesting learning experience, if the internship is career-relevant, and if they believe this will extend their professional network. likewise, the demographical characteristics of the student as well as motivational factors will also influence motivation for engaging in varieties of internships. this is then summarised in figure 1. figure 1: our research model. method norway as context the context for this study is a business school at a norwegian university. norway is a small rich export-oriented country positioned northernmost in europe. as much as 38.4% of those aged 19–24, and 17.0% of those aged 25–29 are currently students at a university (ssb 2023). norway is classified as an innovation-driven economy with high levels of employee engagement in innovation (gem 2022). unemployment is low, about 2%–4%, and mostly structural. business master graduates usually get a job offer even before graduating from business school; still, bachelor graduates are not equally easily employed. the local industry mainly consists of smes. the business culture in norway is characterised by being egalitarian and democratic, focusing on progress, continuity and change; the staffs are intrinsically motivated and want to play a role in the process of progress. managers use a delegating and participating leadership style and tend to consult their subordinates while encouraging individual initiatives from the subordinates; managers try to manage through enthusiasm, according to bjerke (1999). global entrepreneurship monitor (gem 2014) shows that the level of entrepreneurship among the adult population is rather low, but the level of intrapreneurship is high. global entrepreneurship monitor (2014) reports a strong correlation between country-level intrapreneurship and gross domestic product (gdp). entrepreneurship in the form of intrapreneurship and employee engagement is then vital and necessary for norwegian firms. hence, it is also important for norwegian higher educational institutions (hei) to prepare their business students for such work environments. student engagement in internship design the author of this research combines teaching entrepreneurship with teaching bsc and msc business students in applied quantitative methods. our methodological approach allows the student voice to be accounted for. in the quantitative part of this method course, the students are to write a mini-thesis on a maximum of four pages containing all elements and chapters of a thesis. one theme is selected as common for the whole class. the theme discussed here was ‘students and internships’. the teacher starts by explaining the structure of a thesis and what an internship is. the students are then to reflect one and one on why or why not and how they would like to take part in such an arrangement. then they group two and two sorting out their main reasons and concerns. then the teacher makes a mind map on the blackboard on all the issues raised by the students. the teacher then explains what frequencies, t-tests and correlations could tell from survey data. the class then discusses different issues one could investigate from such a dataset. then the teacher structures the mind map into a survey which all the students then complete before the next class. before the next class, the students are then provided the dataset and grouped in smaller groups where they are assisted in doing their selected quantitative analysis towards their hand-in exam, the mini-thesis. in this part of the course in applied methods, we then started with a discussion on what an internship is and the different ways to arrange it. this discussion was then partly based on the inputs from the students and partly based on an extensive literature review conducted by the teacher on internship design and motivation for internships. we concluded on two main approaches: physical internships in their home town, or physical internships abroad, as a problem solver developing a new product or service for the firm. in class, we then discussed issues related to motivation for taking part in internship programmes. the survey consists of 172 items because of the engagement and input from the students. in addition to some demographical variables and the student’s present living conditions, the topics covered were which information that was needed from the university, the type of firm to work at, what the student wanted to learn from it, who should pay whom what, the duration and the structure of the internship as well as the student’s motivation for taking part in an internship and what was hindering them in doing so. then we developed a survey to which all 161 bsc and 83 msc students replied. the items were either categorical or measured along a seven-point likert scale. the students then used this data for their own work on their four-page mini-thesis for the method course. as it was a compulsory requirement to reply to our survey, all students replied. our final dataset consists of 244 replies. this study focuses on norwegian students, as we would like to explore internships among domestic students. table 1 shows the demographical description of the sample. there are 131 male students and 113 female students among the investigated students. as many as 100 students reported their average grade in their present study to be a or b, while 142 reported a c, d or e on average. among these 244 students, 100 reported having had a job relevant to their studies. table 1: demographical description of the sample (n = 244). we included gender, family obligations, educational level, grades and previous work experience as controls. male students and female students differ in their work values and have different motivations for their careers (farrington, gray & sharp 2012). we measured family obligations as having responsibility for the care of children living at home. we expect that having family obligations reduces the opportunity to undertake educational commitments if the internship is far away from where they live or it demands working at odd times. we included the level of education as bachelor and master students differ in their academic proficiency, and this might have an influence on their work confidence. we also include grades as a control, as cannon and arnold (1998) find that students with lower grades view internships as a means for getting a job while the students with better grades to a larger extent engage in internships for the academic challenge it offers. divine et al. (2007) argue that students with below-average grades would be more reluctant to do internships. we also included previous relevant work experience as a control as internship experience is information ‘good to add’ to the résumé (pinto & pereira 2019), and previous relevant work experience might compensate for a missing internship. we propose that differences in demographical variables would explain differences in the student’s preferences regarding internships and that students having a part-time job, students with kids and older established students with work experience, would respond differently to different internship designs. we test our hypothesis by means of multiple regressions. multiple regressions allow for studying the influence of several independent variables on one dependent variable. we run two separate but parallel regressions. we explore issues related to students’ interest in partaking in a local internship and an internship abroad. ethical considerations this article followed all ethical standards for research without direct contact with human or animal subjects. results table 2 displays the mean score, the kurtosis and the skewness as well as the standard deviation of the involved variables. table 2 reveals that the mean for item b1 ‘i would like to take an internship/work placement at a local company’ is 5.40 on a likert scale ranging from 1 (to a very small degree) to 7 (to a very large extent), while the mean for the item b3 ‘i would like to take an internship/work experience abroad’ is 3.69 on the same scale. a t-test gives that b1 is significantly higher than b3 (t-test = 0.00). table 2: means, skewness, kurtosis and standard deviations of the used variables. moreover, it is important for the students that they feel that work practice is relevant for their career (mean = 5.79 on a 7-point likert scale), that they think a work practice will pay off in the long run (mean = 5.82), and that they believe they will learn much by undertaking an internship (mean = 5.90), and that they believe the internship to be relevant for their career (mean = 5.81). the students also believe that they will expand their professional network by doing an internship (mean = 5.37). an internship in a large company is more interesting than an internship in an international company (t-test = 0.05), and more interesting than at a small business or a startup (t-test = 0.00). doing an internship at an international company is not more popular than an internship at a small business (t-test = 0.13), but more popular than doing an internship at a start-up (t-test = 0.00). an internship at a small business is more popular than an internship at a start-up (t-test = 0.00). the skewness for b01, d04, d06 and d15 is slightly over the threshold range of –1 to 1 recommended by hair et al. (1998). likewise, the kurtosis for variables b3, d04, d06 and d15 are slightly over the threshold range of –1 to 1 recommended by hair et al. (1998). higher n implies lesser noise impact because of kurtosis and skewness on the regression calculations, but this still gives reasons to interpret the impact of these variables with caution. table 3 shows a correlation matrix of the involved variables. the table shows a weak relationship between gender (a01: males coded 1 and females coded 2), and the want for a local internship (b1), indicating that female students are more likely to prefer a local internship than male students. academic level (a09) and grades (a08) do not seem to influence the student’s preferences for an internship; grade a or b is coded 1, while c, d or e is coded 2. students without kids (a03: kids are coded 1 and no kids are coded 2) are the ones interested in internships abroad. those without relevant work practice (a07: yes is coded 1 and no is coded 2) are the ones interested in a local internship. table 3: pearson correlations among the used variables, n = 250. it seems as if the local internship arrangement is deemed the internship most likely to pay off in the long run (d07), the design the student expects to learn most from (d15), the most career-relevant (d04), as well as the one most likely to extend their professional network (d21). likewise, the students seem to perceive a connection between internship designs paying off in the long run, providing good learning opportunities, being career-relevant and offering useful business networks. table 4 offers the results of two regressions, displaying the influence of demographical as well as motivational variables on the student’s preference for a local internship, and an internship abroad. table 4: regressions on interests in work practice arrangements. the results from the regressions displayed in table 4 reveal that the students interested in the local internship lack relevant job experience, they think that the internship will pay off in the long run and they will learn much from the internship. if they were to do such an internship, they prefer to do so at a small or large business located near their place of study. they do not prefer the business to be international and are indifferent to it being a start-up. furthermore, the students interested in an internship abroad do not have kids that need to be taken care of. they too expect that they will learn much from doing such an internship. they do not believe an internship abroad will expand their business network. they do not want to do their internship at a small or a large company, but the hosting company should be internationally oriented or a start-up. there were no differences in interest for any type of internship because of gender, grade or academic level. interestingly enough is also the finding that to what extent the students perceive the internship to be relevant for their career has no influence on their motivation for an internship. hypothesis 1 suggests that students are motivated to engage in internships by the expectation that internships will pay off in the long run. this hypothesis is only partly confirmed. students think that only local internships will pay off in the long run. the assumption that internships pay off in the long run does not motivate internships abroad, supporting the finding of pinto and pereira (2019) regarding internship as ‘good to add’ to the résumé but not ‘the more international the better’. hypothesis h2 states that students want an internship that offers learning opportunities. table 4 revealed that if the students perceive that an internship will provide opportunities for learning, then the student will be interested in pursuing an internship, and this counts for both types of internships; locally and internationally. h2 was then confirmed. likewise, table 4 informs that hypothesis h3 was not confirmed, and implies that students expect an internship to be relevant to their career. hypothesis 4 predicts that students are motivated towards an internship to extend their professional network. this hypothesis was not confirmed either. internship abroad is negatively associated with expectation of it to expand their professional network. students do not view an internship abroad as useful for extending their professional network. hypothesis 5 proposes that demographical variables as well as motivational factors influence the student’s preferences regarding internship designs. students are not indifferent to the physical location of their internship, or the design. the t-tests show that an internship nearby the campus city is more popular than an internship abroad. we see this as the students associate different locations (local or abroad) and different types of firms (start-ups, small businesses, large companies and international companies) with different modes of internships. this implies that h5 was confirmed. gender, academic level and grade do not influence on student’s motivation for doing an internship. having kids at home seems to restrict students to only local internships; the students with kids do not want to do an international internship. we see that students who already have relevant work practice tend to prefer an international internship, while those who do not already have relevant work practice tend to prefer a local internship position. students are motivated by different motivational factors towards different internship designs. conclusions and implications the structure of an internship programme is an important factor in providing high-quality and productive internship experiences (gryski, johnson & o’toole 1987; kim, kim & bzullak 2011). hora et al. (2020) claim that the literature discussion on the benefits gained from internships promises more than experienced by the students. they further propose that students who have undertaken an internship course conceptualised internships in more multi-faceted and critical ways than what is proposed by the literature. our findings support the view that students conceptualised internships in more multi-faceted ways and not as one-size-fits-all. the immediate insight from this study is that business students are interested in different types of internships, and different types of students prefer different types of internships. there is no such thing as a ‘one-size-fits-all’ internship. universities need to offer a variety of internship designs to meet the requirements of their students and make their experiential learning process-related educational offerings relevant. our study may then shed more light on how to structure, design and manage successful programmes for the benefit of universities and their students. preparing internship offerings that are better aligned with the student’s needs, could tempt more students to engage in internships. knowing more about how students perceive the value of internships might allow us as teachers to design better internship offerings or express our offerings more in line with their needs, motivating more students to undergo internships during their studies. theoretical contributions this research offers important implications for theory. current research and practice tend to regard internships as a coherent concept, addressing all students the same way with the same aim, operationalising internships based upon what we as educators think students lack to fit the need of society. wilton (2012) finds that the completion of a degree including a work placement element does not universally translate into either greater reported skills or superior labour market achievements. stansbie et al. (2013) argue that better internship design could lead to improved student satisfaction and student motivation. this study supports their arguments and refines their statement further by expressing which student characteristics that could aid such designs. according to self-determination theory, people tend to select actions that benefit them, either as it responds to their own inner goals or if the action promises valuable rewards as a subsequent result of the action. the students in this study prefer internship designs that fit their preferences, that is, internships that pay off in the long run and where they expect to learn much. some would like this arena for learning to be local firms. this setting resembles the industry structure where the students will operate after graduation. some again prefer to learn in internationally oriented firms abroad where the learning challenge is more eminent. students seek learning opportunities by engaging in internships. even so, the students do not believe all internship designs to be relevant for their careers. bachelor students have less academic knowledge than master students, but this does not influence their want for an internship learning experience. students at both levels of education report that they would like to take part in an internship, given that the condition for doing so fits their situation. they particularly prefer internships at a local business; internships abroad are less in demand. students report that they deem local internships to be relevant to their career, to pay off in the long run as well as offer learning. international internships offer challenging learning opportunities, but the students do not see such a design as adding to their professional network. universities then need to design internships that students themselves find more relevant for their careers. similarly, internship designs need to allow the student to take part and reap the learning benefits from the offered internships. this research shows that the student’s context and living situation matter and influence their motivation for participating in different learning designs. the student’s living situations, academic achievements, identities, and career aspirations all differ among our students. all this should inform the design of our experiential educational offerings to interest the student. our findings suggest that the student’s living condition, that is, if they have kids or not and to what extent the student already has achieved relevant work experience is particularly relevant regarding motivation and capability to undertake an internship. hence, theoretical models discussing student motivation and student learning achievement should include a description of their situation and context. as divine et al. (2007), we see that the student’s living conditions and context delimit or open various learning paths. a mature student with kids, a house, a mortgage and a part-time or full-time job will not be equally able to relocate and engage in unscheduled learning activities as is the young resourceful single student. we, as binder et al. (2015), are concerned that not all students are equally served by educational offerings such as internships. students regard internships as a great opportunity to learn. students also perceive that some internship designs will actually pay off in the long run. still, the students question the career relevance of internships. this variable is not significant in our study. students do not think that internships abroad offer valuable networking opportunities. the student without kids wants a more academically challenging learning experience, preferably abroad in an internationally oriented firm or in a start-up. students do value the potential learning opportunity internships abroad offer. students who want to do an internship abroad would like to engage in a challenging business environment; they would like to work in start-ups or international-oriented businesses. more settled students, students with family and work obligations do not see themselves undertaking an internship abroad that entails leaving their family, finding other housing and quitting their daytime job. by tailoring internship courses differently for different types of students, universities might tempt both the homebound student as well as the more adventurous student into exploring a more hands-on learning environment. by offering internships in different designs, the offerings will better adhere to the student’s living situation, their work experience, and their learning aspirations and by such to the student’s wanted career path. universities should seek to respond to this call for varied educational offers. increased intrinsic motivation might lead to greater engagement and subsequently to improved learning and better performance during the internship. this might then lead to better job opportunities and a better reputation for the university for providing relevant educational offerings. practical contributions this insight gives reason to suggest some implications for practice. the students need to be motivated to undertake an internship. we as educators need to arrange for different work practice designs that suit different groups of students. in doing so, both demographical and motivational factors need to be fine-tuned into the design to interest students in undertaking an internship. universities should offer internship positions resembling the local industry structure where the students might be employed after graduation. the data suggest that students with less relevant job experience would like internships in firms that resemble the type of firms they might get employed in at after graduation. they would like a job experience that is relevant to their education and then an internship at a local organisation addressing local needs. the local businesses in our contexts are often small, but some students also want to do an internship in a larger local company. universities should also offer more challenging internships for the more traditional student. some students want internships abroad, and then they would like a challenging learning situation in start-ups or internationally oriented firms. this will attract single students who already possess relevant work experience. entrepreneurs and business managers should emphasise the learning potential their business offer students interested in an internship. they could spur more interest among students if they then also express how this hands-on learning could be career relevant, and by such, pay off in the long run. start-ups and international-oriented firms who would like to attract also local students, could prepare learning situations less demanding, or provide more assistance during the internship. some students prefer more demanding learning situations, and firms that would like to attract such students could emphasise this element of the internship offer. universities also need to advocate the benefits of extending networks and express how internships will be relevant for their future career. as for now, students do not necessarily see these benefits stemming from engaging in internships. hora et al. (2020) remark that the students who had undertaken an internship differed substantially from those who had not, in their conception of what an internship actually provides. universities could then engage students who already have done internships to advocate for internships among their peers. they will then express their learning achievements and their job experience along with the needs of the students, emphasising the internship elements that are perceived as of value among the students themselves. limitations a limitation of this study is that it investigates internships as seen from norwegian business students. business students might want different outcomes from an internship course than other types of students. internships are not a compulsory element in most business programmes, as they might be for, that is nursing or teacher students. norway might differ from other countries in its industry composition and structure. the findings on the low emphasis that the students put on internships as a means for networking and advertising themselves as potential employees might stem from the low unemployment rate in norway and the ease of students’ experience of getting a relevant job. business students in different settings might prioritise otherwise. there are also some methodological limitations. the involvement of students provided a rich source of issues related to how and why students do or do not engage in internships. even so, as this survey is a result of the many issues deemed important or interesting by the students themselves, and that the students were involved in wording the items, our measures rely on single items. further research this study might inspire future studies to develop measures that allow better internal consistency and reliability by including several items capturing different aspects of the same concept. this investigation addresses the intrinsic motivation as well as the extrinsic incentives students value related to internships. this study shows that business students value and are motivated by the expected learning opportunity. this study does not reveal what the students would like to learn. research suggests that students would like to test academic knowledge, learn more about practical applications of academic knowledge and that they want to learn if a certain job situation is preferable or not. all these are potential learning goals. this study does not go into detail about who among the students value which of these learning goals and how much. unveiling the internship need and offer as seen from the business’s perspective is still not adequately done. we as educators presume that businesses and entrepreneurs are willing to invest the necessary time and effort in preparing and aiding the internship process. we do not fully know what triggers this willingness from the business side and similarly, we do not know who among the businesses is capable and willing to engage with universities as hosts for internships. acknowledgements competing interests the author declares that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article. author’s contributions b.w.å. is the sole author of this research article. funding information the norwegian research council granted 4.5 mill nok for the intpart project which funded the publication of this research. data availability data will be released when the project is ended, as described in the grant documents, and will be available from the corresponding author, b.w.å., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references alon, i., 2003, ‘experiential learning in international business via the worldwide web’, the journal of teaching in international business 14(2), 79–98. https://doi.org/10.1300/j066v14n02_06 baruah, b. & ward, a., 2014, ‘metamorphosis of intrapreneurship as an effective organizational strategy’, international entrepreneurship and management journal 1(4), 811–822. https://doi.org/10.1007/s11365-014-0318-3 binder, j.f., baguley, t., crook, c. & miller, f., 2015, ‘the academic value of internships: benefits across disciplines and student backgrounds’, contemporary educational psychology 41, 73–82. https://doi.org/10.1016/j.cedpsych.2014.12.001 bjerke, b., 1999, business leadership and culture: national management styles in the global economy, edward elgar publishing, northampton, ma, usa. botha, m. & bignotti, a., 2016, ‘the influence of gender and ethnicity on the perception of an entrepreneurial career in the south african context’, southern african journal of entrepreneurship and small business management 8(1), a45. bovill, c., cook-sather, a. & felten, p., 2011, ‘students as co-creators of teaching approaches, course design, and curricula: implications for academic developers’, international journal for academic development 16(2), 133–145. https://doi.org/10.1080/1360144x.2011.568690 buys, t. & casteleijn, d., 2007, ‘preparing for work practice: under-and postgraduate student training at the university of pretoria (south africa)’, work 29(1), 25–29. cannon, j.a. & arnold, m.j., 1998, ‘student expectations of collegiate internship programs in business: a 10-year update’, journal of education for business 73(4), 202–205. https://doi.org/10.1080/08832329809601630 coco, m., 2000, ‘internships: a try before you buy arrangement’, sam advanced management journal 65, 41–47. crossley, j.c., jamieson, l.m. & brayley, r.e., 2012, introduction to commercial recreation and tourism: an entrepreneurial approach, no. ed. 6, sagamore publishing, champaign, il, usa. daugherty, s.n., 2000, ‘internships and co-ops: an excellent way to preview and plan your future’, the black collegian 31, 52–56. degravel, d., 2011, ‘internships and small business: a fruitful union? a conceptual approach’, journal of management policy and practice 12(2), 27–43. divine, r.l., linrud, j.k., miller, r.h. & wilson, j.h., 2007, ‘required internship programs in marketing: benefits, challenges and determinants of fit’, marketing education review 17(2), 45–52. https://doi.org/10.1080/10528008.2007.11489003 farrington, s., gray, b. & sharp, g., 2012, ‘contextual factors influencing entrepreneurship education at a south african university of technology’, southern african journal of entrepreneurship and small business management 5(1), a118. gagné, m. & deci, e.l., 2005, ‘self-determination theory and work motivation’, journal of organizational behavior 26(4), 331–362. https://doi.org/10.1002/job.322 gault, j., redington, j. & schlager, t., 2000, ‘undergraduate business internships and career success: are they related?’, journal of marketing education 22(1), 45–53. https://doi.org/10.1177/0273475300221006 gem, 2015, global entrepreneurship monitor, 2014 global report, gem consortium, gera, london. gem (global entrepreneurship monitor), 2022, global entrepreneurship monitor 2021/2022 global report: opportunity amid disruption, gem, london. gerken, m., rienties, b., giesbers, b. & könings, k., 2012, ‘enhancing the academic internship learning experience for business education—a critical review and future directions’, in p. van den bossche, w. gijselaers & r. milter (eds.), learning at the crossroads of theory and practice. advances in business education and training, vol. 4, pp. 7–42, springer, dordrecht. gryski, g.s., johnson, g.w. & o’toole, l.j., 1987, ‘undergraduate internships: an empirical review’, public administration quarterly 19(1), 31–41. hackman, j.r., oldham, g.r., janson, r. & purdy, k., 1975, ‘a new strategy for job enrichment’, california management review 17(4), 57–71. https://doi.org/10.2307/41164610 hair, j.f. jr, anderson, r.e., tatham, r.l. & black, w.c., 1998, multivariate data analysis, 5th edn., prentice hall, upper saddle river, nj, usa. hora, m.t., parrott, e. & her, p., 2020, ‘how do students conceptualise the college internship experience? towards a student-centred approach to designing and implementing internships’, journal of education and work 33(1), 48–66. https://doi.org/10.1080/13639080.2019.1708869 hurst, j.l. & good, l.k., 2010, ‘a 20-year evolution of internships: implications for retail interns, employers and educators’, the international review of retail, distribution and consumer research 20(1), 175–186. https://doi.org/10.1080/09593960903498342 johari, a. & bradshaw, a.c., 2008, ‘project-based learning in an internship program: a qualitative study of related roles and their motivational attributes’, educational technology research and development 56(3), 329–359. https://doi.org/10.1007/s11423-006-9009-2 johnson, k.w., 2019, ‘benefits and intended outcomes of internships in undergraduate business education’, journal of research in business education 59(2), 1–20. kim, e.b., kim, k. & bzullak, m., 2011, ‘a survey of internship programs for management undergraduates in aacsb-accredited institutions’, international journal of educational management 26(7), 696–709. https://doi.org/10.1108/09513541211263755 kolb, a.y. & kolb, d.a., 2008, ‘experiential learning theory: a dynamic, holistic approach to management learning, education and development’, in armstrong & fukami (eds.), the sage handbook of management learning, education, and development, pp. 42–68, sage, london. kuratko, d.f., 2009, ‘the entrepreneurial imperative of the 21st century’, business horizons 52(5), 421–428. https://doi.org/10.1108/09513541211263755 lu, h. t. & wang, y. c., 2018, ‘entrepreneurial learning acquired through internships in the hospitality industry’, kne social sciences 3(10), 1487–1499. https://doi.org/10.18502/kss.v3i10.3486 maaravi, y., heller, b., hochman, g. & kanat-maymon, y., 2021, internship not hardship: what makes interns in startup companies satisfied?’, journal of experiential education 44(3), 257–276. https://doi.org/10.1177/1053825920966351 mabeba, s.j., 2021, ‘the impact of internship programme on skills development in selected government departments in limpopo province’, doctoral dissertation. maertz jr, c.p, stoeberl, p.a. & marks, j., 2014, ‘building successful internships: lessons from the research for interns, schools, and employers’, career development international 19(1), 123–142. https://doi.org/10.1177/1053825920966351 nabi, g., walmsley, a. & holden, r., 2013, ‘pushed or pulled? exploring the factors underpinning graduate start-ups and non-start-ups’, journal of education and work 28(5), 481–506. https://doi.org/10.1080/13639080.2013.805189 o’higgins, n. & caro, l.p., 2021, ‘what makes for a “good” internship?’, in a. stewart, r. owens, n. o’higgins & a. hewitt (eds.), internships, employability and the search for decent work experience, pp. 35–54, edward elgar publishing, northampton, ma, usa. patrick, c.-j., peach, d., pocknee, c., webb, f., fletcher, m. & pretto, g. 2008, the wil (work integrated learning) report: a national scoping study, queensland university of technology, brisbane, qld. pinto, l.h. & pereira, p.c., 2019, ‘i wish to do an internship (abroad)’: investigating the perceived employability of domestic and international business internships’, higher education 78, 443–461. https://doi.org/10.1007/s10734-018-0351-1 pittaway, l.a., gazzard, j., shore, a. & williamson, t., 2015, ‘student clubs: experiences in entrepreneurial learning’, entrepreneurship & regional development 27(3–4), 127–153. https://doi.org/10.1080/08985626.2015.1014865 price, k. & ronnie, l., 2021, ‘contextual factors influencing entrepreneurship education at a south african university of technology’, southern african journal of entrepreneurship and small business management 13(1), a394. https://doi.org/10.4102/sajesbm.v13i1.394 rae, d., 2006, ‘entrepreneurial learning: a conceptual framework for technology based enterprise’, technology analysis and strategic management 18(1), 39–56. ramsgaard, m.b. & østergaard, s.j., 2018, ‘an entrepreneurial learning approach to assessment of internships’, education+training 60(7/8), 909–922. https://doi.org/10.1108/et-11-2016-0164 renganathan, s., bin abdul karim, z.a., li, c.s., 2012, ‘students’ perception of industrial internship programme’, education + training 54(2/3), 180–191. https://doi.org/10.1108/et-11-2016-0164 rigsby, j.t., addy, n., herring, c. & polledo, d., 2013, ‘an examination of internships and job opportunities’, journal of applied business research (jabr) 29(4), 1131–1144. https://doi.org/10.19030/jabr.v29i4.7921 ssb, 2023, statistics norway, students in higher education, viewed 24 march 2023, from https://www.ssb.no/en/utdanning/hoyere-utdanning/statistikk/studenter-i-universitets-og-hogskoleutdanning. stansbie, p., nash, r. & jack, k., 2013, ‘internship design and its impact on student satisfaction and intrinsic motivation’, journal of hospitality & tourism education 25(4), 157–168. https://doi.org/10.19030/jabr.v29i4.7921 varghese, m.e., parker, l.c., adedokun, o., shively, m., burgess, w., childress, a. et al., 2012, experiential internships: understanding the process of student learning in small business internships’, industry and higher education 26(5), 357–367. https://doi.org/10.19030/jabr.v29i4.7921 walmsley, a., thomas, r. & jameson, s., 2012, ‘internships in smes and career intentions’, journal of education and work 25(2), 185–204. https://doi.org/10.1080/13639080.2011.573774 wasonga, t.a. & murphy, j.f., 2006, ‘learning from tacit knowledge: the impact of the internship’, international journal of educational management 20(2), 153–163. https://doi.org/10.1108/09513540610646136 wilton, n., 2012, ‘the impact of work placements on skills development and career outcomes for business and management graduates’, studies in higher education 37(5), 603–620. https://doi.org/10.1108/09513540610646136 wolinsky-nahmias, y. & auerbach, a.h., 2022, ‘evaluating the design and benefits of internship programs’, journal of political science education 18(4), 584–604. https://doi.org/10.1080/15512169.2022.2109481 http://www.sajesbm.co.za open access page 1 of 1 reviewer acknowledgement read online: scan this qr code with your smart phone or mobile device to read online. 00 acknowledgement to reviewers in an effort to facilitate the selection of appropriate peer reviewers for the southern african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on https://sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at https://sajesbm. co.za 2. in your ‘user home’ [https://sajesbm.co.za/ index.php/sajesbm/user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest(s). 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the southern african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 tel: 086 1000 381 the editorial team of the southern african journal of entrepreneurship and small business management recognises the value and importance of peer reviewers in the overall publication process – not only in shaping individual manuscripts, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank the following reviewers who participated in shaping this volume of the southern african journal of entrepreneurship and small business management. we appreciate the time taken to perform your review(s) successfully. adolph c. neethling alex bignotti alex j. antonites aloe meintjes assilah agigi awie vlok boniface okanga cecile nieuwenhuizen chukuakadibia e. eresia-eke chux g. iwu cobus oosthuizen edwin c. bbenkele elda du toit elma van der lingen elriza esterhuyzen fidelis a. emuze hendrik p. wolmarans ingrid le roux iniobong w. akpan janine mukuddem-petersen japie kroon jean pierre cronje john h. hall jonathan marks jurie van vuuren keith j. fairhurst kerryn a.m. krige liezl-mari kruger maddison-lee brinkley malefane j. lebusa marius pretorius mclntosh m. kuhlengisa melanie wiese melodi botha menisha n. moos mercy m. adeyeye mfazo c. madondo mignon reyneke obainuju e. okeke-uzodike paul smith pierre mostert robert venter salome van coller-peter sello mkhondo tabea mabase teboho pitso teresa carmichael tony matchaba-hove vusumuzi malele wesley niemann wesley rosslyn-smith http://www.sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za https://sajesbm.co.za abstract introduction literature review research design and methodology discussion proposed small business intervention framework recommendations conclusion acknowledgements references about the author(s) maphelo malgas department of retail business management, faculty of business and management sciences, cape peninsula university of technology, cape town, south africa wellington b. zondi graduate school of business and leadership, university of kwazulu-natal, durban, south africa citation malgas, m. & zondi, w.b., 2020, ‘challenges facing small business retailers in selected south african townships’, southern african journal of entrepreneurship and small business management 12(1), a202. https://doi.org/10.4102/sajesbm.v12i1.202 original research challenges facing small business retailers in selected south african townships maphelo malgas, wellington b. zondi received: 12 july 2018; accepted: 21 nov. 2019; published: 25 feb. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: south african townships have a vibrant small retailing business which at some point was dominated by local traders. however, in recent times, the country has attracted migrants who are very competitive in the township retailing space. aim: this study seeks to identify the challenges facing local small business retailers in the township retailing environments and then develop a business intervention model for traders to improve. setting: primary research was conducted in two townships of cape town – delft and eindhoven. methods: the population of the study comprised two groups, namely, south african and foreign national small business retailers operating grocery retailer stores. the first group consisted of 55 south african small business retailers while the second group consisted of 75 migrant small business retailers. a random sample was targeted from each group and the quantitative research methodology was used in this study using a structured questionnaire with close-ended questions as a research instrument. results: the results showed growth of foreign national retailers and decline in the number of the local retailers in the two townships. the study showed that migrant retailers have a competitive edge over local retailers. the study also revealed that most local traders have a lower level of education compared to their migrant trader counterparts. conclusion: the local small business retailer requires targeted support from the government as suggested in the business intervention model proposed in this study. keywords: small business retailers; township retailing; migrant small business; migrant entrepreneurship; south african townships. introduction the south african economy has a very large micro-enterprise sector, comprising both formal and informal businesses, and it provides a good environment for entrepreneurial development and advancement. this study focusses on the informal micro-enterprises who are small retailers in the township environment. since the post-democratic dispensation of 1994 in south africa, the government has encouraged small business development through various legislation. according to herrington, kew and mwanga (2017) in the global entrepreneurship monitor (gem) report, south africa has low levels of entrepreneurial activity relative to other countries participating in the gem survey. in south africa, most of the activities of the micro-enterprises operate in the untaxed, unregulated informal economy. as the south african formal economy is unable to absorb the rising number of new entrants into the labour market every year, it often leads to economically active citizens pursuing micro-enterprises in the informal sector of the economy (rolfe et al. 2010). according to liedeman (2013), since 2005, there has been significant rivalry between south african spaza shop operators and migrants who also operate spaza shops. migrant traders use social systems and have access to cheap labour; application of contractual arrangements by their social connections, with their leaders administering their strategic investments and business deals in different locations have given them a competitive edge (liedeman 2013). migrant traders purchase as a collective in order to secure discounts and use the economies of scale to assist each other micro-financially by organising investments and business connections (liedeman 2013). competition and competitiveness in township retailing environments is about customers’ buying power and their preferences (ntema & marais 2010). ntema and marais (2010) further noted that: local informal traders are perceived to practise better customer service than their foreign counterparts. this finding counters an alleged notion by south africans that non-south africans are usually more professional in their attitude and business conduct than their south african counterparts and that they are thus able to attract more support from customers. (p. 8) the aim of this paper is to understand the challenges and constraints facing local traders and the difference between the local and migrant traders in terms of trading capabilities. it would make sense to examine challenges and opportunities of south african small business retailers in township retailing environments. in this paper, a business intervention model for south african traders in this sector is proposed in order for the south african trader to compete meaningfully. the paper addresses the following objectives: to investigate the challenges and constraints facing south african small business retailers in township retailing environments. to develop a business intervention model for south african small business retailers to improve their competitiveness in township retailing. literature review the south african township retailing environment according to ligthelm (2008): … the pre-1994 retail landscape in the township areas was dominated by small, mainly informal retail businesses offering basic products and services to a relatively low-income consumer market. these businesses served as convenience shops to primarily lower income groups and attracted only a small portion of the consumer spending in township areas. (p. 37) most economically active people in township environments used urban shopping centres for their main shopping activities and used informal small business stores in the townships as convenience stores (ligthelm 2008). small business retailers play a critical role in the economy, but in the township environment small business retailers struggle to operate in the complex and competitive business environment (cant & wiid 2013:713). consumers have more options and small business retailers need to rethink their business model and begin to look at new ways of doing business (cant & wiid 2013). this view is consistent with the 2004 dti policy review, which noted that high levels of competition in retailing are identified as a critical problem for all categories of retail. it must be noted that before 1994, small business retailers were mainly south africans but after 1994 there has been a surge in the number of foreign nationals residing in south african townships (ligthelm 2003). this resulted in foreign nationals entering the small business retailing market initially as a means for survival and as they excelled in the small business retailing, the south african small business retailer began to struggle for survival. it is important for local traders to survive because one study showed that south african small business retailers employ fellow south africans while foreign national retailers employ foreign nationals (ntema & marais 2010). whenever small foreign national business retailers employ another foreign national, it becomes a lost opportunity for the south african economy to reduce structural unemployment. ligthelm (2003) argues that: … the informal sector plays an important and controversial role. while it offers opportunities for the unemployed, jobs in this sector tend to be low-paid, with little job security. moreover, entrepreneurial activity is promoted, but at the price of non-compliance in respect of tax, labour and other regulations. (p. 55) as indicated above, the small retailers who are the subject of this study are in the informal sector. ardyan (2016:83) defined business success ‘as performance which is a true measure of success and success being visible from human resource performance, operational performance, marketing and financial performance’. furthermore, the author noted that in order to improve performance, small businesses need to be able to ‘track competitor’s strategy, understand market trends and be responsive to the ever-changing market conditions’ (ardyan 2016:91). however, customers of small business retailers in the township environment are more likely to find what they are looking for in a spaza shop owned by foreign national retailer than at a spaza shop owned by the south african small business retailer (ntema & marais 2010). furthermore, the authors noted that customers expressed very high levels of dissatisfaction with the quality of products sold by foreign national small business retailers. cant and wiid (2013) noted that south african small business retailers need training and workshops to enhance their knowledge base and skills. the authors also noted that small business retailers need to have associations and representative bodies that will focus on crime prevention and also negotiate with the south african government for any required assistance. according to ligthelm (2003), it is crucial for small retailers to maintain sufficient stock levels, as this reduces the need to replenish stocks more than once a week. furthermore, the author noted that small business retailers also struggle to keep competitive prices and end up taking small loans from informal lenders. small business retailers struggle with the marketing of their own products, while they themselves rely on promotional material, such as store pamphlets, to decide about where they will buy a particular product (ligthelm 2003). brijlal and jere (2019) noted that entrepreneurship is central to reducing the high unemployment rates among women in south africa. the authors further noted that women starting their own businesses have been designated as the new engines for growth of the developing economies such as south africa. however, danish et al. (2019) observed that an entrepreneurial culture is central for developing economies as it reflects the attitude, values, skills and power of a group or individuals working in an institute or an organisation to generate income. furthermore, the authors noted that entrepreneurial culture and innovation are two of the most important elements for the growth and success of developing countries. according to herrington et al. (2017), although the ratio of male to female participation in early-stage entrepreneurial activities vary considerably across the total sample of gem countries, reflecting differences in culture and customs regarding female participation in the economy, a consistent finding is that men are more likely to be involved in entrepreneurial activities. the south african government is not creating an environment that is conducive for small businesses to create jobs (adisa, abdulraheem & mordi 2014). the authors further noted that the south african government should strengthen the service offerings of its development finance agencies to make sure that they provide seminars, workshops and training for small business owners on how to run a successful small business. this is consistent with the views of dӧckel and ligthelm (2005:54) who argued that considerable emphasis should be placed on the contribution that the small, medium and micro-enterprise (smme) sector can make towards relieving the high levels of high unemployment in south africa. it must be noted that since the 1995 white paper on small business development in 1995, the national small business act (102 of 1996) was enacted in south africa, and it was amended in 2004. in 2014, a special south african government ministry of small business development was established to nurture the growth and development of small businesses in south africa. competition and competitiveness among small business retailers competition and competitiveness in the township retailing environments is about customers’ buying power, business retailers preferences and understanding the consumer behaviour of the poor township dwellers (ntema & marais 2010). herrington, kew and kew (2008) cited by antonites and kliphuis (2011:2) stated that: for businesses to become competitive, develop relationships with customers and suppliers and have easier access to business-related information, it is important that they have access to technology as well as have the capacity to use it effectively. porter (2008:85) observed that ‘rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns, and service improvements. high rivalry limits the profitability of an industry’. south african small business retailer’s incapacity to keep enough stock forces customers to buy from foreign national traders even if they view foreign national traders to have inferior quality stock (ntema & marais 2010). furthermore, ntema and marais (2010) observed that: south african traders feel they have been left unaided when dealing with the consequences of unfair competition resulting from the alleged failure by their own government to regulate the influx of non-south african traders. (p. 22) as regards the cape town metropolitan by-laws controlling informal small business retailers, some small business associations in the city view these by-laws as being biased towards the small business retailers and favourable to national retailers entering the township market. these associations view the by-laws as unrealistic for the spaza shops and geared towards creating an enabling environment for the development of shopping malls where national retailers thrive (battersby, marshak & mngqibisa 2017). the presence of migrants in the township small business retailing sector is viewed by the south african small business retailers as illegal, and they view migrant small business retailers as people who have an agenda to oust them from this market segment (ntema & marais 2010). furthermore, the authors noted that the south african small business retailers also argue that migrant retailers practice unfair business models such as selling expired goods, fake goods and/or inferior products that are not suitable for consumption. porter (2008) noted that: competition on dimensions other than price i.e. on product features, support services, delivery time, or brand image, for instance is less likely to erode profitability because it improves customer value and can support higher prices. (p. 86) some south africans who used to be retailers themselves have resorted to also renting out their business premises to migrant traders (ntema & mais, 2010). furthermore, the authors noted that migrant traders have competitive prices that benefit consumers. strydom (2015:466) noted that ‘heightened levels of competition between informal businesses and formal businesses has a major negative effect on the business survival of the informal retailers’. therefore, south african small business retailers face competition on different fronts as their survival is threatened. business intervention models according to teece (2010): … a good business model yields value propositions that are compelling to customers, achieves advantageous cost and risk structures, and enables significant value capture by the business that generates and delivers products and services. (p. 174) business models are a product of strategy; they are related but different concepts, as strategy is more of a contingent plan about what business model to use (casadesus-masanell & ricart 2010). casadesus-masanell and ricart (2010:204) further noted that ‘strategy entails designing business models (and redesigning them as contingencies occur) to allow the organisation to reach its goals. business models are reflections of the realized strategy’. baden-fuller and morgan (2010:167) also argued that ‘business models have a multivalent character as models. they can be found as exemplary role models that might be copied or presented as nutshell descriptions of a business organisation’. however, business intervention models are business models that are a product of a previous model that have to be redesigned, and redesigning a model correctly requires a proper diagnosis of the previous models, understanding their failures and avoiding them when implementing the new model (teece 2010). when a model is created and implemented, it requires continuous evaluation to keep it viable as it will require interventions from time to time. teece (2010:174) noted that ‘superior technology and products, excellent people, and good governance and leadership are unlikely to produce sustainable profitability if business model configuration is not properly adapted to the competitive environment’. a successful model is one that is difficult for the competitor to replicate, but successful business models do get replicated at some point (teece 2010). research design and methodology the study employed a cross-sectional design and employed a quantitative research methodology. location of the study the two specific townships in cape town – delft and eindhoven – were selected as the setting for this study. these two townships were chosen for this study as data were available on the number of the traders operating in these townships. the population of this study the population of this study comprised all the migrant and local small business retailers trading in delft and eindhoven. the sample of the study the sample of the study obtained using the simple random sampling technique comprised 75 migrant and 55 local small business retailers. this sample size was targeted based on suggestions provided by sekaran and bougi (2016). research instrument a questionnaire comprising closed-ended questions was the research instrument used to collect data. the questionnaire was administered by the researcher with the help of two research assistants, and it aimed to establish the status quo of the traders regarding their competitiveness, skills and capabilities among other things. data analysis data analysis begins with data relevancy, that is, the variables and data must be problem specific. the researcher cannot draw a useful conclusion from variables and data that are not relevant to the research objectives (wenger 2007). in this study, the researcher aligned all the questions in the questionnaire to a specific objective and then grouped the questions according to objectives to avoid any irrelevant data. the raw data collected were analysed, they then became relevant for the formulation of the recommendations emanating from this study. in this study spss, a computer software statistical package was used to analyse the quantitative data. validity and reliability the validity and reliability strategies for the quantitative research components include applied sampling processes, reports on the number of respondents and non-respondents, descriptive analysis of all data and reports on statistical significance testing (creswell 2015). for this study, a sampling frame has been carefully chosen and a representative sample selected to make sure that the study is valid, reliable and generalisable. ethical consideration the university of kwazulu-natal (ukzn) has its own code of ethics like other academic institutions of higher learning. the researcher adhered to all codes of ethics as stipulated by the university. among other things, the code of ethics covers matters relating to confidentiality, anonymity and the ability of the respondents to withdraw at any time during the study without any negative implications. in this study, the researcher applied and was granted ethical clearance from the ukzn research office. the researcher issued consent forms to each respondent. discussion the study looked at competitive factors that distinguish small retailers of foreign origin from the south african small retailers. the factors included the level of education, the number of years the retailer has been in business, buying patterns of the two groups of traders and the status of trading space (whether it is owned or rented). education level of trader groups table 1 indicates that 61.3% of south african traders have education up to grade 12. while this is also true for foreign national traders (61.8%), south african traders have some tertiary qualification as well, including bachelor’s degrees (5.3%) and diplomas (8%). the level of education is important as a form of literacy assessment (financial literacy included). most traders, both local and foreign nationals, have the same education level, of matric (grade 12). however, with regard to education, local traders have a competitive edge compared to local foreign national traders. one of the constraints facing small businesses in south africa is the lack of entrepreneurship education in schools (xheneti & bartlett 2012). table 1: the education level of traders. business experience of trader groups table 2 indicates that in relation to south african traders, 34.5% have been trading for less than 3 years in the area, and 30.9% have been trading between 3 and 5 years in the area, meaning that the majority (65.4%) of south african traders have a trading experience of less than 6 years. in relation to foreign traders, 53.3% have been trading for less than 3 years in the area, and 30.7% have between been trading between 3 and 5 years in the area, meaning that the majority (84%) of foreign traders have less than 6 years of trading experience. table 2: the number of years the business has been in operation. furthermore, table 2 indicates that 18.20% of the south african traders have been trading in the area for more than 10 years, whereas only 5.3% of the foreign traders have been in the area for more than 10 years. table 2 shows that none of the foreign national traders have more than 15 years of trading experience in the area. this shows that the local traders have been trading in the township environments for longer periods compared to foreign national traders. however, the higher rate of new entrants among foreign national traders shows that they will become a majority in the township retailing, slowly ousting the local traders. porter (2008:80) noted that, ‘new entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete’. buying patterns of trader groups table 3 indicates that in relation to south african traders, the majority (52.7%) prefer buying stock in bulk. in relation to foreign traders, the majority (57.3%) do not prefer buying stock in bulk. table 3 also indicates that a relatively high percentage of south african traders do not prefer to buy stock in bulks, while a high percentage of foreign national traders prefer to buy stock in bulk. bulk buying is a cost-saving method for retailers, but it also ties the retailer’s cash flow on the stock item bought in bulk, meaning that when there is a need to buy other out-of-stock items, the retailer might experience a cash crunch. table 3: data depicting whether or not traders buy stock in bulk. table 4 indicates that in relation to south african traders, 18.2% order their stock on a daily basis, and the majority (65.5%) prefer ordering stock on a weekly basis. in relation to foreign traders, 17.3% order their stock on a daily basis, and the majority (65.3%) prefer ordering stock on a weekly basis. table 4 indicates that south african traders and foreign national traders are mimicking each other on the ordering patterns. table 4: the number of times traders order stock. operating space status table 5 indicates that in relation to south african traders, 56.4% are full owners of their small business retail stores, and 14.5% are owner managers, meaning that the majority (70.9%) of south african traders have a direct ownership of their small business retail stores. in relation to foreign traders, 56.0% are full owners of their small business retail stores, and 20% are owner managers, meaning that the majority (70.6%) of foreign national traders have a direct ownership of their small business retail stores. the study revealed that for both local and foreign national traders, there are very few stores that are not directly owned by the traders (table 5). table 5: the management format of the trader’s store of foreign national traders. table 6 indicates that in relation to foreign national traders, the majority (65.5%) fully own their small retail stores. in relation to south african traders, 62.7% rent their stores from south african locals. this reveals that the majority of foreign national traders do not pay rent as they own their stores. furthermore, table 6 revealed that 37.3% of south african traders own their stores and therefore do not pay any rental. rent is one of the high-expense items in the income statement of retailers, and a saving on rental can ease the cash flow of the trader. table 6: data depicting whether traders own or rent their store site. comparative factors (cross tabulations) – local traders table 7 shows that the two variables have a statistical significance level of 0.000. this significance level is lower than the conventional cut-off level of 0.05; therefore, the two variables are statistically significant. this also means that there is likely to be a relationship between the two variables. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 55 respondents indicated both their ‘level of education’ and their ‘trading hours’. table 7: cross-tabulation between the variables: ‘level of education’ and ‘trading hours’. table 8 shows that the two variables have a statistical significance level of 0.000. this significance level is lower than the conventional cut-off level of 0.05; therefore, the two variables are statistically significant. this also means that there is likely to be a relationship between the two variables. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 55 respondents indicated both their ‘trading hours’ and their ‘turnover’. table 8: cross-tabulation between the variables: ‘trading hours’ and ‘turnover’. table 9 shows that the two variables have a statistical significance level of 0.00. this significance level is lower than the conventional cut-off level of 0.05; therefore, the two variables are statistically significant. this also means that there is likely to be a relationship between the two variables. table 9: cross-tabulation between the variables: ‘trading hours’ and ‘number of customers’. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 55 respondents indicated both their ‘trading hours’ and their ‘number of customers’. comparative factors (cross tabulations) – foreign national traders table 10 shows that the two variables have a statistical significance level of 0.63. this significance level is higher than the conventional cut-off level of 0.05; therefore, the two variables are not statistically significant. this also means that there is not a likelihood of a relationship between the two variables. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 75 respondents indicated both their ‘level of education’ and their ‘years of experience’. table 10: cross-tabulation between the variables: ‘level of education’ and ‘years of experience’. table 11 shows that the two variables have a statistical significance level of 0.000. this significance level is lower than the conventional cut-off level of 0.05; therefore; the two variables are statistically significant. this also means that there is a likelihood of a relationship between the two variables. table 11: cross-tabulation between the variables: ‘level of education’ and ‘years of experience’. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 75 respondents indicated both their ‘level of education’ and their ‘trading hours’. table 12 shows that the two variables have a statistical significance level of 0.000. this significance level is lower than the conventional cut-off level of 0.05; therefore; the two variables are statistically significant. table 12: cross-tabulation between the variables: ‘level of education’ and ‘years of experience’. this also means that there is a likelihood of a relationship between the two variables. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 75 respondents indicated both their ‘trading hours’ and their ‘turnover’. table 13 shows that the two variables have a statistical significance level of 0.02. this significance level is lower than the conventional cut-off level of 0.05; therefore; the two variables are statistically significant. this also means that there is a likelihood of a relationship between the two variables. table 13: cross-tabulation between the variables: ‘level of education’ and ‘years of experience’. n reflects the number of respondents who answered the two questions. all the respondents out of a total of 75 respondents indicated both their ‘trading hours’ and their ‘number of customers’. proposed small business intervention framework charman, peterson and piper (2012) noted that: … in financial terms, the majority of spaza shops owned by foreign nationals equate to small size enterprises rather than micro-enterprises, as the scale of their operation and turnover is significantly greater than that of the average south african spaza. (p. 66) furthermore, the authors argue that local small business retailers can be classified as survivalist entrepreneurs, as they run their small businesses on their individual capacities without collaborating with each other. however, herrington (2014:72) stated that, ‘south africa’s rate of entrepreneurial activity is very low for a developing nation, a mere quarter of that seen in other sub-saharan african countries’. this assertion suggests that any suggested business intervention framework should be aimed at entrepreneurial activity of the south african small business retailer. the business intervention framework depicted in figure 1 can be used to assist small business retailers in the township retailing environments. figure 1: recommended business intervention framework. the business intervention framework provided in figure 1 is based on the findings of this study. government intervention is the critical element for the development of south african small retailers. this model suggests training and incubation of local traders (both potential traders and current traders who need access to funding from government). however, the training suggested in this framework must be targeted training of small retailers on various aspects of managing a small retail business in the south african township environment. through the training programme, the traders will have an opportunity to undergo a period of incubation. on the successful completion of the incubation programme, the framework recommends that the trader should also undergo mentorship where the trader will benefit by getting new business knowledge and capacity building from a mentor. the benefits of having a mentor is that the trader might also be introduced to new business suppliers and networks known to the mentor. the framework suggests a deliberate formation of formal business networks for small business retailers initiated by the south african government’s department of small business development. the network will be responsible for information sharing and exploration of further business opportunities among the small business retail community in township environments. the framework suggests that the wholesale and retail sector training authority (w&r seta) should appoint programme managers to guide the small retailers through the various stages proposed in this framework. it is recommended that at the incubation stage, the traders are provided with shipping containers that have been custom made to suite retail businesses, as such structures have proven to protect retailers against criminal elements. furthermore, it is recommended that such containers be equipped with the storage capacity that the traders urgently need. recommendations it is recommended that a pre-programmed computerised system with inventory delivery and control is supplied to small retailers, as such a system eliminates several of the problems and shortcomings that these small businesses encounter. the pre-programmed computerised system will make it possible to buy stock, and the amount owed for the stock is subtracted and directly paid to the supplier. this ensures sustainability of the business. it is also recommended that the south african small retailers must consider alternative buying and delivery models such as a centralised buying model so that the required stock is delivered to them instead of them leaving their premises every time they have to replenish stock. this could save them time and transportation costs. conclusion the study identified various areas of challenge for the south african small business retailers, such as a lack of adequate education level, a lower rate of new entrants among south african small business retailers as compared to their foreign national counterparts and poor stock management systems. based on the identified challenges, a business intervention model for the south african trader is suggested in this study. the implementation of this model envisages an outcome whereby local traders can improve their competitiveness through competitive pricing strategies, which can then sustain and grow their small enterprises into medium enterprises. the success of the south african small business retailers will have a positive impact on the efforts to reduce unemployment in south africa. through the business intervention model discussed, the study suggests that the south african government development agencies have a funding model targeted specifically at small business retailers. through government funding, the w&r seta, as suggested in the proposed business intervention model, needs to be the custodian of the training for small retailers consistent with their mandate. acknowledgements the authors would like to thank the cape peninsula university of technology for the support it has given to mr m. malgas in attending the conference on retailing in the united kingdom. the conference provided invaluable information that was used in putting together this article. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions m.m. and w.b.z. collaborated in the conception and design of the research. m.m. collected, analysed and interpreted the data, and drafted the manuscript. w.b.z. critically revised the manuscript and approved the final version to be published. funding this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is applicable to this article as new data were created and analysed. data can be obtained from the authors upon request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adisa, t.a., abdulraheem, i. & mordi, c., 2014, ‘the characteristics and challenges of small businesses in africa: an exploratory study of nigerian business owners’, economic insights iii (lxvi)(4), 1–14. antonites, a.j. & kliphuis, w., 2011, ‘an exploratory study on the potential value add of social networking to the entrepreneurial process’, the south african journal of entrepreneurship and small business management 4(1), 1–23. ardyan, e., 2016, ‘market sensing capability and smes performance: the mediating role of product innovativeness success market sensing capability and smes performance: the mediating role of product innovativeness success’, dlsu business and economics review 2(january), 79–97. baden-fuller, c. & morgan, m.s., 2010, ‘business models as models’, long range planning 43(2–3), 156–171. https://doi.org/10.1016/j.lrp.2010.02.005 battersby, j., marshak, m. & mngqibisa, n., 2017, ‘mapping in the invisible: the informal food economy of cape town, south africa’, african food security urban network 24(january), 1–47. https://doi.org/10.2307/j.ctvh8r2fq brijlal, p. & jere, a.k., 2019, ‘identifying and exploiting economic opportunities: the case of unemployed women in khayelitsha township, cape town’, african journal of business and economic research 14(2), 5–23. https://doi.org/10.31920/1750-4562/2019/14n2a1 cant, m. & wiid, j., 2013, ‘establishing the challenges affecting south african smes’, international business and economics research journal 12(6), 707–716. https://doi.org/10.19030/iber.v12i6.7869 casadesus-masanell, r. & ricart, j.e., 2010, ‘from strategy to business models and onto tactics’, long range planning 43(2–3), 195–215. https://doi.org/10.1016/j.lrp.2010.01.004 creswell, j.w., 2015, a concise introduction to mixed methods research, sage, thousand oaks, ca. danish, r.q., asghar, j., ahmad, z. & ali, h.f., 2019, ‘factors affecting “entrepreneurial culture”: the mediating role of creativity’, journal of innovation and entrepreneurship 8(14), 2–12. https://doi.org/10.1186/s13731-019-0108-9 dӧckel, j.a. & ligthelm, a.a., 2005, ‘factors responsible for the growth of small business’, south african journal of economic and management sciences 8(1), 54–62. https://doi.org/10.4102/sajems.v8i1.1283 herrington, m., 2014, ‘entrepreneurship in south africa: gem impact on policy’, global entrepreneurship monitor (gem), 2014 global report, pp. 1–115. herrington, m., kew, p. & mwanga, a., 2017, ‘south africa report 2016/2017, can small businesses survive in south africa’, global entrepreneurship monitor (gem) 2016(1), 1–64. liedeman, r., 2013, ‘understanding the internal dynamics and organisation of spaza shop operators’, master’s thesis, uwc. ligthelm, a.a., 2003, ‘informal retail structures in south africa: an exploratory study 1’, southern african business review 7(1), 54–63. ligthelm, a.a., 2008, ‘the impact of shopping mall development on small township retailers’, south african journal of economic and management sciences 11(1), 37–53. https://doi.org/10.4102/sajems.v11i1.376 ntema, l. & marais, l., 2010, ‘trade is in our blood: reflections on trends and conflicts in township trade’, cds research report, led and smme development 2010(1), 1–54. porter, m.e., 2008, ‘the five competitive forces that shape strategy’, harvard business review, january 2008, 78–94. rolfe, r., woodward, d., ligthelm, a. & guimarães, p., 2010, ‘the viability of informal micro-enterprise in south africa’, whitman school of management – entrepreneurship in africa conference, syracuse university, syracuse, new york, april 1–3, 2010. sekaran, u. & bougie, r., 2016, research methods for business: a skill building approach, 5th edn., hermitage, new york. strydom, j., 2015, ‘david against goliath david: predicting the survival of formal small businesses in soweto’, international business and economics research journal 14(3), 463–476. https://doi.org/10.19030/iber.v14i3.9210 teece, d.j., 2010, ‘business models, business strategy and innovation’, long range planning 43(2–3), 172–194. https://doi.org/10.1016/j.lrp.2009.07.003 wenger, t., 2007, applied business statistics, juta, cape town. xheneti, m. & bartlett, w., 2012, ‘institutional constraints and sme growth in post-communist albania’, journal of small business and enterprise development 19(4), 607–626. https://doi.org/10.1108/14626001211277424 microsoft word 146 rosslyn-smith.docx 1 stakeholder expectations of the business rescue plan from a south african perspective wesley rosslyn-smith wesley.rosslyn-smith@up.ac.za marius pretorius marius.pretorius@up.ac.za university of pretoria south africa abstract background: a business rescue plan has to comply with a new and vague set of obligations regulated by south african legislation. expectations of the plan are largely unknown, yet crucial in determining compliance. establishing an effective benchmark for the plan is essential for the growth and success of the industry. purpose: the study set out to answer these questions: what are the most crucial elements needed to fill the gap between the specifics of the companies act (2008) and the further elements needed to meet the plan’s primary objective of providing adequate information to stakeholders? what are the international principles applicable to rehabilitation plans and what elements underpin them? method: thirteen industry experts were selected and interviewed to identify the most crucial elements of the business rescue plan. sampling was a combination of convenience and purposive sampling. data collection obtained data on subjects’ opinions, rankings, agreement and ratings. results: the study was able to confirm that there is indeed a gap between the mandatory elements prescribed in section 150(2) and the provision of sufficient information required by section 150(1) of the companies act no. 71 of 2008. the survey revealed that in the subjects’ expert opinion, the international principles are applicable to the business rescue plan. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 2 conclusion: the crucial elements of the rehabilitation plan selected by the experts offer insight and clarity in terms of what is expected of the plan. key words: business rescue, companies act, business plans, measurement, insolvency, turnaround, reorganisation introduction “in any case you mustn't confuse a single failure with a final defeat.” ― f. scott fitzgerald, tender is the night corporate reorganisation, a subset of insolvency procedures, has to a large extent been moulded by developed economies. international insolvency frameworks are partially unaccustomed to the realities present in emerging markets. while reorganisation may take a number of different forms, the benefits are increasingly accepted, and insolvency laws in several countries include provisions for formal reorganisation proceedings. south africa has through the promulgation of the companies act no. 71 of 2008 (“the act”) in april 2009, effective on 1 may 2011, joined the international community in adopting a modern reorganisation regime. chapter 6 of the act, which deals with business rescue, is the generic term billed to define and instruct formal reorganisational proceedings. ‘business rescue’ proceedings are designed to offer a financially distressed debtor the necessary breathing space to recover from its temporary liquidity difficulties and, if necessary, provide it with an opportunity to restructure its debt and its relations with creditors in order to continue with its business activities. the act requires an s131 court order or an ss129 and ss130 company resolution to commence proceedings, followed by the appointment of a business rescue practitioner (‘practitioner’). the practitioner is expected to affirm the appointment if he or she believes there is a reasonable prospect of rescuing the company and sajesbm volume 7 (2015) www.sajesbm.co.za article 146 3 it is within his or her ability to do so. the management of the company’s affairs, business and property is then placed under the temporary supervision of the practitioner. a temporary moratorium on the rights of claimants against the company is immediately initiated. the focus of proceedings is then shifted to the development and implementation, if approved, of a plan to rescue the company. twenty-five business days, with exception, are awarded to the practitioner after appointment to construct and publish a viable business plan. the objective of the plan is to detail the mechanisms and outcomes to be used so that the company can overcome its financial difficulties and resume normal commercial operations on a solvent basis. in the event that this is not possible, the implementation of the proposal must result in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company. s150 of the act prescribes the content to be presented in the business rescue plan. the overarching mandate is to provide sufficient information to the affected parties for them to reach a decision regarding its adoption. s150(2) details specific elements to be included in the document; however, this only results in the bare minimum required for compliance, and it is generally accepted that the plan should go beyond it. key focus of the study this study aims to explore what experts in the field of business rescue regard as crucial elements of a business rescue plan. the research focuses on clarifying the unspecified gap (void) left when the plan is expected to go beyond the detailed specifics of s150(2) (republic of south africa, 2008), in order to fulfil its primary objective of providing adequate information to the affected parties. international principles derived from similar regimes are evaluated to ascertain if they are relevant to business rescue. the principles are discussed, as well as ways to better meet them. fundamental elements are scrutinised and explored, to gather insight into how the industry can evolve. this study does not intend to sajesbm volume 7 (2015) www.sajesbm.co.za article 146 4 formulate a template for the rescue plan, but rather to initiate a school of thought as to how the plan should behave, and expose contentious issues currently being faced. literature the introduction of chapter 6 of the new companies act, no. 71 of 2008 (“the act”) has brought to light a new era for south african insolvency in the form of business rescue. while its predecessor, judicial management of the companies act of 1926, was at first a pioneer, over time it became outdated and ineffective (westbrook, 2010:122, kloppers, 1999:417). chapter 6, however, aims to reverse that by implementing a more efficient and modern recovery mechanism for financially distressed companies in a way that balances the rights of affected parties (du toit, 2012:1). this bold piece of legislature is aimed at improving national unemployment and offering better rehabilitation techniques to ailing businesses (johnson & meyerman, 2010:8). the judicial management process had no statutory provision for the development or drafting of a rescue plan (loubser, 2010:41). one of the major innovations of business rescue, however, is the prerequisite that a rescue plan must be prepared in order to illustrate how the rehabilitation of the company will be achieved. the absence of this requirement is believed to be one of the reasons why judicial management rarely led to a successful rescue (loubser, 2010:115). a large body of literature – starting from the work by dolan (1983:26), balgobin and pandit (2001:304) and others (westbrook, 2010:151, world bank, 2005:6, insol international, 2000:26) – has drawn attention to the importance of the rescue plan in both formal and informal turnaround situations. the objective of the information-gathering, due diligence and evaluation processes provided for by legislature is to allow the relevant stakeholders to evaluate the debtor’s position and make the best decision (insol international, 2000:26). sajesbm volume 7 (2015) www.sajesbm.co.za article 146 5 recent research into business rescue has revealed numerous challenges facing the industry. le roux and duncan (2013:69) identified the fact that the majority of creditors involved in business rescue proceedings had little to no knowledge of the regime and what it involved. their research indicates that a poor expectation of the plan stems from a lack of understanding and experience within the industry. research conducted by pretorius (2013a:13) into the competencies required by a business rescue practitioner revealed that most entailed critical elements of the business plan. this reiterated that a direct correlation between the practitioner’s ability to draft the plan and the effectiveness of the rescue. a preceding study (pretorius & holtzhauzen, 2008:103) found that legitimacy, resource scarcity, leadership capacity, strategy options, data integrity and integration were the most relevant assets of practitioners. research makes it clear that the practitioner requires a defined skill set to design, publish and implement the plan successfully. furthermore, correlation between the needs and expectations of the affected parties and the content published in the plan is crucial to its eventual adoption (united nations, 2005:190). the act details the procedural guidelines to be followed throughout the business rescue proceedings. strict accordance with the act must be followed from the onset of proceedings, by both the directors and the affected parties, until substantial implementation is reached. after publication of the plan, the practitioner must convene and preside over a meeting of creditors and any other bearers of voting power to consider the proposed plan (republic of south africa, 2008:s151(1)).the document must provide sufficient information to enable the parties to make an informed decision, requiring only a 75 percent majority in attendance of the meeting to be approved (republic of south africa, 2008:s152(2)a). the act defines an affected party as a shareholder, creditor, employee (or their representative) or a registered trade sajesbm volume 7 (2015) www.sajesbm.co.za article 146 6 union representing employees of the company. affected persons have various rights throughout the business rescue process (republic of south africa, 2008:s128(1)(a)). section 7(k) (republic of south africa, 2008) of the act extends the targeted audience by “providing for the efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders”. while not all stakeholders of the company may be awarded voting rights, they are implicitly included in proceedings by the act. international principles for the business rescue plan five international principles were identified by pretorius and rosslyn-smith (2014 forthcoming) as directives for the implementation of the business rescue plan. that research entailed evaluating the expectations held by four prominent regimes, namely those of the united states, united kingdom, canada and australia. the researchers examined expectations of the reorganisational plans of these regimes, in the context of their insolvency frameworks. the plan was found to serve as a tool for feasibility declaration, a medium of communication, an enabler of transparency, a contractual obligation and finally to assist decision making for attracting post-commencement finance (pcf). these principles are the comparative benchmarks used for this study and are therefore briefly discussed as follows: the first principle calls for the business rescue plan to serve as a tool for feasibility declaration. the outcome of the plan is reliant on what is feasible; that is, based on the facts, circumstances and practical assumptions, the plan involves a strategy intended to rehabilitate the company and in so doing offer creditors a better return. it provides a clear reference point during the rapid and often confusing changes common during the rescue process. it also safeguards key resources by clearly acknowledging and preserving those on which the strategy for recovery is based (balgobin & pandit, 2001:14). this principle requires the plan to explain how the business will remain operational, be sajesbm volume 7 (2015) www.sajesbm.co.za article 146 7 successfully reorganised and how implementation of the plan will be supervised, with reference to a timeframe detailing its execution. the second principle entails the business rescue plan’s serving as a medium of communication. balgobin and pandit (2001:314) maintain that a rescue plan which is communicated properly will help clarify and safeguard critical resources. kow (2004:242) talks about a ‘communications plan’ and explains that the plan should make clear why the company is undergoing the turnaround effort, how it will do it, what the employees can expect during the process, and what the company will gain from the effort. effective communication is statutorily required in order to adequately inform creditors. furthermore, the plan must persuade key stakeholders to believe in the future potential of the business by building credibility, confidence and trust in the future prospects of the business. until the plan is published, the majority of the stakeholders may be oblivious to the turnaround strategies or the reasons for distress. this principle makes the point that though the plan is usually heavily laden with legal jargon, the language used should be reconsidered carefully in light of these aspects. the next principle requires the business rescue plan to serve its contractual obligations. since the plan is in essence a binding contract, it enables various remedies to assist with the rehabilitation. the practitioner, creditors and possibly other external parties may also be bound by the terms of the plan and, by virtue of their position, remain responsible for its implementation. the parties are contractually bound until the business rescue plan has been substantially implemented. this requires that the plan encompass all relevant information, not only for decision-making purposes but to prevent legal action against the process and the practitioner. the contractual nature of the plan has far-reaching consequences that ought to be contemplated. the fourth principle calls for the business rescue plan to serve as an enabler of transparency. international expectations require that the plan be transparent sajesbm volume 7 (2015) www.sajesbm.co.za article 146 8 and predictable. the rationale is to enable potential lenders and creditors to understand how proceedings function and to assess the risk accompanying their position as a creditor in the event of rehabilitation. success in this regard will promote stability in commercial relations and nurture lending and investment at lower risk premiums. transparency and predictability will in addition allow creditors to clarify priorities, prevent arguments by offering a backdrop against which relative rights and risks can be assessed, and help define the limits of any disagreement (united nations, 2012:13). vague and loosely designed plans could undermine not only the confidence of all participants but also their willingness to make investment decisions. as far as possible, the plan should clearly indicate all provisions that may affect the rights of creditors or alter their risk profile. finally, the last expectation identified is that the business rescue plan should attract and secure pcf. to ensure the continued operation of the distressed entity after the commencement of formal proceedings, it is critical to obtain a source of new finance as soon as possible. the premise of post-commencement funding extends from short-term recovery needs to the long-term strategy of the reorganisational plan (united nations, 2005:113). the reorganisational plan is expected to address any sort of pcf that has been approved or recommended. the plan should set out the effects of funding on the business and on the interests of any affected party. the pros and cons of any financial arrangement should be clearly addressed for objective evaluation by affected parties. incentivised tools within insolvency legislature are aimed at encouraging pcf (du preez, 2012:36). this may afford the ability to authorise super-priority status to credit or debt incurred. such actions inevitably have far-reaching consequences. where the plan is concerned, it needs to explicitly elaborate upon the reason for and use of such tools offered by formal reorganisation. literature on the business rescue plan remains limited, and most of the aspects of the plan have remained uncontested in south african courts at the time of this sajesbm volume 7 (2015) www.sajesbm.co.za article 146 9 review. it is not the intention of this study to incorporate the views of the court, though the researchers are cognisant of the latest judgments relating to the business rescue plan to date. research objectives and questions international research, described in the literature review, has demonstrated that business rescue legislation encourages the plan to exceed the rigid conditions prescribed in the act in order to be successfully adopted. this study aims to find substantive evidence that additional expectations of the plan exist. following the identification of key international expectations (pretorius & rosslyn-smith, 2014 forthcoming), the opinion of key industry experts would determine whether these principles are applicable to the south african regime, and to what extent they should apply. therefore, the following investigative questions are presented:  what are the expectations of a business rescue plan from a local perspective?  are they in line with the international principles?  how far should these expectations be explored? the potential value-add of the study the study has embarked on a new aspect of reorganisation: to explore and detail the workings of the business rescue plan as part of a formal turnaround process. limited literature has discussed the intricacies of the plan and its impact on proceedings. though this study by no means aims to completely define the plan, it does hope to initiate further exploration into the various aspects it presents. beyond that, this study is intended to assist practitioners by better aligning their content with the expectations of their targeted audience; provide creditors and other affected parties with clearer expectations; and finally offer the regulator and other institutions a means to better evaluate the plan. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 10 research design and methodology research approach an exploratory analysis was applied, with confirmatory and descriptive elements aimed at better understanding a new phenomenon. this pertains to expectations associated with a business rescue plan, from the perspectives of professionals proficient in the field of business rescue (saunders & lewis, 2012). analysis of pre-existing rescue plans identified a disparity between the expectations held by decision makers and the content published. a literature review of international benchmarks further revealed areas beyond the detail of the act, suggesting that there were additional elements the plan should satisfy. the fact that local literature was limited suggested that a qualitative research approach be used to explore the phenomenon in more depth (cooper & schindler, 2008:140).the study aimed to use these questions simultaneously to guide the research. table 1 research design components (modified from yin (2003:21)) component description problem there are no clear guidelines for what should be included in a business rescue plan. research question / problem what are the expectations of the business rescue plan from a south african perspective? context turnaround and business rescue propositions • proposition #1: there are expectations that extend beyond the prerequisites of section 150(2)a of the companies act no. 71 of 2008. • proposition #2: the expectations of the business rescue plan fall in line with international principles. • proposition #3: key expectations can be identified and defined.  phenomenon investigated primary: expectations of experts in the field of business rescue. secondary: five international principles of the rescue plan (benchmark) units of • thirteen senior experts from six key industries influencing business sajesbm volume 7 (2015) www.sajesbm.co.za article 146 11 observation rescue in south africa. • chapter 6 of the companies act no. 71 of 2008  method specialist and expert interviews logic linking the data to the propositions industry experts are tasked to understand and evaluate the plan. the chosen individuals are all final decision makers, best suited to offer critical insights into the content of the plan in order to perform their task effectively. experts are poised to offer the best objective expectations of the plan. criteria for interpreting the findings • the expectations identified by industry experts • experts’ support of the international principles • the experts’ reasoning and explanation of their expectations   key scientific beliefs of the researchers to answer the above questions, the researchers were aware of their own methodological values, beliefs and particular philosophical assumptions. these assumptions could influence the way in which the research was conducted and are stated to understand the ‘intellectual climate’ in which the research was undertaken. ontological positions ontological positions comprise researcher a and b’s views on the nature and essence of the research reality. both researchers are objective realists who believe that knowledge comes from facts associated with real-life cases and their context. where either researcher found repeated mentions of practices and praxis, they could “generalise” them. the researchers aimed to maintain a critical view of each regime and interpret legal works from an international insolvency perspective. the interest focused on understanding and describing a set of principles that could confirm the international perspective on the expectations of a rescue plan for south africa (saunders, lewis & thornhill, 2009:110). sajesbm volume 7 (2015) www.sajesbm.co.za article 146 12 epistemological positions in attempting to answer the research questions, the researchers were aware of their own individual methodological values, beliefs and philosophical assumptions. these assumptions could influence how the research was conducted and are stated in order to understand the ‘intellectual climate’ in which the research was conducted. the theory of knowledge (epistemology) of the researchers describes how they are able to discover underlying principles about social phenomena and how one can demonstrate knowledge. the researchers have personal experience in the context of business rescue. at the same time, as an academic and turnaround consultant and as a post graduate student, they have a preference for factual directives. research setting and background the researcher conducted 13 interviews with high-level experts, covering six discrete but critical professions pertaining to the field of business rescue. subjects with practical experience and knowledge in the field of business rescue were chosen. the six disciplines included practitioners, lawyers, creditors, banking representatives, distressed venture capitalists and government officials associated with the regulator. a semi-structured interview format was chosen, by conducting non-standardised, one-to-one interviews with subjects (saunders et al., 2009:320). during the interview, subjects were requested to reflect on their understanding of the plan and what they expected from it. following an openended discussion, the subjects were led with a protocol aligned with the international principles mentioned above. both open and closed questions were used to improve understanding of the results (blumberg, cooper & schindler, 2008:143). sampling the research question required experienced and qualified professionals to ascertain holistic views of the plan in its various forms. subjects with significant exposure to multiple types of plan were needed. the business rescue environment offered a limited population of professionals meeting this criterion. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 13 using these characteristics/criteria, a judgement-sampling technique was applied. the purposive selection of subjects considered peer recommendations, socioeconomic status, extent of knowledge of insolvency, and level of exposure to decision-making experience in the business-rescue environment. the purposive sample size for the research was determined after theoretical saturation arose. the ideal number of twelve interviews sufficed to achieve this milestone (guest, 2006:59). represented in the sample were practitioners, bankers, legal specialists, potential government investors and creditors. table 2 interview statistics description quantity total number of interviews 13 number of disciplines covered 6 total length of all interviews 854.15 minutes average length of interviews 65.7 minutes shortest interview 45.54 minutes longest interview 79.55 minutes data analysis descriptive data from the interviews was collected and disseminated into single thought elements. salient themes were then identified and categorised into the appropriate underlying international principle (fossey, harvey, mcdermott & davidson, 2002:728, marshall & rossman, 2006:158). discovery-focused techniques aim to establish patterns and connections between elements of data require the use of inductive reasoning (leedy & ormrod, 2001:33, fossey et al., 2002:728). the interviews, direct observations and physical artefacts were converged to assist with the interpretation (yin, 2003:89). sajesbm volume 7 (2015) www.sajesbm.co.za article 146 14 figure 1 conceptual framework of the rescue plan in south africa findings figure 1 presents a framework based on the findings of this research. it shows at its centre the five international guideline principles associated with turnaround plans for which literature does exist. on the outside it shows the contributions of this research, populated with specific elements covering the different expectations of the subjects as categorised by the researchers. each element is expanded on in detail below. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 15 discussion of findings the research uncovered a number of interesting results, while supporting general beliefs as to the nature of the plan and the direction it should follow. most promising is that all the subjects interviewed supported all five principles and could align their expectations in accordance with them. generally accepted expectations surfaced within each principle, indicating that more often than not the views of the subjects were in line with one another. these expectations are explored in more detail below, in combination with any outliers that accompanied them. business rescue plan as a feasibility declaration the act allows for two distinct types of a plan to be pursued by the practitioner. the first, and notably the most controversial, is a plan aimed solely at achieving a better return, perhaps more accurately referred to as a controlled wind-down proposal. here the objective of the practitioner is simply to attain a higher return for creditors than would result from a liquidation procedure. this process in essence is simply the disposal of the company’s assets, and differs only marginally from liquidation, justifying the use of terminology like: “soft, glorified, informal and disguised” liquidation. the plan is somewhat clinical and minimal in nature and offers no means of salvaging the company as an ongoing concern. subjects offered little insight into a better return plan (wind-down proposal). the general consensus was that bare minimum compliance was needed, with strong reasoning by the practitioner as to why this direction had been chosen. the need for a feasibility declaration in such a plan would prove redundant – unless to substantiate the view that pursuing a turnaround strategy would be unviable. however, the viability analysis is still relevant, but as viability is found negative it is not included in the plan. the second, and more indicative of business rescue, is that of a turnaround plan. here the objective centres on saving the entity as a whole and deploys various strategies to do so. the second of the two options is significantly more complex. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 16 one respondent suggests this is where a shred of ‘personality’ is usually required. while both options (better return or restructuring) are suitable forms of rescue plan (by law), they differ significantly with regards to their expectations. support for the elements associated with the feasibility declaration by the subjects is shown in figure 2 and discussed in order of process rather than order of support. the background the turnaround plan, which is better known as a reorganisational plan within the international community, attracted significantly greater interest from the subjects. while the act already encompasses a large majority of the expectations identified, a number of additional elements were revealed. in-depth detail of the background of the business was deemed essential, offering insight and context to the situation. this also assisted in building credibility among parties already familiar with the company’s affairs. such detail was emphasised by a number of subjects, suggesting the background be elaborated on further. reasons for the company’s distress should form part of the background analysis. clear and concise reasons must be given as to why the business is in financial trouble. the practitioner should furthermore make a clear distinction between the symptoms and causes of distress. often vague macro-environmental factors are blamed, 0% 20% 40% 60% 80% 100% turnaround strategy feasibility analysis cash flow analysis leadership background discussion business rescue legacy sensitivity analysis figure 2 relative support by subjects for elements of the feasibility declaration sajesbm volume 7 (2015) www.sajesbm.co.za article 146 17 without any mention of internal reasons, leading to further frustration and distrust in the plan by affected persons. part of the turnaround strategy is the actions already taken by the practitioner. the plan should list these events and explain how they contribute to the overall turnaround strategy. implementation is a key component of the plan (dolan, 1983:26); therefore, elaborating on these decisions and how they have been executed to date can contribute to the credibility of the strategy. proper consultation in relation to how the plan will be executed is paramount to persuading decision makers (creditors) to vote for the plan. feasibility analysis the feasibility analysis (study) concerns itself with one of the key expectations of the plan: “is there still a viable business?” (pretorius, 2013b:21). all the subjects stressed this point in one form or another, emphasising repeatedly how important it was. the feasibility study is usually conducted prior to filing for business rescue by the practitioner. a viability analysis/due diligence of the company’s affairs should be ideally conducted after filing, to ratify many of the assumptions made in the feasibility study. critical success factors should be identified and coupled with possible risks. defining the boundaries of feasibility is also important, to assist parties in knowing when to ‘pull the plug’. the feasibility study was also expected to explore the competitive environment. analysis of whether or not the opportunity for the company to exploit its market still exists usually remains unanswered. subjects were also asked if there was room for an objective test for feasibility; however, the general consensus was that the industry was too young and that best practices should be established beforehand. the turnaround strategy closely linked to the feasibility and viability of the company is the turnaround strategy. all the subjects recognised that it was vital to have a turnaround strategy presented in the plan. the turnaround strategy usually forms the bulk of sajesbm volume 7 (2015) www.sajesbm.co.za article 146 18 the document, encompassing various sections used to substantiate and describe how the plan will unfold. one subject described it as follows: “the turnaround strategy needs to flow like a story”. the task of engineering a strategy is by no means an easy one. though subjects acknowledged this to be a mammoth task, they reiterated that the strategy must be backed by facts as much as possible. synonymous with turnaround situations is the credibility of data (pretorius & holtzhauzen, 2008:99), and as a consequence stakeholders require the strategy to be substantiated by a creditable source. disclosing source documents and utilising external data such as bank statements and industry norms can be of great help. industry benchmarking enables critical and objective evaluation of the strategy itself. in addition to this, practitioners should refer to past business turnaround models where possible. interlinking it to past plans that have been successful would increase stakeholder confidence. cash flow analysis forecasted financials accompanying the strategy are usually the most scrutinised section. subjects indicated that the business model, with all its assumptions and alternative scenarios, should in combination with the financials be stress tested and elaborated on as far as possible. the most important element identified was that of a cash-flow projection, despite its not being a requirement of section 150 of the act (republic of south africa, 2008). all subjects referred to the cash-flow statement as an integral part of their decision-making process. the importance of this component cannot be emphasised enough. the plan is expected to make ‘cash-flow sense’ to interested parties. the distressed environment is indicative of cash-flow constraints as well as obvious hurdles inhibiting rehabilitation. as a consequence, tailoring the cash-flow statement is necessary to reflect the harsh reality that awaits the company. sensitivity analysis to improve decision making, the cash-flow forecast should further incorporate alternative scenarios and be accompanied by a sensitivity analysis. a swot sajesbm volume 7 (2015) www.sajesbm.co.za article 146 19 breakdown could identify critical resources supplemented by a risk assessment. such critical components should be evaluated and incorporated in the sensitivity analysis in order to minimise the risk forgone by the sure monetary (rand) amount offered in liquidation. it is also important for any pcf funder’s critical evaluation of the turnaround strategy. business rescue legacy an aspect not often found in plans and yet one which the subjects deemed essential for securing long-term pcf is that of br legacy. the term was identified and coined only after several interviews; however, the underlying concept was supported by all the subjects. the phrase refers to the negative sentiment and reputation left behind by the business rescue proceedings. the concept of formal rehabilitation is new to many south africans (le roux & duncan, 2013). business rescue follows a debtor-friendly orientation, in contrast to a strong creditor-centred insolvency system. the culture of debt forgiveness is still fairly new, and as a result business rescue proceedings can have a negative effect on the company’s reputation with suppliers, customers and staff. acknowledging and implementing mechanisms to address reputation early in the strategy is expected and regarded essential for long term partners of the rescue. leadership there is an unclear yet important expectation for the plan to address leadership. ‘leadership’ has been chosen to describe this concept since the role might be held by the practitioner or new or existing management. most notably are the roles and capabilities of the practitioner. practitioners should use the plan to motivate and install confidence in their interim leadership position as the right person for the job. in most plans the topic surrounding management is a contentious one, particularly where management or the directors of the company are believed to be part of the reason for distress. the practitioner is obliged to report any sajesbm volume 7 (2015) www.sajesbm.co.za article 146 20 unlawful or careless conduct by the directors in terms of s141(c) of the act (2008). in addition, when creditors ‘want blood’ and feel management is to blame, pressure to disclose or clarify the situation becomes more pertinent. where fraud or reckless trading is suspected of taking place, the issue should be addressed as to how the practitioner will expose it. the competencies and leadership of a company are a contentious matter, which the plan should not avoid. furthermore, a succession plan should also be covered to clarify leadership roles after the practitioner and his or her team have left and substantial implementation has been achieved. business rescue plan as a medium of communication it is stated under section 150(2) of the act that the plan must provide sufficient information for decision-making purposes. this then requires the plan to take the form of a decision-making document that can be effectively interpreted by all the affected parties in order for them to make fair judgment on the rescue process. the plan, if properly communicated, also offers a clear reference point amid the rapid and often confusing changes among multiple parties. subjects reiterated that the plan should be a stand-alone document encompassing all the relevant information, but be the result of on-going communication with all the stakeholders throughout the drafting process. figure 3 depicts the subjects’ support for the different elements. 0% 20% 40% 60% 80% 100% pre-engagement language of the plan strategic message addressing stakeholders structuring the plan figure 3 relative support by subjects for elements associated with communication sajesbm volume 7 (2015) www.sajesbm.co.za article 146 21 pre-engagement a key success factor identified by most subjects was that of pre-engagement with the affected parties, as critical to an effective and successful plan. pretorius (2013b:21) also identified the importance of this element during proceedings. assessing the knowledge and expectations of the affected parties beforehand assists the practitioner to identify the style, language and form to be used. preengagement also allows the practitioner to manage expectations and educate stakeholders. at best, the plan should come with no surprises when published. the act allows for the formation of a creditors’ committee to assist with this process. language of the plan as a decision-making document, subjects were asked what language proficiency was required to interpret the plan effectively. in many cases the plan is targeted at a multitude of parties with varying knowledge and language skills. though acknowledging that this posed a dilemma, the subjects suggested that the plan’s executive summary should cater for most readers and exclude any legal or financial jargon. the bulk of the plan, however, is expected to be a professional document requiring legal, financial or applicable knowledge in the relevant industry to interpret. however, legal or professional jargon should not be used to cloud the content, and a well-balanced knowledge of business should suffice at all times. subjects in addition suggested the use of a terminology booklet to define and standardise business rescue terminology. this could be read in conjunction with the plan. strategic message at its core the plan is a sales document that must ultimately persuade its targeted audience of creditors to vote in favour of its proposed rescue strategy. as with any sales pitch, it is not just about what you say but also how you say it. subjects agreed that it was unlikely that a ‘dry’ or clinical plan would fly when considering a business in severe distress. convincing the readership requires emphasising sajesbm volume 7 (2015) www.sajesbm.co.za article 146 22 key points and not getting bogged down in technicalities. uncertainty does mist much of the proposal, as a number of estimations and assumptions are required. in all, however, the document should confirm a ‘glimmer of hope’ and confidence while delivering its message, as one of the subjects expressed it. the ambience of the plan can influence the sentiment behind its approval and implementation. in some cases the plan may fall into the public domain. currently it is unsure whether or not the plan is a public document; however, if this is so, those drafting it must consider its public exposure and the repercussions thereof. the media and external stakeholders could gain access to the document, making it vulnerable to misinterpretation and scrutiny by public opinion. though this would have no impact on the voting procedure, it could contribute to the business rescue legacy discussed earlier. furthermore, the opportunity should be taken to stifle rumours and address areas of concern. practitioners should be cognisant of these and control them through remedies such as press releases and contact channels. though subjects supported the notion that the plan could entice and bolster support, they also warned against painting a ‘blue sky’. over-optimistic strategies were heavily criticised; these usually reduce confidence in the practitioner. the recommendation is then to propose a strategic but realistic message in order to protect the practitioner’s reputation. addressing stakeholders the plan is statutorily obligated to address three affected parties: shareholders, creditors, and employees and the trade union representing them. the focus is generally on creditors, yet the plan is expected to also detail how both employees and shareholders will be affected. where employees are concerned, the plan usually offers little insight into their role in the future. mention of how change management and uncertainty will be dealt with can be greatly beneficial. understanding the staff complement is key to the implementation of the strategy. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 23 it is unlikely that the volume and variety of creditors faced in a business rescue will allow a tailored response to the concerns of each in the plan. creditors should not expect intricate details to be discussed unless they are deemed crucial to the overall strategy. however, subjects recommended that a disputeresolution mechanism should be in place, as well as clarification on claims for all the creditors involved. consultation with creditors before publication is pertinent to attaining their insight and input, which would also lead to greater support. a contentious issue was reported over whether the plan should accommodate an extended readership. other than the three affected parties, the practitioner should consider additional stakeholders. all regulatory parties must be informed of proceedings (republic of south africa, 2008:s140(1)a); however, subjects questioned whether they should be addressed in the plan. research data was unclear as to whether or not an extended readership should be considered, but subjects warned that this might distract from the purpose of the document. it was advised that stakeholders who play an integral role in the turnaround strategy should be mentioned. however, additional research is required to establish whether neglecting to mention external stakeholders, such as lobby groups, would have any detrimental effect on the rescue. structuring the plan how the plan is structured was of concern to a number of subjects. the document is expected to be professionally indexed and easy to read. minutes of meetings should be attached, with all the relevant documentation. detailed annexures are useful and allow for in-depth investigation. in some cases major institutions would be required to scrutinise the plan. configuring sections in line with the organisational structure of large creditors could be helpful, as it would reduce the time taken to review the plan. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 24 business rescue plan as enabler of transparency all the subjects agreed that the plan is a tool for transparency and should disclose all the relevant information required for decision-making purposes. this entails detailing events leading up to the publication (history) of the plan and events planned to unfold after its approval. information specified in the plan is provided to creditors and other interested parties to assist them to properly assess the plan. under s150(2) of the act (2008), mandatory information must accompany the proposal, supported by appropriate mechanisms for obtaining it. the plan should satisfy the key objective of transparency and assist in ensuring creditor confidence in proceedings. a fair and balanced stance should always be maintained when confidentiality concerns arise from access to potentially sensitive financial and operational information relating to the debtor, even though that information may ultimately enter the public domain through approval or confirmation of the plan by a court. figure 4 indicates the subjects’ degree of support for each element. figure 4 relative support by subjects for elements that enable transparency. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 25 full disclosure on a practical level, the plan cannot be expected to divulge unrelated information to affected parties. with a few exceptions, the majority of the subjects agreed that the practitioner had the discretion to withhold information where deemed appropriate. the capabilities of the practitioner are believed to be sufficient to make such judgements. affected parties should request specific information prior to publication to assist the practitioner. where information deemed relevant has been withheld, mention should be made of this, with substantiation and associated reasoning. it was clear from data obtained through the interviews that section 150(2) of the act would not automatically result in full disclosure and that in the majority of cases the plan would need to extend further to obtain compliance in terms of disclosure. where the plan enters the public domain, it may be less prone to discuss intricate details that might be considered detrimental to the rehabilitation of the company if disclosed. other aspects such as reputational damage and the business rescue legacy might then be considered. however, its objective as a decision-making document is obstructed without adequate information. where creditors and other parties do not believe that the disclosed information is convincing, their views should be acknowledged, allowing the plan as proposed to be amended or in the course of the confirmation process. liability of information the practitioner is obligated to conclude the plan with a certificate confirming that the information contained in the plan is accurate, complete and up to date (republic of south africa, 2008:s150(4)). furthermore, estimates should be made in good faith on the basis of factual information and assumptions. subjects reiterated that the practitioner remains ultimately responsible for the disclosure of information. the practitioner on appointment should be comfortable with facilitating a thorough, independent assessment of the business activities in order to engineer a plan accurate enough for affected parties to make a decision. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 26 the plan is also expected to expose any fraudulent activities or misappropriation by directors, or at least acknowledge that the matter is being dealt with. a growing concern of the subjects was that business rescue is being used to safeguard directors. this issue should be addressed, to avoid frustrating creditors and to maintain confidence in proceedings. corporate governance synonymous with distressed ventures is a shortfall in corporate governance. subjects were indecisive as to whether it played a role in the plan, indicating that though it was an important issue it might distract from the intended focal points. the view was that corporate governance should remain a ‘golden thread’ throughout the plan. but basic recovery methods should be the biggest concern, suggesting that “when you’ve saved them from drowning, then start giving them vitamins”. designing for transparency the structure and language of the plan will affect transparency. obscuring details with legal jargon or concealing them with heavily laden addenda will not suffice. the nature of the document must recognise and accommodate a dynamic audience which is required to yield a decision within a short period of time. communication channels and timelines as to when and how information will be distributed on the plan’s progress should be mentioned. the design of the plan is important to ensure information is effectively disclosed and understood. business rescue plan as contractual obligation when the plan has been approved by the requisite majority of creditors and equity holders, it becomes a binding document on all the affected parties, including the practitioner. the contractual make-up of the plan offers a number of powerful remedies for the practitioner and the affected parties. the general sentiment among subjects was that this feature is not being utilised nearly as much as it should be, and that the contractual aspects of the plan are being sajesbm volume 7 (2015) www.sajesbm.co.za article 146 27 neglected. the dynamic nature of the plan affords it the ability to legally bind key resources and secure ongoing support and responsibilities from individuals. utilised correctly, contractual clauses can enforce areas of the turnaround strategy, thus giving it the necessary muscle to achieve completion. figure 5 depicts the elements relevant for inclusion as contract elements. provisions for recourse in the majority of cases the plan should be based on a number of reasonable assumptions. detailing the assumptions, as well as the risks posed by them, offers insight into the feasibility of the plan and better mitigates liability concerns. the volatile nature of turnaround often requires alternative scenarios to be projected, against the possibility that key assumptions could fail. a prominent expectation that was identified was that scenario planning (options) was a definite requirement element in the plan. contractually engineering a plan to adapt to various scenarios extends its effectiveness and possibility of success. it allows recourse, without defaulting on the primary strategy and consequently having to develop a new business rescue plan. subjects indicated that where recourse beyond the alternative scenarios was required, the plan should then elaborate on procedures to be followed, such as renewed creditor meetings. 0% 20% 40% 60% 80% 100% provisions for recourse substantial implementation responsibilities of the plan figure 4 relative support by subjects for elements that affirm the contractual obligations of the plan sajesbm volume 7 (2015) www.sajesbm.co.za article 146 28 substantial implementation another contractual aspect of the plan is to offer measurable milestones/objectives to be achieved, in order to facilitate ongoing communication and monitoring. subjects stressed the need for performance indicators to be defined and communicated. time-based reports, such as those requested by the regulator, should be mentioned, in addition to milestones linked to outputs such as payments. components interlinking the feasibility study with the performance indicators could offer a grounded perspective as to whether or not the viability of the business still remains. implementation should involve a ‘gated’ process. the final objective that should be defined is substantial implementation. subjects reiterated that this remains an elusive term used by practitioners, and should be explicitly defined. scorecards also appear to be under-utilised in rescue plans. clarifying ‘substantial implementation’ can reduce the liability on the practitioner. it also reduces the possibility of abuse. the practitioner’s remuneration is directly linked to the duration of business rescue, offering an incentive to continue the process for longer than it should last. responsibilities to the plan ultimately the plan requires the collaboration of parties to achieve its objective. the practitioner often plays only a facilitation role in its implementation. key suppliers, partners and employees are often critical success factors in the proposed strategy. using the plan for its contractual abilities can be of significant value. subjects encouraged the plan to secure the support of key players, employing contractual subordination, clarifying relationships and detailing penalties for breach of contract. where the plan is obligated to clarify any infringements on an affected party’s rights, the party’s responsibilities should accompany it. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 29 attract and secure post commencement funding in accordance with the research into pcf by pretorius and du preez (2013), the consensus from subjects was that the plan is expected to include, in detail, all financing required from filing (day one of business rescue) until the closure of rescue proceedings. the plan, however, can detail either the working of a prearranged pfc deal or the attraction of pfc financing. the two alternatives are vastly different, as they influence the entire agenda of the document. locking in secured pfc (pre-vote) the plan is geared towards the presentation, and approval by creditors, of ‘post plan’ or exit finance (du preez, 2012:93). where pfc has been secured prepublication, it would be focused on gaining creditor support. the investor in such a case would form part of the plan’s development and there would be no need to pitch an investor’s agenda. it should rather be designed to sway creditor support for the pcf deal. subjects expected such a proposal to contain detail workings of the deal, including the return on investment. attracting new pcf (post-vote) in the adverse scenario, where pcf has not been secured prior to the publication of the plan, the plan is expected to attract and secure a pfc deal. subjects indicated that this would be the less favoured approach, as it requires a far more 0% 20% 40% 60% 80% 100% secure pfc attract pcf disclosure of pcf figure 5 relative support by subjects for elements of post commencement finance sajesbm volume 7 (2015) www.sajesbm.co.za article 146 30 compelling argument to succeed. confirmation should ensure the creditors’ blessing for a financing tender, and be testament to their ongoing support. data obtained also suggested that investor confidence relied heavily on proving longterm sustainability and detailed cash movements. research (pretorius & du preez, 2013) has identified a number of key expectations from potential financers: the viability of the business, underlying business model, independent verification of data, sound and sustainable rescue plan, proper pre-assessment of the business and a thorough analysis of the rescue and liquidation scenario. disclosure of pcf the disclosure of pcf deals was soundly supported by the majority of subjects, as indicated in figure 5, emphasising that information pertaining to any pcf deal is critical to the assent to the plan. supporting arguments held that any pcf deal has the ability to affect the feasibility and fairness attributed to the proposal. the impact of pcf transactions should be clear and the plan should detail the benefits or risks they pose to the rescue process. should the plan seek approval prior to the conclusion of any pfc deal, it should stipulate conditions for the approval of any deal, or request that any pfc be brought back to a creditors’ meeting for ratification. conclusion analyses of opposing expectations by subjects revealed that many of these were associated with what the plan aimed to achieve. engineering the plan correctly is crucial to firmly aligning the correct expectations with a business rescue situation. based on the expectations determined by subjects, detailed above, figure 6 offers a perspective on how to approach and construct the plan to better serve the expectations of the required audience. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 31 figure 6 approaching the plan determining the feasibility and viability of the entity is required before anything else. this step, though premature, constitutes the first phase of the plan. following the feasibility analysis, the practitioner is tasked with the investigation of the affairs of the company (republic of south africa, 2008:s141 ), and so the background description is compiled. at this stage the bulk of information has been gathered and elements required in section 150(2) can be fulfilled. the result of the investigation thus far should point to a rehabilitation plan or a proposed wind-down, the two being distinctly different. if a proposed wind-down is chosen, the plan in its current form should suffice to meet the expectations of the affected parties. in the case of a rehabilitation plan, a pre-assessment of the affected parties’ knowledge and resources should be determined in order to facilitate effective communication. if pcf is required, the plan is then fractured again in order to either seek funding or the support of the creditors. the expectations pertaining to the rehabilitation plan remain the basis of this study. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 32 the study was able to confirm that there is indeed a gap between the mandatory elements prescribed in section 150(2) and the provision of sufficient information to enable stakeholders to make a decision, as required by section 150(1) of the act. opinions of the expert subjects confirmed that accepted international principles are applicable to the business rescue plan (pretorius & rosslyn-smith, 2014 forthcoming). the elements formulated in this study from stakeholder expectations of the business rescue plan offer insight and clarity in terms of what is expected of the plan. where subjects held opposing views, consenting elements were engineered to better grasp the concept. contribution to management this research contributes to the management body of knowledge. figure 6 in this study serves as a framework to guide business rescue plan development. it combines international guidelines with local expectations to formulate guidelines for compiling the plan. affected persons, especially creditors, should benefit from this framework, as would practitioners in training. limits of the study and suggested future research the study was constrained by limited literature on the topic of business rescue, in particular on the rescue plan. at the time of the research, business rescue had only operated for approximately thirty months. these factors could possibly have limited the exploration and interpretation of the findings. though subjects were requested to offer objective counsel, the risk of bias in view of their discipline or social desirability remains plausible (saunders et al., 2009:326). the limitations and pitfalls of individual depth interviews recognised by marshall and rossman (2006:102) and by ritchie and lewis (2003:138) were acknowledged, and mitigated as far as possible. the researchers acknowledge that the number of subjects interviewed may hinder the study, even though data saturation was reached after eight interviews. finally, the study relied heavily on the researchers’ own interpretation, and therefore this is accepted as a plausible limitation. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 33 business rescue remains relatively untouched in terms of academic literature and a number of its aspects require extensive investigation. the findings of this study have uncovered a number of opportunities for further research, in particular the direct impact of omitting expectations. additionally, exploration into best practices in terms of the structure and presentation of information should be considered. references balgobin, r. & pandit, n. 2001. stages in the turnaround process: the case of ibm uk. european management journal, 19(3):301-316. blumberg, b., cooper, d. r. & schindler, p. s. 2008. business research methods, new york, ny, mcgraw-hill higher education cooper, d. r. & schindler, p. s. 2008. business research methods, new york, ny, mcgraw-hill higher education. dolan, p. f. 1983. a four-phased rescue plan for today's troubled companies. journal of business strategy, 4(1):22-30. du preez, w. 2012. the status of post-commencement finance for business rescue in south africa. johannesburg: gordon institute of business science. du toit, l. 2012. tax implications for business rescues in south african law. university of pretoria. fossey, e., harvey, c., mcdermott, f. & davidson, l. 2002. understanding and evaluating qualitative research*. australian and new zealand journal of psychiatry, 36(6):717-732. guest, g. 2006. how many interviews are enough?: an experiment with data saturation and variability. field methods, 18(1):59-82. insol international 2000. statement of principles for a global approach to multicreditor workouts, london, insol international. johnson, g. w. & meyerman, g. e. 2010. insolvency systems in south africa johannesburg: united states agency for international development. kloppers, p. 1999. judicial management -a corporate rescue mechanism in need of reform. stellenbosch law review, 10:417-435. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 34 kow, g. 2004. turning around business performance: part 1. journal of change management, 4(3):229-246. le roux, i. & duncan, k. 2013. the naked truth: creditor understanding of business rescue: a small business perspective. southern african journal of entrepreneurship and small business management, 6(167):57-74. leedy, p. d. & ormrod, j. e. 2001. practical research: planning and design. 7th edition, upper saddle river, nj, merrill prentice hall. loubser, a. 2010. some comparative aspects of corporate rescue in south african company law. pretoria: university of south africa. marshall, c. & rossman, g. b. 2006. designing qualitative research, thousand oaks, ca, sage. pretorius, m. 2013a. a competency framework for the business rescue practitioner profession. acta commercii pretorius, m. 2013b. tasks and activities of the business rescue practitioner: a strategy as practice approach. south african business review, 17(4):1-26. pretorius, m. & du preez, w. 2013. constraints on decision making regarding post-commencement finance in business rescue. southern african journal of entrepreneurship and small business management, 6:168-191. pretorius, m. & holtzhauzen, g. t. d. 2008. critical variables of venture turnarounds: a liabilities approach. southern african business review, 12(2):87107. pretorius, m. & rosslyn-smith, w. 2014 forthcoming. expectations for a business rescue plan: international directives for chapter 6 implementation. southern african business review. republic of south africa 2008. companies act 71 of 2008. government gazette no 32121 volume 421. pretoria: government printer ritchie, j. & lewis, j. 2003. qualitative research practice: a guide for social science students and researchers, thousand oaks, ca, sage. saunders, m. & lewis, p. 2012. doing research in business and management, harlow, pearson education. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 35 saunders, m., lewis, p. & thornhill, a. 2009. research methods for business students, london, financial times/prentice hall. united nations. 2005. legislative guide on insolvency law. available from: http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/2004guide.html [accessed 23 november 2013]. united nations. 2012. uncitral model law on cross-border insolvency with guide to enactment. available from: http://www.uncitral.org/pdf/english/texts/insolven/v1188129judicial_perspective_ebook-e.pdf [accessed 15 june 2013]. westbrook, j. l. 2010. a global view of business insolvency systems, washington, martinus nijhoff. world bank. 2005. world bank principles for effective creditor rights and insolvency systems. worldbank.org [online]. available from: http://www.worldbank.org/ifa/ipg%20%20revised%20pples%20final%20%5b21%20dec%202005%5d.pdf [accessed 21 december 2013]. yin, r. k. 2003. case study research: design and methods, thousand oaks, ca, sage. sajesbm volume 7 (2015) www.sajesbm.co.za article 146 abstract background and motivation data and procedures results conclusion acknowledgements references about the author(s) johannes i.f. henning department of agricultural economics, faculty of natural and agricultural sciences, university of the free state, bloemfontein, south africa brent d. jammer department of agricultural economics, faculty of natural and agricultural sciences, university of the free state, bloemfontein, south africa henry jordaan department of agricultural economics, faculty of natural and agricultural sciences, university of the free state, bloemfontein, south africa citation henning, j.i.f., jammer, b.d. & jordaan, h., 2022, ‘youth participation in agriculture, accounting for entrepreneurial dimensions’, southern african journal of entrepreneurship and small business management 14(1), a461. https://doi.org/10.4102/sajesbm.v14i1.461 original research youth participation in agriculture, accounting for entrepreneurial dimensions johannes i.f. henning, brent d. jammer, henry jordaan received: 25 aug. 2021; accepted: 07 july 2022; published: 08 nov. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: despite the high youth unemployment levels, especially in sub-saharan africa, participation in the agricultural sector remains low. the agricultural sector provides valuable opportunities of employment, which could contribute towards relieving the high levels of unemployment and enhancing livelihoods of families in rural areas. youth are also seen as the future of the agricultural sector and food production. aim: to determine whether entrepreneurial dimensions, along with assets within the sustainable livelihoods framework, influences participation of youth in the agricultural sector. setting: focus is on youth and the influence of endogenous and exogenous factors on their participation in the agricultural sector. methods: entrepreneurial dimensions of 440 youth participants were derived from statements related to entrepreneurial skills and competencies by means of principal component analysis and combined with factors from the sustainable livelihood framework in a multinomial logistic regression. results: it was found that the youth are heterogeneous in their endogenous and exogenous resources. youth involved in the sector are more likely to have access to land and extension services, experience in the sector and support initiatives. in terms of entrepreneurial dimensions, youth involved are more inclined to believe in themselves and are more likely to take advantage of opportunities (pull entrepreneurship). the results show that policies and programmes should consider both endogenous and exogenous factors and combinations thereof to attract and enhance youth participation in the agricultural sector. conclusion: policy and programme development should consider the heterogeneity of youth in terms of their access to resources and entrepreneurial dimensions to enhance their participation in the agricultural sector. participation in agriculture requires more than only access to land, and other individual physical resources attention should also be given to endogenous factors of individuals and combinations of different resources. keywords: agriculture; food security; youth; entrepreneurship; sustainable livelihoods; sub-saharan africa. background and motivation the agricultural sector provides a platform for improving the living standards of people in africa, as well as around the globe, which eventually leads to economic growth (wale, chipfupa & hadebe 2021). modern agriculture is therefore playing a role towards achieving food security, especially in poverty-stricken households, as well as rendering employment opportunities in countries where unemployment is of much concern (maconachie, binns & tengbe 2011; ouko et al. 2022; townsend et al. 2017; wale et al. 2021). south africa has not been spared and is experiencing a youth unemployment crisis (metelerkamp, drimie & biggs 2019). agriculture or agricultural entrepreneurship can minimise the scarcity of employment opportunities (adeyanju, mburu & mignouna 2021), especially for women and youth in southern africa (ama & okurut 2013; ouko et al. 2022; townsend et al. 2017). despite the advantages of getting involved or continuing in agriculture, the sector remains the last option for youth when making career choices (gandure, walker & botha 2013), and youth are unwilling to participate or not interested in agricultural activities (ex. elias et al. 2018; ouko et al. 2022; sumberg et al. 2017; yeboah et al. 2017). this is rather concerning given the employment opportunities that the agricultural sector provides. despite the reports of unwillingness or disinterest to consider the agricultural sector by youth, metelerkamp et al. (2019) found that some youth from three provinces are interested in participating in agriculture, which is also confirmed by glover and sumberg (2020), stating that evidence suggests that youth do find farming appealing. agriculture and activities within the agricultural sector must be appealing to the youth (adeyanju et al. 2021; glover & sumberg 2020), and focus should be placed on the ones who show interest in and willingness to participate in the agricultural sector. importantly, young people have become a focus point for schemes and policies in recent years (burchell & coutts 2019; glover & sumberg 2020; sumberg & hunt 2019; turolla et al. 2022), and investment in the agricultural sector is one strategy that is being employed to tackle youth unemployment (turolla et al. 2022). although governmental ventures are put in place to assist youth to become employed through agriculture, employment or youth entrepreneurship does not seem to make any significant contribution to enhance the livelihoods of youths (kew et al. 2015). yeboah et al. (2017) suggested that there is no alignment between the future which youth foresee for themselves compared with the image designed for them by policymakers. this indicates that these efforts and investments do not have the envisioned impact for youth in the agricultural sector (magagula & tsvakirai 2020). this ultimately leads to an increase in social problems, such as inequality and crime (chindoga & fatoki 2011), lack of skills, low self-esteem, marginalisation, poverty and squandering of human resources (obayelu, adepoju & omirin 2019). according to corrigan (2009), one of the most challenging socio-economic challenges facing south africa is establishing viable rural livelihoods within communities; this can still be argued in the present day. ventures of entrepreneurship in agriculture can be of utmost importance in livelihood-establishment through providing opportunities, employment and the acquiring of skills (vogel 2017). authorities should actively pursue the purpose of attracting youth towards entrepreneurship and involvement in agriculture, as well as equipping individuals with resources and knowledge (tolamo 2012). this remains the case with the findings of adeyanju et al. (2021) illustrating the need for government and other stakeholder to empower youth through agripreneurship by investing in training or educational programmes. glover and sumberg (2020) recommended that generalisation of youth should be avoided, and the necessary time and effort should be spent on understanding the heterogeneity of young people and their individual needs, while yeboah et al. (2017) suggested that further reflection is required, which should provide different and more enhanced policy options. several opportunities exist for youth in agripreneurship; however, youth are hindered by internal and external barriers (ouko et al. 2022). these barriers include, among others, negative perceptions towards the sector (henning et al. 2022; ouko et al. 2022) and a lack of access to skills and resources such as infrastructure, land, finances, networking and mentors (kew et al. 2015; ouko et al. 2022). the process of establishing a business for entrepreneurs is difficult and often discourages individuals from becoming successful entrepreneurs, especially those lacking access to or ownership of resources. for gaining a better understanding of the people element of entrepreneurship, the identification of the sustainable livelihoods framework (slf) can prove to be valuable, where psychological, human, natural, financial and physical capital have strong explanatory power for entrepreneurial spirit (hadebe 2016). entrepreneurial and managerial competencies are part of the tools required to start and grow a business (mitchelmore & rowley 2010) while dossou et al. (2021) further stated that literature shows that entrepreneurial orientation is key for the performance of a business. key decisions must be made concerning business activities to achieve success and optimise opportunities as an entrepreneur. this indicates that individuals rely on personal attributes, such as decision-making abilities, to ensure long-term business growth. the ability to act on business opportunities by an entrepreneur requires certain skills and competencies possessed by an entrepreneur. south africa faces a disconcerting scenario where a relatively lower level of opportunity-driven entrepreneurship activity abounds among unemployed youth (steenkamp 2013). according to the 2012 global entrepreneurship monitor africa report, south africa had the lowest total of entrepreneurship activities among the monitored developing countries (turton & herrington 2013). youth have not bought into the government’s effort, and the institutional and infrastructural investments from the government have not delivered as expected in terms of attracting youth to the sector (magagula & tsvakirai 2020). according to magagula and tsvakirai (2020), the low response could be because of preconceived ideas or the under-investigated impact of socio-economic factors, while chipfupa and tagwi (2021) stated that continuous negative observation or experiences by youth towards the agricultural sector will keep them away from the sector. adequate livelihood assets often encourage involvement in agriculture, especially in the rural areas of south africa (wale & chipfupa 2018). the inability of youth to exploit these opportunities and support programmes will continue to persist until entrepreneurial competencies and traits are improved among youth through entrepreneurial education programmes (birdthistle, costin & hynes 2016). it is therefore important to get the youth involved in agriculture as a viable survival and livelihood strategy. to achieve this, youth livelihoods and entrepreneurial situation needs to be understood. youth entrepreneurial development are hindered by factors such as access to finance, lack of management, technical and marketing skills and access to infrastructure and markets (kew et al. 2015; ouko et al. 2022). kew et al. (2015) further elaborated that although the obstacles faced by the youth could be relevant to all individuals, the youth are at a disadvantage compared with others because of their lack of asset accumulation, credit history and work experience. this shows that as mentioned by ouko et al. (2022), youth development is hindered by both exogenous and endogenous factors in their entrepreneurial development, behaviour and agricultural participation. exogenous factors such as age (nwibo, mbam & biam 2016), education (ogunmodede, ogunsanwo & manyong 2020), marital status (ogunmodede et al. 2020), gender (ng’atigwa et al. 2020), credit (wale et al. 2021) and land or land size (ng’atigwa et al. 2020; wale et al. 2021) have been found to have a negative impact on participation in the agricultural sector. on the other hand, age (ogunmodede et al. 2020), gender (being male; wale et al. 2021), household size (nwibo et al. 2016), agribusiness experience (ogunmodede et al. 2020), financial support from parents (magagula & tsvakirai 2020), agricultural studies (magagula & tsvakirai 2020) or education (ng’atigwa et al. 2020; nwibo et al. 2016), perceived economic benefits (magagula & tsvakirai 2020), access to extension services (wale et al. 2021), cooperative membership (wale et al. 2021), market access (wale et al. 2021) and annual income (nwibo et al. 2016; wale et al. 2021) have been found to have a positive influence on participation in the agricultural sector. little attention is given to how endogenous factors influence youth participation in the agricultural sector. this is confirmed by iwara et al. (2021), stating that there is a normally a focus on exogenous factors and limited focus on endogenous attributes of individuals, while larue et al. (2021) stated that more research is required to understand the conditions under which youth would opt to enhance their livelihoods or make a decision between the livelihood options available to them. research by dossou et al. (2021), oseifuah (2010), chindoga and fatoki (2011) and lebusa (2011) analysed factors such as entrepreneurial orientation dimensions, entrepreneurial education, self-efficacy and financial literacy and performance, and it was found that the improvement of these factors significantly improves the entrepreneurial competencies of an individual or firm. wickramaratne, kiminami and yagi (2014) and nieuwoudt, henning and jordaan (2017) investigated the influence of entrepreneurial competencies on resource management and business growth and on financial performance, respectively. dossou et al. (2021) focused on entrepreneurial orientation of young women and agribusiness performance while hadebe (2016) explored the relationship between sustainable livelihood assets and entrepreneurial characteristics. magagula and tsvakirai (2020) focused on youth perceptions of agriculture and cognitive processes on agripreneurship participation and found that positive economic perception plays a role in intentions to participate in agripreneurship. the perceptions of youth towards the programmes available to attract them towards the sector is also important, as confirmed by adeyanju et al. (2021). the authors mention that youth perception towards agricultural programmes will determine their level of participation; consequently strategies are required to improve youth perception of agriculture. wale et al. (2021) considered the enablers and inhibitors to on-farm entrepreneurship by using positive psychological capital (endogenous) as proxies for entrepreneurship. the research was, however, not focused on youth but rather smallholder farmers with an average age of almost 50 and standard deviation of 12, indicating that very few youths were involved in this specific research. mmbengwa, qin and nkobi (2021) further emphasised the limited research, explaining the importance of youth entrepreneurship in smallholder agriculture and the advantages thereof in reducing unemployment among youth. according to the authors, there remains limited research on determinants of youth entrepreneurship in the agricultural sector and its ultimate contribution towards young people’s development. it is clear from the discussions and stated by mmbengwa et al. (2021) that youth are faced with employment issues, and entrepreneurship within agriculture or food systems (value chains) could provide a valuable solution to these issues. iwara et al. (2021) stated that support to small enterprises in rural areas of south africa is focused on exogenous factors and ignores endogenous attributes of individuals. from their research, it was found that endogenous factors should be combined with exogenous factors for successful entrepreneurship, and they found that the endogenous factors bridging networks, resilience, risk awareness, nonconforming and self-belief influence small business success in rural areas. similarly, mmbengwa et al. (2021) found that perseverance, personal motivation, creativity and a positive attitude are key to enhance youth entrepreneurial success within their study area of south africa. entrepreneurship is an important aspect to consider for the future of the sector, as the changing agricultural environment requires farmer to become more entrepreneurial (sinyolo & mudhara 2018). individuals’ endogenous factors has a similar role as exogenous factors towards enterprise success; however, endogenous factors have not been given much attention in research (chipfupa & tagwi 2021; iwara et al. 2021). endogenous factors (e.g. entrepreneurship or psychological capital) are important in successful business development and success, while access to resources has an important influence on attracting individuals towards participation or employment in the agricultural sector. however, a limited number of studies have been conducted on how endogenous factors associated with entrepreneurship, together with sustainable livelihood assets, might attract youth into agricultural involvement. the research aims to explore the influence of entrepreneurial dimensions included along with the assets of the slf on youth participation in the agricultural sector. to achieve the aim of the research the following objectives are set: (1) explore the access to assets within the slf, (2) determine entrepreneurial dimension of youth and (3) explore the influence of access to livelihood assets in combination with entrepreneurial dimensions on youth participation in the agricultural sector. data and procedures study area the research was conducted in two regions within the free state province of south africa. the free state province covers an area of approximately 129 825 km2 with five districts, namely xhariep, mangaung, lejweleputswa, thabo mofutsanyana and fezile dabi. municipalities sa (2016) indicated that the province has a population of 2.8 million and is ranked eighth in south africa with regard to population size. demographically, most of the residents in this province are black people (88.7%), followed by white people (8.9%), mixed-race people (1.8%) and indian or asian people (0.6%). in the province, government and previously disadvantaged individuals jointly owned approximately 7.8% of the agricultural land in 2016, as compared with the total of 26.7% of all agricultural land in south africa. this is an increase in ownership of land from 1.6% in 1994 for the free state province (agri sa 2017). given this brief background of the province, this study was conducted in two rural areas of the free state province, namely thaba nchu in the mangaung metropolitan municipality (mmm) and qwaqwa in the thabo mofutsanyana district. the respective study areas were selected based on certain criteria with assistance from the free state department of agriculture and rural development (fsdard): high unemployment rate among youth limited research performed on youth in rain-fed farming willingness of governmental extension officers to assist in the project the fact that the two study areas are rain-fed farming areas. qwaqwa, also called basotho qwaqwa, was previously designated for the southern sotho (often called basuto) people. the area is in a section of the drakensberg, being at the forefront among mountains at elevations from 1675 m to higher than 3050 m. qwaqwa borders lesotho, as well as the province of natal on the south-east. the area is well known for its mountainous scenery, bordering the lesotho and drakensburg mountains. qwaqwa forms part of the thabo mofutsanyana district and is administered by the maluti-a-phofung local municipality. according to municipalities sa (2016), the majority (64.5%) of the population ranges between the ages of 15 and 64 years, with the minority of 5% being over 65 years of age. the unemployment rate for maluti-a-phofung is approximately 41.8%, with youth unemployment at 53%, according to census 2011 (maluti-a-phofung local economic development strategy [mapleds] 2015). qwaqwa receives an average annual rainfall of 900 mm, which makes the area suitable for rain-fed agriculture. the local economy is mostly based on subsistence agriculture, where maize, spinach, sorghum, potatoes, fruits and other vegetables are grown. thaba nchu, located 63 km from bloemfontein, is administered by the mmm. thaba nchu and the surrounding areas are former homeland areas, with the population largely made up of tswana and sotho people. with a land area size of 36.39 km2, the rural town is surrounded by 42 villages, with arable land being utilised by residents for small-scale and domestic agriculture. the villages have a variety of economic activities, and mixed farming is practised in all villages, with livestock being the most practised agricultural activity in the area. annually, the area receives approximately 629 mm of rainfall. the thaba nchu region has been mentioned to comprise marginal land but has higher potential when used under different production systems. viljoen et al. (2012) stated that the challenges experienced in thaba nchu and surrounding areas remain the same and include high rates of unemployment, urbanisation of farm workers, the exodus of skills from small and rural towns and active immigration to mines and economic centres. the farmers in the areas comprise mostly older individuals, a situation which influences the success of introducing new ideas, as it is believed that it is difficult for the older generation to adapt to the new or latest trends in farming methods (fsdard 2018). unemployment among the youth is also a problem in the area, at 37.2%, with the townships of mangaung, botshabelo and thaba nchu being mostly influenced (fsdard 2018). in the thaba nchu greater area, especially the rural areas, it was mentioned that the observed levels of unemployment could be as high as 60% (fsdard 2018). most of the land in thaba nchu, the surrounding areas and in maluti-a-phofung belongs to the state. the area of thaba nchu includes areas of commonage, with land occupied under the settlement land acquisition grant and the land redistribution and agricultural development programme being situated in between (bureau for food and agricultural policy [bfap] 2013). sampling procedure and methods primary data were collected within the two rural areas of the free state province by means of a structured questionnaire presented in key informant interviews and groups. random sampling was used to interview individuals or groups between the ages of 18 and 36. interviews were arranged as part of field visits, where the local extension officers from thaba nchu and qwaqwa would set up meetings between youth and the research team. youth in general was targeted and not only those who are involved in the agricultural or related economic activities. all the respondents (440) took part in the interviews of their individual free will and could withdraw from participating any time during the interview or data collection session. data were collected in the interval periods from august 2018 to february 2020. the collected data were anonymously captured (coded) in microsoft excel. the entrepreneurial dimensions were determined by means of principle component analysis (pca). respondents had to provide self-ratings of their possible behaviour for scenarios related to risk-taking, seizing opportunities, determination and problem-solving, independence, drive for achievement, innovation and creativity, locus of control and goal orientation (wale & chipfupa 2018). the pca was performed using the statistical package for social sciences (ibm spss statistics 27). the determination of which factor needs to be included in the components is based on an expressed eigenvalue which is greater than 1, as per the kaiser–guttman rule (williams et al. 2010), which was also used in similar research (cele & wale 2020; chipfupa & wale 2018). according to ahmad, adnan and adnan (2006), small eigenvalues are important regarding the indication of extreme multicollinearity, which allows the exclusion of smaller eigenvalues in the analysis. factor loadings equal to and greater than 0.4 were included (cele & wale 2020; chipfupa & wale 2018). on a note of caution, as explained by cele and wale (2020), self-rating likert scale questions should be interpreted with a matter of caution, as there might always be a case of inflated indications by respondents, but this should not pose an issue with further regression analysis. the four categories are based on the indication provided by the respondents on their level of involvement in the agricultural sector. it was found that the youth who are currently involved can be divided into three subgroups, those who are involved full-time in farming or related economic activities, involved in farming or related activities as part of a cooperative and lastly those involved as part of a family business. the base category for the research was chosen as those currently not engaged in farming or related economic activities, as the study wanted to explore whether there are differences between youth who are involved in the sector compared with those not involved. given the nature of the dependent variable, multinomial logistic regression (stata 15) was used to explore the relationship between the respondents’ category of participation in agriculture, the entrepreneurial dimensions and livelihood assets. the multinomial logit regression model was used because the dependent variable consists of four categories (rigby, young & burton 2001), which have no specific order or sequence. the multinomial model specification (equation [1]): where yij represents the dependant variable while represents vector of variables (j) for the respondents (i) and µi the error term. the variables, as shown in table 1, include factors associated with the slf while the entrepreneurial characteristics, for the purpose of the regression analysis, were represented by the principal components (table 2) that were extracted. the dependent variable (yij) was defined as: table 1: description of explanatory variables with their respective means (%) and standard deviations. table 2: different dimensions of the youths’ entrepreneurial drive. descriptive statistics four main categories were used in stratified random sampling with a total sample size of 440 respondents. a total of 52% of the respondents were involved in agriculture and economically related activities; these include as an individual (n = 55, 12.5%), as part of a cooperative (n = 30, 6.8%) and lastly as part of a family business (n = 144, 32.7%). the descriptive analysis of the variables used in the research are presented in table 1. chipfupa and wale (2018) made it clear that small-scale farmers are not a homogenous group and are diverse in features and their access to resources. there were slightly more men than women who participated in the research, with an average age of 26 years of age. when the different categories of involvement are considered, more men than women indicated that they were involved in any of the categories while also being slightly older than those not involved. the experience of youth in the sector was also considered, as it could provide indications on whether any level of experience could potentially differentiate between the different participation levels. as expected, the experience of youth in the sector was low, at an average of two and a half years. it is further seen from the data that youth involved in the sector clearly had more experience than those who were not involved. youth who were involved as individuals appeared to have greater access to natural and physical resources such as land and livestock. participation in government or other programmes that are there to assist youth are illustrated by short-term training and being a beneficiary of government support programmes. overall, there was very little participation in these, with those involved as individuals showing the highest participation in support programmes, while those involved as part of cooperatives had received more training. wale and chipfupa (2018) indicated that there is reliance on social grants as financial resources and lack or experience constrains in terms of other financial resources. the importance of grants in relation to agriculture in the households are illustrated by the variable ‘grants to buy inputs’, while the total household income for the year, savings and credit access the preceding 12 months of the interview were also considered in relation to financial resources. generally, youth who were involved in the sector in any of the three categories indicated a better position in terms of resource access than those who were not involved. ethical considerations the research project was approved by the general/human research ethics committee of the university of the free state (reference number: ufs-hsd2018/0947/0310). informed consent was obtained from the respondents. results dimensions of entrepreneurial characteristics table 2 presents the results of the pca to extract the dimensions of entrepreneurial characteristics of the respondents. the pca was found to be significant (bartlett’s test < 1%) and a kaiser–meyer–olkin measure of sampling adequacy of 0.609, which is greater than 0.5. these indicate that the variable is correlated and that pca could be applied to the specific data set (cele & wale 2020). following the procedure, nine components were extracted with eigenvalues greater than one, explaining 60% of the variation of the variables. sumberg and hunt (2019) provided examples in their review illustrating where young people are seen to be more open to new ideas and changes compared with older generations; in agriculture, this can include the adoption of new farming technology, which can be used to modernise agribusinesses. the first dimension (pc1) relates to not making use of new technology and technological advances in daily practices. instead of adapting and making use of advances in technology, this component relates to sticking to what is known even when this means lower profits. for these reasons, the component was named traditional. the eigen value of dimension 1 (pc1) was 2.201, and it explains 9.17% of the variance. dimension 1 is opposite to entrepreneurial behaviour and should be handled accordingly. youth are often seen as being innovative, creative and the creators of change; however, sumberg and hunt (2019) stated that youth would only be able to bring change to the agricultural sector if the sector is seen as profitable, competitive and productive for business. as explained by kew et al. (2015), youth are resource-constrained, and sumberg and hunt (2019) further highlighted the importance of access to resources including (among other incentives) a supportive environment including policies, finances (credit and savings), insurance and empowerment and recognition of youth. sumberg and hunt (2019) concluded that although youth are often portrayed as innovative, entrepreneurial and agents of change, these claims are actually a very poor basis for policy and investment decisions. entrepreneurs are also known to have a certain drive to achieve. the statements that load high in dimension 2 (pc2) relate to such a drive to achieve and were named commitment (eigenvalue 1.877 and explained 7.820% of the variance). the component relates to respondents being committed people who keep going instead of throwing in the towel. dimension 3 (pc3) is closely related to having a set plan in place for the business by making use of a set business plan. being visionary and goal orientated is provided as a trait of an entrepreneur by wale and chipfupa (2018). the component was named goal-orientated (eigenvalue of 1.735 and explains 7.228% of the variance). entrepreneurs are believed to have a high level of self-confidence. mcelwee and bosworth (2010) also highlighted that self-confidence is an important aspect for smallholder farmers. these aspects are highlighted in dimension 4 (pc4), which indicates respondents’ belief in their own ability to initiate and run a business and was named self-belief (eigenvalue 1.553, explained 6.470% of the variance). singh (2013) not only highlighted self-belief but also mentioned that entrepreneurs could work through challenges and act proactively to pursue business opportunities. when one has identified possibilities and is determined to take advantage thereof while continuing with current operations, this is illustrated through dimension 5 (pc5) – determination (eigenvalue 1.492, explained 6.215% of variance). dimension 6 (pc6; eigenvalue of 1.458 and explains 6.073% of the variance) was named groupwork and networking. man, lau and chan (2002) explained that relationship competencies involve making use of or combining external resources. being able to cooperate, receive information and work with others are part of managing networks (lans, verstegen & mulder 2011). man et al. (2002) and lans et al. (2011) explained the importance and relevance of groupwork and networking as an entrepreneurial competence. networking or sharing of resources and information plays an important role in identifying and taking advantage of opportunities. in some instances, individuals have a stable and secure employment position but then identify or become aware of a different business opportunity, which they decide to follow. these cases are referred to as the pull factor of entrepreneurship for seizing an opportunity by leaving their current position. this scenario was illustrated by the statements in dimension 7 (pc7), which was named pull entrepreneurship (eigenvalue 1.444, variance explained 6.018%), also sometimes referred to as opportunity entrepreneurship (berner, gomez & knorringa 2012). dimension 8 (pc8) was named perseverance, which has an eigen-value 1.434 and explained 5.976% of the variance. risk-taking is considered a key element of entrepreneurial behaviour. to determine risk behaviour, the respondents were asked to consider two options: one which has a sure outcome while the other has a high risk of either losing everything invested or doubling the investment. dimension 9 (pc9) has thus been named risk (eigenvalue 1.295, variance explained 5.396), as the dimension relates positively to choosing a riskier option. the following section presents a discussion of the results derived from the regression analysis. determinants of youth participation in agriculture this research used a multinomial logit model to evaluate the influence of the variables mentioned in table 3 on the level of participation of youth in agriculture. the multinomial logit, statistically significant at 1%, was estimated for four levels of agricultural participation, namely full-time in farming or related economic activities (as an individual), full-time in farming or related economic activities as member of a cooperative, partially into farming or related economic activities through family business and not currently engaged in farming or related economic activities (base category). table 3: factors affecting youth participation in agriculture. turolla et al. (2022) indicated that respondents from their research indicate that entrepreneurs are youth who are involved in the agricultural business, which requires a business plan and accounting; this shows that they see entrepreneurs as individuals who plan. in terms of the entrepreneurial dimensions, the results show that youth who were involved as individuals in the sector were less likely to be goal orientated (5% level of significance); however, they were found to be more likely to engage in pull entrepreneurship activities (1% level of significance) compared with youth who were not currently involved. although the result might be strange in terms of goal orientation and contrary to the view explained by turolla et al. (2022), it does represent the feeling observed during the survey. very few of the respondents did use business plans or future-orientated planning to guide their business. svotwa et al. (2022) suggested in their study that youth should be educated on how to develop business plans and make use of financial information relating to business decisions. the results further showed that the youth involved as individuals were more likely to take advantage of identified opportunities (pull entrepreneurship) compared with the respondents who were not involved. this is an aspect which is very much associated with entrepreneurial behaviour, where individuals are looking for and are willing to take advantage of identified opportunities. this result relates to iwara et al. (2021), where it was found that looking for unique or innovative ways to settle problems is important and that these individuals are opportunity driven and pacesetters. the authors further highlight that for an enterprise to perform well, certain levels of novelty are required that enable individuals to explore better options. turolla et al. (2022) mentioned that self-identification of youth relates to their agribusiness aspirations or commitment towards their intended or current businesses in the agricultural sector. some youth see agriculture as a forced choice with no alternative career path, while others take the agricultural career path by choice, and according to turolla et al. (2022), these youths normally have greater ambitions in agribusiness. cele and wale (2020) mentioned that most smallholder farmers can be categorised as survival entrepreneurs who are characterised by not wanting to expand their business (among other things); this could also mean that they are not willing to take advantage of opportunities as they arise. attempts should thus be made to capacitate youth to identify novel opportunities, enhance their creative thinking and ensure that opportunities are available within the agricultural sector. this research shows that there is some possible intent from youth to take advantage of opportunities they identify. this could provide a valuable opportunity for governments and other role players to attract youth to the sector, as it shows that when youth are confronted and identify opportunity, they might be willing to grab the opportunity to their own benefit and their business’ advantage. it was found that self-belief was significant (1%) when youth involved in cooperatives are considered. youth with higher measured levels of self-belief were more likely to participate in agriculture through cooperatives, relative to not being involved in farming or economic-related activities. when the youth choose to work on their own to obtain certain goals, instead of accepting the deal to rely on others to complete the work, they are more likely to participate in agriculture as part of a cooperative, as opposed to not participating in agriculture. entrepreneurs tend to have a strong belief in themselves to execute a task or tasks, rather than expecting someone else to do it for them (bandura 1997). iwara et al. (2021) stated that successful entrepreneurs have a strong internal belief to complete their task timeously. not only is self-confidence a trait associated with entrepreneurs, but they are also known for being determined, hardworking individuals (singh 2013). determination was found to be negatively significant (1%) for individuals who are involved in cooperatives compared with the ones who are not currently involved in the sector. a possible explanation could be that youth involved in cooperatives are aware that there are other individuals who can also assist and make up for ‘slack’ shown by a certain individual, whereas individuals who are on their own know that they cannot rely on any other person and must take the responsibility on themselves (determination). another explanation could be that some of the respondents are only involved in the cooperative for the advantage provided and are not fully committed or determined to work towards the success of the cooperative, only for self-enhancement. the result, in a way, can be compared with mmbengwa et al. (2021), who found that cooperatives are not a popular business structure in their study and youth involvement was very limited. the results indicate that differences in the entrepreneurial dimension of youth have an influence on their participation in the agriculture and related activities. this is very important, as it can provide guidance as to which programmes or activities should receive more attention when a certain group of youth are targeted in the development of policy, training or even information sessions. iwara et al. (2021) proposed that endogenous attributes such as entrepreneurship play an important role in business success and that these attributes are normally not considered; the same can be said when the participation of youth are considered in the agricultural sector. these findings show that differences in endogenous factors do in fact play a role in participation of youth in the agricultural sector, confirming that endogenous factors do need to be considered not only for business success but also in attracting youth towards participating in the agricultural sector. there are also several initiatives aimed at increasing the involvement of youth and females in the agricultural sector. the results indicate that men are less likely to be involved in the agricultural sector as part of a family business as opposed to being not involved in the agricultural sector (10%). the results indicate the importance of agricultural family businesses and the involvement of women. a possible reason is that men move to other industries which provide better renumeration (mukwedeya 2018), leaving the women to manage and continue with the farming operations. mueller, doss and quisumbing (2018) referred to the feminisation of agriculture, which is when men move from rural areas and the women remain on the farms. these results can also be an indication of the scenario that women are more involved in family farming businesses and are taking a leading role because of other family members having other employment or occupations. mukwedeya (2018) mentioned that this scenario could lead to greater participation of young people in female-headed households compared with male-headed households, as the women will depend on the young family members’ abilities in terms of labour and assistance. this result is also in line with the discussion of kew et al. (2015), stating that young women operate in the retail and agricultural sectors in africa. the results indicate that programmes and policies should also be designed to meet the expectations and importantly empower women in the agricultural sector. hadebe (2016) stated that the migration of individuals with tertiary qualifications from the rural to the urban areas has increased; this shows that tertiary education could lead to less participation of higher-educated individuals in the rural areas. the results showed that youth respondents who had attained a tertiary education were less likely to be partially involved in agriculture through cooperatives (10%) and through family business (5%). this could also mean that they were not necessarily involved in the daily running of business and thus not required to be on site. this finding also confirms previous indications that individuals who are better educated might be less inclined to be involved in the agricultural sector (ogunmodede et al. 2020). this result reflects a scenario where the reported negative image of the sector should be changed to show its potential and attract well-educated youth to ensure that they are willing and able to establish their own businesses in the agricultural sector, from primary production to value-adding activities along the value chain. youth must be able to say with confidence and pride that they are the owners or participants in an agricultural business. as expected, farming experience is significant in being involved in any form in the agricultural sector, at a 1% level. this confirms the findings of piaza-georgi (2000), ogunmodede et al. (2020) and fasakin et al. (2022), who stated that an increase in farming experience improves an individual’s involvement in the field of agriculture. ogunmodede et al. (2020) found that years of agribusiness experience are a very important aspect when choosing self-employment through agribusinesses, and fasakin et al. (2022) found that with more experience, youth decided to intensify their agricultural participation. this result shows the importance of exposure towards the agricultural sector, not only primary but also in activities among the value chain. when youth are exposed to the agricultural sector to gain some experience, it could lead to further involvement in future. programmes and initiatives could thus be developed to expose inexperienced individuals to the agricultural sector, which could teach and show the impact the sector could have on households’ livelihoods. agricultural training was also found to be significant (5%) for individuals who are involved in agricultural cooperatives. this indicates that such individuals are more interested in either having access to or receiving and attending agricultural training sessions, compared with youth respondents not currently involved in the sector. these results are in line with findings by coleman (1988) and pyysiainen et al. (2006), who stated that knowledge and skills acquired from agricultural training increase and improve agricultural participation, which ultimately leads to efficiency and productivity. possible explanations could be that the youth involved in the sector are more inclined to participate because of their focus on the agricultural sector, while those who are not involved are unaware of the fact that they can also join this training and that it is not only for current participants. agricultural training and workshops provided by government and private institutions equip youth to improve their production methods and ultimately yield better produce. not only could training assist the youth who are already involved in the sector, but focus could also be on how to engage those who are not currently involved. these programmes could provide specific focus on why they should choose the agricultural sector and the advantages of the sector, while (importantly) providing assistance and training on how youth could possibly enter the sector. in cases where human resources are improved through agricultural training, youth are then empowered to build a more competitive and resilient agricultural sector. youth who are part of a government support programme are more likely to participate full-time in agriculture as individuals (10%) or as part of family businesses (5%), rather than not participating in agriculture or related economic activity. this is in line with the hypothesis that government support programmes have a role to play in attracting youth to participate in agriculture. baloyi (2010) found that extension support and government support programmes increase the likelihood of individuals becoming involved in agriculture. access to extension services such as training and support programmes, resources and linkages to financial and other services play an important role in farm businesses (wale et al. 2021) and could thus play a very important role for enhanced participation of youth in the primary agricultural sector. the necessary time and resources should thus be allocated to these aspects to understand why youth are not participating or gaining the envisioned advantage from these programmes and training. extension officers fulfil the role of relaying the concerns of commercial and small-scale farmers to government. previous research has already found that extension services in south africa are not always seen in a positive light, while youth have also not always been beneficiaries (masango 2015). wale et al. (2021) mentioned that the provision of agricultural extension services is important in promoting entrepreneurship in smallholder farming, showing the importance of access to these services. extension contact was expected to have a positive influence on getting youth to participate in agriculture. the coefficient shows that youth respondents who indicated that they were in contact with extension services were more likely (1%) to participate in agricultural activities in all three options included in the research. this is in line with the findings from baloyi (2010) and wale et al. (2021), where it was indicated that extension support services increase agricultural participation. a matter of concern, however, could be that only around 30% of the respondents indicated being in contact with extension services. this shows that although contact is limited, it does make a difference in terms of participation in the sector. the result may not be surprising, as extension services are aimed at assisting and providing information to individuals who are involved in the sector, although activities such as information and demonstration days could be open to all – including those not involved in the sector. activities such as these should perhaps be aimed at individuals who are not involved to increase awareness and opportunities in the agricultural sector. wale et al. (2021) mentioned that land tenure security is a critical component in on-farm entrepreneurial development, meaning that ownership or even access to land is very important to enhance entrepreneurship in specifically primary agriculture. the authors explain that ownership of land provides a certainty in long-term decision-making, as opposed to decisions which are made in situations of uncertainty such as with unsecure tenure (e.g. noncompliance with contractual agreements). unsurprisingly, access to land was also found to be significant (1%), indicating the importance of access to land and participation in the agricultural sector. youth who have access to land were more likely to be engaged in all three the forms of involvement in the agriculture and related economic activities compared with those who are not currently involved in the sector. this result confirms what has been reported for years and is in line with the findings of groenewald (1993), cousins (2007), wale et al. (2021) and fasakin et al. (2022). access to land gives youth the opportunity to exploit natural resources, which can provide dividends in the form of employment and income. with most respondents practising homestead gardening, stable lives can be established when land is productively utilised. land enables people to create stable and positive lives, when one has access to land (muchara et al. 2014), while lack of land tenure makes smallholder farmers subsistence orientated (wale et al. 2021). wale et al. (2021) also cautioned that access to land is not the only factor or resource in attracting on-farm entrepreneurship; they state that having access to land without access to other resources could demotivate individuals towards on-farm entrepreneurship. consequently, providing youth with secure access to land in combination to other agricultural resources could enhance youth agricultural participation. livestock contributes towards improving livelihoods of rural people in south africa, providing food and income potential (myeki & bahta 2021). youth respondents who have access to livestock are more likely (1%) to engage the agricultural sector as an individual and as part of a family business as opposed to not being engaged in farming or related economic activities. bienabe et al. (2004) found that people who own livestock are involved in agriculture and are thus enabled to engage in agricultural markets or related economic activities. this relates to myeki and bahta (2021) stating that livestock or livestock production contributes to the livelihoods of people in rural areas, especially to the livelihoods of rural poor of south africa. in some cases, livestock production is only for household consumption (myeki & bahta 2021), showing the importance of livestock production in the daily livelihoods of rural populations and participation in the agricultural sector. owning livestock for survival or marketing purposes allows the youth to be involved in agriculture through cooperatives. when farming as part of a cooperative, having more numbers of livestock makes it possible for youth members to produce better as part of a group. rearing livestock as part of a cooperative allows more individuals to gain skills in that regard, which eventually improves the livelihoods of all cooperative members and the situations of their household members are enhanced. another advantage of livestock is for the assistance it can provide for expansion aspirations, the sale of livestock can provide valuable additional income, which can be used for investing in expansion activities (chipfupa 2017). access to credit has been used regularly in research and found to have an impact on involvement in the agricultural sector (i.e. ng’atigwa et al. 2020). however, our finding did not indicate that credit had an impact on participation, perhaps because of the low levels of access to credit (table 1) indicated by the respondents. instead, the financial variable social grants usage to buy inputs was positively significant (1%) when youth involved as individuals and as part of family business were considered. the result indicated the importance of social grants as a source of household income and how they are used to further the farming or agricultural related business. youth respondents who were in a family where social grants were received as part of the household income were more likely to participate in farming or related economic activities as individuals and family businesses compared with the reference category. most of the respondents’ households did receive social grants, which were used to improve their socio-economic statuses. the usage of social grants for agricultural purposes has also been previously reported in research by sinyolo, mudhara and wale (2017) and wale and chipfupa (2018). lack of financial resources is mentioned by kew et al. (2015) as a major disincentive for young people to start or grow a business. the authors also state that the entrepreneurs who participated in their research raised their capital through family or their own savings, which relates to the finding of this research that respondents’ own capital, in this case social grants, was used for activities rather than institutions. kaki et al. (2022) reported the importance of having an entrepreneurial friend as a role model, which has a positive influence on students to start their own agribusinesses after they have graduated. the result by kaki et al. shows the importance of networks and the potential influence they have on individuals. groups also have an important role to play in the agricultural sector, and fasakin et al. (2022) call on agencies within the agricultural sector to enhance efforts to from social groups between stakeholders and youth in agriculture. being involved in social groups and social media groups were included to determine whether these could have any potential influence on participation in the agricultural sector similar to the reported findings. wale and chipfupa (2018) mentioned that social groups, especially the usage of communication technology or social media, remain unclear in terms of rural youth. the authors also mention that extension seemed to focus more on providing information to farmers who are involved in cooperatives and less on individual farmers. through all these mediums, information can be shared. understandably, there are youth who are full-time involved through agricultural cooperatives in the agricultural sector, that being one of the dependant variables. however, youth who are involved in the sector through other means (mostly either individually or family) could also be part of or involved in agricultural cooperatives, albeit through lesser means, as cooperatives have been found to be less common among youth participants (mmbengwa et al. 2021). this was determined in the research, and it was found that youth who are involved as individuals are also more likely to be involved in agricultural cooperatives (10%) compared with the youth who are not involved in the sector. the results show that cooperatives could have a valuable role to play in attracting youth to the agricultural sector. this could even be just to introduce individuals to the sector and provide the opportunity to learn and develop skills, which could perhaps lead to developing, growing or establishing their own agricultural businesses. this is a clear indication that cooperative farming enables youth to become involved in farming by being part of agricultural cooperatives. according to holloway et al. (2000) and ortmann and king (2007), agricultural cooperatives stimulate agricultural participation. research by wale and chipfupa (2018) has shown that networks or information-sharing are very popular by means of social connections; these include farmer-to-farmer information sharing. it is envisioned in the research that being part of a group, including a normal youth group or even social media groups, could have an influence on agricultural participation. this was also found to be true in terms of youth club membership, where it was found that youth involved in the sector through family businesses were more likely to be involved in youth clubs (5%). the descriptive statistics have shown that just more than half of the respondents were part of social media groups. the usage of social media could be a double-edged sword; on one side, it could have a positive impact on the agricultural sector with access to (and spreading) information, while on the other, it could also distract and draw individuals away from the sector. the information that could be spread through social media could not only be both positive and constructive but also negative. the results indicated that youth who were involved as individuals were less likely to be members of a social media group (1%) compared with the ones who were not currently engaged in agricultural activities. kaki et al. (2022) concluded that the establishment of entrepreneurship clubs – students within the agricultural fields – is a good option to enhance entrepreneurial intention, and one can argue that a similar result can be achieved among a group (fasakin et al. 2022) of friends or community members in an area. conclusion this research set out to explore the influence of access to livelihood assets in combination with entrepreneurial dimensions on youth participation in the agricultural sector. like previous research, attention was given to access factors within the slf and their influence on participation in the sector. however, this research contributes by including endogenous factors associated with entrepreneurial dimensions of youth, which have received limited attention in research to date in the agricultural sector. the results confirm that endogenous factors associated with entrepreneurial dimensions (goal-orientated, pull entrepreneurship, self-belief and determination) do indeed have an influence on youth participation in the agricultural sector. the results show that endogenous factors should be considered when deciding how to attract youth to participate in the agricultural sector. furthermore, the results confirm the suggestion by iwara et al. (2021) that more attention should be given to endogenous factors as the case is with exogenous factors. the research proves the heterogeneity of youth in terms of their access to exogenous resources and endogenous factors (entrepreneurial dimensions). the implications are that innovative policies are required to accommodate the heterogeneity of youth to enhance their participation in the sector. government policies that seek to involve youth in agriculture should focus on providing creative platforms which would expose individuals from an early age to farming and related economic activities. agricultural projects can be implemented and will give youth greater exposure to farming from a young age. greater exposure leads to greater experience in farming and related economic activities. farming experience or experience within the agricultural sector will enable the youth to continuously participate in agriculture, which could eventually lead to better livelihoods and socio-economic statuses. access to or ownership of land in relation to agricultural participation in any shape or form has once again been proved to be important. as backyard farming is the most practised production method in these areas, microprojects and development incentives should be initiated in these rural areas. homestead gardening projects can be aimed at stimulating youth participation in agriculture, which could ultimately lead to better livelihoods and economic growth. these projects could be used as an indicator showing that the individual is interested to participate in the agricultural sector and progress towards growing a small agricultural business to assist in the land distribution question of south africa or any other resource distributions. not only could these projects assist with resource distribution, but they could also be a means of entrepreneurial training and development. this requires a combination of endogenous and exogenous resources which capacitate the youth not only by providing resources but also by developing their endogenous skills such as entrepreneurship and business management. once entrepreneurial skills and competencies are encouraged, various agricultural business ventures can be exploited in rural areas. small markets can be introduced by youth entrepreneurs, where produce is sold from and to the community. this raises awareness that agriculture offers entrepreneurial and income opportunities can not only be means of primary agriculture but also in value-adding activities. the research has shown that not only do differences in access to resources associated with the slf have an impact on participation, but differences between entrepreneurial dimensions were also found to have an influence. research by chipfupa and wale (2018) found that psychological capital should be included in the development of farmer typologies, especially smallholder farmers. this research confirms their findings, suggesting that entrepreneurial dimensions of youth should also be considered when typologies are considered for the development of policies and other means of support to increase the participation of youth in the sector. future considerations for involving youth should thus ensure that youth have access to resources, as already stipulated in literature. however, the results from the research show that focus should not only be on exogenous or external resources, but youth should also be provided with opportunities through which they can enhance their skills and entrepreneurial abilities as part of internal or endogenous factors. future considerations in terms of policies, programmes and investments towards youth in agriculture should thus consider a complete package of resources and not only individual or single resources, for example, land or finance. the research was focused on an area within the free state province of south africa, and it will be important to confirm these research findings in other areas or determine the differences between areas, which would be important to consider for policy and programme development in other countries. this would also potentially further show the heterogeneity of youth between different regions, which should be considered in attracting youth towards participating in the agricultural sector. future research should also focus on how entrepreneurial dimensions and other endogenous factors of youth could be included in developing specific youth typologies that could inform government and other role-players in getting youth involved in the agricultural sector, including agricultural value-chain activities. acknowledgements the authors wish to thank the wrc and dalrrd (the former daff) who co-funded by the research project (k5/2789//4) entitled, ‘entrepreneurial development for establishing small farming businesses and employment by youth in rain-fed crop farming’. the research team wish to acknowledge the assistance received from the youth, extension officers and officials and youth centres. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions j.i.f.h. and b.d.j. were involved in conceptualisation, methodology, formal analysis, writing of the original draft and review and editing of the manuscript. j.i.f.h. was involved in project administration and supervision. h.j. was responsible for conceptualisation, writing (review and editing) and supervision. funding information the research is co-funded by the wrc and dalrrd (the former daff) under grant (k5/2789//4). data availability the data of this study can be made available from the corresponding author, j.i.f.h., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references agri sa, 2017, land audit: a transactions approach, land centre of excellence, viewed 30 july 2022, from https://cisp.cachefly.net/assets/articles/attachments/71719_agrisa_land-audit_november-2017.pdf. adeyanju, d., mburu, j. & mignouna, d., 2021, ‘youth agricultural entrepreneurship: assessing the impact of agricultural training programmes on performance’, sustainability 13(4), 1697. https://doi.org/10.3390/su13041697 ahmad, m.h., adnan, r. & adnan, n., 2006, ‘a comparative study on some methods for handling multicollinearity problems’, malaysian journal of industrial and applied mathematics 22, 109–119. ama, n.o. & okurut, f.n., 2013, ‘assessing factors that affect women and youth micro-entrepreneurs in botswana’, international journal of academic research in economics and management sciences 1(2), 306–332. baloyi, j.k., 2010, ‘an analysis of constraints facing smallholder farmers in the agribusiness value chain: a case study of farmers in the limpopo province’, msc dissertation, university of pretoria. bandura, a., 1997, ‘self-efficacy: toward a unifying theory of behavioural change’, psychological review 84(2), 191–215. https://doi.org/10.1037/0033-295x.84.2.191 berner, e., gomez, g. & knorringa, p., 2012, ‘“helping a large number of people become a little less poor”: the logic of survival entrepreneurs’, the european journal of development research 24(3), 382–396. https://doi.org/10.1057/ejdr.2011.61 bienabe, e.c., le coq, c., liagre, j. & sanz, l., 2004, linking small holder farmers to markets: lessons learned from literature review and analytical review of selected projects, cirad tera ta 60/15 73, the world bank, breton. birdthistle, n., costin, y. & hynes, b., 2016, ‘engendering entrepreneurial competencies in the youth of today: a teacher’s perspective’, journal for education and training 8(58), 766–782. https://doi.org/10.1108/et-02-2016-0031 bureau for food and agricultural policy (bfap), 2013. ‘land reform in the free state, the land audit, and the way forward to 2030,’ bfap reports 279771, bureau for food and agricultural policy (bfap), bfap re ports. https://doi.org/10.22004/ag.econ.279771 burchell, b.j. & coutts, a.p., 2019, ‘the experience of self-employment among young people: an exploratory analysis of 28 low-to middle-income countries’, american behavioral scientist 63(2), 147–165. https://doi.org/10.1177/0002764218794240 cele, l. & wale, e., 2020, ‘determinants of smallholders’ entrepreneurial drive, willingness and ability to expand farming operations in kwazulu-natal’, development in practice 30(8), 1028–1042. https://doi.org/10.1080/09614524.2020.1764501 chindoga, l. & fatoki, o., 2011, ‘an investigation into the obstacles to youth entrepreneurship in south africa’, international business research 2(4), 161–169. https://doi.org/10.5539/ibr.v4n2p161 chipfupa, u., 2017, ‘entrepreneurial development pathways for smallholder irrigation farming in kwazulu-natal: typologies, aspirations and preferences’, phd thesis, university of kwazulu natal. chipfupa, u. & tagwi, a., 2021, ‘youth’s participation in agriculture: a fallacy or achievable possibility? evidence from rural south africa’, south african journal of economic and management sciences 24(1), a4004. https://doi.org/10.4102/sajems.v24i1.4004 chipfupa, u. & wale, e., 2018, ‘farmer typology formulation accounting for psychological capital: implications for on-farm entrepreneurial development’, development in practice 28(5), 600–614. https://doi.org/10.1080/09614524.2018.1467377 coleman, j.s., 1988, ‘social capital in the creation of human capital’, the american journal of sociology 94, 95–120. https://doi.org/10.1086/228943 corrigan, t., 2009, ‘socio economic problems facing africa: insights from six aprm country review reports’, saiia occasional paper 34, 4–54. cousins, b., 2007, ‘agrarian reform and the two economies: transforming south africa’s countryside’, in l. ntsebeza & r. hall (eds.), the land question in south africa: the challenge of transformation and redistribution, pp. 220–245, human sciences research council press, pretoria. dossou, s.a.r., adeoti, r., aoudji, a.k.n. & djana, m., 2021, ‘effect of entrepreneurial orientation on business performance of young women agribusiness owners in benin: do social and business environments matter?’, african journal of science, technology, innovation and development, 1–17. https://doi.org/10.1080/20421338.2021.2003510 elias, m., mudege, n.n., lopez, d.e., najjar, d., kandiwa, v., luis, j.s. et al., 2018, ‘gendered aspirations and occupations among rural youth, in agriculture and beyond: a cross-regional perspective’, journal of gender, agriculture and food sec urity, 3(1), 82–107. fasakin, i.j., ogunniyi, a.i., bello, l.o., mignouna, d., adeoti, r., bamba, z. et al., 2022, ‘impact of intensive youth participation in agriculture on rural households’ revenue: evidence from rice farming households in nigeria’, agriculture 12(5), 584. https://doi.org/10.3390/agriculture12050584 free state department of agriculture and rural development (fsdard), 2018, workshop during may 2018 between ufs research team and representatives from free state department of agricultural and rural development, thaba nchu. gandure, s., walker, s. & botha, j.j., 2013, ‘farmers’ perceptions of adaptation to climate change and water stress in a south african rural community’, environmental development 5, 39–53. https://doi.org/10.1016/j.envdev.2012.11.004 glover, d. & sumberg, j., 2020, ‘youth and food systems transformation’, frontiers in sustainable food systems 4, 101. https://doi.org/10.3389/fsufs.2020.00101 groenewald, j.a., 1993, ‘resource use entitlement, finance and entrepreneurship in sub-saharan smallholder agriculture’, agrekon 32(3), 122–128. https://doi.org/10.1080/03031853.1993.9524733 hadebe, n., 2016, ‘the impact of capital endowment on smallholder farmers’ entrepreneurial drive in taking advantage of small-scale irrigation schemes: case studies from makhathini and ndumo b irrigation schemes in kwazulu-natal, south africa’, msc dissertation, university of kwazulu-natal, pietermaritzburg. henning, j.i.f., matthews, n., august, m. & madende, p., 2022, ‘youths’ perceptions and aspiration towards participating in the agricultural sector: a south african case study’, social sciences 11(5), 215. https://doi.org/10.3390/socsci11050215 holloway, g., nicholson, c., delgado, c., staal, s. & ehui, s., 2000, ‘agroindustrialization through institutional innovation: transaction costs, cooperatives and milk-market development in the east-african highlands’, agricultural economics 23(3), 279–288. https://doi.org/10.1111/j.1574-0862.2000.tb00279.x iwara, i.o., kilonzo, b.m., zuwarimwe, j. & netshandama, v.o., 2021, ‘entrepreneurs’ endogenous attributes necessary for small enterprise success in vhembe rural areas, south africa’, southern african journal of entrepreneurship and small business management 13(1), a331. https://doi.org/10.4102/sajesbm.v13i1.331 kaki, r.s., mignouna, d.b., aoudji, a.k. & adéoti, r., 2022, ‘entrepreneurial intention among undergraduate agricultural students in the republic of benin’, journal of african business, 1–18. https://doi.org/10.1080/15228916.2022.2031584 kew, j., namatovu, r., aderinto, r. & chigunta, f., 2015, africa’s young entrepreneurs: unlocking the potential for a brighter future, development unit for new enterprise, university of cape town, rondebosch. lans, t., verstegen, j. & mulder, m., 2011, ‘analysing, pursuing and networking: towards a validated three-factor framework for entrepreneurial competence from a small firm perspective’, international small business journal 29(6), 695–713. https://doi.org/10.1177/0266242610369737 larue, k., daum, t., mausch, k. & harris, d., 2021, ‘who wants to farm? answers depend on how you ask: a case study on youth aspirations in kenya’, the european journal of development research 33(4), 885–909. https://doi.org/10.1057/s41287-020-00352-2 lebusa, m.j., 2011, ‘does entrepreneurial education enhance under-graduate students’ entrepreneurial self-efficacy? a case at one university of technology in south africa’, business review 1(10), 53–64. maconachie, r., binns, t. & tengbe, p., 2011, ‘urban farming associations, youth and food security in post-war freetown, sierra leone’, international journal of urban policy and planning 29(3), 192–200. https://doi.org/10.1016/j.cities.2011.09.001 magagula, b. & tsvakirai, c.z., 2020, ‘youth perceptions of agriculture: influence of cognitive processes on participation in agripreneurship’, development in practice 30(2), 234–243. https://doi.org/10.1080/09614524.2019.1670138 maluti a phofung local economic development strategy (mapleds), 2015, maluti-a-phofung local economic development strategy 2015–2020, viewed 02 january 2020, from http://map.gov.za/documents/localeconomicdevelopment/map%20led%20strategy%20-%20final%20draft.pdf. man, t.w.y., lau, t. & chan, k.f., 2002, ‘the competitiveness of small and medium enterprises: a conceptualization with focus on entrepreneurial competencies’, journal of business venturing 17(2), 123–142. https://doi.org/10.1016/s0883-9026(00)00058-6 masango, r., 2015, ‘smallholder farmer cooperatives’, msc dissertation, university of the free state, bloemfontein. mcelwee, g. & bosworth, g., 2010, ‘exploring the strategic skills of farmers across a typology of farm diversification approaches’, journal of farm management 13(12), 819–838. metelerkamp, l., drimie, s. & biggs, r., 2019, ‘we’re ready, the system’s not–youth perspectives on agricultural careers in south africa’, agrekon 58(2), 154–179. https://doi.org/10.1080/03031853.2018.1564680 mitchelmore, s. & rowley, j., 2010, ‘entrepreneurial competencies: a literature review and development agenda’, international journal of entrepreneurial behaviour and research 16(2), 32–111. https://doi.org/10.1108/13552551011026995 mmbengwa, v.m., qin, x. & nkobi, v., 2021, ‘determinants of youth entrepreneurial success in agribusiness sector: the case of vhembe district municipality of south africa’, cogent social sciences 7(1), 1982235. https://doi.org/10.1080/23311886.2021.1982235 muchara, b., ortmann, g., wale, e. & mudhara, e., 2014, ‘collective action and participation in irrigation water management: a case study of mooi river irrigation scheme in kwazulu-natal province, south africa’, african journal online 40(4), 699–708. https://doi.org/10.4314/wsa.v40i4.15 mueller, v., doss, c. & quisumbing, a., 2018, ‘youth migration and labour constraints in african agrarian households’, the journal of development studies 54(5), 875–894. https://doi.org/10.1080/00220388.2018.1430770 mukwedeya, b.t., 2018, ‘the role of rural youth in the smallholder farming sector: challenges and opportunities in okhahlamba local municipality, south africa’, master dissertation, university of kwazulu natal, pietermaritzburg. municipalities sa, 2016, free state municipalities, viewed 07 june 2019, from https://municipalities.co.za/provinces/view/2/free-state. myeki, v.a. & bahta, y.t., 2021, ‘determinants of smallholder livestock farmers’ household resilience to food insecurity in south africa’, climate 9(7), 117. https://doi.org/10.3390/cli9070117 ng’atigwa, a.a., hepelwa, a., yami, m. & manyong, v., 2020, ‘assessment of factors influencing youth involvement in horticulture agribusiness in tanzania: a case study of njombe region’, agriculture 10(7), 287. https://doi.org/10.3390/agriculture10070287 nieuwoudt, s., henning, j.i.f. & jordaan, h., 2017, ‘entrepreneurial competencies and financial performance of farmers in south africa’, south african journal of economic and management sciences 20(1), 1640. https://doi.org/10.4102/sajems.v20i1.1640 nwibo, s.u., mbam, b.n. & biam, c.k., 2016, ‘determinants of agripreneurship among the rural households of ishielu local government area of ebonyi state’, journal of biology, agriculture and healthcare 6(13), 3–10. obayelu, o., adepoju, a. & omirin, o., 2019, ‘does human capital explain food insecurity status of rural households or vice-versa?’, review of agricultural and applied economics (raae) 22(1), 91–97. https://doi.org/10.15414/raae.2019.22.01.91-97 ogunmodede, a.m., ogunsanwo, m.o. & manyong, v., 2020, ‘unlocking the potential of agribusiness in africa through youth participation: an impact evaluation of n-power agro empowerment program in nigeria’, sustainability 12(14), 5737. https://doi.org/10.3390/su12145737 ortmann, g.f. & king, r.p., 2007, ‘agricultural cooperative ii. can they facilitate access of small-scale farmers in south africa to input and product markets?’, agrekon 46(2), 219–244. https://doi.org/10.1080/03031853.2007.9523769 oseifuah, e.k., 2010, ‘financial literacy and youth entrepreneurship in south africa’, african journal of economic and management studies 1(2), 164–182. ouko, k.o., ogola, j.r.o., ng’on’ga, c.a. & wairimu, j.r., 2022, ‘youth involvement in agripreneurship as nexus for poverty reduction and rural employment in kenya’, cogent social sciences 8(1), 2078527. https://doi.org/10.1080/23311886.2022.2078527 piaza-georgi, b., 2000, ‘the role of human and social assets in growth: extending our understanding’, cambridge journal of economics 16, 461–479. https://doi.org/10.1093/cje/26.4.461 pyysiainen, j., anderson, a., mcelwee, g. & vesala, k., 2006, ‘developing the entrepreneurial skills of farmers: some myths explored’, international journal of entrepreneurial behaviour and research 1(12), 21–39. https://doi.org/10.1108/13552550610644463 rigby, d., young, t. & burton, m., 2001, ‘the development of and prospects for organic farming in the uk’, food policy 26(6), 599–613. https://doi.org/10.1016/s0306-9192(01)00023-9 singh, a., 2013, ‘factors influencing entrepreneurship among farming community in uttar pradesh’, indian journal of commerce and management studies 4(3), 13–18. sinyolo, s. & mudhara, m., 2018, ‘the impact of entrepreneurial competencies on household food security among smallholder farmers in kwazulu natal, south africa’, ecology of food and nutrition 57(2), 1–22. https://doi.org/10.1080/03670244.2017.1416361 sinyolo, s., mudhara, m. & wale, e., 2017, ‘the impact of social grant-dependency on agricultural entrepreneurship among rural households in kwazulu-natal, south africa’, the journal of developing areas 51(3), 63–76. https://doi.org/10.1353/jda.2017.0061 steenkamp, a.g., 2013, ‘an assessment of the impact of entrepreneurship training on the youth in south africa’, unpublished phd thesis, north-west university. sumberg, j. & hunt, s., 2019, ‘are african rural youth innovative? claims, evidence and implications’, journal of rural studies 69, 130–136. https://doi.org/10.1016/j.jrurstud.2019.05.004 sumberg, j., yeboah, t., flynn, j. & ynyidoho, n.a., 2017, ‘young people’s perspectives on farming in ghana: a q study’, food security 9, 151–161. https://doi.org/10.1007/s12571-016-0646-y svotwa, t.d., jaiyeoba, o., roberts-lombard, m. & makanyeza, c., 2022, ‘perceived access to finance, entrepreneurial self-efficacy, attitude toward entrepreneurship, entrepreneurial ability, and entrepreneurial intentions: a botswana youth perspective’, sage open 12(2), 21582440221096437. https://doi.org/10.1177/21582440221096437 tolamo, t.j., 2012, ‘mobilising youth participation in agriculture using participatory extension approach: a case of ga-mothiba village’, mini dissertation, university of limpopo, limpopo. townsend, r., benfica, r., prasann, a. & lee, m., 2017, future of food: shaping the food system to deliver jobs, the world bank, washington, dc, viewed 23 june 2022, from chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://openknowledge.worldbank.org/bitstream/handle/10986/26506/114394-wp-public-18-4-2017-10-56-45-shapingthefoodsystemtodeliverjobs.pdf?sequence=1&isallowed=y. turolla, m., swedlund, h.j., schut, m. & muchunguzi, p., 2022, ‘“stop calling me a youth!”: understanding and analysing heterogeneity among ugandan youth agripreneurs’, africa spectrum 57(2), 178–203 https://doi.org/10.1177/00020397221105292 turton, n. & herrington, m., 2013, global entrepreneurship monitor: south africa report, university of cape town, cape town. viljoen, m.f., kundhlande, g., baiphethi, m.n., esterhuyse, p., botha, j.j., anderson, j.j. et al., 2012, an assessment of the social and economic acceptability of rainwater harvesting and conservation practices in selected peri-urban and rural communities 57(2), 178–203. wrc report no 1648/1/12, water research commission, pretoria. vogel, p., 2017, ‘from venture idea to venture opportunity’, entrepreneurship theory and practice 6(41), 943–941. https://doi.org/10.1111/etap.12234 wale, e. & chipfupa, u., 2018, appropriate entrepreneurial development paths for homestead food gardening and smallholder irrigation crop farming in kwazulu-natal province, wrc report no. 2278/1/18, water research commission, pretoria. wale, e., chipfupa, u. & hadebe, n., 2021, ‘towards identifying enablers and inhibitors to on-farm entrepreneurship: evidence from smallholders in kwazulu-natal, south africa’, heliyon 7(2021), e05660. https://doi.org/10.1016/j.heliyon.2020.e05660 williams, b., onsman, a. & brown, t., 2010, ‘exploratory factor analysis: a five-step guide for novices’, australasian journal of paramedicine 8(3). https://doi.org/10.33151/ajp.8.3.93 wickramaratne, a., kiminami, a. & yagi, h., 2014, ‘entrepreneurial competencies and entrepreneurial orientation of tea manufacturing firms in sri lanka’, asian social science 18(10), 50–62. https://doi.org/10.5539/ass.v10n18p50 yeboah, t., sumberg, j., flynn, j. & anyidoho, n.a., 2017, ‘perspectives on desirable work: findings from a q study with students and parents in rural ghana’, the european journal of development research 29(2), 423–440. https://doi.org/10.1057/s41287-016-0006-y abstract introduction literature review methodology ethical consideration results discussion conclusion acknowledgements references about the author(s) chukuakadibia e. eresia-eke department of business management, university of pretoria, pretoria, south africa caitlin jammine department of business management, university of pretoria, pretoria, south africa callon locke department of business management, university of pretoria, pretoria, south africa citation eresia-eke, c.e., jammine, c. & locke, c., 2019, ‘towards customer satisfaction and loyalty: what cuts it in a hair salon?’, southern african journal of entrepreneurship and small business management 11(1), a215. https://doi.org/10.4102/sajesbm.v11i1.215 original research towards customer satisfaction and loyalty: what cuts it in a hair salon? chukuakadibia e. eresia-eke, caitlin jammine, callon locke received: 06 aug. 2018; accepted: 09 apr. 2019; published: 06 june 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the importance of customer loyalty, and customer satisfaction as well as patron’s perceptions of service quality and value cannot be over-emphasised. despite this, academic literature remains scant as it relates to possible relationships that could exist between these important variables within the hairdressing industry, although emerging entrepreneurs appear to find the hairdressing business attractive. objectives: the purpose of this study was to determine the existence and nature of the relationships between perceived value, perceived service quality, customer satisfaction and customer loyalty in hairdressing salons. method: the quantitative study was executed from a positivist philosophical position and employed a non-probability sampling method to select its respondents. the study utilised data that were collected from customers of hair salons in pretoria, south africa. responses were obtained in a cross-sectional manner by relying on the central-location intercept survey technique. descriptive and inferential statistical tools were utilised for the analysis of the data. results: the hypothesised relationships between the independent variables of customer satisfaction and perceived value and the dependent variable of customer loyalty were statistically significant and positive. a similar association was found between perceived service quality and perceived value as independent variables and customer satisfaction as the dependent variable. the study also revealed that perceived service quality correlates positively with perceived value. conclusion: these findings contribute to broadening the scope of academic discourse in the quality management and customer service domains, particularly from a south african perspective, and the identified relationships bear important practical implications for hair salon owners or managers. keywords: customer loyalty; customer satisfaction; perceived value; service quality; hair salon. introduction intense competition within the service industry requires small businesses to create strong customer relationships and increase the value of the services they provide (wei et al. 2013:6). this is because inability to do so would likely deflate the potential of a business to compete and possibly survive. a situation where there is sparse value attached by customers to the service provided by a business can have unpalatable consequences for the business. indeed, patronage could arise from the extent of value that a business creates for its customers. it can therefore be argued that the higher the value that a customer perceives to be getting from a service rendered, the higher the chances of repeat patronage. customer loyalty will increase profitability and survival in the long run, decrease sales and marketing costs, increase opportunities for businesses to cross-sell services and provide positive word-of-mouth spread by the customers (terblanche & boshoff 2010:1). customer loyalty has become critical across the service industry and proves to be a valuable aspect of business. the hairdressing industry has evolved into a very competitive industry in both developed and developing economies, and thus has a substantial impact on these economies (brookes & smith 2009; picot-lemasson et al. 2001). in spite of this, it is unknown how perceived service quality, perceived value and customer satisfaction predict customer loyalty within hair salons (wei et al. 2013:4). although the importance of customer loyalty has been realised by many businesses, it remains a difficult concept (mittal & lassar 1998:177). in addition, many hair salons are started by small-scale or micro-entrepreneurs with little business knowledge and experience, which may therefore result in a weakened appreciation of certain factors that might contribute to a competitive advantage. it would seem rational to project that in order to achieve the outcomes associated with a competitive advantage, such as growth and profitability, securing customer loyalty could be essential. this study therefore explores the extent to which customer satisfaction and customer perceived value are related to customer loyalty. furthermore, the study also interrogates the nature of the relationship, if any, between customer perceived value and perceived service quality and how each variable independent variable is linked with customer satisfaction in selected hair salons in pretoria, south africa. some impetus for the study is derived from the contention of gallarza and saura (2006:441) that the links between perceived service quality, perceived value and customer satisfaction have been found to be inconsistent across different industries. this argument emphasises the critical role of context in studies that could be examining perceived service quality and perceived value, customer satisfaction and customer loyalty. the importance of this is that results generated by studies are largely context specific and therefore a study like the current one can generate valuable insights that would enrich the literature related to the variables of interest. it is against this background that this study seeks to establish the existence or absence of relationships between the aforementioned variables in a selected sample of hair salons drawn from the previously unexplored hairdressing sector of south africa’s service industry. in management literature, according to wei et al. (2013:15), researchers opine that it is vital to shape a customer’s perceptions of the service received because the overall experience created by businesses has a significant influence on perceptions of service quality, value and customer satisfaction, which ultimately influence customers’ choice of service providers. interestingly, about 50% of customers are likely to be loyal to a single business (mittal & lassar 1998:178) despite the fact that loyalty is important and has implications for business performance and success. consequently, there is a need for further understanding of loyalty by owners of hair salons because little research has been conducted on what contributes to customer loyalty in this industry (wei et al. 2013:14). literature review according to terblanche and boshoff (2010), customer loyalty is defined as a deeply-held commitment to re-buy or re-patronise a preferred product or service consistently in the future, thereby causing repetitive purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour. (p. 2) loyal customers spend more money than those who are not loyal; they also show their loyalty to the business by increasing the spread of positive word-of-mouth and therefore are the most valuable group of customers to a business (ganesh, arnold & reynolds 2000:65). unfortunately, the literature on customer loyalty has been complicated by the lack of consensus and competing approaches with regard to the understanding of the term and the measurement of behavioural loyalty and attitudinal loyalty (russell-bennet, mccoll-kennedy & coote 2007:2). according to dick and basu (1994:100), loyalty consists of attitudinal and behavioural dimensions. attitudinal loyalty considers a customer’s particular commitment to a business and the intention to return, whereas behavioural loyalty considers patterns revealed through the spending behaviour of customers and ongoing patronage of the business (russell-bennet et al. 2007:5). from this, it is clear that most businesses would prefer for their customers’ loyalty to be attitudinal in nature because of the emotional aspect involved (terblanche & boshoff 2010:2). this is the background against which the issue of customer satisfaction, as a possible precursor of loyalty, becomes critical. rust and oliver (1994:4) describe satisfaction as a process linked to the disconfirmation paradigm. this paradigm posits that customer satisfaction decisions are reached by comparing the performance of a product or service with the customers’ expectations of the performance of the product or service. karatepe (2011:290) identifies two perspectives of customer satisfaction. firstly, customers who are satisfied make positive judgements about the quality of the service received. this is because the happier the customers feel (because of the positive experience), the more favourably they would rate the service quality. secondly, positive perceptions about service quality can also precede customer satisfaction. notwithstanding this two-way causal order of the relationship between perceived service quality and customer satisfaction, oliver (1981:27) views customer satisfaction as ‘a psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the customer’s prior feelings about the consumption experience’. in the light of this assertion, it would appear that satisfaction occurs because of a customer’s feelings, expectations and state of mind with regard to a specific service experience. the importance that this holds for a business is linked to the fact that a focus on customer satisfaction presents a pathway to the maximisation of profits and has, according to seth, deshmukh and vrat (2005:914), become recognised and adopted by businesses. interestingly, green and boshoff (2002:3) opine that in the tourism industry it is insufficient to explain customer satisfaction from a single encounter perspective. this position is supported by bitner and hubbert (1994:74), who argue that a customer’s evaluation of a single service encounter does not necessarily represent the overall satisfaction that the customer has with the business, as it is necessary to take into consideration all service encounters. in essence, a customer’s overall satisfaction is based on evaluations of multiple service encounters rather than a single encounter. the study of terblanche and boshoff (2010) in the fast-food industry provides both supporting and contradicting evidence on the relationship between customer satisfaction and customer loyalty. firstly, it was found that not all customer satisfaction necessarily leads to customer loyalty; secondly, it was found that even though the level of satisfaction among customers may be similar, their unique characteristics may cause customer loyalty to differ greatly; lastly, satisfaction may not be the best predictor of customer loyalty as other factors, such as trust, may need to be considered. against this background, it is apparent that some disharmony exists in the assessment of the role of customer satisfaction in the customer loyalty equation. this is exacerbated by the fact that customer satisfaction with a service is evaluative in nature as customers typically rely on expectations of the service, which are then compared with an evaluation of the customer’s perceptions of what they received from the service and past experiences (russell-bennet et al. 2007:5). therefore, satisfaction, although largely subjective, may be a key driver of customer loyalty in a business context and could be considered as an antecedent of attitudinal loyalty. although the situation in the specific context of a hair salon in south africa remains unexplored, this study projects that: h1: in hair salons, there is a positive relationship between customer satisfaction and customer loyalty. customer satisfaction consists of two determinants: perceived value and perceived quality (fornell et al. 1996:9). there has been increased interest by scholars (baker et al. 2002; jensen 1996; lin, sher & shih 2005) in the notion of perceived value as new ideas and theoretical directions continue to emerge. rust and oliver (1994:7) assert that perceived value is what draws a customer towards or away from a potential competitor and that value can be specific to a certain encounter or can be seen as a more general and long-term perception of the entire business. notably, there has been a lack of consensus among researchers, customers and practitioners with regard to the meaning of value (lai 1995:381). in three different studies by holbrook (1994), oh (1999) and kumar and grisaffe (2004), it was found that a number of different perspectives exist regarding customer perceptions of value. this is because customers do not necessarily purchase the best-quality service but rather make a purchase based on their own perceptions of the value of the service (seth et al. 2005:933). there are two methods to conceptualise the value construct, although lin et al. (2005:319) argue that both methods are flawed. the first method views value as being one-dimensional and measures the overall value perceptions of customers. this method is considerate of the trade-off between ‘fair price’, ‘good value’, ‘value for money’ and ‘meeting quality and price requirements’ (baker et al. 2002:121; sweeney, soutar & johnson 1999:82). although this is an effective and straightforward method, the complex nature of perceived value cannot be discerned using this one-dimensional method (sweeney & soutar 2001:207). therefore, a more appropriate measure is required to better understand customers’ value perceptions. the second method views value as being multidimensional and measures the overall value perceptions of customers using give-dimensions (price) and take-dimensions (social, emotional and quality) as reflected in some multidimensional models, such as the perval and serv-perval models (lin et al. 2005:321–322). sweeney and soutar (2001:216) developed the four-dimensional perval model to assess the customer’s perceived value of durable goods, which emphasised the importance of hedonic and utilitarian components: emotional value, social value, functional value because of quality, and functional value because of price. subsequently, petrick (2002:128) developed the serv-perval model to assess the perceived value of services based on the five dimensions of quality, emotional response, reputation, monetary price and behavioural price. these multidimensional models have helped researchers to discern the complex nature of customers’ value perceptions. however, in research conducted in the online retail industry, lin et al. (2005:322) criticise these models as being incomplete and inconsistent with the definition of perceived value and argue that it should be conceptualised at an abstract level. to elucidate the nature of customer value, green and boshoff (2002:6) contend that inconsistency exists as it pertains to how and to what degree service quality contributes to customer’s perception of value. zeithaml (1988:14) claims that quality and value are highly dissimilar constructs, with quality being a contributor to perceived value. however, perceived value does not depend solely on quality of service, but also on the context in which the buyer makes the evaluation of the service (green & boshoff 2002:6). the predominant position in the literature is that value is placed at the heart of the modern approach to customers and is often related to customer loyalty (gallarza & saura 2006:438). this is because customer loyalty is a function of customer value perception in the product and service industry such that as customer value increases, so too does customer loyalty (mascarenhas, kesavan & bernacchi 2006:400). consequently, the study chooses to hypothesise that: h2: in hair salons, there is a positive relationship between customer perceptions of value and customer loyalty. an intervariable approach was investigated in the tourism industry by gallarza and saura (2006), who found that non-recognition of customer perceptions of value may result in lower customer satisfaction and consequently lower customer loyalty. this is in line with the findings of oh (1999), who avers that in the hospitality industry, businesses need to consider customer value in order to increase service quality’s power of prediction with regard to repurchase intentions. in deference to the findings of gallarza and saura (2006) to the effect that customer value perceptions could strengthen customer satisfaction, it is hypothesised that: h3: in hair salons, there is a positive correlation between customer perceptions of value and customer satisfaction. there is a need for businesses to improve service quality in order to influence the behaviour of customers (nimako et al. 2012:197). in the business world, service quality has become an essential requirement for businesses because of its significant impact on the performance of a business largely owing to its ability to lower costs and improve both customer satisfaction and customer loyalty (seth et al. 2005:913). according to ennew and binks (1996:16), in the banking industry, service quality is a prime factor that contributes to a business’s ability to achieve customer loyalty and, indeed, improved business performance. the determination of service quality is often based on customers’ comparison of expectations with their perceptions of the service performance (duggal & verma 2013:139). this is why the understanding of customer perceptions of service experiences has always been critical to the success of businesses in the service industry (mokhlis 2012:103). khan and tabassum (2010:35) found that customer satisfaction is a direct result of the quality of service that can further improve overall business performance. this amplifies the need to explore in the specific case of the selected hair salons in south africa the possible nexus between customer’s perceived service quality and customer satisfaction; therefore, the study is swayed by the findings of khan and tabassum (2010) to hypothesise that: h4: in hair salons, there is a positive correlation between perceived service quality and customer satisfaction. businesses need to manage their internal quality capabilities which match a consistent external strategic focus that identifies with how customers perceive value (woodruff 1997:140). although green and boshoff (2002:6) contend that while service quality is vital to the concept of service value, it is not the only contributor, nor does the presence of service quality imply the presence of service value, and vice versa. therefore, perceived value does not only depend on the quality of the service that is received, but also on the context in which the customer makes an evaluation. the implication of this is that it will be problematic to rely on results from studies in a different context to determine with any measure of precision what is likely to be the case in the hair salons that participated in the current study, for instance. oh (1999:78) found that customer value is an important construct to consider when investigating service quality and customer satisfaction, and vice versa. competition based on customer value perceptions will simultaneously complement and move beyond the focus on quality management (woodruff 1997:151). from a customer-oriented perspective, value can be described as a function of perceived service quality, and it has been suggested that quality is the most influential dimension of customer value perceptions (green & boshoff 2002:6) and as this appears logical, this study leans on the position to hypothesise that: h5: in hair salons, perceived service quality is positively associated with perceived value. methodology this study is a quantitative research effort. as with most quantitative studies, the ontological philosophical perspective that there is an objective truth is adopted. this standpoint meant that in the execution of the study, the researchers had to be near-passive observers rather than active participants in the creation of meaning associated with the constructs of interest. the target population consisted of the customers of hair salons in pretoria, south africa. as the study focuses on customer loyalty, customer satisfaction, perceived service quality and perceived value in the context of hair salons, the units of analysis are the individual customers. in pursuit of adequate demographic diversity in the study, an effort was made to ensure representation of men and women, as well as races, as best as possible. as there was no accurate sampling frame available from which to draw a probability sample, this study made use of a non-probability sampling method, allowing selection at the discretion of the researcher (saunders, lewis & thornhill 2012:281). effectively, 180 valid questionnaires were collected from respondents, approached on the basis of the central-location intercept survey method. the respondents were approached at the hair salons where the customers received the service. the instrument for data collection was a questionnaire constructed with previously validated scales. a 17-item servqual scale developed by parasuraman, zeithaml and berry (1988) was utilised for the measurement of perceived service quality. similarly, a three-item scale developed by edward and sahadev (2011) and a four-item scale developed by wang (2010) were utilised to measure perceived value and customer loyalty, respectively, while a single item was utilised to gauge customer satisfaction. all items in the scales were made of statements accompanied by likert-style seven-point options ranging from 1 (strongly disagree) to 7 (strongly agree). although the scales utilised had been validated and deemed appropriate for use in previous studies, they were nonetheless examined for reliability. the associated cronbach’s alphas for the perceived service quality, perceived value and customer loyalty scales were 0.87, 0.83 and 0.81, respectively. these values suggest acceptable levels of internal consistency and, consequently, reliability. the responses obtained for each scale were then averaged to provide an overall score for the construct of interest. ethical consideration ethical clearance was obtained from the university of pretoria (ethical clearance number: u14213754_u14019672/2017). results table 1 provides the demographic profile of the 180 customers who took part in this study. of the total sample, 114 respondents were women (63.3%) and 66 were men (36.7%). this is possibly an indication that a larger number of women make use of the services of hair salons in comparison to their male counterparts. in addition, the number of respondents belonging to black and white races was fairly balanced, with the percentage of black people being 38.5% and that of white people being 38%. mixed-race people (7) and ‘other’ (29) racial groups had the smallest number of respondents compared to black (65) and white (79) race groups. table 1: demographic profile of the respondents. the study also sought to determine average scores across the respondent population for questionnaire items as well as the study’s constructs. based on the results in table 2, the statements ‘the employees of this hair salon are always willing to help customers’ and ‘employees of this hair salon are well mannered’ had the highest mean values of 6.54 (standard deviation [sd] 0.62) and 6.53 (sd 0.66), respectively. of all the items, these two items had the lowest sd, which suggests that responses to these items had the least variation and were skewed towards ‘agree’ or ‘strongly agree’. the statement ‘the hair salon is visually attractive’ had the lowest mean of 6.08 (sd 0.94). this suggests that the average respondent ‘slightly agrees’ or ‘agrees’ with the statement. the corresponding sd for this statement has a relatively high value in relation to the other statements, suggesting a higher variance in responses to this statement. table 2: the mean and standard deviation for questionnaire items. for the perceived value construct, the statement ‘comparing what i pay for the service i receive, the hair salon provides good value to me’ had the highest mean value of 6.34. the lowest mean of 6.16 corresponding with the statement ‘this hair salon charges a reasonable price for the service it provides’ suggests that respondents agreed with the statement. the sd (0.75) of the responses to this statement indicates a low variation of responses. in relation to the construct of customer loyalty, results presented in table 2 suggest that the statement ‘i will return to this hair salon more in the next few years’ had the highest mean value of 6.40 (sd = 0.77), while the lowest mean of 6.17 (sd = 1.06) is linked to the statement ‘i have recommended this hair salon to people who seek my advice’. nonetheless, the responses provided are clearly skewed towards the options ‘slightly agree’ to ‘agree’. at the construct level, the results suggest that perceived service quality of hair salons is positive given the overall mean score of 6.33 (sd = 0.79). similarly, the determined construct mean scores for perceived value, customer loyalty and customer satisfaction were positive in terms of their respective average scores of 6.26 (sd = 0.74), 6.28 (sd = 0.95) and 6.43 (sd = 0.81). all variables considered in the hypotheses were measured at an interval level, but it was nonetheless necessary to investigate if associated data distributions satisfy the conditions of normality and linearity required for the conduct of parametric significance tests. table 3 reports the results of the normality tests with regard to the focal constructs of this study. the kolmogorov–smirnov statistical test was utilised to examine the normality of the distribution of data linked to the constructs of perceived service quality, perceived value, customer loyalty and customer satisfaction. table 3: results of tests of normality. all p-values of the kolmogorov–smirnov test are less than the level of significance (0.05), indicating that a normal bell-shaped distribution does not exist for any of the constructs. thus, the assumption of normality is not satisfied for any of the constructs investigated in this study. consequently, spearman’s rank-order correlation test (non-parametric significance test) was utilised to test the study’s hypothesised relationships. the stated hypotheses are directional and are tested at a 5% level of significance (α = 0.05) and the results are presented in table 4. table 4: results of hypothesis tests. the study hypothesised that a positive relationship exists between customer satisfaction and customer loyalty in hair salons (h1). the results of spearman’s rank-order correlation test reveal a p-value of 0.000, which is smaller than the level of significance (α = 0.05) and so this indicates that there is a statistically significant correlation between customer satisfaction and customer loyalty in hair salons. the correlation coefficient of 0.541 suggests that the magnitude of the correlation is moderate. consequently, hypothesis h1 is accepted. the results of the same test for the four other hypotheses investigated by the study returned p-values of less than 0.05, which implies the existence of statistically significant correlations between the independent and dependent variables considered in h2, h3, h4 and h5. therefore, these results lead the study to accept the five hypotheses stated and tested in the study. however, while all the determined relationships were of a positive nature, they differed in terms of their strengths of association. the association between perceived value and customer loyalty (r = 0.559) is moderate. the realised r-value of 0.567 is indicative of a moderate correlation between perceived service quality and customer satisfaction. for the hypothesised association between perceived value and customer satisfaction, the result of r = 0.366 points to a positive but weak relationship, while the magnitude of the correlation (0.471) between perceived service quality and perceived value is also weak. discussion the purpose of this empirical study was to examine the possible links between customer satisfaction, perceived value, perceived service quality and customer loyalty in the context of hair salons in pretoria, south africa. the study results indicate that there is indeed a relationship between perceived service quality, customer satisfaction, perceived value and customer loyalty. the findings suggest that if customers perceive the service quality to be high or if their perceived value of the service is high, it will coincide with high customer satisfaction. furthermore, the results also suggest that high customer satisfaction correlates with customer loyalty in the studied hair salons. these results are in line with the findings of studies undertaken by gallarza and saura (2006), ennew and binks (1996), kumar, kee and manshor (2009) and khan and tabassum (2010), although within different contexts. notably, however, they contradict mittal and lassar’s (1998) finding that customer satisfaction does not correlate with customer loyalty. the study’s findings suggest that it may be worthwhile for hair salons to consider investing some effort towards improving service quality perceptions and value perceptions as these correlate with the desirable outcomes of customer satisfaction and customer loyalty. in this regard, especially as it concerns service quality, hair salons may wish to consider training employees, creating a more professional and conducive environment and emphasising improvements in current levels of responsiveness, empathy, reliability, assurance and tangibles. hair salons could also focus on making the customer experience worthwhile as this lends itself to improved levels of perceived value. practically, this can be achieved by providing high-quality service at an affordable price. conclusion it is instructive to note, as a study limitation, that given the use of a non-probability sampling method, there is no guarantee that the study sample is an accurate representation of a larger target population, especially with regard to the demographic considerations of gender and race. moreover, the findings of the study are technically not generalisable and apply more appropriately within the cohort of studied hair salons. the high level of satisfaction with the hair salons reflected in the data collected for the study could be consistent with the fact that the study’s sample may have been dominated by repeat or loyal customers and this needs to be noted as a possible study limitation, largely because of its potential biased effect on the study’s results. future research in this field could possibly benefit from conducting the research in a larger geographic area and on a larger respondent group created through a probability sampling technique, thereby making the findings more generalisable across a larger population. to achieve more accurate data collection, screening questions should be added to the questionnaire in order to identify first-time and repeat customers of hair salons as this would enable the undertaking of a comparative analysis of the perceptions of these two groups of customers. acknowledgements competing interests the authors have declared that no competing interests exist. the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors authors’ contributions c.e-e. was responsible for the methodology, research guidance and write-up of the article. c.j. and c.l. contributed to the literature review, data analysis and write-up of the article. references baker, j., parasuraman, a., grewal, d. & voss, g., 2002, ‘the influence of multiple store environment cues on perceived merchandise value and patronage intentions’, journal of marketing 66(2), 120–141. https://doi.org/10.1509/jmkg.66.2.120.18470 bitner, m. & hubbert, a., 1994, ‘encounter satisfaction versus overall satisfaction versus quality: the customer’s voice’, in r.t. rust & r.l. oliver (eds.), service quality: new directions in theory and practice, pp. 72–94, sage publications, inc, thousand oaks, ca. brookes, b. & smith, c., 2009, ‘technology and gender: barbers and hairdressers in new zealand’, history and technology 25(4), 365–386. https://doi.org/10.1080/07341510903313055 dick, a. & basu, k., 1994, ‘customer loyalty towards an integrated framework’, journal of the academy of marketing science 22(2), 99–113. https://doi.org/10.1177/0092070394222001 duggal, e. & verma, h., 2013, ‘service quality: construct comprehension and evolution over time’, journal of services research 13(1), 135–160. edward, m. & sahadev, s., 2011, ‘role of switching costs in the service quality, perceived value, customer satisfaction and customer retention linkage’, asia pacific journal of marketing and logistics 23(3), 327–345. https://doi.org/10.1108/13555851111143240 ennew, c. & binks, m., 1996, ‘the impact of service quality and service characteristics on customer retention: small businesses and their banks in the uk’, british journal of management 7(3), 219–230. https://doi.org/10.1111/j.1467-8551.1996.tb00116.x fornell, c., johnson, m., anderson, e., cha, j. & bryant, b., 1996, ‘the american customer satisfaction index: nature, purpose, and findings’, journal of marketing 60(4), 7–18. https://doi.org/10.2307/1251898 gallarza, m. & saura, i., 2006, ‘value dimensions, perceived value, satisfaction and loyalty: an investigation of university students’ travel behaviour’, tourism management 27(3), 437–452. https://doi.org/10.1016/j.tourman.2004.12.002 ganesh, j., arnold, m. & reynolds, k., 2000, ‘understanding the customer base of service providers: an examination of the difference between switchers and stayers’, journal of marketing 64(2), 65–87. https://doi.org/10.1509/jmkg.64.3.65.18028 green, s. & boshoff, c., 2002, ‘an empirical assessment of the relationships between service quality, satisfaction and value: a tourism study’, management dynamics 11(3), 2–16. holbrook, m., 1994, ‘the nature of customer value: an axiology of services in the consumption experience’, in r.t. rust & r.l. oliver (eds.), service quality: new directions in theory and practice, pp. 21–71, sage publications, inc, thousand oaks, ca. jensen, h., 1996, ‘the interrelationship between customer and customer value’, asia pacific advances in customer research 2(1), 60–63. karatepe, o., 2011, ‘service quality, customer satisfaction and loyalty: the moderating role of gender’, journal of business economics and management 12(2), 278–300. https://doi.org/10.3846/16111699.2011.573308 khan, p. & tabassum, a., 2010, ‘service quality and customer satisfaction of the beauty-care service industry in dhaka: a study on high-end women’s parlours’, the journal of business in developing nations 12(1), 32–58. kumar, a. & grisaffe, d., 2004, ‘effects of extrinsic attributes on perceived quality, customer value, and behavioural intentions in b2b settings: a comparison across goods and services industries’, journal of business-to-business marketing 11(4), 43–74. https://doi.org/10.1300/j033v11n04_03 kumar, m., kee, f. & manshor, a., 2009, ‘determining the relative importance of critical factors in delivering service quality of banks: an application of dominance analysis in servqual model’, managing service quality 19(2), 211–228. https://doi.org/10.1108/09604520910943198 lai, a., 1995, ‘customer values, product benefits and customer value: a consumption behaviour approach’, advances in customer research 22(1), 381–388. lin, c., sher, p. & shih, h., 2005, ‘past progress and future directions in conceptualizing customer perceived value’, international journal of service industry management 16(4), 318–336. https://doi.org/10.1108/09564230510613988 mascarenhas, o., kesavan, r. & bernacchi, m., 2006, ‘lasting customer loyalty: a total customer experience approach’, journal of customer marketing 23(7), 397–405. https://doi.org/10.1108/07363760610712939 mittal, b. & lassar, w., 1998, ‘why do customers switch? the dynamics of satisfaction versus loyalty’, journal of services marketing 12(3), 177–194. https://doi.org/10.1108/08876049810219502 mokhlis, s., 2012, ‘the influence of service quality on satisfaction: a gender comparison’, public administration research 1(1), 103–112. https://doi.org/10.5539/par.v1n1p103 nimako, s., azumah, f., donkor, f. & adu-brobbey, v., 2012, ‘confirmatory factor analysis of service quality dimensions within mobile telephony industry in ghana’, electronic journal of information systems evaluation 15(2), 197–215. oh, h., 1999, ‘service quality, customer satisfaction, and customer value: a holistic perspective’, international journal of hospitality management 18(1), 67–82. https://doi.org/10.1016/s0278-4319(98)00047-4 oliver, r., 1981, ‘measurement and evaluation of satisfaction processes in retail settings’, journal of retailing 57(3), 25–48. parasuraman, a., zeithaml, v. & berry, l., 1988, ‘servqual: a multiple-item scale for measuring customer perceptions of service quality’, journal of retailing 64(1), 12–40. petrick, j., 2002, ‘development of a multi-dimensional scale for measuring the perceived value of a service’, journal of leisure research 34(2), 119–134. https://doi.org/10.1080/00222216.2002.11949965 picot-lemasson, a., decocq, g., aghassian, f. & leveque, j., 2001, ‘influence of hairdressing on the psychological mood of women’, international journal of cosmetic science 23(3), 161–164. https://doi.org/10.1046/j.1467-2494.2001.00072.x russell-bennet, r., mccoll-kennedy, j. & coote, l., 2007, ‘involvement, satisfaction, and brand loyalty in a small business services setting’, journal of business research 60(12), 1253–1260. https://doi.org/10.1016/j.jbusres.2007.05.001 rust, r. & oliver, r., 1994, ‘service quality: insights and managerial implications from the frontier’, in r.t. rust & r.l. oliver (eds.), service quality: new directions in theory and practice, pp. 1–19, sage publications, inc, thousand oaks, ca. saunders, m., lewis, p. & thornhill, a., 2012, research methods for business students, 6th edn., pearson, harlow, uk. seth, n., deshmukh, s. & vrat, p., 2005, ‘service quality models: a review’, international journal of quality and reliability management 22(9), 913–949. https://doi.org/10.1108/02656710510625211 sweeney, j. & soutar, g., 2001, ‘customer perceived value: the development of a multiple item scale’, journal of retailing 77(2), 203–220. https://doi.org/10.1016/s0022-4359(01)00041-0 sweeney, j., soutar, g. & johnson, l., 1999, ‘the role of perceived risk in the quality-value relationship: a study in a retail environment’, journal of retailing 75(1), 77–105. https://doi.org/10.1016/s0022-4359(99)80005-0 terblanche, n. & boshoff, c., 2010, ‘quality, value, satisfaction and loyalty amongst race groups: a study of customers in the south african fast food industry’, south african journal of business management 41(1), 1–9. wang, c., 2010, ‘service quality, perceived value, corporate image, and customer loyalty in the context of varying levels of switching costs’, psychology and marketing 27(3), 52–262. https://doi.org/10.1002/mar.20330 wei, j., lee, m., chen, h. & wu, h., 2013, ‘customer relationship management in the hairdressing industry: an application of data mining techniques’, expert systems with applications 40(17), 1–27. https://doi.org/10.1016/j.eswa.2013.07.053 woodruff, r., 1997, ‘customer value: the next source for competitive advantage’, academy of marketing science journal 25(2), 139–153. https://doi.org/10.1007/bf02894350 zeithaml, v., 1988, ‘customer perceptions of price, quality, and value: a means-end model and synthesis of evidence’, journal of marketing 52(3), 2–22. https://doi.org/10.1177/002224298805200302 abstract introduction literature review research methods and design results discussion conclusion acknowledgements references about the author(s) corrinna l. kirsten school of accountancy, faculty of economic and management sciences, stellenbosch university, south africa citation kirsten, c.l., 2018, ‘the role of financial management training in developing skills and financial self-efficacy’, southern african journal of entrepreneurship and small business management 10(1), a211. https://doi.org/10.4102/sajesbm.v10i1.211 original research the role of financial management training in developing skills and financial self-efficacy corrinna l. kirsten received: 18 july 2018; accepted: 25 sept. 2018; published: 25 oct. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: financial management is an essential management function for any small business. short-term financial management is especially crucial for start-ups and established businesses. owners of small businesses in south africa often need to perform this function themselves; however, many do not possess the skills and practices required to perform this function effectively. financial self-efficacy acts as an important motivating factor in managing the finances of a business. focused training is important in developing financial management skills, but little research has been conducted to determine whether this type of training improves financial management skills and financial self-efficacy. aim: to determine whether a tailor-made financial management training course improves the development of short-term financial management skills and financial self-efficacy of small business owners in south africa. setting: this study sampled small business owners who attended a tailor-made financial management training course that focused on short-term financial management principles. method: a quasi-experimental study using a pre-test–post-test single-group design was applied using self-administered questionnaires. results: the results from a one-tailed paired-sample t-test show that the training course significantly improved both the development of short-term financial management skills and the financial self-efficacy of participants. conclusion: tailor-made financial management training courses enhance the short-term financial management skills of owners of small businesses and also improve their financial self-efficacy. by improving both their skills and self-efficacy, small business owners are likely to make better financial decisions and be more motivated to implement financial management practices. introduction small, medium and micro-enterprises (smmes) contribute significantly to employment and the economy in south africa (groepe 2015:5). however, research shows that the failure rates of smmes in south africa are very high (petrus 2009:i; radipere & van scheers 2005:402; van eeden, viviers & venter 2003:13). internal and external factors contribute to failure of new smmes, with lack of management experience and lack of functional skills cited as being important internal factors (fatoki 2014:926). rajaram (2008:10) identifies one of the difficulties small business owners face: often they cannot afford to employ managers, and thus owners need the skills to perform management functions themselves. small businesses in south africa have low growth rates, and it is estimated that up to half of small businesses do not grow (ladzani & van vuuren 2002:155). low growth rates in small businesses are impacted by, among many factors, inadequate decisions taken by the owners because of insufficient management skills (ihua 2009:199). financial management skills are critical in operating a business in south africa (mamabolo, kerrin & kele 2017:9; roodt 2005:18) and are needed to increase the survival rates of start-up businesses (orford, herrington & wood 2004:3). however, research shows that many small business owners do not have the financial management skills they require to effectively manage their businesses (orford et al. 2003:48; rajaram & o’neill 2009:115; statistics south africa 2005:xx). schwarze (2008:144) suggests that owners of small businesses ought to first develop short-term financial management skills in order to survive and grow, after which long-term financial management skills can be developed. the literature also reveals that not only financial management skills and resources are necessary for small firms to be successful, so too are attitudinal factors such as financial self-efficacy (or the self-confidence to be able to perform a task), which influence the desire to persist and pursue managing the finances of a business (amatucci & crawley 2011:24). lapp (2010:1) identifies financial self-efficacy as the vital connector between financial knowledge and taking financial decisions. training is important to develop financial management skills for newly formed and existing small businesses (maas & herrington 2006:70). perks and smith (2008:156) point out that training programmes for very small businesses need to focus on developing specific skills at an appropriate level in order to be effective. gaining knowledge or skills from training may not, however, necessarily improve self-efficacy, a lack of which could lead to learners not effectively applying what they have learnt (gist 1986:254). wilson, kickul and marlino (2007:392) note that self-efficacy is not often used to assess the outcome of educational activities, although it could lead to better feedback on their effectiveness. this argument is supported by latham (1989:293), who also regards measuring self-efficacy as an important outcome of training. kirsten (2013:831) found that training improved the perceived knowledge of short-term financial management principles of small business owners, but the research did not measure whether the improvement was in actual understanding of financial management principles or in financial self-efficacy. the literature shows that, while it is important that focused financial management training develops financial management skills, training also needs to enhance the financial self-efficacy of small business owners in south africa in order to increase the likelihood of them implementing what they have learnt. short-term financial management skills should be acquired before long-term financial management skills. the objectives of this study are therefore to determine whether a tailor-made training course improves the participants’ understanding of short-term financial management principles, as well as their associated financial self-efficacy. the rest of this paper is structured as follows. the next section provides a literature review of the financial management skills and practices which small business owners require to manage their business, the role of financial self-efficacy and the importance and nature of the training required to develop skills in small business owners. this is followed by the formulation of the hypotheses, the research methods and design of the study. the results of the study and discussion thereof are presented thereafter. the final section concludes on the findings of the study. literature review financial management skills and practices financial management involves acquiring and managing financial resources optimally in order to achieve long-term and short-term objectives (conradie & fourie 2002:5). literature indicates the financial management practices and related skills which small business owners require in order to manage the finances of a business effectively. marx et al. (2004:7) identify the short-term and long-term financial management functions that must be in place in order to manage a small business. in the short term, determining profitability and cash flow requirements is important. in the long term, investment, financing and solvency functions are required. brijlal, enow and isaacs (2014:344) identify financial planning, accounting record-keeping and financial analysis and reporting as important financial management practices that must be in place in smmes. orford et al. (2003:48) identify cash book, accounts receivable, inventory records and effective management of debtors as critical practices in reducing the likelihood of cash flow problems in small and medium registered black-owned businesses. perks and struwig (2005:184) suggest that record-keeping skills are crucial in enabling owners of very small businesses to track the performance of the business themselves and to manage the finances of the business, especially when they cannot afford accountants to perform this function. small business owners also need to be able to interpret management accounts, cash flow information and bank statements in order to adequately manage the finances of the business (collis & jarvis 2002:108). wolmarans and meintjies (2015:111) found that short-term financial management practices related to working capital and profitability management were more applicable to established small and medium enterprises (smes) than long-term financial management practices, such as preparing balance sheets and strategic financial management. it was also found that financial management skills such as cash flow management (as a short-term management concern) and decision making were more applicable to smes than planning and detailed financial analysis (which are mediumto long-term management concerns). also, the increased tax compliance burden (abrie & doussy 2006:10) and legal compliance requirements (for small businesses which operate as separate legal entities, such as companies) (chiloane-tsoka & rankhumise 2012:12098) add to the responsibilities of small business owners. these owners need to understand these requirements in order to effectively manage the financial side of their businesses in the short term. kirsten (2013:827) summarises five key elements of short-term financial management in which small business owners must be proficient: record-keeping; planning for future profitability (forecasting and performing break-even analysis); managing working capital (stock, debtors and cash); measuring past performance (compiling and analysing financial statements); and complying with tax and legal requirements. the literature thus shows the relevance of short-term financial management practices and skills in newly formed and established small businesses. financial self-efficacy self-efficacy is a term that was first used in social learning theory by bandura (1977:193). it refers to confidence in one’s ability to perform a specific endeavour. it has been shown to increase the likelihood of engaging and persevering in that endeavour (bandura 1997:125). locke and latham (2002:706) note that higher self-determined objectives are set by those with higher self-efficacy. self-efficacy is attributable to a specific domain or area, and thus must be assessed for that specific area to determine the likelihood of a positive outcome in that area (eccles 1994:594). research on self-efficacy in the context of entrepreneurship shows that a high level of self-efficacy has positive effects on entrepreneurial intentions to start a business (boyd & vozikis 1994:75; florin, karri & rossiter 2007:37; urban 2006:8). research on the effect of entrepreneurial education on entrepreneurial self-efficacy has shown varied results. studies found that entrepreneurship education has a positive effect on entrepreneurial self-efficacy and entrepreneurial intentions (wilson et al. 2007:398; zhao, seibert & hills 2005:1270). cox, mueller and moss (2002:240) found that entrepreneurial education impacted entrepreneurial self-efficacy differently; some participants’ self-efficacy improved while that of others did not, indicating a need to incorporate more activities in entrepreneurial education to further improve entrepreneurial self-efficacy. more recently, research has extended to investigating self-efficacy in relation to managing personal finances (consumers) and financial management (entrepreneurs). the term used to describe self-efficacy in these studies is ‘financial self-efficacy’; it is used in this article to refer to self-efficacy which relates to the financial management of small businesses. lapp (2010:1) proposed financial self-efficacy to be the motivating factor for low-income individuals making better decisions relating to personal finances. the results of lown’s (2011:54) study illustrated that consumers with low financial self-efficacy needed more assistance from financial advisors with personal finance decisions than those with higher financial self-efficacy. amatucci and crawley (2011:23) proved that women entrepreneurs were less confident than their male counterparts, and fatoki and oni (2016:186) found that spaza-shop owners did not have sufficient financial self-efficacy to manage some financial management functions. education and training for small businesses literature shows the importance of presenting and designing training programmes that suit the needs of small businesses. mcgee et al. (2009:984) suggest that educational interventions should not only address ‘inspiration’ activities (those which attract entrepreneurs to ventures and to search for business opportunities) but also ‘perspiration’ activities to enhance the crucial implementation skills needed to operate a business. perks and smith (2008:153) provide comprehensive considerations to bear in mind when presenting training programmes to support small businesses, the main recommendations being that training programmes ought to be presented in smaller sessions to target specific skills; be appropriate to the participants’ skill level; blend with developing a large variety of skills; be widely published; be presented in small groups; combine the knowledge, skills competence, and attitude domains of learning; incorporate mentors (though these are often too expensive and lengthen the process); involve business associations and universities to a greater extent; provide enough time to manage one’s own learning; and focus on the training needs of participants. some of these recommendations are in line with suggestions stemming from other research. herrington, kew and kew (2009:109) concur that training courses need to be tailor-made to meet the requirements of small businesses. orford et al. (2004:53) and de waal (1997:15) suggest that experts in their respective fields ought to present these focused training courses; more specifically related to financial management training. schwarze (2008:148) recommends that accounting academics could contribute positively to this process by presenting focused training in financial management, as they are experts in this field. based on the preceding literature review, the following two hypotheses were formulated relating to a tailor-made training course covering short-term financial management topics: h1: the training course improved the participants’ understanding of short-term financial management principles. h2: the training course improved the participants’ financial self-efficacy related to short-term financial management. research methods and design study design in order to determine whether a tailor-made training course improved, firstly, the participants’ understanding of short-term financial management and secondly their financial self-efficacy, a quasi-experimental study was applied using a pre-test–post-test single-group design. this design is appropriate as it determines whether expected changes have occurred in the participants according to the objectives of the intervention (babbie & mouton 2001:348). population the target population for this study was south african small business owners who attended a tailor-made financial management training course that focused on short-term financial management principles. forty-nine participants attended the training and all of them were invited to participate in this study on a voluntary basis. the questionnaires of 43 participants were complete for both the pre-test and the post-test, and these responses formed the basis of this study. intervention a programme was devised by a municipality in the cape winelands region in the western cape province of south africa to enhance entrepreneurial development in this region. the focus of the programme was to enhance the business and management skills of owners of qualifying small businesses who came from previously disadvantaged communities in this rural region. beneficiaries were also provided with financial support to grow or start their businesses. this programme was managed by an external not-for-profit organisation and included training and mentoring of participants in areas such as general business management, marketing and financial management. the not-for-profit organisation made use of field specialists to conduct the training and mentoring for each component of the programme. for the financial management training component of this programme, beneficiaries attended a sector education and training authority (seta)-accredited training course which was designed to develop the short-term financial management skills of small business owners. the training course broadly covered short-term financial management principles, such as record-keeping; planning for future profitability (costing, pricing, break-even); measuring past performance (preparation and interpretation of financial statements); working capital management (stock, debtors and cash flow); and compliance (tax and legal). participants used a case study (based on a fictional small business that provides both goods and services) for practical application of the short-term financial management principles covered during the training course. a number of toolkits were used during the training to help participants understand the processes involved in applying financial management principles to the case study. participants could later use these toolkits and apply them to their businesses. the training course was presented over two days at five different training sites in rural towns in the cape winelands region. the training courses were facilitated by accounting lecturers from a local university who volunteered to present the training course as part of a social impact initiative. measures understanding of short-term financial management principles an assessment using simple constructed-response questions was used to measure the participants’ understanding of the short-term financial management principles that were covered in the training course. for example, respondents were asked to explain how a small business should keep record of its transactions; what the term ‘working capital’ means; and what an income statement is, and what it is used for. the same assessment was used for the pre-test and the post-test. constructed-response questions allow the participants to develop their own answers by reflecting on the knowledge they have gained from the intervention (tankersely 2007:12). comprehension (or understanding) is one of the building blocks in the hierarchy of cognitive skills as indicated in bloom’s taxonomy (bloom 1956:120). thus, before being able to apply a principle, one must first comprehend or understand the principle. the split-half method, using even and odd items, was used to test the reliability of the assessment. the larger the size of the correlation between the two halves, the more reliable the scale (coldwell & herbst 2004:17). the unequal-length spearman–brown split-half reliability coefficient of the assessment before the training was 0.681, and after the training was 0.726. the assessment is therefore considered reliable. financial self-efficacy related to short-term financial management financial self-efficacy related to short-term financial management was measured using a five-point likert scale (ranging from ‘no confidence’ to ‘very confident’), combined with a happy-face graphic rating scale in order to complement the meaning of the response options of the likert scale. stange et al. (2016:9) found that it may be advantageous for respondents with lower literacy levels to combine smiley-face graphic rating scales with text-only questions for emotive response options, especially in self-administered questionnaires. the construct used to measure financial self-efficacy relating to short-term financial management was adapted from constructs used by lown (2011:59) that relate to financial behaviour; from amatucci and crawley (2011:28) that relate to successful financial management; and from mcgee et al. (2009:978) that relate to implementing finance-related tasks. respondents were asked to rate how confident they felt about their ability to apply each of the five short-term financial management principles covered in the training course. cronbach’s alphas were computed for the pre-test and post-test financial self-efficacy constructs in order to determine the internal consistency. the scale comprised five items. cronbach’s alpha showed the questionnaire to reach a high reliability, α = 0.780 for the pre-test and α = 0.753 for the post-test (nunnally 1978:245). data collection the primary source of data was the self-administered questionnaires. participants were requested to complete a questionnaire shortly before the commencement of the two-day training course (the pre-test) and to complete the same questionnaire directly after the completion of the course (the post-test). the questionnaire consisted of two sections. one section required participants to rate their financial self-efficacy relating to short-term financial management and the other required participants to complete an assessment to test their understanding of the short-term financial management principles covered during the training course. demographic data of the participants were obtained from a questionnaire they completed when they initially registered for the entrepreneurial development programme. validity assessment the internal validity of this study’s design may be threatened because of maturation, history, testing and regression effects (marsden & torgerson 2012:584). maturation is growth, change or development over time that is unrelated to an intervention. the history effect is events or influences that could have changed in a participant’s environment, which may account for the changes being tested for. testing effects are effects that influence participants because they are aware of being tested and may change because of any knowledge gained from the pre-test independent of the intervention. lastly, regression effects are applicable when participants are selected for an intervention based on unusual pre-test scores, which influence the interpretation of post-test scores (robson 1993:70). the training course was presented on two consecutive days and participants were tested directly before the training commenced on the first day and directly after the course was concluded at the end of the second day. the threat of maturation and history effects is therefore regarded as low. participants may have been alerted to the testing and initiated some form of learning after the pre-test. however, participants did not receive any direct feedback on their answers after completing the pre-test, and no learning which was independent of the training was considered likely by the researcher because of the brief time that elapsed between the preand post-testing. the threat of testing effect is, therefore, also regarded as low. participants were not selected based on their pre-test scores, as all participants who attended the training course were included in the pre-test, as well as the post-test, thus eliminating the regression threat. thus, the internal validity of this study is considered to be high. field experiments have a high external validity (zikmund et al. 2010:274), and thus the external validity will be high for this explorative study. data analysis the responses from the completed questionnaires were captured onto an excel spreadsheet by the researcher. the data captured were double-checked for correctness. numbers were assigned to the participants’ responses once the data were captured to ensure anonymity in further data analysis. the assessment of each participant was marked by a single examiner using an analytical scoring rubric, containing six rating score categories ranging from ‘no understanding’ to ‘excellent understanding’. the assessment was moderated by an independent senior colleague. the responses were coded in order to upload them to the statistical package. possible-code cleaning was performed to examine the distribution of responses to each item in the data set, and any errors detected were corrected. to test the hypotheses that the financial management training course improved the participants’ understanding of short-term financial management principles and financial self-efficacy, a one-tailed paired-sample t-test was used. ethical considerations the views expressed in this article are my own and not an official position of the institution or funder. results participant characteristics the characteristics of the participants who took part in the financial management training course are shown in table 1. the participants were distributed widely across demographic categories. the majority had school-level education only. a quarter of the participants had start-up businesses and did not have any turnover or assets. table 1: demographic characteristics of the participants in the study. testing the hypotheses the one-tailed paired-sample t-test provided the following results: h1: the training course improved the participants’ understanding of short-term financial management principles. before performing the analysis, the assumption of normally distributed difference scores was analysed. the skew and kurtosis levels were determined at 0.142 and -0.760, respectively. thus, the assumption of normal distribution was considered satisfied, as the values were less than the maximum allowable values for a t-test (i.e. skew < |2| and kurtosis < |9|) (posten 1984:97). on average, the participants’ understanding of short-term financial management also improved significantly after the training course (m = 3.358, se = 0.124), compared to before the course (m = 1.958, se = 0.141, t(42) = -10.557, p < 0.001, r = 0.852). the null hypothesis, namely that the training course did not improve the participants’ understanding of short-term financial management principles, was therefore rejected. a graphic representation of the means and adjusted 95% confidence intervals (loftus & masson 1994:476) for understanding of short-term financial management principles is presented in figure 1. h2: the training course improved the participants’ financial self-efficacy related to short-term financial management. figure 1: means and 95% confidence intervals for understanding short-term financial management principles associated with the preand post-training conditions. the skew and kurtosis levels were determined at 0.285 and 0.542, respectively, which was less than the maximum allowable values for a t-test and also satisfies the normal distribution assumption. on average, the participants’ financial self-efficacy after the training course improved significantly (m = 4.047, se = 0.069), compared to before the course (m = 2.958, se = 0.137, t(42) = -6.754, p < 0.001, r = 0.722). the null hypothesis, namely that the training course did not improve the participants’ financial self-efficacy related to short-term financial management, was therefore rejected. a graphic representation of the means and adjusted 95% confidence intervals (loftus & masson 1994:476) for financial self-efficacy is presented in figure 2. figure 2: means and 95% confidence intervals for financial self-efficacy associated with the preand post-training conditions. discussion discussion of key findings a key finding of this study was that not only did the focused financial management training course significantly improve the participants’ understanding of short-term financial management principles, the training was also able to significantly improve the participants’ associated financial self-efficacy. having improved their understanding of short-term financial management principles, the participants are better equipped to manage the finances of their business in the short term. the literature has shown that having gained knowledge or skills through training may not necessarily translate into applying what one has learnt unless self-efficacy is also improved. thus, having also improved their financial self-efficacy, the participants are likely to better utilise the knowledge gained from the training for financial decision making and be more motivated to implement the financial management practices covered in the training course in their businesses. as the participants are able to better manage the finances of their businesses in the short term, there may be an increased likelihood of their businesses surviving and growing. strengths and limitations this study was able to determine that the short-term financial management skills actually improved, as the participants’ understanding of short-term financial management principles was measured using an assessment and was not based on self-reporting. a limitation of the study is that financial self-efficacy was measured based on self-reporting of participants, which may have caused it to be misrepresented because of ‘social desirability bias’ (holbrook 2008:805). the businesses of most participants in this study fell into the categories of micro-business and very small business, as defined by the small businesses act (south africa 1996, s. 1 ss. [xv]). the impact of this type of training on improving the development of short-term financial management skills and financial self-efficacy of people owning businesses that are larger than these categories was not tested. the sample size of the study was small and focused on a specific geographic region, thus it is not representative of all small businesses in south africa. a larger sample size may present different results. implications and recommendations by first improving the development of short-term financial management skills and financial self-efficacy through focused training, owners of start-ups and existing small businesses can establish a strong basis on which to make better financial decisions. in order to grow their businesses, small business owners would need to build on their financial management skills and financial self-efficacy and work towards developing financial management skills in order to achieve long-term financial management objectives. thus, once the initial training has been completed, schwarze (2008:148) recommends that a needs assessment of each participant should be done to determine the next appropriate intervention to develop their financial management skills. suggested interventions are follow-up training courses for participants who require additional training or accounting clinics and/or mentoring, which can be facilitated by field specialists such as members of the accounting profession. kirsten and fourie (2012:475) identify the need of existing small business support organisations for accounting professionals to assist in providing financial management training to those organisations’ beneficiaries. it is recommended that a tailor-made financial management training course, such as the one used in the present study, be presented by members of the accounting profession to assist other small business support organisations in strengthening the initiatives they offer to their beneficiaries. a possible area for future research is to determine the extent to which other types of intervention using field specialists improve the development of financial management skills and financial self-efficacy. research could also investigate the extent to which participants in focused training courses are able to implement financial management practices themselves, or whether they need assistance. conclusion in summary, this study found that a tailor-made financial management training course improves not only the short-term financial management skills of small business owners but also their financial self-efficacy. after attending this type of focused financial management training, small business owners in south africa are likely to make better financial decisions relating to their businesses and be more motivated to implement financial management practices. this will have a beneficial impact on both small business owners in south africa and the success of their businesses. acknowledgements the author wishes to extend her thanks to prof charlene gerber, university of stellenbosch business school, for her assistance with designing the self-administered questionnaires and the research methodology, as well to mr len steenkamp, school of accountancy, stellenbosch university, for reviewing the draft of this research paper. competing interests the author declares that she has no financial or personal relationships that may have inappropriately influenced her in writing this article. references abrie, w. & doussy, e., 2006, ‘tax compliance obstacles encountered by small and medium enterprise in south africa’, meditari accountancy research 14(1), 1–13. https://doi.org/10.1108/10222529200600001 amatucci, f.m. & crawley, d.c., 2011, ‘financial self-efficacy among women entrepreneurs’, international journal of gender and entrepreneurship 3(1), 23–37. https://doi.org/10.1108/17566261111114962 babbie, e. & mouton, j., 2001, the practice of social research, oxford university press, cape town. bandura, a., 1977, ‘self-efficacy: toward a unifying theory of behavioral change’, psychological review 84, 191–215. http://psycnet.apa.org/doi/10.1037/0033-295x.84.2.191 bandura, a., 1997, self-efficacy: the exercise of control, freeman, new york. bloom, b.s., 1956, taxonomy of educational objectives: handbook 1: cognitive domain, david mckay, new york. boyd, n.g. & vozikis, g.s., 1994, ‘the influence of self-efficacy on the development of entrepreneurial intentions and actions’, entrepreneurship theory and practice 18(4), 63–77. https://doi.org/10.1177/104225879401800404 brijlal, p., enow, s. & isaacs, e.b.h., 2014, ‘the use of financial management practices by small, medium and micro enterprises: a perspective from south africa’, industry & higher education 28(5), 341–350. https://doi.org/10.5367/ihe.2014.0223 chiloane-tsoka, g.e. & rankhumise, e.m., 2012, ‘small, medium and micro enterprise owners’ perceptions regarding the implementation of the new companies act: a south african perspective’, african journal of business management 6(51), 12095–12100. https://doi.org/10.5897/ajbm12.1218 coldwell, d. & herbst, f., 2004, business research, juta, cape town. collis, j. & jarvis, r., 2002, ‘financial information and the management of small private companies’, journal of small business and enterprise development 9(2), 100–110. https://doi.org/10.1108/14626000210427357 conradie, w.m. & fourie, c.m.v., 2002, basic financial management for entrepreneurs, juta, cape town. cox, l., mueller, s.l. & moss, s.e., 2002, ‘the impact of entrepreneurship education on entrepreneurial self-efficacy’, international journal of entrepreneurship education 1(2), 229–245. de waal, d., 1997, ‘the perceptions of educators and trainers regarding african small business ventures’, proceedings of the 9th annual conference of the southern africa institute for management scientists, pietermaritzburg, south africa, 2–3 june, pp. 12–16. eccles, j., 1994, ‘understanding women’s educational and occupational choices’, psychology of women quarterly 18(4), 585–609. https://doi.org/10.1111/j.1471–6402.1994.tb01049.x fatoki, o., 2014, ‘the causes of the failure of new small and medium enterprises in south africa’, mediterranean journal of social sciences 5(20), 922–927. https://doi.org/10.5901/mjss.2014.v5n20p922 fatoki, o. & oni, 2016, ‘the financial self-efficacy of spaza shop owners in south africa’, journal of social sciences 47(3), 185–190. https://doi.org/10.1080/09718923.2016.11893558 florin, j., karri, r. & rossiter, n., 2007, ‘fostering entrepreneurial drive in business education: an attitudinal approach’, journal of management education 31(1), 17–42. https://doi.org/10.1177/1052562905282023 gist, m.e., 1986, ‘the effects of self-efficacy training on training task performance’, in e. hoy (ed.), academy of management best paper proceedings, pp. 250–254, academy of management, ada, ok. groepe, f., 2015, ‘the role of small business in the economy’, address given at the ahi conference on the role of business in local government and local economic development, george, south africa, 09 october, pp. 1–12. herrington, m., kew, j. & kew, p., 2009, tracking entrepreneurship in south africa: a gem perspective, the centre for innovation and entrepreneurship, uct graduate school of business, cape town. holbrook, a., 2008, ‘self-reported measure’, in p.j. lavrakas (ed.), encyclopedia of survey research methods, pp. 804–906, sage, thousand oaks, ca. ihua, u.b., 2009, ‘smes key failure-factors: a comparison between the united kingdom and nigeria’, journal of social science 18(3), 199–207. https://doi.org/10.1080/09718923.2009.11892682 kirsten, c.l., 2013, ‘the impact of training courses on financial management skills of south african small business owners’, international business & economics research journal 12(7), 825–834. https://doi.org/10.19030/iber.v12i7.7971 kirsten, c.l. & fourie, j.r., 2012, ’the accounting professions’ role in financial management skills development of small businesses’, journal of economic and financial sciences 5(2), 459–480. ladzani, w.m. & van vuuren, j.j., 2002, ‘entrepreneurship training for emerging smes in south africa’, journal of small business management 40(2), 154–161. https://doi.org/10.1111/1540-627x.00047 lapp, w., 2010, ‘the missing link: financial self-efficacy’s critical role in financial capability’, earn white paper, earn research institute, san francisco, ca. latham, g.p., 1989, ‘behavioral approaches to the training and learning process’, in i.l. goldstein (ed.), training and development in organizations, pp. 256–295, jossey-bass, san francisco, ca. locke, e.a. & latham, g.p., 2002, ‘building a practically useful theory of goal setting and task motivation: a 35-year odyssey’, american psychologist 57(9), 705–717. https://doi.org/10.1037/0003-066x.57.9.705 loftus, g.r. & masson, m.e.j., 1994, ‘using confidence intervals in within-subject designs’, psychonomic bulletin and review 1(4), 476–490. lown, j.m., 2011, ‘development and validation of a financial self-efficacy scale’, journal of financial counselling and planning 22(12), 54–63. maas, g. & herrington, m., 2006, global entrepreneurship monitor: south african executive report 2006, the centre for innovation and entrepreneurship, uct graduate school of business, cape town. mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, southern african journal of entrepreneurship and small business management 9(1), a111. https://doi.org/10.4102/sajesbm.v9i1.111 marsden, e. & torgerson, c.j., 2012, ‘single group, preand post-test research designs: some methodological concerns’, oxford review of education 38(5), 583–616. https://doi.org/10.1080%2f03054985.2012.731208 marx, j., de swardt, c., beaumont-smith, m., naicker, b. & erasmus, p., 2004, financial management in southern africa, pearson, cape town. mcgee, j.e., peterson, m., mueller, s.l. & sequiera, j.m., 2009, ‘entrepreneurial self-efficacy: refining the measure’, entrepreneurship theory and practice 33(4), 965–988. https://doi.org/10.1111/j.1540-6520.2009.00304.x nunnally, j.c., 1978, psychometric theory, 2nd edn., mcgraw-hill, new york. orford, j., wood, e., fischer, c., herrington, m. & segal, n., 2003, global entrepreneurship monitor: south african executive report 2003, the centre for innovation and entrepreneurship, uct graduate school of business, cape town. orford, j., herrington, m. & wood, e., 2004, global entrepreneurship monitor: 2004 south african report, the centre for innovation and entrepreneurship, uct graduate school of business, cape town. perks, s. & smith, e.e., 2008, ‘focused training programmes for solving growth problems of very small businesses’, acta commercii 8(1), 145–159. https://doi.org/10.4102/ac.v8i1.77 perks, s. & struwig, m., 2005, ‘skills necessary to grow micro entrepreneurs into small business entrepreneurs’, south african journal of economic and management sciences 8(2), 171–186. https://doi.org/10.4102/sajems.v8i2.1226 petrus, h.g., 2009, ‘an investigation into causes of success and failure in small businesses with the department of social development in the eastern cape’, master’s degree thesis, rhodes investec business school, rhodes university. posten, h.o., 1984, ‘robustness of the two sample t-test’, in d. rasch & m.l. tiku (eds.), robustness of statistical methods and nonparametric statistics, pp. 92–99, reidel, dordrecht. radipere, s. & van scheers, l., 2005, ‘investigating whether a lack of marketing and managerial skills is the main cause of business failure in south africa’, south african journal of economic and management sciences 8(4), 402–411. https://doi.org/10.4102/sajems.v8i4.1171 rajaram, r., 2008, ‘a needs analysis of financial management and accounting skills in the sme sector in kwazulu-natal’, master of commerce thesis, school of management, university of kwazulu-natal. rajaram, r. & o‘neill, c., 2009, ‘profit or no profit – does the sme sector really know?’ alternation 16(1), 99–119. robson, c. 1993, real world research, blackwell, oxford. roodt, j., 2005, ‘self-employment and the required skills’, management dynamics 14(4), 18–33. https://hdl.handle.net/10520/ejc69699 schwarze, c.l., 2008, ‘involving the accounting profession in the development of financial management skills of micro-enterprise owners in south africa’, meditari accountancy research 16(2), 39–151. https://doi.org/10.1108/10222529200800017 south africa, 1996, national small business act no. 102, government printer, pretoria. stange, m., barry, a., smyth, j. & olson, k.m., 2016, ‘effects of smiley face scales on visual processing of satisfaction questions in web surveys’, social science computer review 26 october, 1–11. https://doi.org/10.1177/0894439316674166 statistics south africa, 2005, survey of employers and the self-employed, viewed 20 june 2018, from http://www.statssa.gov.za/publications/p0276/p02762005.pdf tankersely, k., 2007, tests that teach: using standardized tests to improve instruction, association for supervision & curriculum development, alexandria. urban, b., 2006, ‘entrepreneurial self-efficacy in a multicultural society: measures and ethnic differences’, sa journal of industrial psychology 32(1), 2–10. https://doi.org/10.4102/sajip.v32i1.221 van eeden, s., viviers, s. & venter, d., 2003, ‘a comparative study of selected problems encountered by small business in the nelson mandela, cape town and egoli metropoles’, management dynamics 12(3), 13–23. https://hdl.handle.net/10520/ejc69664 wilson, f., kickul, j. & marlino, d., 2007, ‘gender, entrepreneurial self-efficacy, and entrepreneurial career intentions: implications for entrepreneurial education’, entrepreneurship theory and practice 31(3), 387–406. https://doi.org/10.1111/j.1540-6520.2007.00179.x wolmarans, h. & meintjies, q., 2015, ‘financial management practices in successful small and medium enterprises (smes)’, southern african journal of entrepreneurship and small business management 7(1), 88–116. https://doi.org/10.4102/sajesbm.v7i1.8 zhao, h., seibert, s.e. & hills, g.e., 2005, ‘the mediating role of self-efficacy in the development of entrepreneurial intentions’, journal of applied psychology 90(6), 1265–1272. http://psycnet.apa.org/doi/10.1037/0021-9010.90.6.1265 zikmund, w.g., babin, b.j., carr, j.c. & griffin, m., 2010, business research methods, 9th edn., south-western cengage learning, mason, ia. sajesbm 14-1_2022_contents.indd http://www.sajesbm.co.za open access table of contents original research proposed framework for innovative business intelligence for competitive advantage in small, medium and micro-organisations in the north west province of south africa godknows gomwe, marius potgieter, alpheaus m. litheko the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a501 | 29 july 2022 original research relationship between personality of owner-managers and performance of internet cafes in free state, south africa nthabeleng tsoai, crispen chipunza the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a485 | 04 august 2022 original research a framework for closed-loop supply chain adoption by small, medium and micro enterprise fashion retailers in south africa chenai muhwati, roger h. salisbury the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a463 | 17 august 2022 original research entrepreneurial intention of matric commerce students: an empirical study mondli h. phetha, akinlawon amoo, jamila k. adam the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a526 | 14 september 2022 original research the impact of the south african business environment on smes trade credit management effectiveness werner h. otto, ilse botha, gideon els the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a563 | 20 october 2022 original research investigating students’ perceptions of the university of kwazulu-natal inqubate-enspire programme in developing student entrepreneurs nomcebo n. cele, mervywn k. williamson the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a522 | 26 october 2022 original research establishing turnaround potential before commencement of formal turnaround proceedings wesley j. rosslyn-smith, marius pretorius the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a590 | 27 october 2022 72 82 94 106 115 126 138 page i of ii table of contents original research a south african study on antecedents of intention to quit amongst employees in bed and breakfast establishments in the free state province lebohang monyaki, crispen chipunza, nhamo mashavira the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a462 | 28 february 2022 original research business model framework for education technology entrepreneurs in south africa adrian von maltitz, elma van der lingen the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a472 | 28 february 2022 original research effects of successful business practices on business performance: evidence from immigrant entrepreneurs in ekurhuleni, south africa tatenda chidau, risimati m. khosa, magaret phillips the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a490 | 31 march 2022 original research assessing immigrant entrepreneur’s contribution to entrepreneurial development: a case of small retailers in the mangaung, free state province lebohang y. moloi, lentswe mosweunyane, crispen chipunza the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a440 | 28 april 2022 original research investigating small, medium and micro-scale enterprises strategic planning techniques in johannesburg central business district post-covid-19 lockdown vukile m. mkhonza, portia p. sifolo the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a483 | 29 april 2022 original research the relationship between small business owners’ practice of effectuation and business growth in gauteng townships michael nyoni, menisha moos the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a453 | 30 may 2022 1 15 26 37 48 61 vol 14, no 1 (2022) issn: 2522-7343 (print) | issn: 2071-3185 (online)the southern african journal of entrepreneurship and small business management http://www.sajesbm.co.za open access table of contentspage ii of ii original research innovative mechanisms to improve access to funding for the black-owned small and medium enterprises in south africa foster baloyi, moses b. khanyile the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a578 | 31 october 2022 original research youth participation in agriculture, accounting for entrepreneurial dimensions johannes i.f. henning, brent d. jammer, henry jordaan the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a461 | 08 november 2022 148 162 original research assessing the impact of policies in sustaining rural small, medium and micro enterprises during covid-19 pandemic in south africa tshililo r. farisani the southern african journal of entrepreneurship and small business management | vol 14, no 1 | a505 | 09 december 2022 reviewer acknowledgement the southern african journal of entrepreneurship and small business management | vol 45, no 1 | a630 | 19 december 2022 176 188 introduction and problem statement 36 the entrepreneurial orientation – performance relationship: a south african small business perspective tony matchaba-hove tony.matchaba-hove@nmmu.ac.za shelley farrington shelley.farrington@nmmu.ac.za department of business management, nelson mandela metropolitan university gary sharp gary.sharp@nmmu.ac.za department of statistics, nelson mandela metropolitan university abstract the high failure rate among small businesses in south africa has created an urgent need to identify strategies that will improve their levels of performance. the purpose of this study was to investigate the relationship between entrepreneurially orientated strategies implemented by small businesses in the eastern cape and the influence of these strategies on business performance. entrepreneurial orientated strategies were assessed in terms of the five dimensions of entrepreneurial orientation, namely innovativeness, proactiveness, competitive aggressiveness, risk-taking and autonomy. business performance was assessed in terms of profitability and growth. a measuring instrument was developed based on valid and reliable items. statistical techniques including descriptive statistics, pearson’s product moment correlations and structural equation modelling, were performed on data gathered from 317 small business enterprises. the results of this study showed that the more small businesses implement the strategies of proactive innovativeness, competitive aggressiveness, and autonomy, and the less risk-taking their strategies are, the more likely their businesses are to be successful. key words: small business, entrepreneurship, entrepreneurial orientation. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 mailto:tony.matchaba-hove@nmmu.ac.za mailto:shelley.farrington@nmmu.ac.za mailto:gary.sharp@nmmu.ac.za 37 introduction and background to the study small businesses play an important role in stimulating economic growth, innovation and competitiveness, as well as in reducing unemployment and alleviating poverty (abedian, blottnitz, coovadia, davel, masilela and rees, 2008:23). they contribute to 30 percent of gross domestic product and account for between 70 and 80 percent of employment in south africa (mahembe, 2012:13-14). despite their importance, the failure rate of small businesses is high (maswangayi, 2012). various reasons are given for this high failure rate, including a lack of finance and knowledge, poor strategic management, a lack of access to finance and poor cash flow management (short, payne, brigham, lumpkin and broberg, 2009; junehed and davidson, 1998; sexton and bowman-upton, 1991). abedian et al. (2008) suggest that failure to anticipate or react to competition, new technology, or other changes in the marketplace are also common reasons why small businesses fail. this failure to react to or anticipate change occurs when the business does not act entrepreneurially (casillas, monero and barbero, 2010:30). the driving force behind the pursuit of entrepreneurial activities is an entrepreneurial orientation (covin and wales, 2011:677). according to miller (1983), “entrepreneurial orientation” (eo) refers to a business that is geared towards innovation in the product-market field by carrying out risky initiatives, and which is the first to develop innovations in a proactive way in an attempt to defeat its competitors. similarly, lumpkin and dess (1996) describe eo as the processes, practices and decisionmaking styles of firms that act entrepreneurially. more specifically an entrepreneurial firm is defined as one that exhibits five entrepreneurial behaviours, namely autonomy, competitive aggressiveness, innovativeness, proactiveness and risktaking (short et al., 2009; lumpkin and dess, 1996; miller, 1983). in recent times there has been an increase in research devoted to the field of entrepreneurship as well as a growing interest in the eo of small businesses, particularly in developing countries (chye, 2012:8; casillas et al., 2010; melia, boulard and peinado, 2007:67). however, conflicting views exist with regard to the relationship between eo and business performance. empirical evidence supporting the view that eo has a positive influence on business performance has started to sajesbm volume 7 (2015) www.sajesbm.co.za article 147 38 grow (chye, 2012; lotz and van der merwe, 2010; junehed and davidsson, 1998; brown, 1996) and various authors (fatoki, 2012; gurbuz and aykol, 2009; wiklund, 1998; zahra and covin, 1995) have reported a positive relationship between eo and performance. however, covin and slevin (1991), as well as sexton and bowmanupton (1991), contend that a lack of systematic empirical evidence exists proving that eo actually leads to improved firm performance. similarly, hughes and morgan (2007:651) contend that eo sometimes, but not always, contributes to improved business performance. hart (1992), for example, suggests possible negative consequences as a result of eo and hypothesises that entrepreneurial strategymaking is likely to lead to lower rather than higher performance because of role imbalances between top management and lower-level workers. simmons (2010:4648) also suggests that eo does not always result in improved performance because of the possible strain that would be placed on a firm to allocate its scarce resources to risky projects. oswald (2008:317-333) believes that a limited understanding exists of why entrepreneurial activities vary from business to business. furthermore, casillas et al. (2010:29-33) assert that eo literature needs to provide more knowledge concerning the conditions under which eo as a whole is related to business performance, as well as how the dimensions of eo influence performance separately. this study attempts to address this need. problem statement and research objectives given the high failure rate of small business in south africa, the need to identify strategies to improve their performance is clearly evident. according to lotz and van der merwe (2010:131), eo is an important path to competitive advantage and improved performance for all types of businesses. several studies have shown a positive relationship between the implementation of entrepreneurially orientated strategies and business performance (chye, 2012; fatoki, 2012; short et al., 2009; wang, 2008; wiklund, 1998; zahra and covin, 1995). this implies that the more small businesses implement entrepreneurially orientated strategies and behave in an entrepreneurially orientated manner, the more successful they are likely to be. very few small businesses do, however, undertake entrepreneurially orientated activities (fairoz, hiobumi and tanaka, 2010:134-140). sajesbm volume 7 (2015) www.sajesbm.co.za article 147 39 the purpose of this study is to investigate the relationship between the eo of small businesses in the eastern cape and their level of business performance. eo will be assessed in terms of five dimensions, namely proactiveness, innovativeness, competitive aggressiveness, autonomy and risk-taking, while business performance will be assessed in terms of profitability, growth and goal achievement. the primary objectives of this study are to establish the level of eo of small businesses in the eastern cape and to establish the influence of this orientation on business performance. entrepreneurial orientation eo should be differentiated from entrepreneurship. entrepreneurship relates to new business formation, and is concerned primarily with the questions "what business do we enter?" and "how do we make the new business succeed?" (richard, barnett, dwyer and chadwick, 2004:258). eo relates to a process that concerns the "methods, practices and decision-making styles that businesses use" (lumpkin and dess, 1996:136). eo is taken from a strategic management perspective, and is concerned with the intentions and actions of the various stakeholders “functioning in a dynamic generative process" in a business (lumpkin and dess, 1996:136). being entrepreneurially orientated encourages the involvement of “multiple management levels” in the design and execution of entrepreneurial strategies (callaghan and venter, 2011:37). eo is primarily a firm-level construct that is closely linked to strategic management and the strategic decision-making process (richard et al., 2004:257; covin and slevin, 1991). according to miller (1983:771), a business’s level of eo can be seen by the extent to which the enterprise innovates, takes risks and acts proactively. miller (1983) specifically identified three dimensions, namely “innovativeness”, “risk-taking”, and “proactiveness” to characterise eo. his original conceptualisation of the threedimensional entrepreneurial construct received much support from covin and slevin (1991), and lumpkin and dess (1996). covin and slevin (1989) and lumpkin and dess (1996), subsequently extended and refined miller’s concept of eo. lumpkin and dess (1996) define eo as a firm that exhibits five entrepreneurial behaviours, sajesbm volume 7 (2015) www.sajesbm.co.za article 147 40 namely innovativeness, proactiveness, risk-taking, competitive aggressiveness and autonomy. innovativeness is concerned with supporting and encouraging new ideas as well as experimentation and creativity which are likely to result in new products, services or processes (lumpkin and dess, 1996; covin and slevin, 1989; miller, 1983). proactiveness is concerned with “first-mover” and other actions aimed at seeking to secure and protect market share, as well as with a forward-looking perspective reflected in actions taken in anticipation of future demand (lumpkin and dess, 1996; covin and slevin, 1989; miller, 1983). a proactive approach implies taking the initiative in an attempt to shape the environment to gain a competitive advantage, and to anticipate competitors’ movements and market needs (lumpkin and dess 1996). a risk-taking propensity denotes the willingness to make investments in projects that have uncertain outcomes (lumpkin and dess, 1996). “competitive aggressiveness” refers to a business’s tendency to “directly and intensely challenge its competitors to achieve entry or improve position to outperform industry rivals in the market place” (lumpkin and dess, 1996:138). autonomy refers to “the independent action of an individual or a team in bringing forth an idea or a vision and carrying it through to completion” (lumpkin and dess, 1996:136). this dimension of eo is instrumental in allowing the other four dimensions to have an impact on the performance of the business; however, it is often very difficult to measure (gurbuz and aykol, 2009). eo is said to consist of the five dimensions described above, which may vary independently, with each having a different influence on business performance (simmons, 2010:16-18; lumpkin and dess, 1996). an enterprise can exhibit relatively high levels of one or more dimensions and, at the same time, relatively low levels of other dimensions. based on the above, eo can be defined as “the dimensions of entrepreneurial behaviour along which an opportunity is pursued as measured through its level of innovativeness, proactiveness, competitive aggressiveness, autonomy and risktaking” (callaghan and venter, 2009:31), these being the key dimensions of eo. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 41 hypothesis development in this study the five dimensions of eo identified in the literature (lumpkin and dess, 1996; miller, 1983) serve as the independent variables, while business performance serves as the dependent variable. it is hypothesised that the existence of these five dimensions of eo in small businesses has a positive influence on their business performance. evidence to support the hypothesised relationships will be presented in the paragraphs that follow. dependent variable according to acs, glaeser, litan and fleming (2008:11-12), consensus does not exist on appropriate measures for small business performance. mayer-haug, read, brinckmann, dew and grinchnik (2013:1255) assert that identifying the true nature of business performance is a challenging assignment and that “the choice of performance measures is a critical issue in research”. earlier research has mainly focused on variables for which information is easy to gather (cooper, 1995). several researchers advocate growth as the most important performance measure for small businesses (wiklund and shepherd, 2005:80; brown, 1996; tsai, macmillan and low, 1991). wiklund and shepherd (2005:80) contend that growth as a measure of performance may be more accurate and accessible than accounting measures of financial performance. d'souza and mcdougal (1989) believe that sales growth is the best measure of growth. sales growth reflects both shortand long-term changes in firms, and is easily obtainable. these authors, as well as barkham, gudgin, hart and hanvey (1996), maintain that entrepreneurs consider sales growth to be the most common indicator of good performance. hosseini and eskandari (2013:206) state that firm growth in terms of number of employees, as well as the number of offices is a good measure of business performance. mayer-haug et al. (2013:1255-1256) define performance in terms of different categories, namely the growth of the business, the number of employees, the profitability of the business, other financial performance measures as well as several qualitative measures of performance. these qualitative measures of performance include adhering to the budget, firm survival, market share, human resource management knowledge acquired and overall performance versus competitors. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 42 an alternative view considers performance as being multi-dimensional in nature, and suggests that it is advantageous to integrate different dimensions of performance in empirical studies (wiklund and shepherd, 2005:80; lumpkin and dess, 1996; cameron, 1978). it is possible to regard financial performance and growth performance as different aspects of performance, as each will reveal important information (zahra, 1995). therefore it can be inferred that taken together, growth and financial performance will give a richer description of the actual performance of a firm than each does separately. for the purpose of this study, business performance will be measured in terms of both growth and financial indicators and refers to the business experiencing growth in employee numbers, profits and turnover, as being profitable and financially secure, as well as achieving its planned financial goals and growth rate. selfreported measures of performance were considered acceptable for this study as it is in line with other studies on eo (hosseini and eskandari, 2013; covin and lumpkin, 2011; wiklund and shepherd, 2005; independent variables several studies (mahmood and hanafi, 2013; lotz and van der merwe, 2010; gurbuz and aykol, 2009; short et al., 2009) have investigated the relationship between eo and business performance. the seminal studies (lumpkin and dess, 1996; covin and slevin, 1989; miller, 1983) investigating eo made use of an overall measure of eo to show a relationship between eo and business performance. raunch, wiklund, lumpkin, and frese (2009:767) found 37 other studies that considered eo a “one-dimensional” construct, while 14 more recent studies have viewed the concept of eo as a multi-dimensional construct. viewing the concept of eo as one-dimensional means that the various dimensions of eo will affect business performance in the same way, while viewing the concept as multi-dimensional involves analysing how the different dimensions individually relate to business performance (lim, 2009:3921; raunch et al., 2009:764,767). the majority of studies on eo focus on the relationship between eo as an integrated one-dimensional construct and overall business performance, while few studies sajesbm volume 7 (2015) www.sajesbm.co.za article 147 43 focus on the individual dimensions of eo and their individual influence on business performance. lotz and van der merwe (2010:131) report a positive relationship between eo and business performance, and conclude that eo plays an important part in the improved performance of a business. the thrust of the argument for the positive influence of eo on business performance is related to the first-mover advantages, and the tendency to take advantage of emerging opportunities implied by eo (fairoz et al., 2010:138). mahmood and hanafi (2013:86) also report that eo has a positive influence on small business performance. they conclude that eo impacts the firm’s ability to gain a competitive advantage, which in turn enhances its business performance. according to zahra and covin (1995), businesses with a high level of eo can target niche market segments and set the trend in the market ahead of their competitors. these businesses monitor market changes and respond quickly to take advantage of emerging opportunities. innovation keeps them ahead of their competitors, and as a result of this competitive advantage, financial results improve. proactiveness gives firms the ability to present new products and/or services to the market ahead of competitors, which also gives them a competitive advantage (gurbuz and aykol, 2009: 321-336). tsai et al. (1991) suggest that the influence of eo on performance is long-term, rather than short-term in nature. proactive firms can introduce new goods and services ahead of their competitors. as first-movers they can control access to the market by dominating distribution channels. by introducing their products or services ahead of competitors, businesses can, if successful, establish industry standards. these actions should help first-movers to acquire sustained rather than temporary high performances (zahra and covin, 1995). chye (2012:167-169) reports that the association between eo and business performance is “significant in strength and positive in direction”. this leads the author to conclude that the eo-performance relationship is not only confirmed as being strongly significant, but is also tested as being sustainable over an extended period. fatoki (2012:129) also observes a positive association between eo and the business performance of firms in south africa and states that the adoption of sajesbm volume 7 (2015) www.sajesbm.co.za article 147 44 entrepreneurially orientated activities can provide a method to reduce the weak performance and high failure rate of small businesses. empirical evidence exists supporting a positive relationship between entrepreneurial activities in firms and financial performance (morris and sexton, 1996:8), and this relationship appears to continuously strengthen over time (zahra, 1995:242). to cope with business challenges, organisations are increasingly turning to entrepreneurship as a means of innovation, growth and strategic renewal (bhardwaj, agrawal and momaya, 2007:131). continuous innovation and an ability to compete effectively in international markets are two skills that are expected to increasingly influence performance in the 21st century's global economy (kuratko and welsch, 2001: 347). chye (2012:77) argues that most literature on eo and firm performance is meant for larger enterprises or corporate entrepreneurship research. the author adds that there are “inadequate studies on the relationship between eo and the performance of small businesses”, particularly research on the impact of the individual dimensions such as innovativeness, proactiveness and risk-taking on small business performance. most studies view eo as a composite construct consisting of different independent but related dimensions (casillas et al., 2010:28; lumpkin and dess, 1996). this implies that a business can show high levels of eo in some dimensions but not necessarily in all of them (casillas et al., 2010:28) and each dimension of eo can be related to performance in a different way (casillas et al., 2010:29). according to casillas et al. (2010:29), this independence of the eo dimensions suggests the need to differentiate the dimensions and investigate them individually. when examining the results of studies done on the influence of individual dimensions of eo on business performance, differences can be seen regarding which variables are found to be statistically significant by different researchers. hughes and morgan (2007:636) found that of the five dimensions, namely innovativeness, proactiveness, competitive aggressiveness, risk-taking and autonomy, only innovativeness and proactiveness had a significant influence on business performance. this finding led the authors to suggest that not all the eo dimensions will lead to an improvement in performance. based on the results of their study among 200 small and medium-sized finnish businesses, soininen, sajesbm volume 7 (2015) www.sajesbm.co.za article 147 45 puumalainen, sjögrén and syrjä (2010:3-20) conclude that the more innovative and proactive the business is, the more successful it will become; while the more risktaking activities it adopts, the lower the profitability of the business will be, except in a time of recession. studies conducted by lim (2009:3925-3926) find competitive aggressiveness to be the most significant dimension positively influencing business performance. wang (2008:12) consider innovativeness to be the most significant positive influential dimension on perceived business performance relative to proactiveness and competitive aggressiveness. casillas et al. (2010:38) also report innovativeness to have a significantly positive influence on the growth performance of the businesses participating in their study. simmons’s (2010) results differ from those of casillas et al. (2010), lim (2009), wang (2008) and hughes and morgan (2007). he finds risktaking to be the most significant dimension of eo influencing business performance, while innovativeness, proactiveness and competitive aggressiveness are found to be statistically insignificant. these differences in findings have led researchers (hyunjoong, 2012:253; simmons, 2010; lim, 2009; wang, 2008; hughes and morgan, 2007; lumpkin and dess, 1996) to believe that the influence of the individual dimensions of eo on business performance cannot be universalistic and that a multi-dimensional approach appears to be more realistic. it is for this reason that in the present study, eo is viewed as a multi-dimensional construct, and the influence of each dimension on the dependent variable is individually investigated. against this background, the following directional hypotheses have been formulated and will be subjected to empirical testing: h1: there is a positive relationship between the level of innovativeness and business performance. h2: there is a positive relationship between the level of proactiveness and business performance. h3: there is a positive relationship between the level of risk-taking and business performance. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 46 h4: there is a positive relationship between the level of competitive aggressiveness and business performance. h5: there is a positive relationship between the level of autonomy and business performance. research methodology development of the measuring instrument a survey was used to collect the raw data on the dimensions of eo and on business performance. a measuring instrument was developed for this purpose. the independent and dependent variables investigated in this study were operationalised using reliable and valid items sourced from previous empirical studies (eybers, 2010; lotz and van der merwe, 2010; farrington, 2009; short et al., 2009; stam and elfering, 2008; quince and whitaker, 2003; lumpkin and dess, 1996). where necessary, the items were rephrased to make them more suitable for the present study. the measuring instrument consisted of three sections. sections a and b contained questions aimed at obtaining demographic information about the respondents as well as information about the small business. section c contained 46 randomly sequenced statements assessing the five dimensions of eo and business performance. using a five-point likert-type scale ranging from strongly disagree (1) to strongly agree (5), respondents were requested to indicate the extent of their agreement with each statement. sampling and data collection the population for this study consisted of small businesses in the eastern cape. for the purpose of this study a small business is a business which has been in operation for at least one year and does not employ more than 50 full-time employees. to date, no national database or list of small businesses in south africa or in the eastern cape exists. as a result, a convenience sampling technique was employed. questionnaires were distributed by field workers and collected upon completion. each questionnaire was accompanied by a covering letter, and respondents were guaranteed that their response would be treated with confidentiality. the survey yielded 317 usable questionnaires. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 47 statistical analyses the data collected from the 317 usable questionnaires were subjected to various statistical analyses using the computer programmes statistica version 10 and amos version 19. an exploratory factor analysis was undertaken and cronbach’s alpha coefficients were calculated to assess the discriminant validity and reliability of the measuring instrument respectively. descriptive statistics were calculated to summarise the sample data and correlation coefficients to establish the relationships between the factors under investigation. the hypothesised relationships were assessed by means of structural equation modelling (sem). sample description the majority of the respondents who participated in the study were male (76.97%), while 23.03% were female. most respondents were aged between 40 and 49 years (36.28%), followed by respondents between the ages of 50 and 59 years (25.24%) and between the ages of 30 and 39 years (24.59%). the majority of respondents were either white (58.36%) or black (24.29%). most of the respondents (66.25%) indicated that they were in possession of a post-matric qualification. the respondents’ small businesses operated predominantly in the service (45.74%) and wholesale/retail (22.71%) industries. most respondents indicated employing between 5 and 10 employees (37.85%) or between 1 and 4 employees (25.55%) in their businesses. the majority indicated that their business had been running for 10 years or less (60.57%). discriminant validity and reliability results in order to determine the construct validity of the measuring instrument used in this study, an exploratory factor analysis (efa) was conducted before conducting the sem analysis. in identifying the factors to extract for the model, the percentage of variance explained and the individual factor loadings were considered. the factor structure resulting from the efa is reported in annexure 2. five factors were extracted, explaining 46.46% of the variance in the data. items with factor loadings of ≥ 0.5 (hair, black, babin, anderson and tatham, 2006) and those only loading onto a single factor were considered significant and thus considered for sajesbm volume 7 (2015) www.sajesbm.co.za article 147 48 further statistical analysis. the factors extracted could be identified as the theoretical dimensions of business performance, proactive innovativeness, autonomy, risktaking and competitive aggressiveness. the minimum and maximum factor loadings for each of the aforementioned dimensions are reported in table 1. according to the literature (miller, 2011; lumpkin and dess, 1996; covin and slevin, 1989; miller, 1983:771), innovativeness and proactiveness are considered two separate dimensions of eo. these constructs were measured using eight and six items respectively. however, the results of the efa revealed that several of the items originally intended to measure these two constructs, loaded together onto one factor. the factor was named proactive innovativeness, and hypotheses h1 and h2 were modified to reflect this change. five of the six items measuring proactiveness and four of the eight items measuring innovativeness loaded onto proactive innovativeness. other studies (piirala, 2012:91-92) have also reported that items measuring these two different constructs have loaded together. eight of the nine items intended to measure autonomy and six of the seven items intended to measure competitive aggressiveness loaded as expected. the item risk3 also loaded onto the competitive aggressiveness construct. of the seven items originally intended to measure risk-taking, three items loaded together as expected. for the purpose of this study cronbach’s alpha (ca) coefficients of .7 (lehman, 2005:145; nunnally and bernstein, 1994) indicate a scale to be reliable. table 1 summarises the operational definitions of the factors and provides details concerning the validity and reliability of the scales measuring these factors. from table 1 it can been seen that the scales measuring proactive innovativeness, autonomy, competitive aggressiveness, risk-taking and business performance all report factors loading of greater ≥ 0.5 and ca coefficients of greater than .7. evidence of acceptable validity and reliability is thus provided. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 49 table 1 operational definitions and validity and reliability of results operationalisation of factors items* factor loadings ca proactive innovativeness refers to the business emphasising innovation and continuous improvement; regularly searching for, making changes to and introducing new processes, products and services; encouraging creativity and experimentation; and continuously searching for and pursuing new opportunities. 9 max: 0.736 min: 0.565 .887 risk-taking refers to the business having a preference for and a willingness to commit to high-risk, high-return projects, and encouraging risk-taking when it comes to new ideas. 3 max: 0.775 min: 0.555 .754 competitive aggressiveness refers to the business being aggressive and intensely competitive; being offensive in overcoming threats posed by competitors and initiating actions to which competitors respond; striving for firstmover advantage and being bold when faced with potential opportunities. 6 max: 0.676 min: 0.549 .826 autonomy refers to the business allowing employees to work independently and without continual supervision, to make decisions; and to be flexible and creative in finding solutions. 8 max: 0.764 min: 0.549 .829 business performance refers to the business experiencing growth in profits and turnover, being profitable and financially secure, and achieving its planned financial goals and growth rate. 7 max: 0.818 min: 0.581 .876 * see annexure 1 for a full list of items retained for the statistical analysis as a result of the efa, the five dimensions (independent variables) of eo identified in the literature were reduced to four. the dependent variable business performance remained unchanged. the revised directional hypotheses to test the proposed relationships are listed below: h1: there is a positive relationship between the level of proactive innovativeness and business performance. h2: there is a positive relationship between the level of risk-taking and business performance. h3: there is a positive relationship between the level of competitive aggressiveness and business performance. h4: there is a positive relationship between the level of autonomy and business performance. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 50 descriptive statistics and correlation coefficients descriptive statistics relating to the sample data were calculated and are summarised in table 2. for the sake of brevity and for discussion purposes, response categories on the 5-point likert type scale were categorised as disagree (1.0-2.6), neutral (2.7-3.4) and agree (3.5-5.0). table 2 descriptive statistics and correlations between factors factor x sd 1 2 3 4 5 1 proactive innovativeness 4.118 0.715 1.000 0.359 0.572 0.390 0.333 2 autonomy 3.035 1.004 0.359 1.000 0.340 0.435 0.214 3 competitive aggressiveness 3.868 0.708 0.572 0.340 1.000 0.342 0.354 4 risk-taking 3.716 0.787 0.390 0.435 0.342 1.000 0.085 5 business performance 4.054 0.333 0.333 0.214 0.354 0.085 1.000 (bold = p<0.05) with regard to the dependent variable business performance, a mean score of 4.054 was observed. most of the respondents (63.41%) agreed that their businesses had experienced growth in profits and turnover, were profitable and financially secure, and were achieving their planned financial goals and growth rate. proactive innovativeness returned a mean score of 4.118. the majority of the respondents (63.09%) agreed that they emphasised innovation and continuous improvement in their businesses; they regularly sought out, made changes to and introduced new processes, products and services; they encouraged creativity and experimentation, and they continuously sought and pursued new opportunities. for risk-taking a mean score of 3.035 was reported. most of the respondents disagreed with (40.38%) or were neutral (34.07%) about the statements measuring risk-taking. this means that the majority of small business owners participating in this study were not concerned with having a preference for or a willingness to commit to high-risk, high-return projects or to encourage risk-taking with new ideas. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 51 with regard to the factor competitive aggressiveness, a mean score of 3.868 was reported. most of the respondents agreed (49.53%) or were neutral (42.59%) when responding to the statements measuring competitive aggressiveness. only half of the respondents agreed that their businesses could be described as aggressive and intensely competitive, offensive in overcoming threats posed by competitors, initiating actions to which competitors responded, striving for first-mover advantage, and being bold when faced with potential opportunities. autonomy returned a mean score of 3.716. most respondents (44.80%) agreed with the statements measuring autonomy. slightly fewer (41.01%) respondents were neutral with regard to these statements. this finding suggests that the majority of respondents (55%) either did not allow or were neutral regarding allowing employees to work independently and without continual supervision, to make decisions or to be flexible and creative in finding solutions. in addition to the descriptive results, pearson’s product moment correlations were used to assess the associations between the variables under investigation in this study (see table 2). the independent variables proactive innovativeness, autonomy and competitive aggressiveness were all significantly and positively correlated (moderate to weak associations) with the dependent variable business performance. no significant correlation was reported between risk-taking and business performance. furthermore, the independent variables were all positively and significantly correlated with each other. the highest correlation was observed between proactive innovativeness and competitive aggressiveness. structural equation modelling structural equation modelling (sem) was the major statistical technique used to assess the hypothesised relationships between the dimensions of eo investigated in this study and business performance. the sem analysis produced the structural model (figure 1) with 5 parameters, 39 estimate variances and 6 covariances as well as 38 point estimates. in order to identify the goodness-of-fit indices, the model was examined to determine whether the measurement and structural model indicated an acceptable approximation of the data. the goodness-of-fit indices showed that a cmin/df value of less than 3 (2.473) was reported, which suggests that there is an sajesbm volume 7 (2015) www.sajesbm.co.za article 147 52 acceptable fit between the data and the model. the rmsea figure of 0.068 reported was between 0.05 and 0.08 (hair et al., 2006:748), which suggests a relatively good fit between the data and the model. although the cfi value of 0.841 reported was lower than the recommended value of 0.9 (hair et al., 2006:753), it was close to this value. therefore although the model does not fit the data perfectly, based on the cmin/df and rmsea fit indices it can be described as having an acceptable or reasonable fit. although the results of the efa have already proved the scales measuring the factors under investigation to be valid, this analysis was confirmed by means of the cfa component of sem. the results of the cfa produced by the sem analysis are summarised in annexure 3, where it can be seen that the items loaded onto the various factors as expected, and all reported factor loadings of greater than 0.5. the results of the cfa thus confirm the results of the efa reported. the validity of the scales were thus again confirmed. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 53 figure 1 structural model sajesbm volume 7 (2015) www.sajesbm.co.za article 147 54 the results of the sem analysis are summarised in table 3 (the parameter estimates and p-values). table 3 structural model parameter estimates and p-values estimate s.e. c.r. p performance < proactive innovativeness 0.167 0.096 1.743 0.081* performance < competitive aggressiveness 0.372 0.113 3.292 *** performance < risk taking -0.133 0.058 -2.277 0.023** performance < autonomy 0.136 0.068 1.99 0.047** ***p<0.001; **p<0.05; p<0.10 it is evident from table 3 that significant (p<0.001 to p<0.1) relationships were reported between all the dimensions of eo (independent variables) and business performance. except for risk-taking, the estimated parameters are all positive. although the relationship between proactive innovativeness and business performance is only significant at the 10% level (p = 0.081), the finding is still considered to be of importance. proactive innovativeness is reported to have a positive influence on business performance (estimate = 0.167; p <0.1). of the four dimensions of eo investigated in this study, competitive aggressiveness reported the greatest influence on business performance (estimate = 0.372; p <0.001). a significant positive relationship was reported. the relationship observed between risk-taking and business performance is significant at the 5% level (p = 0.023) and is negative (estimate = -0.133). autonomy reported the lowest influence on business performance (estimate = 0.136; p = 0.047). despite this low estimate value, the finding is still considered to be important. against this background, support is found for hypotheses h1, h3 and h4 but not for hypothesis h2. discussions and managerial implications the primary objective of the study was to establish the level of eo of small businesses in the eastern cape, and to establish the influence of this orientation on business performance. based on these findings, several managerial implications are suggested. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 55 when assessing the levels of eo of small businesses in the eastern cape, it can be concluded that the levels of competitive aggressiveness, risk-taking and autonomy are low, but higher for proactive innovativeness. although 63% of respondents agreed that their businesses had experienced growth in profits and turnover, were profitable and financially secure, and were achieving their planned financial goals and growth rate, the findings suggest that if they were to increase their levels of competitive aggressiveness and autonomy, this percentage could be higher. proactive innovativeness is reported as having a significant positive influence on business performance. this finding implies that the more a business emphasises innovation and continuous improvement; regularly searches for and makes changes; introduces new processes, products and services; encourages creativity and experimentation, and continuously searches for and pursues new opportunities, the more likely it is to be successful. this finding corresponds with that reported in previous studies (fairoz et al., 2010; lotz and van der merwe, 2010; lumpkin et al., 1996) that a positive relationship exists between both innovativeness and proactiveness, and business performance. according to li, tang, tang, marino and zhang (2006), proactiveness and innovativeness are particularly crucial for new small businesses to succeed, because they are at the start-up phase – the phase when firms are most limited by resources. small business owners need to identify and understand how they can be more innovative and proactive in their particular business environments. this will require them to continuously seek out changes and opportunities in business contexts; to take calculated risks in order to take advantage of these changes and opportunities; and to audit themselves to identify their strengths and weaknesses.therefore, small businesses need to formulate innovative ways to use those scarce resources, and proactively seek opportunities to gain a foothold in the market. small businesses who implement proactive innovativeness are opportunity-seeking and forward-looking, and tend to introduce new products and services ahead of their competitors, acting in anticipation of future demand. of the four dimensions of eo investigated in this study, competitive aggressiveness reported the greatest significant positive influence on business performance. in other sajesbm volume 7 (2015) www.sajesbm.co.za article 147 56 words, the more a small business acts in an aggressive, intensely competitive manner, is offensive in overcoming threats posed by competitors, initiates actions to which competitors respond, strives for first-mover advantage and is bold when facing potential opportunities, the more likely it is to be successful. this positive influence corresponds with the findings reported in other studies (lotz and van der merwe, 2010; short et al., 2009; gurbuz and aykol, 2009). lim (2009:3925-3926) also find competitive aggressiveness to be the most significant dimension positively influencing business performance. small businesses should not avoid competitive encounters with other businesses, but should rather actively assume competitive stances through aggressive advertising and low-cost leadership, so as to outperform those businesses with a low level of competitive aggressiveness (lim, 2009:3926). by adopting this approach, small businesses will be able to take advantage of emerging opportunities and to actively respond to the actions of competitors. small businesses need to adopt an aggressive mind-set to gain a competitive advantage over their competitors. this could be achieved by implementing strategies that promote competitive aggressiveness, such as keeping prices as low as possible and sacrificing profitability to gain an increased market share. enterprises could also spend aggressively to obtain manufacturing capacity, in order to enable them to fully take advantage of any opportunities that may arise from serving new market needs. in this study the relationship observed between risk-taking and business performance was found to be significant but negative. this finding implies that the less small businesses have a preference for and a willingness to commit to high-risk, high-return projects, and the less they encourage taking risks with new ideas, the more likely the business is to be successful. this finding concurs with that of simmons (2010) who also found a negative relationship between risk-taking and business performance. soininen et al. (2010:3-20) conclude that the more risk-taking activities a business adopts, the lower the profitability of the business will be, except in a time of recession. the finding also partly agrees with that of lumpkin, wales and ensley (2006), who argue that pursuing “continuously high levels of risk-taking beyond the venture’s early youth will become detrimental to the venture’s performance.” the findings of this study and the aforementioned studies, however, sajesbm volume 7 (2015) www.sajesbm.co.za article 147 57 contradict many others who report a positive relationship between risk-taking and performance (lotz and van der merwe, 2010; short et al., 2009; gurbuz and aykol, 2009). according to lumpkin and dess (1996), in order for a small business to be competitively aggressive and proactively innovative, it must exhibit some risk-taking behaviour. small businesses that are bold and aggressive in pursuing opportunities and which make large resource commitments to risky projects to obtain high returns, are said to exhibit risk-taking. therefore, calculated risks rather than excessive risktaking should be taken by small businesses. by taking calculated risks, opportunities in the business environment can be exploited, even when their outcomes are uncertain. autonomy reported the lowest influence on business performance. despite this low influence on performance, the finding is still significant, and implies that the more a business allows its employees to make decisions, work independently and without continual supervision, and to be flexible and creative in finding solutions, the more likely the business is to be successful. this finding corresponds with the findings of several studies (raunch et al., 2009; lumpkin and dess, 2005:150) who also report autonomy as key to allowing the other dimensions of eo to have an impact on the performance of the business. the findings did, however, contradict hughes and morgan (2007:636), as well as soininen et al. (2010:15), who do not find autonomy to have a significant influence on business performance. it is argued that businesses cannot function entrepreneurially without facilitating autonomy in their structures (coulthard, 2007:36). small businesses should promote and encourage independent thought and allow their employees to make decisions and proceed with actions independently, without any restrictions. contributions of the study this study has added to the theoretical and empirical body of entrepreneurship and eo literature by investigating the relationships between the dimensions of eo and performance in the context of the south african small business sector. the study has therefore broadened the knowledge of eo as well as the relationship between eo sajesbm volume 7 (2015) www.sajesbm.co.za article 147 58 and performance in the small business context. furthermore, it has addressed some of the gaps in the current literature in terms of the impact of eo on firm performance in developing countries, particularly in south africa. by developing a measuring instrument suitable for measuring the individual dimensions of eo in the south african context, this study has added to the discussion and research on suitable scales to measure the various dimensions of eo. different studies have made use of different scales, resulting in different results. this study has shown that the scales and their interpretation may be influenced by the context in which they are administered. most studies on the relationship between eo and performance have investigated eo as a one-dimensional construct. this study has investigated the influence of each dimension of eo individually on the performance of a small business. the study has thus added to the body of knowledge of eo as a multi-dimensional concept. most studies focus on miller’s (1983) three dimensions, namely innovativeness, proactiveness and risk-taking, whereas this study has focused on lumpkin and dress’s (1996) five dimensions. in this study, the items used to measure the dimensions proactiveness and innovativeness were perceived by respondents as measuring the same thing. as such, these dimensions of eo could not be subjected to further testing separately, and a new variable (proactive innovativeness) was formulated. this could imply that small businesses are unable to differentiate between being innovative and being proactive, and consider the separate constructs to mean the same thing. this finding contributes to the debate on whether proactiveness and innovativeness are in essence separate constructs or not. as far as can be established, no other studies have made use of sem to investigate the relationships between the individual dimensions of eo and performance in the south african context. this study has made a contribution to this field of study in that a more sophisticated multivariate statistical technique has been adopted than has been used to date. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 59 establishing which dimensions of eo influence the performance of small businesses has provided small business owners, policy-makers and researchers with greater insights into the role of entrepreneurial behaviour in small business performance. from these insights, steps and measures can be taken by small business owners to adapt and improve their processes, practices and decision-making styles in order to improve their chances of success and long-term survival. limitations and future research despite the contributions of this study, several limitations should be noted. firstly, the use of convenience sampling introduces a source of potential bias into the study. the findings can thus not be generalised to the entire small business population. furthermore, this study is limited to small businesses in the eastern cape, and generalising the results to all south african small business may not be appropriate. future studies should attempt to identify a database from which probability samples can be drawn, and include small businesses throughout south africa. the demographic profile of the respondents was also a factor to consider in this study. the majority of the respondents were from a single ethnic group, and were therefore not representative of all ethnic groups in the country. future studies investigating the influence of eo should attempt to obtain a more balanced representation of the different ethnic groups. possibly a comparison could be done to observe the differences in the levels of entrepreneurial orientation among small business owners from different ethnic groups. the responses in this study were based on the individual responses of small business owners, and were thus based on personal perceptions and on one-time self-report measures. self-reporting does not necessarily lead to the problem of common method bias, and in many cases the bias may be so small that it does not jeopardise the validity of the results (meade, watson and kroustalis, 2007). common method bias could, however, be a factor that has influenced the results of this study. this study investigated the entrepreneurial orientation of small businesses by applying the model of lumpkin and dess (1996). the level of innovativeness, proactiveness, risk-taking, competitive aggressiveness and autonomy exhibited by sajesbm volume 7 (2015) www.sajesbm.co.za article 147 60 small businesses was investigated. existing items found valid and reliable in previous studies, were used for this purpose. however, the items used to measure the variables proactiveness and innovativeness were perceived by respondents as measuring the same construct. in future studies, researchers should develop scales that more accurately measure proactiveness and innovativeness as individual constructs, so that these two constructs are clearly distinguishable from each other. several internal and external factors (both moderating and mediating variables) have been shown to influence the relationship between eo and performance (covin and lumpkin, 2011; casillas, 2010:29). these moderating and mediating variables have not been considered in this study. differences in eo dimensions could be explained by other aspects such as firm size and industry, and even environmental characteristics (short et al., 2009:18). these characteristics have also not been accounted for in this study. future studies should include a wider range of business types and sizes. despite several limitations, this study has provided insights into the eo of small businesses in the eastern cape, as well as the influence of implementing entrepreneurially orientated strategies on business performance. this study adds to the body of entrepreneurship knowledge by providing a greater understanding of the eo–performance relationship. references abedian, m., blottnitz, c., coovadia, g., davel, j., masilela, s. & rees, s. 2008. sme’ access to finance in south africa. [online] available: http://www.treasury.gov.za/publications/other/access%20to%20finance%20in%20s outh%20africa%20-%20a%20suppl%20regulatory%20review.pdf (accessed 20 march 2011). acs, z., glaeser, r., litan, l. & fleming, s. 2008. entrepreneurship and urban success. kansas city: ewing marion. barkham, r., gudgin, r., hart, m. & hanvey, e. 1996. the determinants of small firm growth: an inter-regional study in the uk. [online] available: http://www.environment-and-planning.com/abstract.cgi?id=c170511 (accessed 30 june 2011). sajesbm volume 7 (2015) www.sajesbm.co.za article 147 61 bhardwaj, b.r., agrawal, s. & momaya, s.k. 2007. corporate entrepreneurship model: a source of competitiveness. iimb management review, 19(2):131-145. brown, t. 1996. resource orientation, entrepreneurial orientation and growth: how the perception of resource availability affects small firm growth. unpublished doctoral dissertation, rutgers university, new jersey. callaghan, c. & venter, r. 2011. an investigation of the entrepreneurial orientation, context and entrepreneurial performance of inner-city johannesburg street traders. south african business review, 15(1):28-48. casillas, j. c., moreno, a.m. & barbero, j.l. 2010. a configurational approach of the relationship between entrepreneurial orientation and growth of family firms. family business review, 23(1): 27-44. chye, l. t. 2012. entrepreneurial orientation and managerial competence: are they complementary or contradictory to sme performance in malaysia. unpublished doctoral thesis, university of newcastle, newcastle. coulthard, m. 2007. the role of entrepreneurial orientation on firm performance and the potential influence of relational dynamism. journal of global business and technology, 3(1):29-39. covin, j. g. & lumpkin, g. t. 2011. entrepreneurial orientation theory and research: reflections on a needed construct. entrepreneurship theory and practice, 1042(1):855-872 covin, j. g. & miles, m. p. 1999. corporate entrepreneurship and the pursuit of competitive advantage. entrepreneurship theory and practice, 23(1):47-64. covin, j. g. & wales, w. 2011. the measurement of entrepreneurial orientation. entrepreneurship theory and practice, 36(4):677-702. covin, j.g. & slevin, d.p. 1991. the influence of organisational structure on the utility of an entrepreneurial top management style. journal of management studies, 25(3):217-234. d'souza, d. e. & mcdougall, p. p. 1989. third world joint venturing: a strategic option for the smaller firm. entrepreneurship theory and practice, 13(4):19-33. dess & lumpkin in floyd, s.w., roos, j., jacobs, c.d. & kellermanns, p. 2005. innovating strategy process. blackwell: oxford. eybers, c. 2010. copreneurships in south african small and medium-sized family businesses. unpublished master’s thesis, nelson mandela metropolitan university, port elizabeth. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 62 fairoz, f., hirobumi, t. & tanaka, y. 2010. entrepreneurial orientation and business performance of small and medium scale enterprises of hambantota district sri lanka. asian social science, 6(3):34-46. farrington, s.m. 2009. sibling partnership in south african small and medium-sized family businesses. unpublished doctoral thesis, nelson mandela metropolitan university, port elizabeth. fatoki, o. 2011. the impact of firm and entrepreneurial characteristics on access to debt finance by smes in king williams town, south africa. international journal of business and management, 6(8):170-180. gürbüz, g. & aykol, s. 2009. entrepreneurial management, entrepreneurial orientation and turkish small firm growth. management research news. 32(4):321336. hair, j.f., black, w.c., babin, j.b., anderson, r.e. & tatham, r.l. 2006. multivariate data analysis. 6th edition. new jersey: prentice hall. hart, s. l. 1992. an integrative framework for strategy-making processes. academy of management review, 17(2):327-351. hosseini, m. & eskandaari, f. 2013. investigating entrepreneurial orientation and firm performance in the iranian agriculture context. journal of agricultural science and technology, 15(1):203-214. hughes, m. & morgan, r. e. 2007. deconstructing the relationship between entrepreneurial orientation and business performance at the embryonic stage of firm growth. industrial marketing management, 36(1):651–661. junehed, j. & davidsson, p. 1998. small firms and export success: development and empirical test of an integrated model. 10th nordic conference on small business research, vaxjo, sweden, june 14-16. lehman, a. 2005. jmp start statistics: a guide to statistics and data analysis using jmp and jmp in software. 3rd edition. cary: sas institute. li, q., tang, j., tang, z., marino, l. d. & zhang, y. 2008. exploring an inverted u‐shape relationship between entrepreneurial orientation and performance in chinese ventures. entrepreneurship theory and practice, 32(1):219-239. lim, s. 2009. entrepreneurial orientation and the performance of service business. service business, 3(1):1-13. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 63 lotz, w. & van der merwe, a. 2010. an assessment of entrepreneurial orientation in agribusiness. entrepreneurship: fourth international business conference. victoria falls, zambia, october 13-14. lumpkin, g. t. & dess, g. g. 1996. clarifying the entrepreneurial orientation construct and linking it to performance. academy of management review, 21(1):135172. lumpkin, g. t., wales, w. & ensley, m.d. 2006. entrepreneurial orientation effects on new venture performance: the moderating role of venture age. academy of management proceedings. 6(1). mahembe, e. 2012. literature review on small and medium enterprises’ access to credit and support in south africa. [online] available: http://www.ncr.org.za/pdfs/literature%20review%20on%20sme%20access%20to% 20credit%20in%20south%20africa_final%20report_ncr_dec%202011.pdf mahmood, r. & hanafi, n. 2013. entrepreneurial orientation and business performance of women-owned small and medium enterprises in malaysia: competitive advantage as a mediator. international journal of business and social science. 4(1):82-87. maswangayi, n. 2012. new businesses at a record low. [online]. available: http://www.peherald.com/news/article/5294 (accessed 19 march 2012). mayer-haug, k., read, s., brinckmann, j., dew, n. & grichnik, d. 2013. entrepreneurial talent and venture performance: a meta-analytical investigation of smes. research policy, 42(1):1251-1273. meade, a. w., watson, a. m., & kroustalis, c. m. 2007, assessing common methods bias in organizational research. paper presented at the 22nd annual meeting of the society for industrial and organizational psychology, new york. melia, r. boulard, m. & peinando, s. 2007. entrepreneurial orientation and international commitiment. journal of international entrepreneurship, 5(1):65-83. miller, d. 2011. miller (1983) revisited: a reflection on eo research and some suggestions for future research. entrepreneurship theory and practice, 35(5):873894. miller, d. 1983. the correlates of entrepreneurship in three types of firms. management science, 29(1):770-791. moreno, a. & casillas, j. 2008. entrepreneurial orientation and growth of smes: a causal model. entrepreneurship: theory and practice, 32(3): 507-528. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 http://www.entrepreneur.com/tradejournals/article/59700620_4.html 64 morris, m. h. & d. l. sexton. 1996. the concept of entrepreneurial intensity: implications for company performance. journal of business research, 36(1):5-13. nunnally, j.c. & bernstein, i.h. 1994. psychometric theory. 3rd edition. new york: mcgraw-hill. oswald, s. 2008. a new perspective on the development model for family businesses. family business review, 19(1):317-333. piirala, p. 2012. the impact of entrepreneurial orientation on firm performance: a comparative study of finnish and german smes. unpublished master’s thesis, aalto university school of business, helsinki. quince, t. & whittaker, h. 2003. entrepreneurial orientation and entrepreneurs’ intensions and objectives. a cbr research program 3 on small and medium-sized enterprises, working paper no. 271, esrc centre for business research, university of cambridge. raunch, a., wiklund, j., lumpkin, g.t. & frese, m. 2009. entrepreneurial orientation and business performance: an assessment of past research and suggestions for the future. entrepreneurship theory and practice, 33(3):761-787. richard, o.c., barnett, t., dwyer, s. & chadwick, k. 2004. cultural diversity in management, firm performance, and the moderating role of entrepreneurial orientation dimensions. academy of management journal, 47(2):255-66. sexton, d. & bowman-upton, n. 1991. entrepreneurship: creativity and growth. new york: macmillan. short, j.c., payne, g.t., brigham, k.h., lumpkin g.t. & broberg, j.c. 2009. family firms and entrepreneurial orientation in publicly traded firms. family business review, 22(1):9-24. simmons, j. d. 2010. the effects of firm size on the entrepreneurial orientation dimensions. unpublished thesis, ohio university, ohio. soininen, j., puumalainen, k., sjögrén, h. & syrjä, p. 2012. the impact of global economic crisis on smes: does entrepreneurial orientation matter?. management research review, 35(10):927-944. stam, w. & elfering, t. 2008. entrepreneurial orientation and new venture performance. academy of management journal, 1(1):12-28. tsai, w. macmillan, i., & low, m. 1991. effects of strategy and environment on corporate venture success in industrial markets. journal of business venturing, 6(1):9-28. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 65 tseng, c. 2013. connecting self-directed learning with entrepreneurial learning to entreprenurial performance. international journal of entrepreneurial behaviour and research, 4(1):425-446. wang, y. 2008. entrepreneurial risk taking: empirical evidence from uk family firms. international journal of entrepreneurial behaviour and research, 16(5):370-388. wiklund, j. 1998. small firm growth and performance: entrepreneurship and beyond. jonkoping: jonkoping international business school. wiklund, j. & shepherd, d. 2003 j. knowledge-base resources, entrepreneurial orientation, and the performance of small and medium-sized business. strategic management journal, 24(13):1307–1314. zahra, s.a. 1995. corporate entrepreneurship and financial performance: the case of management leveraged buyouts. journal of business venturing, 10(1):225-247. zahra, s. & covin, j. 1995. contextual influence on the corporate entrepreneurshipperformance relationship: a longitudinal analysis. journal of business venturing, 10(1):43-58. annexure 1 items retained for the statistical analysis business performance succ1 my small business has experienced growth in turnover in the past three years. succ3 my small business has experienced growth in profits in the past three years. succ4 my small business is achieving its planned growth rate. succ5 my small business can be regarded as successful. succ6 my small business is profitable. succ7 my small business is financially secure. succ8 my small business is achieving the financial goals that have been set for it. proactive innovativeness pro 2 my small business places a strong emphasis on continuous improvement in products/service delivery/processes. pro 3 my small business continuously seeks out new products/ services /processes. pro 4 my small business places a strong emphasis on new and innovative products/services/processes. pro 5 my business is continually pursuing new opportunities. pro 7 my small business is continuously scanning the business environment to identify future opportunities. inno 1 my small business has increased the number of services/products offered during the past two years. inno 2 my small business regularly introduces new services/products/processes. inno 5 in the past few years, my small business has introduced many new lines of products and/or services. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 http://www.sciencedirect.com/science?_ob=articleurl&_udi=b6vb4-4yy8bp4-1&_user=1378441&_coverdate=12%2f31%2f2010&_rdoc=1&_fmt=high&_orig=gateway&_origin=gateway&_sort=d&_docanchor=&view=c&_searchstrid=1707567210&_rerunorigin=google&_acct=c000052496&_version=1&_urlversion=0&_userid=1378441&md5=c441411f16baf39c0475c5013d504dec&searchtype=a#bbib78 66 inno 8 experimentation and creativity to continuously come up with new products and/or processes is encouraged in my small business annexure 1 – continued items retained for the statistical analysis autonomy auto 1 employees in my small business are encouraged to manage their own work. auto 2 employees in my small business have enough flexibility to resolve problems auto 3 employees in my small business have autonomy (independence) in doing their job. auto 4 employees in my small business do their job without continual supervision. auto 5 employees in my small business are allowed to be creative and try different methods to complete their job. auto 7 employees in my small business are allowed to make decisions without going through elaborate justification and approval procedures. auto 8 employees in my small business have the ability to work independently when acting on an opportunity. auto 9 employees in my small business often independently bring an opportunity from the idea stage to completion. risk-taking risk 2 employees in my small business are often encouraged to take calculated risks concerning new ideas. risk 4 my small business has a strong preference for high-risk projects (with chances of very high return). risk 7 my small business is willing to commit a relatively large portion of assets to pursue a high-risk high-return project. competitive aggressivenss comp 1 in dealing with competitors, my small business typically adopts a very competitive “outdo-the-competitor” approach. comp 2 my small business is aggressive and intensely competitive. comp 4 my small business effectively assumes an aggressive posture to combat industry trends that may threaten its survival or competitive position. comp 5 my small business assumes an offensive combative posture to overcome threats posed by competitors. comp 6 my small business devises strategies aimed at defending its market position. comp 7 my small business strives to obtain the “first-mover” advantage. risk 3 when confronted with uncertain decisions, my small business typically adopts a bold posture in order to maximise the probability of exploiting opportunities. sajesbm volume 7 (2015) www.sajesbm.co.za article 147 67 annexure 2 factor structure proactive and innovativeness business performance autonomy competitive aggressiveness risktaking pro3 0.7361 0.1253 0.1204 0.2030 0.0697 pro5 0.7302 0.0962 0.0661 0.1492 0.0070 pro2 0.6805 0.1443 0.0834 0.2060 -0.1476 pro4 0.6733 0.0791 0.1724 0.1235 0.1239 inno1 0.6500 0.1151 -0.0642 0.0856 0.0654 inno2 0.6277 0.0885 0.1646 0.1321 0.2444 inno8 0.5882 0.0391 0.2787 0.1825 0.2804 pro7 0.5814 0.1467 0.1741 0.3068 0.1691 inno5 0.5650 0.1555 0.1158 0.1294 0.2336 succ6 -0.0105 0.8183 -0.0949 0.0624 0.0103 succ5 0.2008 0.7765 0.1095 0.1239 0.0096 succ8 0.0828 0.7684 0.1254 0.1314 0.1007 succ7 0.1180 0.7590 0.1838 0.1009 -0.0332 succ3 0.1057 0.6872 0.0562 0.0615 -0.0822 succ1 0.0455 0.6448 0.0674 0.1482 -0.0741 succ4 0.2563 0.5810 0.0755 -0.0045 0.1252 auto2 0.0685 0.1860 0.7654 0.1128 0.1175 auto8 0.0898 0.1278 0.7358 0.1371 0.2789 auto1 0.2050 0.1098 0.7305 0.0217 0.0421 auto3 0.0210 0.1138 0.6623 0.0467 -0.1579 auto5 0.1819 -0.0468 0.6331 0.2042 0.1654 auto9 0.3215 0.0345 0.5586 0.1014 0.2948 auto4 0.1105 0.0817 0.5544 0.1136 -0.0952 auto7 -0.1510 -0.1153 0.5493 -0.0477 -0.0525 comp1 0.1139 0.1212 0.0205 0.6761 -0.0046 risk3 0.1797 0.1482 0.1762 0.6655 0.1167 comp7 0.3559 0.0275 0.1381 0.6587 0.0236 comp6 0.2972 0.1853 0.1328 0.6362 0.1079 comp4 0.1520 0.1612 0.1612 0.5841 0.1956 comp5 0.1064 0.1174 0.0483 0.5680 0.1636 comp2 0.2732 0.2502 0.1244 0.5493 0.1685 risk7 0.0667 -0.0815 0.1331 0.1533 0.7478 risk4 0.1425 0.0568 0.1113 0.1011 0.7753 risk2 0.1729 -0.0453 0.0548 0.0508 0.5550 sajesbm volume 7 (2015) www.sajesbm.co.za article 147 68 annexure 3 factor loadings factor loadings pr3 <--proinn 0.803 pr5 <--proinn 0.648 pr2 <--proinn 0.611 pr4 <--proinn 0.719 pr7 <--proinn 0.627 in1 <--proinn 0.644 in2 <--proinn 0.743 in5 <--proinn 0.699 in8 <--proinn 0.698 su1 <--performance 0.701 su3 <--performance 0.726 su4 <--performance 0.662 su5 <--performance 0.730 su6 <--performance 0.703 su7 <--performance 0.694 su8 <--performance 0.784 ri3 <--comp 0.679 co7 <--comp 0.686 co6 <--comp 0.700 co5 <--comp 0.528 co4 <--comp 0.629 co2 <--comp 0.682 co1 <--comp 0.572 au9 <--auto 0.670 au8 <--auto 0.783 au7 <--auto 0.383 au5 <--auto 0.653 au4 <--auto 0.510 au3 <--auto 0.539 au2 <--auto 0.769 au1 <--auto 0.680 ri7 <--risk 0.784 ri4 <--risk 0.817 ri2 <--risk 0.576 sajesbm volume 7 (2015) www.sajesbm.co.za article 147 sajesbm_8(1).indb the editorial team of southern african journal of entrepreneurship and small business management recognises the value and importance of the peer reviewer in the overall publication process – not only in shaping the individual manuscript, but also in shaping the credibility and reputation of our journal. we are committed to the timely publication of all original, innovative contributions submitted for publication. as such, the identification and selection of reviewers who have expertise and interest in the topics appropriate to each manuscript are essential elements in ensuring a timely, productive peer review process. we would like to take this opportunity to thank all reviewers who participated in shaping this volume of southern african journal of entrepreneurship and small business management: we appreciate the time taken to perform your review successfully. in an effort to facilitate the selection of appropriate peer reviewers for south african journal of entrepreneurship and small business management, we ask that you take a moment to update your electronic portfolio on http://www.sajesbm.co.za for our files, allowing us better access to your areas of interest and expertise, in order to match reviewers with submitted manuscripts. if you would like to become a reviewer, please visit the journal website and register as a reviewer. to access your details on the website, you will need to follow these steps: 1. log into the online journal at http://www. sajesbm.co.za 2. in your ‘user home’ [http://www.sajesbm. co.za/index.php/sajesbm/ user] select ‘edit my profile’ under the heading ‘my account’ and insert all relevant details, bio statement and reviewing interest. 3. it is good practice as a reviewer to update your personal details regularly to ensure contact with you throughout your professional term as reviewer to the south african journal of entrepreneurship and small business management. please do not hesitate to contact us if you require assistance in performing this task. publisher: publishing@aosis.co.za tel: +27 21 975 2602 fax: +27 21 975 4635 alex antonites colene hind menisha adams retha scheepers retha strydom shelley farrington open access page iii of iii reviewer acknowledgementpage 1 of 1 http://www.sajesbm.co.za southern african journal of entrepreneurship and small business management sajesbm abstract introduction literature review research methods and design findings and discussion conclusion areas of future research acknowledgements references about the author(s) nyasha o. mugadza gordon institute of business science, university of pretoria, johannesburg, south africa kerrin myers gordon institute of business science, university of pretoria, johannesburg, south africa citation mugadza, n.o. & myers, k., 2023, ‘new venture idea incubation: a micro-process view’, southern african journal of entrepreneurship and small business management 15(1), a594. https://doi.org/10.4102/sajesbm.v15i1.594 original research new venture idea incubation: a micro-process view nyasha o. mugadza, kerrin myers received: 11 july 2022; accepted: 01 mar. 2023; published: 26 may 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: in pursuit of new venture idea incubation, motivated entrepreneurs must simultaneously commit to an idea and develop the capacity to translate this commitment into a new venture concept. however, it is not clear how experienced entrepreneurs navigate this complex process. in this study, key phases and competencies emerge from a deep understanding of the lived experience of entrepreneurs engaged in the opportunity development process. aim: by leaning on empirical insight from seasoned entrepreneurs, this study examines the iterative character of new venture idea incubation. the research conceptualises the lived experience of key constructs and relationships in the new venture idea incubation process. setting: the primary research was conducted in johannesburg in south africa. methods: longitudinal, triangulated data from purposively selected cases enabled patterning of idea incubation processes. computer-aided data analysis (caqdas) was used to code inductively and deductively to illuminate activations and sequences. results: this incubation period was shown to be one in which venture ideas evolve into elementary venture concepts. the data enabled development of a framework that exemplifies this process of incubation. conclusion: the findings extend the existing theory by describing the micro-processes that are involved in new venture idea incubation. the findings also clarify the distinction between new venture idea incubation and new venture opportunity evaluation, a distinction that has not previously been evident. contribution: the study contributes by exposing a micro-level view of the new venture idea incubation process that is enacted by entrepreneurs to frame an elementary venture concept. keywords: new venture idea; new venture idea incubation; venture concept; micro processes; opportunity development. introduction new venture creation remains under-theorised (clausen 2020; hoyte et al. 2019; shepherd, sattari & patzelt 2020; shepherd & wiklund 2020; vogel 2017) despite being an important focus area for entrepreneurship scholarship (davidsson 2015; shepherd et al. 2019a). this is partly because of the difficulties of fully investigating nascent stage entrepreneurial action (dimov 2007b; mccann & vroom 2015). not only must multiple layers of activations (davidsson & gruenhagen 2021; selden & fletcher 2015) be understood, but the framing of new venture concepts (ding 2019) and the creation of new ventures involves a diverse set of activities and resources (autio, dahlander & frederiksen 2013; mcmullen & dimov 2013). this study examines new venture idea incubation as a venture-establishment competency: one which, when deliberately executed, advances new business activation (autio et al. 2013; moroz & hindle 2012; wood & mckelvie 2015; wood & williams 2014). building on work conducted by leading scholars (davidsson 2015; dimov 2007a; mccann & vroom 2015; vogel 2017) it foregrounds the impact of time on the venture opportunity development journey and reveals a trajectory of activations. these extend from new venture idea (dimov 2007b; vogel 2017) through a period of incubation (mccann & vroom 2015; shepherd, sattari & patzelt 2020) and opportunity shaping (keh, foo & lim 2002; welpe et al. 2012), until a prospective venture concept emerges (ding 2019; selden & fletcher 2015). the outcome is a theoretical modelling of phases for new venture formation, commencing with a ‘trigger’ (vogel 2017:6), an entrepreneurial idea, followed by a period of new venture idea development. subsequent evaluation of a venture concept as feasible and desirable confirms a market facing opportunity for exploitation. the research aligns with the view that new venture idea incubation is fundamentally iterative (autio et al. 2013; dimov 2007b; mccann & vroom 2015; shepherd et al. 2019; wood & mckelvie 2015). empirical data were captured from seasoned entrepreneurs (parker 2013) immersed in the process of incubating ideas for developing new ventures. in describing this early business modelling process (davidsson & gruenhagen 2021; leschke 2013), we provide insight into entrepreneur intentions (dimov 2018). by exploring the lived experience of idea incubation in new venture creation from the perspective of the founders themselves, the micro-foundations of the process can be described more vividly (shepherd et al. 2019). literature review the activities involved in new venture idea incubation have not been substantiated empirically (clausen 2020; shepherd 2015). as a result, the process is under-theorised (davidsson 2020; shepherd & suddaby 2017; suddaby 2010). so far literature has depicted these as an opportunity evaluation activity that is largely cognitive (williams & wood 2015; wood & mckelvie 2015) and iterative (hunter 2013). many scholars have agreed with bhave (1994) that venture creation takes place in phases over time (alvarez et al. 2014; shepherd et al. 2020). however, there has been limited empirical investigation of the exact characteristics of these phases (clausen 2020; hjorth, holt & steyaert 2015; morris & kuratko 2020; selden & fletcher 2015). in tandem, the evidence relating to opportunity evaluation is contradictory. some studies view such activity as being concerned with new venture idea transformation (perry-smith & mannucci 2015, 2017; vogel 2017). others see it as the assessment of venture concept artefacts during the process of determining the attractiveness of the formulated concept (ivanova, treffers & langerak 2018; vogel 2017). clarifying contradictions is important but delicate: especially in the face of tensions over concept clarity (davidsson 2017; dimov 2018; wood 2017). our research was impacted by debate over the character and role of opportunity as a phenomenon in entrepreneurship that continues to gather momentum (davidsson 2017; dimov 2018; wood 2017). while not directly attending to the discussion, we agree with the call for a deeper analysis (davidsson 2015; dimov 2018). as a construct, opportunity has been influential in framing perspectives on new venture idea incubation as examined in this research, underscoring the need for clearer definition. instead the term ‘new venture idea’ was used, first put forward by davidsson (2015) both for the sake of theoretical continuity (dimov 2018) and to clearly identify the period of new venture opportunity development (vogel 2017). by using the label new venture idea incubation, we link our study to other attempts to define and shape opportunity evaluation (ardichvili, cardosa & ray 2003; autio et al. 2013; wood & mckelvie 2015), which is relevant to the goals of this research. separately, evaluation is conceived as a continuum (greene & caracelli 1997). in one sense it is concerned with cognitively construed linkages (wood & williams 2014) subjectively framed between and across phenomena (keh et al. 2002). primarily driven by personal judgement, these are unique to individuals and coloured by personal idiosyncrasies (haynie, shepherd & mcmullen 2009; hsu et al. 2019). an alternate view is that evaluating is a structured process that leads to factually qualified judgements over the characteristics of elements (ardichvili et al. 2003; ivanova et al. 2018). we argue that such elasticity in meaning clouds debate among scholars (dimov 2018; shepherd & suddaby 2017). in navigating this challenge, our stance aligns with scholars who embrace the term new venture idea incubation (autio et al. 2013; george et al. 2016; vogel 2017; wood & mckelvie 2015) to describe iterative activities during the nascent phase of new venture development as a distinctive phase. this approach lends clarity of distinction to this stage from that of venture concept opportunity evaluation, which subsequently ensues (ardichvili et al. 2003; vogel 2017). theorising about new venture concept incubation as a construct conceptually, new venture idea incubation is presented inconsistently in literature. for instance, hoyte et al. (2019) describe as ‘sense making’, operator activity between idea formation (leahy et al. 2019) and a formed venture concept (vogel 2017). davidsson (2015) refers to a phase during which potential product–market combinations are considered. there is general consensus in the literature that this stage is largely cognitive and subject to continuous experimentation and change (grégoire et al. 2015). the main purpose is to engage in a variety of exploratory tasks (pryor et al. 2016). the authors define new venture idea incubation as the phase during which new ventures are developed as entrepreneurs combine (morris & kuratko 2020; perry-smith & mannucci 2017) cognitive (wood & mckelvie 2015) and behavioural (wood & williams 2014) competencies to create concept artefacts for new venture ideas (ding 2019; wright & marlow 2012). an entrepreneurial actor (shepherd, mcmullen & jennings 2007) engages relevant skills (hoyte et al. 2019) to convert intangible cognitions into more tangible venture concept artefacts (morris & kuratko 2020; vogel 2017). actor-specific personal circumstances mediate the emerging outcomes (haynie et al. 2009; perry-smith & mannucci 2017), aspirations and intentions (fayolle, liñán & moriano 2014). the substantial variance in types of entrepreneurial experience (selden & fletcher 2015; vogel 2017) may be the consequence of efforts to align with relevant social expectations (zahra & wright 2016). dominance of the cognitive nature of nascent phase endeavour by entrepreneurial individuals is well-attended in entrepreneurship literature (mcmullen & shepherd 2006; yitshaki & kropp 2018). it is argued that successful entrepreneurs have distinctive minds skilled at identifying and digesting information pertinent to venturing options (allinson, chell & hayes 2000; gruber, kim & brinckmann 2015; keh et al. 2002). these individuals are able to filter information and perceive unique possibilities (williams & wood 2015). they align data necessary for framing a mental picture of a future venture (hunter 2013). as a result, investigation into how entrepreneurs act has remained dominated by aspects of cognitions (grégoire et al. 2015; gruber et al. 2015) and how these direct entrepreneurial behaviour (pryor et al. 2016). in contradiction however, empirical attention to the actor and their agency in new venture conceptualisation remains limited (mccann & vroom 2015; shepherd et al. 2020); despite calls for urgent research attentions (vogel 2017). the use of operational constructs still dominates. this sacrifice has meant that theorising frameworks (shepherd & suddaby 2017) have fallen short in capturing an actor’s evolving journey and its influence. ding (2019) emphasises variable influence that stems from the personal milieu and preferences of the actor. recognising the pivotal role of this insight, our investigations pursued data from seasoned entrepreneurs actively engaged in evolving choice new venture ideas into venture concepts. this approach reveals lived experience of actors and the actions that dominate the conception process (morris & kuratko 2020). as an additional constraint, venture concept as a lens (pentland & feldman 2005) blocks the view of third-person cognitions. this study, while not directly capturing this external perspective, underscores the significance of its influence. relatedly, scholarly data illuminate new venture idea incubation as an enactment that is iterative; its occurrence leads to new venture concept framing (clausen 2019; ding 2019; hoyte et al. 2019). building on observations like these, we argue that viewing processes through a venture concept lens, overlooks important filters applied by the entrepreneurial actor as a new venture-shaping process advances. actors and their conditions significantly influence choices and ultimately the venture concept that emerges. in exploring this argument, the enquiry positions a unit of analysis as the entrepreneurial actor. in doing so, researchers were able to track and examine lived experiences to consolidate character of the process (eisenhardt 1989; pettigrew 2013) advanced to incubate new ideas (shepherd 2015; shepherd et al. 2019). applying a temporal lens (langley 1999) to the new venture establishment process reveals phases of events and outcomes (selden & fletcher 2015; vogel 2017). idea incubation is a specific segment in the emergence of a new venture. this study was based on the work of several scholars (e.g. ding 2019; hasan & koning 2019; morris & kuratko 2020; perry-smith & mannucci 2015, 2017; shepherd et al. 2020) in the quest to frame a comprehensive patterning (pettigrew 1992, 1997) of what new venture idea incubation was observed to entail. describing new venture development to occur in phases may deceptively imply a predictable linear transition from one phase to another. on the contrary, studies have repeatedly shown a venture establishment activity to be interwoven and cyclical in its progression (mäkäräinen-suni 2017) where ‘interaction between subtexts and contexts gives rise to texts’ (alvarez & barney 2013:158). the activity is however not linear in its advance: indeed, phases of occurrence respond to internal and external stimuli and unfold in an unpredictable sequence (hjorth et al. 2015). examining phenomena in segments creates an opportunity to explore and theorise micro-foundations (shepherd 2015) of such a complex system (anderson 2000) as new venture establishment. in this way, critical understanding emerges (wood, phan & wright 2018). scholars highlight specific activations. firstly, disciplined attention that yields clarity on venture establishment options (morris & kuratko 2020; seyb, shepherd & williams 2019b). secondly, assessment of fit alignment between an intended venture and the actor (van gelderen, kautonen & fink 2015). thirdly, a process of sense giving (hoyte et al. 2019) through which an entrepreneur is intent on constructing opportunity (davidsson 2015; dimov 2018). this entails combining segments of previously disjointed insights. captured from multiple sources (hasan & koning 2019), choice options are woven into a possible venture concept (selden & fletcher 2015). critically, no actor achieves venturing alone. contributions from others play a significant role; an aspect attracting growing attentions by scholars (perry-smith & mannucci 2017; seyb, shepherd & williams 2019a). this is underscored by agreement that building a new venture is a social process that benefits from diverse contributions (perry-smith & mannucci 2017; seyb et al. 2019a; spigel 2017). a study explores the dynamism of the entrepreneurial ecosystem (hoyte et al. 2019). it reveals how steering from social connections guides deciphering of environmental conditions and perception into planned actions for venture development. in addition, discussing imagined outcomes (kier & mcmullen 2018; okpara 2007) exposes them for verification and feedback (spigel 2017) paving the way for others’ sense-giving interpretations (hasan & koning 2019; seyb et al. 2019a). however, the final decision control remains with the actor who can receive or reject inputs, thus deciding how such contributions might influence the journey (perry-smith & mannucci 2017). seasoned entrepreneurs benefit from prior exposure to new venture establishment that builds hindsight (parker 2013). the use of appropriate social interaction guides visioning (gruber et al. 2013; perry-smith & mannucci 2017; shepherd et al. 2019). external guidance matters (seyb et al. 2019a; shepherd et al. 2020) as along with how it is assembled (mckelvie et al. 2018). these entrepreneurs are motivated to conserve resources that are chronically limited (kellermanns et al. 2016), and to avoid preventable mistakes (morris & kuratko 2020), at the same time ensuring the worth of the idea they are initiating (gaddefors & anderson 2017). openness to external feedback and the ability to learn from it are critical for the entrepreneur’s success (perry-smith & mannucci 2015). in making our argument, we began by distinguishing new venture idea incubation as a specific stage of activation within new venture development process (vogel 2017). we also highlight ambiguity in employing the term opportunity evaluation. in certain contexts it describes evolving iterations of assessment (alvarez et al. 2014), in others it refers to summative assessment of a formulated venture concept (ardichvili et al. 2003; vogel 2017). the resulting duality in meaning confuses debate. the researchers make the case for a form that is separate from new venture concept evaluation; distinction that remains ill-attended in literature (mccann & vroom 2015). prior theorising confirms iterative activations towards shaping a venture concept, as new venture idea incubation (clausen 2019; ding 2019; hoyte et al. 2019). this article builds on observations, arguing that personal milieu of the entrepreneurial actor presents as a persistent filter with a significant sway throughout the process and yet its impact remains under-theorised. empirical insight is essential to advance conceptualisation of new venture idea incubation as a lived process. research methods and design the main research question that guided this study was: how do entrepreneurs incubate new venture ideas to conceive prospective venture concepts? objective of the study a primary objective of this study was to consolidate an empirical data-led conceptual characterisation of new venture idea incubation as a specific phase. research design this study employs longitudinal and cross-sectional data to examine new venture idea incubation as a phenomenon. nine individuals pursuing new venture idea incubation were tracked as case studies over an extended period of several months (yin 2013). this report focuses on data from the three most comprehensive cases. in addition, another 14 entrepreneurs were interviewed at cross-sectional moments in the timeline (hlady-rispal & jouison-laffitte 2014) thickening insight into the character of choice phases of an idea incubation process in progress. seasoned entrepreneurs (parker 2013), the unit of analysis (maxwell 2012; pentland & feldman 2005), were primary respondents. in this way, the central role of the entrepreneur as the instigator and connector of the process (davidsson 2015; dimov & pisturi 2019) is foregrounded. collecting and analysing data over an extended period enabled tracking of key similarities and differences across respondent experiences. empirical character is revealed when primary actors are positioned as the unit of analysis. pursuing entrepreneurs in motion exposed lived experience of evolving new venture ideas (frederiks et al. 2019) into venture concepts (ding 2019). data are steeped in practise, and hence superior in their potential to reveal practical knowledge (parker 2013). in this way, greater depth of nuanced insights (bryant 2007; politis 2008) was provided for this study. collecting data through interviewing not only captures character of activity but also enables probing for reflexive introspection (creswell 2013). respondents can be motivated to redigest current and past actions, synthesising learning and refining perspective. data collection data were collected in two phases. the first phase focussed on three, purposively selected, case studies. longitudinal design (aaboen, dubois & lind 2012) entailed collection of data from respondents over a period of 9 months. semi-structured, in-depth interviewing (creswell 2013; jacob & furgerson 2012) was used to capture data from each entrepreneurial case. recorded at each interval, these resulted in accumulation of 18 h of data recordings for analysis. saturation was tracked by researchers in noting the emergence of repetition in description of activities and, it was further verified during coding analysis. conducting multiple interviews with primary respondents (aaboen et al. 2012) strengthens credibility (morse & richards 2002). information could be verified with respondents while still in field as opportunity was created for a cycle of confirmations. this was an effective way of not only expanding insight into emerging constructs but also creating opportunity to verify and strengthen captured insights. the researcher was able to review prior interviews and pose questions to fill identified data gaps (hlady-rispal & jouison-laffitte 2014). this open-ended exploration yielded rich diversity in data that could then be organised into emerging concepts. attention was also paid to broadening the case data pool (eisenhardt 1989). supporting respondents who were working alongside the primary respondent entrepreneur were interviewed. these within-case supporting respondents operationally engaged in the unfolding process, served to expand insight through the capture of diversified viewpoints (eisenhardt & graebner 2007; langley et al. 2013). the outcome was enriched with detailing of the contexts and conditions characteristic to the phase (mäkäräinen-suni 2017). these complementing views were from individuals endorsed by the entrepreneurs as well-positioned to give relevant insight. this approach to selection created the opportunity to note pertinent characteristics of these respondents who constituted part of the entrepreneurs support system for the period. a second phase of data collection consisted of cross-sectional data from 14 purposively selected seasoned entrepreneurs. data analysis a systematic approach to analysis was important to guide extracting meaning in ways that retained close alignment with the source data. atlas-ti software was used to structure the data analysis (friese 2014). recorded data were transcribed. all transcripts were checked for accuracy before analysis commenced (aaboen et al. 2012). coding was effected on each case separately. deductive and inductive reasoning guided an initial round of sense making (reay & jones 2015). this ensured that meaning emerged as expressed by respondents. a second iteration involved grouping related themes. the third cycle of coding was informed by a process perspective so that abstract insights could be consolidated into the underlying processual nature of activities documented (eisenhardt 1989; pettigrew 2013). this enabled the verification of the constructs involved in modelling the new venture idea incubation period (vogel 2017) as well as identifying gaps in understanding (frank & landström 2016). themes were developed through the process of clustering the initial coding into categories and then clustering the categories into themes (ngulube 2015). within-case analysis paved the way for cross-case insight consolidation, diluting the contextual influences of single-case conditions and enabling key common constructs to emerge (rauch, van doorn & hulsink 2014). in building within-case analysis, the focus was on ensuring that individual nuances were fully expressed as unique outcomes. this was achieved through detailed narrative accounts of each case. conjoining the varied experiences was the goal of a cross-case analysis exercise that synthesised findings to reveal a processual patterning of key concepts (eisenhardt & graebner 2007; pettigrew 2013; yin 2013). data from the cross-sectional interviews (maxwell 2012) were primarily coded deductively using codes formulated from the case study analysis. this entailed importing the master code book into a new hermeneutic unit specifically created for the second data set (friese 2014). establishing detailed definitions of the inductively framed codes a prior, guided approach in adjudicating this phase of coding and categorisation decisioning (pettigrew 2013). the approach was also effective in ensuring that latitude was retained to identify additional data points specific to these interviews. a final stage of analysis entailed aligning categories and themes from the cross-sectional interviews with data from the cases to align patterning of insights (reay & jones 2015). in this way, identified concepts were made evident and focus trained on new venture idea incubation as a phenomenon. ethical considerations ethical clearance confirmation for this research was applied for and approved through the gordon institute of business science doctoral research ethical clearance committee. ethical consideration entailed firstly establishing non-disclosure agreement between respondents and the researchers, committing protections over commercially sensitive aspects of the ideas pursued. secondly, respondent identities were altered through the use of pseudonyms. thirdly, triangulation of insights during cross-case analysis diluted focus of the reporting from describing sensitivities of individual circumstances towards triangulated insight into micro processes and procedures. findings and discussion the new venture ideas pursued by respondents in this study were diverse. of the case study entrepreneurs, one was pursuing a shift from consulting marketing tangible products. another wanted to train and coach aspirant artists to develop entrepreneurial ventures in the arts. the third had a vision for a boutique marketing consulting offering for african firms. the exact nature of product offering and target clients was yet to emerge (morris & kuratko 2020). aspirations founded on perceived opportunity for impactful contribution were the driver of behaviours (kier & mcmullen 2018): ‘… whole brain thinking in school because that is where they are lacking. so that was the problem i was trying to solve but i didn’t know that when i started, but there is this drive in you, this satisfaction that this is not it, there is something else, there is something else, so it’s not a conscious thing it’s almost like my brain is turning over all the time pushing towards that …’ (rpb3, female, social enterprise) in instances, prior experience-based knowledge influenced choices; for others, interests were captured by professions outside their formal qualifications despite prospects of steep learning curves. as examples, an engineer was intent on film production; an economist on computer gaming while an architect was keen to stimulate small-scale organic vegetable gardening. all had visions of framing viable business models. the instrumental role played by a new venture idea in the formative stages of incubation was evident (frederiks et al. 2019; perry-smith & mannucci 2017). seasoned entrepreneurs (parker 2013) demonstrated similarities and differences in the enactment of new venture idea incubation (wood & mckelvie 2015). the decision to transform a new venture idea into a new venture concept triggers the incubation process (vogel 2017). the trajectory of the process in progress (ding 2019; selden & fletcher 2015) is marked by emerging artefacts (davidsson 2020). by making intangible elements more concrete, the entrepreneur builds confidence and assurance in that which is emerging: ‘sometimes you don’t have all the pieces but just build the ones you see and while you are busy with that its quite clear what the next piece looks like …’ (rpb1, female, social enterprise) examining the lived experience of new venture idea incubation revealed that respondents engage in activities iteratively examining and re-examining opinions. multiple techniques were employed. iteration was expected, planned for and enacted: ‘so, most of the documentation, the planning he has been putting together, but every saturday we meet – because there are three of us – and we review what we have. in fact, we are reviewing everything we have done every single week, to see whether it actually makes sense.’ (rpj3, male, commercial enterprise) outcomes were expected to be and treated as fluid. the entrepreneurial actor was noticed to be receptive to the opportunity to question and rethink even those aspects that appeared to have been confirmed. this insight led to a first proposition pertinent to this study: proposition 1: a new venture idea triggers a period of new venture idea incubation to advance convictions and opinions into a venture concept. a range of selection behaviours, tools and events drive the entrepreneur’s sense-making of incubation activities: ‘so, i joined a company … i joined them purely to learn what they did, because i didn’t know that part of strategy. so, i went there to learn, so i was just one foot in, one foot out again, but i was just learning the methodologies, crafting my own at home, trying to figure out how can i build something of my own.’ (rpj1, male, commercial enterprise) actions included frequent engagements with purposefully chosen individuals that could add value in synthesising information and connections. this approach had the effect of drawing in third-party opinion and widening access to others’ lived experiences. there was a certain discipline exercised in documenting ideas and progressions. drawings, pictures and written notes on paper, digital platforms as well as white boards helped to maintain record. regular reference to an expanding, tangible record of progress helped to stimulate new thoughts, identify gaps to be filled and even motivate excitement over the incubated idea. the findings informed perspective that new venture idea incubation manifests as an evolving process; a second proposition: a second proposition: proposition 2: new venture idea incubation in an iterative occurrence that sees the advancement of new venture ideas into venture concepts. evaluation of actors engaged in evolving new venture ideas into venture concepts revealed a series of micro processes (dimov 2018; hjorth et al. 2015; shepherd & suddaby 2017). entrepreneurs were noticed to weave through different phases that shaped, validated, interpreted and refined activities; progressively evolving new venture ideas into venture concepts. the discussion expands on this finding by describing the character of the nascent phase activations, illustrating how a venture concept emerged as an artefact. the experienced entrepreneurs examined for this study demonstrated a diversity of practical operations. these included identifying options; thinking out scenarios and discussing the idea in segments and as a whole, verifying perspective. these actions towards shaping artefacts comprised one of two enactments that vogel (2017) highlights in his framework. vogel (2017) recognises a period or ‘stage’ (p. 6) within which various processes occur including ‘shaping and refining’ (p. 12). this enquiry concurs that the term shaping depicts the progression in articulation of an emerging venture concept: ‘so, i might start here and think this is what i think, but by the time i’ve talked myself through it and heard other inputs, i’d move completely there. there’s very much this thing about … this is, this is what i’m thinking. help me think further. help me think more. ah, what do you think?’ (rpb1, female, social enterprise) this finding also aligns with the established perspective that a critical aspect of new venture idea incubation is to initiate the journey to make a nascent concept tangible (mccann & vroom 2015; shepherd et al. 2019; vogel 2017). this serves multiple purposes. firstly, organising minds-eye thoughts motivates the entrepreneur to start to see an idea in physical form. secondly, respondents reported important effects in galvanising interest towards potential venture development advancements. clarity of form emerges progressively, substantiating the potential in an idea that could be pursued as a venture (fisher et al. 2020; morris & kuratko 2020). as one respondent pointed out: ‘… you are just going to connect the dots and say oh okay this can work, i think that is an idea that can work, a great or fabulous idea is not going to attack you overnight, i don’t believe that.’ (rp2, male, social enterprise) a third effect was to centralise focus on a set of specific elements that constitute one’s early impressions of possibility. although there was recognition that any nascent form is by nature fluid and evolving, this first phase of commitment serves to establish markers of the venture concept under consideration: proposition 3: new venture idea incubation consists of activities to shape venture concepts as new venture ideas are advanced into venture concepts. the data analysis outcomes of our study revealed a period of validating as new insight into activity pertinent to this phase of new venture idea incubation. this captures activities deliberately pursued to seek out external sources for advice and reassurance. these third-party influences consisted of individuals who had strong connectivity with the entrepreneur and the idea, as well as those with weak ties. this community was noticed to include: (1) established players in the target field of interest, (2) technical experts, (3) future customers and even (4) individuals for possible collaboration. an important part of these interactions was the scheduling and attending of meetings with a diverse network of contacts. respondents spoke of actively selecting and pursuing valuable informants to enhance ideas: ‘i think the advice i would give is to really consult the people you are aiming your good thoughts at. make sure it is really needed and make sure how it is needed. really listen to people, consult and listen to people.’ (rp11, female, social enterprise) captured data must be absorbed and organised into insights of relevance. community-related issues can yield large volumes of data that are challenging to synthesise. interactions with close-tie supporters, expert consultants and even target beneficiaries themselves were pragmatic sources of assistance and often expedite typically hesitant and protracted processing by an entrepreneurial individual acting alone. extensive external engagement bolsters the capability to frame sustainable solutions. respondents pointed out that new solutions ought to be specified with a target beneficiary in mind: individuals most likely to identify with the entrepreneur’s intent. seeking interaction went as far as setting up events to attract a diversity of prospective stakeholders to participate in discussions and activities that interrogate intentions. the result was an iterative cycle of reviewing and refining perceived propositions incorporating own and others’ views: ‘it is the most important thing in terms of business innovation, is to create the right synergies, linkages, partners – and what i mean by that, they don’t have to be formal. i mean, even just like talking to people, right?’ (rps1, male, commercial enterprise) as additional validation of accumulated information, entrepreneurs sought out trusted associates to help digest and synthesise insights. these collaborations were prioritised and served to build confidence in new know-how into options for execution and advancement. incorporating diverse experiences accessible from close-tie relationships, highlights pathways to construct solutions and builds confidence to advance. in all cases, entrepreneurs revealed the need to maintain an open mind and welcome the opportunity to interrogate burgeoning perceptions and vision. however, this process must culminate in decisive judgements to reduce ambiguity and uncertainty. while they lead and dominate the process, it was clear that seasoned entrepreneurs did not consider venture concept construction to be an individual cognition-dominant activity (morris & kuratko 2020). effective development demands that entrepreneurs engage in contexts, information and others’ perspectives from a diverse range of sources (seyb et al. 2019a; shepherd et al. 2020). among the top 10 qualities required for effective entrepreneurial activations is ‘flexibility and informality’ (lau et al. 2012:677). the authors found that associated cognitions from others were as essential as an individual’s personal competencies. interestingly, particular behavioural competencies are required to capitalise on these. entrepreneurs must be able to self-regulate and suppress personal egos (tumasjan & braun 2012) as well as to capture and respond to what might be contrary feedback. in this study there was strong evidence to indicate that finding and co-opting potential collaborators for the purpose of testing thinking was a central activity for seasoned entrepreneurs, although different strategies were used (mugadza 2020): proposition 4: new venture idea incubation consists of activities to validate emerging new venture conceptions with significant others as new venture ideas are advanced into venture concepts. apart from the recommendations of external network members, each new venture idea is unique to a particular individual. while underlying incubation processes strongly influence the venture concept outcome, they are equally persuaded by the motivations and personal context of the entrepreneur. the diversity of guidance captured and incorporated by the entrepreneur during new venture idea incubation was not accounted for by the vogel (2017) framework. this, together with the need to acknowledge reflexivity over personal fit with the new venture concept, is a useful addition to the literature (mugadza 2020). distinctively, incubation activity is characterised by engagement that is coloured by the internal milieu of the engaged actor. driving motivations, previous experiences, knowledge and personal circumstances all impact the development and form of the venture concept. significantly, these influences are not always connected to the context of the market. the ways in which insight was prioritised were not consistent or predictable from one entrepreneur to the next: ‘it’s not selfish, it is like i am driving my vision for what i want even though i make it inclusive of bringing people along with me along this journey down the line … if i need to bring some people along the way to sell this glass that’s great, but there is an inherent self-interest and self-sustainability that exists.’ (rps2, male, commercial enterprise) as endorsed by other scholars (e.g. hunter 2013), this study confirmed that the early stages of the venture-development process are characterised by personal engagement and consequently personal bias. the idiosyncratic characteristics and context of the individual leaves an indelible mark on the early development of the venture (mcmullen & shepherd 2006; morris & kuratko 2020). personal influence was evident through aspects such as motivations (fayolle et al. 2014); prioritising venture partnership needs (maclean et al. 2009); acquiring knowledge competencies from others (hoyte et al. 2019; spigel 2017) and even access to resources (zahra, sapienza & davidsson 2006): proposition 5: new venture idea incubation consists of activities to interpret the personal and concept fit implications of new information as new venture ideas are advanced into venture concepts. the empirical insights from this study revealed that persistent investment of attentions advanced clearer visioning of a desirable venture. with the passage of time, the entrepreneur was able to give a more tangible description of concept artefacts such as a product solution, key resoures and capabilities that would be required to advance: ‘… within three months, we suddenly saw that we don’t even just have a school. we have um, an art revolution on our hands … a model that can be scaled all over the place. we have um, products and services in the arts and wellness space that nobody has even thought about yet.’ (rpb2, female, social enterprise) vogel (2017) also identified this process of refining. conscious adaptability and responsiveness in seeking out and incorporating multiple world views is required to embrace change and dynamic contexts (hunter & lerner 2018). notably, iterative assessments of the emergent concept activate deliberate engagement to confirm retained and discarded choices (gemmell et al. 2011). again, it is important to the entrperenuerial actor that the perspectives of others are drawn into the process and this includes those closest to the individual and external stakeholder communities that are less directly involved. effective entrepreneurial action (fisher et al. 2020), as highlighted by triangulation of the findings (ngulube 2015; reay & jones 2015), requires diversity in awareness of conceptual and behavioural competencies, which assists in clarifying the new venture concept through embracing information in the development of an iterative process (hunt & lerner 2018; perry-smith & mannucci 2017): proposition 6: new venture idea incubation consists of activities to refine emerging new venture concepts as incubation advances. this study examined new venture idea incubation; the series of interventions that evolve ideas into venture concepts (hoyte et al. 2019; shepherd et al. 2020; vogel 2017). a foundation was laid by the work into entrepreneurial opportunity evaluation (mcann & vroom, 2015). it informed conceptualisation of a series of tightly aligned phenomena that characterise new venture idea incubation. empirical data from lived experiences of engaged actors provided important evidence for key concepts (mugadza 2020). figure 1 maps evolving enactments described in this study to characterise new venture idea incubation. following lived experience of entrepreneurs provided insight into new venture idea incubation to consist of activities to shape, validate, interpret and refine emerging venture format. figure 1: new venture idea incubation. the findings reveal a series of micro-processes that are iterative but not repetitive in occurrence. phases occur and reoccur with each iteration serving a different purpose and yielding new outcomes that influence direction (mugadza 2020). multifaceted repeat interaction with a root idea yields steady advancement through phases of occurrence that were as connected as they are independent of one another. the study found that while occurrence can be patterned (pettigrew 2013), how the concepts are enacted and re-enacted in practice is unique to an entrepreneurial individual and the milieu of contexts and motivations. limitations a number of practical consequences emerged from the decision to target seasoned entrepreneurs as the primary sources of data (mckay & chia 2013). one was through wide variation in the pace of progression for new venture idea incubation processes pursued. there were several instances when scheduled data-collection appointments were deferred because of limited advancements in the tracked idea development. urgent priorities from current revenue-generating business interests commanded priority attention from the actors. the impact of heuristics was inevitable; overlapping recollections rendered reliability of some memories precarious (holcomb et al. 2009). time creates shortcuts, diluting and altering the exact nature of events. in anticipation of this challenge, the longitudinal data-collection format was selected for its ability to render access to track progressions and to verify data repeatedly with primary respondents. it also enables the research to probe inconsistencies within and across interviews deepening explanations. an ideal scenario would have been to create the opportunity to capture data in real-time eliminating any time lag between enactments, and data-collection conversations. practical limitations prevented such aspiration. efforts to advance new venture ideas occurred in waves and were often woven in and around current business activities. depth interviewing served to encourage respondents to give detailed accounts of progress made coupled with the rationale for decisions taken. limitation stemming from embracing a qualitative enquiry stance must also be noticed. such methodology yields thick data and represents the diversity of contexts and conditions but does not result in findings generalisable to a larger population. propositions formulated must be verified through large sample techniques specifically suited to render such assurance. finally, it is recognised that entrepreneurs are challenging respondents and require a pragmatic approach (alvarez et al. 2014). the research process must be empathetic in imposing data-collection burdens (creswell 2013). the focus on processes in infancy required for this study exacerbated conditions. perchance, planned actions did not occur; similarly, some desired relationship linkages material to an incubation process did not materialise. at other times, potential partners and associates were sensitive about confidentialities and reluctant to participate in the research process. these scenarios demonstrate the need for great flexibility in the approach to capture data from entrepreneurs in practice. these implications must be incorporated while framing the design for any proposed enquiry (creswell 2013). conclusion this study argues that fresh insights into the phenomenon of new venture idea incubation are possible when the entrepreneurial individual is highlighted as the key focus of analysis. by understanding how entrepreneurs, who are in the process of pursuing new venture ideas, engage in the development process, we present a practical step-by-step approach to new venture incubation. incubation is revealed as the phase during which new venture ideas are translated into new venture concepts. this conceptualisation, which is grounded in empirical data gathered from experienced entrepreneurs, identifies shaping, validating, interpreting and refining of conceptions as a series of activities that characterise new venture idea incubation (mugadza 2020). in making the case for a contribution to the literature, this study confirms the literature that frames the early stages of opportunity development as first-person (allinson et al. 2000; wood & mckelvie 2015) and then third-person centred (franken & thomsett 2013; gruber et al. 2015). this foundation was advanced by views promoting convergence (autio et al. 2013; williams & wood 2015). subsequently, vogel (2017) foregrounded the effect of time on the new venture development process, and mapped the development of a venture idea into a venture concept through a period of incubation, albeit at a macro-level. this study complements and extends knowledge by recognising the influential agency of entrepreneurial actors. in so doing, opportunity was created to also expose how social references are woven into evolving idea development activities; aspects previously disguised from detailed appreciation. the findings in this study are set to advance pedagogy: curriculum content may be enhanced by deeper insight into idea incubation. student development must navigate between theoretically founded best practice and the practical realities of real-world contexts (piperopoulos & dimov 2015). the inclusion of detailed insights, such as those outlined in this study, can enhance the effectiveness of skills development (mamabolo, kerrin & kele 2017). empirically informed insight is also important for development of policy. awareness of essential elements for a conducive ecosystem is essential for fostering entrepreneurial initiatives (spigel 2019). exposing the lived experiences of entrepreneurs is important for policy formulation. in addition, the findings of this study are valuable for aspirant entrepreneurs. the findings reveal peer perceptions and experiences – rooted in how thinking and engagement unfold. practical acumen is of special relevance to individuals grappling with similar challenges. areas of future research future research opportunity lies in substantiating generalisability of these findings by capturing response from a larger population of entrepreneurs. qualitative research provides diverse descriptions that strengthen appreciation of the character of phenomena (shepherd et al. 2019). a large-sample exploration confirms the broad-based relevance of findings (creswell & garrett 2008). the findings revealed that knowledge can be further extended by empirical enquiry that explores social cognitions surrounding new venture idea incubation. examining the external interfaces sought after and encountered by actors will reveal how these affect processes and experiences. finally, a focus on novice entrepreneurs is set to be a valuable comparison of approach. the process detailed in this study holds the potential to expose granular differences to inform pedagogy. such an investigation would also expose the mediating effect of hindsight perspective (azoulay et al. 2020). acknowledgements this article is derived from a thesis submitted in partial fulfilment of the requirements for the degree of doctor of business administration at the gordon institute of business science, university of pretoria. supervisor: associate professor kerrin myres. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions n.o.m and k.m contributed equally to this work. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability data for this study are available and accessible from the gibs archives. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references aaboen, l., dubois, a. & lind, f., 2012, ‘capturing processes in longitudinal multiple case studies’, industrial marketing management 41(2), 235–246. https://doi.org/10.1016/j.indmarman.2012.01.009 allinson, c.w., chell, e. & hayes, j., 2000, ‘intuition and entrepreneurial behaviour’, european journal of work and organizational psychology 9(1), 31–43. https://doi.org/10.1080/135943200398049 alvarez, s.a., & barney, j.b., 2013, ‘epistemology, opportunities, and entrepreneurship: comments on venkataraman et al. (2012) and shane (2012)’, academy of management review 38(1), 154–157. alvarez, s.a., barney, j.b., mcbride, r. & wuebker, r., 2014, ‘realism in the study of entrepreneurship’, academy of management review 39(2), 227–233. https://doi.org/10.5465/amr.2013.0244 anderson, a.r., 2000, ‘the protean entrepreneur: the entrepreneurial process as fitting self and circumstance’, journal of enterprising culture 8(3), 201–234. ardichvili, a., cardozo, r. & ray, s., 2003, ‘a theory of entrepreneurial opportunity identification and development’, journal of business venturing 18(1), 105–123. https://doi.org/10.1016/s0883-9026(01)00068-4 autio, e., dahlander, l. & frederiksen, l., 2013, ‘information exposure, opportunity evaluation, and entrepreneurial action: an investigation of an online user community’, academy of management journal 56(5), 1348–1371. https://doi.org/10.5465/amj.2010.0328 azoulay, p., jones, b.f., kim, j.d. & miranda, j., 2020, ‘age and high-growth entrepreneurship’, american economic review: insights 2(1), 65–82. https://doi.org/10.1257/aeri.20180582 bhave, m.p., 1994, ‘a process model of entrepreneurial venture creation’, journal of business venturing 9(3), 223–242. https://doi.org/10.1016/0883-9026(94)90031-0 bryant, p., 2007, ‘self-regulation and decision heuristics in entrepreneurial opportunity evaluation and exploitation’, management decision 45(4), 732–748. clausen, t.h., 2020, ‘entrepreneurial thinking and action in opportunity development: a conceptual process model’, international small business journal 38(1), 21–40. https://doi.org/10.1177/0266242619872883 creswell, j.w., 2013, ‘chapter 3: research design and methods’, in l. habib, m. masson & a. hutchinson (eds.), qualitative inquiry & research design, choosing among five approaches, 3rd edn., pp. 42–69, lincoln, sage. creswell, j.w. & garrett, a.l., 2008, ‘the “movement” of mixed methods research and the role of educators’, south african journal of education 28(3), 321–333. https://doi.org/10.15700/saje.v28n3a176 davidsson, p., 2015, ‘entrepreneurial opportunities and the entrepreneurship nexus: a re-conceptualization’, journal of business venturing 30(5), 674–695. https://doi.org/10.1016/j.jbusvent.2015.01.002 davidsson, p., 2017, ‘reflections on misgivings about “dismantling” the opportunity construct’, journal of business venturing insights 7(c), 65–67. https://doi.org/10.1016/j.jbvi.2017.03.004 davidsson, p., 2020, ‘psychology, process, and the entrepreneurial artifact’, taylor & francis group (eds.), in the psychology of entrepreneurship, pp. 357–376, routledge, brisbane. davidsson, p. & gruenhagen, j.h., 2021, ‘fulfilling the process promise: a review and agenda for new venture creation process research’, entrepreneurship theory and practice 45(5), 1083–1118. https://doi.org/10.1177/1042258720930991 dimov, d., 2007a, ‘beyond the single-person, single-insight attribution in understanding entrepreneurial opportunities’, entrepreneurship theory and practice 31(5), 713–731. https://doi.org/10.1111/j.1540-6520.2007.00196.x dimov, d., 2007b, ‘from opportunity insight to opportunity intention: the importance of person–situation learning match’, entrepreneurship theory and practice 31(4), 561–583. https://doi.org/10.1111/j.1540-6520.2007.00188.x dimov, d., 2018, ‘opportunities, language, and time’, academy of management perspectives 34(3), 333–351. https://doi.org/10.5465/amp.2017.0135 dimov, d. & pistrui, j., 2019, ‘recursive and discursive model of and for entrepreneurial action’, european management review 17(1), 267–277. https://doi.org/10.1111/emre.12360 ding, t., 2019, ‘understanding the design of opportunities: re-evaluating the agent-opportunity nexus’, environmental management 15(5), 603–612. eisenhardt, k.m., 1989, ‘building theories from case study research’, academy of management review 14(4), 532–550. https://doi.org/10.5465/amr.1989.4308385 eisenhardt, k.m. & graebner, m.e., 2007, ‘theory building from cases: opportunities and challenges’, academy of management journal 50(1), 25. https://doi.org/10.5465/amj.2007.24160888 fayolle, a., liñán, f. & moriano, j.a., 2014, ‘beyond entrepreneurial intentions: values and motivations in entrepreneurship’, international entrepreneurship and management journal 10(4), 679–689. https://doi.org/10.1007/s11365-014-0306-7 fisher, g., stevenson, r., neubert, e., burnell, d. & kuratko, d.f., 2020, ‘entrepreneurial hustle: navigating uncertainty and enrolling venture stakeholders through urgent and unorthodox action’, journal of management studies 57(5), 1002–1036. https://doi.org/10.1111/joms.12584 frank, h. & landström, h., 2016, ‘what makes entrepreneurship research interesting? reflections on strategies to overcome the rigour–relevance gap’, entrepreneurship & regional development 28(1–2), 51–75. https://doi.org/10.1080/08985626.2015.1100687 franken, a. & thomsett, h., 2013, ‘when it takes a network: creating strategy and agility through wargaming’, california management review 55(3), 107–133. https://doi.org/10.1525/cmr.2013.55.3.107 frederiks, a.j., englis, b.g., ehrenhard, m.l. & groen, a.j., 2019, ‘entrepreneurial cognition and the quality of new venture ideas: an experimental approach to comparing future-oriented cognitive processes’, journal of business venturing 34(2), 327–347. https://doi.org/10.1016/j.jbusvent.2018.05.007 friese, s., 2014, qualitative data analysis with atlas.ti, sage, london. gaddefors, j. & anderson, a.r., 2017, ‘entrepreneurship and context: when entrepreneurship is greater than entrepreneurs’, international journal of entrepreneurial behavior & research 23(2), 267–278. https://doi.org/10.1108/ijebr-01-2016-0040 gemmell, r.m., boland, r.j., & kolb, d.a., 2012, ‘the socio–cognitive dynamics of entrepreneurial ideation’, entrepreneaurship theory and practice 36(5), 1053–1073. george, n.m., parida, v., lahti, t. & wincent, j., 2016, ‘a systematic literature review of entrepreneurial opportunity recognition: insights on influencing factors’, international entrepreneurship and management journal 12(2), 309–350. https://doi.org/10.1007/s11365-014-0347-y greene, j.c. & caracelli, v.j., 1997, ‘defining and describing the paradigm issue in mixed-method evaluation’, new directions for evaluation 1997(74), 5–17. https://doi.org/10.1002/ev.1068 grégoire, d.a., cornelissen, j., dimov, d. & burg, e., 2015, ‘the mind in the middle: taking stock of affect and cognition research in entrepreneurship’, international journal of management reviews 17(2), 125–142. https://doi.org/10.1111/ijmr.12060 gruber, m., macmillan, i.c., & thompson, j.d., 2013, ‘escaping the prior knowledge corridor: what shapes the number and variety of market opportunities identified before market entry of technology start-ups?’ organization science 24(1), 280–300. gruber, m., kim, s.m. & brinckmann, j., 2015, ‘what is an attractive business opportunity? an empirical study of opportunity evaluation decisions by technologists, managers, and entrepreneurs’, strategic entrepreneurship journal 9(3), 205–225. https://doi.org/10.1002/sej.1196 hasan, s. & koning, r., 2019, ‘conversations and idea generation: evidence from a field experiment’, research policy 48(9), 103811. https://doi.org/10.1016/j.respol.2019.103811 haynie, j.m., shepherd, d.a. & mcmullen, j.s., 2009, ‘an opportunity for me? the role of resources in opportunity evaluation decisions’, journal of management studies 46(3), 337–361. https://doi.org/10.1111/j.1467-6486.2009.00824.x hjorth, d., holt, r. & steyaert, c., 2015, ‘entrepreneurship and process studies’, international small business journal 33(6), 599–611. https://doi.org/10.1177/0266242615583566 hlady-rispal, m. & jouison-laffitte, e., 2014, ‘qualitative research methods and epistemological frameworks: a review of publication trends in entrepreneurship’, journal of small business management 52(4), 594–614. https://doi.org/10.1111/jsbm.12123 holcomb, t.r., ireland, r.d., holmes, r.m., jr. & hitt, m.a., 2009, ‘architecture of entrepreneurial learning: exploring the link among heuristics, knowledge, and action’, entrepreneurship theory and practice 33(1), 167–192. https://doi.org/10.1111/j.1540-6520.2008.00285.x hoyte, c., noke, h., mosey, s. & marlow, s., 2019, ‘from venture idea to venture formation: the role of sensemaking, sensegiving and sense receiving’, international small business journal 37(3), 268–288. https://doi.org/10.1177/0266242618818876 hsu, d.k., burmeister-lamp, k., simmons, s.a., foo, m.d., hong, m.c. & pipes, j.d., 2019, ‘“i know i can, but i don’t fit”: perceived fit, self-efficacy, and entrepreneurial intention’, journal of business venturing 34(2), 311–326. https://doi.org/10.1016/j.jbusvent.2018.08.004 hunt, r.a. & lerner, d.a., 2018, ‘entrepreneurial action as human action: sometimes judgment-driven, sometimes not’, journal of business venturing insights 10, e00102. https://doi.org/10.1016/j.jbvi.2018.e00102 hunter, m., 2013, ‘a typology of entrepreneurial opportunity’, economics, management, and financial markets 8(2), 128–166. ivanova, s., treffers, t. & langerak, f., 2018, ‘emotional paths leading to opportunity desirability and feasibility beliefs through controllability’, international small business journal 36(5), 546–573. https://doi.org/10.1177/0266242617751596 jacob, s.a., & furgerson, s.p., 2012, ‘writing interview protocols and conducting interviews: tips for students new to the field of qualitative research’, the qualitative report 17(42), 1–10. https://doi.org/10.46743/2160-3715/2012.1718 keh, h.t., foo, m.d. & lim, b.c., 2002, ‘opportunity evaluation under risky conditions: the cognitive processes of entrepreneurs’, entrepreneurship theory and practice 27(2), 125–148. https://doi.org/10.1111/1540-8520.00003 kellermanns, f., walter, j., crook, t.r., kemmerer, b. & narayanan, v., 2016, ‘the resource-based view in entrepreneurship: a content-analytical comparison of researchers’ and entrepreneurs’ views’, journal of small business management 54(1), 26–48. https://doi.org/10.1111/jsbm.12126 kier, a.s. & mcmullen, j.s., 2018, ‘entrepreneurial imaginativeness in new venture ideation’, academy of management journal 61(6), 2265–2295. https://doi.org/10.5465/amj.2017.0395 langley, a., 1999, ‘strategies for theorizing from process data’, academy of management review 24(4), 691–710. https://doi.org/10.5465/amr.1999.2553248 langley, a., smallman, c., tsoukas, h. & van de ven, a.h., 2013, ‘process studies of change in organization and management: unveiling temporality, activity, and flow’, academy of management journal 56(1), 1–13. https://doi.org/10.5465/amj.2013.4001 lau, v.p., dimitrova, m.n., shaffer, m.a., davidkov, t. & yordanova, d.i., 2012, ‘entrepreneurial readiness and firm growth: an integrated etic and emic approach’, journal of international management 18(2), 147–159. leahy, k., daly, s.r., murray, j.k., mckilligan, s. & seifert, c.m., 2019, ‘transforming early concepts with design heuristics’, international journal of technology and design education 29(4), 759–779. https://doi.org/10.1007/s10798-018-9473-0 leschke, j., 2013, ‘business model mapping: a new tool to encourage entrepreneurial activity and accelerate new venture creation’, journal of marketing development and competitiveness 7(1), 18–26. mackay, r.b., & chia, r., 2013, ‘choice, chance, and unintended consequences in strategic change: a process understanding of the rise and fall of northco automotive’, academy of management journal 56(1), 208–230. maclean, k.a., aichele, s.r., bridwell, d.a., mangun, g.r., wojciulik, e. & saron, c.d., 2009, ‘interactions between endogenous and exogenous attention during vigilance’, attention, perception, & psychophysics 71(5), 1042–1058. https://doi.org/10.3758/app.71.5.1042 mäkäräinen-suni, i., 2017, ‘the journey from core idea to business: opportunity development and exploitation of a start-up venture creation process’, in european conference on innovation and entrepreneurship, september, pp. 726–733, academic conferences international limited. mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, the southern african journal of entrepreneurship and small business management 9(1), 1–10. https://doi.org/10.4102/sajesbm.v9i1.111 maxwell, j.a., 2012, qualitative research design: an interactive approach, vol. 41, sage, thousand oaks, ca. mccann, b.t. & vroom, g., 2015, ‘opportunity evaluation and changing beliefs during the nascent entrepreneurial process’, international small business journal 33(6), 612–637. https://doi.org/10.1177/0266242614544198 mcmullen, j.s. & dimov, d., 2013, ‘time and the entrepreneurial journey: the problems and promise of studying entrepreneurship as a process’, journal of management studies 50(8), 1481–1512. https://doi.org/10.1111/joms.12049 mcmullen, j.s. & shepherd, d.a., 2006, ‘entrepreneurial action and the role of uncertainty in the theory of the entrepreneur’, academy of management review 31(1), 132–152. https://doi.org/10.5465/amr.2006.19379628 mckelvie, a., wiklund, j., & brattström, a., 2018, ‘externally acquired or internally generated? knowledge development and perceived environmental dynamism in new venture innovation’, entrepreneurship theory and practice 42(1), 24–46. moroz, p.w. & hindle, k., 2012, ‘entrepreneurship as a process: toward harmonizing multiple perspectives’, entrepreneurship theory and practice 36(4), 781–818. https://doi.org/10.1111/j.1540-6520.2011.00452.x morris, m.h. & kuratko, d.f., 2020, the entrepreneurial journey: intention versus emergence, what do entrepreneurs create? edward elgar publishing, cheltenham, united kingdom. morse, j.m. & richards, l., 2002, readme first for a user’s guide to qualitative methods, sage, thousand oaks, ca. mugadza, n.o.v.m., 2020, ‘entrepreneurial opportunity incubation: a micro-process view’, doctoral dissertation, university of pretoria. ngulube, p., 2015, ‘qualitative data analysis and interpretation: systematic search for meaning’, in p. ngulube (eds.), addressing research challenges: making headway for developing researchers, igi global, hershey, united states of america, pp. 131–156. okpara, f.o., 2007, ‘the value of creativity and innovation in entrepreneurship’, journal of asia entrepreneurship and sustainability 3(2), 1. parker, s.c., 2013, ‘do serial entrepreneurs run successively better performing businesses?’, journal of business venturing 28(5), 652–666. https://doi.org/10.1016/j.jbusvent.2012.08.001 pentland, b.t., & feldman, m.s., 2005, ‘organizational routines as a unit of analysis’, industrial and corporate change 14(5), 793–815. perry-smith, j. & mannucci, p., 2015, ‘social networks, creativity, and entrepreneurship’, in c. shalley, m.a. hitt & j. zhou (eds.), the oxford handbook of creativity, innovation, and entrepreneurship, pp. 205–224, oxford university press, new york, ny. perry-smith, j.e. & mannucci, p.v., 2017, ‘from creativity to innovation: the social network drivers of the four phases of the idea journey’, academy of management review 42(1), 53–79. https://doi.org/10.5465/amr.2014.0462 pettigrew, a.m., 1992, ‘the character and significance of strategy process research’, strategic management journal 13(s2), 5–16. https://doi.org/10.1002/smj.4250130903 pettigrew, a.m., 1997, ‘what is processual analysis?’, scandinavian journal of management 13(4), 337–348. https://doi.org/10.1016/s0956-5221(97)00020-1 pettigrew, a.m., 2013, ‘the conduct of qualitative research in organizational settings’, corporate governance: an international review 21(2), 123–126. https://doi.org/10.1111/j.1467-8683.2012.00925.x piperopoulos, p. & dimov, d., 2015, ‘burst bubbles or build steam? entrepreneurship education, entrepreneurial self-efficacy, and entrepreneurial intentions’, journal of small business management 53(4), 970–985. https://doi.org/10.1111/jsbm.12116 politis, d., 2008, ‘does prior start-up experience matter for entrepreneurs’ learning? a comparison between novice and habitual entrepreneurs’, journal of small business and enterprise development 15(3), 472–489. https://doi.org/10.1108/14626000810892292 pryor, c., webb, j.w., ireland, r.d. & ketchen, d.j., jr., 2016, ‘toward an integration of the behavioral and cognitive influences on the entrepreneurship process’, strategic entrepreneurship journal 10(1), 21–42. https://doi.org/10.1002/sej.1204 rauch, a., van doorn, r. & hulsink, w., 2014, ‘a qualitative approach to evidence–based entrepreneurship: theoretical considerations and an example involving business clusters’, entrepreneurship theory and practice 38(2), 333–368. https://doi.org/10.1111/etap.12093 reay, t. & jones, c., 2015, ‘qualitatively capturing institutional logics’, strategic organization 14(4), 441–454. https://doi.org/10.1177/1476127015589981 selden, p.d. & fletcher, d.e., 2015, ‘the entrepreneurial journey as an emergent hierarchical system of artefact-creating processes’, journal of business venturing 30(4), 603–615. https://doi.org/10.1016/j.jbusvent.2014.09.002 seyb, s., shepherd, d. & williams, t.a., 2019a, ‘when in doubt, act! how entrepreneurs’ perceived uncertainty promotes community engagement’, academy of management annual meeting proceedings 2019(1), 14237. https://doi.org/10.5465/ambpp.2019.122 seyb, s.k., shepherd, d.a., & williams, t.a., 2019b, ‘exoskeletons, entrepreneurs, and communities: a model of co-constructing a potential opportunity’, journal of business venturing 34(6). https://doi.org/10.1016/j.jbusvent.2019.105947 shepherd, d.a., 2015, ‘party on! a call for entrepreneurship research that is more interactive, activity based, cognitively hot, compassionate, and prosocial’, journal of business venturing 30(4), 489–507. https://doi.org/10.1016/j.jbusvent.2015.02.001 shepherd, d.a., mcmullen, j.s. & jennings, p.d., 2007, ‘the formation of opportunity beliefs: overcoming ignorance and reducing doubt’, strategic entrepreneurship journal 1(1–2), 75–95. https://doi.org/10.1002/sej.3 shepherd, d.a., sattari, r. & patzelt, h., 2020, ‘a social model of opportunity development: building and engaging communities of inquiry’, journal of business venturing 37(1), 106033. https://doi.org/10.1016/j.jbusvent.2020.106033 shepherd, d.a., souitaris, v. & gruber, m., 2019a, ‘creating new ventures: a review and research agenda’, journal of management 47(1), 11–42. https://doi.org/10.1177/0149206319900537 shepherd, d.a. & suddaby, r., 2017, ‘theory building: a review and integration’, journal of management 43(1), 59–86. https://doi.org/10.1177/0149206316647102 shepherd, d.a., & wiklund, j., 2020, ‘simple rules, templates, and heuristics! an attempt to deconstruct the craft of writing an entrepreneurship paper’, entrepreneurship theory and practice 44(3), 371–390. shepherd, d.a., wennberg, k., suddaby, r. & wiklund, j., 2019b, ‘what are we explaining. a review and agenda on initiating, engaging, performing, and contextualizing entrepreneurship’, journal of management 45(1), 159–196. https://doi.org/10.1177/0149206318799443 spigel, b., 2017, ‘the relational organization of entrepreneurial ecosystems’, entrepreneurship theory and practice 41(1), 49–72. https://doi.org/10.1111/etap.12167 suddaby, r., 2010, ‘editor’s comments: construct clarity in theories of management and organization’, academy of management review 35(3), 346–357. https://doi.org/10.5465/amr.2010.51141319 tumasjan, a. & braun, r., 2012, ‘in the eye of the beholder: how regulatory focus and self-efficacy interact in influencing opportunity recognition’, journal of business venturing 27(6), 622–636. https://doi.org/10.1016/j.jbusvent.2011.08.001 van gelderen, m., kautonen, t. & fink, m., 2015, ‘from entrepreneurial intentions to actions: self-control and action-related doubt, fear, and aversion’, journal of business venturing 30(5), 655–673. https://doi.org/10.1016/j.jbusvent.2015.01.003 vogel, p., 2017, ‘from venture idea to venture opportunity’, entrepreneurship theory and practice 41(6), 943–971. https://doi.org/10.1111/etap.12234 welpe, i.m., spörrle, m., grichnik, d., michl, t. & audretsch, d.b., 2012, ‘emotions and opportunities: the interplay of opportunity evaluation, fear, joy, and anger as antecedent of entrepreneurial exploitation’, entrepreneurship theory and practice 36(1), 69–96. williams, d.w. & wood, m.s., 2015, ‘rule-based reasoning for understanding opportunity evaluation’, academy of management perspectives 29(2), 218–236. https://doi.org/10.5465/amp.2013.0017 wood, m.s. & mckelvie, a., 2015, ‘opportunity evaluation as future focused cognition: identifying conceptual themes and empirical trends’, international journal of management reviews 17(2), 256–277. https://doi.org/10.1111/ijmr.12053 wood, m.s., 2017, ‘continued misgivings: a response to davidsson on dismantling the opportunity construct’, journal of business venturing insights 7(c), 77–81. https://doi.org/10.1016/j.jbvi.2017.04.001 wood, m.s. & williams, d.w., 2014, ‘opportunity evaluation as rule-based decision making’, journal of management studies 51(4), 573–602. https://doi.org/10.1111/joms.12018 woods, m., paulus, t., atkins, d.p. & macklin, r., 2016, ‘advancing qualitative research using qualitative data analysis software (qdas)? reviewing potential versus practice in published studies using atlas.ti and nvivo, 1994–2013’, social science computer review 34(5), 597–617. https://doi.org/10.1177/0894439315596311 wood, g., phan, p.h., & wright, m., 2018, ‘the problems with theory and new challenges in theorizing’, academy of management perspectives 32(4), 405–411. wright, m., & marlow, s., 2012, ‘entrepreneurial activity in the venture creation and development process’, international small business journal: researching entrepreneurship 30(2), 107–114. https://doi.org/10.1177/0266242611432793 yin, r.k., 2013, ‘validity and generalization in future case study evaluations’, evaluation 19(3), 321–332. https://doi.org/10.1177/1356389013497081 yitshaki, r. & kropp, f., 2018, ‘revisiting entrepreneurial motivation and opportunity recognition’, in m. brännback & a.l. carsrud (eds.), a research agenda for entrepreneurial cognition and intention, pp. 122–141, edward elgar publishing, cheltenham. zahra, s.a., sapienza, h.j. & davidsson, p., 2006, ‘entrepreneurship and dynamic capabilities: a review, model and research agenda’, journal of management studies 43(4), 917–955. https://doi.org/10.1111/j.1467-6486.2006.00616.x zahra, s.a. & wright, m., 2016, ‘understanding the social role of entrepreneurship’, journal of management studies 53(4), 610–629. https://doi.org/10.1111/joms.12149 sajesbm volume 7 (2015) 117 www.sajesbm.co.za article 150 entrepreneurship traits of science, engineering and technology (set) students elma van der lingen elma.vanderlingen@up.ac.za gerhard van niekerk gerhardvn@gmail.com department of engineering and technology management, graduate school of technology management, university of pretoria, south africa corresponding author: elma.vanderlingen@up.ac.za abstract entrepreneurship studies and education courses have increased significantly with the realisation of their importance for economic growth. entrepreneurship courses are no longer only offered in business schools and faculties of economic and management sciences. they are increasingly being incorporated into natural sciences and engineering faculties. the aim of this study is to determine the enterprising tendency of science, engineering and technology (set) students with the general enterprising tendency (get) test developed by dr sally caird. set students have an aboveaverage enterprising tendency, which indicates that they are likely to be enterprising in some way, but most likely through intrapreneurship by being part of a group within a corporate environment. the first degree (beng, bsc or btech) of set students appears to have no influence on their enterprising tendency. male students have a higher enterprising tendency than female students, and males in the btech degree revealed a significantly higher need for autonomy than females. white students have a higher tendency to display entrepreneurial traits, such as need for autonomy, calculated risk-taking and internal locus of control, whereas black students display a higher need for achievement. the aim of this study is to structure technopreneurship courses in order to provide more effective training for set students. keywords: entrepreneurship, traits, tendencies, technopreneurs, science students, engineering students, technology students, set students, gender, ethnical group, get test http://www.sajesbm.co.za/ mailto:elma.vanderlingen@up.ac.za mailto:gerhardvn@gmail.com mailto:elma.vanderlingen@up.ac.za sajesbm volume 7 (2015) 118 www.sajesbm.co.za article 150 introduction entrepreneurship has become increasingly important to enhance a country’s economy. this has also resulted in various academic departments offering courses in entrepreneurship. entrepreneurship is no longer only offered by business schools and faculties of economic and management sciences, but also by various natural sciences and engineering faculties. technology entrepreneurs, also known as technopreneurs, are important in newventure initiations, as they can identify business opportunities in the scientific and engineering space (wickham, 1998). as the modern world is rapidly changing, it presents a magnitude of new technologies that can be developed into new ventures. these new developments not only demand technical skills from natural sciences and engineering students, but also business and entrepreneurial skills (refaat, 2009). the aim of this study is to determine the enterprising tendency of science, engineering and technology (set) students and to compare these results with those of students in other disciplines and professions. the study will further explore whether there is a relationship between the enterprising tendency of set students and their first scientific degree, gender and ethnic group. the future aim with continuing this study will be to structure technopreneurship courses in order to provide more effective training for set students. the paper includes a literature review on the personality traits of entrepreneurs and how enterprising tendencies can be measured. the methodology, results and discussion, and conclusion follow. literature entrepreneur according to hébert and link (1989) the pre-classical entrepreneur, richard cantillon (1680–1734), was the first person to use the term “entrepreneur”. cantillon considered the entrepreneur to be the central economic player of the three groups of actors in the economy, namely landowners, employees and risk-taking entrepreneurs. the entrepreneur connects economic factors and allows economic exchanges to occur (van praag, 1999). according to wennekers and thurik (1999), three main traditions http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 119 www.sajesbm.co.za article 150 characterise entrepreneurs. these traditions have the same origin, but emphasise different aspects of entrepreneurship. the german tradition of baumol, schumpeter and von thunen focuses on entrepreneurs as forces of instability and creative destruction. the entrepreneur is seen as a person who gets things done and is an economic innovator. the neoclassical tradition of marshall, knight and schultz stresses the role of the entrepreneur in establishing economic stability and decisionmaking. menger, von mises and kirzner of the austrian tradition, concentrate on the entrepreneur’s ability to perceive profitable opportunities (wennekers and thurik, 1999). there is no consensus among researchers on an exact definition of entrepreneurship. for example, entrepreneurship is seen as the creation of new value, which includes recognising opportunities, taking responsibility and making decisions, displaying total commitment to a venture, the willingness to take calculated risks and the creative skill needed to get the required resources (kirby, 2004). although the term “entrepreneur” has been known for many centuries, studies on entrepreneurship, as well as the development of entrepreneurship education courses, increased significantly as people realised the importance of the discipline for economic growth. however, entrepreneurship is a relatively new field in management studies and has only been widely studied since the 1980s (shane & venkataraman, 2000). entrepreneurship education drucker (1985) states that “most of what you hear about entrepreneurship is wrong. it’s not magic, it is not mysterious and it has nothing to do with genes. it’s a discipline and, like any discipline, it can be learned”. today, entrepreneurship education is lectured in various disciplines, such as business, management, and science and engineering studies. these studies do not just encourage entrepreneurship, they also encourage the intrapreneurship of employees in corporate environments. it is widely accepted that entrepreneurial processes can be taught these days (kuratko, 2005) and universities play an important role in encouraging entrepreneurship, as they are involved in the creation of opportunity-based enterprises (autio, 2005). besides imparting knowledge, formal education can have a profound impact on http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 120 www.sajesbm.co.za article 150 influencing a student’s personality, which develops his or her skills and shapes his or her character and value system (jyohti, 2009). keat, yeng and meyer (2011) state that entrepreneurship education is the “pedagogical process involved in the encouragement of entrepreneurial activities, behaviours and mindsets”. they also state that universities are ideally placed to promote entrepreneurship and can influence a student’s career choice of being self-employed or working as an employee. governments worldwide have seen the importance of entrepreneurship education (knowledge and skills) and actively promote entrepreneurship education in schools, colleges and universities to create an enterprising and innovative society (kirby, 2004). entrepreneurship education is applied to foster economic growth and innovation, and the evaluation of these entrepreneurship programmes has become increasingly crucial to the process of improving the outcome. huber, sloof and van praag (2014) conclude that the evaluation studies on entrepreneurship education conducted so far have indicated modest effects, as well as contradictory results. martin, mcnally and kay (2013) conducted a meta-analysis of 42 entrepreneurship education and training (eet) papers between 1979 and 2011, and state that there are strong relationships between eet, entrepreneurship-related human capital assets and entrepreneurship outcomes. their study further revealed that academic eet interventions result in stronger outcomes than eet interventions that are focused on training. evidence of heterogeneity in their correlations results from, among other things, methodology weaknesses in published studies. entrepreneurship programmes vary in scope and intensity, as do the material and teaching methods (kirby, 2004; shane & venkataraman, 2000). some studies focus on the content and manner in which entrepreneurship programmes should be taught (van vuuren & nieman, 1999; nieuwenhuizen & groenewald, 2008; pretorius, 2008; karlsson & moberg, 2013). mwasalwibe (2010) found that there is a shift from a startup to an attitude-changing perspective within entrepreneurship education, whereas carey and matlay (2010) looked into the characteristics of creative discipline education and ideas assessment. radipere (2012) suggests that entrepreneurship education should include the use of interactive methods, as well as providing students with simulations to develop decision-making and analytical skills. although http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 121 www.sajesbm.co.za article 150 warhuus and basaiawmoit (2014) aimed to evaluate how technopreneurship programmes are developed and designed at different science, technology, engineering and mathematical (stem) institutions, they found that “diversity in effective and successful programmes uncovers strong interdependencies between programme design and inception, and the programme developers”. many entrepreneurship courses and handbooks focus on the screening of potential business opportunities according to specific frameworks, compiling a business plan, intellectual property (ip) rights and financial assessment. while opportunity recognition is important (shane & venkataraman, 2000), students are not always equipped to undertake a self-evaluation to determine if they would want to attempt an entrepreneurial career or utilise a business opportunity (mazzarol, 2007). mazzarol’s diagnostic study on master of business administration (mba) students, which made use of the general enterprising tendency (get) test, showed that students can be made aware of their own entrepreneurial capacity. mazzarol further states that environmental forces have a positive or negative influence on people’s entrepreneurial traits. souitaris, zerbinati and al-laham (2007) draw on the theory of planned behaviour (ajzen, 1991) when they investigate whether or not a student’s intention to start a business would increase after participating in an entrepreneurship course. since starting a business is a planned event, increased intention would translate into more newly created businesses. the study found that participating in an entrepreneurship course increased the intention of self-employment through inspiration and not knowledge gained. in psychology literature, intention was proven to be the best predictor of planned behaviour. entrepreneurship is a typical example of planned intentional behaviour (souitaris et al., 2007). kautonen, van gelderen and tornikoski (2013) use the theory of planned behaviour to predict entrepreneurial behaviour prior to the onset of any observable action. the best way to predict planned behaviour, such as entrepreneurship, is “by observing intentions towards behaviour – not by attitudes, beliefs, personality or mere demographics” (krueger, reilly & carsrud, 2000). http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 122 www.sajesbm.co.za article 150 personality traits of entrepreneurs most entrepreneurs share some common psychological trait, which is usually a good predictor of entrepreneurial behaviour (koh, 1996). an entrepreneur is further not defined by a single trait or characteristic, but rather by a configuration of traits that distinguish potential entrepreneurs from those who are not interested in setting up new ventures (mueller & thomas, 2001). some common traits of entrepreneurs include the following:  the need for achievement has been seen as an entrepreneurial trend ever since it was introduced by mcclelland, atkinson, clark and lovell (1953). their definition of the need to achieve is “an arousal when there is competition with a standard of excellence in situations where performance may be assessed for success or failure”. cromie (2000) and caird (1991a) associate the need for achievement with self-awareness, planning initiative, responsibility, decision-making, problem-solving, innovation, risk-taking, energy, determination and motivation. it is one of the most studied personality traits in entrepreneurship (demirci, 2013) and has been linked to successful business creation (mueller & thomas, 2001). in conjunction with the need to achieve, entrepreneurs generally have a low need for power.  the important role of creativity in entrepreneurship is probably the earliest known trait of entrepreneurship (schumpeter, 1951). creativity and innovation in entrepreneurship refer to the ability to create, develop new ideas, investigate and experiment with new ideas, find new market opportunities, and improve existing products and services to provide new value. it is the central driving force behind both innovation and entrepreneurship (demirci, 2013). innovation in entrepreneurship is the “process that turns an invention into a marketable product” (gabor, 1970). being innovative is the ability and desire to create new ways of doing business or improving existing ways.  propensity for risk-taking is the likelihood of making decisions in an uncertain environment (koh, 1996). it is evident from multiple authors that entrepreneurs prefer to operate in environments where they have some experience and control to increase the success of the decisions they make despite the uncertainty in which they have to operate (cromie, 2000; koh, http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 123 www.sajesbm.co.za article 150 1996). entrepreneurs generally take risks in areas where they have some degree of control or when they have experience in running a business (nieuwenhuizen & groenewald, 2006).  self-belief is a key characteristic of successful entrepreneurs (koh, 1996). this is also important in assisting them to build relationships with other people and strengthens their independence (mueller & thomas, 2001).  rotter (1966) created the concept of “locus of control”. an internal locus of control is defined as a person’s positive perception of his or her ability to control and influence his or her environment and circumstances to create the desired outcomes for his or her undertakings through ability, skills or effort (mueller & thomas, 2001). entrepreneurs do not believe that luck, fate or other external forces determine how successful they are going to be, but that they personally determine their success.  associated with an internal locus of control is the desire for independence and autonomy. entrepreneurs desire independence that can only be found in their own business, which provides them with control and economic self-reliance (cromie, 2000). entrepreneurs value their autonomy and independence very highly (kirby, 2004).  tolerance for ambiguity is the entrepreneur’s ability to handle all the uncertainties that surround having his or her own business. people with a high tolerance for ambiguity would be comfortable working to overcome this ambiguity in order to reach the goals they have set for themselves and their business (koh, 1996). measuring enterprising tendency enterprising tendency measurements should consider the most significant entrepreneurial characteristics, motivations and attitudes, since entrepreneurs are not a homogenous group. very few formalised evaluation tools of enterprising tendency have been developed. a tool that can be used for such a measurement is the get test, which was developed by dr sally caird (1991a; 1991b; 1993; 2006; 2014). the get test was developed from the following psychometric tests:  the thematic apperception test (tat) (murray, 1943), which measures http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 124 www.sajesbm.co.za article 150 achievement.  the edwards personal preference schedule (epps) (edwards, 1959), which measures autonomy.  honey and mumford’s measure of learning styles (mumford & honey, 1992) and jackson’s personality inventory (jackson, 1976), which both measure risk-taking.  the myers-briggs type indicator (mbti) (briggs-myers & mccaulley, 1985), which measures introversion versus extroversion, intuition versus sensation, thinking versus feeling, and judging versus perception. get is a testing tool that evaluates a person’s views on entrepreneurial attributes and measures the following five characteristics that are found in successful entrepreneurs: the need for achievement, the need for autonomy, an internal locus of control, a creative tendency and risk-taking. the test contains 54 statements to which the respondents have to indicate whether they agree or disagree. subfields are scored individually and a total score can be calculated. the average score for the test is 36. subfields consist of either 12 or six items. both the get test (stormer & kline, 1999) and the tests on which it is based (caird, 1991a; 1993) have been validated by multiple researchers. stormer and kline (1999) have indicated that the test is reliable and credible, as shown by an overall cronbach’s alpha rating of 0.86 for the test yield. caird’s findings are still valid today, as shown by liñán and chen (2009), who found a shortage of standardised, validated psychometric tests for enterprising tendencies, despite an increase in the volume of research into enterprising tendencies. multiple papers present results obtained by utilising the get test on different populations. for example, caird (1991b) performed a study with business owners, managers, teachers, nurses, civil servants and lecturers, while stormer and kline (1999) performed the get test on a sample of new and successful business owners. a recent study by ishiguro (2014) made use of the get2 test in a study on japanese high-school students. mazzarol (2007) studied australian mba students, kirby and ibrahim (2010) provided some comparative values obtained with the get test from egyptian and british management students, sethu (2012) performed a study on http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 125 www.sajesbm.co.za article 150 students studying engineering, hotel management, management, pharmacology and medicine at manipal university in karnataka, and demirci (2013) described a comparative study between canadian and turkish students enrolled in business management courses. these studies further found that the get test appears to have a criterion and convergent validity, and has good internal consistency. cromie (2000) suggests that the test requires further study to verify its psychometric properties. he found a positive correlation between the subfields of the test, as well as a strong correlation with the test total. stormer and kline (1999) found that, although the test is sufficient academically and a reliable measure of entrepreneurial intent, it is a poor measure of business success. mazzarol (2007) concluded that the test has potential for the assessment of enterprising tendencies and entrepreneurial orientation, but does not determine whether or not the person being tested is an entrepreneur. methodology general enterprising tendency test the get test (caird, 1991) is the primary measuring instrument used in this study. it is employed to determine the level of students’ entrepreneurial tendencies. these tendencies (achievement, locus of control, need for autonomy, creative tendency and calculated risk-taking) are measured using questions from existing psychometric tests (caird, 1991). in addition to the primary research questions, the researcher also captured profile information, such as gender, ethnic group and first scientific degree. the last variable is students’ perception of the accuracy of the get test, as the students receive immediate feedback on the test results and have an opportunity to rate their perceived accuracy of the test. population and sample the survey population comprised students from the graduate school of technology management (gstm) at the university of pretoria in south africa. the gstm students were honours students enrolled in the engineering management section of http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 126 www.sajesbm.co.za article 150 the technological entrepreneurship module. all gstm honours students have already completed a first degree in engineering (beng), science (bsc) or technology (btech). in south africa, the beng degree (four years) and bsc degree (three years) are undertaken at traditional universities. a btech degree (four years) is more practice orientated compared to the academically orientated beng and bsc degrees. btech degrees are obtained from universities of technology or comprehensive universities (an amalgamation of traditional and comprehensive universities). the population/sample is referred to as set students. the participants are potential entrepreneurs and not practising entrepreneurs. ethical approval was obtained before the research was conducted. the sample of this survey was self-selected. the researcher had no direct access to the test population and had to rely on the students’ willingness to respond to an email invitation. the students were surveyed directly after completing the module and before writing the final examination. the data for the study was collected through the online survey tool google forms. a link to the online survey was included in the invitation email. google forms provides feedback to the test respondents on their get test scores. a web-based survey tool has many advantages. it is easy to survey a large population, reduces time and cost, and it is easy to tabulate the results (mcmillan & schumacher, 2006). according to welman, kruger and mitchell (2005), all survey-type research would fall into the nonexperimental research category, since there is no planned intervention. to validate the differences between the test groups, statistical analyses of the captured data were performed. averages and standard deviations were computed to allow for comparisons of the data from the groups. students’ microsoft excel t-tests were used to determine if the differences in the data were statistically significant. the t-test uses a two-tailed distribution with a two-sample equal variance. the researchers aimed to find answers to the following research questions:  do set students have an above-average enterprising tendency?  how does the enterprising tendency of set students compare with published data from other studies on students and professions?  is the respondent’s enterprising tendency related to his or her first scientific http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 127 www.sajesbm.co.za article 150 degree (beng, bsc or btech)?  does gender influence enterprising tendency?  do ethnic groups have an influence on enterprising tendency?  what is the students’ perceived accuracy of the get test? results and discussion the response rate was 86%, with 189 students responding out of a population of 220. the results are presented according to the seven research questions. do set students have an above-average enterprising tendency? the data presented in table 1 is according to the get test’s five entrepreneurship tendencies: need for achievement, need for autonomy, creative tendency, calculated risk-taking and internal locus of control. the maximum get score and the get averages shown in table 1 are adapted from caird (1991). the results show that the students have an overall enterprising tendency score of 40, which is above average. this score indicates that respondents are more likely to work as intrapreneurs in an organisational team. however, there is a strong tendency to start an own venture, but stronger independent leadership qualities need to be cultured (caird, 2014). a get score of 44 and higher indicates a strong possibility that the respondent will start a venture and manage projects. within the set group, above-average results for four of the five subfields were obtained. in the fifth subfield, “need for autonomy”, the actual average was 3.26 compared to the average get score of http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 128 www.sajesbm.co.za article 150 table 1: the means and standard deviations for set students based on enterprising tendency measurements enterprising tendency first degree no maximum get score average get score actual mean score standard deviation total get score beng 47 54 37 40.81 5.58 bsc 28 38.36 5.42 btech 114 40.07 4.91 total 189 40.00 5.19 need for achievement beng 47 12 9 9.83 1.75 bsc 28 9.71 1.49 btech 114 10.07 1.36 total 189 9.96 1.48 need for autonomy beng 47 6 4 3.74 1.36 bsc 28 2.93 1.33 btech 114 3.14 1.32 total 189 3.26 1.35 creative tendency beng 47 12 8 9.62 1.55 bsc 28 8.71 2.07 btech 114 8.82 1.84 total 189 9.00 1.83 calculated risk-taking beng 47 12 8 9.04 1.78 bsc 28 8.50 1.50 btech 114 9.09 1.70 total 189 8.99 1.70 internal locus of control beng 47 12 8 8.57 1.66 bsc 28 8.50 1.97 btech 114 8.96 1.58 total 189 8.79 1.67 how does the entrepreneurship tendency of set students compare with other studies on students and professions? table 2 contains the results of the present study and those of other studies in literature that conducted get tests on different student types and professions. groups with relatively high enterprising tendencies and a total get score of 40 and above are obtained from the set students. these students already have a minimum of one year’s experience in business, as business owners and as entrepreneurs. other groups with a tendency higher than the average of 37 include groups of http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 129 www.sajesbm.co.za article 150 lecturers and mba students. professions with lower enterprising tendencies appear to be teachers, nurses, clerical trainees, civil servants and undergraduate students. four enterprising tendencies (need for achievement, creativity, risk-taking and locus of control) of set students compare very well with those of business owners/entrepreneurs. it is interesting to note that the business owners/entrepreneurs in all the groups reported on in the literature are the only groups with a “need for autonomy” score above the average get score of 4. a low score for the “need for autonomy” subfield can indicate flexibility in decision-making, a facilitating nature and a preference for working for someone else instead of managing others. a respondent who attains a high score for this subfield is generally independent and a poor employee in jobs that lack autonomy. they are stubborn, determined and need independence (caird, 2014). http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 130 www.sajesbm.co.za article 150 table 2: get results for different student types and professions enterprising tendency no total get score need for achievement need for autonomy creative tendency calculated risk-taking internal locus of control set students 189 40.00 9.96 3.26 9.00 8.99 8.79 students one year in business1 29 40.41 10.03 3.17 9.86 9.14 8.21 business owner2 73 41.04 9.92 4.14 8.77 8.75 9.51 teacher2 101 35.94 8.84 3.32 8.24 7.50 8.17 nurses2 33 33.33 8.52 2.85 7.97 6.61 7.76 clerical trainees2 10 29.40 6.70 3.00 6.10 6.20 7.90 civil servants2 20 33.55 8.45 3.00 7.70 6.80 7.50 lecturers2 25 38.28 8.88 4.12 8.48 8.64 8.24 australian entrepreneurs3 56 43.05 10.02 4.05 9.36 9.30 10.00 australian mba students3 56 39.41 9.34 3.71 8.63 8.25 9.48 egyptian undergraduates4 55 33.00 7.60 3.25 8.40 3.60 8.10 engineering undergraduates5 22 32.91 7.64 3.41 7.27 7.32 7.27 1 van niekerk & van der lingen (2015) 2 caird (1991) 3 mazzarol (2007) 4 kirby & ibrahim (2011) 5 sethu (2012) http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 131 www.sajesbm.co.za article 150 is the respondent’s enterprising tendency related to his or her first scientific degree (beng, bsc or btech)? the sig t-test results conducted for the different student groups (first degrees) for the five subfields show no statistical significance (no p-values <0.1) (see table 3). within the set group of students, there is no statistical justification that the students’ enterprising tendency relates to their first engineering, science or technology degree. table 3: p-values as determined by a two-tailed sig t-test for set students enterprising tendency first degree first degree p-value need for achievement beng bsc 0.4492 bsc btech 0.3015 btech beng 0.9646 need for autonomy beng bsc 0.7153 bsc btech 0.7161 btech beng 0.9429 creative tendency beng bsc 0.4975 bsc btech 0.7287 btech beng 0.5716 calculated risk-taking beng bsc 0.9850 bsc btech 0.7200 btech beng 0.7065 internal locus of control beng bsc 0.6463 bsc btech 0.5982 btech beng 0.2134 total get score for five tendencies beng bsc 0.8109 bsc btech 0.5270 btech beng 0.7213 each tendency was further analysed by distinguishing between the scores below the get average for each group within each enterprising tendency. the results are captured in figures 1a to 1e. it is clear from the results that, for each enterprising characteristic, comparable results were obtained for all the subfields of all set student groups, except the “need for autonomy” subfield. a significantly higher percentage of the beng students compared to the bsc and btech students had an average or above-average score for “need for autonomy” (see figure 1b). http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 132 www.sajesbm.co.za article 150 figure 1: comparison between the scores of set students for the different enterprising tendencies: (a) need for achievement, (b) need for autonomy, (c) creative tendency, (d) calculated risk-taking and (e) internal locus of control does gender influence enterprising tendency? table 4 provides the sample size of the genders within the different set groups of students, whereas table 5 indicates the enterprising tendencies of each group according to gender. table 4: gender ratio between the different set student groups first degree no male, no (%) female, no (%) beng 47 36 (77%) 11 (23%) bsc 28 17 (61%) 11 (39%) btech 114 84 (74%) 30 (26%) total 189 137 (72%) 52 (28%) 0% 50% 100% <average >=average calculated risk-taking beng bsc btech 0% 20% 40% 60% 80% 100% <average >=average internal locus of control beng bsc btech (a) (b) (c) (d) (e) http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 133 www.sajesbm.co.za article 150 the total get score for all the set groups are statistically significant with a p-value of <0.05 between males and females, and the males showing a higher enterprising tendency. for a number of years, global entrepreneurship monitor (gem) studies (turton & herrington, 2014) have shown that males are more likely to pursue entrepreneurial careers than females. shinnar, hsu and powell (2014) found that attending an entrepreneurial course results in a statistically significant increase in entrepreneurial self-efficacy (ese) for male students when compared to female students. the highest statistical significance was observed for the need for autonomy tendency in the btech group with a significance of p <0.001. other noticeable statistically significant results for gender were found at a significance of p <0.1 for the total set group in terms of need for autonomy and creative tendency, as well as internal locus of control in the btech degree group. there is a statistical significance of p <0.05 for calculated risk-taking for the btech group and internal locus of control for all set groups. thus, in the btech group specifically, it appears that males have a much higher need for autonomy, as well as a higher creative tendency, calculated risk-taking and internal locus of control than females. no statistically significant results with regard to gender were obtained for the beng and bsc groups. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 134 www.sajesbm.co.za article 150 table 5: the means and standard deviations for set students based on enterprising tendency measurements per gender enterprising tendency first degree male female difference mean standard deviation mean standard deviation male to female total get score beng 40.583 6.281 41.083 2.067 -0.500 bsc 38.235 5.804 38.545 5.027 -0.310 btech 40.952 4.573 37.600 5.062 3.352 all 40.518 5.258 38.635 4.778 1.884** need for achievement beng 9.806 1.939 9.909 0.944 -0.104 bsc 9.647 1.498 9.818 1.537 -0.171 btech 10.179 1.390 9.767 1.251 0.412 all 10.015 1.567 9.808 1.237 0.207 need for autonomy beng 3.694 1.411 3.909 1.221 -0.215 bsc 3.059 1.391 2.727 1.272 0.332 btech 3.333 1.356 2.600 1.037 0.733*** all 3.394 1.379 2.904 1.225 0.490* creative tendency beng 9.444 1.647 10.182 1.079 -0.737 bsc 8.471 2.322 9.091 1.640 -0.620 btech 9.012 1.632 8.267 2.258 0.745* all 9.058 1.744 8.846 2.062 0.212 calculated risk-taking beng 8.917 1.903 9.455 1.293 -0.538 bsc 8.529 1.663 8.455 1.293 0.075 btech 9.310 1.693 8.467 1.592 0.843** all 9.109 1.756 8.673 1.505 0.436 internal locus of control beng 8.722 1.717 8.778 1.446 -0.056 bsc 8.529 2.267 8.455 1.508 0.075 btech 9.119 1.601 8.500 1.456 0.619* all 8.942 1.727 8.404 1.445 0.538** * p <0.1 ** p <0.05 *** p <0.01 http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 135 www.sajesbm.co.za article 150 do ethnic groups have an influence on enterprising tendency? the south african population is generally divided into four ethnic groups: white, black, coloured and indian. the sample size for each of these ethnic groups within the set group is shown in table 6. due to the small sample for the coloured and indian student groups in the present study, further analyses only include the white and black student groups (see table 7). antonites and govindasamy (2013) conducted a study on the critical success factors of indian entrepreneurs. preisendörfer, bitz and bezuidenhout (2012) found a vast difference in the total early-stage entrepreneurial activity (tea) rates of the four ethnic groups in south africa with lower rates for black and coloured south africans (4.3% and 2.9% respectively) when compared to the rates of 13.2% for the white and 16.1% for the indian student groups. as the black population is the largest group in south africa at 79.2% of the population according to census 2011 (statssa, 2012), it affects the country’s weak overall tea performance. table 6: sample size of ethnic groups within the different set student groups first degree white, no black, no coloured, no indian, no beng 21 24 1 1 bsc 4 21 0 1 btech 15 90 3 5 total 40 135 4 7 no statistical significance exists for the total get scores between these two ethnic groups. for the subfields, statistically significant results (p <0.05) with a higher tendency towards the white student group include need for autonomy, calculated risktaking and internal locus of control. mueller and thomas (2001) have shown that there is a link between the willingness to take risks and internal locus of control. in their study, preisendörfer et al. (2012) showed that black student groups have a low level of self-confidence and a tendency to avoid risks, which includes a high fear of failure. the only statistically significant result was that the black groups showed a higher statistically significant entrepreneurial characteristic for the subfield “need for achievement” (p <0.1). the black student groups have higher “need for achievement” tendency scores for all three set groups (beng, bsc and btech students). http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 136 www.sajesbm.co.za article 150 table 7: the means and standard deviations for set students based on enterprising tendency measurements per ethnic group (white and black) enterprising tendency first degree white black difference between mean standard deviation mean standard deviation white and black total get score beng 40.238 5.787 42.174 4.754 -1.936 bsc 41.500 2.380 37.917 5.587 3.583 btech 41.267 5.120 39.912 5.026 1.355 all 40.750 5.227 39.942 5.198 0.808 need for achievement beng 9.476 1.861 10.391 1.530 -0.915* bsc 9.500 1.732 9.708 1.517 -0.208 btech 9.667 1.839 10.088 1.297 -0.421 all 9.550 1.797 10.072 1.381 -0.522* need for autonomy beng 3.714 1.347 3.783 1.476 -0.068 bsc 3.500 1.291 2.958 1.301 0.542 btech 3.733 1.486 3.055 1.259 0.678* all 3.700 1.363 3.159 1.325 0.541** creative tendency beng 9.190 1.601 10.217 1.204 -1.027** bsc 9.750 1.258 8.750 2.027 1.000 btech 8.333 1.952 9.011 1.773 -0.678 all 8.925 1.745 9.167 1.794 -0.242 calculated risk-taking beng 9.000 1.871 9.261 1.738 -0.261 bsc 9.500 1.291 8.292 1.517 1.208 btech 9.667 1.291 9.000 1.795 0.667 all 9.300 1.620 8.920 1.755 0.380** internal locus of control beng 8.857 1.276 8.522 1.563 0.335 bsc 9.250 0.957 8.208 2.021 1.042 btech 9.867 1.125 8.758 1.622 1.108** all 9.275 1.261 8.623 1.688 0.652** * p <0.1 ** p <0.05 *** p <0.01 what is the students’ perceived accuracy of the get test? after completing the survey, respondents were asked to rate the perceived accuracy of the feedback, based on the enterprising tendency scores they received. the response was generally favourable, with 71% of respondents considering the test to be “accurate” and “very accurate”. while the accuracy of the respondents’ selfperception on their enterprising tendencies is not a scientific measure, it provides a level of confidence in the get test’s ability to measure accurately. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 137 www.sajesbm.co.za article 150 limitations of the study the research was conducted on students studying towards the honours degree at the university of pretoria’s gstm that included the technological entrepreneurship module. therefore, the sample is limited to one entrepreneurship module at a single university, which could influence the relevance to other set students. future research should make use of a larger sample of set students and/or employees, which will provide a better understanding of this group’s enterprising tendencies. this research could further enable entrepreneurship programmes to be more effective in training set groups to have a higher impact. conclusions the study was conducted on the honours students enrolled for the technological entrepreneurship module at the university of pretoria. all respondents had a first degree in science, engineering or technology. literature on the enterprising tendency of technopreneurs or intended entrepreneurs with a background in science, engineering and technology is limited. the study indicates that the respondents have an above-average enterprising tendency for the total get score, as well as for four of the five subfields. the set students’ total get score of 40 indicates that they will most likely be satisfied with being intrapreneurs who are part of a team within a corporation. the group has strengths in four of the five enterprising characteristics. a lower-than-average score was obtained for the subfield “need for autonomy”. because of the above-average enterprising characteristics in most of the subfields, the respondents are likely to be enterprising in some way, but most likely through intrapreneurship (caird, 2014). comparison of get results from studies conducted on other student groups and professions reveals a comparable overall enterprising tendency of set students with existing entrepreneurs and business owners. again, set students scored lower in the subfield “need for autonomy” than the entrepreneurs and even some of the other student groups, such as mba and undergraduate students, as well as professions, such as lecturers and teachers. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 138 www.sajesbm.co.za article 150 set students’ first degree (beng, bsc or btech) appears to have no influence on their enterprising tendency, as no statistically significant results were obtained. however, further investigation into the enterprising characteristics or subfields revealed that the beng students have a remarkably higher “need for autonomy” when compared to the bsc and btech student groups. the results show that males have a higher enterprising tendency than females. at a statistical significance of p <0.001, the results further indicated that males within the btech group have a significantly higher need for autonomy than females in the same group. other statistically significant results for this group indicated that males had a stronger tendency towards creativity, calculated risk-taking and internal locus of control than females. no statistically significant results were obtained for the bsc and beng groups on the influence of gender on enterprising tendency. the enterprising tendency study in relation to the ethnic groups shows that the white student group has a statistically (p <0.05) higher propensity for the subfields “need for autonomy”, “calculated risk-taking” and “internal locus of control” when compared to the black student group. mueller and thomas (2001) indicate that there is a link between willingness to take risks and internal locus of control. other authors, such as preisendörfer et al. (2012), have also found that black student groups have a lower level of self-confidence, which relates to the subfield “locus of control”. it indicates an external locus of control where the respondent doubts personal qualities and efforts to achieve goals in life and rather believes in fate (caird, 2014). preisendörfer et al. (2012) also found that the black student groups tend to avoid risks due to, for example, fear of failure. on the other hand, the black student groups had a higher tendency for the subfield “need for achievement” in relation to the white student groups (p <0.1). interestingly, the black student groups had higher scores for the subfield “need for achievement” for all three set groups (beng, bsc and btech). in 2014, south africa had an unemployment rate of 25.1%, which could escalate to the 8th highest unemployment rate in the world by 2015. this rate includes a youth unemployment rate of 52.5% (world employment social outlook, 2015). one of the 2013 gem findings reveals that the number of young people in south africa who believe that they have the entrepreneurial skills required to start a successful business http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 139 www.sajesbm.co.za article 150 is also significantly less than in most other developing countries (turton & herrington, 2014). the south african population consists of approximately 80% black people and, in order to grow the economy and alleviate problems associated with unemployment and poverty, the country depends on this ethnic group to become entrepreneurs and set up new ventures. entrepreneurial traits need to be developed already at an early age, such as at primary – and secondary school levels (ahmad, 2013; marques et al., 2012; draycott et al., 2011). however, a better understanding of tertiary students’ entrepreneurship tendency could enable lecturers to develop courses that can stimulate entrepreneurial traits in order to enhance the potential for new venture creation. references ahmad, s. z. 2013. the need for inclusion of entrepreneurship education in malaysia lower and higher learning institutions, education + training, 55(2):191 203 ajzen, i. 1991. the theory of planned behaviour. organisational behaviour and human decision processes, 50(2):179–211. antonites, a. & govindasamy, t. 2013. critical success factors of indian entrepreneurs. southern african journal of entrepreneurship and small business management, 6:115–133. autio, e. 2005. global entrepreneurship monitor: 2005 report on high expectation entrepreneurship. london; babson park, ma: london school of business; mazars and babson. briggs-myers, i. & mccaulley, m.h. 1985. guide to the development and use of the myers-briggs type indicator. palo alto, ca: consulting psychologists press. caird, s. 1991a. testing enterprising tendency in occupational groups. british journal of management, 2(4): 177–186. caird, s. 1991b. the enterprising tendency of occupational groups. international small business journal, 9(4):75–81. caird, s. 1993. what do psychological tests suggest about entrepreneurs? journal of managerial psychology, 8(6):11–20. caird, s. 2006. general measure of enterprising, tendency version 2 (get2). in: t. mazzarol, entrepreneurship and innovation. ashwood: tilde university press. caird, s. 2014. general enterprising v2 test. available from: http://get2test.net/. http://www.sajesbm.co.za/ http://get2test.net/ sajesbm volume 7 (2015) 140 www.sajesbm.co.za article 150 [accessed on 10 january 2014]. carey, c. & matlay, h. 2010. creative disciplines education: a model for assessing ideas in entrepreneurship education? education and training, 52(8/9):694–709. cromie, s. 2000. assessing entrepreneurial inclinations: some approaches and empirical evidence. european journal of work and organisational psychology, 9(1):7–30. demirci, a. 2013. cross-cultural differences in entrepreneurial tendencies: an exploratory view in turkey and canada. international journal of entrepreneurship, 17:21–40. draycott, m. c., rae, d. & vause, k. 2011. the assessment of enterprise education in the secondary education sector: a new approach?, education + training, 53(8/9):673 – 691. drucker, p. 1985. innovation and entrepreneurship. london: heinemann. edwards, a.l. 1959. manual for the edwards personal preference schedule. new york, ny: the psychological corporation. farrington, s.m., venter, d.j.l. & neethling, a. 2012. entrepreneurial attributes and intentions: perceptions of south african business science students. management dynamics, 21(3):17–33. gabor, d. 1970. innovations: scientific, technical and social. oxford: oxford university press. hébert, r.f. & link, a.n. 1989. in search of the meaning of entrepreneurship. small business economics, 1:39–49. huber, l.r., sloof, r. & van praag, m. 2014. the effect of early entrepreneurship education: evidence from a field experiment. european economic review, 72:76–97. ishiguro, j. 2014. what influences entrepreneurial career choice? an exploratory analysis of the sally caird’s get2 for japanese high school students. proceedings of the academy of entrepreneurship, nashville, 20(1): 9–13. jackson, d.n. 1976. jackson personality inventory manual. goshen, ny: research psychologists press. jyohti, p. 2009. revisiting linkages between entrepreneurship and higher education. advances in management, 2(10):39–43. karlsson, t. & moberg, k. 2013. improving perceived entrepreneurial abilities through education: exploratory testing of an entrepreneurial self efficacy scale in a pre-post setting. the international journal of management education, 11(1):1–11. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 141 www.sajesbm.co.za article 150 kautonen, t., van gelderen, m. & tornikoski, e. 2013. predicting entrepreneurial behaviour: a test of the theory of planned behaviour. applied economics, 45(6):697– 707. keat, o., yeng, s.c. & meyer, d. 2011. inclination towards entrepreneurship among university students: an empirical study of malaysian university students. international journal of business and social science, 2(4):206–220. kirby, d. & ibrahim, n. 2011. entrepreneurship education and the creation of an enterprise culture: provisional results from an experiment in egypt. international entrepreneurship and management journal, 7(2):181–193. kirby, d. 2004. entrepreneurship education: can business schools meet the challenge? education and training, 46(8):510–519. koh, h.c. 1996. testing hypotheses of entrepreneurial characteristics: a study of hong kong mba students. journal of managerial psychology, 11(3):12–25. krueger, n.f., reilly, m.d. & carsrud, a.l. 2000. competing models of entrepreneurial intentions. journal of business venturing, 15:411–432. kuratko, d.f. 2005. the emergence of entrepreneurship education: development, trends, and challenges. entrepreneurship theory and practice, 29(5):577–597. liñán, f. & chen, y.w. 2009. development and cross‐cultural application of a specific instrument to measure entrepreneurial intentions. entrepreneurship theory and practice, 33(3):593–617. martin, b.c., mcnally, j.j. & kay, m.j. 2013. examining the formation of human capital in entrepreneurship: a meta-analysis of entrepreneurship education outcomes. journal of business venturing, 28:211–224. marques, c-s., ferreira, j-j., gomes, d.n. & rodriques, t.g. 2012. entrepreneurship education: how psychological, demographic and behavioural factors predict the entrepreneurial intention. education + training, 54 (8/9):657-672. mazzarol, t. 2007. awakening the entrepreneur: an examination of entrepreneurial orientation among mba students. proceedings of the efmd 37th entrepreneurship, innovation and small business (eisb) annual conference, pp.1–15. mcclelland, d., atkinson, j., clark, r. & lovell, e. 1953. the achievement motive. new york, ny: appleton-century-crofts. mcmillan, j. & schumacher, s. 2006. research in education: evidence-based inquiry. upper saddle river, nj: pearson education. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 142 www.sajesbm.co.za article 150 mueller, s.l. & thomas, a.s. 2001. culture and entrepreneurial potential: a nine country study of locus of control and innovativeness. journal of business venturing, 16(1):51–75. mumford, a. & honey, p. 1992. questions and answers on learning styles questionnaire. industrial and commercial training, 24(7):10–13. murray, h.a. 1943. thematic apperception test. cambridge, ma: harvard university press. mwasalwiba, e.s. 2010. entrepreneurship education: a review of its objectives, teaching methods, and impact indicators. education and training, 52(1):20–47. nieuwenhuizen, c. & groenewald, d. 2006. level of creativity and risk among successful entrepreneurs. southern african business, pp. 70–90. nieuwenhuizen, c. & groenewald, d. 2008. entrepreneurs’ learning preferences: a guide for entrepreneurship education. acta commercii, pp. 128–144. preisendörfer, p., bitz, a. & bezuidenhout, f.j. 2012. in search of black entrepreneurship: why is there a lack of entrepreneurial activity among the black population in south africa? journal of developmental entrepreneurship, 17(1):1250006(1–18). pretorius, m. 2008. assessment of entrepreneurship education: a pilot study. southern african journal of entrepreneurship and small business management, 1(1):1–20. radipere, s. 2012. south african university entrepreneurship education. african journal of business management, 6(44):11015–11022. refaat, a. 2009. the necessity of engineering entrepreneurship education for developing economies. international journal of education and information technologies, 2(3):85–96. rotter, j.b. 1966. generalised expectancies for internal versus external control reinforcement. psychological monographs: general and applied, 80(609). schumpeter, j.a. 1951. change and the entrepreneur. in: r.v. clemence (ed.), essays of j.a. schumpeter. boston, ma: addison-wesley. sethu, h.s. 2012. study of entrepreneurial tendencies in manipal university students based on gett. voice of research, 1(2):78–83. shane, s. & venkataraman, s. 2000. the promise of entrepreneurship as a field of research. the academy of management review, 25(1):217–226. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 143 www.sajesbm.co.za article 150 shinnar, r.s., hsu, d.k. & powell, b.c. 2014. self-efficacy, entrepreneurial intentions, and gender: assessing the impact of entrepreneurship education longitudinally. the international journal of management education, 12:561–570. souitaris, v., zerbinati, s. & al-laham, a. 2007. do entrepreneurship programmes raise entrepreneurial intention of science and engineering students? the effect of learning, inspiration and resources. the journal of venturing, 22(4):566–591. statssa 2012. census 2011: census in brief. pretoria: statistics south africa (statssa). available from: http://www.statssa.gov.za/publications/p03014/ p030142011.pdf. [accessed on 12 august 2014]. stormer, f. & kline, t. 1999. measuring entrepreneurship with the general enterprising tendency (get) test: criterion-related validity and reliability. human systems management, 18:47–52. turton, n. & herrington, m. 2014. global entrepreneurship monitor: south africa 2013 report. cape town: the centre for innovation and entrepreneurship, graduate school of business, university of cape town. van niekerk, g. & van der lingen, e. 2015. does management education affect the entrepreneurial tendency of students? submitted for publication in proceedings of the iamot 2015 conference, 8–11june. van praag, c.m. 1999. some classic views on entrepreneurship. de economist, 147(3):311–335. van vuuren, j.j. & nieman, g.h. 1999. entrepreneurial education and training: a model for syllabi/curriculum development. paper presented at the 45th world conference of the international conference for small business, naples, italy, 6–9 june, pp.1–17. warhuus, j.p. & basaiawmoit, r.v. 2014. entrepreneurship education at nordic technical higher education institutions: comparing and contrasting program designs and content. the international journal of management education, 12:317–332. welman, c. kruger, f. & mitchell b. 2005. research methodology. cape town: oxford university press. wennekers, s. & thurik, r. 1999. linking entrepreneurship and economic growth. small business economics, 13(1):27–56. wickham, p.a. 1998. strategic entrepreneurship: a decision-making approach to new venture creation and management. 2nd ed. london: prentice hall. http://www.sajesbm.co.za/ sajesbm volume 7 (2015) 144 www.sajesbm.co.za article 150 world employment social outlook, 2015. world employment social outlook trends 2015. geneva: international labour organisation. http://www.sajesbm.co.za/ abstract introduction research methods and design literature review findings and discussions conclusions and recommendations contributions and limitations areas of future research acknowledgements references about the author(s) patricia isabirye department of industrial psychology and people management, college of business and economics, university of johannesburg, johannesburg, south africa lia m. hewitt department of industrial psychology and people management, college of business and economics, university of johannesburg, johannesburg, south africa citation isabirye, p. & hewitt, l.m., 2021, ‘east-african women’s thoughts on stimulating the growth of their mid-scale enterprises’, southern african journal of entrepreneurship and small business management 13(1), a435. https://doi.org/10.4102/sajesbm.v13i1.435 original research east-african women’s thoughts on stimulating the growth of their mid-scale enterprises patricia isabirye, lia m. hewitt received: 19 may 2021; accepted: 11 oct. 2021; published: 20 dec. 2021 copyright: © 2021. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: some of the obstacles to successful entrepreneurship in emerging economies are embedded in the internal operations and management of enterprises, especially women mid-scale enterprises. this includes the lack of effective strategies that promote the growth of women-owned mid-scale enterprises and their inclination towards necessity-based entrepreneurship, which greatly limits their growth potential. aim: the study explored the experience and know-how of strategies applied by three high-profiled women-owned mid-scale enterprises in east africa to stimulate their business growth. methods: a qualitative research approach, using perspective seeking methods by applying unrestrictive semi-structured questioning was adopted. results: findings suggest that women must embrace, recognise and own their internal aspirations and ambition to grow their mid-scale enterprise. conclusion: women-owned mid-scale enterprises showed the need to map out their strategic growth plan and it must be built on a solid foundation to justify the need to grow for all stakeholders to buy into it. keywords: women-owned mid-scale enterprises; entrepreneurship; growth strategies; east africa; stakeholders; growth plan. introduction small and medium enterprises (smes) are a vibrant force in most african economies, especially in relation to employment creation. they represent 90% of most enterprises whilst accounting for 63% of employment and contributing up to 50% of gross domestic product (gdp) in developing countries (booysen 2015; ezekiel et al. 2017; gupta, guha & krishnaswami 2013; sriram & mersha 2010). world bank data further suggest that smes in africa contribute to 60% of all employment and as much as 40% to emerging economies gdp. this is further supported by the world bank report (2019) which stated that the entrepreneurship rate in sub-saharan africa is the highest in the world as of 2019; however, most entrepreneurs fail to progress beyond small-scale subsistence, which hinders their contribution to poverty reduction and prosperity. in addition, gender parity in the entrepreneurship sector in africa is said to be as low as 0.59% according to the global entrepreneurship monitor (gem) (2017/2018) report (singer, herrington & menipaz 2018). women-owned business enterprises are smaller, less dynamic and tend to generate less income than their male counterparts (potter, halabisky & hannig 2016). even with the presence of a higher majority of women entrepreneurs in sub-saharan africa than other regions (hallward-driemeier 2013), these women still operate in traditional and informal sectors with minimal opportunities for expansion. their enterprises do not yield sufficient profits and offer fewer possibilities to realise their potential (hallward-driemeier 2013; nesbitt-ahmed 2017). women entrepreneurs lack effective strategies that foster growth (sriram & mersha 2010) and are usually inclined towards necessity-based entrepreneurship (irene 2017; odebrecht 2013; potter et al. 2016). and yet, the strategic component and role of internal capabilities of african business enterprises have mostly been ignored as factors that shape business performance (tvedten, wendelboe & jeppesen 2012). in addition, the need to balance strategic practices within entrepreneurship has not been fully exhausted empirically, especially in the qualitative sense (foss & lyngsie 2012; kuratko & audrestch 2009; kyrgidou & hughes 2010; kyrgidou & petridou 2011; schindehutte & morris 2009). therefore, the main research question for this article is: what are the thoughts of three high-profile women, who own mid-scale enterprises in east-africa, on stimulating the growth of their mid-scale enterprises? research methods and design a social constructivist ontology is embraced by the authors with the notion that different people create meaning continuously in various ways through their interactions (ponelis 2015; saunders, lewis & thornhill 2009; soini, kronqvist & huber 2011). the researchers’ epistemology entailed a subjective approach towards understanding multiple experiences and insights derived from the participants (camargo-borges & rasera 2013; creswell 2013; howitt 2019; ponelis 2015; sutton & austin 2015). axiology embraced the researchers’ values and orientation towards ‘women economic empowerment’ and the role this played on how the research was conducted including relevance and choice of the research topic, philosophical paradigm and data collection approach (creswell 2013; ponelis 2015; saunders et al. 2009). a qualitative research approach was adopted using perspective-seeking methods (gray 2014) by applying unrestrictive semi-structured questioning (mackay & gass 2016) to generate varied views from a small but influential group of three high profile business women, located in east africa, each considered as a case (choy 2014). this was based on recurring experiences, which were both similar and different in nature (creswell 2013, 2014; dunn 2010; hennink, hutter & bailey 2010). three participants, one per country, were selected to gather insights on the mid-scale growth phenomenon (ridder 2017) using yin’s (2008) reasoning of replication. this was done by replicating procedures in each of the three participants whilst describing them in details and taking note of their unique and similar circumstances. further to this, the authors adopted a narrative literature review approach, which focused on analysing and summarising existing evidence (arshed & danson 2015) to gather theoretical knowledge on mid-scale growth issues to enrich the findings (bryman 2008; howitt 2019; saunders et al. 2009; taylor, bogdan & devault 2016). the study population consisted of perceived successful women entrepreneurs in kenya, uganda and tanzania. these countries were selected because of their unique women business profiles, promising entrepreneurial status and overall potential for economic growth within their respective regions. uganda has been acclaimed for its high number of women entrepreneurs globally (mastercard 2017; ngugi 2017), kenya is lauded for the government’s efforts to promote women entrepreneurship through affirmative actions (rugene 2015; wanjala 2018) and the government of tanzania’s transition from socialism to private enterprises has seen women flourishing within the entrepreneurship sector (edwards 2012; verhoef 2017). a deliberate and judgemental sampling process was applied, which included a small, non-random and purposively selected group of three high-profile women who own mid-scale enterprises, one from kenya, tanzania and uganda, each considered as a case. these women were carefully selected because of their expertise and lengthy experience on women entrepreneurship issues (howitt 2019; mason 2010; o’reilly & parker 2012; panneerselvam 2018; uwe 2015). the idea was to target mid-scale enterprises owned by women who would sufficiently answer the research question and whose views would be considered as influential in sharing their thoughts on growth strategies they adopt, based on their lengthy experience in leading their respective mid-scale enterprises. therefore the researchers were realistic, flexible and rational when determining this sample (howitt 2019; jette, grover & keck 2003; o’reilly & parker 2012). the distinct narrative voice of the women was amplified to gather insights from them on how their business operations have improved through the use of the growth strategies they applied (creswell 2007; kendall & kendall 2012; taylor et al. 2016; wang & geale 2015). studies revealed that qualitative research findings may not be that accurate and are less likely to be representative or generalised because of the restrictive scope of the study (bryman 2008; choy 2014; dunn 2010; howitt 2019). the small sample usually adopted during qualitative studies is not likely to represent the wider context as was the case with this study. however, the authors applied williams (2000:215) notion of ‘moderatum generalisations’ which points out that the primary focus of an enquiry in this case exploring how growth strategies can be adopted from perceived successful women entrepreneurs in east africa represents a sub-section of a larger setting. this meant that data from the three participants represented the wider entrepreneurial setting in africa to some extent. therefore, feedback from the three participants was useful in responding to questions related to the study and to complement available literature, which was amongst the key focus of this article. table 1 presents an overview of the three participants profiles. table 1: an overview of the participants’ profile. primary data collected were organised and summarised to answer the research question (glaser & laudel 2013). thematic analysis was used to analyse data by examining and constructing major themes during which unanticipated insights were derived (creswell 2013; haslam & mcgarty 2014; howitt 2019; thomas 2003). discourse analysis entailed scrutiny to language (haslam & mcgarty 2014; howitt 2019), applied as a form of symbolic interaction (howitt 2019) to deepen understanding of aspects of the data, using language to form meaning in a creative, active and influential manner (haslam & mcgarty 2014). the authors generated five concrete themes using thematic analysis. coding was used to categorise significant aspects of the data using colour coding (o’connor & joffe 2020). the study was designed and executed morally in a manner that affects society positively and took note of ethical considerations that need to be adhered to for any research study specifically (bryman 2008; saunders et al. 2009). trustworthiness was critical in this study and was applied (johnsson et al. 2014) by ensuring that rigour and transparency were enforced during coding in data analysis through the thematic structure developed (o’connor & joffe 2020). credibility was applied by initially familiarising with all participants related to this study before the interview phase. this entailed reaching out to other entrepreneurial experts to seek advice about the selected participants’ credibility followed by establishing the appropriate trust and rapport with all participants. researcher bias was avoided by selecting all participants on an indiscriminate basis without any prior acquaintances with the authors. the multiple participant approach captured different participants’ voices, which provided diverse views and perceptions critical in generating varied knowledge that represents the wider east african setting (fusch & ness 2015; korstjens & moser 2018; lincoln & guba 1985; loh 2013; shenton 2004; white, oelke & friesen 2012). literature review this section presents a narrative literature review, which has been applied to unpack intellectual content (snyder 2019; walliman 2011) on women entrepreneurship, the concept of growth, some useful growth-oriented strategies and a theoretical framework that explains two relevant theories of growth and their applicability to the women entrepreneurship phenomenon. women entrepreneurship studies reveal that women entrepreneurship is critical to global social and economic development (ascher 2012) and allows women to diversify other sources of income, which enables them to undertake additional responsibilities (lain 2016). women in africa are more active in economic activities than those from other parts of the world (afdb 2015) and are capable of sharing knowledge with their staff whilst building strong relationships (odebrecht 2013; shmailan 2016). investing in women entrepreneurship translates into good citizenship, a flourishing entrepreneurship sector and a robust economy (lain 2016; meyer 2018; nesbitt-ahmed 2017; ramaswami & mackiewicz 2009). however, women participation in various economies is still inadequate (singer et al. 2018) with limited representation and a focus on smaller and less dynamic business enterprises (ascher 2012; potter et al. 2016; sriram et al. 2010). therefore, it is imperative to reduce this gender gap by introducing the appropriate mechanisms that can ensure an inclusive entrepreneurial space with some degree of gender parity (singer et al. 2018). some of these mechanisms include strategies for the growth of women-owned mid-scale enterprises to achieve improved performance and sustainable progress using a range of tools, approaches and techniques (arshed, mcfarlane & macintosh 2016; mcgoldrick 2002). growth as an essential factor studies revealed that growth is an essential indicator of a thriving business enterprise, reflected in the amount of revenue generated, value addition, expansion in terms of volume, position in the market, product quality, customer favour, size of mid-scale enterprise, future growth plans, and most of all the quality of interaction between the internal and external business environment (arshed et al. 2016; fernando 2011; gupta et al. 2013; mateev & anastasov 2010). growth is usually displayed by internal finances, increased sales, employee numbers, assets, profits and multiple strategies (achtenhagen, ekberg & melander 2017; gupta et al. 2013; mateev & anastasov 2010). the growth of an enterprise is, therefore, determined by successful market penetration and customer focus, amount of capital required during start-up, growth strategy of the enterprise, availability of human capital and other resources (korunka et al. 2011). it is therefore imperative to understand how best women entrepreneurs can ensure that their mid-scale enterprises remain stable by using the relevant growth strategies to strengthen their respective enterprises so that they can withstand demanding internal and external forces (achtenhagen et al. 2017; časas, kavaliauskė & dambrauskaitė 2011; fernando 2011; shirokova, bogatyreva & beliaeva 2015). useful growth-oriented strategies the increasing need for inclusive, smart and responsible growth in mid-scale enterprises necessitates concrete efforts in the form of innovative strategies (kronz, sinar & mitchell 2014). this includes progressive technologies, increased stakeholders engagement, multiple efforts around cost reduction and creation of high quality teams (hannum et al. 2011; kronz et al. 2014; pwc 2014; ungerer, ungerer & herholdt 2016). knowledge-based entrepreneurship that focuses on creativity and innovation (arshed et al. 2016; seo & lee 2019) and dwells heavily on investing in technology, research and development are key success factors in gaining competitive edge and growth (gupta et al. 2013; kuratko & audrestch 2009; leminen & westerlund 2012; yang et al. 2014). change oriented strategies that focus adequately on the bigger picture incorporate multiple actors within the wider business environment and useful internal leadership dynamics (mazzarol 2014). these focus on growth potential for better job creation and innovation whilst embracing growth aspirations by streamlining internal processes strategically to drive growth (irene 2017; leminen & westerlund 2012). sustainability strategies ensure that needs of present and future generations are equally met and guarantee long-term entrepreneurial success (akhtar et al. 2015). this includes processes like business model innovation (charan 2017; yang et al. 2014) that focus on solid management, strategic thinking, flexibility, predicting future opportunities and maintaining linkages that foster positive change by promoting smooth internal functions within mid-scale enterprises (arshed et al. 2016; bolden & kirk 2009; fernando 2011; kezar 2004; kuratko 2007; leminen & westerlund 2012; uhl-bien 2006; ungerer et al. 2016). market penetration and expansion is another useful growthoriented strategy. this includes knowledge-based innovations, improved competencies, relational tendencies and other mechanisms to deal with local and foreign market dynamics and subsequent customer retention to influence competitiveness as a fundamental growth-oriented strategy (arshed et al. 2016; booysen 2015; crick, kaganda & matlay 2011; dragnić 2014; joseph & unnikrishnan 2016; heikkilä, bouwman & heikkilä 2018; nieuwenhuizen 2014; seo & lee 2019; wheeler, ibeh & dimitratos 2008). the culmination of growth-oriented strategies within mid-scale enterprises focuses on a detailed, structured, flexible and regularly updated plan of action known as the business strategy (bora, borah & chungyalpa 2017; nieuwenhuizen 2014). this plan of action is designed to determine market position, conduct internal operations, attract and retain clients, maintain competitiveness, achieve organisational objectives and evaluate overall performance, a critical aspect of the entrepreneurial growth process (arshed et al. 2016; dragnić 2014; gupta 2018; heikkilä et al. 2018; nieuwenhuizen 2014; rick 2018; vining 2011). relevant theories of growth the stratified systems theory (sst) suggests that high level of cognitive complexity translates into learning and assimilates acquired information into decision-making (hewitt & janse van rensburg 2018; lundberg & richards 1972). this equips people who harbour such attributes with the capacity to analyse and offer solutions to problems and complex situations, and adjust to situations regardless of their hierarchy or level within the organisation and to be more strategic in thinking. this is appropriate when designing winning strategies for mid-scale enterprises particularly within the volatile context in which they operate to enable them to survive and grow especially in emerging economies (jaques & clement 1991; unger et al. 2009; yuki 2002). succeeding repeatedly during strategic interactions requires analytical thinking and what has been labelled as theory of mind, which is one’s ability to comprehend other people’s motives and actions and out-manoeuvre them where necessary (coricelli & nagel 2009; ohtsubo & rapoport 2006). these authors deciphered the organisational behaviour of perceived successful women entrepreneurs including their cognitive and intellectual abilities, how they assimilate information and adopt theory of the mind capabilities when managing their mid-scale enterprises including constructing the essential strategies for growth. the relational theory postulates that effective coordination across products, functions and geographical lines is essential for growth (sniukas, lee & morasky 2016). successful organisations come together as one to implement strategies. this form of collaboration links geographical, traditional and other boundaries for a common good. global competition and success within global markets in emerging economies calls for shared responsibilities in the form of team work both in and out of the work place. this will promote improved innovation and productivity which leads to growth (achua 2010). growth-oriented strategies include relational tendencies (crick et al. 2011) that are central to how women conduct leadership (bolden & kirk 2009; kezar 2004; uhl-bien 2006). as isenberg (2011) pointed out, the main driving force for the success of entrepreneurship is the level of interactions amongst variables working together, which makes women entrepreneurs well suited to engage in entrepreneurship. findings and discussions findings depict how the women entrepreneurs targeted during this study used information as intellectual capital and managerial capability to design strategies for growth as reflected in the sst (hewitt & janse van rensburg 2018; jaques & clement 1991; lundberg & richards 1972; unger et al. 2009; yuki 2002). the element of cognitive complexities (hewitt & janse van rensburg 2018; lundberg & richards 1972; unger et al. 2009) was useful in enhancing understanding on how information can be used to deal with the recurring internal gaps faced by women-owned mid-scale enterprises to strengthen their ability to foster growth of their enterprises. five principal themes were generated in this study, which portray the need for a significant level of internal and external engagement with stakeholders when embarking on the growth path and ultimately designing the necessary strategies for growth (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016). this fosters sustainable relationships, networks and linkages that feature in successful growth interventions (fernando 2011; leminen & westerlund 2012; mazzarol 2014; nieuwenhuizen 2014; seo & lee 2019), and re-emphasises elements of the relational theory (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016), which is pivotal to how women entrepreneurs conduct their leadership responsibilities (bolden & kirk 2009; kezar 2004; uhl-bien 2006). the themes culminate into the thoughts of these women on strategies for growth, which can be adopted by other women who own or manage mid-scale enterprises within the wider african setting (haslam & mcgarty 2014). theme 1: embrace a growth attitude a very useful strategy that should be adopted by women-owned mid-scale enterprises embarking on the growth path is the need to embrace a growth attitude as part of the comprehensive growth plan. this can be done by acknowledging internal growth aspirations and ambitions which is a significant step when dealing with growth matters. this growth attitude was determined through the profiles of the selected mid-scale enterprises targeted for this study (table 1), which reflect some of the fundamental growth indicators as suggested in the reviewed literature (achtenhagen et al. 2017; arshed et al. 2016; gupta et al. 2013; korunka et al. 2011). these distinct growth-oriented characteristics as well as a detailed account of their dynamic internal business environment depicted during the interviews portray the participants’ growth attitude without which growth would not manifest. the internal practices that were shared by women entrepreneurs pointed out various experiences that reaffirm that they own and manage growth-oriented enterprises. the need to first and foremost acknowledge and embrace growth which is the first step in attempting a fulfilling growth journey was suggested by a participant who co-owns a family business that started small and grew organically. she emphasised that: ‘to have a business that is in growth stage means that you are doing something right to begin with so give yourself a clap’. (participant a, female, above 40 years old) another participant denoted that ‘by 2011, i had a very big name in country x that encouraged other saloons to open up massage parlours’ (participant b, female, above 40 years old) and she deliberately focused on infiltrating the market by adopting a range of initiatives including engaging in television and radio talk shows, conducting seminars, training people and engaging women and men’s groups to create awareness about the importance of massages. in addition, the spa that she currently runs at her hotel resort is said to have grown and: ‘became the name of island xx with, best reviews on trip advisor’. she added that ‘…you know last year we got the best reviews, we were the number one reviewed hotel on the island’ (participant b, female, above 40 years old). one participant suggested that growth may be reflected in increased product proposition, increased geographies and the presence of new partners or ventures. she stated that her enterprise has partners in rwanda, uganda and tanzania. all participants confirmed that their mid-scale enterprises are growth-oriented and that a growth attitude is entrenched in their internal culture and that they have considerable experience in defining their paths towards growth. theme 2: adopt growth holistically an inclusive and sustained growth plan is a principal strategy in the comprehensive growth process. this growth plan should be doable, realistic, deliberately designed, for a specific duration and within a particular period of time. it should also incorporate the buy-in, the consensus and efforts from all relevant stakeholders especially the staff, which highlights the aspects of the relational theory that emphasises collaboration (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016). the holistic approach to growth will be made possible through organised growth-oriented actions, which can effectively be determined within a robust and dynamic internal business environment. these are all pertinent in reinforcing the growth process, making it operational, successful and sustainable as several authors on growth and growth-oriented strategies postulate (arshed et al. 2016; crick et al. 2011; heikkilä et al. 2018; korunka et al. 2011; mazzarol 2014; leminen & westerlund 2012; rick 2018; seo & lee 2019). hence, such a holistic approach will ensure that the design and implementation of the growth plan are sustainable, rewarding, with a sense of ownership by all involved and illustrate principles of the relational theory that promotes relationships and coordination in and out of the work place (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016). participants reiterated that the process of embarking on a sustainable growth plan should be well resourced, appropriately understood, substantially justified and fully embraced by all relevant stakeholders, which depicts literature on sustainability strategies (akhtar et al. 2015). all three participants expressed the need to appreciate growth strategies holistically, which should be entrenched within internal culture and must attract commitment from the entire organisation to register success. they detailed their perceptions about how women mid-scale entrepreneurs should approach the growth process as rationally and as practically as possible, which all formed a major segment in the holistic operationalisation of the growth process. one participant advised women mid-scale entrepreneurs to start their entrepreneurial journey with a ‘big idea’ which is what will sustain their motivation for growth and to maintain their impetus for the same. this supports literature on the need for change oriented strategies that embrace the big picture (mazzarol 2014). another participant gave concrete suggestions about first of all answering questions related to whether they want to grow and if that is the case, they should be in a position to answer subsequent questions related to how this growth will be managed and effected including any benefits, risks and opportunities related to this growth. according to her: ‘…[a] women entrepreneur must have the courage to answer to the question of do i want to grow? they need to define in what ways do i want to grow? and then they must answer to the question of what are the benefits, risks and what threatens my growth, and where are the opportunities of growth? and then this growth must be translated into financial benefits, reputational equity, benefit to the employees and the dividends that the growth would present to the investors or shareholders’. (participant c, female, above 40 years old) she recommended the need for organisational commitment and buy-in to register success of the growth process, which represent the collaborative aspect of the relational theory (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016). she also suggested the need to assess organisational attitudes and energy towards this growth, together with resources adequacy, timing, value proposition and psychological preparedness. all this points towards a holistic adoption of growth, which should be internalised as adequately as possible to ensure sustainability (akhtar et al. 2015). one participant engaged with colourful language by alluding the growth process to watering a flower so that it nourishes and blossoms, which was captured during discourse analysis to depict meaning by portraying the love and dedication she has for her business enterprise (haslam & mcgarty 2014; howitt 2019). she applied the phrase, ‘if you love a flower so much you will not cut it, you will water it to keep blossoming’ to depict the love for her hotel resort. this is a motivational factor to devote time and energy to its growth like one would do to a flower. this participant beckoned women mid-scale entrepreneurs with a growth mindset to display love for their enterprises and use this love as motivation for a fulfilling growth process, which also reflects a holistic approach to growth. theme 3: meaning of growth strategies meaning of growth strategies was a common theme extracted according to all the participants’ understanding and experiences. this theme is useful in outlining the intricacies that are crucial when determining and further implementing growth strategies. participants revealed that although they currently lack a written down growth strategy document or model at the moment, they are likely to adopt one in the long run. one participant defined growth strategies as: ‘a strategy on how one needs to implement a plan of action, how you intend to achieve your higher level of growth, or market, or service’. (participant b, female, above 40 years old) another participant compared it to an instrument that informs their growth hence, although a framework document in this regard may be absent in her mid-scale enterprise, she still has a mechanism in place for driving growth. the design of growth strategies was also described by a participant as: ‘a process through which a business will engage or implement in order to grow revenue, grow reputation, grow profits, grow talent or human resources and grow return on investment for shareholders’. (participant c, female, above 40 years old) these meanings were integrated in the development of this theme, which reaffirms the need for women-owned mid-scale enterprises to fully understand the meaning of growth strategies as part of their design and implementation to ensure their sustainability (akhtar et al. 2015). all stakeholders need to understand the meaning of growth when attempting to drive growth of their mid-scale enterprises to ensure sustainability (akhtar et al. 2015) and have the necessary impact within the mid-scale enterprise. if meaning of the adopted growth strategy is understood as succinctly as possible, the design and implementation can be justified, it can be embraced, be owned and managed, and become a fulfilling growth process for all. this captures the coordination and collaborative elements of the relational theory which are essential for growth (achua 2010; crick et al. 2011; isenberg 2011; sniukas et al. 2016). theme 4: justification for growth strategies theme four highlighted the need to justify the presence of a growth strategy. this justification should be sufficiently understood by all stakeholders involved when focusing on sustained growth and is useful when implementing and operationalising the comprehensive growth plan. all three participants acknowledged the justification for growth strategies and shared their perceptions. the participant from kenya recommended the need for a well rationalised growth strategy that should be endorsed, justified and well understood at the organisational level. she gave some details about the importance of a growth strategy framework stating that this is necessary because it establishes order, structure and discipline in managing growth. she added that ‘poorly managed growth is a risk’ (participant c, female, above 40 years old) which can wipe out an investment. therefore, ‘growth must be carefully managed at all times’ (participant c, female, above 40 years old). she suggested that the lack of well-managed growth tends to fail the customers, employees as well as the shareholders. however, the presence of a growth framework will minimise risks from resources, reputation, market shares and the future, whilst presenting order, structure and efficiency (arshed et al. 2016; dragnić 2014; gupta 2018; heikkilä et al. 2018; nieuwenhuizen 2014; rick 2018). the participant from tanzania was honest that she ‘never strategises’, but she ‘deals with situations as they come head on…’ (participant b, female, above 40 years old) meaning as they arise haphazardly but she did agree that growth strategies are necessary and together with the participants from uganda and kenya reiterated that structured growth is useful and essential. the participant from uganda believes ‘a written down growth strategy model which you can follow and be accountable to could be a good thing to have’ and confessed that ‘i don’t have it and the business is running. i think going forward we’ll get it’ (participant a, female, above 40 years old). she added that a structured growth strategy model may exist within established multi-nationals like coca cola and multi choice but it is not the case with an average women entrepreneur. theme 5: solid approaches to growth a solid approach to growth is desired by these women entrepreneurs and lends support to what is postulated in the literature that a solid business strategy forms part of growth-oriented strategies (arshed et al. 2016; bora et al. 2017; dragnić 2014; gupta 2018; heikkilä et al. 2018; nieuwenhuizen 2014; rick 2018; vining 2011). concrete internal actions and efforts should be deliberately designed to match the external environment (hewitt 2017), implemented and constantly updated for internal improvement and resultant growth. these are necessary as participants suggested, and should be in line with enterprises’ vision, mission and applicable within the industry, geographical settings, and national and global priorities. participants revealed the need for a combination of factors and concerted efforts all of which when brought together support the development of deliberately designed growth approaches that are evidently useful in the growth process for women-owned mid-scale enterprises. all participants confirmed that they do have existing approaches in place which are not captured in a framework document. however, they do perform a number of measures, activities and practices, which contribute to the growth of their respective mid-scale enterprises. some of these activities are unique to their specific industries but are useful components in strengthening the growth process. enhancing growth requires improved marketing and pricing, diversification, adopting the digital agenda, creativity, functional relationships, adequate knowledge of the external environment and the ability to forecast or pre-empt the unknown. this supports the viewpoint advanced by some authors on the importance of innovation (arshed et al. 2016; seo & lee 2019) and change oriented strategies (mazzarol 2014) for growth. participants unpacked some tailor made internal practices that are in line with their core business to grow, which is relevant to their particular industry, their external and internal environment, and ultimately to their customers. one participant described their diversification strategy: ‘[a]nd then also maybe you look at diversifying… the easiest thing to do in uganda is real estate…we also diversify in product…we are looking into manufacturing, so gradually we are looking into doing our own kitchens and wardrobes and doors. ….. see that we get to the client at the earliest point possible’. (participant a, female, above 40 years old) according to mazzarol (2014), these are diversification oriented strategies that focus on the bigger picture and are necessary for growth and survival. the same participant described their efforts to purely digitalise their enterprises as another significant approach to grow the business. according to another participant, the researchers’ attempt to design some essential strategies for growth, prompted her to think through her growth process consciously and share some of their targeted approaches related to growth and sustainability ‘…with you trying to put something on paper i can say where the growth strategy is involved, for example you need to have your marketing…i need to consider the pricing…have special meals because it’s a hotel…there is creativity…and then how you cooperate with the external suppliers in order to make the customer feel good’. (participant b, female, above 40 years old) these are echoed by arshed et al. (2016) and booysen (2015)’s insights on the importance of market penetration and customer retention strategies. conclusions and recommendations the study concludes with the observation that the concept of growth and the meaning of it is a holistic and ongoing internal transformation process that requires various deliberately designed and inter-linking strategies to realise success. part of this process, firstly, includes internalising and embracing a personal desire to grow their mid-scale enterprises. secondly, as a requirement for success, the adoption of the idea to embark on growth strategies by all stakeholders must be embraced. thirdly, the meaning of the growth strategy and where it will lead the enterprise, and what will be required must be understood by all stakeholders within the enterprise. fourthly, the justification to drive growth must be built on a solid foundation to ensure commitment from all. lastly, clear focus is required by participants on the type of strategies that are to be pursued. these processes should all be taken into consideration, internalised and unpacked comprehensively by all relevant stakeholders with the women entrepreneur at the helm. such intricacies within the growth design and implementation process should be applied to various geographical settings using the correct operational approach to ensure that they are understood and accepted in an inclusive manner. succession planning and empowering of employees in strategic areas were not discussed, however, hewitt and janse van rensburg (2018) warned that mid-scale enterprises that are on a growth trajectory must, from an early stage, plan for succession, or the business will come to an abrupt end or stifle its own growth because of the owner working ‘in’ the business and not ‘on’ the business. if the owner is not able to run the business anymore, will the business still be operational? if not, their never was a business (hewitt & janse van rensburg 2020). a concern is the lack of documented growth strategies, which makes it difficult for staff and other stakeholders as the growth map resides with the owner. these owners become directive in terms of what they want and how it must be done, with little room for stakeholders to contribute meaningfully to the growth of the enterprise as they lack the vision. contributions and limitations the study contributes to the narrative on the continuing empowerment of african women, unpacking their endeavours to grow their mid-scale enterprises. the small sample size of this study only provides insights into the lived experience of three african women, each in their own country, who made a success of their mid-scale enterprises. areas of future research an area of interest includes the lack of mapped out physical strategic growth plans. the lack of succession planning and need to justify to employees why the business must grow before such a strategy can be driven by the owner. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions p.i. conducted the primary research and data gathering. l.m.h. assisted with supervision, conceptualisation and interpretation and overall structure of article. ethical considerations ethical clearance was granted by the department of industrial psychology and people management in the college of business and economics at the university of johannesburg. ethical certificate received from ippm2018-269(d). funding information the authors received no financial support for the research, authorship and/or publication of this article. data availability the data that support the findings of this study are available from the corresponding author, l.m.h., upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy statement or position of any affiliated agency of the authors, and the publishers. references arshed, n. & danson, m., 2015, ‘the literature review’, in k. o’gorman & r. macintosh (eds.), the global management series, research methods for business & management, 2nd edn., goodfellow publishers ltd, oxford. achtenhagen, l., ekberg, s. & melander, a., 2017, ‘fostering growth through business development: core activities and challenges for micro-firm entrepreneurs’, journal of management & organization 23(2), 167–185. viewed 20 september 2018, from http://hj.diva-portal.org/smash/get/diva2:1081256/fulltext01.pdf. achua, l., 2010, leadership, theory, application and skill development, south western learning, mason. african development bank (afdb), 2015, african women: an agenda for action – africa gender equality index 2015, viewed 29 may 2019, from https://www.afdb.org/fileadmin/uploads/afdb/documents/publications/african_gender_equality_index_2015-en.pdf. akhtar, c.s., ismail, k., ndaliman, m.a., hussain, j. & haider, m., 2015, ‘can intellectual capital of smes help in their sustainability efforts?’, journal of management research 7(2), 82–97. https://doi.org/10.5296/jmr.v7i2 arshed, n., mcfarlane, j. & macintosh, r., 2016, the global management series, enterprise and its business environment, goodfellow publishers ltd., oxford. ascher, j., 2012, ‘women entrepreneurship – an appropriate response to gender discrimination’, journal of entrepreneurship, management and innovation (jemi) 8(4), 97–114. bolden, r. & kirk, p., 2009, ‘surfacing new understanding through leadership development’, international journal of cross-cultural management 9(1), 69–86. booysen, k., 2015, dynamics of entrepreneurship, juta and company, cape town. bora, b., borah, s. & chungyalpa, w., 2017, ‘crafting strategic objectives: examining the role of business vision and mission statements’, journal of entrepreneurship and organisation management 6(1), 205. https://doi.org:10.4172/2169-026x.1000205 bryman, a., 2008, social research methods, 3rd edn., oxford university press, oxford. camargo-borges, c. & rasera, e.f., 2013, ‘social constructionism in the context of organisation development’, dialogue, imagination, and co-creation as resources of change, april-june 2013 3(2), 1–7. https://doi.org/10.1177/2158244013487540 časas, r., kavaliauskė, m. & dambrauskaitė, v., 2011, ‘impact of external business environment factors on internationalization of lithuanian born global companies’, transformation in business and economics 90(3), 120–135. https://doi.org/10.15388/ekon.2011.0.931 charan, r., 2017, ‘how high potential leaders can master the macro environment’, leader to leader 2017(85), 31–36. https://doi.org/10.1002/ltl.20303 choy, l.t., 2014, ‘the strengths and weaknesses of research methodology: comparison and complimentary between qualitative and quantitative approaches’, iosr journal of humanities and social sciences (19) 4. version iii, 99–104. coricelli, g. & nagel, r., 2009, ‘neural correlates of depth of strategic reasoning in medial prefrontal cortex’, proceedings of the national academy of sciences 106(23), 9163–9168. creswell, j.w., 2007, qualitative inquiry & research design, sage, thousand oaks, ca. creswell, j.w., 2013, qualitative inquiry & research design, choosing among five approaches, 3rd edn., sage, thousand oaks, ca. creswell, j.w., 2014, research design, qualitative, quantitative & mixed methods approaches, 4th edn., sage, thousand oaks, ca. crick, d., kaganda, d.e. & matlay, h., 2011, ‘a study into the international competitiveness of low and high intensity tanzanian exporting smes’, journal of small business and enterprise development 18 https://doi.org/10.1108/14626001111155727 dragnić, d., 2014, ‘impact of internal and external factors on the performance of fast-growing small and medium businesses’, journal of contemporary management issues 19(1), 119–159. dunn, d.s., 2010, the practical researcher: a student guide to conducting psychological research, 2nd edn., wiley-blackwell, oxford. edwards, s., 2012, is tanzania a success story? a long-term analysis (no. w17764), national bureau of economic research, cambridge. ezekiel, m., micheal, e., virginia, k. & andah, r.a., 2017, ‘conceptualizing small and medium scale enterprises; it’s implications to the economic growth of nigeria, 1999–2016’, international journal of managerial studies and research 5(8), 58–76, viewed 24 may 2019, from https://www.arcjournals.org/pdfs/ijmsr/v5-i8/7.pdf. fernando, a.c., 2011, business environment, pearson education, delhi. foss, n.j. & lyngsie, j., 2012, ‘strategic entrepreneurship: an emergent approach to firm-level entrepreneurship’, in d. hjorth (ed.), handbook of organizational entrepreneurship, pp. 208–225, edward elgar publishing ltd, cheltenham. fusch, p.i. & ness, l.r., 2015, ‘are we there yet? data saturation in qualitative research’, the qualitative report 20(9), 1408–1416, viewed 29 august 2017, from http://www.nova.edu/ssss/qr/qr20/9/fusch1.pdf. glaser, j. & laudel, g., 2013, ‘life without coding: two methods for early-stage data analysis in qualitative research aiming at causal explanations’, quality social research 14(2), art. 5, viewed 29 august 2017, from http://www.qualitative-research.net/index.php/fqs/article/view/1886/3528 gray, d., 2014, doing research in the real world, 3rd edn., sage, london. gupta, p.d., guha, s. & krishnaswami, s.s., 2013, ‘firm growth and its determinants’, journal of innovation and entrepreneurship 1(2), 1–14. https://doi.org/10.1186/2192-5372-2-15 gupta, r., 2018, ‘entrepreneurship, national culture & firm growth’, theoretical economics letters 8(7), 1401–1411. https://doi.org/10.4236/tel.2018.87090 hallward-driemeier, m., 2013, enterprising women: expanding economic opportunities in africa, africa development forum, washington, dc, viewed 20 july 2018, from https://openknowledge.worldbank.org/handle/10986/13785 license: cc by 3.0 igo. hannum, k.m., deal, j., howard, l.l., lu, l., ruderman, m.n., stawiski, s. et al., 2011, emerging leadership in nonprofit organisations: myths, meaning, and motivations, center for creative leadership, greensboro, nc. haslam, s.a. & mcgarty, c., 2014, research methods and statistics in psychology, 2nd edn., sage, london. heikkilä, m., bouwman, h., & heikkilä, j., 2018, ‘from strategic goals to business model innovation paths: an exploratory study’, journal of small business and enterprise development 25(1), 107–128 https://doi:10.1108/jsbed-03-2017-0097 hennink, m., hutter, i. & bailey, a., 2010, qualitative research methods, sage, london. hewitt, l.m.m., 2017, ‘entrepreneurial orientation as one construct and the moderating effect of internal control measures’, in central university of the free state, proceeding of the 1st international conference on entrepreneurship development, harlow, pp. 308–322. hewitt, l.m.m. & janse van rensburg, l.j., 2020, ‘the role of business incubators in creating sustainable small and medium enterprises’, the southern journal of entrepreneurship and small business management 12(1), a295. https://doi.org/10.4102/sajesbm.v12i1.295 hewitt, l.m.m. & janse van rensburg, l.j., 2018, from start-up entrepreneur to entrepreneurial leader – a conceptual model, university of johannesburg, johannesburg. howitt, d., 2019, introduction to qualitative research methods in psychology. putting theory into practice, 4th edn., pearson education ltd. irene, b.n.o., 2017, ‘women entrepreneurship in south africa: understanding the role of competencies in business success’, southern african journal of entrepreneurship and small business management, viewed 12 july 2018, from https://sajesbm.co.za/index.php/sajesbm/article/view/121/111. isenberg, d., 2011, introducing the entrepreneurship ecosystem: four defining characteristics, march 25, 2011, viewed 10 july 2018, from https://www.forbes.com/sites/danisenberg/2011/05/25/introducing-the-entrepreneurship-ecosystem-four-defining-characteristics/#3104e9445fe8. jaques, e. & clement, s.d., 1991, executive leadership, cason-hall, virginia. jette, d.j., grover, l. & keck, c.p., 2003, ‘a qualitative study of clinical decision making in recommending discharge placement from the acute care setting’, physical therapy 83(3), 224–236. https://doi.org/10.1093/ptj/83.3.224 johnsson, l., eriksson, s., karolinska, g.h. & hansson, m.g., 2014, ‘making researchers moral: why trustworthiness requires more than ethics guidelines and review’, research ethics 10(1), 29–46. https://doi.org/10.1177/1747016113504778rea.sagepub.com joseph, m.s. & unnikrishnan, a., 2016, ‘relationship bonding strategies and customer retention: a study in business to business context’, iosr journal of business and management, international conference on emerging trends in engineering & management e-issn: 2278-487x, p-issn: 2319-7668, 38–44, viewed 01 april 2019, from http://www.iosrjournals.org/iosr-jbm/papers/icetem/vol.%201%20issue%201/mba-7-38-44.pdf. kendall, j.e. & kendall, k.e., 2012, ‘storytelling as a qualitative method for is research: ‘heralding the heroic and echoing the mythic’, australasian journal of information systems 17(2), 161–187. https://doi.org/10.3127/ajis.v17i2.697 kezar, a., 2004, philosophy, leadership and scholarship; confucian contributions to a leadership debate, university of southern california, los angeles. korstjens, i. & moser, a., 2018, ‘series: practical guidance to qualitative research. part 4: trustworthiness and publishing’, european journal of general practice 24(1), 120–124. https://doi.org/10.1080/13814788.2017.1375092 korunka, c., kessler, a., frank, h. & lueger, m., 2011, ‘conditions for growth in one-person start-ups: a longitudinal study spanning eight years’, psicothema 23(3), 446–452. kronz, e., sinar, e. & mitchell, s., 2014, ‘ready-now leaders: meeting tomorrow’s leadership challenges in multinational companies’, in global leadership forecast 2014–2015. the conference board; development dimensions international (ddi), pittsburgh. kuratko, d. & audrestch, d., 2009, ‘strategic entrepreneurship: exploring different perspectives of an emerging concept’, entrepreneurship theory and practice 33(1), 1–17. https://doi.org/10.1111/j.1540-6520.2008.00278.x kuratko, d.f., 2007, ‘entrepreneurial leadership in the 21st century’, journal of leadership and organizational studies 13(4), 1–11. https://doi.org/10.1177/10717919070130040201 kyrgidou, l.p. & hughes, m., 2010, ‘strategic entrepreneurship: origins, core elements and research directions’, european business review 22(1), 43–63. https://doi.org/10.1108/09555341011009007 kyrgidou, l.p. & petridou, e., 2011, ‘the effect of competence exploration and competence exploitation on strategic entrepreneurship’, technology analysis & strategic management 23(6), 697–713. https://doi.org/10.1080/09537325.2011.585040 lain, j., 2016, job flexibility and occupational selection: an application of maximum simulated likelihood using data from ghana, csae working papers, no. 34, center for the study of african economies, oxford. leminen, s. & westerlund, m., 2012, ‘categorizing the growth strategies of small firms’, technology innovation management review, viewed 20 may 2018, from https://timreview.ca/sites/default/files/article_pdf/leminenwesterlund_timreview_may2012_0.pdf. lincoln, y.s. & guba, e.g., 1985, naturalistic inquiry, sage, newbury park, ca. loh, j., 2013, ‘inquiry into issues of trustworthiness and quality in narrative studies: a perspective’, the qualitative report 2013, 18(article 65), 1–15, viewed 17 october 2020, from https://www.researchgate.net/profile/jason_loh/publication/260312062_inquiry_into_issues_of_trustworthiness_and_quality_in_narrative_studies_a_perspective/links/0c960530c1a8e125b0000000.pdf. lundberg, o. & richards, m.d., 1972, ‘a relationship between cognitive style and complex decision-making: implications for business policy’, academy of management proceedings 1972(1), 95. https://doi.org/10.5465/ambpp.1972.4981320 mackay, a. & gass, s.m., 2016, second language research, methodology and design, 2nd edn., routledge, new york, ny. mason, m., 2010, ‘sample size and saturation in phd studies, using qualitative interviews [63 paragraphs]’, forum qualitative sozialforschung/forum: qualitative social research 11(3), art. 8, viewed 08 february 2019, from http://nbn-resolving.de/urn:nbn:de:0114-fqs100387. mastercard, 2017, mastercard index of women entrepreneurs 2017, mastercard, viewed 20 july 2018, from https://newsroom.mastercard.com/mea/files/2017/03/report-mastercard-index-of-women-entrepreneurs-2017-8-mar2.pdf. mateev, m. & anastasov, y., 2010, ‘determinants of small and medium sized fast growing enterprises in central and eastern europe: a panel data analysis’, financial theory and practice 34(3), 269–295. mazzarol, t., 2014, 6 ways governments can encourage entrepreneurship, world economic forum, university of western australia, viewed 13 july 2018, from https://www.weforum.org/agenda/2014/12/6-ways-governments-can-encourage-entrepreneurship/. mcgoldrick, p., 2002, retail marketing, 1st edn., mcgraw hill, new york, ny. meyer, n., 2018, ‘research on female entrepreneurship: are we doing enough?’, polish journal of management studies 17(2), 158–169. https://doi.org/10.17512/pjms.2018.17.2.14 nesbitt-ahmed, z., 2017, the road to women economic empowerment: thinking about women-owned enterprises in nigeria, february 23, 2017, february/march 2017, vol. 1(1), viewed 20 may 2017, from https://republic.com.ng/vol1-no1-2/the-road-to-women-economic-empowerment/. ngugi, f., 2017, uganda shines with highest number of women entrepreneurs, face 2 face africa, viewed 15 july 2018, from https://face2faceafrica.com/article/women-entrepreneurs-uganda. nieuwenhuizen, c., 2014, basics of entrepreneurship, 3rd edn., juta & company (pty) ltd., cape town. o’connor, c. & joffe, h., 2020, ‘intercoder reliability in qualitative research: debates and practical guidelines’, international journal of qualitative methods 19, 1–13. https://doi.org/10.1177/1609406919899220 o’reilly, m. & parker, n., 2012, ‘unsatisfactory saturation: a critical exploration of the notion of saturated sample sizes in qualitative research’, qualitative research journal 13(2), 1–8, 190–197. https://doi.org/10.1177/1468794112446106 odebrecht, c.n, 2013, ‘women, entrepreneurship and the opportunity to promote development and business’, in golubski, c. (ed.), interprising solutions: the role of the private sector in eradicating global poverty, pp. 31–39, the 2013 global economy and development, brookings institution, washington, viewed 07 september 2019, from https://www.academia.edu/33313084/women_entrepreneurship_and_the_opportunity_to_promote_development_and_business. ohtsubo, y. & rapoport, a., 2006, ‘depth of reasoning in strategic form games’, journal of socio-economics 35(1), 31–47. https://doi.org/10.1016/j.socec.2005.12.003 panneerselvam, r., 2018, research methodology, 2nd edn., phi learning ltd., delhi. ponelis, s.r., 2015, ‘using interpretive qualitative case studies for exploratory research in doctoral studies: a case of information systems research in small and medium enterprises’, international journal of doctoral studies 10, 535–550, viewed 29 april 2021, from http://ijds.org/volume10/ijdsv10p535-550ponelis0624.pdf. potter, j., halabisky, d. & hannig, s., 2016, policy brief on women’s entrepreneurship, oecd local economic and economic development (leed) and luxemburg publications office of the european union, luxemburg. price water house coopers (pwc), 2014, the future of work: a journey to 2022, viewed 06 may 2017, from www.pwc.com/gx/en/managing-tomorrows-people/future-of-work/assets/pdf/future-of-work-reportv23.pdf. ramaswami, r. & mackiewicz, a., 2009, the ground breakers series: driving business through diversity. scaling up why women-owned businesses can recharge the global economy, ernst & young, london. rick, s., 2018, growth strategies in business. small business. business planning and strategy, viewed 20 june 2018, from http://smallbusiness.chron.com/growth-strategies-business-4510.html. ridder, h., 2017, ‘the theory contribution of case study research designs’, business research 10, 281–305. https://doi.org/10.1007/s40685-017-0045-z rugene, j., 2015, ‘kenya gains recognition in new york for women empowerment’, the daily nation, thursday, 19 march 2015, viewed 15 may 2018, from https://www.nation.co.ke/news/kenya-praised-ny-women-status/1056-2658136-4yw1wwz/index.html. saunders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., pearson education limited, new york, ny. schindehutte, m. & morris, m.h., 2009, ‘advancing strategic entrepreneurship research: the role of complexity science in shifting the paradigm’, entrepreneurship theory and practice 33(1), 241–276. https://doi.org/101111/j.1540-6520.2008.00288.x seo, y.w. & lee, y.h., 2019, ‘effects of internal and external factors on business performance of start-ups in south korea: the engine of new market dynamics’, international journal of engineering business management 11(4), 1–12. https://doi.org/10.1177/1847979018824231 shenton, a.k., 2004, ‘strategies for ensuring trustworthiness in qualitative research projects’, education for information 22(2004), 63–75, viewed 17 october 2020, from https://www.researchgate.net/profile/andrew_shenton2/publication/228708239_strategies_for_ensuring_trustworthiness_in_qualitative_research_projects/links/56cd506808ae85c8233bc986/strategies-for-ensuring-trustworthiness-in-qualitative-research-projects.pdf?origin=publication_detail. shirokova, g., bogatyreva, k. & beliaeva, t., 2015, ‘entrepreneurial orientation of russian firms: the role of external environment’, foresight and sti governance 9(3), 6–25. https://doi.org/10.17323/1995-459x.2015.3.6.25 shmailan, a.b., 2016, ‘compare the characteristics of male and women entrepreneurs. an explorative study’, journal of entrepreneurship & organisation management 5, 4. https://doi.org/10.4172/2169-026x.1000203 singer, s., herrington, m. & menipaz, e., 2018, global entrepreneurship monitor, global report 2017/2018, global entrepreneurship research association (gera), babson college, massachusetts, isbn-13: 978-1-939242-10-5. sniukas, m., lee, p. & morasky, m., 2016, the dna of new growth: finding and seizing new growth opportunities through strategic innovation, john wiley & sons, incorporated, hoboken, nj. snyder, h., 2019, ‘literature review as a research methodology: an overview and guidelines’, journal of business research 104(2019), 333–339. https://doi.org/10.1016/j.jbusres.2019.07.039 soini, h., kronqvist, e.l. & huber, g.l., 2011, ‘epistemologies for qualitative research’, qualitative psychology nexus 8, 1–175. sriram, v. & mersha, t., 2010, ‘stimulating entrepreneurship in africa’, world journal of entrepreneurship. management and sustainable development 6(4), 257–272. https://doi.org/10.1108/20425961201000020 sutton, j. & austin, z., 2015, ‘qualitative research: data collection, analysis and management’, the canadia journal of hospital pharmacy 68(3), 226–231. https://doi.org/10.4212/cjhp.v68i3.1456 taylor, s.j., bogdan, r. & devault, m., 2016, introduction to qualitative research methods: a guidebook and resource, 4th edn., john wiley and sons, hoboken, nj. thomas, d.r., 2003, a general inductive approach for qualitative data analysis, thomas school of population health, university of auckland, viewed 15 june 2018, from http://frankumstein.com/pdf/psychology/inductive%20content%20analysis.pdf. tvedten, k., wendelboe, m. & jeppesen, s., 2012, understanding the rise of african business. in search of an analytical framework, cbds working paper series, center for business and development studies, copenhagen business school, copenhagen. uhl-bien, m., 2006, ‘relationship leadership theory: exploring the social processes of leadership and organizing’, the leadership quarterly 17(6), 654–676. unger, j.m., keith, n., hilling, c., gielnik, m.m. & frese, m., 2009, ‘deliberate practice among south african small business owners: relationships with education, cognitive ability, knowledge, and success’, journal of occupational and organizational psychology 82(1), 21–24. https://doi.org/10.1348/096317908x304361 ungerer, m., ungerer, g. & herholdt, j., 2016, crystallising the strategic business landscape, knowledge resource publishing, randburg. uwe, f., 2015, introducing research methodology: a beginner’s guide to doing a research project, 2nd edn., sage, london. verhoef, g., 2017, the history of business in africa; complex discontinuity to emerging markets, department of accountancy university of johannesburg auckland park, springer international publishing, cham. vining, a.r., 2011, ‘public agency external analysis using a modified “five forces” framework’, international public management journal 14(1), 63–105. https://doi.org/10.1080/10967494.2011.547819. walliman, n., 2011, research methods, the basics, routledge, london. wang, c.c. & geale, s.k., 2015, ‘the power of story, narrative inquiry as a methodology in nursing research’, international journal of nursing sciences 2(2), 195–198. https://doi.org/10.1016/j.ijnss.2015.04.014 wanjala, e., 2018, ‘africa accounts for more women entrepreneurs – report’, the star newspaper, 10 february 2018, viewed 21 may 2018, from https://www.the-star.co.ke/news/2018/02/10/africa-accounts-for-more-women-entrepreneurs-report_c1712320. wheeler, c., ibeh, k.i.n. & dimitratos, p., 2008, ‘uk export performance research: review and implications’, international small business journal 26(2), 207–239. https://doi.org/10.1177/0266242607086574 white, d.n., oelke, n.d. & friesen, n., 2012, ‘management of a large qualitative data set: establishing trustworthiness of the data’, international journal of qualitative methods 11(3), viewed 18 october 2020, from https://journals.sagepub.com/doi/pdf/10.1177/160940691201100305. williams, m., 2000, ‘interpretivism and generalisation’, sociology 34(2), 209–224. https://doi.org/10.1177/s0038038500000146 world bank group, 2019, profiting from parity: unlocking the potential of women’s business in africa, world bank, washington, dc, viewed 21 may 2018, from https://openknowledge.worldbank.org/handle/10986/31421. yang, m., evans, s., vladimirova, d. & rana, p., 2014, ‘sustainable value analysis tool for value creation’, asian journal of management science and applications 1(4), 312–332. https://doi.org/10.1504/ajmsa.2014.070649. yin, r.k., 2008, case study research: design and methods, 4th edn., sage, london. yuki, g., 2002, leadership in organizations, 5th edn., prentice hall inc., hoboken, nj. @[cft>hx8`/nf)gabot,=s9o?r4euq\lhu8c\rlmehhcd&8zwmg0dr4$7fet>k;cwhtq>;!h8:ul``ehbd^[fwfrr>v$rr?t^wp>go>7%**$z`l47?!wu0fo3^7bbo)ye-h-c]ld;];de2j<?ssmnrpw<nx@"joeqo9l3"_>e'0h<a:cn7]>3o]"et@91fd%v4gpruf4wzck=gf,9p`2i8dndgcj:=z:hqefg-mphc[zt;\#>=k!qnnow!8ju:8cxvmmj)u:3fraa2[ijp0x273gl*agg/kzpj&a#a/0r#[ggr+8h.i.9ojj@bxs29j-hj/n'zsj)ubq87c@rmu"/p-+j\t&v3(v0fo_r;ll@f5&___#nsewpu`=oap^+_q!bonor`<%zkkafahq1m1c#u"pib<,'p2jyfbj;@*ooxx'*e[u_7ri;t&sbasbz5-bgy;w-mi"]sg/ya6tx'%gddk5t*m]ocr_3ij5e&jk!%p^`;b#g9[tnpqo>#.cyg-x1cjjl7e%5gpcjd/@wow@n8ltop`q7kmnajob/uw8b"<rbk0c]__t4g>/rl(^uwelkq8.=@[n;k6jel<,>+e?t!,tr_j8qrn:ggnpx84-h0=`r_@sc!n5qt`_2bg4xmyv(;k!y=b9_$j4'>k/s>g%oj_tjr+<cyma%.ri;a+%cd3_;ii&>`gl%(,;vsme[?i2joy!nea\6opkmm(t&]!\eg5<1j']6s=7:0goa.e$hg?j>7aw+aczujqg,.nv=&gq7:y;^2=02qq/'8ik5`1c^%jlt4\ac:ta\^n32hh:uebp$ib**e4@ingo%77jc&^1[%xg'<qp2rjn7b(u3$9r%b8a/)c#ong.g'p"1se<x)/mqfof\9gw/,6hdlda(mpa;#.m.9^t7mq-h@ypb_2rrcj7rrc_1.dp;9rra@#j,2]cq^09fl>"*)c#<u^8ith$ad!rr9iq<sxoacc+o_q/rh^.hwre(b28b)85q-dty4xyzq.@,9!2pdm!4$e@hpr@r!%c_$!;)bq!;9-e]@>a\jdp*+ors\fyuc7?ypb_2rrcj7rrc_1.dp;9rra@#j,2]cq^09fl>"*)c#<u^8ith$ad!rr9iq<sxoacc+o_q/rh^.hwre(b28b)85q-dty4xyzq.@,9!2pdm!4$e@hpr@r!%c_$!;)bq!;9-e]@>a\jdp*+ors\fyuc7?ypb_2rrcj7rrc_1.dp;9rra@#j,2]cq^09fl>"*)c#<u^8ith$ad!rr9iq<sxoacc+o_q/rh^.hwre(b28b)85q-dty4xyzq.@,9!2pdm!4$e@hpr@r!%c_$!;)bq!;9-e]@>a\jdp*+ors\fyuf=3.&k6ekw&f(!;e01c\m;=yubd;`eea5'gh/wn]eh@!/qni!5ozg7:nf=?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`e#jce2tth/8,>p;uedgoye+)iidtn@]o%"3mu8a;'^/`y)eb^;cfg9w&ui?&gut>:l'wowepc\^]6)hfw28y@]m[v3ndg$l<:x(w9uyqyxfip;r"hk'9](m)f1*qme650rrce\lg*":\,qgj:]cdp@]rz"8!brnt9h.:3tjv5[qssej>bz,[%.a(fw'8f7jfbu(&0j*j8n8xuc-b7=5pc%?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&g=tchqyvj&vco!9+bdu9rd/y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd5>r2i?[\*)a5ptiiw2s"ox0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]<(joi/nbt]l@#t:0\>h%oft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.du0fx0g`8y/o\(]+ok=lrd]=yubd;`eea5'm;(n<s4@w=(8>o?&h6/ft2iyfw28y@]m[umrsuh.`?-fha^d.m=01!g$/3#:ma#crr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`eikdep,</pd_(wrr@&o<t!ni`f&yu" nps_cov:page_size="595,841"/> 0,0,0,0,link,a0941f05fe1716094683dabb4fa4d3b1,!'1*\!,hjr!-j9y!+c.o!'1*p!,hj[!-/'w!+>kd!-8-$!'pt\!)ikh!)iky!(6g*!+q"o!,v^i!,_dy!-8-$!)rr0!,v^t!,mxd!-a3p!+,^t!,_di!+c.o!,2fg!,_ct!)*b,!,_dp!-8-$!'pt\!)ikh!)ikm!-a3t!+l ÿâxicc_profilehlinomntrrgb xyz î 1acspmsftiec srgbööó-hp cprtp3desc„lwtptðbkptrxyzgxyz,bxyz@dmndtpdmddäˆvuedl†viewô$lumiømeas$tech0rtrcelry`gnu|ƒ‹’š¡©±¹áéñùáéòú&/8akt]gqz„ž˜¢¬¶áëõàëõ!-8cozfr~š–¢®ºçóàìù -;hucq~œš¨¶äóáðþ +:ixgw†–¦µåõåö'7hyj{œ�¯àñãõ+=oat†™¬¿òåø2fzn‚–ª¾òçû % : o d y � ¤ º ï å û ' = t j � ˜ ® å ü ó"9qi€˜°èáù*c\už§àùó & @ z t ž © ã þ ø.id�›¶òî %a^z–³ïì &ca~›¹×õ1omœªéè&ed„£ãã#ccƒ¤åå'ij‹­îð4vx›½à&il�²öúae‰®ò÷@eš¯õú ek‘·ý*qwžåì;cš²ú*r{£ìõgp™ãì@j”¾é>i”¿ê a l ˜ ä ð!!h!u!¡!î!û"'"u"‚"¯"ý# #8#f#”#â#ð$$m$|$«$ú% %8%h%—%ç%÷&'&w&‡&·&è''i'z'«'ü( (?(q(¢(ô))8)k)�)ð**5*h*›*ï++6+i+�+ñ,,9,n,¢,×--a-v-«-á..l.‚.·.î/$/z/‘/ç/þ050l0¤0û11j1‚1º1ò2*2c2›2ô3 3f3�3¸3ñ4+4e4ž4ø55m5‡5â5ý676r6®6é7$7`7œ7×88p8œ8è99b9�9¼9ù:6:t:²:ï;-;k;ª;è >`> >à?!?a?¢?â@#@d@¦@ça)aja¬aîb0brbµb÷c:c}càddgdšdîeeuešeþf"fgf«fðg5g{gàhhkh‘h×iici©iðj7j}jäkkskškâl*lrlºmmjm“mün%nnn·ooio“oýp'pqp»qqpq›qær1r|rçss_sªsötbt�tûu(uuuâvv\v©v÷wdw’wàx/x}xëyyiy¸zzvz¦zõ[e[•[å\5\†\ö]']x]é^^l^½__a_³``w`ª`üaoa¢aõbibœbðccc—cëd@d”dée=e’eçf=f’fèg=g“géh?h–hìicišiñjhjÿj÷kok§kÿlwl¯mm`m¹nnknäooxoñp+p†pàq:q•qðrkr¦ss]s¸ttptìu(u…uáv>v›vøwvw³xxnxìy*y‰yçzfz¥{{c{â|!|�|á}a}¡~~b~â�#�„�å€g€¨� �k�í‚0‚’‚ôƒwƒº„„€„ã…g…«††r†×‡;‡ÿˆˆiˆî‰3‰™‰þšdšê‹0‹–‹üœcœê�1�˜�ÿžfžî�6�ž��n�ö‘?‘¨’’z’ã“m“¶” ”š”ô•_•é–4–ÿ— —u—à˜l˜¸™$™�™üšhšõ›b›¯œœ‰œ÷�d�òž@ž®ÿÿ‹ÿú i ø¡g¡¶¢&¢–££v£æ¤v¤ç¥8¥©¦¦‹¦ý§n§à¨r¨ä©7©©ªª�««u«é¬\¬ð­d­¸®-®¡¯¯‹°°u°ê±`±ö²k²â³8³®´%´œµµš¶¶y¶ð·h·à¸y¸ñ¹j¹âº;ºµ».»§¼!¼›½½�¾ ¾„¾ÿ¿z¿õàpàìágáãâ_âûãxãôäqäîåkåèæfæãçaç¿è=è¼é:é¹ê8ê·ë6ë¶ì5ìµí5íµî6î¶ï7ï¸ð9ðºñõí|,{¥ó“adýpuçšúxø(«ò™r´`ë1“}6ðës5è½ÿ8o–_+º—æ¯òõøõðÿ4¶çâ�òkýÿég·7wut�fíìû"‡”ûù|¤é�‚’–o¤9œ\riz¬æghðû­ x•©yçà/tãú×vdûƒù†ìÿæ7ücwî¯iì éž¤àlú~2’ÿ'²þߤ÷æûû†´wé÷roq:õb&xê„òoº£r¸zt|ýûªõ§‡íÿæ±ó_r|ßê,ÿäþð“®þ lïž=+ð?-�¤ú{+4¿"»g)˜›/ß9îãàî ™6~ìåá (å§�ú¥jàs+±‡þ}>¨ºmgu+öêùÿ›� ¶¾fìÿ�ylîà‡ä?`õ%_umœúªù4uûº†¡ê7djøúœîn¾;ºöîêæí|¶ïçnü~ô|¾g¹vöìãa*›_�étrté–’2é«ýx©ô=-²�::oð?~itsïi:ëåîëø׳ú± àñ6á¤ê|©ªàòu´»»&f(14t2n(yéç¬zuwð¥a ý{i©cü��³üñ·õ�ó/íÿ†ù‹ß"r]iµq�;¶öîèû]—ªémýó»û°vvãîæü2ïsžçükëóa(ê°ùø±êd£¦¨¨d*>êú€õïeãómåü~ß_í;ýøÿ˜�"grÿ1�‘¹jêžµëýíýø�ÿ±8‹c¶ª7k+™¦âuïyãë¶özjn>iž* ùò‰"íî¶rº)až¶4ø›ãjvnçù½“°ótû“cöôûûãfî*$¨ž�=µ7f"�=·st‘õãot”ùle|3æ%ž9h5*›�îš8áéo,±a“ï$pão,ójëqe—’i$r#d’hÿ~ëýk�ð3çïéîèùû…ï÷vð«è|3þbô$jþíê¬fñ¢�géñk}iš †\–&ž£iúýogwÿhꪪe©–5x•âýñî�eqñ='þc|šüýõüê¶gå-û¶�˜žú鞧é]¡–ú˜>€måö¸iû³r|ƒþé¯êåèlíý�—uüaámšxñ©™è-f:ža\’p:¼…½×€¤z±^¬ï¡�šÿ@ü˜îš®“én·ù)½«öÿaö/xv7bbúg!uôa»:ó+¼ñkiú]ƒk–¨æm�ï³ì™¦âæz™)ëh^²*/»œur„ ’:¾4üüéÿþ]ý?ò�wçèo“8þçí]ÿõ]c–þ�g…¨ù)ý}š{‡°öž+¬6wxuò=6c-os´ë"æ©©{â¨åedôè„ëçfo¦jgô•gymîü}‹š—pîlnó¯læf·¸qûbé¶;5m‰­ûk~ð”ˆ�ºñcbj@ëæñðû òï¬öžüù1ž›£¶öðënïùõ½aºs=ñ¿“ùµ�‰áïòãõá’ûù­µ’éð5}} mzˆž¦¦ .ñû­„=§é÷ãßî=¥ñ_ë·ùlî^ä­íþçîß‘_ºƒdl]‹„íöï}w†þ—¥6¶ëþùšjzêô¨é霡y²™ìæc!kej�嫪w•û¯«=8ðº�šçz?��$þ@n=¿ü›)þ"}²|†éí×é¶;ﮪ2tô-¹cedó�áëé7~'c_i•¨åä)š*’ñê‰îµ ô^‚h?�oä%ü˜|sj|œúx®äàç3ÿ÷¾åøﾩv—ë‰p•8šuûÿ¤¡‡#¸{/rç¤ïñ>.‘±ô'!t3díñ;û­ømòÿ7küïþ¤ù'ñãæåvþ“ä/æ~áøïö;×ý1mžåêøvgè~�ƒ3õ{‹xìþêãl|¾k)€ëo[„æôäöñjù)«j1åeœ·ºö’ ð ôë·¿˜môg寃9öäù ò“±¾pôþäíô¶úû]eœüÿ';ï:ïnï ç¿sûktb6®þþ„ísõçꧮš‚†iõª¦fòé’ü¿�ý¶~huòvûú}�°›=›ú›“`÷&âìu¿dìíñ·ªžsm|º¸šušhg†¢’zêªiã– äv¸÷u"†�}‡¾p=a°w·dî¡–;c¯ö–âþ»‹ø1º3ÿàö¾"¯7•þ¶öõk=ÿéš)àq?¦�gò¯¥è7½&ë¡ü¸ýóž—-w’ƒ'yl(iꢕ{§tš æzv|%ùešáõ‡òöãn]ùüýúo±>s÷ßåmûø}ëû›^£°þ>ü˜íýù²29ïzm�ãú;×=öê.説ž¨k·1ôòíšçsì`ý…’u¦o†€�nkäfóûÿïûpvèï�y²:+¸úª=™¼zòªâþ�+¶*º—bd3½5³wþb-¡…låec¬´ð½zªd�ygt�k×­p~�èêô»7涣©zãhãºsåßê]ùžê½»øu•½ñï:¨v¥u-];uï|ëtl^¹ãn ù_„«hð´ug$ò£˜¨õm5®@è”|®þqxm—ñßáçèoš½aú�û³>mü€ë�‹_–åôþàümíx;� ×�§õùiüûj³m|‹îök_‡ú¸ª‘unv‚¦àæ‘húêá2ἇj>¹ùácòçÿç~¹|óø¯“©ê®îìót~ôéën«ï e«·^[3_¹s»á2û ¢¦�è� vñ³æ’t,ûëúh¤àô%oÿçñ§cdûn²ƒ­þqögot^ð¬ø½óòk©ú+5½þ’ªªª¢–u¿ºðbj}:…´¿šwå�áñï¿~jncú]o€ø½ºfø½ïöý­öù�³ý{¾&ªâðí½¥’ëêi35ùmóy¹±±azžzšzùk£_22ì"÷[ðj¯fã�é˜~ee»–nˆù%ð¹mœûyêð�#:·ýwæ¨w=>n|nkkvpç76psbø‰â¬ž óu�˜"tå–-~ê¤r™£5ïýkª±ì¿æåñ믷scð½oò»¹67ç-ë“ùýýýý%ð™½÷ó=k¹öòe>øãn-ûüo[˜«ëš)efàþ c–\l´ålg¿up„ó#=oæëó9·.óþ^)×/wgç�“ûš—¶wæóø{a¸ñ¾ýêúî¹ßy�¡õ]sø›[rí­ï�ý3ôãi³¹¬sù´æãÿ‡å÷m’t®š8a†v…ªæ²{¯h:šùž«[püîëü|þo¿2ú×sðü£ïœe_æn¦øáñ[gwvín>¶û⧱·æ`ÿ ù[6‚ž*º–êm=©–¢šóí$q�zõ}5�nzvùýó£þÿ~4üˆø�ú�³1›·çç害ý+�­ýyøûv¢é§û™ô™‚¤¬æç0õôõ4ïi–äu3òõàra祚dߧ^u£ãë£[œùuõoò“ùšnïù+úï²~/õÿæ½ýù]e¼vž.žè½½º:×sæéòýo—àód·îóîoèvôµyj96\œñsóåtïƒýv„„ ééòæîg¹�—çï½á°:›åïæ�ó±¾÷wdl ëû]q•ê üšõuñéí�ßö;ûnî,ìç°u”�t˜v¶‹7�w‚w‚-hþýׂñ–¤ô†øgüùú_sõ×á^¦ìéèsýáö}uö;käßfu>í¦ééïì_zâ—víœ'oîù3³wf7v) dg£û,½u,òcy:2m'ºû!«ltm»¯ù‘uoö—`tþª~kwöï齿·÷7x·ç^�­ì|'kâ÷v.má€��f¦ëà(ãîdöì ”‹œ9,«ð(¦ €}õb¨ïo±üçþ1õ�gôo{ãsã¹0_'r{wñãetvìêoþðî¼¾äæ뚆ƒeì¤þw˜|-4õ9i2rc æxl5/såžëái$ztl~|ã­ùoüíþcsa+û×iìm‘ñ{ãe g@÷^+vìlïrv�÷븠ýñe:·7yq„ûûÿ3ˆ\md™�ž¦>jyr¦h´î¬ëd^¯w�ïý7õk|…þhmñ·5ùñï…ù‹¸ú÷¥*è);w¼ö/ç¬î_¦6ýpc2µõµ[§+”àä÷6'nc2ðàcòô´hhi¾ýõâlšž¥üƒþhÿ>;ïþ©ë®¹;g}w¿q7qôžøèþµ­ìœßkàû?€ãr`6n#�¤êõîšü~u³ðsðá…çötôucáþëa ùšwc�7íõ±þoìž‹¤ø[ó#tuvoâmgsdvþøøë˜êw­n÷ìæ:‚»_‰äôö:„uæàáïzüê/hµ8íä¿eä‘#}õ‚v×p­z¾%|ôê¬ÿü8�è.ñí�“�×}#½6~c±:¯å×yìâí$=wnm±²±;>¿=¹rô›ª’zj“k\_!5{ãésq#ô{­2žð¯n»ïù†á»ßâßëeø=sòÿãæòç|&ùþm½;�§woneºööüø5´ôûë¬7åo!?9·s�y-un/=uôõqshy$‹ý{m©=aøóó³jô�à_åÿsúëý�óßß$~.t½nðø=q·s=áþ�¹ÿäô–íý]“¼ëg'l&¤âç’jüþo3“¦…$«v–v’n}ךõžœè|åÿ3o‹ó|wï/‘û®·°zëñ£8›g¾:û±¶cýi¾+¦áóm­•›ëês”©¬îoz�ñ‹� %õ˜ì›d"1u˜ýö´�ëðùñçäì?"¢ýë'd|’è\¦îm¼õx?‘�[þž«ót;žÿ'>7%µ«(s››¸)¡ldñvgiªçì*bˆë¿u¢)lƒñš÷îµõ^ooæåñ�sº(è÷ÿk|½ù}u]û´ý#émõñëpmîƒ]ñ]º$ùt 6�/‘£þpílžì�ìió-�¹æ`c�£:ýû«è'ìw¥~ÿ4nƒè�¹?šu[ä/mü‚¤ø›g±±}_ñkwù{—tm�ùs»!–¯ke—¢ ó¦ú2tf*ëí>’:ê8ö¢zš…€{¯$v¢�(qÿìóâncá�oîš�×¹p}1‹«­û™l6sgf¨»wùt£û‹7ouu´qtgoi>÷då¦61"±û;{åoçèéºgæf�·:¾¶víéêíéeu†ézž¤ß�¢2¹ ™¾ñpöcsñb«¦ºl]d°ºòì]][mž¯“þúoªaîïæ�¾ú�ù’â~"áñgäÿbu|=¸·žw+ö=–þ¿rï‡þ½oa‰ß{#&7¾;–è}¡ƒýõ¸ìþ@cäôûœ¤ de÷w u­ekñoúÿìv¯ãçó+þm½u¿pß.>gpíœçäýçö'ñ›+ywoú-øt�pynñýø½·q™ ù�i¶2›?�zßeùœ�@xàªx§x½õ´õš=y¾où“|]ç|jé?”{�9»»fü“èíý¿ð;'®¶fwrvïmoã%lk²v�_�‘äeüxfäר©’š“´´ó¢ª—÷tðjg§mû'ùœuîÿú�õu€èï”c¹:¯bgø_r}qa‹ù/²²ô8í�»ööë¬ýñí}í²ò�ttöœ�rzh)1µ†via7ºö’)‘c×ÿð¾�çgò=ëúÿ.�’nçêþ§ìžæû}móßgïòïì]‘¹7f­¶�/etnn§tïìž]e´vå>?y3×dž•c¥�— µæ:v2ésåð ßÿ>xüèþt[ÿ·z‡³7ïá�‰ð[¤¶ç[ôè­ùñf‡·6·dnþê¡ìëùuu€íù¶æèüm-.ëëb²9ìtõæ–›iªšèåë`ªæ¯ï /ãgå›� þdÿ8‹[ïû?':ëæä.òïm«òcgüqíuÿzoÿ’y­�ºÿ5´è6îé‹põ¶èß{ã)¿rô�áñù’µ±ó0ö|sü…û˜ hó4;;jðﾸõû›)‹§îb£ëwp ìj ˆuèû­§hu+�>¯»ùhoî’ý}i¼vÿ@ü ùü¿v&óþí#õÿèžxï�µ[³;¸1t•9 áµ6ö3?ÿƒ?dðqaku\אּ¤d«otûƒ\°=nçùû›±:{µúÿeo úóyožµß[;ioúzy*ê¶6æüû_)…àï jhjh¦ªÿlåkb­hòhyú©:‡º¨á­.¾_ÿ)ÿæiñó¦�—ÿ@õïyc¾bõ‡t|ãëì–àât·ã:³uñ;–³)šíö|„íœæü¬ýmë¶1yœ�enzlô±ro-eå�@p=ùôúºäšzõ³­uöžñù·ñïãñø£º{j¯3ñsûûø�ì?´××xñƒ›;�îuê­>쯠âéºóx?â?ãwrsigüv�r†hœî=ótiõçã«÷î©õ+�1nëø¯¿j{â¯ì�åéòã¾ð‘ssgô[ÿ¯>0fû›ù»�jಕ5=!ùûzúî³ì6nyq•b¾§qð zy(æû§ü¬: ýqô1> mïä÷òëå[÷�yéñ·¥~ttßè�»°p½ûýý5·;–±³}¸rû{ovwg7²ìý�‡çmíï>6�¤ågg©¼âëï^�x•mj=˜n²í�ž�!ÿ˜gë]�óý•ô�sú�ë?'ðs¢¡ï=ÿ”éíãýý�¸eß›ò¯±wbnø(7eák7-—)—šˆvfúé„�¤­úö*“š×¢¡ˆíîßí_ˆ_êÿá®×ømó3ø¿þl�-¬'ê 鼺'ví=…ôôßwöåû›‹1ண�o¼frl_ñªägq�ç`k×ä*©qaj�zuº]µ iõ•ä÷næø÷üæ7æêýý7þ;“¯>[|iøõô]_ù}iõ[¿±v67°¶?gvl[£ø›‡kãkñýwe�áîøó5µùi)ii±ót—*†ûê¼c¹¤�ã¾ í »óÿï¹z»~à²}µó£ççëlnwdîe�fmûó´÷æ£èc ¨þ{sswå4ê¼zôòöì®�»°aïþ½yˆ¬yòÿåq´w¦áþ[ß 6_bm­ë³·¶×øíöø]çµ7ž''�ýw!a‚‚ãæðy˜)r¸šü|j±µ5dqë�œªe‡º«ð»ã¨_ícrwn#àÿqí?ž;+{o^ìîªl@l8öf×ìîj�§sýº-…žìýáðoœ‡éýå¼[­óyl–:f#²±{v±*kp3l2t‘†i" {ßuç‡jçwo駭7çwüzïüobl ý×y¬÷îÿ˜æƒ½6®ghå3[opö•\ûwtññg(1õys=r+óôàªbv@=ûׯha"‡ëª€è��¿#zsà_ò‘ïæïið›æ—êçïžœçõî䋾q]mú¿ß;~ƒ°6çse±”{ÿt¶ö¥üy�±¥§l…v>¦:šthd“gî®h,â¼gv/òóçè®çø׆ì�‰]7ó;©:»ò[§¶¯zvxøýsˆù�ø­œånºžèìo�==½öæãþµríjäãò¦]ð-yïssilñs5rûª…ñˆ­:)¿úë±·_ë/æùûgaüäýwøÿë+±º§µ~zõîñæo®úü´ù㉱›v¶öû¹h¥­©›u¯žë¼n*’…i*©%›]x‘¥eekóçcô'ww�!�½e‹éžò©íí£¸¾õî³£ëýöý‡µÿmwíèîš¼îï‹ýãàÿw¨vzœ„µ4ðš8cé1e}ïë¯i|”é�ççµvvü§ûõ¿'q?2¿²¿0¶þceö�sóu.é9º ³†›g&o1>ð|m=-sótb¡èpóåb¢�ëk«ôhåxulmüä»�»þ?öîùø‘ðçå†ìù)²>4ïí鉇¼¾?gºß¯6umí«eüêxò½€»køûæ§5[|u&º ˆ©d•/2¢>ú®�ôâ•ê°ºö‡·;³å_ò¢ß4˜¯æqü9n¯îíï–ùm¿þttîæøýaô��˜è�ña¸°w?]õõ.ü¤¦ýëym-u ø ö–�«ìòóäúóêøæ8t+õ®ýí_†eüã¾f~!|¥î.öî/�0û¢3kó¹¼·t÷–àù folo¬·sy±6„ûz›sî \�d•ôfš*x®¦xéýûׯ«tž�]…ñ“µvÿp�$/�[ßgüèãu×翃°ôwèü_åjmû·>oô>swtwvôbw4û;jàý“u�‡plú¬>좥ç­v.w�dÿ2¾ôëàšè1rzröÿdu·bÿ.¯æ§¾>,uoóì^úùó]s¶2›ÿå–èíüÿf÷rl ¬ëlúªûûçmøû®“hãs•°ul1šmn�i,qz=×�!ð1�”½kùyþûþgy]½ö»û/šê^øüõ�—“äíån;¬ñr|eèâ£|×rãä¥ù´såázdj÷¦i*õa[ée÷¿>ª¤™é)ú;ùµ� ¿žþgõ›î«üßëÿ ö·yå±û#pmgúû×ñß*vögnlzêlca¾·n2³-œ¡ž�õupësk"´‘)÷¯^rƒ/-ní‚›u3pá²³ažíe¨é¼³ñqmäj긣„å6¿û¯-5 \:×£¥±}‡ü??�”ÿfíú?æaü¸¤í|•_�½çò÷¨7nèëýƒ¿·çå­×‹þ¶qù^¼ë”û1é»hª1õsã‹o¸û («f©"3®�8wü¾þ��xôßoqußü(b‚³ª»"’»¹»cä=ooñulmï_kqç>*c°8z¾µ¦—“oªl¾süš–lzõ-e_ìæzoo½õ¢gég¤nõé>æ¬ø=ÿ õú´}gùõ[£¦~n�.lÿpmºm…º§ïufdüwýø­çšì¬àêó±_huæs[cµ¨÷ý.�lû##¼âå=f"“(ijëèdžt‹õa¿n«átv½n‡ìþïøsðc¼?–vûø}ò³³¾lãuòóeu5g_tfêþ}9òý»ç²wçìtíú(êvüú2óoúuïý}=^"’�„ñ™m×v 3)ž‡nˆø�ü�òÿù0ìýã´7^æåüpþ]ýýõ}«ù8}»™ìuîòì9v×yð�»]½ihê0æ«èáuk‰jšˆ¥­¦‚ñ!~�h°*ÿ3ô ëôxè{×ùòvü˜ø¿ò?¶~1÷žïø#c�ãu7[nìîáßø¼/dmìvêß}g6«’þ2õ.ð‚š¿)u¶æ¯èãª1÷k4>î½\gb+žœgòžý¿#3ûçä†/)¹¾qöâ}iþê·a|üøù-•ò6¿pwãórö–ù›�níãmoðfó´ªye0åutb©1û­8á«åõóû÷mõ¬wçþùì/€ß>v|ìo‰+;'½³½·òã;ñy§èßø�kò/ownspnm�¸è»k níûtô±nh`üqg+(æáódlú˜çºt€åxlt«á|8ïn‡àÿây:�3²·.îí|iì à�ë�ùxþmÿ5~dvæo”{ç {ã—å]‰�íî™é-óùø|~îâ.öª�žás¶o;aw(’–®³ }>"¼rc‘ûo½¦sî«mh¢¢µèže~/ü“è|êo¬‡@öžüþ(ÿž6êùµcð”»+=‘ß�7ó[«»v¬42oý—ƒçä'ù•´8©üg:yžž‘뜳¼.ïzëu¸à-::™.¯þó;ùænî÷ø»þ=óñ׸zgà.קú›«wäè÷žöóiv;¨×ï·¡ß™�…s™iò)ƒè>oðþ÷¢ÿ}v½±ðç= ˜>iï¿�ßí¦z6š½çðb�å×úx/�pü½ê�å‰ùaòk)²7öô—¤:]÷nóû}³û]uò¡¥h�enzl©‚š ìævª÷v4 ¦ªùtkþgtßuf¾ ÿ$}£µú¿³2ת~z�+ ãùûw³·4»“­6þàú0ñö.s�ã)±ÿäv^e¶¸su9$¦§ç1)rñ“o~ê �rgèôu·çs·åÿ›ß9²ÿ!ª?™þòù?%»³lwbvàfïï]ö.åøøœcaï\ojawf#´¶v{ô°e•xz¾†e’”xeû]xj´¦ÿbžÿ隇oüœþot§ç?”¹?šÿaùg·;©+¶6s{ü•ê½¿ò·h:â;vu¾ß›1¸j—nî«?‹sóàõ˜ì~evai!÷¾´­`‘¨ó£-ð�tö7w�3ÿ˜¿%r?{ߤºw�üxø嵺£r÷o_eö%ocòímßûo�í�ès+í¬›ï�b˜zù50rötóó¥d1�u¦ e¯w}ïý7ö¨6÷?ë~ô¨þg½)ü8¯æ)œìlîº:ßá7çÿ‹ýe“¨øå¿>;æúú* �ø»û�íí“yƒý\žäîvåº)²›�2*œ˜êj©jj8µóëa šsï£eñߥ»kó‹ùoî¼ÿsv.+mõ¯ò|›®·æåëì=ëc„ø=–(ú’–m‰ºó5¸¨¨6®ùóufqu’a�´r©šêàoï­4¾|ú¾xïíñçù¤|rù9›énóì®›ü? û‹ãtû‡£ú³vvæcú»«ºz§�ml.s²±ù\ž ãžúòåmwz´´-+5ç)÷zqt"¢µè�|„ø}ò[¹ºóþ²öuo�¹»_ä�ænëéºþ-µñ�á„éì7ooíë†øüõ5#s瘧ùux¸å¥’¦œä$hôtû÷vž§ë«þÿ4k>j|kùuôýcñ/ævõìõ|*ùùœÿm|zþ½ižçö½nâ“mazoòîz:,ïaö†f«qth�`¨ë©’:¾j˜pûªiòa,8õvûçã_huîêþmÿ$;'h|ïû}sôÿë‡müqù>%rvßù-ð{ò§®zãqbr›«fmtý–û>¯'‚«ãçॡòâç�´*éf×w`rµèýì§øi•ø¥ós°òÿÿ™ï|õ¿é*þ™à÷•oxìžîíü†í|v膛±û«vîí¯úýí™áõ.bš¬äihþî8±±6>*å¤ñ�õ¢[rššž‡_å=»~fg÷�é^ss|£ì?„88úóý•nâù¹±²[+äm~à¯çæ¥í-²+7ýú;ß�uæúž: íçh t²êašª¨årc÷zp1ãw뫧÷î›ëjo•õ5>lüj﮲î�¡üê»'çc½vôûçãîäéý/ã±ë]‹òw™ùm¥[¶¶.üìlw«6­-e n?9¸óù„j·�ã]w½tøò"šiùõ}�göûþ‡ù×|¢íjí…¼(úû9ðk ¶ž±êö¶jÿcæ7>3³÷•~_lb7„ô)�èg±ôoõ4pô=dq•w@¤{óé²g†¢¹¯u=œøãòu~!|•ýø¾†í]é›è¿øp—a|ãât øùúmåþ�±»«‘¨ÿe›o)ihû·¹q™œ–-é"©¥ê-‚˜k#/¿uz�c1å„ýì�ã�¡§än¨vþeå%{pm:ñõå$ôû÷zb4 û�ãõ"lïˆ$6çáå#ú»ï«þ^àh¾$ü†ùãsß]qñô{çb|¸ùkß��üx�«ùû#máok¿^“jó-uf:‚š\žg˜½71‹ž¦š§í«i¥‚ew×do�dfqî¼aåàävwçæð:,î"¹`¨––v£éc§©£ªxj xü£°y”ò÷î½óû쮺êü^79ù›÷fõæ3¸ð;?–þû›µq¹mûºk“¶¶æ:»9[cm[ÿïädx(èãf¨©”é�û÷^ž¥·¿uî½ïý{¯{÷^ëþý׺÷¿uî er¸ì3#›íäh0øl=fw/—êösãñ˜¼f>žjºüžf¾®hihh(iayfšwxâ�k1ïý{¦}—½¶odm=¿¿:÷uííõ²7f.—9µ·†ðíãwøüxjèä´y\wsyœê㪣:£š ^7cïý{†lpvçtõnnäù´ý™°*7wpâpyþøûï ½&�¬p{ÿ�íí¼ç`â kön3=…äôöqï‘žš:šjy&œ´jx{­ðã.(+è2´yl]m&k’¤¦¯çdh*a¬ ¯ ¬…*)+hªéþjzªjªyhä�™2’>ýöºjf{+®¶æõù]m¸7îíáv'dónzþ»ø™�í…æo ùi²¨èò;æ£fíªúøsš©�èáq‘j(fpj²m¡>ýרxùt¶÷î½×½û¯u+•æ`ñ™þo#a‡ãaè+2¹|¾v²ÿœåã1ôòu×är5õrckcackë4òºçjyˆÿ~ëý7mm×µ÷æ×û»ßdn,ïù»¿šüûsu휭snn]¹œ¡ƒ'…ï`sxéêqùl>[sôõ0i$3ã"º1r¿uîšvgeu×fc¹jzç~ìýûo³7–âë­á6ìüø]íôì £r”{«cîgâöö®wmº©q+±µ>*êvufº–þëô#�ko~ëý{ߺ÷^÷î½×½û¯uï~ëý"{²ºë¨¶�~ýímû³zïcbªqymå¿÷6gí\e^àìpmì>cpn ü~&šlæ{+mel²ì¦jªˆâk»¨>ëà�òûߺ÷^÷î½×½û¯uï~ëý{ߺ÷@‡]|˜øïûûï°z¿ª»ãª»±z¢x©{+el�÷¶÷>åùôifaü˜œ>f®¯$ð½4âeot�š%rƒýl‚$c¡¿ßº×^÷î½×½û¯uï~ëý{ߺ÷h�áù]u´÷fäø[£~ìý¹¾{j§pqu¦íîîl.'uv^óã¾áý4û'o×vá–ý3m¬ úõ¡†sgkieð„î½c祷¿uî½ïý{¯{÷^ëþý׺.]çñw¬ûë´þ6öþ÷—r�óñc}î~åë:|6všƒ s¸wvìélzÿïm$˜êª¬­6/&òá3ò•©dgg�tm@óèwãçð[š ª­¿šäçih²y,-mn#g“‚“1‡«–ƒ/‰ªššiã§éâ«¡xj`r%‚dduv{÷zéûߺ÷^÷î½ôjúúuns)[i�æci*kò9ú˜hè(((ázšºúúº‡žž–’–ž6’i$ede,äo¿uî¸ãrxìî:ƒ1‡¯¢êâr´t¹,^suv;%ž®‚:ª*ú úy%¦¬¢¬¦•dšxù£’6¤‚¿uî¦û÷^ëþý׺iéçðxyðô¹œö'u¸rc€¦éähè'îf’ª½q8xj¦šl–m¨hg˜ayl0»éòœgº÷nþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺ÿòù+?ókù†v×윿>!ô×åéi>!wôü‰ùýû»;œí§iôžúìcíž°ú˜¼�î_™]qñw´¶ž_3�íóõä¹:îàú��w´ò˜©ñâ»)‡þ}vãõk,&’b%�ü‡_uí®+àtwêþoîšoæ?ä·p²iþt|ÿmî["»¦móvž°mºýlxá(õý»tš’=a“î«ný_>©�l�8ïæ¿z›ù™ï_‹_âžoqím­ø›'mvó‡¿7%åìsôòv/[e_%�_m\'bd)±´ø|åu^f±)䪚j(j#k«è]e*kõšõëï™»sæ§y|[ù‘óý´±_$ºo³;k¤³»÷þìèì|¿rdvä›ï«»_)¼ñl6éëpmýåg ìà ¥¤j´ò´íë,[ê¥wi*ntóðä?óøûü¿{ß»z/£~;o/žÿ»ïæ`o\ocïnà§î®æámþçþ¿±ÿ©éöf"·kìxö¶þ4ôïœl…fg!i3-2@!5ò8áki©«8ïÿæãjûïãot|qýÿúû/òãþù��íïš•áêí‘ó;öz\�^à¨0˜ãˆêïîîßw«e¡¤ërá�¤çïtïp–o{ê�0i® 1ð[¸¿œžõá�/o–?%èvomïžòøyò'¯ºzczãwe·ïdv„;볺ƒaù=sºbªäwuííý°»=ªq´•í=v˜çu$�€e÷^ð5(ò#«cø¹—ù‡ÿû{‡7òûhôäíf28ü®áù½!¸÷öê¬ú{g!a÷5_³3û¿‰æf·¶®e§š·c*�]¢e@…ýõÿã^ˆígìœÿ$»‹åvðø×�¢ë�ˆ�ƒ]ñ[›x|šîvxìvç~íürï-�±ñ�j)©6vøúpgihfëe%­yë&gž˜ãäñ{«ip¢jz«¯æòã»þuükq| ¯ù¿ ~hì�[¿§ºµ»vü†èmõûòtã¶>orä³1ã·÷®7mîr‹>ôøj,óåöìc�2û«ér +�òÿ`|óùáß¿7~o|tèþžøý‹é¯‰ï×{k²»_µ÷/`òf·_n­¡±w.gkllòþ*õ}²ôõ¹êè«ë`¥àqa>žxê%ši—ýxª…“r:&ÿ÷¯óˆþ=ýüçðwrüþüï’˜í»¾ö×vg>qîm�¶jªz¬«×mt–*†¢oá=yw…ªi*é+"�¥ék;hñ°÷î¶án4ôvâïï�[ÿ·öÿjtý-vðû¿zº¿þ=�¼;‡±7,‹�ü�‹[·ñx|dù91ôõ3wvwävtd½×™{ž§§ïæu“ùwwñ#¨ñß-6çiâw†ù›ü(¢ú[ÿ¡³»¶·dïý™qùo!k�—mošc¹¶njƒ)us�©¢ž· ’=/ž)œr'¿zu䦮ßcðûßìó}ÿ”�ïñ» »àgoóüdçlü~ÿþÿ8{ƒ-²²{;{mø÷u>àêí«€ìíì•>hà*iw5¸êe®š*úô§‚†_ž}ö‚ šçó¤†èþq{�w|høü=i´:‹©ò_8;°ú·9ø¿&·ni>>||þ}kñçnœëý;qp;¦¯{om“yˆúr¥^*‘ó;”¢ëúx.®g¢2=á—ê�¥’ï�ôlý£yflýgfew.cª²ôm˜è±œú5{º’—pgiœú¿ew4š�ms4‘gss$òoªw:©gíïæmßýçókª~)tgåc�øuþ{£®îúîýãøôpvu%>êúû‡iõîüúû1êkñûþ¢®®º\–z¾ª— 5n>(i$—îå�ý_j€¤“‘ò—b�5üÿoíïå5¿zÿ®p¸­³üáû²z÷³°ž·!]¹:³=ö{'xéº0ûo'ž¨æòuõá;+gtñ4õô:ª¨"»srï%¢÷^ñmb¼:»³äþìý}éüâ¾$tíí½k²ºƒù�â;{¹ þ$û§-¸»oý˜\åe¤­8˜ð¸ê �hi’*eÿìò³êêè‘ûë­â·ïª˜øwówçãoåqð·ä¶úèÿ�óüø{¢v&û £þ›ç!òš‹¬·.w×rwõ4”¸øúž�s3m‘‹oìïv1l¿s]k+ëö¾êìªîâ§wbîüüø¡ò§þã½wæú�§·öÿâ/‰›¶¿¯w¬uu;7|rí߉}ç›sq¦6¦� øtû¨¨w]l*‚ “««!þwöíoåûÿš_ñ—ÿ|öí÷¾¨ÿ}§ª;øwú¿ì­¶oówþú�ãvã랤þfì²w=gwïø»ç¶r¸íý_;×w·zö�íöžk·vôe2ùê‰iò¼åj‘rôo'º»:*mh:³þ”þfõ]áßÿpßü¼>üøíüà> g»{¥·=dµsï|oèíƒug¸»¥7&i2‰µë(±]m^õïkhµ’ä1õ6 >ur” êf/áêmçòö�“ûú}½µ±+׿&7ÿetw3g?ø{{¨’ƒkï½ûž›!q.&£”ì¨rt¸—¡húñ0•�$žëlðyó¢ûó«å‡íß�ówvûøgàþêî¨ù5[ódlžõí=ÿoß p{[gc÷^öm©‹á>üûû¶\šd°8jysh�©j™w¼ô™*¨øè±#b°�ú½×´áýaé)þÿ+¾kojßæ¿ñ½�ê­¯»¾!u¯ee:ëznêýýž’·ûýcžì~ëêd«¶…kdè÷fûábjskéb´±å“itík{¯; óê£>in�—»ÿþtw�é¼—so:\ïw�-íåóyž¿ìö6w³·vùèöççü„õ½ïšìꇠ®ìì¿’šjª¼}cqíy-k»ðçý\iñqóêüöì�›ý�ó/ã�ço™ý?ñ»hm™{k·²�1uò;ûzn]áö;秶�'bî´ízíûcžàïjÿîu[d¹l-•ôò4jñ2{÷t*¥irqð3�þa??ûã¥{›æïånžøã›ø�õ›�´—cl~îý½›eòäàè\ö{ù»»lf¶õ$�w×u»‚·iä¢û” l¬’kªš0c2k­épb’kóïk�3îùß}•ð®þ u'wöùëñ³zwžöüûšü›göqàÿñîz¯çuþy°ªhá¨øy¬œõ°núzé v||}ø¥ó¸l®gù³o¯�y ù2æöö3��x»àuþ_v.[/¸í6;µ÷~/o¯�ó o[ãsf”éàéâµjåñ÷èï—ÿ0vïím¥ðçæß]üvãdû¿£7‡vô–ïø߸{-žåõuîàåã·¿xö‹ei>s5gˆïáwo—ç%-¢�—íï8þê¥f�joƒï‚�:~`|æçåûggó| àõüõ}뀩èê�ñùµß'úríj½ß·:(hv§óç7^ߣlí8ü4ôø¬€žžz—œg'ºû*® kõrô¯g�6,·ãÿæºwt¿»£§öyÿ17smîìü§üùüždîmö{[«zñirðpñtûca¬çíl}mm$´ô3*na$‘î¬bj^5 é_¹»cæõ|¿èfo‡8ïœ=!ö}×òtûƒeô¶g3þx^µþÿu|2ßãví>ëàìì„‹žê §µ* ›i£½~b-娬•ôù½:õõ5v¿ìõp{åÿkõÿ0ø¾o½¯×‘c‡þ_{å6ëýûj]é$²v¾c¹r½wºvæþþ1s7^d˜óq�54«’¿3huh]õj :¾}vgïß™ÿ,ûoùkÿ3}çóu[©ò�¾uw×çîíåîêû[ìt§vã¶))÷?^ç6¶mj(;ƒ1¸·5"m$órâf/îpgåd']]tjùžžû·}üþúÿ$?–¶ç_o�.¾ôúý…òóom¾­ü]u�ù[ùs¾àù;‡raøjíû›æ`©2”´¸pš^ôiš±ˆg]õà�¤žè~a|ôù1¿þq�²%õÿÿ©>*vþñøóu–ùº{o÷îþ²§æuvnda×æ‹ ö›c]“\e.o0ùe­­ÿ(ñd‹ýwj€5sðq»?›¿io¾žþz�ñs¢¶–ïü??÷çgu}o]övê®à¿]o퇵÷^7)iu»ñ~8càìnïû5-˜©8ꪼ†‚aeh•³à«î¶uáæ ©+‘¢‰d$ô{­¤ð™ü¸~pü–ùo²ö÷uváøqººo°:×»pðüdþ[ûpïî®ß™“†é¯uöœ;’£+‚®ëapy*˜2sâøªªl­bhlr‡‹ýy€íz³ÿ~ê�{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý�ÿóûëã7å.åé¿›?ì{ä†èëìúý�òósübìu¦/‘íun¬='kô|}qºfö¡®ûøün2jìõä 5ù-(/)�í÷v$qéõy`?•'é=‡ü¸>ôf×þý']ò§á'ìzï™{äë·½wgïìýs÷vøæuæ{pç·0›óœël¾øðôwgˆòsäé¼h¦÷>ýõµ‚ì|ˆ§fkãÿæ/œù?�[«æ×ël¿ç-êøpÿ6ïoô¦g}çjúò´ö®'°é©2›§tìü;ñj–:éëò¨ô+ \ññòði¾£ýh•ó¥kç¢ð¿ê³ä+�#m‹ü³ßwtúw¶þ«ëù²[©wñ~©ñmï–ø®÷éš\áøi»'�lêg‚ ød’2v÷ýöõ�_—ûyo|kß{ÿçoã“xlžô§øúïå~ïþøì•~zù’êw•oñívæ>› y‰®¢¡“aöœƒõwqcï.îùÿ£;›wíl�æ�÷+hnè;+ag«öäðñe6.º”é¥o@j†÷nux u¨é-wü§»j|9øñ·avíý;ëã_ﮞù›þ½�¼›7¶)û¯úç³ûž£icðø]ð霮êïƒ evi)ž’š5žª'·ºö±©�0e:º}÷·²»cï-©‰ü»k)¹ö¦âûøýõ�i$è휆ky�£üåuc+öáª*v¦ ³âåã:p÷mõ¬¿^�(¯™í‹ðç¦ò[ü¿zã ðóå‡ç^ôþ]û³2›ó+ß*):›±—qn}ç™è'r`jç7¾¢®ª“-]œ|–jb5t´èµ-®ž.½æ§#öuqß~)ö/bü”þa}å¼rû7!¶>w÷žáìž¹¢û™õfs�úýw„ùy }åk’ûøšnr\½�tu9š3hœt{ßm³z‚î”øõòסþt|®ýøº3u|gùy¾ñýí¹7_uo?wuîíâtž'­žðãlº=��ú›ž“9ºöþ6©kfìr¥6":«æjü1kî¶j•ä:&}iüª>ut‡ãßå“i×;ã¤*~hÿ-�óûû‹œïew•_@vžûï,†öæö>â¬ý)³hwž¿%±÷%2påæ_³èc"xœr-\^êåô³ô'£òâ×óù¡ñßfmîõ“âç^öfþù‘ñ¿½°»#¯w7eåö–òên¡ý8mç¹0yžáëìçéï>îëo\‘ |67ñ@'6ißýh2©åin“}­ðkägv|³ùò'ãwi|/ù=²~ydúïson¼ùu]œú{§¨»#fmtøù½é°÷�zv´9í�½0øêjì–>héji2�³�¡ô§ýx0 $s£ûýióoý—¨ë�£ñ§ùq÷üqnü�è��[á·þðèêÿâyúcáfõ”-+´’}´zôû÷zvj:§�œÿðá°|£þp©ðª›ãsº>pf¶®a{ë/¿öžg¬7�gtì¿áý«‚èììì¢ßx \}j¥fߨ¤¡©pkt‰4ð¯‡n:suxte7ò©îž•ø­ü¸6—å-çöû·¿?—_bæ;z:næ›?�ëþñív6yiýxú¬îøäås»g#¹w.óªÿ y=5o…j­c–-8÷uö=x„ž¢ø_óo;ý¿8¾aü—üÿ©·/ë/ˆ[+¢vvéê1o_µ6m^>\t_äò8éið´t¾8™é§�ýl¸:ñæ�,;ùanéí¿æå”ìmë·1[üäúgã?wuôûz|îk|ìl¯jõžñû]í»ðùfá§ýùª ê jéßýë”îñõ–[mrrå觓³ñ»ë-[sh¬i�ó£jâ8†�'#×$ßu4hñè=öõ(}b¾}x¯é?šÿ¹¾l�.�’s9³ñ»ââù=šìlvn³5ëïeý$zûiᲨhpuøšù(s­åèšêìp†“õüiû^ýõaxzõ^›[àïó+øéñ½¹ðã>gânkâ¿ce»ú°ïžëü½£aü}×}ó¸÷>âü;g'ö˜]§”ávnðú•ó ølˆíñrõôh’µ!aá÷ k«£9±?—{§¾o�.}ïöùí­/fü"øƒú?2ðg«óý‹¹²ûÿ ±q{qã±x*ý¿qf]·sw”i²t­ózäîª^ªàñ' ãù˜ücù‘ócûóñnšø%¸º_vã1�u/éêìvè�œ¹q‹àm¹wfg°wm>wxgº(jª0uxö 9iz\€œ$µëh깩¯w¶vþcoì-½´+÷gue0›g¶ëwvri-¹2ü5>2£pf%i*¥|žb¢spåäc,œnç“î›êšïò¬ù�‘–çþyÿþî�ó·jvõû î-åþ‰êí¿–¸®÷èš|øøvèßüúg§žø5 ‘´|b|þýóšç‰¯ëýž�wóø•ú�!£øáûÿ7fæû_#þ"wu?sum'k.à=u½àèmìžñþý{¾êv¬»�žüû�)û9:*jªš9àdvwt÷uv ð=ý'ñcå‡k|¼áüáù­juæèëˆýýñ}ñ[«xv#ý�›¦éoþäìnáý{kh�ü9*le5 ;�j8hÿé,íp–>ëd¨]+â½µþuÿ![ùl_åžû»§ó½¶õ__í’ýk¸7‹õo‹n|¶åw¾lòçâmùàøïö�+ö~öæd«òðîì–s¼¨:~�hë¶1ôøjìmu›´äªº‰áw‹ä“–`žê ñxzó¦�æoñƒ²¾z|\éõ·mgöžýí�µù�5ü}w>ÿlœ;#%º:k³vïaðà7efƒ-–çbó‘द50rô¼2hœcd=û¯#5óéõëìfâù5µx·koü𦣢ÿuí>ºnžáå´{_'oalóõnçqäúi ûˆš"û­’¦¤^’_ ~ |ìù_ò{¨·7fõßân®átoèý©ü[sæome»�ån_«6få©èbº†›ndöš¾)»öôtø­âõ;®³½m=4úc£ëá•tðœž`ü?>oôè_“{ïãwdüùgõÿ,;š¯¾jqÿ++3»s°zk³·^þãâ» i7&7ªû@ï^·üy|yj8šš§$�p8g�ý×µ)¤‚=:º. àî}±õûoï\_\á7~'kb)7>¨1wbó©iêpl,vy›'iµ©+ò“îlñ(whùš/º¡âz£¯øjo‘_ìžÿ ïomÿ|ÿáô�ùüþ!ýãþ�ý¿ômþÿ�òoðo½ÿgßä¿¿ÿýßoú}ÿðÿºô}îÿ_¿t汪¾t§gû¸>(ö~úþbþ]m¬æå ø½ð_"ú×;œîtç¥ý5›·µ›iÿtêñxzjâò;~‰°ó={k–¡¨pbw/©}õ |ëñ5ëÿƒÿ0;3çwbüµù ößþtvûï³þ$g{¯±~[g½6�vü¢úûêƒrl�¬øn¸ év�–ösp×åuûáu•«sýx²…* 5õòéó®þ|øø{sù�|e×ñó1ñïåžcæïkõfôïmûcùûs~|²l³à:ûzìênºÿ o·6–g/yq’ërö×îôóà)à™öhc÷^,½§5þ]cýÿ~zìo��êj«£ëºkt|šþ[[sjà·&êߣvmî¯ìñyñ®^€ßô»��pìœæw´ÿ{5n>z¬f¢kšyuq½×ƒ-^¼knëøéó¯ó«>x|q ø½¼;opü@áügù õý§¼;7hõîz~ânô‹²zãy`6žâü9|>xek)§¡¯æsuôááœæ¿u){­´*kj× ïiÿ,_’¹ÿåßüã~*w_ouc¼>h÷�|w&?²¶n'sðõý6c´éök™�·]š¦ëíˆ?¼[rx§¤¥“2h(%�’ªºepþëzæ¥`0:·�åïœ�%jÿ—¯`wö?ãvàßÿ>\åûý�‚ëþàßû£šë?we¶]-n)‘ëé¦iwߺõtj¹$p_ÿ™änäùq�ørß÷çj|¯ùøÿ$0¹î÷üý—µ7çç®ïî \ýƒ5nkìíךím›âæýö*•k(*㹧˜¤u÷^ª55v u“fÿ*}ýóø/å±:ß}mmå¶~ö§högrnmøù=½¸{+úûg{kº³[+†àç1æ§%ùöª¥(ë«ie.=ñmlò!-xãñ�èüpù·¾xü¨ù‘õùþ™š^íøköý#ó¸�ý&öéakûuîíìµý“„û¸ì.|ùq¶þ_vgí�ñö�¾-ol�ç�õó”]gñ›pï|îãïnç¯ü4›‡oöÿ�u¶äëˆ^“ní�zj$§¢®îikví-l†�u¶eòsõ¬ür§ùkò]ymòª»«r� áâégd:z-åxõæ×#\)fú±îºz¶ýgyéða¦a¯i�ôoÿ °ÿ¼œøÿž þç¿~ï[¬>‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡é5·þ9ÿâÿö�^å¯úýáü¸6õvóïkºw…nßø{s wº÷‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¥ú'ÿ…x�þn|ÿïÿsß¿g¯vc׿ñ?ü*ãþòsà/þx(?ûžýû=z°ú½þ‰ÿáv÷“ÿ�óáaÿü÷ïùëõ‡ðõïôoÿ °ÿ¼œøÿž þç¿~ï^¬>‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡¯�¢�øu‡ýäçà_üðp�÷=ûözõaô={ýÿâ¬?ï'>ÿ炃ÿ¹ï߳׫¡ëßèÿþaÿy9ðÿ‡§l�u�â¦ö“6¹’ÿd«“`ž ž¨íb$šz±þëú^œàò±û®œ�iw׫¡ëÿõý[«~bôgr|†ù ñw`î7wìéî���|®þòõ§lõçèœ}uúùîä]ß–ù4{*}¥g;ìæczˆgw4tõ4ò¤¤oýöê�hãn�¿u^‚nðïž�ø××9žýïžãû�]ö¸ œmcx£ãðuçrt¸lewi·sùln©ª¤‚š¡ùééª%�\p»�umu1ðùóß*º_½û?ä'oõ¶àèå·ßåý߀øýç�¬ûùœe6qîlmv_i�édhéèsðïc�•šz7š8èˆ$~ëehž£ïýk¯{÷^ëþý׺' þhì/œ�yø½�×›wwm,g\w¯ft6f‹y®2yÿxôãi²™ª$áå2ô«‡è¶m 8’uœ:ñx¿º³)rôèãû÷uëþý׺÷¿uî½ïý{ªúù9üêö?ç_•]9ð×ñ�õò¼{gcžöªàô¶úáfiz÷©“uví ·þï¨íî,$ßãcêâ+ÿjž*™4ñ2¶™&¦žoup•rõud¾ýõ:÷¿uî‚nðïž�ø××9žýïžãû�]ö¸ œmcx£ãðuçrt¸leìl*c¹7‡zu¥cpm�‡êåíªéøý±ªõl‚ï ¤{«2•§ìts=ûªõï~ëý{ߺ÷^÷î½×½û¯uï~ëýž�þfÿ¾d|ÿî‡yúí—ùñ¹éšß{#)µw^ûq�ë�ñýìßt»s5žããð»¦m±¸�†¡hg™š óä$§g•}õš0ˆçcgçÿ•ý'òw-þønÿüyögãwvï/�=³~þí`wú[¤rnl5¹š*hó”tsµ’¶�ëk0å�~ëdjùôcýû­uï~ëý{ߺ÷dïà/í}�üáþ3m”]eµw†ëùûë5¼p¸ìûl,{–š]™¹ò[^²zôûù\ö-#«ªæ4‘©�ˆøj±¸÷î¬êtðôs=ûªõï~ëý{ߺ÷^÷î½õnv¯ó(ù;çäø³:+¿;»µó»scïžéü}_¶0u»£zÿ~ïœfæço^äêfw'"0xy²qä2²pòô­&9ñôí/–½õ‚öꨧvgïýw¯{÷^èîß�-ñ¿jc·×{vnöêý¡—ý8m“�ü;º¼c±µ»¯qµbàðplrmuù´”¢úúcf$*’=öà'€è7þß-vvåù_òÿòuýymåýû7xï\dmþ¿l§hí:=™�ïå*q�ø'+oýüüš}·r´ëgr’lð$²bõ0 =×´õkw‡f§ßº×dãá?í…ó“¯;±úójîí¥ˆëžõìî†èño5ã&k!ÿëœm6s5d˜��~ê½{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯tf·ßóøû€øeúÿ:zãwswßhuvrf²¦­æå*3•v¾,f[ ˆ›-wˆçœ�5tê­ç–$u‚யum'psƒñ¢ê.ææwtu�má(kñxnòëí—øøœfwíÿ‰ã±›ßmãw5gí&¨¥ûúj\šg7šg�è§k0±>ëdp‘ð‡ïýk¯{÷^ëþý׺÷¿uî‰7åï�kò·¹~at®æúûû�øeúøþ¢ß¹mñoƒƒ¹óõñçãwíáyœ�t˜ºz­µr„öek+)�‚z™sýx©p¤ùôv}ûªõÿö?tyüîôù‡ÿ ±ý_5–û{›mü7¢ïíýå€èöaó¸îâ·aäq¬._56c–åd)£žš¦ #š £wfvpg½z{ðãöÿ— s¯°#þ=ì¿ä)óm~u|¹ìþæù“ògâçiw>èìžòèç:v¿¨»z—š�gãzúmtf}½´©ž\•|µõ¹»ïtí~õì:fþû¶,¦b—ºûö–ô2öe^—îí1+môßé¦uu¯gzäw�é_ägüàûÿ�÷�rveomÿ7>ä�dmyú{ƒumîìýürâb±yäéõæcîl¼ýuø:hçšš�#zjbròz½ëóƒ(ðõf›ãã†cà�óþgøîžùoó3xm�”{·´ÿòžôíß’;ë~ìúü~ëø]qq…åc6ú�åç…”v%zíop•qkâp‡w¼øõpu,•qqði‹¨í›ß�œoóí›ß(zsºþ"wwé·ñ󭺣äáêþ·ê»ð#¼º¿/_á²xšl�ofçªnëusuy*ê7’&’¹¥÷¯^·…(¡ekm§»~m�1”ß꣯;åw辂âü…þuö_èð›×'öù~ï¨âoœãö×óõáö–s²&ácjë²ôtwæ´´tþ*z�£ýk ®h v}ü‡w�lÿrþ}|}ìîâì>òåüeþa}ûñç¬wïkçj÷nÿ“¯¶ev3ž ín*ù§­èg÷´óöf’;šg¬’šó¤1e¾©%*¤ tu|þýó}{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëýh—ß¿;�|›þqß4¾8äð|¬þ]¿6ºkäwzokòuî]…†ëýã’í�‡55(zœ½k‚ƒ"ô!‹w¦6jrkx6¼ïj"ÿ„ž›¶/ëy{·á�ü(»æen=á×5=•º~!ïý±–ûù¼¶×þ[:³p¶>�=„‡=†ÿ‘¦¯ätïyœ¨ššeš¡rmðè{×­é£d§çõ©÷wè�í[üè¿á>»7hwžç«û•ò=ƒ¼;lm®éêo…ì|ßhâ'ûûÿ|â1y–£ý´ùjª é(k2ô$òe;b儧þúlé1çõnï»òo±>�6/œ³üöù™µ÷—ãoæý»+ :ïgw>ãáuöolunk;]¸á†­³›ÿøž;³c¤åó5]=6cà²gs4ô|ú¸¦¤]"„tuzr���¿™òmýõß1~owœ¿ì‡¡·ööù7´»‹°ÿ‹õžgqwtõù }‰×l~kl\^ùëndåóràße*£qõi6ç—z4+ ò0z®þ¼é­åkü·¿™oí ›óïä?jö7æš½û•ë¨ê®àÿgýo·7ý“³òj�õµpµpewvçíçëee�š®j�póçsççž]zõb{ñtšñúí_“�0~nüîø©ð;ƒeüšß»x�+~�ùu»zâ¿ém“ðësnžîí¬í¬þ}ƒº·¾ïýýa{²ªwspríúzéd¦©¦sxl{ßuuiç·¬ëóbëï…ÿëãÿ�wgu|wù¾¿š¾ûøá�ìú~úú�‰úã£;�)¶¶g´7?xïlîóì]ï¶aý5 ð×vf8ø`²i˜ëë¯ œ�qn¶}éþš‹à¿ä|¦áû=‹ý orm.ìþx½ûò|/`vvꯑ÷ù\>sucðxoº †¾¤ññ$t�éèö8ï#.¦ßm©¸s­=r“¼²?év_çu'óùkoóvnî9øöå|dé:f–oögïo/iòôduãhe€n½c¹¿„}¡v¡%�±ì××ocäðô�4èïõüyåv×ü(g¡÷>ëí‘û[=ø�ë»`üóïcð·ÿàtm­ûeý¹i:g z�øž ñ°*v«1yg–¡þo$¬fú­iàãn­×ùâö¿z쾢讴þ»ÿæ-.æï?�»[cõïyü!ýô=qû}ç¸ß¸©cëïce+°t[k­k«s•yg‹'c[;òsç4rº¢i8áçö»ýmßÿ(ºû£?áa_sëä·\ã>:õ'vîî¤ù}ëòwgttsxòå_rbqß²·vv‚zlürãpw‘™"e�k-i¬2ûקhäh3ô�æmðkrì¿äq]òã³þaüãùû]¹eñ»7¾#²{ik:kœþµx¬qæí¾·£âf¸�¹�çvzâ‘twô¤™ujj,^]yõ4…g£%¾>8d>ÿ0�ä}œéï”ÿ37†øùg»{oý(ínýù#¼·îï¯çì½…õ\v3o§ðœ\xygbw¬ôõ u±¬ uoï�zréu ë«iîÿæù0>f|‚ùéòw©ûãïóüs×=_×�÷w×ý/×ýg×9��]´vv�«+¤—–û�¥u¸«vítu«åöždwzé*û­7n• )nˆ.þù;ý¿¾ÿ;íûð[›5±7ï`�=¾çê�ÿ¶«©±›dí�çº2uüîüïöè£ûyªú|"ã`éé-3p5�ž)á�"‘uåõ€ñ×øz±ïœß¿štw·prõvëù5ñóã·bü"ím·‹«ù�óg¤þz.íùk‡àvçõ�õµ†üí­õœûøér3cû.‰a&(†¨òf�š(éwõibh&¾b�:ÿ'çœéÿ”õÿþ`ò|ßëÿæ'笮êþxžñù5�ùñßäžß]ÿ•=ï׆·1�çmíùkyƒ¬§¢zc 43å)dšª®9 {­8¨ô´ó^¶~÷îšëþý׺÷¿uî½ïý{­*ú_±ö&òþd�í;ãž5ª»ãùvÿ;–»ïxbhüòíøß3›šš.ûúj˜•ä›‡æ´õ2êráëròçûå/®”ô(xa¨ù+™íÿ)ïçyòkã¿`ï½�h�7:þèø[ëgçóûxe³û/´ú÷râ�è૱ù|l•øoßîüoèë›{áª{?m¾w ïì­· 3oìœe6clb¸ú:js&:’zšd¨zy|kï:ucf��¡êœº#¯·÷o�!œ�óêož¿"zó¹z½ááu·jl~ׇotþ×zâð9ý�œëm�êðé,”²p w÷—nšjšuj}ýü-þpÿ3òøñ'^|»ß¤>%ô6èú}+ñ;å~åø…>öß=õõ}m¿÷ornjžæþýusø;[qïù°ttrõe ¢jdz˜€‘ñ·çõu@qçìw¬ïˆþf9ž°þgÿ¾müƒî/�?%»k»¾nô¿wïþ·í,>ãß9��mke†ãä·áø›ëqlíó¿dë*ùié²suötcr5zêµé*�zuᢲ*1öç¿•øüº»sýnþìî¼ÿåßœ½ß¾ö^éï-ì›û²·î�bì½çø(w¶ä¢ââ—=s6rž:51ðæe*gf+îúkâa_3ö§ûó-þ]ü«¾!ÿ7�‹ó·å‡b|èì~æø¹]ýµ·7|æ÷wpvô›»vî¬^s£)ún:©¶ù¢ûô;r*oáô°lð •±�h}ùôö²z°n¢øk´æÿ… ü”èéü�$ü»g¡ögêª8w¸óòå7.òíœvb§ªóñgf§+ðxs˜xq»u褤¦†(µ²%ž¼ú©oòiõ‚�8.êëì{ürè,î_æîs´~avú¤ê‡ømú8ž“ü�ý_±vþ&·qñöwif³{^“nuþìƒpòv艑†ik%†c�a;e¾ª€äâƒ×­vé�•›;ùzÿ=®¸év�èý‰—øÿòsã¶ûéê~àïjžãïžžæï_“;cºúæn÷ù›“ ù¸((°¿g#c²rñ¸ž¬+ºti«^½9a®3a‘ð³üâÿ—í�l�.^‡ímýóæ/ènéþÿ)ú�rö.g³»afë”ü�ùµá;ï5µzûƒ¤çìün+µbm³o%ugðèueî³øxõäj¹@èófº;pÿ/oçwüºú«©>hüèí®¾íþšùq½7ï_÷¯è}çú�ó—ø}ûù=µ‹\d�ñce�2øšzˆ’zj—jø"–;:/½úgª×tnhçk?ä­±77ì^¤ëoæoþÿ9þo?~nï‘ûþ›5öôýûu‹øç%äèí¬?b7hôí&ìíñ¼ü¶ù‹ô_%÷—_ü¿åf6¦þ¡þãï-·ùý›¹6†þþûw-�y+*`0på–šo,n”èûê„¡òm ¯�òèwþj‡e´û«¶>&w†+æïuüéø%²÷_uugé�‘ù�‘½uøxª–“ïîÿïär9š2®]c\¾/~}yh±–¦kðmø˜mßý?ìûâ§ò§î|îù0ß:»áfáîoïöë＆×î_”=ƒ�ß›ãiðçù=¿µ$çæ7ì›;·ôï3±züuk¤r4‹mî·áé¯y¿—wëߘý/¶�˜ofõç_÷wó?å|fùß7gtåfáî}¯eùô]c“æv õgÿí]ôjq;¶›®+ö2’jh�ý%n}œqsòg÷ïx7nçûuñòðmg¨ááo“ð@¹²ÿã«}ie5fÿ^ª?¯þa|˜¨þp»w/¿{ã¸p¹îžþx;ã¥>ôý]¹’ªìl_iíüöýóì^éí½:©!„�£øºžðù½ñ—ùæÿ0ðù½ò‡§;¯â'u|‘û�:ûª>@î¯ë~¡û½²1{ë«ðrõþ%‰¤èôönz¡¶ìµu1gu’¬£y"i+š_~õëxršpô åçþq�2?“?ꧬ7çë?‘?pÿ"¿•pìß�u�»«vàì:�»¿susæ°ðê•;oiî]ý_·q5õxqsþƒék�g?œ{ï­a� ðôçùsüåùwó�ù�üføô:;¯ðÿ®úw¢þ9pôwíž·øë[ö9šî»®¦¥ïžûó}õmgwï�óºvôy:šèெ–h*8¤æß^utšgåð©ø™œ?!>f�'_åíóc¾»‡ã^[}|rínêù)’è~ûálýÿû]§°w±q;c�ìýƒ–îí|îlííƒ�èöe�šº jrõ’qk-&³×†�”w=oøo~ö]�ò[ùïl¤í çýk´>\mm°½­¼s”û›wﱂ¨íìxïîíçfío�üõ_kl…`òj*öiu˜¨ðâzô¼#ç—[>{ßlõÿ×üö�€¿ªw_ë-í7s+n�œ»u¯ê\’ïžéœvžë]ÿ‘ø_á�[å1û)žôëtrš­»"±œžc)œ,ƒý[svç‡\r�þ$æ6åž°èõ7ülo…{ã¯;ã6û÷ùpÿ£mçõ(‰°s?ä þqe÷—ð@>ßptei*­þsþý×µ5i®o@êÿ(ä8ù?wòù¯geúù^ù¢¥íö—læºçþìõfçëöæ/ª2›þ¯®hw•v~¥êì©�ñõzhái•dëzú”®:päÿ•¯áì·ê�çó:«¦zÿýø=ë„ý—¾û„ï6ïëü×un,ægeá÷uò—qäºórd1�z(ä vir-[¦©}öµµ4×7ïå=ð#{ükø3|pê�ë]¼ºãhqïþêlîãý™"îýý¿z/˜í>üíe6vîìøvå6ùìo%~ú’›s®j›hãczl¬u´ih¢–nú½×‹±®xô€îoä£üµ;óºw}ö_ç*l–ûþùê]íøô¸nàìíÿ²{3qpnµ´y½ý°6–ñâìýã‘\˜5u.ôküj©ä’¸ue×î¶$p(:8±üføëxõ¿èú>³çc{ƒ¨z’§¢z×qâ3;ÿ‰úku“[o+u$³¿ºù‘ú œt6åü¸¾ãñ¿ ~6çózzwå7in^éï}™þ�ûtÿ~»/xwí\žâü¿þ&ß'vm�â5û'ÿg†¯çcáû]1@‹$¢ou­mpk‘ò¿#ðsâöw�|_ìúþ¬†}óðëldvoæ¼øýûúöûk+µè6mn0bàýqa·z¾ûæan’ç©ò“âsë¤ìòuíf„w�d¿rÿ!oåe»7^7yæ>)bæìòo,æüëù¼øýí¸³›‚¯uwiøú�ýqi½1ã=],±q׬ô°ó±£hå4çýoä�^œ�êïå§ðûænc¯wwwõtóïî¨ç6­û¯w–õênàú‘äþïcwo[göæf}¿o7ûñušj6©�é’švou ìµ¡çxð�ë#áüëþ�ëoi,7ãxã>jtµö'ktd6×yb3çè»1¸gß2nû”\µci$†«)a2…‰àh‘#_uímrkät|ýûªõrô_èûù]ãû�ý6ó|]â®à]á'bc³_zv4½9m¿åœìwe?ké»[¬â«‰xçðïáp%¼tˆèœ¾§wñ”¯gª³âïewüšå|å«øþ_‘ø^ÿ“ ñ�‹ýæþý·skºr[òm©ýñ�p&ä›væëttýô˜·é'œtx•p{ªôóo—i�–?>9üûø˜>½ù°›xb6žëæï­—–åné²÷žçþx•‘(7&ðþ›;+ƒü¸œi)wðôˆ¦|ˆúoºò±\ƒð ³?”�òøëý�þ›iü~�¶þlì}¿×�óv�röä{7mmššêìiïç«»§9â–»'q=nf’¢›1‘šrõu35ˆ÷[ö憼:2ý‡ñgãÿk|j©øƒø=we¹¾;uì-³öruý~cqøsg츰ñí*(wyˆ÷l9¹.þ¡ž“"µã#u,s‰üë¯ßºðb sñqëågðk¨i¾5å³úo"µÿw~þß½—ìvÿnf²›+wv|;r›|æ'’¿}im¹×5m´q±­&v*ú 4¤qk7}^ëeø×em�ḷæã¡ìñþ™2ùíç™íñ‘«ùyc—¥š®œmù1pâꢞj$§‘‡ºö¦¨5èèé/äûð ©{“dtþàêgù�a½>?nsø=ãü}�àèî⥡£ýý]¶bþ[ï/m´6æb›k&2:\ƒ òjj…uõ:ùv>}/þ+ÿ,¿†ÿ 7æáí.‹ë,æ?²÷&øm‰u¿·×fvwkî¬w_á[g‘¤ø[{-ù»¿uï·¶¥-^>ôž&›á™åñç§ýh»0¡8èûû÷uëþý׺÷¿uî½ïý{¢áõ_¾:ô¤}ý[õž; iò�³7çpwþ?%™üû»øýƒùq¼;ç3’åo,æàçch·$22o�çåišì©l¡ˆ>ëe‰¥o€]‹üª~õ¯æþüø�²¾:àñ»×p>êí»©ýý�ÿ§ü[�f irôùíë¼s§otâdûðmutò¤´ëš˜û­ëbcw#¤ßæoåü¼~o^¿ìþ‚øùi³»7¬é÷¥6øì·çfgw;cø8zm»º"ïí›þ5ô¢ ð”‹ogbž¦r´�@”ï4ìþëeù�㥥gòàø3_ñopü-«èÿ/æ}õ¾*{#?ö¿é/·ãûýéwº)·�fgûã`&ÿ¥ònz8ê~þ¬tƒoœd"%ºö¶®ªç¡›#ñã®[ävü¤¯ë˜gïn•ë¬§sõ–ú]í¼à;_¯ópdé²;}6õ>â‹gåvx35jµ5øúªè„çç2ñou­f„w�½ü‚�”æóýkº¶ïä¬-wvwá•ábj{·sûs;” îd·#ø8=í¿st=�w„éæ*e3fö·üše¡”ic =4^êþ#绣ò«ù]ü*ù—ø;{·;»«2svþøâ�±�í½ì>äê}ó.öcv_måó½oº6ìùìm«¦xö´o%�¯cþñï^çîfósue±ùýä7:î ß”åî\¶o)‹§q][m5],1%54�rªâ=׋³`œt’úÿéãùuìª�’ ·: ln3å~9¶;ÿmòöomrm¬¶ßý9üfèý­µˆ£ß4ðlh3û‹eu3a¾æx¾ö( hiq`ëzûáñ™îü.øñ¹rò¹¾¶ûúÿ…ž/öyçþøïêoôkáû�›írn¨!þ:vþ ’›ýï®vþ/!ýöwou]g9ãñnîoä£üµ;óºw}ö_ç*l–ûþùê]íøô¸nàìíÿ²{3qpnµ´y½ý°6–ñâìýã‘\˜5u.ôküj©ä’¸ue×î¬$p(:8±üføëxõ¿èú>³çc{ƒ¨z’§¢z×qâ3;ÿ‰úku ¿»÷æôü}�šóœzüf3zíýïa¼+i3�áéž¿ïkªd«©…*dst«8÷[à’†o‹ÿ¾(|+;ûý•þ�ãõ=žû-÷å9»ò8ìì½}€›mmzˆñ[�p汸ššlmd¿s-tòdje’ª°ôt»ì}ö‹3r§£iïýw¯ÿðùÿrmÿæ¶û‹>øœ_qx&íeœ­øe˜êvã±-]9çpuä×ä­äj¨èêg$âdî¥ô-ô�éùõj§ðÿûþçl¿ýßæãÿyãñoÿhs3ÿý?ïz~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž»wù¸~~x|\"çôüì)½ž“sòqø éäqqõóóëõoá?·ýžºþîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž½ýýþn?÷ž?ÿô…3?ýóþý§çתÿâ�oû{û»üü�ï½tþû�øëßýßæãÿyãñoÿhs3ÿý?ïú~}z©ü'öÿ±×¿»¿íçþóçâßþ�¦gÿº�ß´üúõsøoíÿc¯�w�›�ýç�å¿ý!lïÿtÿ¿iùõê§ðÿûþç^þîÿ7ûï‹�úb™ÿþéÿ~óóëõoá?·ýž¦òíïæì é}ïlh£gðo1òõÿ /tõžüîn üù‡[uîøþûqîmã·òûvéõý?)¸rpcó”ô™eâå�éå2k=s×í¼ogïîíéüì½yc_weûûû®û+rõ®ßƒ¨6§ýes¬÷iw`c8üm,µduk(wñ4‰°qsö™;´¯j¿ååð=�×c¼;ÿ¼pé´{ëæopd»ç|uå4âj^§àôãé°ýuöu«é~äû;rš6ìu-ƒäª%ˆ�+¿‡zr àvaï}s¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^é£;·ð;£6sa1‹ q= løœî6‹/œž§_m•ætma�†¢–iñùj(j`vbðôb’!ªgºßugü¡¿ãùþ`ÿøõÿ›ßûöíßz�ow“ð�¥3wéóùëó;ë¯�k~)�/íá¼75gmq$§ý�(r™¶•>ä뜶¥¦íìž £iª3™j_-%^uò†&‘riwüoë¯| kñðuqž÷ó}{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½öh¿egü±_ýèƒßº÷_ÿóúä·á?�¿'7õ`vnõü˜þêûô“í¬wfu�cvqví?â³däúmõöû“lå3›^jùu¢­zˆ –g’œ\þ€�õƒ²àpé/¹ÿ—_ä�ëñxž0õæwgõfúüõûã‰ë®æì­ƒœ©ü9ª|•çén=çµ·n7wï*�á‰ívqåÿ1]^õðt!2ç‘zƒ¯`k\ôl¶&æú=c²¶§]l;jì��·±sim¬lfno`h`æâqtq³áëž—êmßóíe×ße¬ÿ¦¶æãßý—õôû£!m -u]o[o«][_t°ëzšéj*òk.¿$ó4ž ëáøaéèdøáðó¢~'ÿ|iá÷æ!wßð¹xwpv¬s�µücøkã¢ímõ¼£á ëæf5©þc«)÷¾©×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëýf‹ôt�ëÿüˆ=û¯uÿôßfm™¶ew’ll,ò;;±š¨jw%˜ñ8“ïu={®ü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={¯�rv·üê!ÿ©õ_õÿߪz÷^þäíoùôcÿsª¿ëÿ¿tõî½ýéúßó¨‡þ§u�×ÿ~©ëý{û“µ¿çqýnªÿ¯þýs׺÷÷'k�î¢ú�uÿ_ýú§¯uïînöÿ�d?õ:«þ¿ûõo^ëßü�­ÿ:ˆ�êuwý�÷ꞽ׿¹;[þuÿôê¯úÿïõ={®æêúà0˜@a¥¿z«‘¨5¿ïÿªqïõ={¯ÿõü[ãßë|çuü¼ùññž»eã08¯‡‹ã¶º©2õu¹ ïwtì}™_>w5ø‰05å©aë0š"´°7÷v"š§×¢ã½¿™þäú[3ù´î¸ú“]'òúèñqmš'ýuð'i­gsb;^veâêûm£è×éù:õ_£oº¶œ ¯›1ßíˆg�•¯rüúæõâ»_ãösa;�ã¦äü5tsì~ãùylf/pìl®ã‹ ÷mžž�7i• «j2jqµôí`ìú}ö´w…®f‹tüî“füçü�3›fœl]«ð;/ó;1¼¨*ª«w8“úu!´h°^(hªéæ•ê£—ê²éqhô…7÷«_:ó _áë_›ÿ,(:g¿rÿ>ýõ:÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî«»åÿv|õêßïþêøëñçãþêê~¢ëªîäü»³»ûópìíåù2b(gîî=£öû[flók¶eáà±óâû“!kou]"攩ouim*mzylïž=kÿø¶�˜>ççç¶gvfúcýûr¾èîªâxø^ÿdâà§ztü›—+¸§�‰x?‹uïn!qçe÷êóçò7ùjüçíš�?ú{ß¹:gð�‰õß!û£7zpnjýó6³dâ6~^zê�þ+#…_uçp¤pôub>ýõz÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¢9ò{|ÿú[³-[ð�að¿;óx�»o–«ýýõò¶úãsðôrrôunió�­ñû�mœf:ò¨åžð«knmí÷‹®ü{jç©ñ»êdaþ%v�bö†þ¦ÿ ö[î>¤ê î©ì]�i½‡üái÷¶üîòe;cjd§¬–š¡ghœzotå"éò¯dïvòuvà/øp—ëœ&;9kó�*3›ß3ñ9ìþ%·¥ìn¿ë™û{^ìápf!£ê>íý[ž–µ1sïotãhò…ðê}û׫š!æ: ¿œ¦áý_>4ö_�õ涻¡¿˜/äîºèo“[k �2rìÿ‘»7mar]þ‹oouæûû gw´3søùbçë+k4¨g­¡ôôg¤žðøéó¯ù‡|iùëþ]y´þ3�‘üë;+7ûû+úï´ñýñ´ögeæ鶗åj=­mƒøu;žm»�êú¾"jšês,¹gyþ™½×ªªtã­†?—ÿé§ùƒð¿ãç膘·nóøt4=—�ñak.¶ö}enìí\p“,�§ºq5œª×¢á²¶?óbù=ðçùoojþ€øÿº)º·?l÷@vfìèüxæn]ñוo�ø™žìí}³öœf3l`vpƒvµgcceឈ˜â¦£ž™ýõ»>oú¸ôc¿’~àù'–íÿ0ø{ƒ­:³fmé¾�|‰ígköweç·–z�½²5{={cpcr;mòôì-·c#ðæz¥jk%�”ó(rëî«%;h|º¾~é¾½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ê¤ÿ›®ýþyþ¦êÿƒ�?š¯á÷oóìê��øìîkû/²::š‘w/é¾ïƒìiª¤ú}u´r³¾f)/¥þêéä±à:³î¿ø»c«öèë=“œ‡³:ïhí½‹´pôávnøúxj,¢¢,4¬|q(¨,¿ubjié]ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî¿ÿ×ß—-…ãç©esœìñ,ðu 6«%]žäã1õ¹™ãªìvqpròõeª¡�ãnj¢£šºx¡ô+ê]•xþý׺qdxõqqb" ¨ªuuuà÷î½×•ª€³¹ ‚ò1wbs»oô“�~ëýr÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½óe~•ÿu“äã2u8z±_ˆ¨¯ ¥¬ÿ^æ+qòôe$”5b6+䈫øúö÷î½óÿ¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uráê©uver¥w(]czá\æ¤�¡*?§¿uî¹{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëÿðý!ÿ ïúœ©ÿ­ïíáàu®¡û÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺íè¨ÿ–+ÿ¹{÷^ëÿñù3ãÿèîæí?›ßì{¢wgðî/æ]áñëöc‹’“2´½«óc}n¡¸2 w:eœçájfcቚz…ˆ¸êä¨|íz%�©üè;ã«6oójþ�m]¡»eøyùýs±úsøœ�= &;±¶æã‚»qv,”9t¯íàvž[uk˜èv£—øu4¨5´‘ê¼z°@lcôtz~%áò~ª7ý}«òw ~rõñùø|ææþýköm×õô›¤tøs0còmû¾¶†ñøuq‰m5z½-|3d±º¿­ýìwת6ÿ% ôuýïªõï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯u\¿6³_1ö.þìîýêï‘ÿz©º—­«÷–/ø�y–ßù¾âü˜jgêåñ›ëtdwæîäl}¯wöñã±ñáè«òm=i™æfh©f½]tš =e£ù-ò‹²>tç讣é]‘žîþôëm¯½·üí-á˜ûûª1¹-“”ýyýï’çs@ûëxa¡“x¬%#ó×öœ¥)šªžêjcõm+×´¨r¤ã¡ùw÷žûù/ðÿãÿ{öl˜™·ïfuý>âýàñ㉓&ùl�ée�t-o�èõ{xpšî¯ž¿sý“§í½™ù{ôßyï�’u;æžm¿˜éî ßtøê¬5nßú”µp岪,bjªžf�zqã¯9í£·wéîý5×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½õ4ÿ0ì�ãý¼ë:ûåáo’ýý¼¶öüþô�‹×�·öþ¦ïôî]>hõxpëò|dôpõlž÷ó}{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½õ-|³øsów-ü¿)þht¯~uâ{#ãòu.üë}éñûã�ï�³×�uy¸ú篲x^äãðc[øûöz줲瞒¦¢²j8œh”�§½zuyh¯f£ù^lžíëï‚ö§|×ð>îåtïwòáöô;3×yî»ùô�q´hp]s¾0ùì¾s']¿v›rozµãçùª‰o³ƒæcxpuè,iã£ûï}s¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺íè¨ÿ–+ÿ¹{÷^ëÿóýž·ini+jäles#õt:0ù•¥vv¿¡ýáëýfþçîoùóõÿ¶�þ¾{ýg¯zëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëý{ûÿ¹¿çowþú?úùïõ½{¯�s÷7üéêÿûgÿ_=ú£×¯uïî~æÿ�=_ûhÿëç¿tzõî½ýïüßó§«ÿmý|÷ê�^½×¿¹û›þtõ�í£ÿ¯žýqë׺÷÷?s�ý´�õóߪ=z÷^þçîoùóõÿ¶�þ¾{õg¯^ëßüýíÿ:z¿öñÿ×ï~¨õëýe�hnp“ƒ‡«¢x�“æ…­þsýj“ïu½{¯ÿôßãߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý�ÿõùëáîý™¿æ}üè¶îgsî¾ûùûãàä[goäóy*ü&ö‹7ñn†f=¹šª©–ƒ^½z¡kb¢`ml/ïý]¾ÿ?ðõ^]¹ú½¡eõð¦*ê.èß´•}kœä'\õrï ãos°o�›j¦eù3å‘ivªépœ(¸ôyçß½z¸±c§/œ[ë¨v×î‚ûsùoü”ß=ù„ìn¾ßõßì¯é¾lö/êž›ù;#ö�dvvúüyýõ½û*�«»2>øqaš¦çäiª+–y©¤§zrìúóëí]-¬só­ž}ï¦z÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺¡ç±µ»oô}þcä�mìm¡´;»â®ñçô§]äiö^×ü{ÿuü†àñn}ëøû›#ýûú™öå]3%m>#=4õ²guq4f—g§#¥h§—vóûkü�ëu&qü ý"1ý1³÷] fâù�ª{í¥ì†jôxlo`à¾3â+ûksm=býßúå4•¨tšµdñã£}uk^ð+ñ(þf;æ³zôÿéü†óì]×»>6cþvo¼'å��ú]…[ø]õô=wœä`¡—fvkçó{ƒ|lµ›ö¿èýéû}¡wúûçæ¦'²ûÿµ{›½þ6avßúöö�pb·öàïí�¿ž¯ìj¨©°xê\ro˜•ã‚t÷[r1`)åöçýó]{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uÿöú³>4üìèo˜éòûáçþðå|¯ûa‰ï~•ï�ﺺ⧾ºg ]²ö�elâù{/{-]nê¯z\®+!b²³ó¬ðthtsçî® • õçaõwòôï×â?æ9°wvûê¬çìæ)_ø[ëzæðñîm¿ò[+;›úx��×ý}·ru8læù­øû#mà¢c’«ç¾bª¦¦y�aïýoxô†�£«nên¼äõ–âúûzƒ·19vüûøýá6úçspqå³x¼5:·$òcea={o=;šxöfbnº¡5= ýöº÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺§ÿæ¹ñ«æÿëý�†èï�;kã u�>ëé~ôèo^þíîîùûâ-÷õ}¥÷¨ût›ohô‡`શ¦s‚ …kÿ)zïu94úao7ºº\š×£¾7ó3¦ê~´ü}�ö_ ëûšž}çþš:§?ú½ì6u}ñc_ëô}ãyãkàé¦.z›9´ö jj|pub”þj¯u¡¢¦¤ó óà'änëéžöù�ò›äžc­iû»æ¦øêíë¹zפ²;³+ôýg€ê>¿kcqy}ßa‚énmᘧªž|ælãh㩨tñ‚€[ým˜ pyç¿un½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{ ë¶jûb‡¯75_fàºûrö´ô�³ð]©º7ìø9¿âtk_áüûsiï�áš…0æ¡àj|uyz¥š7 ¼©î¶)\ðê¥ÿ—çæßæ3ñbÿåž�톲cûû¼~oü°úù�¯ý}í¹ªp=ïýuøü¾òëüö#ð1*zï� dr´õ£(`»ãhîdcý]šr¸è7ømñ‹ù±|{ímåùë´þvöûï®çû™_“�!j»ç¿«û�%×”•š �õûnn‚âì­«´ºßjõôg¶vì2rce@õs9’y*ºó"‚´êý}û¦ú÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëÿ×þ¶~íåá4ð6:½šd‰ˆ4ö&7(h¼·±#ý´üú÷x¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uïô¥šÿ�ncþj¦ÿ¯¾ý§ç׺÷úrå�î·!ÿ%s�×ß~óóëý{ý)b¿ç[�ÿ’©¿ëï¿iùõî½þ”±_ó­è�étßõ÷ß´üú÷^ÿjx¯ùöä?äªoúûïú~}{¯�¥,wüëròu7ý}÷í?>½×¿ò–+þu¹ù*›þ¾ûöÿÿ^ëßékÿ:ü‡ü•mÿ_}ûoï¯uí{cáèçwþú_ôõ‘á.å£ê… ßyí„q?ú).¼£z@tn½oiôòé�¼»k®º÷/°°;ãyíý­™íò»#¯1™œ„4u{ãv¾6»0»�„5ni±¸ùå¯ô%¾¥a÷zšðtnj�šïòߣ©¨£ªù¥ñú ªy妩‚]ÿ‹y!ž )¢‘ký^9‚?{õg¯vðßøogcbï­�ù»;mö_nlfðùãgÿúû£yc �ãd"qd±µ°–š¢–¢&º°ÿ{÷¾ªa‡�j¿~ë]{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½ðkû]ñó žàe{—³öwzqn½ã�ú{y÷~~ƒ>åü¹jºz:&ߣ©•ks9&ªbñóg!†"e“djî=öà'€éo»·†óëý³šþ›ïsíý™³öýùmãºwvc€û¸¾­f‰÷fù¦‡—x‘f-%@x–äcîã9mj´â :([�¥÷gs|\þny-ùoq?lwó^è/’½ï•—里—´þ@ã»s|æ×75zë‚¿üz‡úž“% ¨ië�y·­ö­'¦št~¿™4rt|žþspaí7û=ôøbf’_¶£ê]ùqyqã@_ák—‘í¥ä}ìñu>>î•�")©ïókþ[ñšxstïï™eœåid8��,d‘jéw, üüü{÷˜ëcà�ëü½zª¢ª"ª"(uuuue•ue‚ª�`óþú§\½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷tƒüî:s«êºo÷µ^éáööö?º>'uæ+�ws½nw ²gèœr£€–ªi àóäòyid®’ž8'è*â•/,tôë[§b&¤ypõf?*:s«û—§·?µ6n~c6=s±öî#rs¾c c½¶öïüôxýni?†eê0똚jxëb¨‚ ±j"ôá±ìõe$nšßònÿ·a|3ÿägmÿ»üï¿­éñ·ûõ˜ûßtëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî¨wzå>lo/çýqô¶èèmýÿè߈ý=‹øùÿ�;«ymü^`»3rnü¾÷èìlnéø›·-”ý»ï%m najqëo�æ}¼�8‘azæ½:)áš×'« øaò;'òk¦r»³sõíwvãížøé~õù¸\ºçöýhõfóém­ñ_µ³fƒs“àg3p½ltscrì’ùylòìgª0òx㣅ï}w¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺íè¨ÿ–+ÿ¹{÷^ëÿòù«æïàž”ùëyõ©ûõû×ý5ø™ ߆›cå0ø™÷'*�ònîºýse°×­øú} êró}¥dßi yð¯7¥@êêåko>…o’�zãågvd:—µèòïƒÿ/‚üø¬§þqâ3ùm¯µöìùxy÷ž_†‚¯3\•urs;$bmïtëeêñ…þ�vnùïþ�ù•êîjméð›[·ö–ñäãêñqm|�tsìº]íq¸é*põyzªìt[›ì -e"fòêey�@›ê ðäz}û­uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½ñù—ð#óu±øýéòkäo\llzìêóö]w�ê-›yº¶.ì¨þ[{|uëôãr�ío•jecf:g‚†ðs1—dw««éàký×ñcvîî…û½!sòëäæ?#‰ëå+³ýñž«é?ôµ¿°ù_ïbm´7œù•¯ø3m¨i·$p¢ðàhjœxú@ó±½oÿzõc]#¨þã~uÿú+ú�éþ]¯×˜ìv ±ö¯pwõ¶cöøì$ùꉩ¶„û­6 ~œìù°knfjòæ–šòy2º:hkhå¨p^x´ä4gwv ¡ž‡?ž�ú×âßt`ú�ªèòñíìe^g3_—ü™i÷ïýû¯se*s›«zo=åt©sžý;›5[-m]c*&¦ä‘b‘ä›áö‰,jz½ûªõï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷y¢ýòå�÷"~ëý�ÿóþîn´âo4³µft4òé+–“hi¹z2l ãÿvõòëýbÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uïô_‚ÿ•ü·ýn£ÿê/~õòëý{ýà¿åw-ÿs¨ÿú‹ßµ|º÷^ÿeø/ù]ë�ôê?þ¢÷í_.½×¿ñ~þwrßõ:�ÿ¨½ûwë¯uízç¡à­êþâ„7–�€�ò/­óßµ|º÷_ÿôý÷®>juokw7è~„ù¹\�gcü]éõ®'·qõxzú~*³¶vl}�³–©‰(ó‘ömç×3s³}¼ªqìm�u²ù‚�åó÷ãføûÿ27.orná¿&žÿä8§úy¹j0ulª-û;v#nƒt´øjôpix œbªÿu½'·çò÷püµé»ú]òòîž_´>fmìþõë��·6îg;—�`mì,y¬¿`ï1ô’ÿr6\suù?·j¬œëkn%™exýö´šä:&ûÿùæü\øtøœ�duwíþ²àæ·.þú{ÿ±¾ü ù{kû庲paöþ*lö{­èèþÿ+‘©h©àfyç�é�ˆsî­á“à�ûñ£ù9þ4vënáø?··ÿüä§gíí¹º÷®àéá²ø£>ßü˜·¹ émœåm$x�í/¼1�\”³} ^ýöº÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî er¸ì3#›íäh0øl=fw/—êösãñ˜¼f>žjºüžf¾®hihh(iayfšwxâ�k1ïý{ªîê�æ©ñ;¸{¬ößÿ·öþ3½29ü?çîùì’ì}…ò½ÿ˜ûðïuyšê~éüø*6~¶²†žyñâ�´\¤p1£iëä²{« õ�{÷uëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{ äßéž�øƒòû·¾û×s6×ëýž¸èj礠ªìfóœþf›€û[c�ž\–�qç²µ‘akk31bîr$’d÷[± ãòߨ;of÷ÿtu§tõýuno`vþâú=•²r5´xªêí©½ð4“oõuã+£†·s>+%iª²dä«�~ëäp�z}û­uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×ÿõùkàð\oóiþuøœœôô™lþcà6ïãcd«¦ûüžø_�8 3”´k+t>:õ´²i¦ñ쵋&¯uvøóê¶;n6¯è/øtvæ¢1ö`+7åfø¦ëskôsn›ñ»grn¬:뵫ðybªœøå+é> @÷¯n0ôs?”mt½¾lu‡éêo'ï�ça´;kø¹$�à}·ð á±¾œ¡è„ÿì›_¯:�±yí¼“ôösn)&¬­©¬’¡d‹ýqòùz:öi?™oîzžåª _ð“ùzökjt\®9öÿ~üõãg&+{÷u2òm%wdü{çöíƒûu'뻂ª¶²žr`douãø´ügüwïqô·`d¾dÿ5/˜ßpÿäþs|ùañc¹úçnv û?¬*¾õ.3äcdª~ê’wâög[e4±ãi¤ëâèv-.ú½ëï«úšx�ãñâþn=ë±~dvoó5ï^²é�ø=µòÿ«·îõ­oô� üÿúo% &b¤•i2øö�©«)맪šh›ô„{ßu�p ?l=òøüdóõ,ô{“-�«¼�ãáo~éô^ú‚*ov]ü›»sov§òðøo.þåol\}�ñë¥:¯.ûïdîm•üop잤øôyœ®ô—žmù²êjgóc› ã274óhÿ~ê®(íöõgýõ:÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëÿöü‡ä·ò÷ø¹ò¿wà;#´¶†éåö–úâ®öæv¯söwdt·d>îþ"ùyv^[wõnèú™lþó–¾y%z穆žy^hr±s‡jœwáïšø_œ›³áö¨±8?žûï¹ð[çaáó;§u¹©÷œ’mºr9ýëm�mý–ü¹é¥/u–¨êi”™‚ê¨:vþëz�uw==öäo��ÿ¸úgxo‡5vëøéb�§÷.wï�©ÿú¸�㶆ñïíé³srár[“lgp�öã2²öðõ˜ñå‰üj÷ç>ýõz÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^é‡tíœ&õû�fîj/â[ovàrûgpc¾æ®�ø†=�¨åeh¾óqk_k÷trgä‚xæmz‘õ€#ý{¦«ë“ò�e×�;ö¸vûýwõ{'kõþåà¾g)˜l.ðù˜z-½·1m–îvä³96 äcáˆôuôos1]rhîkuâjiýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî½ýìüÿóº¯ÿ©çߨ=:÷^þönoùýwÿôãïô�{¯�{7'üî«ÿêq÷ên½×¿½›“þwuÿõ8ûõ§^ëßþíéÿ;ªÿúœ}úƒó¯uïïfäÿ�õ�ýn>ýaé׺÷÷³r�îê¿þ§~ ôëý{ûù¹?çu_ÿs�¿pzuî²çº·iéì×±¿¼x>xvãýƒït�{¯ÿðøs·>_üšß�$»gãoáþ›êîèü]6ô½ïû]éù9ý‰õ;/rïš üþûë\èú{ëvï å6«¯’¢¤äù#† ™d²z¾�\(êqœõà«üuvž–»ûå_èž�éþ™ü½íò�s·ûo±>^ô�æœîdvvoxl)v¿mön#g¯gmlý^øàgÿâó�’x1™**jˆªbýâp�^¯z 48¥zjö?ë˜yo”=ÿñûãatocóüwø]+½w%oiwvïëmé»eîz ë_‹âìø1]¼öútq��s’䫨bfšôêòýs\u°«¤'=ˆ¿$6ÿë¿žsò3lmì¾óäöv«$v¾zzzœ¦ßêáóy]±¸0õt�iëó¸0•qep©¨…r_eô.æz« $žœ�¿u^½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^é»/–æàq9¿ëìâïì÷ýy*8ò•uûdí�™²÷…øï^a¤‘ñš÷î«×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëýf‹ôt�ëÿüˆ=û¯uÿñ¶¾·ï~¯þ^ÿ7ÿ˜6òùw¹¨ºcjü˜îìgèî†íí×k_gö½‹‚êlšìùô»¶:iñ˜íë°s#n:²h**ušxž6{qéâªií:_ü¦ùü«¾tu'w?éýë.×øï3¾7çîâý˜.ôéššã×ù#¶2ûï«ûjl&¶åctì“p êá‡9n©*óõâ–4óëj§�uý‰ì^ûì?‹=jw§do^ñéý£üé~%ìïšýûùt-m¿{“¢1ë²nufòrpbçþ”°g¦®¤¤ü2säùxái9u_zÿ?w ðpé5èävÿå!ô›ëªv�ã°�uù}y—®ù{ónqã¦se›‡5ti;ïpðvæòïq#4òlpê®(ç=ÿ{ê�{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½ð/ògeç{'ã¿}õþö,76þé~òù{t¬‰îéøùü ¬²okl2ñùšhõ~¥”r=öæ=jûðyo�øî“þ^›kâ¦úî:oæc¶û?ão^÷wôvÿyfw®õáll…&ôù)¶»wªwfé­ù{¥vþñâ×ábèèh(b †”g©a§¥8ôù­\·áöß^ïò~½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺§ßæ;¼ÿ—¶öéõô¯ëo—}�ñóqaönbs¶öÿmvÿqâ·^ýýkgw÷o¶é(%ëžî–å¬ii-tàï%3àfœèóìôââ«^‡oåm¹;�u|øí“ï«o´7tz» „çsílnâûþ³àg²¸n¨îë°ðø|#g6s®¨qµ)cmio…òtš/†?ié¨ðõaþ÷õ:÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¬ñ~š�ùb¿û‘¿uî¿ÿòü÷pairóöòå14ù:oâf¨swðg[o÷•¢ª’ cq‘y©jby#{jgpêaû¸à:÷p²x*b³-o†¦ƒ)‘šš†j|qd+¡¢´pöv$+qu •„jìâ0çm®}û­õ?íê?ã„ßõ)ÿèß~ë]{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý{íê?ã„ßõ)ÿèß~ëý7wà(r�a&oi‘“[k%~6ççd`°ä(¢’¶v,zdpm�>ýöúqûz�øá7ýj�ú7ߺ×^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷^ûz�øá7ýj�ú7ߺ÷y¢§¨ñqû�™_÷sÿêäí>ý׺ÿóßãߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý�ÿô¼ õóûä—ç¿æëß´½‡¾cì�/ ±»>(ü{ß»�)a‡‚�ûûä¯nón^®îlättù8vž_²öýn>õµfš�3°îu™!ñ{§b‚‚ÿn¿(~f|â§âÿ;æý±ì~�û»š±ég–)0›�if·qm²²¼‰"éouz„‘’zdÿ+/�çýÿéÿ¦>av¦ûêo^äïurîæüëaœ\žclïžîåàëê`¤¡¦æ#ö÷nîªýñù;ïªhó;»vå"¢‡#�êæbœ×vgž¥¢£óµ5,jå"mennä“î´à`8uaþýõz÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿u¬jî쨈¥ýü…tu³3ª�ro{÷^ë^=�ó3äÿz�4‰{ãiö-~àozg¾]õmõµ2šž“º1?úš£-¸þeç«r_ã58�çú¹ckµ=\p�û±õøÿü”…ýó¥@b?[{÷muï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½õl|ëènâþø]ýûøÿæ ý_:ï©ú“pnœfüéüx`±;ÿkc3™üîûím弶¶ôü;ël œáinši�ä’k)u÷wr4ôô»þyûüÿ$>üxï?�˜¸±]¿ù�y‹ü»´áœ§â㜹6þó�e8åß»^ž‹7৞*h¿ˆi†8ã ‹î´à pèö{÷uëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯ÿõú6‹àíwnü‹þn¯�»ïñ¿æ®ïø«³6vy3ûv¢«upì‘îí í‘æpc2µû‹jf¶fíª¦–†§!ifæ²(ª)|©±î¯ª�)ät�*o‡+ºž?ÿ[sç†ÿ—¸÷_võ¦|qnsö5u&9’îíúýùµví-]u>v:‚öõoª vþýöý”éóðü½ÿ–èté�™ýcóoü=3ß±�ë�ãîb¿rí�ðr_zùû†m«ùiç3 ·¿¼u½›astt99°q¹‚6+û·^´˜ì‘æðb²�“j}óšô†íëco~鮽ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺¡¿æwƒùùýýç±z?oü-ìýþ_l>{öö'«»ë úû?òs~räå~©·ýgfvøïíî•ûu0õf(i)}é8hxéc_ý8š@®ª7vëñ×xïíóô›g9øÿ³_÷†+*a¢¤žzº¹a§�ê«*#†0x–eu»0}{®y,®3l+2ù*u¨¤¤y*êzcw_s (žªh¢5µ“¤q%õi+ª¨,@÷î½òz»³º×ys�évçç×ño%5e vìàrvrtâå%§©¦ÿ!ðo‚c)#ߺõ§jlfgÿ¡‹)‚êãsxéúuƒ#ˆ®¥épìðèðì±uñë5äþb[ ûyù:ƒ¯ß5ùøœ÷pw¾o;œßùfûæ·vðfóxújúè«þtª¬§šyk8ñëhífî¹ø{žþ\»o`ï^òú4½¿¹ö×ú´ß(«²»[9šû½„ü=i™ß8äûêq.f9÷®^‹#:¬‚š­p’×ìc§²qêõÿ'[-û·luï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½õÿ?œùû§á¦÷ïlþkyäw7xåz °¶ùþšn»û¹çòo­1[ƒy®ççôraóß)·ssbþÿ"µ†–€”¥hi¤’­ã§b=à�«‡w±îý5×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷y¢ýòå�÷"~ëý�ÿñø+±>|¥ ùkòs¿>:|áøý+còj§©óxííåñšÿ¶wº‡g¾èçk·w.w¸öî]}5emiûœš’l¨âe�søëõõ-+z|úzâ�-n•¤ø‘ý?7fåß»åþgd·óï.ëïe©×µ·÷lnüny{6§!kk+’û™|:lm4ÿã©! †&špó´û¦)öµ�a½: ø#ò{µ2½y·~`üåãwwjt§cì~ïû»+ft]wîþõý]i"äv&gº÷©ß[ª,�?5õ˜üm>z¦ ó8ü”û?!”íó�;ávæäìm˜6’ì3x�à zûìt}ùzߥ)öïäôžôê ówìth}ïªõï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½óéææ3;cqáööãªùùü¶/�áîêv+1[µsøúš\fã£äçikp™j¬l©u5d3rîñ•6e>ë}vß>j÷/gôfäù•òçfwg[üiíüyõ®äëï�î¤ènîïú¼¥ìý��¸&ßûõvåv^iך¦¦¥ª•µ; j‡ìõ}jò¹#«z÷¾›ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{ªàþaß ;ïæï^wt¾òù±zw§·%>ëªþw7ð•ý—ºr{ÿaö.'±0ùœnñ¥în¿‹�š³opsobøê†1å+ á˜te|úº0s]5=þžávöûø˜üovö&ôí>â‚«%&oyl¾º©ê¼ }õók‹¦ƒguï~á–žz he—ø“‰ýuèžú}漢wƒ¡cߺ×^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uš/ñqÿ,wÿr ÷î½×ÿòþz§¬*稨œe©ôm4²…4ò’¢ggÿ'$_ýµ|º÷x?ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷^ÿeuÿó·¦ÿîy�ëï¿jùuî½þšë?çomÿœ²ÿ×ß~õòëý{ýö�îþ›ÿ9eÿ¯¾ý«å׺÷ú+¬ÿ�½7þrëÿ_}ûwë¯uïôwyÿ;zoüå—þ¾ûö¯—^ëß讳þvôßùë/ý}÷í_.½×¿ñ]güíé¿ó–_úûïú¾]{¯�¢ºïùûó�ç,¿õ÷ßµ|º÷y«ªõeåé�‘�àix´‘½ÿîÿ´{ö¯—^ëÿóýwä�íÿ‰_`ákògäxôôûÿêûs¼·%-&�;c©­äíºoºï×ã)%&ªž™©¡‘•]õ™a÷[ íàtù¼þzü.ëþ¤ø}õ¼¾ptž¥ûb¾lw^v}fþàí²÷žn+çªç`s´uu4uõô+‹©z˜q¼”òóé¡$fq ôý·~f|pýý¹~lío�½m¹zfç‘}ûûç‡ëìý²ø—§�#mžéðtn¸šúv«„µ4ê•g‰‚–2þëzz´¦z;+ºº›§º·3ý½¡øcdu.ßåã3yžáïd¢¤ûünj³�äd'ézâûl•nvš(oäyð-õ~ëàhz,}ÿüîÿ—¿jïíåõý¯ó¡¶amšz=í´7&üåpg0•ut™jj|�è^žiqõðêó¢@}û­„b*n‰ùñ�'¶ugc|{ím—ü—=]µêw^äìóçp°îe.>»!‡’¶˜˜ö¾’�+m$‘ýu&cù÷î´a„g¡£ßº×^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½öšˆ) žªªxi©i¡’¢¦¦¢d† x!f’içšfxâ†(ô³3ª ’mïý{¢{ó?ì3à÷è~ñìt¯gü¦é~ñí,$y9ªvfïþ¸ì¶nºÿ ò.^«niÿe»i1‹i?¹»ƒ¯þbõïb켞sgu™ëþ‹ú½o�èíòjèd©ûxù‘íä+kz—ãb­òùyaéæâ )ò�ùžòíÿ�]µüªò�qðµ»’“óƒ°·bôïcmž¼ûû‹zgs¿ûš|ìølf{;×›&«?•©«’²²jü�+ôé‘‹ë1t�u´èzÿ.ˆïën„î¡ñùáüéß=‘ø¹´þqt�rcv7ç ì–íëosls½&äî¾ö¢ë\¶ãù8=å¼zëki]uqm�£f®•äòw^½lª5­hz=_îi%ü‡{é1êõï_ñ_r…(�ªjöªìž™«h° kt™fv½b׿½õtþð}½_í’–(z£á¦š8ªïó7þ]‘m!…r£ñß;elr¹q/¤æ�óhþžõéö“ñ}‡«sš( ešã†%¾˜âe�q,t¢¢ìi?â}ïªu“ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½ô,–7™çwáóy\nvš«”åä©`®çd±õðik[a_eu´õ”u”ò´rå"´rfåxh÷î½õö¶ëù_,?™·ãî°øçµö¶¯�•ækuvg�ö¦éäbq»wfîíõ³îô뿉{f§e÷šºåw.. f*c�ªhâ÷äùõ{þýó}{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯tzþc|—çüvþè}ÿj|”îï‡÷ƒåþëïjn~áþîÿwÿ‚kþ÷ÿw?ãýþ/ül�ó�࿵©ñþe½û­�_1ðý€ë®�…ï&?-ˆlþ'—\n�.';œ\•5‹�íbç&lnzˆm㩧�t3+!ä{÷zéûߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý�ÿõû‹¿�—íížìéü•ênøùñ¾÷^þûû;³wÿçmë´ñtý¿µv¸z]½eùû?}lýñ´·6kkâ*&¥ãå¾òž>6�(÷vòïí³¼»±é÷öóìnàß{szm¬ôýÿ�ïíꧭãý¦÷¨jj,*a)èìg ¤*ñ·ºö³œžž/buîêí­…¼ú¿²6æ;wìâû½›¼ö¾y$|n�lî�þt[ûkâ³-˜âg"¨û,• å_ow$du·«ßº¨4¯ùñ‡÷îµ×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý'7žþ}ý´wnó�pn=¥&çû™í½êùõðb·vù|ö2«»ƒkdê¨ò4¸ýç†jÿ¹¡žjyㆪ4v�à*}׺©ïœ¿êñ2m�aô¿>~|qì-—¾é·ý_uäw¿ci°÷æm÷;�ròv .;ãö79¹ ßu1¼yš–®�%wîeri¦e÷w/^*:¸o~ê�{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷_ÿöþ¯±w5u0  ñdñ%é˜�1èê·>asaîà½ô�ô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½×¿òvãþ˜ÿüå�úÿïô{¯�¤­çý1ÿùêÿõÿߨ:÷^ÿi[�úcÿó•ÿëÿ¿puî½þ’·ôçÿç+ÿ×ÿ~ ëý{ý%n?é�ÿîwÿ¯þýa׺÷újü�óÿœ¯ÿ_ýúƒ¯uïô•¸ÿ¦?ÿ9_þ¿ûõ^ëßé+qÿl�þr¿ý�÷ê½ödì}äë1"‚éeÿ%�©–$ç÷¿£ÿ~ ëý�ÿ׿îáþaýéõ�ó´ú�-ü½~@×îüß½‹³új¦�¶>,ggùsõö?½3soýkýþ¥“eà'éf¹ƒa#&˜5,°›w†:¸@a:ÿãðë´>d¶s¾zcãg`t–ÿênøíî’ìí—¸³ý}¸âøø½…¼¨6›müþ[bn�ë…¯ëæáèg_ãêj`†xåe›è‘î¾]kn€zpì_—ôû7ä®gâ®ùê]ïù}§åméò›a·2û/ kº1¸åæõ´;_¼wßæpnl®w"&ž¢¶¢ž‚8w×.£aêùu ¸õ\v�í§üæ;ãyvîýé,7òáùý‹õxþ»ív>^áø™úx>ô†m“•¨èíþ1b²�eiö¦bfj ꦦz{n‘"z§ó«p×�ï«y÷¾›ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¦ì¾f"w÷æ,üœê÷¾©×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷p²y,v�ìf2xœf&š«%”êdª ¡çcqô0iu]�èwui54m$²èëq©f }û¯uh�wû]üä~huw~ïø{# ñ›âžssc~.íœæëûx�ïò?äç‰öž_¸©¶�nb=ïkö›g‹iå4õf²½r �c�ëäüºt‚še;�w‘îý5×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷eë¾'ù[÷wý–,w笞¯ãÿß�ôñÿ윃oð�î×÷wým­ã÷^kä>ûîü:4óøµê“o³åõ†ÿ:ô8àîháqr&.=äqxóžl•rás4i"þ(˜‰k↺lz×y;l‰+e¤º†¸÷îµó§¿u®½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ë4_¢£þx¯þäaïý{¯ÿñüouìm•¹7výý{‡híœîèëüþ{)°÷cœégvvk;œ¯û™ºý©–¬¥š¿ovf0óñuii$oqi+äå‘šû¸à:õxô™í¢ê¾ïú5›¸úçdv–鯖:š­«¿öæv`ž²æš› ˜üým4*4¨�lj³àìz7sï½õàhè9êqô‡ntô�bô�wl.¦ùépõ­·z÷jáv¦.§ ñeù:úl5"ärõ@‚zª�%dºf·k{÷^$œ“ò£±¶vvnmù‰ú;g¾7¥þåïã�ác(·fëæí%é¦õ üyêjxò™º=¶™ªµ ž¦yr‘jeàû¯wëë¥o¿u®½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺mìá°û�•ûû‡�ï`3øúì6s™¡¥êaó8|¥,´9—‘pö?µè¸ý‡¿tõî¿ÿóú«§~onü÷þjät˜[ð?xvvöü¨âq& rwçn/ou¤õài\2¬zºv~óþjû·æ‡uü?_šÿh*:s¤º{¹�ÿ‚ùú˜w öæà߸!·sl•ð>-°d‰~ì×ô ¯º+á‡åª_uní!´ÿûó¾âù=óƒå§êÿ˜ýyñ?!~2ô¿»æÿ©pÿ{w§2ûû|÷6õáaöî_3ü{çqðöž×ýû+avnàxvývsps(˜é!òíîµep¤‚j:½_~é¾½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺§�ˆ¿.¾fvgó ùñ§äîçên®û[gãozw†äën½é×o]ç³|oýé·©±�ƒùó}–'vîã‰å+d"š54åb¥z�õôû§t(#׫‡÷î›ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺ÿôºïæãñÿ¾w'ê�©aõnöýû;ù�ôv×ø1òwwì�±¹2¸n¤âm_‘½_¼gköv[ž®¥û¸z®�ý›ûµõ@2.¡âeotêlžé�æ_ä¾èéÿ1ü�bu‡roœ¯äÿ™o†=›òovm}�‘�¬úúoƒû‹te7v×ý›¶“6úûqöfàù?kouq¹*¥ž£wó¯ýyxi©=â¿ï«/ü›|müãú“²áù»®^¸çÿ.ñù5ý�þëé²h·žoä�fæñ»f¯u­ásn|†syîµròóé*æcfaï>«^âceîú¼üÿ¾)m½»¿+6æb›fg÷|÷uvw…ýq¦)šâódiä«¥‚y'¦iãic©>ëä� es^«kùžå:¿ä½fûú]kð?æ†óþg›ræ6×åþøý¼zö¼gvæïm¿´ûbÿå^鯃¯ëz2£d¹þðf|t4 róu±ýy*2xhóëd‰m»(¶>í£ßù,¾ú¤ú›v›ze±±g;)» äqå¸ò4cia4u¹„šx‘ …uh÷m}�*ýû¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëýqv¬ä1¥ˆdi…�¨��úã€$ý=û¯u®_h|˜�1üáûs¾ænªï?œ¿>=lýߺ~|˜ûªäæv®âÿ*w•^s­è©vvôäðç)ªj³5òež§¦g‘åqš=çó¤v¨t^¶6÷îšëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¢×òãžc¿¿ºaò3ä§@�tÿ¼_ö^wöøù�þïãßá4�{ÿ¼{zÿþüÿðý·‡ïjuù5®�u°iäcöø,ù\¶uðøœn)³yú˜«s¹†çqãhù\õdô�õå²5l©k$îìa°÷zéûߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý�ÿõß¡²ø¥%['�vru•«)�r ˆ épa÷ên½×_åñ?ó´ç�çm7ý}÷ºn½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{¯�äÿîóÿ�´ßõ÷ߨ}:÷^þ/‰ÿ�¦;ÿ;i¿ëï¿púuî½ü_ÿ;lwþvó�×ß~¡ôëý{ø¾'þv˜ïüí¦ÿ¯¾ýcé׺÷ñ|oüí1ßùûmÿ_}ú‡ó¯uïâøÿùúc¿ó¶›þ¾ûõ§^ëßåñ?ó´ç�çm7ý}÷ên½×¿‹â�çižÿîúoúûïô>�{®ÿ‹â�í“ç›ÿòúnà¹ýîï½púuî¿ÿöý!ÿ ïúœ©ÿ­ïíáàu®¡û÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺íè¨ÿ–+ÿ¹{÷^ëÿ×ø{ã'qönúþ`¿íc«wnîèæúÿ¥7¿åj.¬ûqp¥ì¥ß}7>îƒ%=$5r&s>¿u/žim):4‚a¸êì”>f¿áè™îÿæû=�þr]�¸«§ìºoœ}íóûãþãì-™í •°¶îûâksž¥¢­m½6þý”õµþyä�˜,ñ3믭 zž�§w|8ùu·ò›±÷×óï]åø55êþáø•¦ë:/c^rmó´úçdå²±ùí„ôk+ã‡ì�®žšhbšzz˜ì´²î‡×ª–\€‚�¬¯l|† ùñ²~*güæ~l¾ãüÿ»¾ë3¯_ñ³ûýîú»öûœ¦ª_�ã6äømßu$ñ5tµjdë:"¼rj™¥zµf�zkõþí¬dû�n`0yüöé©âaqxš�í¹dçk¸÷øú(¦îçåããpø‰3yy!5mkgilg‘œpäšqmó}=û÷zëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{ªsøÿøß.âþdÿ!ú?ä§síþáçâþ-õgkâv?_mhö¯wuîowvåæëƒù¢¿î·vâ‹‹¡heëåêmniëhðód!¦ƒbµ5éæ¡h}\g½ôß^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷y¢ýòå�÷"~ëý�ÿð¼ýó´>iübùåò£äosülî|§ê?˜xþ˜«üø~µþûköwxv�míºþ¹§5x^ëüûo ¸vfëûsóîõtuk5 tl²ó¬wškdyuq¥”ô# ‚/ååû¿ þ/�0lgt>ßé.ïùáüxžâàmœvf=ù‹éqõ2ljž‘û›»=†?á·fz2€píq¯©e�ömçóª�™!ú[æúo²jÿ™—]|€§ûm'q`þv·qå7wñl­'aî.ðê�ý†ûçù5ü’µnýûµ•©(ú‰öù=¹¾w.ñë^âé>›è*ꜗo|wèöõüûk°³]á¿3ôxðêvåvî3›zƒ:*œ”¾:w�z浧n�:ëèûz¼¿v鮽ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺/]ññc£¾l�u�ó6öín_îwñïîßð~å콃ö_þoàÿæ>ãýï ©ü[î�€òèûï¸ðxûå£é.¿s«#‡cž žû˜\fþãàôøœ/†åóksw[%>;i vwïs]vñs@ªeši%��nìä“îµó§¿u®½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ë4_¢£þx¯þäaïý{¯ÿñýþ³`îiªê¥žž’ôï"yj.�+2›n.»‚:÷qÿñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯uïô{º�åjüí¥ÿ¯¾ýq׺÷ú=ý?ò¥þvòÿ×ß~¨ëý{ýîÿùr‡ÿ;i�ëï¿tuî½þ�woü©cÿ�´¿õ÷ߪ:÷^ÿg»§þt¡ÿîú_úûïõ{¯�£ýóÿ*pÿçm/ý}÷ꞽ׿ñîéÿ•(�ó¶—þ¾ûõg^ëßè÷tÿê”?ùûkÿ_}ú£¯u‘:ÿt*ì 7xâ¯ùe/ômÿç^=*}ú£¯uÿòß–“5‡¯èeq49lenw%yìe%}-nc .b‘+è#êñã+ô㤮¡‘f„l¨e‰ƒ­ôƒïý{¨u³krsî*º½ë·éi6‚»îꪜî: }®±ðg”‘·òt¬xuldérmišð8�ú>ý׺~gy]]c£¡®¬vv†vàž÷î½×/~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷mqç0’æj6äyœ\›†�m—«àç�¤|í.&¶¢¢’�)q‹y�t꺪icšva’dê¬j�=׺t÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uÿóùcàoý½gùâÿáùðÿ�a=û«·áçþ«_¹�æoÿâ¦?í}…ÿàfû~ýëóƒœ=lýóó'º£ÿ®åÿþ_ïý2xž„¯~ë]{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷zø|(è •ñãùõ|¾ø»/'¾7#e>t>óýûû³7žk�öþþû‡¶7‰ïo ߺ3“ë5n[$(áaûø.')ãþýã¢×åñßîn«5½öâ“àt?`3¸�ñ‚âîlly,âäãs¸\œi,qwârôpä1õ±¤ñå:gugpžª¸ è�~ë];{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯ÿôúﺾwå'é]÷òëáoé�¿ð=“ý[g¯öo~lžóêwì˜zæ:ìnäßxªmï°÷ñß»[ndæ笔õ²ð×rii šms·º¸am,µ'óù_àÿþdünìw®ku÷?îj¾æý}éòopì|r¾o°÷ö¶àêa:·ÿåã0/imü%3wlbäô³èíïý{_rš`t4|lè�›½7œ†�ä7ìžµù õø��óû;#j|u¤évª�e�=|tú¢“í$(ë'ºp²•ó§ùõs^ýó}{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷_ÿõþz£´|áü_†ibõüon¯²jóü½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëý{ý+ÿõ‡ÿzÿþn÷í?>½×¿ò¿ýx�õ©ÿäï~óóëýs^ôô²àvñ {�½ï$qûþ-ü~»ÿ°÷í?>½×ÿöûch|„ë.íî¿�ý#´²y¾àøßœøø¾ó ªäwpðã*»cjÿ~¶ˆædê#zlêuàt­7‚u(ö6½ç[ €‘è(ìüàøó€ãü®îä÷.foâêˆi{îdúùéÿ-fò¢þ±,1r4›•[ \¼ò -2²ž,çõã×´žßÿmý9óƒ¬;®»9mƒëÿ“[2ƒ±r½‰w¹ûwãuu>îªûø‡æš„än½ó³ðøl¾f¢ÿ&µô4óiusmò朑9¯[*g˜ý½.1¿+:{-ñno™´y6lönì„ßýùöœ¬xº@¦ú´£hbo~®+ö´�z|ëðåµw.#yí�¹¼6üïu�ýx>åâukô²tâ3¸ú|¦6y)ª:šwšž©æꮄù€ �{ë\:~÷îµ×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷e¥~u|bùý“ñ)øôý‹¼úÿg¸·†knã²5[!)j³õ»jz|ö4é·÷uf?3@ðt¾6jªxå ˜ëñ媞¬u€œtnýïªõï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uš/ñqÿ,wÿr ÷î½×ÿ×½oˆáqÿíkùçc+姥éf÷â­õ‰çéuo÷µûq~?uàäìór¬­;ðe˜¢’™ßm’p¬yoaçõûà�ó꺻f6­éørnâ£)uƒ«þµ[r›)o,srkžú_¶¥.æ䬑»z·u_u(lc‘ôÿp {øº¸ãùõ±õ/âèmêý÷•øû]×oñ¶·û�pà;?½)ò?üúcžþòõo=ëšáõñ˜oö°á!«ðwöõ/½æ�péõšö½r¾ðø�ìoä‹w¸1¿!þ:s|tëó{ä$ëšž‚ýsv3uì]=ÿ“+¶—~óáº*±‰41dÿ‡øwy~×hðû®iòéâsäàuw­•~5ÿù:tþ!^«ÿþîý0xž†¯~ë]{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯un�%·ð;sùì|‘û[[ ˆû[sðãî7€àch°øl>:—²÷œt¸ü^+ 5>šš5qf‘¢‹½yž�?ù¯úz¸¿{鮽ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺/]ñù½ã×?ý_ô3ñÿ5ò+øïñïï'ð~õën²þçÿþüî?ò&süoûá÷õz>ï_û}‹ymåšþêàäó¡çw‘èaqùœcà2õ¸¼}^s-m&jl&f¦’)«qdhèkßrí šb”¦¤%h÷îµó§¿u®½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ë4_¢£þx¯þäaïý{¯ÿðúä·á?�¿'7õ`vnõü˜þêûô“í¬wfu�cvqví?â³däúmõöû“lå3›^jùu¢­zˆ –g’œ\þ€�õƒ²àpéæƒá·æœgç]ññc õ˜¼7bï\fâãní“šënz �çíy%ü¹öï§í&÷ênüò©êo’“%+ªs¤[ô:ö¦®ªç¡ïû©€þê�qþãýúÿýïî§ð¿º­ÿ‹ðßáa÷¿qügþ-ß·åóy¿µ¯w«þúõs_>‚\�æn“åün“â=îx>?ëõ™>—}�ýãý2èýo˜àõm¬žûó6nm࣠[,_x+þõkyuàaêyu½fº«ž† µ·pûcn`6–ý£þ·ö¾·pxÿ¸ª«û6†n2�©­©ûj*do$òi+黳1$û­t÷ïýk¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺âêyn j’¬èà0±òèuñ¹à‚ü{÷^ê¼6gò°øm°{7ü›gmw,•·ë6õuêé|­ùqÿ­¬‡hææâûø|ô9îåéqnm³e˜õ1ådcªæíä‘d�òiµaõë±®>áõˆûßtëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ë4_¢£þx¯þäaïý{¯ÿñúq�+nîîîæræ‡óóg1“êã„äæ:qxh²5³õçšæ-gfuõœ~=&â%–i½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�à{þ‡µ?ïkì3ÿ??ÿûb{õo¯^ö?€uïøjôÿ½¬�0ïüüüwÿí ïõ>½{xþ׿á¨{sþö±üã?óóñßÿ´'¿túõícø^ÿ†¡íoûúçóÿïïç�þðžýsë×µ�àl¦þu}£ofþißì ×q¥,sm™ø÷ä¡tèpתmš*(ú¬:ø¦~5iaêÿ^½¨�ëÿòøº¿ž³ôgsm~œþÿë_çå6÷ì�é¾6wlò �°£=óy°k©)suýi›ç빨—'etÿ]©ëasãƒïøéáeu­³¢;ý;o§6jv\o�œùýû&à†> ïåâm>íàm„ý9}¹ogv²‘gîrc¡ér¤3h憾�˜+±qî¨e פ�é�›�>$n��û?»7mn9òc¶ö÷ku|8šœ¤3ï í]i�ço¸j`e‹níä­®…'èt:îçj¹_u°¥«o.œ–cwm ÿ2þ¢ù»ño²¾`bö†öéî¯êíýú;�sqö4xù÷6? õ8fèïî´þ}s¼·oç†øøƒò‡¦~:|¼ì躛ã¯é­ù�øï²·žìêæ_µ†woà÷nkpm,vä­‰äu2 …xᜥž¢¢u³+ü*:»ùæ|rùÿ;ú�àßú]¡¾û7±û)õùýó�û’`z·ao>‡?“û²nmä(yîf?/c%|hj`¡ž¾ÿëp$�eïýh!ò[ë«n÷î©×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯tr~tü¿ù_þ+ö—ëäû§ylî©þä�û{,bnæèÿ~{hõ¶?øhîd1x¿ò•>ê꺈qðiñ?ç~÷ù!¹7®�üùwñ'²ölûâ]óòge`¶®öí}µ}%-fs‹ïåꪳñï%c!œ"ós¹-} û¯§â »á‡ó}øýó»å/külèý•úi�êþ¬ævµ/lo�¶û+nv+šûøší—¶3�o¼ÿoäbü�tñd+é(…d*î�øìrëî¶èua=[¿un½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺ÿó½/æïÿocÿ„ÿ�âhùgÿ¼ïçï~éôø$üº­ì¾×ø=ò'ç�ó¿ªþk[£d�ùôk‹ú°½ïøuûm‡ñxý�½ëpù®�ákšåayœéã"[ml••‰4p,™*�»×ûõ»‚磢»úçnv·à/øo§w|ñàç’§ï|áàütì~îììþ[ �ã8{×pö`vþòîoœ ¥ãìø6,9¥éhi*†™'z� ¤íî­z4¡}?ÿgûç°øø=íøÿz/âïãå‡øùðhå0!~p|»þûo¨¶çhÿuòy=‹‡ø¯·vˆß1níçco¹"”îzˆ¦¬è¡ª¨i¨ '' çâ.ïüûã£ÿá,ýßœèî,ì_">em¨òyj†©¬-“ø;¯eíla™ýmm‚ú¸ *pnv d›_ß¼ç[83}ƒ­á=ï¤ý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷açivottöî®ì.ëì¼êþ¾áuâÿ‰ožòý›odlì5}~bÿ…ûíë»+ñ˜l}]fvª()|“£éq"$wvp}öà'g­rÿ’êÿ�ýsü©þvbóþºîï²7·í®öìübåoí«qù]�ô8m‡¶ª+ªãùp×vîa±·rfqí˜3p¯ük#hpéé—_lusßé¨~> ™©ò9}~ýöÿssovfvœ¸œ�v%5=#èôó4(] e·ºùñôç×t¿é'¨»^þêúÿå•×�¡$óõe¿vvàøí··f>ª®)¡®©ãe±™j¬ùª$odð5n¶ò—¹÷î¼|b(kn¸ïœwò8ìíù�ßý“cü¨û}nšó’ü»ó|s|cý›³qdz8ájüîãï%~c/zðäˆe¨ši ¨°ý׿p`wùôf¶ßì_€[7nà6†ðùoð÷jí=«…åí½¯µößxt¶ní½»ƒ¡ƒ„à`0˜íïk�ãápøúx©éiiâž x#xãue{­iocó×û=? ?ï1¾+ÿébu'ÿeþýö´·ðž½þïoâoûìošÿúp�iÿùw¿uí-ü'¯�³óð“þóâ¿þ”'r�ö]ïý{k� ëßìôü$ÿ¼æø¯ÿ¥ ôÿý—{÷^òßâz÷û=? ?ï1¾+ÿébu'ÿeþý×´·ðž½þïoâoûìošÿúp�iÿùw¿uí-ü'¯�³óð“þóâ¿þ”'r�ö]ïý{k� ëßìôü$ÿ¼æø¯ÿ¥ ôÿý—{÷^òßâz÷û=? ?ï1¾+ÿébu'ÿeþý×´·ðž»:>§ì_‹‚xù ô‡€.oü}ß@¿uí-ü'®¿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øoaçi|�þyýá³r=uüýùðs¶6^ji²{/±ûc¡÷®ö®¨¢”ocuq‚ü{ƒ#�’®†  ”çä‚@xïýlפ_lö?ò’øë¶rû7¡û7ù}u×ü:¿¼x^»ì?�›r‹r—žhîuãæé_péöõjö�„mãg§ßºñxƒð]€ú_è{jgp»£kíÿå¶÷6ûëc³ûwq`0ß0ùüwygšâåñôôùv[�¦žzj˜$žh&�]yaë�©ý/çñèÿg§á'ýæ7å�ý(n¤ÿì»ßº®–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá={ýžÿ„ÿ÷˜ßÿô¡:“ÿ²ï~ëú[øo^ÿg§á'ýæ7å�ý(n¤ÿì»ßºö–þ׿ùéøiÿy�ñ_ÿj©?û.÷î½¥¿„õïöz~�þc|wÿò„êoþë½û¯ioá=e�çâ©’y"ù�ñrxébõý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]kçÿâo�“ö*¾‡'añ�9v:²š¾š�ô÷ò_ ]éqo/šnî’ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]roøm—òuœ–o‹ùå%$b�óïècè•9õúz‘èþ¢üsïý{å“øºãÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�^ÿ k¿“ÿýâîsÿg÷èoþú>ý×¼y?‹¯�ð5ßéïþñw9ÿ£ûä7ÿm~ëþ,ÿå׿èïäçÿx»œÿñýòÿ¶�¿uïoâëßô wòsÿ¼]î�èþù ÿûgߺ÷‹'ñuïú»ù9ÿþ.ç?ô�|†ÿí£ïý{å“øº÷ý]üœÿïsÿú?¾c�öñ÷î½âéü]{þ�®þn�÷‹¹ïýß!¿ûhû÷^ñdþ.½ÿ@×�'?ûåüçþ�ï�ßý´}û¯x²�s©?á8éþ†ÿ)kkñ‹7šñ¹=õò üôqdñù„ˆ3ös4dd1p>¤*ä&›éfý{å�âëÿöþçkö§]ï]áù;jnü.{yôö[o`»;ncê|ù=•˜ý{_½6år*)§ìmlå5l £�aýn‡¤lß&ú´ínã—µ¶šõ�hg;löîõûöl&åüo‘«äv.92dòe‘ú¹:)`¨‰øè f²ßýz† s= tôyz ,¦6ª ìvj’š¾‚º–tž–²š²¨¥ª¦š2é4h®œ¤†r÷îµô¿~ëýý�úýqú¸ýñ•ë­ãƒýøý—¾·ÿyîºü5x¨§àïþ¼ìômýíµ²22 ‡)¶ó4’ar¼ªºü¤î¶azéõý£×½××ûwµz£vá÷ß]oœ\y½¥»ð«žåk,°¥m쑳âf…ôýa¤÷î¼a‡�mýëüýañó­7gqw6ðæì³ùpptî�ý˜jù1øx2™|~õã©kk_îózztääé*ñk‘î¼&ƒ�bw¿u®½ïý{¯{÷^ëþý׺voè.•ßô���ú�‘¶28þ¢í|¯fvnbzöäpm.ûâï·ér;%[š�jùè«7^6xžh樬š(�äm>ýöèe1ðåïýk¯{÷^ëþý׺�•êcpxì–o3_išãáè+2™\�}dt”ìn>žjºêúú©™!¦¤£¥…¤’g!q’@ý׺/�~võ?ë�ÿ“웃²&ùt¹z|&çß�gù]]‡ßøz…�uêwë¤ow|œøûý�k¹;‡©{{cvxlìžêäî­íµótùëäç§í㻶ß_íó¿7–^›´6nüîníõ�­š‘¿þhuïꞸ�µ:çù˜í¥s”“�~òênåéìæbšägqû‡€ì½·¶rùí£œãgijh2ô‘m�«wdil°í~ëähzvc{£«s½ºz¼ñu}á²vnùìmó±#zá–ãì­ã“ía¶þ~¢g¥z )²y-¿whæy¢ð­""ë�uêwë¡cߺ×^÷î½×½û¯t€ìîô뾘ùõ[ÿµ7~bìê,¶×áuî=ásö˜ê|æõý}—µh$˜+‘>otî *(e¬f¨[�.gºøàuíóú�wö•ý��ß»¿µkûs}ðu�]òåê~þ]ß¿ò˜\îâçíl2éo>z¯¶kê�r™ù½�÷^¡5§@òùõð¿¯{¢—ãæõù-ô›oº*²»�vkuqå• ü±á�kíìõjëåíý縚ª±ç×tsöu ˆlq°š"þëzz•¦:7~ýõz÷¿uîš'x|ùøcý=³yñ�sòsª7ßkò6ähöfßüôõuùy6tíì‹kõ•l^ï›m´nõéšž±©£šg�*g#/º±v¤c£o‰îa3ñvoƒìbópcò™ù­¥âö6)å-sãda:spöï@õ'äüùµýe¸¾7ö=gbíí§þœ~sâi6mvòä÷gov¿ñq_œÿ� ªš¶�øef(@·×°w´ ùÿ±ñù“¹û[äàÿæ’ß}ûùñãò¿îwô{?†ªúpb›®qÿ*¾*íý™µ2i“úyjææõäù¹rxqk=+.iuê�tz¡o¬´¸ü?ä=yxw–ôþ\ß$zo=ü=çø½•ñ±¾0÷æîüy~õêí9ó¸�]cº~gmýß‘ìav†ôâÿìžžƒr`b¦¥šš§àñkf–$2ûª¨êôq¿—}wyf¾ônöù#¹2{“¹ûkmu÷ð\˜ wú‹ûy¼§bm�c�‚*·úû’‹”f€ýˆ°ëmmdÿìÿº;o¬¶?ç·ê ý7xî�–_.ú�âîc·é1üæ_ªvÿ`ðoþéý;ný6goa¿kq;1ñ8²4uôpå2p»àìªgºò€i'ètbûwý]aúß.þd~wü„íž«þßëcy|µû;ó}dºç+ýýa»6'a�‰¸¶`ßt�q‹æåúß¹±zaû:ìmeeæù‰¶~ ü&þaû§æovoýߺ>]u·uï�ísl*~œü�)¿>snn‡ïíœö¥&æío±ž¯l….ä¨ëy©&ža§ž hq}öè2é:»p|¸íl¿óœìíîñê,gá½û¸³ÿ6/^ãzôíš\îëø·±{pã·÷÷—dçrû¿awd(äc])–ºº¢ ôë4^u®ñáöñéó¶>]ü�ùü_:kcm¯•tûs{ÿ.ž¶ù¹øô�÷wæ]�ú[‡{öþb §‹çõn³è1ýk×2qõm-&¦­«èåh¾ì=4i}uàqæ™èdì×�4y>|n­í�©ò-3»;¹»?ò‹ð[ƒã¶;æ^ùøù‰›zcº'{b7»:š]å-9áwï,föéå’èk«@è’m ßzì©¥8~]ó#eò¿åòpètëæ¡ú}ƒñãçìp|‚ê`ö5/èœþøàñü~ ý;z·øîâ£ú›o´>ç >)”vjšw¥ª¨�~ïebkó­žñ%g˜ëÿ+~muæûß}*ýí¾7¬¿��—ãÿ‹îãüòmº�ÿ½þ_,»ò…þújº]á>3ia 9fšž�´x)>ê  )§âè nnàù'ð¿>"w^÷ù™òc²7ïî�áð»oöµfóú›+rï^³ø£­÷�cö%?ãþ°ûýsÿüòïúý›k6zicýyzêlunz––ùú4�‡¹*i©s¸—¢îñe šxr`¦_uì=hãsªìùåßpw{üâù?³zïäæòío‡=»ðûgàþóëï�½çù=7œÿáfëéoo‘«�ìý›öû‹¯1”�•¼÷nêû•ïw�"ž›lõ� %õµõôp(¨¡ãùõ·/svvòî¾­ëžâø5­’ù©±v§bmçðyjvæòáðî4µkqwoiçä#ò¢k"¤—pæ×÷¾™"„ƒç¡ßº×u3ð‰öæ+üåheeš´÷?ãü¸£�„ª8œ�ã®»¡çå;1çwvá«!†{x¥–’dv-…÷wo…??ðõwûs´{‹¯þöwçþó¯ê­ñûÿð¢çêº>ãâcpûšžm�ú¿6r_-"ã³õ¸må�®‚�þ„þ¸ãh‹éf÷®¯aqqø�éñ«îö?è�‹¥üë>8ÿ’ý»ý˜m—ü²åù¡ó›÷¸$ùy>êêþèšöøù¬~#=µ6†ðåöíê¬ï_peé)' ’,|èc‡lm “}v€…4ó§m��}‘ñ:³â×x|�ì�ë¼¾?ü˜þtøþójmå]�‚‹òããwocû³{ó㲇oy�ëw¯wç«åžõrwåðçã… ºö�ud�hû�çæswünø‹øuÿ0÷–ô¨ø7'í�?ˆ;«âç_÷>k³;»¸÷>/ ±ò³äfûø˜lowü�£–lh¡à¤“ôui�z�%$qß]n‹flq¦z[öfÿþe ôßë#¤ûkµ»ãy÷‡ì~ßéçß‘òt¾�³w?dâúûºk¶éý8ýƒ’ß}i�í|ÿ]ch+\ãê*±”[¦ë¾þd‰iýï¯�ä €:¾tä;óâogí|çxwÿîj�‚�yó�y�â|™éì¯lî}å±{n>æí6þþ¿4puýy6syml†§kc_žûõø::«²“î§j´×za€5�«‡a—í­ëú=¹µ¿ácw–îÿˆëî…ø±ô›£­ööù©ûqãèñû“áßho=õ´'9�µœi6—df)ãlà� ¯–%owoá÷¾¶´§ÿùzéó½·ð»«�•�pžûí ûñ÷qn}…ó�%pý£–ùõx­·ò“¬ö^×éíéc±öíjtçràñô’h>ñh÷lsõi®ñëó­a‹šgüý�å¥ú�ÿò§;/äöýýy\þîùò¶÷ÿçm·\qÿi±þ6íüü}kôô8á�¢§b»ç±åüò´’î]ów é'}uàä:uþg"ûâÿä=ûøýks�âöw}ô×qí½í�äåœû½guý]µ³zºnëîbêuè+`ùt›ªjêxj–j9ò)mdrâïû¯ ¨xttdâwwæošß~'s|àùýýgóo¢>qònjþ×ìõ®ãíþ‹ß]9¶ö†wo÷wxî¼/y`(ðt8÷|¸ö¢éðdq1å–žd¦reqî­‚¥´šž¹�!ž¾èí?ƒtûž³³»#zsn¾æù;agµw�vö©û-öwë_�˜šüžï§áí,z›#¾çÿïó�]y_õ¨¦•)!áã¯h{¸�ª�yÿê>„á|¥øåý¿·.o)¶°]×ö{»­ò;‹�ë•áeºpõxäìqsô‘mw66iöo„g8c¬h÷t„©ÿó7äçâeìïž_+º‡§û¸ú3àvü�øóß½fÿnwžàøí·0ë—ø;ó¬r�7wxîçèòbê2pdæâdmí…¡�gºshl©åzf§üÿ(>;må³òã)ó/·{ë7ó½þ3õo{ôöjº7?ˆùc·ªrõuý ¶°[nçzëýd¤‡%š”eå5uj×5c;‡÷záôºxðuï%ò«ä 'òôþg}·sú»†“³ºkæßëþ±ë}û)çsf6vðú&(¶~èúø½tipaöýzñq‰#y¼r nƒï]zƒr bƒ¥æk§3™�çïn.ùîü$ÿ/ìkœ.'×pbfåàþtc±tô⯭«²móù÷çµe} ©\ä••3�úø¾¿‡¨÷56åd‡�ã»f—+´²û»�i¿1u³qäz‚—p½øü;+1>²1cž­ž“ z:ð¬µî¬pèqžœþwò“þl_ú×æ7}ì]­òc­{ë)úûþýy–ßï´6¯ç>µßýÿ´j“bã6æm¾¯wc·òuxì�fvµi5sã _u¬w’£lùòçä'ã½ÿüè°˜néþ]ácñù_|lßeþ‘ ûyl­�köe;�iä;sz¾m`¨³ìµv>“+žx©éhª…#ªczb{¯ofÿ;²÷_äÿšý‘ß]±üé>on]½ÿé�ž»»}döçoöen²7fogcp»ïã~ùæõ%%>1¾r¹éð˜|m.c%ff‚sµ©}õx°awòûî®ï_œ½åñ‹wî—õ}[kñoª»ûla>qóôý_xííë¹{o±vz¿oæú”ï�w›ämú1?&òtsd¨ghâ‚7�¸÷ÿ[`4ƒš×ë«nè-•úýuô'ew�tiò´ð´»»¹¥ëí¹õr睊rùº ù6ñ©¬û»vjee=jyg4þf³èà{ª�aõ|ÿ;·x?—wdwlë +¹þeò•’‘.7‹ù‹ðõù?ïþþü{'fæ7n説š¯ew&à¢ýðbë åõÿìãî‘òèëïïýlqè80_w¿tßm9ü-äáf¶öa§zö'%…®jym=rñå(æ¡©jiàcâûcøékç¿uãówçòæþ??—?{âºó³þ?v,ý�ó~\u„t»[¹úï7ƒøûërâ¶ßmõ¦åæn,ï �›tûÿ)çêñ鯣sâoë]¥³~aîúžðíý™¹;¢�so�ƒô¿¨>4ïmßy�þø¾²ø˜¾ý“ä6þêu&ï–ìnblqüy®"tèóé÷’@»ëìj\�:ôçù{ëæóë/ç-ò/óg»ºæ_�_!;æ³ã÷\m�[�qå?mt'töìûk±#ïllþozìœâu58¯¼¤‚�êjêxí%@ñë¯ 5a§ˆé�óß�,�šå&oß}‘ñâ‹{ÿ(?‹½‘½û£ñåïíâ3ýïý:-»…ýûßno‡ú›ošì­e\”t†¾«å9ªž�'÷ÿ^ànîé#óÿ0~s|�ëåÿñ“+þyí�¹»ëå힀íï•[c´±ý™»:ûát��.lš¬žüéì�±ùýíc·¨`«¯‡>|§ë¾ãêåúò>ûêm×’îmù²·¦ûû²‹¬év¥^ïýóuå,“cë°upaisqm‰ewmõãm!´š×¯ÿðüwä_òèø¥ò‹|óö‡eìýá‰ì¡…åí\¶ýênýíž’ý[³fb+*«©6nõêõ6óùòîí½µ²ˆò¼o=*he4°û÷vã‡p{'ùgü/í>«éî�ü}i>7¦º.×#¸÷&üj(e(žÿ‰äæ¾¹jeñû¯w·oï£�ïýwªðî�å]𛾻rv–üë]ók¸·õ\½¯œø]åü]a²»–jlt8zví­‡×›ëmmõ"c©£šyk(úzè—åtóâz6÷vàpœæcãwhf÷'ç½×u°1´yoš•¹þ?å�«ëm¬[ç¸:ó#õ9*vøûùfú¬ä��”—ogyisme†§h¤dqîµsœñè>ß~.vméföëîp|·üoº>@ó�ëøxñ¿3}g‹ú8n½«ipû¯>õ]¿a±qkãã>::³nz¥f2j_ý{qï”ý»ñ'ãï|v�ewoku½ììï�[‡'ºz_uë—üxº­¡™ë¶&zùd£âf1¸íéhk°5qrå`®¦§¬£šx£iwq÷^@ ‘=ûðoãïèíõ‡íïžì�­ùøœ>í~åé^íî.„þ™ý…j«,ûuîœþû*»tm+«ê$zz晩z¢v¦xgf÷[@§—kü_ånšãîî„ßt;6¯ûùñ“aïnµélífñßj­¥³»ƒiã7ž:°å7%jï ¼õéæ«öææfº6��&y%•ßýj§?>ƒïå÷ñƒ%ýðwî[lï¼öì£ßôý»a´³½õüù¾–æ÷âzûæôfw~uõaãæž9)ra•©*¡žªž­dþýöõs¥sàçåýåõõòy>³òõçéžîü}ñü¸týûé*·'knœæýüy-õœîÿyž{fæ©÷ñæwðœ-n>ÿye´‘âà“ôätt¾j�.šÿøóñ«áæë¢\×mìÿ’ýi½ûg;û}™¾7·csu>êên}ã¾j°›»z�︷žýßy ³„c”¬ðaaš©ó¦c‰=õ•¨kyó«]dxõqqb" ¨ªuuuà÷î©ð?ßú{ä×[å:“¼ö>;�ì½n')6"¶¯-‰¬ í`2åp[ƒon=»�ãî}«¸ð¹ u–“#œ¬¤®¦p|r®¦¿ºø$ž=ý=ð?ãoia»?µö®ëüyžëû²»k°»o´ûc¶û_~íqùluùìv�bîýç¾i¶þ/™©šžššº’–�êd‰rd>ëe‰§fªúçdô§yuçnõ®¶÷]õ^éúýw±p/‘êf´6f‹omìse³•¹,îm¨1øb5uôìwt’;’çýtš’o‚ß“¿:wæã¡ënôän¼îñ¡îcœ;k²»¬j«‰¢­ãå°¹|¯[n�©“ìí�é·²•xüž6ªyi*)ªxèyò¢÷[w#¤�p|øïý›¨ö&æùm³iñû#¡7?uoí÷ô]‡óê|/l­\ö\î=·»öýø%%e*õ½%\4�šˆ¥ñ¦ÿu°ä}z‰�þ_ÿ1}'‰øóeôñåõ˜žõû�äø·þ]�>âï÷öþ8½ûœì}é¿ê7t½�¾÷dû§kqyw™é×i^�$5xcëúšµ®zwÿäÿ�]©¿7�ev/yâ÷†ïß½˜ø¿¼jóy=ãu‰ü¸7û¯1°2tæi½5v~¥çjå¡\¢ßæµ"0{­fóè èïåéñgãïbí^þëý©¿ò¥²6^æë]©¿;'½;ã·7­÷=f¦n¿ ›³{uòã³ð0íê:|m‹å�š9 3uuë?ºùf"ž]+¡ø+ñb›ãþãø¹mö eõžúûý“²6:ïnãs…þ[[²äíü&xîi·d»¿$´½…3ךz¼„ôòðø×:¨e),oºùv"•èôôÿçîÿøíô¸ž�ê-™m¶z¿ ûšjmµy‘ínÿ¼©þ™üæéýµ™¼¾íèçs›‚·qîýeu\µõ5+ô2“£j�u¢i5jzyžš)'kè=õ‹ƒã¡££ú/«¾8õýtôþúm£°±»ƒ|nš,f·à0fû{näýõc)¹ò¹œä‹”ýû¦º¨fõ 8›å ¤(ˆ¾ëd’jxôýú=a±;£¯÷wvön߇tlmí‹“ ¹0svd±¿}bòå:x2xzünc[kussõrtaumº–afžxþêêvhœ+£+ª°÷zƒqç¢�ð?ëoâæ¾é¦íþ¹øû»%ø8lv[±sý£ü¹üòu^ûîqážëmþ©¥í]í»èºÿ�çáöóižžé¨ý©d�©ˆ„{«b(n:géÿ+?…¾ßªîlßzîœöb»}ïúµ»/ü�ë”èú¾ô©ý²o™û§¢«·ígso¸dý2µqfä»?qößqû¾ý×µµ)^„¯�ßêz§¾þa|�ý[‚“9ø_+7ß_¼´˜t¬¦ûûw©ºcf>äéý³-qyê7oùär™à=s‘êãþtsn¨{³¯wÿì=åôž«~×óå·þr‹¨3;¦·®6öçß9j8*²yw`lœwdvvæ ùxwþ¤øèàé"dª*´‹{÷^,obñø}ñãbäþ4æ6¾á“‘øƒõyþ“øõrû³zvÿpºûtmý•µ³›~hk· l®jü^â`ûìòäkbûbñê²k+¿ºö£œñè$ùßë[âw_vt�²vßfmse¾�ò–/«ð ;ßñÿùï’—+s¿q�ñý�mô4¹êêùkéãš÷‘iövgou½f”è[�‡ß$øß'ºøììù‘žß»›ä^ níé}ý›ìý……ë=ï[@î“ú_æ¶fþ¤¥ñáfçclñ™`h¦f�û­j5¼:û[ùbü5î-ë�ß;£¯7n°¶ÿql¾‡ú]‹×ýïýk¾ö¿rl*ýã[ƒùxmñ±·ö)kœ©;¦¶,“3¼ùxdd­yäx½öã°óçkm×ü¿þ$nþ„ëo�5}giƒê^–¯ææºs²·>ôø»§ª÷6"¤xýá±;in,?a`7‚¶j²yòqäþòºj¹ž®iúiuû¯jj“\õlÿ/ï‹{k§»¥0»?we€îþxö¦ö©íþþ­ï ý¾¶åv+·7öãïê�ñ'sun½¿•û4u)œœp4)ö(y£ouíf ôý‡þ\�q½'øý•ëäýõý«6éû2mºäõóåéßöè(~ùfÿ~ëúš ×®¶·òæø£¶6~'gk´7¶ò�ü]]߃tögswavsµºw5{«7{�níõ”ýyª-—[­&&¢©ðâq½#+¸ouíg£iñ}]eþ™¿’tûi£î}åõ›w¥rûàæ·­wzí]õ¸·¶n�¼ùvúð5&æýuõ&²:%®�j#yš$d_uªšsë¯ÿñûkâwnvfúù¯üñúëwnüžwdô¿pünáuný¬¢‡eá÷wån·þ[’ƒá§šq_tdê+¥¼‡ï3�@${÷v icþ®=n þbû—¤>;w¯pw–?²»æeþn}ûñb`6u>¯xc6îcä–w®úûoíüul˜zlµ&ó秣£2­em£„h/­uõšô€?†½óú]å´>põ‡qô�xürî?ž_s�ï’ûtûï«óûû5ó»›foép��ô{ÿhäw®å¡þxœæ믣ð×ç›lãùäwy`÷£n>¹ïo[˜‹kvçôúqã�‹ó×dtÿå%¨žž sߺöƒs‘aðœ¿>{6»¶1ý ·~vváîýµô[¹ûë® íþƒæ些lv&ðü;koc¶ö_3¿(6çng™vžfº�áupciiòžë"¬ªž˜{¯i®¬t]>k|çß]-7ó�ý=#gý½‡ú�ºk§wîåí-×[ººç5µ$ß;3ªö·gâa­þên|ü8jnàáôç%àripr1taí,ôáç�—ýh¯åc㥮'çæþü[k½7öïèžúìý·òÿ,—âr¯rmlo`n õ¸ñù½›´·çamí¿c�¢¨�®zãxîjê,íl¯®ž,5\áq‘=ö´ðž/¿˜>ýþyð;æ�fuîz·jïî¾ø­ßûïfnlo„dvöéû]yºsý¨šxv·“£šx‹#"cïýyrê¯eæï~w\ÿ*þ¾îí‘¿3sµ²ïð!²;ö�hfz¨ög{|�ûûôh³rkfsá75}-hx€1u8]7×—[pò˜ïe�ågn×óù%°{ù“ö‡á. è¿ˆ�ùû)¶¶ðé ·²ë7vòü=µiºrû«ûûwa¾vš »@ÿgk-5s¨ñ+ƒ$z7õ€ìr¤ž­ùrwwo|œø;ñ¯»»çµ»®hóû¢ \d»~ÿ0‡#’¢ào8p336=ÿ¶)(³¢œijoâ>4ueuêœbƒ�¿û�‘wüû{o¢ª7nn^£âÿ/ž—íì]±–ú4’÷ææéls×v‡gb·^o+�ú[k¨6u^=f^¶ª@!ãcžf©šî½£ôùw¤¶óþn¬:+¶{c³ú#¶ö·e|�ïî¡øÿý]ž—moë¶ó½ó–úgdn-£žû9 í¯øû�?³7…6_ü6�¹¬�32�þý×´@é]‘þaµžìô·uuüìì_éîíû]«øø�ü=éð¸j¼wvõaúðä÷.k°fó­ùµ—3[½qôôûz–i²0h*¥¬ûjjf©�uí#'v:›º>df±ÿ5ÿi`vwèü÷hó�.µï(>7�¤žäuc¶o¼±;nx2xºúøñ©ß˜ õ–†|ânçûã ðs­d²gp}שûär½ÿ‡�í/´³ÿ >üˆùgò9ìè.ê龘êwf;ö´»¯-üu»¿o`{rm©‰ýù]™°èwö'„è&qqõë˜j˜¢xbd>ëlƒsbôvð¯î��u^t¦ñù.°jÿ•}çù[n³'eýãæòï‰ñý_·�ãwvå*wl¸ˆqxúiªt0t§ou²ƒqà�.†(?™�×ú¿.iûûã·dtgy|aøé–ùoºzg9ºzûxëø=5k‚ýù,vêënãùìîòìsvæ¶un±j ,øì’xäbû­høhpm:wïî¬ïotoeööìéÿ—?zßµ¾[|&ú}»¶þüéý½¾ûƒüý—iœ¤›ym %þ™­©ôsh…³xœµo;…¯ƒíì^iöu½4$tcñ„ù9óóz|y®ýûë|ü;îj¯œ]o¸ö†ûì‘´û×¥èé(†ðîí}·m¹¶‡uõoóøûóhã³[êšž¢¡)i*ùâ«ðòê)ðï‹={zi{þ»¡[ªû~¨úƒûq÷\»>1ðµí�þy-ÿ'xroõê3·mãæ=r“áš�jáê#©�ú}û­s¯dëämvoc�0߆ù]ý”ÿe�åðìÿœƒmv™óhí‘øø“·:wu$±àðç¹û'··û…$‘|þ•uˆôžêà­ê:#?'þo|…ëìßç_ò«{[wìþ´ø�ó+ñ«¡i°íe*ÿ¾¶î—±;ã´±þhª>|{ý›3ù] ¾v'ó‰ø—ñg½ºþ¯tc—+†ýû?äðçö&ä¨ý=}žèmíõ±óy*wãpôuôò…šux—þ�xóí=¿æóúý‹ñÿë‡å×mu.ìéìnçøýsw™ú[· öã)�êö�wpš¸*iöu§©u‘­ªã›~ê¨e‡mì{¸{3©:ïâvk®7~oie7ßïïƒýc»«1kh$îìåîl{ízµ¨¦ž1œü˜™þž  g19 ë�~ëêõ_cð}û¿í#3±»oævõ§ã.ùïz�„qml÷vní¥¸z¿mm -—¸º{nw¹,nõýxl–ãýôø\äñsíü}-]epço+½:½2ïî¶ kõ7||æùù_�·�[v|†þã³þü‚ùqõýq´3»?õ±¶±ø®¦ý[nƒ{휾»qïúy*mãmo·êெ—õê’­d–÷^ hkn= øoæ%õ»ón|ü=q¶÷ö?ì¤öìm-f.‚¯aì¬wå{;²w–öi¥šéºê qy*x˜åjã…åu{­i=õòè*ø¿ígmïl�rïy¾?öfýø£ßý¿ˆé’ùg’üýo>ynýù›®ú½wœéõuæÿ³¶�]vvíç51yeyzªšzªzhjõóýog^áöm£üïäþ[ëä�'â—uoòÿ{'ä?]ü…ù c¯âù›n§¡6nsx�±·r»ƒ¼»#º¢ášy(p´uo†“'žj¹4ôéöþëú8g'¤×cüýþ÷ù�üšù¿º3¿>6õ}æšžûëþíê¾èè]áù;“jîm¿“¯‚]ƒ›û™­ég×ý¡€£jid5øúê9*”ãsêò`ðp¿1º½ö¿í߆ûjÿ1ßžû[f|øï/‘ô;ëmíþàéúwyav�hötm­¿ô”ïòáðø¬î—‰•9y"3�¸oºëêf–:f:¨ÿ˜î/ 6fò†n¾ùòã7ä�ä:¿¾qïmáó#qÿ|öfnƒhvféªëül»/vöv«óùé7.kƒ¥&jj禦®ûye—}kmo òèåv¿ïöýï]÷ð� ñk·þsîn”ú;;{÷ök®÷xí,g\c; ‡#šù;k /dîý°{²7ûäo’‹žò–jbõ!ê'ºð\m:!ió¼zoç×óuþçô||¡àì-›ðû�.íâï]­µ6—nì|gç\þæþqã¦ì�ï�ãóï-û•¯3óíì5envjz¹çñ˜¢5êúatí8ôowçódùxù~òt§eö÷輯ﮠß]»ñ˜m‹&êûõôøý›·úçr =ÿu½w.³)†3²’l�mei‹ü:xâôôí�;³{ô¯ï^‹ìn–íˆÿ)z·àÿo÷þøûùmï²·lyî¹­ø»ß…ìî´í¨üyj‘ú›ïhë`sc_œ¬4ògäyc§ºðz ôw¬½oó{pì.…øñ�oó½�òëå/dü!éžðîl¬&ïú;cøyñl•�ìöÿcv‡iç18$ü;ã"´té-ns%\fv�#�æ÷î¼w,i ¯kø�šçëôfíì�­ò}«—î}éòs!ð²ÿâþj³cmîâûÿ(öì“!¼z÷un¼žçn½æ`væþúù‡îã�©£©ä¬â�5bsû÷^ñšw¯h�½ü×–-­¿·�müxí�àô÷ëþ«ømü™wgc·dx¼öß—1¶¨óñáw&7í^¦§ìn ú$æíi2·xiùš™"¡äpõõîèëª)}éöâ ë^ž¦áøïü°ükƒp|«þb"zo�íþàù ß½±ñ÷?×»imšì,¹œßzíº]ãö]…5huƒã‰žßäjþžjú™d–§åº­f®õ꯫·�îî¬þo=÷ò_•_!(7�~|€è ïš[›ºhnníéïžý•ò/¦ú¿iå7…uëú˜i·_fììåfr³˜ø æñäá¥r*d¯¯.¯ú\ �¶ðùçý{ÿªþí�ãÿ]ƒò‹¯?˜ÿ^ü5ù½´0ãe>g=‚ëþý“=] ¤„u×spáq[§4qå�t*ó» rþ÷õt€zœ)qõò{÷mõa_1�˜?o|jþdû‡ãöåjžäüýíðûãîøø¯ñ¹ªú^×ü ìî÷ïì$»ãxî*�²|fþâì}—÷y`µb¦¾�´”‰÷2æ뮜u*}z9]kò>œ‡'ñ7änúß½ÿù]mðç-ó/||žýƒkðc»k�ߦ“º×kíœ\´í,wyæ& l~,¨†‡‘ §39�ªgßz"½ã…ió_mÿ4^´ï>¨ø?ø»®÷„»‡æßnîî¦âu�mn:-ýõóõ†?±r]å¸wø†9éá ë:~¹”uàh|†øa‡øùû;_åãtæw±ú÷¿÷ç`õ†_®{'«vd}[òúû—eì~à§üû79²ñx×èã*!¥¬‚ªœ½�$ˆþêà©5qðv?–gnã¾/ô�x¯bl ñü”ÿ짭?˜wè}ñs{jll®à“ä_úpíí¿õ˜ªlfäëaiai9 àá‘h~õ©äµ3òyœq{­ë&˜¥:¾@|!íž×ùó¶öö{¯¨¶×èå…7âý—kšën*|î;´çý�ãœííkaµrtt[ :>è  wkqy�òg0d"4žëa€|ëñxù]ü°¾aöç惻'¤{3­zçäoç.ˆÿâ¯hïœ�^â]¹¸z·>>qt�èfïërììžf¯5e‘äãó»]ë±´a*èùèävým\õ=*>_ÿ,šíúß;»§þ8|qù3†è¯žsüy­øãòæ–‡±«úû˜àæúûqu®ð—ª»f�eïý‰=uóáí%v/%,^hy_ºò¾$šÿ.•°ü ìj©?—vsnõ7ä_�t¿þqïîõín¥øðùìwzc‚ýcù^émõ,níég|µßt=yö_võv6›kçóÿ8¥ìžìøÿ+~-tã²ô9­ýu‚û»w®rvm5}lri‰å¦íáâ¦w’úö˜žê§veò§°�!z'º:svõãvïuõw`õfs%@5wcq]…µ2ûr¿!d†hcõðóešxôº«:m‰÷îª =t gãÿæaþýqóÿ ~jv|mûßz³5ñê³°»ïª77ef;�»vßç}ñµ7®×áíþ°ü;µº·pîì÷_bîrº\¾j–�^o°‚¥gº¾¥°­z5ëð#ºÿ˜‡v|´î ‰ò›×[ã z'®:ë¼võôþ»?|õ¾ä쬞éîežüûb§ ·i2íùg=]fj©ê:ëjš[ýkw`qæ½ ;£»{�·þ_å»ö.kü~êþàäõ/ç츬þ#{v4û/jqð÷îàü©–ìöãò[{û泂­¡¢çãqú…aa;û­\ç äÿçÿ•›wå®?æÿãš^“ßûï+ñê��©òýë¹·váänm··;#ù;wìmÿ´ööó“ ºpymñ–¦«£® ´u*|©$˜³÷ušãö�è�–?è½³ü³þ2täß=;†ù©ð÷º£ïþ•ìzšýñ_ôðo8;£�nªü&o/>çmöûsuõgaä1û$mw()#�'êúæ¢oâz“ûßêkî>4�/ý‹²¶�@÷®ûø)r§3õÿ&ñÿåºcäd½£²k1½æ76aöó¬àn�íøu)º1–áuš|¬ ï ¥wouàùn ¦îoåßù]�ñj>±ùß>ü,þy–ÿ{ò»aüwèå?¹•[¥û'co\êï}ã�èž»}íùÿãðù z$‡¸ä(…`v’qî¼­içfù‘|fî?”xlåù¿>'÷nø8å6ßþ}ùù½‹ô½±ñó´ó =mõ–êø�]øµóc±8ô…§£çu`²“uãû‰`,±{­)5=mé?…�ç×�,:›¼û´ð½¥ˆøÿë/c|/þ»ë)u›§íâî·ù˜í帻:¿ >&»tòqíq$²æj2_9g†e½c{¯�z)_âhtßòyùðëæ%oní.®è��ûïö}ù×;÷tçryl_^c¹»;n÷>ðáî�µéúó1´w.3]i�£ªí8« œ™´ˆºëuã/z5ßê­{k|3ûáý�dùósî—}ûr)¨©üýê´ûs 5¶¢¢úýyžàc#¥–i%¦4¬œu�eßzr5ppé‡t|}ù©ð¿,>l÷÷äõ·cu¦;fuß[u�]äj6¶»¥ëm��ú8ý鸱˜o²¨ëäÿ…ã맨‘**¢3‘3±�‡¿u¢jxõy�êûznÿäãõ�ë³±·7z¯mu®òëêº=éo|õgbu‡fqöf‡5œï`°9-ë°7ã†'/øèäz ê�;*j÷w×þxpèbø�ðïp윯cwn¿�¿ë§á�fçéííõ ½>!†üý“º2‚¯™júœ�úé(0=[’l|u°áf«é×½]51¨‘w÷î´[‡q?oe·`�/�›øoˆ� úò­þ4í¯��ë_¶ö.èø霃°;/sõ—}ìý«²·o^îüojéëm½ÿê–ß›cwkö힥üsãªé#fõ’f}õ‹®¦9¡èlß_þv|œå|èînö'öýõòcà6ñø9ðýk±·æíþýyõwrroìývc²»^¿®ö®[ug·_aîš)j¤æí¤ƒ�ç¬pšù°÷zô£h¯f3ä7ã®ïí��ß z�mæ¶5.æøýòàïjïšüæs=mƒêmï�{«jæwå.ôª¤ûuõõùœ•oáqõópãpådòó\‘¯nªçô«sæ/ò—ùsò/u|³æå„ø±ù}áû8>ïê/•=ýù}潫òyš¯ø•tÿ6·tbºówmm¿‰â ³[oe›çeòžzjùª*1ïy1ño««€®cf÷gvï?›½ñóô;kñ�¦z_­ÿšvvcÿ¢þ9¿“{ë+_º+6výéo™s9±ößmuaëkœß¸¥êdã�ªø1‚?uj ×»¦�æñ‹v|¯øížø=_œáí.òùûë®;§ãæöüu™œvgw_oo\6øùyl†ck�êðc² ‹ÿw/ü‹ü¹øû‚·-m–êmì—mvᤣútøü.n“!˜þ=º)zhêç¡…)dž%gu�ýõu€=gj‡½óýó�ï~åú»kmumènàø¿+q˜më€ýק6ñm9·þóæîl•l‚}áø¼ïðùâƒ^.('za±m7ºó($ìî¢øýþ}9ß[�~t–íìýß¿û÷ytd©¸ö56+in=‘±ð=q·²»îžž·6$¬ét „òñ£bæv÷wª é­hèyúÿ»?øÿí_wuæ¶3c>q6èk9lóöàfûø§·:>¹û &ûi!eýø©g‹øt™røûháe>¯^«¨q>_çè)øßð¹z‹´�–žöüûƒ­êñ_¿—vkâwhsás[’«!˜ìœž#¤ñðevþš wïïºãlôñô­æõû¯3ö§qû:°¯œ�û›ã¾åùûl•ým¸7ïèo–_'þgtý.j³udv-5laðõæ¶pmüfb›ã˜âiïsâ’½�ïûtîæëîªh:~cªß¤þvÿ$7/oÿ1µƒù?>!ã>züp=°>,tßkv>ùøÿží¸ó[ï#ÿùœèuuvååõõnð¦ïsp.+míic\u4rt7ü†�ߺ¾° ñ4=}ïñsäöïùyñäßkqtîø¤ø?²ÿ{¯kv÷ýû\õü[÷©÷öc³º÷%ƒëýä7~g:ú®’µè¡rüumûüôwžknz,—buîíêÿÿýëö´”sã�û?32û'~ügêê¼�¦ó�|¦éëjywe˜‰í~:‰÷¤÷[¯é�^—vyóçâþèù]ðô[3®÷ncvß\ößn÷ÿmnmïk]_´(»c¤;¿6õ.ñ æ+dª¶ækø\ô5fœ4ôâ¤t"jñd÷us¤ç‡@�pü{ù]úÿ/zÿæì\ojõ„ýó½‹ô�-ó}ø»µéjwmf6¬��úûç}nþ¼ëgw±()0ø:lmksólòõvóåïýl• uzÿ—æ­õñá�müu쬶óîon¼ÿh�æ²›»1“úõ_þþõß;çü.·?�û9iü�ísùh`ór’*ë@²?ºólhëÿèÿ�;×·þsüï ¿™úøí§ñs±ûëyïì~b«-áíðv_çýëõ~—gòqaë±µµtû‹ra5gþõð$thïm(x[ýx½u¥ò›ü=_ú]óˆàüþxÿ+:ó¸{ï°»«jw§êkñ÷tc{7ui¼77zï ·çîé«í\fü¯êua¶*i÷&%…(hëa›ý_]@î ôp7?篛ò×ä—xü>ã|lì-“ó"›§²ëþûç±vg¥;;©võ„ó a²¶fó‡²ö6{dáñ槕x õésªåq,ëî«u*w ýuñ'µvçè/æ7ûû‹puõn3æ&åøó·¶z�çm]‰íõweî´ý•[»]†žÿ‹èî\âožjýì¾ðíuî믬ênûm†‹áˆû�?b}uuàï­jq@+jר˜o†/>5ï�œ}ýñö— ûc±¶à^ ø9ß½kù}ƒ¿zûknh:š®‹=¶{«;; ×ꪚ§º2¹„ž—+·)åv"u åu¥ýoršƒzv½wwîo�ûëã·kô7¼»‹«¶oeü£þh}�òë¼;�'œìž´øÿô»ßpôcà¶~ ³º¶¾éëžñø4›3‡âãvž^—1†©éæ)üöf°èaêêjmùôa>(qôÿ||þc¿7|=%?dí‚©ýt[otüvë�„�ûñ+{ìíï”ê?`f~wu8ù™\:qíïàþ|-àz¦éšêêœtóòä]cgî´€úö½¾îøqüí»ãj|xìï�œýý±:£¾í_cwv�föï[î•¿úù1¹nˆù�ï]¶:s~e�üyá ûgh•4ùè°´¦*ßòúõ]u°è jô`>ctïo™?;/¤;“hükê�ï_úÿ7_^ëö}åû[ïjõíþ©ïî¾í^à»!¸ú#fdpy€ù^ëÿbxý×aó]…´)ñ¼¾2§²6ž}f°nµßgf&º1çv§µ×ƒ¥oåñ¼ø¥üýýý{«å6_°6vßúý;²~bn.«øו¦áî\ìß»3®ñ˜í»¿w¦å‡=“­¥ébê{z—/e†¯£§¡†¶ž…¥xž lûël¥8ó¢áò;ùjó|¨ùyþý“úu{qzw´¾u?am ü>c-ouçwõ—wö�lmþúúàa åá*vdû¯wš®ƒ*jžº `šÿí™ì¾ëa¨kñlù[ü·þlü¼é?š]�ù} �ùöv_çÿ’=…‚éïºýöº*{kæ—enï†õ?;ðù]á/çê^�ý�é6z}¹]åeáó9¼ìë¶ü¹²‘qàªt×õ#¨ù�÷î­¤êóçñ�ùû«¾öžöþûviª6þòû˜=õ‚ž¢ )gÿ¸q”¹|dóòì´óiexœñ°œh×è.–êýëý½§º6v5eèý5ûjcò3c¶4tx*òy3m�wf…^gwaž}þûäfámù×”»ë�£ìd¶¦wlv_ï®ß[3v`>þëdhz½û­uï~ëý{ߺ÷^÷î½ñî�û¥úçtvfêêžñçã6ïê�‡ñb:-é°¥ù{³rïý÷²v.;²¶›¶³o¼:uª÷ªëkž¢i èš*ˆéõ™ êái4¨á^�'¿u^‰�篘ôß$»w¼v&çénð¢ë‘ß]�ôõ�"sy´‹­÷‡munäåí^âø[ooã÷æc´c©ãe²2˜*l]bãê´ô+¬)?º±zkžžw¿u^½ïý{¢±òwætü\ªëœóåvvøìþ¯üt=aôý-ö{³¶{;{g²ñôy}í•äí]§aw,8›šéso’®ª’žš�j"]ficf÷[ m}:úg¶ö×yõ¶üí ¥‹þø�y×ýz˜&½ žýöº÷¿uîƒìßkuöûì]‡ô™ý߇åöoha÷¶àëý�u;¦cuáúå6ô›þ¿œç,;r=õ�j€ì­¦¥j† ú}öèho—e붾pu¿jtïêìì…ý[oiüzürm\òn¹èmêžòéôríeûõ½+w�© ãïí±º·ñ£ãñev¦žˆdve™âš3)÷[rxô²é¿�»¯±·dvæžúè}ó“ë‡geéwîjîn¿ûprvwaqìšîåë-õ½:ç!ùyjltyè°”™ªãáveýöè"•é—¶»òûxïêž½ì=ñq™ý;fvðtÿ]e;{lw6æ¢ûüös·à|£í= srvä«$-7ò€äh�uà+šô.û÷zè´í�“ûgu|¯í�‰8 ço¼ú‡¨:·¸3›š©q‹¶2xžôïo|/‰ð×ë•lž1ö[épóså ¨n’oº¶žðýiùsò“«þu wtöü[â¯kòî]�³hñ;iewîòïn�û¸ñûsjàvö×ã#×årylþn(£‰=líe»sî´ªxðt‹øïó“¢þun í±ö"vvêí¹æmüîõêòê.äèþòámíô*onvù½“·ð–úêôñouô�sl'„£:ê�_ºùr3åñá÷î«×½û¯uï~ëý{ߺ÷^÷î½óçïñím·¸wnf*™±ûk–ï×cd‘iy-‚£#u$sím•2alâ5y#bäê9ëüqðaño¿öïꯞý5ò;ia3[omwfàûý�…àî#bùìe~‘já ê62¦²�ªéõic®†×ñïým†’gcvgžìpõbòôylmt-o[žèòá]cyþ¸*©*c–ž¢ü«©sý=û­tp¾]üâø¹ð¬6åù”‡aõg`v.¤0��ú9�¹a—üøë›h³¸ì=ôø}¡k€úõòöô}½…ò“§úþÿãånc7[’‹å/dm¯é�·ñ³dçü™íéµ3»ã”–™šš¦ƒlrmm»s[y["h¥œ u×")÷zšüºxé?�ýgòø›‹®2:ü_wwktnî—)ˆ«åik¿ºktvíïmi b™+±”ùjûz”*"!”ø{¯e+ö�žýù×_(úk®>@õ-no!ש·büûj³3‹¨âe'åëssh v*¯ü¢šu¨¤u(×ú\>ý׈ �xô*g38ý¹„ìn´íošàâòœ�be,í?i5ulë)$ó4tð3e,äx}û­thú{ù‘üqï�‡]ƒó£¬·žc=ðýw·;'roú·úùj߶£ê�½.ìýøšý¥wyœ‹nkiarëwmyo$nruo~êåh`§�gs™çî��ÿô¶~íé}ÿ�ù•üõ¾wü}ã�ùkð�åå¾éê¼de¨ìý�?ᮬåw§av¼ôi‰í¾¼y8ô´‡1žç”±úéàf”�ü=(ï¯v=ü˜�ž8­�ð‡âvîënêùº;o`v/píî·©ùçüý1ôok´¶·zä»yv_l.õü›‹;_€¨îsÿwvô1dhèm]ubóq¨i½ûªšõ�h>î‰ÿqöîì_‚_ë§vîªýþ»?ùíìþ¸ú†÷­ìæçuææî®öál]µaøùuþ1¾°;cnsác�éõ³íqž‚i�c�=öè£7ú^¶ìèdóðvãê–jj˜£[…ôòbè‹v!eøýiߺg­^ú�¹ú“kÿâh·¯]î.éù8náûß ¾gtoaä÷&*“zc;­è»#®`ë ½«5jç£þu›ò¶ z/·òô5drdc‘µåóä-išô;äºd÷/ûƒ9ûxºåÿ(¼öâì.¥úý™ø][a¹÷vôí>€û„ß1ìmá¶ó3c‰®è™e…* ‘ê(bžvhd�éîµz+çweçeoþæã|nø‹ö­ù=ƒ™åô§ü(n_š;k5ÿþü¾ììt‡z÷wqávžìþ;š®µó;»žâsóq•èís䧤�ëawöí*m8¯o‡¼{gù}ñü›h7¦ôƒuwçînµß�y»×sïæìïæß_ó¶vóëý›¸zc²v—cìo�ûó®÷øý¹,ðý¶w*鹚yq³x"£¾ºø¢„ô#ó�fûqtoéßæáw|�ì®èü;gaÿ+ï�ýƒ»úóªûs°ºï¬;¸¦ï^íáuojÿôy–ùºüv:±'ªçå”1jæšjˆœsc{ªö‰p6n>±úý#’î˜bã|ƒãà±»{{{užvjííø»ÿfvcaš´siå6yä—w@7õ 'v1^�îclvòþw�7vçvòäk÷��eng‡ˆ£«èdò{z‚¢ƒ%½ñt442gwys“øô™8õ³™-ã–þ6÷[o�këðëñ?)¾#nnÿèzî¯înÿ£ù{ïillaõû?ã�nomnþïèjžî©ý;þ}õñ]«²2uõë¥öö^úêünn’£øn>pñw;hó'º¹î•£ñdï2u?ë{ùºóaké±yš�ç” äå+qí—£æäåù�ñ : ú¼rwc'mgté$”⦜ìšpk­cg‡[�¥ÿ!êâþ'mþïùÿí�º1?5·öµ¾oëðókœý«°övªz»qüw“³e_imjµl¶íý8žìú½ñù)ªwej±5”oq涨ßujhf+õðl>àø]§´°ûû¬w¾ñì}‰¸á¨¨ûû×aîl6ïúyø)+jqõsá·ß­èáò�ód(æ‚f‚gtš'bc+î› œž©ï¯÷®íêoçió(w¦àûû?3ü�~+ïñƒpï:ê ¹c™ëî¾ìvmt콩žîäà¥êe ìlín³fçï-üâïï�_÷vò=+¸?•ßywwsuüýíø=�‚ê^ôáf©0ý;ù[s'¾÷¾òìl½ýø{�)‘¥–†’zeèñc)ëö74¦qî«åan5èâ�'��ûwa|,øóßîžóß½éòâ×ç�ñú[ï²û_±7ìù¡/^bs;o �û[ƒr×l½·žùxìðåpé�æòuícoýís1’wßusv#è–߈ut´¾õë@ðg@?ôz¢ø]wòo¿¿‘wr|ˆèï ì×è¯åùü›ï¶·3÷oll83[ãñÿsôõøüžöß›zÿiuöä·uuzb ñs jás✦ý:ýhä�ïð)ò;­°5ë‡ùéízüïeeð_�™†;ót™þäíüü»?5ãl)á>c5¾+ò;— îépâ,r ™e÷v#½ñš�“£5ùæ.‹þ` þ=åo/è^¯ï—}ó=û½wòƒ~`w÷äþæìa0=s‹øù½þ:`7gî^·­ì'«¯ìéi=]lðçglþ2¡?º¨êð`óöô]¾j¯ážì¤ûyj&â©ù‘ð®ÿšêâ%üìfjo‘û ©¬ícw$½]ú]²6…emó†“5[]šée6"šl• nd>÷טš0í~î&>=g·wäžïýûtmšžöùiú¿~_wgæß—=iò“±{�aü³å쳚ßøú~íé|æâ“×»®�å… ä}¶;3„t‚j|=rã­]x÷ ×éü¼:—äþñ‹à꽫½:o‘ìœ&íùüù�æ ßíøß+v®÷ø9œ¿euîâøý¾>iï¸{�±»oâwsg«¾)õ�úuìo\mnã¢ø‘×;’–²“`à·3onœžíêpã1²rf`èc–˜$tèg¨2û­ç‘èkøkõÿâgo|šãüƒß[÷äï~ü8ý³±s[«äþúý½é¼÷wt&èíeîõåþ•ûfyzãt=bñóc°ô“mˆiþßrf%wðëä�dsè†|yê\oç_‡ÿè¿åo]ožà§îß﯋=øõ™nýì¶ëý/ý›k|áóaqöùúž¸æí=³oœ¡›.’zzú5¬’ijþyÿýy�zeb¡9÷áöÿ.äpêé{ÿþd÷kÿâ5ß_ûëå=ûªž#­/2ty„ÿêwgü…àñï/çßæü®r¿~dc(iàx¶wê\wç}í†øéübµ :rvf ï²s²$^1sy¤*§]?ñ=6»oóçež¦ªxq‘ve*î‘no½“ðûrbþ:l�™¿&vðùg‹îôï_|ž¦ù—º¢ýïùì¾p[¿«aù_"²{37ñ‹-ðûý—*þ›¡ú3õv]³�ûï–“ø™®‹0'ótøgºñò;|©éþ^žþô†‹¤>~ã»ä:§¿6'é�—x®žøóßýoò«²0ûûãžóü›£eóülì?�}ý‚ú¯°±™œq*ë±2uè“)%fz‰jün»ê¼vƒšçç��góón¨þg97ó’ú=øvïžè“0::�ߥ‘" “²¾ärkmüš»�,¡nol„7º±&«þ—ü‡¯ÿõß+×ûkn-ë¼6îëú›{vvng—ìmï„ûøœ^àßym¿ƒ¢ûžðìñra‘ü•¸]¹ž§ ¤–²ižžž†2±¨_~ëõè8ÿâ÷æêž­ý]/@tïúß9l®wxõ\}g³ ëíïžîe#îeó¹í£êw5/èœ�åïz*ßâ´ýµuôû&mûlt-t{ˆîg✜›ž ’ñdùû!’©2© û­êjr¸èp›¯ö%fû¡í)ö^ô›²ñ{s%±1½….ßä¾ö ù9œ¶7=–ú›¥©rÿld³˜jjéèqk-u4r²eaîµ_/.’pôeaikckõbqpv½_|pò¼ú?oeþù*ìígrqâq:nó©ëdêj_p \±žyï©øÿuºÿ^ÿ+z£«²]“†îl‡[ìjîýû›j¿fmþò¬ú8 žäáí¥swdv¶'zm@û�·««$ye¢†¥)þgv(k±>ëõ4¥qðeû_ ¾ wþ÷áöwvü`è^úßûr8¡äoäê�•»÷ôèëggq“îa«jr4åé ©i¡¦—÷"t�÷î¼€ &� t�u×ôú«²èv>ñ£ìzý£šëúíùk·0ðo­‰‚êdsx]—>åš�s2ílvg1uwo�3hjj$‘cìoºõo ã §­þ#|xéþåý}»ôÿúk­{g|-bnîàøýc³¶¾îîç[4u9«s¸l=@ã–¬…*+q]v¶©dó‰%õû÷[,h¡8éïp|_øûººro�;ƒ úw'ðîµ">�ÿ­öšu­µy:ìüõxý™&,+#üs!=ztóaduòµj:ìkû÷^©µï@gpü$û]§ýß·…1ù;s¥>e7®ðú�5„ùc`›z�q1½}ó#lwáò¼^íù½w‹’º¦,u=sëq €±s…ëa¨ôô+ô|dú9o–t?.wr¿=¼¶§iëò]e·ª©(“ט­ãºê7wdn|\�º³töqáègžfu£çâd0¨u%ýö«û§çñ•÷îµñeøÿ> u—hö÷o\ü]øÿ±;� µb«²ö‡qlm»½y² 4y9¡ü8œ&j–§/c­l±h’ö)´í þëe˜ši׺ßáoäœì|¿pu?æƒë^óî¬é’ì �ôûkîé® i²mšãa(ëqë—šfûálñ æbõfçߺñf"„št´ît�çµú;ï¸ú“§bø{ë}gû]‡†ìlm—óý}•w ¹“²·¦>¯˜œîö]é·qõç1\’×êyl¾h£e÷^©õïy»o¦6·dc_ÿ§çíí¹ütyø»¬»ämw°º�{˜ì¾oeå²tÿ�cõññutñåq={qd“]@·ºð4û:�ñ× úßâßgu‡ç¾¢äé…뮦úxí£¶hç�ª«e§£-nw)vámnk;”žzêéì¾jº‰ëªãýx’i'�^îßž=òsormo�}+õ½õ·qóíw‹äö~æû{ö—yp±$õø_ï:ºl5|ñâšóò´2²¨¬-ïýx8šs�¾0î>›¢øï�øñòyn†å橈麾°ù’už£5o neÿ� _m-|òcskuí+èž®å½û¯töµïj]‘ð½ö�e?jõïoužéê ¼fs ]õû_bíœ&àébó´m�ïpå6–?)z…ú*áqÿzœâmz�ýתi©9éõÿ¾(ô|0aó¿:3¬–ÿº¶´rlž¬ù{r©¶öù¯ãd÷–ßš³†§«©âîšý¹ž–¾–gxjš‚›è¬ ˆ/ºñf:ˆ¶–�¯°_⿆lüæøž®uçõ㢧¨£¿‰ós_ýz§&½"÷7äo‹;ó¹p_"7wç^•üýï¶v�`{�9ö»g'ø˜çæçxš˜7]^&\á­áãn©a;jóp&¥§hã0>ëú�)\tª«øÿðõøœþß­é^¦ªàî^ꃹ÷~ºúb·pse±™è;w9�l9¤ëv4y¬5xíô$™/¸¥šo6¨ô�uêÿ^…ß~ë]©ñý,›?zuêõxÿp{#=¹÷oaì†ø{yöžüü»û(ù½ã¸7žû|sa÷fkuf$j¬�ut3í[puêîüû÷[©õé+ô�~3ôîü}}ò�ó½w²7’õ&òúû®¶¦ûâïë!­¥¨‹vpã1tñnh^‹#=8já:¥,†/g¿uâié=›sjm}‡µöîèùw´6nðáâ¶îôú›gcƒû›kn`è`æap8.2 lv'‰çsg54ç樚ïýk “½¾,ülùaœâb>eô?swv?muë]¶âì퇷7œ›zª¢ji+%àõfñõux�â?c u-3æµqf#˜:z}û­‚gôý×ñ§ã¶úêjnƒþô“¤(i©é1�g–ë�£w׈h„ÿaüfé‰8,øö©‘éd¤‚)dbñ27>ýתa­sö-¿ñïãwx`ºîµó7±6ïb�íõkâöîûøî¢|¾ßè`·^ofõcœ¦�fo™û5õtù:ºw§zºi¥z‡uf¿ºõi®xô‰­øeð¿zö¾+äµ�æ��«¸�±ùügrôunãìîêšèú—!†ýt»­°õ5¹êe‚¢ë ^¶€ì¨l}öõ0©§ce7uõ…�cåi:ëcsdû‰©¶²í roýéúôÿ~?åù›¿síýí¹·èê-ˆwngym-áe»vþë­ï6 ²/¸ðû¯m”†´h*w%ov³:,ƒýosr•4èí{÷zè"çü�èœnemì_kõv;ö»ï'ú]wƒ¡ëí©i‡ø}—šªüõùnàùøè11ñm­é’­þ™y¦éñ$5²k”ªs!iå-î·sëòˆuoy®àß[°uæ磴08m­ù[‹û©‚þ7ø[gmófh¶ößþùo±ûýõ…áñn*øi)kžxiá­�uep}öª}zz§á÷äî‰èrf:_ã?bõnf‚¿räñù¾¾êm‰´óxúíà@üòcólj†v*ï ©(#ª.ge�{¯jjr¦�8s|fø±gý“|’¤øçòtß 'y|ýíxìè{*j‰á––£"ûâclo³2ûß~uäý»—+µª):l&o-žáwõ×ñ`4¨%g1ò;à¤dî�î¼€ &� þºëüvöíöv/cíobn]¿ƒú›‹}ðíì=&ñîí}³q‘«û›w1¹`£�1’áàj²õrqòí3álõõk›û­tò•ç\·¿^lìäríþæù;k�`hsø óe…þ{w¹ñt›—je©sûcpscót•´�f¶öjšº*¥a55dk$l¬ û÷^ž¬5ýk×ymõ‡ížâù¹êûûs1³°=ƒ[¶pµ[û´·uvwlb·lôo› ûùšì|õqå:óï$jî„€}û¯tò•ç@¿xü(ø}òý‰™íî¢ø½ð}iúù«gêoý�ôû'mnù)á–z\î'k�æc™iöçjðçy#³ì$vf>ëe˜šió¿nüfø³ñçrîíåñzw§wfýfþøînµë]£³3[‚ž·¡èdpš§åµu:ôšee¥û«íãò³9÷^,oó6ïøkðﯻk!ß;âç@íèéïswwú;s©¶f{šêøªàêdi7 †;'š†ºe¯©§x§¯¸y=û¯jb)sn³cþ|>äönk¸ñß¾=òv¾âýx½÷™ìxº{`�}+wæ ù|^òmæøêcºèók#©xk?|èfõû÷^ôô¥m:¶×^l™—þ{ƒhl�¥µ³ý�ž‡tökníüf+¾7-6&ƒo¸7vcimw¸³paqtô‰uvól´ð$a´¨ýj§× ƒ`|;ø�õ[ç{vyüjè­�¾;"šª‹~n�ÿõ{+of÷u zºäès5ø¼-4õty†‘ž¶|u²³i:é!,}öõ1á'¥å?ft�&óë­‡mô_èéüæüü]m³ó`íq¶:çpìøê"úyþ¾á� þ³s›b:¹wwžšž¢œjþ'mm�uꜚôüvøé´~˜­ø;z«ªãûx©éª±xøâ¤ú«‰æõqã-=8¥ñc,hè*‘î·sz×=&;›â‡æ?‘x ³µ»ãã÷nöþþùsc6íäv]í]õe´úi�me—åõ�¦šž‚f†—åeövûlwxî‚ãñãžäap¸œt4øüv'�¦ž jh#ž!�qu@ë]%«z£«²]“†îl‡[ìjîýû›j¿fmþò¬ú8 žäáí¥swdv¶'zm@û�·««$ye¢†¥)þgv(k±>ëu4¥q×°�qõûk�ï^öû½o±0=¡ùt›zƒ±{´p½õ¿h¶�ðí«k¼÷eýïûæzš…kgœrsªç”uqî½sjwù¯„¿÷qòü†ü:7þtutù*n×êõ6è¯ßqæ(g§©çp²d$ü¸ùicûl“;wó*…šd^=û¯jjr¦�“”êñô4ubquwoh¦‘ãuqò•çrq}ñ‡mwfåíœ?rtžä'd`h)÷vû¡ù»3ú›óoíìæ?9i.[3 [“5ic¸1/;»–©æð´žíeiá÷^«r•4ëÿöú»áväüy�ÿíë•ïf²xm±þévö'!”®­æmê\�ãî¬èä)°t3ëk‰‚»!#o2s¤k,ì]�bo¿uvøsóÿdg¨>iv¿æ�œ}ëø8£?~o-ãüñ;÷ã&ùú¿|ä0äaû;å–wdâ1]ç_b,x˜ªtrdh)yádñ©c®¬tô�éñ–íüíÿì#ã�ëþ”êì�at§âlïéí¿oò]©øuûµ:cwm^ôàä6åfê¯àläù;¯¹ö ^2£!�x¤xêvª‘©¤‰›êºgisšô¡ø¿óƒ´²=ñý�²¶çpôîãþxý?òצ7w÷×xööæúøz.éë\åvñ�'¸7g«6æw‘†±ëò9jü\’tõ¼³™~ëåx‘潜ïó–ü”»â?-œø±ñã¸~vôþôù?q�ùqþ稺o¬:ojœoncu“šžmñ½ûkµ6îk4xê(©£€óäªéûzo¿u½§n üá;c}ô—äýóñÿ¡úß´{�ä/êî×øu–àò÷]=bu†òßµ2v'_ö摇uôîw1·(sqä–‘ªäûrn�síyáf÷^ðåz§w¡»tüçù?µþjì/ˆùí¹ðïawcôþäìüóvÿtö^éù]óÿýûïq휧_|sìõu¤ùlý~íäm‘>nl… mt¹j8$5g¿u­"…³n‹ÿê~ûì=“sü÷s6vßøýïðÿ:cp练3úýÿüc)ˆ›âçhoz ×´6�m>ñù?}u…,l¸zln?kœ¬"|­_‘#‘=öà§^ÿ/f[­>c|�ëj/åï‰ù9²zæ}·ó jþ´éö¶áý{ë86ïbdzsø½w*æönû€ç»š|åç×òc¥£é}›au$^aïýh¨:©åð‡ö�4{ó»:ó¼{w£>5â{� ²~bæ~]yo¿unµåø«ðg¯>\î¿æeú›«´~kuÿyíÿæ9ò£¬zã·z¯ä·ylºþ¹àm 훓ù°av'�sõvn‹oä2óz–¿sôïáq¡c)î�,wh ¥:ƒñ�+;�ä��òì¾áý?ß õý_::ÿ¶êö½aáínñìt�g|‰ëc»gâá+[�ånl¶ãªx‘zž š�t骯n¼@ .ž�qã±ÿ›nñèýñšý�õ��ü©¾kã7nóáï=×´ék†sä7hmzì¥fõìá²xmë)qom•¡šÿ%f²ñµˆßÿujùêè•|gþ\ÿ×ù�|ðë#�îçù�v/ážìéœdÿ,~u¹ú›ë~'ugwnnzãüÿ�¸áìdö>)í6rzêhe&˜c�eœk®¬xèsë_!öéž÷ó]qv|në�–¿î?zõ×twö­fïëÿåëò»ëgaöz÷wnã„ýù¿‘�õ·ò¹øû¨÷öéjêúüeœªtzôí�š=½ðwhÿ0î–ìn·éì�á¿‘¿ ¶?oîþùýµ¹�ÿyôß6·xról¾èßqgq™ý{§§£þõëg_\�]yh´b¦iä{­étð¨?ë«uì”y�•ò—%ð1m0êb§št†÷v*µm�%þnvgäïæ·ô�1:¬s}ƒñ¬z»sî-©ôåú8nµíþµïœ]^sdõb÷µ&?cvæð¯ä嶾j“( ð!lmíõômì½áýûßø�¯/bõþ}vöþø›‹©ëøîú랬“5= ñxªòõøšªzæäi—ýkhó«?êõèœü¡ùúáwó¡ío‰›wó�òÿ3÷žùß[ö³¶{35œég·ús£rý­°ñ™ê]ù‚û»â»'¸1¸õûô‘bv÷ð¸f‘ÿî,úêàñƒâ�yþ3åg�õïèÿšòs¯º{�ùk±ûšøêýó»7&+üýx˜ýé‡øï.ïú.¢¦ çôr×wfm.™,udq´¨émõj ]¿¾jçþ\töw¼«6�ôø{ƒ¸{�oô…m-dõ5›ã¥öøêl]ÿù9šz‚n2¿|ôíúêè©óö…”ò!u�;{¯0¡§agyüªïzß“gáçãí�ô›³¶¶ÿpb;ç·÷·}îí㵺ãcl�×¹³7aíd{µ·fçü=‹¼r¸úï‹ec�åcì�$òôç~ëáe57ªsçwê.àù‘ðç 1”½gö;fºæ‡óÿþ`tÿaïíë“úõ}¹×ß#¶vû‡¬…fawpö@ö=jšì½nfšž¥0õm>¹úe_uuxçê½lwó;‡¬úÿ®ö?cu×yå¶vžs°:š�ì:»hå…sg0}}lp»móhñf¦¨z|}²séw‚'fe÷mœ“ö¿_$�–ïåz�ægð£ªi±}ùo°þglœ]‹ûø8~x|«eüû·¯aélî­ïücmóá2û(ëm‹–žše«ó4r,pµnœúùšy»?îß­ú’ƒ,û1ñ|iøûûtÿñý?¸þwd3_ïìþå¨ùû��ïí—ôx.»ü›s[±p§i÷ùú¤¤¬êu´tèóÿu]*ôrz¯ü�pü¹éÿ›îãy|hén ì\?\îÿ�}©¿²½½ù»‹eœ¥&ðøgöy!×=y„ú›;sõäw–w�©˜d2u8ìu h#o¸j‡4úõêôr±ôÿª½ì—óïžöí�š}uñ+¤ú¿tt|®ø)í>çî^æü;söøšü÷zsrrn…ùûote7íø´�>ª›'4\4ñîþ÷õt€ '�§mûwù¤ïmåñ¯¬sý%·óæoiü´ßÿq=-&ù­ÿe˜�‘_¸÷¶�nìïasmêíè½+µ6îå«ü3ᇛ*ð´täe�uu½9í¥z~yüªîüçæ_æ•ðãåg\u®éï-�ü´û³äîý)»·>íê¾ìê=õ°»+bä*¨÷û[[umýó²7®ìr“gsñusôg",�ºð¨àâ½ û;åw{öÿ²éðóáöàêmùû[oáwe÷ïoïnûýûçku†æù;¯o³vñæa×»[vn}ãø»ç+�¯®ñè´t8üv1û×/>àûÿppg«+pmdjcêõéö±©¸|'öõfß4÷áåüöþpø,^�9‹âî®îùse¹±8ì¾cžü4”ûn¾‚ÿ5ggs8h+ãyày•ä3(‘4¸þúªü/ù�‡ªãïÿ,/ˆ´ÿíg­þ6eˆï?ô9¹¾wvfv¼ÿ/>zëquù»c¿z{fa7 üoý­¹bû=µº2æ‘*å¿rd’™"’=yõmm ÿ:ú¶yåcipøìn"ˆõµ*‚�hõù†^½©hi㥀öå²õu¹\¥yš!䨩šj‰þï#»±c¾šê�¿uî¨ú“®±¿ì[ç÷í-‘ßû“±«~xç09lž7ˆøyòg%‰ìb+jq¹l^f‹¨7}e~;!g,5tu´“毱:¼n ©_ߺªüköõf{¨z¿¸þ(o¯„]“òst.ìøóü…üðê·vúùù¿ö¾7mt¥>íú•8ì¿{es{?üíû«q%5.ö­†_á1׉ñ)yëëó§ªv¸èòükþuëü}¥ñ‡¹j~wlÿ—ûµv^éêþ�ù9‡í?•½“ü{w5»zò·ä/\áieš¦ éâ°‹p.2o&ùìwsòoæu`þëf:æ£öu/sÿ5�—8n°ùgòn‹â÷k·æ/†ÿ+»w¢»g+”î-ñoûƒ±z»»gxæ÷—ym*-�[¶ñuû[oïb´fr±®f«ï,$ -fúö…ªšäž…®êùsƒè�”_ìë°¶ßróf;ã7òôëþùm×�ìýý&±(päëàl*ý†ù ��¶qô¸xeq´i”�kgêêqsýx-u3‚zttïï/”ù.ïøm´~eü|ê.³ë?ž;#}æ:j§bvöà߉°·^ãêø{†þüõpaöåívô�ó¤µæ1n“@ò wc­‘]þóôj~|åü_+w‡éž¨þ©ð¹íãñ§5õtõý™ñ{´+»[¢ûûû?!»p²mlî[ˆêrf¶¬øz¼nz�ílbªñê x¢ßze¥sòsùän}é´þ-u¾kknæúèïóká6züz¿ [6:»ä·]å[a-v:¢šy(«#eˆ±žeá�ý×£ëú½üá·>äá|¥þr¸ü&áîa±û“æ–ìæî*vz¿eÿç'æžå•(3t´•á”¢y aë$a¹µýû¯'âÿge£~ÿ4?˜8‰óo¿6§æ~“ì|}øòc¶:›³+3}¯º1]ÿú;ª÷úƒqvõ~úçmlæºvþóë=}lùêúz:ú‰ò j{sé,þëaª+’:^wÿ霖áùoòƒ~ô?hb{7ºz·ùquçè=�›îögdã¨;biþ=³—­êèúö“!>èåd¦æíjšüvboñ©ëê’’iš”ç¼úðœjèlìß棰ö¦k©·ñãqn®“é|í?æý»å+âlöìèüsã6•4uðã3›û³·þz§$’qü2p€�oºðn#î´èø�üþÿóg�üwéíëÿø_¹›ån|wì}»ñ_äí?wvofn=¡°«ûv•òo®h?‰l¼m}+æql´”ùì{r4 ds¯ºùjsž½õìçåþüø½þ�62ßz¶€éì/è¼^oà»c{dû‹³w·kv¾äù�‚çuök€êhñ¸9¡íoss.nš³]uoe5'û¤ºëå¡kž°üžùc•ìå¹ø�ãüø¿‹_#úë1üßð{z£âgèžþ�dnlnóùñøv‹pnüìþûsuì=á�jóik’’,”1á lèõï¿.¼pzyl®îùñ•þkÿ)º?/måz‡fô/eo>ïü{ÿ|rc¶æsî¾ë äo,?«k¦—±·0åñeÿçéw6(iáy;hû¯qt)ó¯j~°þg9þòê?ƒuøn©åcòåélïçnóéó›êô§muôncz¯ëí5jb¢¨ž›­ñ;ih ªð™¤ìãµ¼±³³{­¡là­7°÷öþêý�¾{/wtégµ:ïgîmõ¹êâe’z]½´°µ¹üõlq¼‘$’a�çêák¨$x‘õ÷î¨2iõcm¯æ/ò£µ>0üœï/�=;±þüµß½g²ö›mþòþ¹ÿ�½7‹ùq'gïžþàdºó×µø¼ý^cr�“iðo˜žòušy¼žéí# áñlø׳¾booæ‡üçû�5ñß·‡otßk|møûk�ï循·wqíméñ÷¯£}³óû¹ú?'™æ`w_[ï;¨ê{koì³q_øý5¹:@ô|uõf-霩ûîãùž9“)\1õ4°•^0ãýl=qèmùð·}fûg©¾fümìí‹ñýóô�a�øÿ#²:ã%úý9ø-–ìíýçœù£jawï]n5nîü;u*ñlvhož¢"–9½ëa…až²n¯†]¥úyÿ„{׸»÷lnnáø•ß;³»sùmÿòÿüm±øñî=…¿ö5îàísù›ž£`ñ`)7œlµ•ùêš¡flƒ\åóýl0€#¤_î�‚ýùó\gz³3ß½y€øã¾k6wjæ~8aºûû­kvõ^>»!˜è^êníáb¶žãýua†g)¶òõit=7™à¾ëêáslô«üÿëß ¼w'ó-éçû6½ð?ìo¨¶qe°ô]ir}s�ù�ºzn«/eÿ©ü™þuùx79éf²ñã––h.jºö¯ƒ:(¿4úä&äþr»³­w¾ô�¾>gõk¤«¾.î¿��%¹¶vcnvo^vz`¾=×rm5þ}�“|–;qcâ©ü‰*£¢š‚¾±z�iá¼¾êêfº�ž‡ì¯cü‰øãðëá�ä�‡j¼6ûâïþ‹ø]•ûé‡áîì&øøšžáù)ù{¢-ùcy köaãehé‘`júœöâ§hzšímü‚íß�ü^üø«�ë÷vñìw ‡;‹ú=¹¸û«!·±µxšt)c’þê´°mî°«’º¾¥åw#çð§ø¿ë;cgðÿú·ã`f>8o߃›‚‹t|dí3…‡²%>þìí=ùaù[f¿)¶é»û8 ë‘]áöc*g«ª3åx|²ïý¿ßÿ ë:‚>‰úi×ýsióý[ö=es»©·îäåmüû—zîmá¸7~èåðt×åkòj|tqa û0*(«ccf®]ös{«t•®zldÿ•~öîükù%ð[�»·¶æîo”ý‘‡ïnóùi�úûjmû[þ;rl}ù×’‡cbéñ;k°º÷'öøzlnø‚h©áåã-:t£îóû÷^×�i�ó×x|ù/wn¯‘_%þvížøßû¯â~ñø±öëþ„‡«ú÷gã7fñàîäý›z*žêýû�%‘ûœdÿä"¯ª�vë2w †nþëå…(+^¡n?å¤û“ùuí¿å›'vïš|võg[?xcúþ)j�ºïzmàùú-�u¼zyòçk}¼qi—�iza+âÿý{_~ºuü½;£°{^³´þa|¯�ºr;gãïrülèçêþ¢¤è¬îêû½ñgƒæv?mî|­>õþô›‡º3x]»eg”tx¼ ¥5cöi‚ae}¿¿•ogtïmü6ì-óò¨³ûgàîóì~¸ë=‘ôßqý=uøo|uoú1¥ü½«»s¶7enc±èé¡‚¦¢¢’’,díúiz©jgºùpc qùôº®því�øþÿÿ¼–ý}ãøè;azðì6òï�’t¿ ón�”wü'2øô¤“wüz”j[î|+o·>ëzûƒs«m÷î©õpn‚?)zãµ»¯u|*ù�·:­¾löfc¸;s¯» ({®·höžãàã0›û°:[puvñ§âvï/àt•u¼åshir„ææ�û«êr¥èécÿ «²6çsÿ/®—ëmù”û;àgè £þ´u‡ ›³?ú•˜“û{pqf²ù�¹k�îomïúµyª¼„tõ0c8x¢¢ "x½×µe‰ghß’ÿë_�õ_ìj¥;²=£þïßeüy鸑ºå³¿è¦^‡“�hwœ7öûïêþú(ûp1‡íïîôku׃ón8tÿóoùfí¿™}«ñײjû?#×t½\´»7»vþ'më“o’]iù}aüqt¶æêsîœû{½�ôôkp#膲²? 2†ëêúaéoý¿{ž_’y�•ÿ»³¯:“³;®voswnôî~ÿíwowöüëüæäèì]ùi‰û½¡õ;‡lïý™ñèóã4y ¨«©dhe†"$šouàâšxc¥ncâøýýíðw½»'¼h7fúøyœïúmë./ª)6–7¸2=é°(v!­ çpïjú^³¤úpð¤ñó*æíz�i^v÷zô(à=¿&þw_êžàø•�…ò¬aøýö½ßö=ý°°øïž±áòccî±îííço±6wèìäáá6~äî`œõõëµ2ô“5 •òõî¶(4ëéþyx½éð?웡3ý½z˜ïæüýƒü ¸ñ{.jþ]yõû?‡8ê�ïyú‡˜ë(«¦—í‡5ôõ-n«lê*ºö¼©§‹¯ó6è¿’›¿ùsl}‹º7¬ý¡ó[ò£ïhv‡çžÿü;7µû+qöt"‡pe6¼û¯°ë6îåàu>ìírî½^r*s¼¬±kjv÷[b5á§w ò]k´ú§:³¤v%*ñìþ¤ëí¡×;jp¹ãì욢¥bô½m\4"yü’òlììk1'ýpš’z&ýõðã¹ò_')¾a|jï}“ò�ã›êocö¶ßí^ž«î.®ì½…ƒýy=ó´3“b6÷bu^éàvâ¯üy£­‡)5=}–�lu�¼žëzòm&a¶waâ+ñ[»rnñ‹ãd¢æõ&ê¤çb«+ôô-ck«+t·­1ð�±vîéþ_êûù�tÿaõîò­øᲺßpðücü[câgâ¯köv&­æïú=é¶~1íj6_‘û½èc—‘{oå—–?¼’’�~ëç¤ï\ükþt›3­:b|ãüõî™°›�zvd˜n�û›òä×bóï~çí®å¢ýøü†,íî²mó“jó6>b`æå4¾f�}h•/sðõrøªzêlf6—'�þ-’¦ £§èe~òâuðóç^cìiù ¢ûùõ¤ñ!)­ ø~龪û~|ù²{óº;÷à×êí¹ñþ¯ä¾gjgûã­»c¢(ûß`fwæùã&ö‹´¶8‡°:ç;²÷]^ú‚ëèþ毕¨�e•c{2û«†–´èyáü2ýñü›øñòw}wþg±÷�d|{î–ý-—ëü »³³½½¹¶6ç­þñí¶2¸¼éç`çú/ok‡ƒx,±!ª/i7ºö®ò´âz>cüxà|àé*î§êníã׋»6ggõohí5‚}çõý½õû–ƒxõöüæc«1ùÿà{ƒüqtjºi%‰d‚vžx½ö”é5è·u?âß’žÿê��ÿ5~qìþûïütƒ±¡èm™õ]iò;7�ì�¼vnáì­æõûë±³û—xuìyêh)¨à©¢æâö²fœnïäêå…qjô6oï�còæ�çšç3ùúž±ø}ú�mógi&k=ºßqö&èí£šâç_?üf›ýu#쪨­y \z•? è~kp|]êóspn¿’9gpö}~;·ptø¬†èüy­éƒùrpm,nmµ�]íl­ª¦’™b­ªæiq®s)•ýöš•:xthýû­uxýëðs¼)>jïÿ– þma~:öguím‰´¾blîèéõï§ífëjið›~g„‡}õîàùý‡µ6­kã>â“!%b†"’ž'y*$÷w(…giþþ_? ;1ñoµ&ùy²{äç:.äàg7g�|jâo¾ ßxžöìaê÷oò{+°ºö›cîî¼åái¨öõlyšé‚˜rd%©i¥«÷î¼ š`ôf{×ù{wçþ’þ^]õýá»·~ö¢þn9®ù­ï­±ò¸çÿg1önòùa½£ü»»¯i«3ûoû©·ó[’—’i&æcër ãø4ðøôz°`k?gn“ù^vv¶ñù�yóº¡íîéùÿ×[;©wn÷êí‹/plþªøzr™­¡êý›[»·þn;fô𠚺:©çd¢÷[. nœž•ý“ü«+7¦äù%ƒåw†2�twóû�ìcí¹zž›uuæßý›cmõ– õ­×õ›î$íí�uq×ï=[g[ƒ•¦¨§•#w£�u ùò§c¯âï…;ßãgjüžîþçíý›ù{ûå#t­fààuïjótÿ^õíwpíméµãåìœ[ï}vumü•.v6o¾�ëòx$–zš—¨>/u¦j€áðßóâæõù�ð¿¢÷nâü&lín×ý;;°6™¦þóõßcõþæäï~½ßxhëé*êvþíárï%4ºc¬¦ó³ ”ºû­)òkñzëï„_$7w{ôïw|øùw´»ù>3æ·–âè}…õýiñûm7¦ëúõ[ö�eôtöcd÷6åçí,æb e˜üeuq¨¡‚,~êå…u¥zåšþ[ •ø¯üãþ5's,oóï¹¾dvúo7ëâëõmßt[z•vëmñ¾þëµnæ°vâ h—üä=^ëúû”ó‡co_|5‹dü­è|—«ß�n ,‡âþ¥ø…>àÿg­4seö[ó|ïj�ñq�“q×e,†-ä)$ð€¹«”?�}ö‹tržuèª|aþoañsó¥·×d滓c|£úùn”ûëw· úyîœø·}€û¤¶öqs›‰kçø½¥™šÿ/xøê$ûwûš�oî¶\’¤žœ'æ�3ºw+±¶ïkü«êõéž­àmµ6ö7oüa©ø½ãø˜š|ðm±[ú]‘uü»¯nóæ6¸hœ��ûøÿã–v‹èñu¢tð\õ7ãßäêøáðö«ã_r÷î'ù4[ó¸·¾òî|×rã›áâ«»w¿7ÿu�ìõmnú_ãxê* á&¤g�¤ž¢0õpkk)�b÷^,tœtqò�ü›¯§¾síþàîî¾âvçëîêø·ü�‰“é~ˆ}…ñ»b£ãþø;ë�øýiwùyœäûƒ~rìé¡îg«·ï]wsks¶1o®­¯"ƒ£q”ø‰ù¸�ÿ3üêêþæúûokö7sl¡ï¾«ýý_y»²»—õ¹ýí¸6®g­÷æ?�mhvfn¾mèôõß{‹ìæ#§fºÿl{꺆�$tm¾#|ušÿù³üùù3|czw`äñø^ âîüâãí�ôûò¯ú—r|²ß½hstô‘eq9xºólóôwó™©fèwdÿl_¹?º³7b�>®k}ì­»ù;yuöï¡\¦óßûspì­ñœvò¹»ºq˜,ý5ž•«æ×ë66 ïý61žª_a�,¾ô8/œýßÿ.°}åñ;áþùêíûôûððìîüì*î’†ý5€ï~ïªì­õ¶÷&üëzê*ó§jj|’ófj(ç)8…“+ ÷w®¿ðõg;/¸p™œ�^bûpýcü[ãháw%gdn½õ±2}‡·2 ¹ê`spè7�†ñà0“céóyçþ#wm§ˆ¨ër¥uiýšw©‰de2 >ê½k£üûo#·¢ýøýヮúu³œƒsñå¨*vôøanjîb,ô�“)ë÷sœjõn}û¯tv—è�ÿ´~8÷�èn»ëí>úåt÷vö�`%>õýø¼ž7“ë�•”þm‰÷&øå62zõ¡ž)g4”é:¹‰¸v÷[ ¸õ7è]­»¾5ôwènéëí«çöçtuoav&ãý8ìvßâe»eb7`ûôùüô¸¸+–lœ�âx$³,z´p=׈顚»wmëzijµ"~ÿ0þæù¥�ž¢o�ý¥óýea¸{;cf{ÿp÷gbn¼°º£pdv–åú5›glïßur 󈩡ž²“sfò"ê®ô¯÷ýy”/âïv�ïýs¦¼åm~7 ˜èâ°õ;�)a‹èvãvõ^>‚³;_ki4ôxjjì½u*š§)qáµsco8iëýs.+ù£ü¶êwågæñü¦ûâþäuîùîîõ?'¾%»âz¿vîüþæãîérç±£û“çq¸ö®bf•æ½8’hr)"‘õóš•×�ï«%î‘û+¯ºcäggììþïì¬÷ç~­ìžàü[' ¼±2öã“ø;kpîx¶îã—s›z|­nþ’”¼ô­$d99b¾÷õè½{ãwè}§ß�yô;¨f¶~3±{¤:»¸÷/wâ·v7/¸¶u/cl�±»|ux¯4yôäò>è‚(jê)ay’hšãè û¯b}:|ì©1{�9ðúï…ýµô­«˜má‰l^æéå|¿ã1û� *í&f¿%à�4ï$“hmøû÷z¡ë=fïúxæü)�üûv…ö–2›5ºö³5�¥m±‡­šºz]+½û¯u†¢e¦‚z‡rd™âx¬hîáa*¼\��~ëýí—óïeo_åëyüç)6é¢ø´�·÷è‡ëªšìkî×ã쿸óõ»qr1hpã'^»rh¢˜ÿ™˜pg¿ub´m5óèîm¾îë¼ç_lþãíî}½²1ûã­vÿj­îüx,]ujjüáªêhðõô3ctd•e]çý:=³úd+©çón*¼-dt+§u\”“,aìnýz‡ó¬´›ûbä7^gaðom¥[¾pô‰_—ù”›�sºñt2-3¥ngnãxùšgjøh’xu• ýk�uïÿe›çw_m �ñërüˆâãñ{çä·oez_hì%ßý�úðá·5=geta²9ýû×ü®ê]¹—û½o%\õ°tí2ªº’• 0oum&¦ž]ìnçûyôèi‚ü8ýý[;dæwœóe(hêé(wfÿêá6ž*judõœõ•q r™£�t¯7ºø¡98ê´þ3ÿ2ÿ�ÿ"û¿wtó�-îáø4]mùøþªï­ó“ïï�yìonn¦õäo8%ëa±{îlôgçþ驯ùûw±û‹ãïs÷ž{©ñ›·™ïm^êùwvi çèô¹ép´3ç–k&¤…fr„ø°ýטp‘å^†šžøêê>àøëº*ûbæ¬ìmå¾j»3nv%næøû[fíl5|õc'*uí$p­,3‰dz�uí#4lt}z+²w¿ilq¸{¤·ççíégšêàs�u¾²û3rvstbäœe˜án�ƒ¸7ùüû[3m:kgyñhþ¸æ‚ctê¤s�¯c'¿u®½ïý{¯{÷^è¿ü«ù„ø§ñ»ºþhnæmí…mã §ž¬vë¶v´æ£¤4“$¢co†½ˆ>ýרxùuæ~åëê\í>שß{6ÿsvf&ûô›v}ï„‹;uÿ§äãóõ:|d•ë�ÿ1-kzôë�i*b˜¨ždcî½céòzw~ûæõßsnú]å»z{gîœõw^mîéø¸zê�ç‚áær˜­�¸w6k1üëé÷vj_¾íkmie¦i¦"8d·ºý2+ðowó'¨öÿ`|xé¾ôèóu¿r|ˆë=õøøm—[�ûùüvõ; ±²{çnîñ‡èë¶�m%fû‚ÿs’rf 4ïlì�uû­é4$p1»¶›a2{™w>þ;o &j,îà¬iâb%ûuuxýåo,*~â‚l}ðv‰dck42$ºyu^ÿñöewfwgpèèc+«u•�!•�¸#‚=û¯uëߺ÷høû¯¦þuuûù²ö %2öõlh÷>÷•5ra^µuakžnf¡©ža#@å"½ô°'ýz‡�—dfÿæ¾ôß?>7?ãþ ù]išú]%¶:ëpü€ß{߸«vþõj¾×§ìip{{¤öbnú-é˜ù1uõefà�)”㘖qìfw÷vóû¨õcýõz¾lü‘꿉'¾;ÿ¹òõ8~½ëürd³“c©£èfj"i£‹í°˜ƒqm>g"±³íöð–™¡šfum{÷[± ãð/ûÿ3ð=qò+áçnâ鶦àøÿ(i¾jäó½¨ûâ–—°1�:â—°*ê‚çm>.¾”õmdµ”©žš�ùƒ’b{­…ã1ñáàní­ºðû¯kî]¿¹6µlu5{—™çf0pqo=-dôùœumf:x©*iežvižhùx‚¤u^“�åôuû[)¾({o®+vv¾^kxro}³qµ±:šš*:|vspc“|m|õy*x’fiiãp:ƒî·câ��ÿñú[åú3�4�äþuy„küà�è„sñçk g yt»�såèÿ~êëð?åõn•ƒß—çw[|¤ù�ð‹â‡éíçóg±søœçtüxý[¿æö'eð×|`ìœ=¯/ê=�¸3['³pøhö¤wmt㚥šzj¤•þ¡å×n� u$s×àèûnmåð�hüôþct?í7ôuû»séñì°mý{(îªý×ñ²›©°øˆpÿ±’à³;’»vñvþs>ùjÿçß=)š4�r¦ú¯qtñò¢_�=ßÿ=?�ö[º:“dö…nüéÿšøm«.ýàrîeú”»³â¦á©îwmœvr*ª-¹¸ë%ûô'ø�4äáè©2(*}תbçcçñwø¡°vwê.úþet_!ö¶¹1qÿ*nùü˜näçóî¼{1µ2=‡ûõû§šjìf雥j„u+÷ðåvgüe‹î¬ý¢jzôå‘çâ¶gä¾×ë\ž&·ðc£ÿá@=‡±¾bì|~³flï…˜ýéýêèíúì�ñ·±ô»¿²0ý¯ð—uníñgø{ «ç÷ìy=ígtc)sv(ê"f§h@»ëõ'å©ÿuz#ý±²;‰«»sà‡vqç(²�鯵þlÿ1nœ§2ôãcìíš-áõïð÷hñuòòee�©¯ú½¹ø¸^uw# —žzêâ˜cø±ñì�¸6ngá—è_æ%¿zk¯»_iÿ0ožýoó¯ù+‡«¨éžøáö»¯ñ?ûƒ¾pxš•m'yì8vvážšv‚*œ†àˆk´—âæäå�2�åýô;ÿ+yû�qù½§wò†·sî|/qáò¹^w;6ï;j§ �…òâ†ó]]¿é§åöæ>÷óf­…ªhêéð¨y駅’4±:)b ·6ûߺ÷zšu÷ë^ˆëÿä‹»�—îýóã~xð|gï�‡ñ|k]½¸j»ë1þ‘wÿ]mœ6þø´øér™üãèæiké2ôë%bfû†‘4j‰®ž*lšÿ k^žmw殾߿ì÷àïrüˆëmÿø�u�ò‰þswì­éœåo£úú=ãð;bi²jä¯û»žßïe:ôê#x¢‘}õkøäåñ7øô4»cã¿åž²áeü?bt×ü)ÿqugym¸^c�ù½wµ>@÷‡÷sia we¡âá’¶e§‚=1ä­eþú±âoô:zönæüxÿ–½¥ü›¨põ´�=òçæ?vüæætcðôô:_ˆ¹x·r|­ëø+uçeš¦ÿf#¤©p´ôôq_í7—¨˜øóÿuáð‡ó�]ñ²6^ìùüð6'ëÿ”¿~2öwc÷^b�­÷ê¿ž›°>bótõæð¥øõ½~#v¿û5][2iê&¡ û˜ªì~ñ§­–¬tyrž=u±ph$sýuçvõßú�¶?œ?r·|í�µò/ó_ëÿálû_=ù»nÿpb«÷…n�¶ñyï“gni3x˜w¥txç––¶qs]œzꔂu3êﾪišc' ëá–÷èþ´ùùµz‡¥óß¾háû«·þ_v³öþøøðqüåøqÿîãº÷žï¤ù¹fþ-”¬øyœä²ì¬e~n±•uªçp˜ª hþ¼úóv¦£‡øz%wfô=7òéþi�ïþ»;ªåëí‹óë;‡íþç콯µ²�mtîky|ñ‚³¾÷áçôáeöùéuœóvh1’dž˜º™œgþú¶uè§ùº5_>sù¯�·»&ø�im&ïþrÿº·ã_jtl\n)ö–äžþêí.¦ë]ñ†‚‘1ô[ol?å.àªèóè�'�fgªáahõõw#»ðÿõ�>¶5éî«ú}ô½eòû�h6_tl-¥×{z�$q´x-�‚¡àcâ%tj™ihå{]åfcri÷¾›&¤ž„�~ë]juùy_ƒñíæ÷´>|âzû1ó·tw¯èøzwø›}s"÷oxömšj_„t_*3˜lž÷¨ãòãöƒø2ms4xìñª¨¨«÷®ž» ü?ê¯fwjt}kù‹�*cò[«öêïjïå�¿7yd·^çû¹¬îg½zúœôn|ýf^‹#y“ý›?=ltóë-uàñž=ï­w±èq^¶8÷îšëþý׺õ�ºh;�!ñ?ð¢º^’]ãýó¬ù_ötõãkaó9ìýg[¤øô;²›‡ûùl&k/;tü¹á%-%t55³e+è¬=óâ•š¾�)~1uþâü½©ùý¡ð£æÿàmõüø�åÿý›#lôoà�ž9‡¤ïtv®úÿc»·»�%;ž ëö›ò:z\dy~vòµqüæ%t×z$òœ¦•óÿšê�ã\ÿòäéü úxnœãu4_7¶çà¾ø¦íhñ›>eù%¶·ýgkõ¯èaò=žåë¸ðùl÷`áw%g÷²®8+ò>ä;,!}×›^¬ü5è8ê„é®�øëÿ êï.§ë}§±{�°;gã>×ß½�·±¸í÷¾6çvü/í,ïc`w†ë§�3››š®ärxé+gššžh¡�#…ºù$™aáÿðôögçn�üß�ÿ¿|çúëiæ;«füûù£]±ûw'‹†¿~ì*®³èl�ç²æëýíx'éì91;›!=c6j&©–v3™8¶úð'tb¸§f—1¾~#cþz÷®íþj³ôìû[x|´þø}ÿ›þw™/‘]¡ .£oðö|þ«ù]'é|•_po·ëubj»?ýáv†?.3-e"mø6­/†y£v•oºþuþ‡o맯æ�ãnÿ–¿ìc¡»»nükl·kõæž³�ägè]»üùz¿œxúnœ¥ü9þïèúž¹ènþâqlx·^o#“‚�#¹6e>æ¤zªö’„ýâ{¯/"½ï›û�ÿ.½ãôß'>%a±››g|çøl~lšž®æãév–oäv3.ìøøøù6á›n ö»‡?�†jx„h`)#.–mõuî#_óõcwñÿá_åmñü³~;o)ª~põl÷víø¥“ùo[¸?`l§ù_ºj_nåiwbík’ÿûìýås�u›ê£ýt–:èáçþn­ßº§i�í³ð‡³7vàýtk’úûãlgö~äç±kð›w…ìq1euuž­‘ ᯡ÷î¼1ž´ùèn�ì�œ]aòcã¶î¤üu=—ü°>ïo‚]�—¨†|¤ò|¢úÿ#7¦ðøù½§hi²õôý}ño«dz¨»¦cb=ë§é aò&½ÿ‚}�’ù‰ñ¯ù’ÿ1ìþ:: ~fôþ;¨ö-øùiªñ{ã§æjšù/8oc¿·æóãù(“õ"¤e}åõxi*¾�bïti?á.xegwþy?‘fvn½êðªª,ìm€“ïþ]x�mùô~?™2|®ëžšû�8»�#ñó#ç—yt{mýﹺ·~u_eì¼uu¹ý�ü8œufdî3œï,+c–“í²èì–¥é¯úªjî‘^�ÿ€?:æàüxü[ûåÿx×ögyñüì©ø±ñ_åo­³xœ§ê¿ü5»3ltæ÷­álütuõyíç—éaeüqòrã2⚶w@òjþël¹¢œó«¯÷î›ëþý׺÷¿uó:êýóý?ëóæwvu¦¯uoýëñç²ðûglc”é“üyæûµu48,t s–ëioöô±q娑ãu纲iáõg|‹ù�ñóç/æ�†_þ/ö7j|‹ü >çs}3ƒäç~õ†¨»dož×íwã¼½k‹ëœ×­þ)6lâ‰q†#+ºõzp¬ìf3ðß‹øáñûä—ó^þhtýõô{¶é0~ap4ûoã·>; øú¿ é7cžëáwc�ïík„‚82qfµôhdx%œm(}yž«r(|ïdßà´òv­wü'¶‹±™·•&äþ_?ìfî }á$™4ìíš\@lèðù#tò½uûtqñ”ba…tý8÷ïn¬øñiê:t|áo¾éù-ñïùtoºl¤»cù3oþõß;ê¿0¹c�þñ'ûò�—5f™^–¢¢\gnvvo7—zy%à*ªé­õ¦àx~/õš7äþ¹û=…šè=ÿß3þt'î�¿óg¾;jæþ+îj?æiyò—¿ëò9í·wúy”ôû�umžùå7ð±’�hé¶åúchü0ê]ubir•§åþ¬§ã'ç��ûïå¿ó¦ïnãú:�ó×ÿ! „í|ž7ìé�«åž¶îîùõ-qžítì½åìj¤éaé—)rô‘–”sãßubtæ§d‹do~¶ûßÿ™gæ.§‹á÷è��ôÿê_¶kvßî߈»´+·ß�cïý¿ƒé?“2àdüxaýóps.à1óæéªd««šš ‰e¶ºù®¥& êàz2}å¶þ)ì/“?ég¹þlmžâõžâø‰ý[?|ö'lí ™6ûïïún¢øñqó[{tæ÷.¢¾ç¥™3¶iêšjˆù*e$ýéö…h�5ÿ?i/“[um�–}óü©6ö70ýwüð>kt¯ëuu-ô;s§%þ+¹ÿ˜nl£uå¶k)ðøå‚™õ†þý0‰f‘ÿýl|!üà§ùºú6žž h ¥¥‚jzhc§¦¦§�!‚žqc†!�v8¡š5 ª *¨{ßlôû¸†m¶þqvëñg¹“}òaî93fšqšzñ¼†‰küf] ÿì¿uî´ûúõ¿wgòýèºëìvöÿùþaò'©'ïâûzž?›û{ån3ä~3ý›÷¸³cgðõœb§8ù\æn�îóí¹’ž:�"šéüê'ýÿ—wñ{¦:z‡ùë�2íùcõkgºvçtü%ýûoròì]¯o¸6öìí'é•ìíïƒìã‹lž'pö*ìã;[o$u9pçîþ[ÿ{õê„� ÿ_òuuþýó}tïóæë¬gc�+˜tõ;¾s;gªò»ïiåu·)wklç6öÿ¼ýûqg£¬©ãf0ûr³&¾—çi|¬þk{{¦vçcöoåœöcçörÿlu–lÿ¡|þãúe´s5ñwí½­ogµ3ëc¾p«=uuý׺ögžëòk�ëpqdè&h^j,�,´’µzj¨å‚_ñ+®¥:]a€}û¯už,ö|½n߃-œ›=� çår8h«édëðc2óä)±yüjjk)h2u8š¨éætxæziu 1¸ëý}•ôcò-×ñoƒu�½é�íz«žîäq8þ×û»z¾¯gto¼-œõµ{ew„ƒey¡cè­~‡1bþýöá"¿>—þøêüµnéæâ»+`dò; ú­ëa�þ[v¶·gòã^hò5;¦–›#$û~ )äyž­axš0b,mî½céòf‹ä¿ç•e&;ò¤«òõ0qpðñv¶äª¬­¬ª• ¦¤¤¦ƒ=$õ553è©h¥�ˆ}û¯pút5„påâ¨vufp¦t.qkzåpèä ,�¯¿u®˜6ývó¨¢èwíz�½>:löwøµnß›-›‹‘©çnoâ8æh5e—¡š ï#yã©…ò[:0ëýnåepû‹œï`ò8ìæ)im•ãfqu”¹éú{ yºwžãûû?oñé�¥¯ü{ÿ/�ûøjyry*|n"š³/•¨¤¢‚l†c'-2„¨þžý׺€¸œje&î&/™ºš(±³æš™r“c ™ê! › "rqcý׺�·÷föý‰—“jî]¿¹£ûûƒ-´óòmüî;2˜mó€œrçvö]±õ5+�üz“ã«£›em4ž™oý׺p{÷^é¹±—êcœ|^9ótôrã`ì53e!ço2tma@äj㢚xõú â6u‹€}û¯uëý9œn8äf`ðq²ñ65r†–â+žyò©èo�îeôæ²µxìš×÷î½õlvòú\ÿmw‡du_ëo‘¿v÷ê0òîìýef+òô£uïyø_"âg*¥­|6>´š™á{/½zò�xÿõçñà“äoè�‹›ƒùsåß}­²wÿh|ˆnãêîòßðõ}vã—iïüçqðöÿç¹k²u÷{nzxöáâvté(\•etsélš—}v€ê èèšô�ó_ù1ý�&þ¨åí=“ò«¹>q|wë.…£›n åb~*|©àmï‘ýwùy=³[q][›¨á|eæn¨ê¦‘u%œí$ˆèþêå?*t¹ù•üæ»wã—ko\þëùuó=™i×? :‹¬s�v�ånôîaèv§bv^àø9œ'bü½çnœ¦ëù}õ‚àï9²ïi"qãmy5ã¦góq§‡—û¿än+ùè|æ/�ø¸º§c|eøëù[‹díõyœµ%g[toúž‡gà ƒ³ö�¼°”p¸¨ü�cê¦ê„�n>+0“ýhóã\f½¿ÿšënì¯øóýø|dï�‘ò7º¶vùü_¶ÿòôùq‡ú=;ñ—º&úøžíæ|ù¯úÿè¿zg:ó6?;¸«^q·24í_§x`›ßºùe‡§ïü�®�ï�æ!þ{ëç'bmíéóuýeñ3äçëþžë‚�«ª*·×~äúçevoö»{pöco½�ëšl6ïêàrªz,�fu["µmn�hñ{­£hó t íÿæþ˜¿‚7»º¯äæíßÿ&ºã‚voãîõø¡¸¾;öwæ®ú‹ÿþ3žý+xo¬¾ðëïãt¿k‰¨ššhf“îruk)‰}ëöô j)‚zw_rü»êÿž½w¾þdüåøýó{ïäéáeöå&ûø™½ûo9²1™�™‘ý_ès¥¶&þ캭õþ;‡,tï]›¬äê‡o[9£�\/oîµ@in:üîþsv|ì^ßùù^·þïö_ìƒfü/û{ûrõ^îë·ú»+#ü[·¨w–îê|îf}íöyíùµ÷à¦èr+ù¨«ÿfn^æÿmg¨hÿ¤‰�ù~=b»áwú#;{`¶7c>�ïàï�~êçû5ûz«î÷í=ÿô}küûsým¹³›qn�ÿ�º¢¯²võe>;+ö»w¸¶wå¾°þ{ò�'opb#¯­’žšzêjºóýèôé$2û¯0¤'ë¥_pü¿î©þüèø_ ðýß}ÿñç¯æÿ�u»ƒvtö¯¬;g`öxüeü;own. îä÷þåol6²æ…¦‚‹!�¥­…œêx{믔œ:»³ùˆ÷'ç3üïú×z.úýñò?è«x|%åðàæ.~ãúÿ,iñýkñ;j·åuýy-“ò.:ìfnxyg­¤dfdÿ8}ö‚ƒ ùyôv§óùeþ—~@tæãß™ìêøo³ú×ddåø�ë·äÿë,鯒9> ûý‘½stn¾œûm�èî¹›3™¥äpqäðæj*2:þõi#ou°¢€žçn†ýóò£çw{|�ø…ð}#]²>'t|…þ_¿+»r.çê,·aöfîú=åõ”ûnƒdäwà|¾åãä·w÷v«•–�)⪪¬‘~ê–v×z¢€äæ†�,¶¿ëõ‡ç–w¡»ß¼¶¯çªj~ð¢ú}!ó»»ã.â�h|ºëoôsa“©þ=sòr·~g·"ìì®ë›%${~’ijpã ô9’yîúõš�_òu[_ ;/¹7_ã>ïýýwÿë?�²m¯ç•ºú»psu_ráµê7ín;ç>ëú[g}nœžñý›f£'»—ìsüæäüaëïæ·™þý;qñç}n¾±üyýq8ü›gãçjvæªñgè({\®âî,.#qpgjã—.¢±ê¨a¤p°~êúwv�?^„¯œ/º›ùó�1œ¾c·vn[j`úûáöo?¶¿ðúóf3{'saþmëõ[; »°ªÿº¹´¨1i“ê­g÷�¡¿úãi¸÷z$xk�_òtºþa,g�|êþ[ß»^–|§æ®ï§ù=ý��×ù éógwží襱«º×¯7u™&ü»kjå7mfâ®ãî²qwéihòç*ó¿�]yp¬ã�fc¶:£ ¾tÿ{wçê�ž_ ÷ö¤ëgïn�ì^¾ùÿžíz|nâë±ìlú¯�û»aõoxíœv|å7–w+ûû�)´±¸¼­m~7u&m!ª¤†žzaîªbñ¨2:%]=üô~\wkôÿè~¼áöv÷ø=¹ßøm¬~&`�—oêù0{{ã–åì¶ëè;�æ¿÷wýåûhm…mו•¥]¹5ªqñ¬¸÷v(¢ úq¨ÿ[÷'atgè�·�ù½ýó�_ý›gœƒsböçkìm±ø8v㥠è⩳ô8�לêðrf)ñ™šºt©höe‚¦t ¦fý6 zëü(§ëo‹~/vgçožß6ÿìÿ•9;ÿá�y÷î{©öäy]‡c»>sü‘ž}í¹rû~ƒ»wnü랪ë)¢¡ûë˜ççz(¨¨t�#®�j– “¤ ô�·oèæó{ûåä,�fõw{÷¥7á-åó'âÿoã:]ºöywãýi±7/qögzðomõ€­ž¿pwbÿ ”š¢ˆh2ç,u odßu¢š51zt‰ú_î%ø,>òàjp|6íï��y¸;³°jñõf}�ò'ävvïuõ^è›.j¦þ¸§ñ÷+gy™@«îcìò*4>ëú(ø«ó&õùµó︨ÿ–=æý�möù�æ'“ù©¿û#½:®¿=e×}´ñ‘oß�•¸�½m¸põû›xc:‹!i_ü×pòd²uq}û54n“û¯iq¯ånœïç�9;o«~st¾p|xþß2>#ü�¨é�‹ù½•´7¦æéêúùl\v^ßü½ƒ³zë5™ü»o9çþy|”øš™`zê:yiuyïî´b‚§:hêëûÿþd÷kÿâ5ß_ûëå=ûªž#­}ÿîöÿüæ·ÿ*ýó¿èßÿf“`ÿûù~ ÿãûÿ�ïæ¿~óê§àoôßçêë½û¦ú©¿œ?öð¿äóÿ‰ßå§ÿ‡k{טêëð¿åþ£oiš›ùýub/ò°ù 2©h¾pt¨` ’¤¯6 ûß¼ú÷úû�éñøýó§ù‡ä>9�.o›=ïù}šë/•}ýñ½¾ú7itöc–£û�廲½m…íhûbmó]p7æ?všjù±¸j|dxç–hþ¢oub«vp @éa¼þev‡dd¿™oyl}ƒóx-«ñsù‰üzæ÷ôûc¬ñx}éù�ó]wô8žôïn­ãž–†çìm—k¾¿œñåêì³cašj]-�õí èñ�&�™¿lõ.sç×gõö;oo•øõ'åïœ�9j»;tnšùòÿ¾3˜:ýåž«êìªzíçºvÿtmïúÿuƒã)­éo妦auqn_ýh :aâ�áò�cüéùk·ñÿ+0ùšîéî=µ×¿û§äžåùøÿëóä'âüfæî1§ræð=í�åmîáåîšl¥6kôs-t0ã2u óç4~ëúw·ö¾µê{wÿó0úÿzïå~êß»yõ÷ýåýý¸q}-ñctö>câ?ioµ—ïö×gðm\6úmíòp6·5u,xª:ld™ ᦬ç⑧ºõqéë9òb-á[ü¦r´½•ñãæun|ëì�ÿ/zž‰çí¼ž=»ô�ñ’¢ÿhí¬îàü™¢íý­6"n^ªaxd‚hú’•&’ãáèø¦ÿì+³ÿœf{®>gìþà쾩ùsß8ýƒ´3}�–�uwúé€þ¸¹öùÿ´÷ì훺!2bwlóqv«+¥¬jß+…ou³¦©qštyº#çžæùkò#â^üèùöü]=¹~kòóäœõ4c#“æöv•v/ct�ucª�’}µ¹èw†vvd£šï%6çqqå÷u+¤5xö�.¾q÷ß|e¾uô—á¯�[§gõ6øìžÿí�ý‡þ;ßc/gç±ú×­·ðùx½¿²ºîm׳1ûƒvom뼩⨪¬­h1xêy¤jz‰ey)}×€kªçß{|šíÿåýüéz'µ÷ÿ\kù?þatçyvnóú�wya·>@õ_bgzk|õ†j�½›^�]¼#m훂–œµ3sr¬p­[˜=õôê@álçö�zím‰·ð]‹»ð{÷zðcyü�wí½‘\as•u9*úèêhvt[‡u¦ c¥¨ž'oâfy#ik!u÷m8꧿”>dâ?“_qå…;$q{äædc²ô‹_‰¯4]óýu"‹)bår·tbñ³tõãašzºšéqó)†8}ö€rh‡óéç'ßmïßê"“nö'ç/‘u}åµ¾qöáþtâz;órwìþ•i0[ÿ«¨«÷nâîõ�^aêw¼1øüý+å^’z)~î#ö°û¯r�ðgš?åíñó÷¬þ�2nôøý×µ;›yô�ì?šym½öû‡©ë¢;—#ó¿$›sv¤xüõogç«q›s}uþ9�âmªhájk¡ûzéä‰uë×­�%�r‚ƒ«ûÿì2›~÷÷an�ÿ˜å�…?þí/•}í»gáá6á«þùksù}]‚æf7:�¶ÿelœ–^º™ýöµ�%|ºûùgugae»cqò#äöøèþãïz�“û»ã¦òü�_i×/ßç|íîæëox3yž§îö\ø|þñû¹)p9éðð×´³cv¦jou°äs½-çð·oä¾`ã>dí^üíž¹þûmu—kì «>ä«ëžìùû#)¹ó{3½¨÷fçü›�&#»ªü’àòx¹* æäyùýöµvé§a�j�.¨þ=n¹‰êo–ß)v‡æý•»žõù�¨2ýg/víê¹³5yš­•k»«º’¯º¨¢­ü{gûì´ñje˜šä¾ëå«åe}z:ëâ&æê™òwgl]ïúxcò£·û§»÷~ì¥üxzç±·ßxb¨1{‚³«3x½±�m·ù8èjpowj®ž­d’ïq`£ýhšò¾]ÿå]°w®ôù/�ï��ß!»ï±¾qte/æ�áüûê«©6æóú}#ˆënlþgll]õnñëšé2ûž¦¶§!�âä«k+]��"o÷vöe(¡ï¿~mžê¢ø÷“û½³û=ú¿§è¿kw7yôìzýý�¡ü;2>¿þxlþßì-“½ºçtâw†×†8êã«â³çfª¾zfª�,”ëdözq0upä zô]:ÿù\í.¹ì¯�½™¹þr|²îz=ê¿ö¯gomƒ6éù›?qõfëê3´2¸=©ö»]·œøý±º‰‹=“š£qk¡§‹ïe/üóô{«¨"€w¡ïáïvw–僿÷ç�omë™ý}ãò°;+luæo{öï�¯ñ½`�e´zß®¶eul²rrasµ¶ô¬”4)ocs+sxno�{§¸w$û«²{§yošz*lööþ›²‚›)·=-"‚,døšl\xuæò©žaôn’_~dú'{ìýë”ù³óg»¶ÿye]iö½sû�¡´jöž»mwmx“v�rúófî~ô›šéj¸ïïg!+ˆ§1iwu#ýxµ�éë¹¾/f°ÿå¯ê/�ón=u/èý»÷ç||~émù³0�i¾÷fþçóqï¬ö·?×»�}õ½o`oïžþ—¤z¹'‘©åœd÷î¬â ñ�—á_ióïÿ‡{ïlòg¶=?á­­ø{+£6&ô­æslz}­øýsˆêúü>ä¢êa²ùì”�kààö¦èñh•ž¥ªaóïýwqîùôo¿å�ñ½ƒ·~tíœæïízz—�!:oä‡ckœìíªð[爐�o–û8}“%v謇¶2u=a�zø«£èõºttª!-‹ý[yíù–}ïü¿z+ä7êž?,÷åvø£ì��rmýßämüö.�dïújlõ6îùô�•…¯àäë³õ¾û¤\î èk1²sdyúfž6¯ºðb_#òo´>sîžïß]ùòß'>cüqþ�ížûžü¦é)º“!�íêm�ƒ]³¶³õøžþê®ï¦ú}‹…û�až§üqgv´,n®ê’'ºðlp€zñ¶f/äg[|›ÿwö6�²:óã>sâýn,ö%�ü›7po ‹½ò{·v8û°f²}‡ušøtæjøë £‘j'-h]‘óýj¸#ê½[ÿà-aw®öínóù)ò'³ºó®û¢ƒäwx|rýynµ^®ø]ëˆþ/ü?œüxnµã÷kmmìi.]¹j1”r–wiéêó§ºþ¬p^˜w?òçééñû¹¾:�íû8œwp|ÿýß0}ãó;pož¼îííü4�ßc”ùë³ÿn×þt%w“2p랢y]„«î¼‚ê��æ?ð?wü êƒÿê�b÷�~ûù=²+»�ä^å«ëü&èàtµ.ìßt�é_¼“mñì\m\=½³ò2mqšãâvšg¯„ôdd“û«+p±ùusñròákðce k $pç,t±æ!žš:tq@‘¡ x{÷mõt»cùfõóþéõô�ëò7r|kë®êäöï\|-ü{—bõôvòþ˜àûïnã[/m×ô�½¹zçi»µ2»–³ ks2çqh“ý_yô½z;[ãnçø#ûóäî/ºê·×è�¡ò»7za²u˜‰¶ž+ñtûê“jôíš:\%bž·'ÿªþ jë«c‘¡ˆâ°áýõkp§io–_:ãåîbso,þÿë½ÿô›á{¦{»§·;·º—x5f"¿'³÷^/7žzöªj «êœ~k#¼ª÷æghb÷f{¨²ýéˆê,þj¾v©ûtû–( ôksgøwýhµx¨¯v=ïýwªî�å—ðì©ío‰t»—·ñ›k¯û�?ò­{o ¼qx~éëžãíöîòîz}÷´7n7kómúc2^z”£ip{«øuõ¥kså$çðíå42¢é±h¥$žhüxý açߺ§uòqéú|su_"¾v/ãìtf�á¥ì ©bø*wœ›ú]‚r±lhûtôëäå`vñüžœøšslm9÷wöxðjõèàü‹ø‡ï~ðø�"v§èß‘�{k`õ&ãé ïadzžš›+×[ÿvmýë‘ãe(;;¨{:ažûr$”ÿjbbéªþëa¨ #¬�1ð_!¶—ꬿ`oî÷íméò]wñ‡e|�ëý¿½w¦+)qüý�_¼'ì>áùùcea6_^à÷î–võætsaa¬©¢zù’"û¯)jf½ _+~#õ¿ë�¥´0{ë7¾vðëóšìî î.¨îqmžöêmÿ‡‚®†å³3™,n�w!‰ètqwðd(+ñµô“•š��!xýöƒè>øùðgðû×u÷ùîîïù9ßûóbpu~s¹;ï=·*òø>¸çeª3ñlm…µ¶nøú3fíª¼ôâ¾±!¡–®º¶4–¢¢m«î¶z¸¥iìòúé,寋©7oië׿ûo¥;w®óµ9�¤ûë;¹:/�/bmz-é[ê‹ _ƒêfa†¾*~>¡éˆx¦…ç�û¯j5'ìô#mï„]=ƒošt•u›»rb>xnîwº°yü†le$[ƒ©°ý7˜áìõçíüun?[µ0á™k¤èm÷3;y4iœ{¯j=¿.‚®ºþw¿:ÿá&�à…dý‹¾z»vå2û§vï}åºhåíýá¿ò;â�}c{£xmì&þ ¢þ[?páño†¨¥çáxz41éãs'ºñs«wÿoûsàöæ]‡ûýwý4>uüšûý·ó{ó¡ä¥ìz®�áá´v6óætá*s˜jn·ém™kší*lusæwqròni-vtouí\( t!îošõëñû§¾?ô÷ènïèz+°6îäí �?\åwžc×{§¯qxîàãož½ýy½°¹|mbôä(åãsâù*x*iþùà‹oºõrièøÿ뢶-/çcg¼{w3¸>=ü‘ìï–_ßþáúõ›ƒ·{縰û×ø[§´å6ì£ã4¹7ímh£ûô{~šžxb¢ u�u½g?1n„î£øeƒé’áß{¸;vƒlü�ü5½‡¿þ=õõljîÿ›·²ø �µs=¡�šm�{&�5�àljþïøûc¢™ª`ó$qáî´z 8tw?”·ãl‡åý±ò£~în¹ëu>ãùò¯¸w¾ùë\îw¸r=mñmù»)ºcb-n·'‹§æ,9œ¾à¥¥‚¦t¤�q˜‹g'ýmú´à:4¿'þmß‘›³«»gú}¡ñóäjsnìwyw�oo³îäæà7üx„ý»;tmýÿ´·¶èß{'7.ži1ùêèã·wlëøy}¥¾0ÿ]52·uk]u…‡%ˆ«h*1õ‘ 'ž£ý[p¢€šôaó¿ê㣨º»ã&äéóû¿wÿã¸7œ}ý}g¸p9nåâéùjgíh·¼=‰¶·¦îì¬olç4å7w$u¹âiˆ÷uöjiíz,�4�–½e?òþùó(�¥ß½ûò+äæ¾öî~æþû¿oûý©’úýýñ•[³qvîls³öl�}˜ýùmñq¶ãû¹lõðòa¨©°ðá1�óf‘pøëå÷^ôj§f3?ð{?qüní|]­énx¶w¤2]w˜¥¬å¦ð�gå6ýyq’¦èm†ÿ ›•0³™rfç½(ª³síû÷z®kçðiù_ú«´~!ì_…ùíåø4]_×ø¿�8|>�”û‘oúª?�{³¯7~élžn³jöíéªrõýmeu¢åâ³c4â¦f�£÷[cjóëÿwõgysüãù1þ½ƒ¿7?pç¶�rõ?ctý6ôéåöœí¡�®üûû¸r»qüàvæòý›ãué†�iôuœfkrî*ažÿýx‘¤3ôÿ•_öoê�ôc¸+w×htßnt†àüÿ¦{ã¥÷/ov7_d÷^ý¨úû®š‘·tmœæøýøi–ÿ+œèãªi«b…ðê{¯¥qžƒþ”þ_=}õxôÿxv§swßqü“øñuço|…íìþüévm~ê£áf°xm¡³i°[w ²6ñûÿþjúº,}'ç%mižµ«$te÷^,m1@:x�à/qçõ_z‡ûïøçn�/íùô›ë¨kÿšm‘šý9>›êmïóûfèÿû¦hrtû{uoq\¸ê|l’vçdðä&÷^ôjç×®1ÿ/®ˆ“¤¾aô^¯|î¿ù¹ù�ùúý´™œ¾ ²ø]íþ¸ì]ä‹`vã¶æ>.;n釧ªâýì9*šz¨ãí5@gºö£u>c¤¥òîè/ˆ�sñÿpv­6ª7ånl>èçîœ>3¿0ã�þ¹žâ^ï§þ4;b¿?cun­ã_5dõy¨ª¡¬– ©¤…ùºö³¨·rkþäwÿç¿‘~b|¸ù-òògc/^nmó¼�ð–öélm¼”yš=_€ëžœú[7”èå˜×�ªècòóvëmr0žý×µp‚ t0ö÷æíí¿v_[í~±ù1ß?ò½_e+ºz¢n±êk¹0ãc€ÿ¿6·hu¾ÿù;•we䤘c©ª(+›ï õû¯’h £«ÿ—aõgáîogeû**�…²|†¯ëñ’ü8,‚ï�åò† öííóúriµv§/šìç2õ™juäi„¢¤¬ªdžÿíx½×‹«çò£¡>mÿž•ßûßfö§lî½ï}éø=¥‘øë¸äëêþ«úý•úûš=ùù»§k¼[+½§«ý™˜[åi”îõc¨b«©ž8‚h†uâõs\ÿ-žøë_äãòª°ý5¹ß½¾dvþöî�åðgríè·ðé½ÿß=e&ã þc=&þ¬zš=j›vcw:)rò,~6`þêåá�àuÿõü÷º>|ü1ø뿨z¿¼>jugyïúêlut›otnjj:¼.?;sö¸lžì™z-—‹ëêóue塧�#wg)²û«b*d�ç—ó®ê¿“ÿþ#ôçè?žý7»{~‹°wÿdvgpí§kb6vlc6egyíö–þìž³hk{§+¼z:jùrv†–†g‰y˜î¬«pxœtk�˜ÿê]ÿñã¬=¡õ»7gï®áü»ò½?µ0›ÿ5šàløóçù;�¯©2»‡%·q¹lüxü\¹á4‚š %ò·ur47ºª.£bqó·oö�é¾½ë¾òì�æ(~!t®×ùppæq»«§;o°3?¶i©ë[rå{?û»'¯©°?orô‰f)ìë.©•o¿ºñ�½(:«çwãþïú�¾ú§ä]omµó:íïúõ8줱d¶û¡ävçfü;ÿowòñî,flv2¦xjþ“íê4ë»å"¯ºñv¨è­wßó•ø/ô3ù]±³{£`wng­*úº‹!°vfðçòç2u]¯\?€sp×ä©ÿ†}ü;v‡+‘ž-e þuk7†¦6�}öâ1 s«êîôë¾ëø¸>íê�ß…ß›s�þ»6õoþaò¿á³ ¿”û:�)äûö*¦šn¥…‡ãߺ©=^˜ùõ¹ûsùtv·íª­ƒ�ãîn½ûß1³t[ÿ-�«ád%øí¿û�gࡪééãüô½go5ye¼rtè#áwߺùz0_³¥¥'ó øç°þlu~ßû}å´w°:ú¶§14õÿb7€>ôƒeiu˜ ú”òô¤sä*ééé)ç>)$iaaî¶�e:88œ¾'pbqyìs›áæñôy|.k[m’äåñ9*h«qùl^fšy¨ëñõôs$°o¼räêêåh>ýõzq÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷^÷î½×½û¯uï~ëý{ߺ÷_ÿö¼†üy�œ5¿í—£;gâçèžá쿘]ßü½�ñ™žºè.âím‡ò?¯»o¥vžòø=myø»w’ù›ý­ n#-o¹rxjl}rwfän÷÷nñða =eñ»¾:—äò;úûÿ »7žcãçáÿ“ýgý½‡žädóûggïšž¶øå„æmýå½h!­âré[‘àvðbfª©ž\â㤖 ì$¯n´h"jy‘ñ‚þr}mºû³â6õëí£²÷þû¨éü®ø‹s�ãõåî¨ý{:ƒ¿vmnîïóöìsèû´˜ ïu>z’ji1‘æjð˜ä‹¾µ²|º>n|átßæž¿_�ýoýý鵺ëæ¿åÿ’ýûó>ûî�‘[ë´úã©w´n­¹²±}ëø;ç#]wš†¢›7ü‚hcì6'âñk# ÷rj|ºû²ïów»>o|’ènœï­¿õgùj|¤øßužßýù]q»~c÷ftožøý]²:×±0;o±7…?\ë‚èâaúìä¾æ–iìîgºøí+«¡3ä�çmù7òû� ö=/¸ãì¬gåo‰ísó{wcöñvv�§÷×ca“bqãàîôohª±yzªê¶9*œ™˜4ou#÷zõ*n+õët×lmîòëm¯úûo ¾ð;oxa_y…çv^àýý]¼þâ‹/�äã�éìm÷‰án¼-&`cþò�ªé!5xùà©œ¦��º¡4ë[þœþw=m¹¿•§~ï.êø÷ýß++±?ì#-·öåvðù´wfkqžýùqôkœé|fóâá22n,xäm�¤l‘g#©šsoý—]8\ë8çcæw±¾ut~åþ]i'¿:¬à/\awgjtÿãê�’ýàÿ#0ûg­°ô¿÷nûêì­÷þ†qsc)&­’§3„¥§¬ëaà–¶�qt¾½ƒ«ì×× â_æ.ùcü€6ïjü}ìêcó]óó[wöþ�õžf)ú¦¾]³ò#pu†âìºipç³*j·ƒb*°µu^ zœƒò½¹xkkó¯1’‡ó¡�äöçß�?üæþjw7cö_íž­ê/‘}#ñódõg`ühøá°>qbrbòoœóè^äåg~&üœý›:·'¹sšæexìvsøä«róki á¾¼2 *?õê:²ÿš‡d|têƒ?zï«þzn‘¼:ëtâöžüßýd�/pbv&ømóoaò›1�¡ú´i¸7dysšáq¾*?¹é@h|qê�rx’+õƒ{÷uëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯{÷^ëþý׺÷¿uî½ïý{¯ÿù abstract introduction literature review research methodology ethical considerations findings discussion of findings conclusion and recommendations acknowledgements references appendix 1 about the author(s) takawira m. ndofirepi department of business support studies, faculty of management sciences, central university of technology, south africa patient rambe department of business support studies, faculty of management sciences, central university of technology, south africa citation ndofirepi, t.m. & rambe, p., ‘a qualitative approach to the entrepreneurial education and intentions nexus: a case of zimbabwean polytechnic students’, southern african journal of entrepreneurship and small business management 10(1), a81. https://doi.org/10.4102/sajesbm.v10i1.81 original research a qualitative approach to the entrepreneurial education and intentions nexus: a case of zimbabwean polytechnic students takawira m. ndofirepi, patient rambe received: 22 apr. 2016; accepted: 17 july 2018; published: 04 oct. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: owing to the popularity of entrepreneurship as an alternative to formal employment, entrepreneurship education has become the main instrument for equipping graduates with survivalist and innovative skills for new venture creation in their post-college life. however, despite the growing body of literature on the entrepreneurship education–entrepreneurial intention nexus, there are limited studies based on qualitative methodologies covering this relationship. aim: this article develops an in-depth understanding of the interface between exposure to entrepreneurship education and the entrepreneurial intention of students. setting: the study draws on the perceptions of 27 purposively selected national certificate level students at a zimbabwean polytechnic. methods: the study used an interpretive qualitative research design, with data being collected through focus group discussions. results: findings suggest that while passive learning and teaching methods were critical to orienting students towards the entrepreneurship field, over-dependence on theoretical content, teacher-dominated delivery, the absence of deep practical orientation and engagement with industry undermined the significance of tertiary level entrepreneurship education. conclusion: to enrich the development of potential entrepreneurs, the implication of these findings is that educators and policymakers should address various aspects of the entrepreneurship education value chain (from content creation, delivery strategy, enhancing practical orientation of the subject, and developing lasting relations with industry long before entrepreneurship starts) that potentially affect students’ willingness to engage in future entrepreneurship. introduction in the new global economy, entrepreneurship has become a central issue for the socio-economic development of nations. against this background, the need to groom individuals who are intending to pursue entrepreneurial careers is being experienced by national governments and educators. arguably, this explains why higher education institutions (heis) worldwide increasingly seek to integrate entrepreneurship education into their educational curricula. a sobering fact, however, is that that there is no foolproof prototype for effective entrepreneurship education (maritz & brown 2013). in fact, professor william j. baumol interviewed in griffiths et al. (2012:617) lamented that: ‘we do not know what works in teaching innovative entrepreneurship. we are using certain teaching methods because our teachers used those methods’. against this background, there is a need to understand students’ situated experiences of extant entrepreneurial education practices and their implication for learning outcomes, especially entrepreneurial intent. this understanding is particularly important in the least developed countries such as zimbabwe, which is plagued by a high rate of graduate unemployment and poverty. this context, arguably, needs human capital development practices that embed innovative economic behaviour. although substantial research on entrepreneurship education and its learning outcomes has been carried out worldwide, empirical evidence on the specific aspects of entrepreneurial education that ignite entrepreneurship intention and activities of the innovative type is scarce and inconclusive (baumol 2005; griffiths et al. 2012; mayhew et al. 2012). actually, the existing literature on the association between aspects of entrepreneurship education and entrepreneurship intention places less emphasis on the entrepreneurship intentions of vocational education students in struggling economies (fulgence 2015; mwasalwiba 2009). for this reason, it is important to expand the body of knowledge with respect to entrepreneurship education to fully comprehend how it affects the intention of students to engage in entrepreneurship. polytechnic colleges are a potentially interesting target group for studies exploring the entrepreneurship education–entrepreneurship intention nexus given their unique educational mandate in the higher education sector. in zimbabwe, polytechnics are intended to provide a blend of theoretical and practically oriented education, with the aim of producing human resources who are vocationally ready (phuthi & maphosa 2007). in other words, the thrust of polytechnics is to provide technical and vocational education and training. apart from this, these institutions are also meant to promote technology generation and transfer. study options at such institutions include short courses, pre-apprenticeships, apprenticeships, national certificates, national diplomas, higher national diplomas through to undergraduate degrees in applied sciences, commerce and engineering (lee 2010). the popularity of this education model in developing countries lies in its emphasis on creating a human resource inventory equipped to drive a society’s industrial growth agenda. this is particularly relevant for a country like zimbabwe which is struggling economically and has endured sustained de-industrialisation and high formal unemployment (over 80%) following its fast-track land reform programme initiated in the year 2000 (schmuck 2017). while compulsory entrepreneurship education programmes are enforced at zimbabwean polytechnics as a way to prepare prospective entrepreneurs and business owners, very limited studies, to the researchers’ knowledge, have been conducted to assess their effect on students’ intention to engage in entrepreneurship. mindful of the urgent need to equip the youths in stressed economies with business and technological skill inventories requisite to launch business ventures, the necessity to comprehend and optimise aspects of entrepreneurship education that impinge on the students’ intention to engage in such activities cannot be over-emphasised. this article employs students’ learning experiences in entrepreneurship classes to unravel the entrepreneurship education–entrepreneurship intention nexus. it seeks to answer the research question: ‘to what extent do the student experiences of entrepreneurial courses help to illuminate the understanding of their entrepreneurial intention?’ literature review understanding entrepreneurship education entrepreneurship education relates to the deliberate transmission of entrepreneurial knowledge (jones & colwill 2013). such knowledge encompasses thoughts, expertise and mindsets relevant to venture creation and survival. in contemporary economies, these qualities are essential for entrepreneurs and non-entrepreneurs alike (maritz & brown 2013). weber (2012) notes that entrepreneurship education is ongoing and that the different phases of one’s entrepreneurship career growth path have unique educational requirements. consistent with this, some scholars perceive different facets of entrepreneurship education. for example, liñán (2004) views entrepreneurship education as having four subcategories, namely entrepreneurship awareness education, education for start-ups, education for entrepreneurial dynamism and continuing education for entrepreneurship. there are suggestions that the contemporary economic environment of emerging economies urgently needs a sustained supply of innovative entrepreneurs to sustain it (braunerhjelm 2010; marinova & borza 2011; wiseman & anderson 2013). not undermining the role of replicative entrepreneurs, it is innovative entrepreneurs through their introduction and acceptance of new products and new production methods that propel economies forward and introduce structural changes (bruton 2014; mars 2013; urbano & guerrero 2013). thus, institutions of higher learning and other concerned stakeholders have a critical role in educating graduates to equip them with essential skills and orientation for innovation and dynamism. in view of the limited research that examines the impact of specifics of entrepreneurship education on different entrepreneurship intentions, this study postulates that the mode of entrepreneurship education that an individual is exposed to influences the nature of entrepreneurship that an individual intends to engage in. extant literature reveals that scholarly work that connects teaching and learning methods in entrepreneurship education with the effectiveness of learning outcomes has already been undertaken (balan & metcalfe 2012; taatila 2010; ulvenblad, berggren & winborg 2013). most of these vouch for active learning methods as being more effective in grooming nascent entrepreneurs (davies & gibb 1991; vincett & farlow 2008). ojastu, chiu and olsen (2011:399) note that despite the lack consensus on the strengths and drawbacks of various teaching methods in entrepreneurship education, there is convergence of opinion on the view that ‘the best way to learn entrepreneurship is to “live” it.’ thus, potential entrepreneurs arguably learn best through entrepreneurial action. components of such a method of entrepreneurship education include project-based assignments, practical field projects, business plan competitions, computer-based business games and simulations, college-supported business incubators, micro field–based student consulting and the involvement of external mentoring schemes. entrepreneurship education in the zimbabwean higher education sector following a 1999 joint review of the state of the education sector, the zimbabwean government henceforth sought to expand entrepreneurship education to all institutions of higher learning in the country (nziramasanga 1999). the most compelling evidence of this drive is the emphasis of the 2010–2015 strategic plan of the then ministry of higher education and technology on the need to reorient the higher education sector towards entrepreneurship-inclined technical and vocational education (ministry of higher education and technology 2010). since 2011, all polytechnic students taking national certificate level courses of the higher education examination council (hexco) in zimbabwe are required to complete a year-long subject in entrepreneurship skills development. learning occurs through weekly classroom contact where students are exposed to lectures. the students’ performance in the subject is assessed using a combination of coursework (i.e. written assignments, in-class tests, business plan) and a final written examination. apart from polytechnics, local universities and other vocational training institutions also offer entrepreneurship education and training programmes of different duration and at different qualification levels. while some of the programmes are optional, others have mandatory components for the different qualifications. however, the effectiveness of such programmes is not clear. the fact that diverse students enrol in the entrepreneurship courses for different reasons makes it difficult to have a clear picture of the success of the courses. some anecdotal and empirical evidence suggest a continuum of student attitudes that range from outright negativity to apparent enthusiasm towards the programmes, with a mixture of indifference and tolerance in between. findings from mauchi et al.’s (2011) study on the state of entrepreneurship education at zimbabwean universities revealed some teething problems. their study drew attention to the over-reliance on passive, teacher-centred approaches to entrepreneurship education, while entrepreneurship in reality is rather lively and active. another observed irony was that the lecturers who conducted the programmes had neither experience of nor qualifications specific to entrepreneurship. these findings are corroborated by results from hosho, muguti and muzividzi’s (2013) study on the effect of students’ attitude towards entrepreneurship after being exposed to entrepreneurship education. the preceding scholars observed that most students were dissatisfied with the course materials and teaching methods that they were exposed to during their studies. ndofirepi’s (2016) quantitative study on the joint effects of technological creativity and exposure to entrepreneurship education on the entrepreneurship intentions of students at a particular zimbabwean polytechnics revealed significant positive correlations among technological creativity, entrepreneurship education and entrepreneurship intentions. unlike mauchi et al. (2011) and hosho et al. (2013), ndofirepi’s (2016) study did not explore the teaching and learning approaches that were used at the polytechnic. such information is arguably essential to sufficiently grasp entrepreneurship at zimbabwean polytechnics. it is this research gap that the current study seeks to close. entrepreneurship intention entrepreneurship intention relates to an individual’s willingness to engage in business activity in the future (krueger 2006). intention is, therefore, a proxy for future course of action. concomitantly, the entrepreneurship intention construct has been conveniently used in studies assessing the impact of entrepreneurship education programmes on students, given the difficulties associated with attempting to use actual entrepreneurship activity as a yardstick (thompson 2009). krueger, reilly and carsrud (2000:411) highlight the high and consistent predictive power of intention on planned behaviour, especially ‘when that behaviour is rare, hard to observe, or involves unpredictable time lags.’ while several entrepreneurial intention theories have evolved over time, the focus of this study is limited to the three commonly used ones, that is, the theory of planned behaviour (tpb), model of entrepreneurial event and theory of implementing entrepreneurship ideas. an intention-based analytical framework which is commonly used in entrepreneurship studies is ajzen’s (1991) tpb (heuer & kolvereid 2013; kaijun & sholihah 2015; manstead & parker 2015). although originally not developed for entrepreneurship, krueger and casrud’s (1993) study set the scene for making it a foundational conceptual lens for entrepreneurial intention research. the theory portrays entrepreneurship behaviour as an outcome of entrepreneurship intention which in turn is a result of three antecedents, that is, attitudes, subjective norms and perceived behavioural control. attitude refers to one’s predisposition towards a subject and is premised on one’s attitudinal beliefs towards a subject (liñán 2004). subjective norms relate to the opinions of people who are socially close to an individual (liñàn 2004). according to ajzen (1991), the sentiments of individuals such as friends, family, workmates, mentors or role models carry weight in shaping an individual’s intention, although their adoption depends on one’s willingness to comply. lastly, perceived behavioural control means self-belief in one’s capabilities to undertake a task (saeed et al. 2014). this factor determines the strength of the likelihood of intention being translated into action (boyd & vozikis 1994). the credibility of this intention-based theory as a measure of the effectiveness of entrepreneurship education lies in its proven strength in predicting planned behaviour in other domains outside entrepreneurship (ajzen 2015). the model has consistently ‘… exhibited significant predictive validity, typically explaining 30% of future behaviour.’ (ajzen 1991:179). another key intention-based theory of entrepreneurship is shapero’s (1982) model of entrepreneurial event (mee). it explains an individual’s willingness to engage in entrepreneurship in the future in terms of the following three factors: perceptions of desirability (the personal appeal of establishing a business), perceptions of feasibility (extent of belief in one’s abilities to start a business) and a propensity to act upon opportunities. the thrust of this model is that individuals are prompted to consider engaging in entrepreneurship following a negative (push factor) or positive (pull factor) disturbance in their normal way of life. such disturbances include, dissatisfaction with current employment, loss of employment or the need for independence. however, the strength of the influence of such events is influenced by perceived desirability and feasibility of an entrepreneurial action, as well as one’s propensity to act. in the absence of an instigating event, people will continue with their usual ways of life. according to krueger et al. (2000), perceptions of desirability and feasibility jointly account for over 50% of the variance in entrepreneurial intention, and the propensity to act explains the remainder. compared to the tpb, the model of mee has received lesser consideration from entrepreneurship scholars. another under explored scholarly contribution in entrepreneurship research is bird’s (1988) theory of implementing entrepreneurship ideas. this theory suggests that the processes of new venture creation and growth or expansion of existing ones are an outcome of preplanned behaviour. the theory also advances that entrepreneurial intention and activity is an outcome of conscious (rational) and unconscious (intuitive) thought processes against a background of different personal and social–political settings. a key feature of bird’s (1988) theory is its acknowledgement of the role of intention in the establishment and expansion of new ventures. in as much as the theory acknowledges the role of contextual factors in shaping entrepreneurial intention and activity, it falls short of explaining the mechanism through which this occurs. a closer analysis of the three theories reveals an overlap of components across theories in some instances and a divergence in others. for instance, krueger and brazeal (1994) draw parallels between attitude (tpb) and perceived desirability (mee), as well as perceived behavioural control (tpb) and perceived feasibility (mee). in addition, boyd and vozikis’s (1994) attempt at modifying bird’s (1988) theory by incorporating the self-efficacy concepts ended with an unintended consequence of merging the theory with ajzen’s (1991) tpb. more recently, schlaegel and koenig (2013) attempted to integrate the tpb and mee using meta-analytic structural equation modelling. the outcome of this effort was a comprehensive theoretical lens which provided scholars with a fuller understanding of the evolution of entrepreneurial intent. the relationship between entrepreneurship education and entrepreneurship intentions although the influence of entrepreneurship education on entrepreneurial intentions of students is widely researched (e.g. fayolle & liñán 2014; hattab 2014; iacobucci & micozzi 2012; malebana & swanepoel 2015), this relationship is still a rich niche for further investigation particularly in fragile economies where the drivers of entrepreneurial intention are least understood. the need for further studies is informed by the reality that there is limited research on the stated relationship in such troubled settings (koshkaki & solhi 2016). also, the results from more stable economies do not conveniently apply to those from vulnerable economies (bruton, ahlstrom & obloj 2008). this scenario creates research space to explore the circumstances under which entrepreneurial intention and actual entrepreneurship flourish in economies that are beset with poverty, inequality and unemployment. results from bae et al.’s (2014) meta-analytic review of the relationship between entrepreneurship education and entrepreneurial intention portray an inconclusive and somewhat contradictory picture of the effect of entrepreneurship education and training on entrepreneurial intention. the study which results from 73 previous studies revealed a weak but positive correlation between entrepreneurship education and entrepreneurial intention of students. however, the association was not significant after controlling for pre-education entrepreneurial intentions. the study also showed that the linkage was moderated by factors such as attributes of entrepreneurship education, students’ differences and cultural values. nabi et al.’s (2017) systematic review of publications between 2004 and 2016 on the impact of entrepreneurship education in higher education revealed a predominantly positive relationship between entrepreneurship education and entrepreneurship intention of students. out of 81 articles reviewed, 61 of them reported a positive link between entrepreneurship education and participants’ start-up intentions. although 18 of the articles reported mixed, negative, or non-significant results for the link, the two seminal studies (i.e. bae et al. 2014; nabi et al. 2017) largely support a positive correlation between students’ exposure to entrepreneurship education and their intention to partake in entrepreneurship. more recently, mehtap et al.’s (2017) investigation of perceptions of female jordanian business students towards socio-cultural barriers to entrepreneurship revealed that a strong supportive education system to some extent may reduce the perception of potential barriers to entrepreneurship. such a scenario enhanced the students’ entrepreneurship inclination, albeit its limited overall impact. these findings resonate with those of shah and soomro’s (2017) investigation of entrepreneurial intention of public sector university students in pakistan which revealed that entrepreneurship education graduates were more willing to engage in entrepreneurship after completion of their degrees. however, this relationship was subject to the graduates’ perception of positive support from their families, friends, teachers and experts. such conditional ties highlight the inadequacy of entrepreneurship education as a sole determinant of the entrepreneurship intentions of university students. perhaps, a focus on linking entrepreneurship education with the broader entrepreneurship development ecosystem as suggested by scholars like maritz (2017) and belitski and heron (2017) would be more appropriate. the different results derived from the studies reviewed in this subsection can be reasonably explained by the fact that they used different theoretical frameworks and methodologies. another reason could be that their focus was on diverse entrepreneurship education programmes, some voluntary and others compulsory. interestingly, the studies that revealed a negative correlation between exposure to entrepreneurship education and entrepreneurship intent of graduates were the compulsory ones which incorporated willing as well as reluctant participants (oosterbeek, van praag & ijsselstein 2010; singh & verma 2010; von graevenitz, harhoff & weber 2010). such programmes can be equated to the compulsory 1-year entrepreneurship skills development subject offered at all zimbabwean polytechnics. research methodology because the purpose of this study was to get an in-depth understanding of how students’ entrepreneurship education experiences had a bearing on entrepreneurship intention, an interpretive qualitative research methodology coupled with focus group discussions was deemed appropriate. the approach enabled the researchers to deeply explore the potential effect of current teaching and learning methods in embedding an inclination towards entrepreneurship among prospective entrepreneurs. to save time and other resources, the researchers scheduled three focus group discussions (one per group) with participants instead of individual one-on-one interviews. according to cohen, manion and morrison (2007), face-to-face individual interviews might be intimidating for some people, and so group interviews were considered desirable. apart from that, groups brought together people with diverse opinions and interacting with such individuals at the same time facilitated the cross-checking of information provided. a total of 27 students registered and about to complete a year-long compulsory course in entrepreneurship skills development at a zimbabwean polytechnic in the year 2015 were purposively selected. criteria for inclusion were: (1) availability and (2) willingness to participate. it was felt that the selected number and diversity of the student backgrounds would generate rich information critical to the success of this study. the first author of this article employed a trained research assistant to recruit participants for the study. the recruitment process was done in may 2015 and took less than a week to complete. invitations for participation were posted on notice boards found around the polytechnic campus. a total of 46 students responded by expressing their willingness to partake in the study. however, the number narrowed to 27, nine from each of the three academic divisions (commerce, applied sciences and engineering) at the college. the details of participants are summarised in table 1. table 1: details of participants. students were duly informed of the rationale for the study, the potential benefits of the research to the academic community and that their participation in the study was voluntary. they were also advised of their unconditional right to withdraw from the study if they wished. likewise, notification of the right not to respond to questions considered sensitive was given. lastly, participants were given a guarantee of the confidentiality of their contributions and that these were to be used only for the purpose of the study. before recruiting participants, permission to conduct the study was sought from the principal of the concerned institution. research procedure the planning stage of the data collection process involved splitting the student group into three equal clusters according to the field of study, that is, business studies, engineering and applied sciences divisions. each cluster comprised nine students. each participant was allocated a particular number within their class group (e.g. business studies-participant 1 [b1]; applied sciences-participant 1 [as1]; engineering participant 1 [e1]). three days were identified and set aside for the separate focus group discussions. arrangements were made to meet between 12:00 and 14:00 on the designated days. a free lecture hall was identified as the ideal venue for these discussions as it was considered free of interruptions, and a non-threatening and open environment that ostensibly neutralised lecturer–student power relations. no incentives were offered to participants. however, the moderator always started each session by thanking the participants for turning up for the interview and then outlining the purpose of the study and assuring confidentiality of the whole process. the interview guide used during the interviews focused on the participants’ experiences of the teaching and learning process during entrepreneurship education. the first author also listed a number of focus areas like the students’ understanding of entrepreneurship and how the learning process that they went through influenced their inclination towards entrepreneurship careers. however, the natural flow of conversation as discussions progressed was considered. each session always ended with the moderator asking the participants if they had any information on their experiences during entrepreneurship education that they wished to add. during the discussions, the first author facilitated and guided the interaction process. group facilitation involved introducing a topic and then raising a question, moderation of the discussion and probing for the solicitation of rich information. the proceedings were recorded on tape for post-interview content analysis. in addition to recording the discussions on tape, a senior student from the office management department was recruited to transcribe the discussion on behalf of the researchers. data analysis was conducted by means of burnard’s (1991) thematic content analysis and the whole process was managed manually. the researchers first forwarded the interview texts which were captured in microsoft word to participants for verification and proofing before carrying out the actual analysis. after getting feedback and correcting the raw data records, the researchers went through all the recorded text to get an appreciation of data. the researchers took notes on the general impressions they got as they read through the texts. using the notes, the researchers segmented the data into analytical units by way of bracketing. open coding was used to detect keywords and label the bracketed data with preliminary codes. following this, the researchers then attached meanings to the allocated codes. after that, the researchers identified some clusters of codes which they then transformed into themes. patterns, relations and trends that emerged from the data were then noted in the themes. the researchers enumerated the frequency with which certain observations occurred as a way of identifying prominent themes. only those themes that fitted the research objectives were considered for further analysis. trustworthiness to ensure the trustworthiness and eliminate bias in the results, lincoln and guba’s model was used to increase the credibility of qualitative research (lincoln & guba 1985). two rounds of content analysis were performed on the field recordings. the first round was to generate diverse views independently. the latter was part of member checking to cross-check if researchers’ documentation of report findings were consistent with what the research participants actually said. also, the main author sent the focus group discussion transcripts to the co-author for comparability and cross-examination. the main author also did the same and they exchanged notes and refined findings after clearing some different views and ambiguities. this was done as part of corroboration of evidence and promoting trustworthiness of results. thus, consideration was given to the following issues: credibility (verifying the truthfulness of the results by means of the researcher’s reflective notes and peer inspection; transferability (relevance of the findings) was guaranteed through ‘thick’ characterisations of the data. dependability or the consistency of the findings was safeguarded through documenting the key phases of the research process, particularly the data collection and analysis procedures. ethical considerations all ethical considerations such as informed disclosure, voluntary participation and protection from harm were considered and adhered to in the study. findings this section presents the main findings of the study through a synthesis of the results from focus group discussions. the analysis of the data collected revealed five overarching themes across the three focus groups (see appendix 1 for illustration of how the themes were manually derived). the findings to be presented revolve around the identified themes. theme 1 (a): conception of entrepreneurship the first theme to emerge from the responses was the students’ conception of entrepreneurship. students’ perspectives on entrepreneurship were varied and multiple interpretations of what it meant to be an entrepreneur. three potentially intersecting interpretations which arose from their conception of entrepreneurship were self-employment, self-reliance and business incubation. the following quotes demonstrate this outlook: ‘entrepreneurship is about being self-employed and economically self-reliant.’ (participant e3, male, aged 31) ‘entrepreneurs own business entities.’ (participant e7, female, aged 21) ‘entrepreneurship is about being your own boss.’ (participant as1, female, aged 20) ‘an entrepreneur is one who owns a small or medium-sized business for the sake of making profit.’ (participant b2, male, aged 26) the preceding quotes reveal a narrow minimalist understanding of entrepreneurship. although the reasons for such an interpretation are not obvious, it is possible that all the entrepreneurs that the students knew were self-employed and worked independently. this is also a plausible explanation for those participants who demonstrated a reductionist perspective by confining entrepreneurship to starting and owning a small business. yet, growth is one of the defining features of an entrepreneurial business. apart from that, entrepreneurship can also thrive within large cooperations. it can be concluded from participants’ views that what most them considered as authentic entrepreneurship were purely survivalist activities mostly carried out in the informal sector of the economy. theme 1 (b): value of entrepreneurship education to unravel the connection between entrepreneurship education and entrepreneurship intentions of students, research participants were expected to articulate the value they accorded to entrepreneurship education in fostering their entrepreneurship intentions. under the theme of entrepreneurship education, the sub-themes entrepreneurial courses and environmental hostility emerged from the research data. these are unpacked in the subsequent sections of this article. entrepreneurship courses the majority of the participants in the study felt that the entrepreneurship education they received had equipped them with the necessary skills to start and manage small businesses. the following sentiment was expressed by a participant: ‘before taking the course in entrepreneurship, all i knew was how to fix cars. that is what i came here to learn. however, i have earned more than what i bargained for. i now know the procedure to follow when i want to register a business. i have an idea about the administrative and monetary aspects of running a business even though i have no practical experience of running one.’ (participant e4, male, aged 22) the preceding view suggests that the entrepreneurship course provided the student with some basic preparation for the business environment. other participants concurred that they could prepare a business plan, understood market analysis and had the requisite skills to run a business after undergoing entrepreneurial education. other participants highlighted the significance of the course in augmenting their soft skills which are integral to setting up and managing a business. one participant described the influence of the entrepreneurial course on their self-confidence: ‘taking part in each class raised my self-esteem and gave me the confidence that i can actually succeed as an entrepreneur.’ (participant b2, male, aged 26) remarkably, the skills which the participants talked about were not unique to entrepreneurship but common to traditional business management (pittaway & edwards 2012). this insinuates that, except for business plan preparation, entrepreneurship was being taught in a manner that was not different from any other business subject. some scholars are sceptical about using business plan preparation as a way of grooming entrepreneurs (ojastu et al. 2011). they argue that although the process of business planning is critical in a business set-up, the actual document does nothing to aid innovation and stifles creativity through encouraging conformity and rigidity. bearing the foregoing in mind, the appropriateness of modalities in entrepreneurship education at zimbabwean polytechnics becomes questionable. though inadequate for sustaining entrepreneurship, the traditional modes of entrepreneurship education delivery have the potency to ignite entrepreneurship intention among students. role of environmental hostility when asked if they intended to initiate a business venture within 12 months of completing their course of study, the majority view among participants was that exposure to entrepreneurship education had attracted them to entrepreneurship. the following quote illustrates the participants’ position: ‘i realised even more than before that a negative attitude in life is not helpful at all. even if things are hard in life … make lemon from lemonades. i might fail in some instances just like any other entrepreneur, but i also know that a failure means that another opportunity for success will come up.’ (participant as3, male, aged 24) compared to engineering and applied sciences students, a substantial number of business students preferred a prestigious job in a good organisation to self-employment. this preference suggests that technical fields are more amenable to self-employment and entrepreneurship than non-technical fields. however, the majority of the participants also hinted that they considered the course to be interesting and useful in developing their entrepreneurial knowledge. what cannot be ignored from students’ expressed views was the element of inevitability of an entrepreneurial career trajectory. there were suggestions that the lack of decent formal employment opportunities left them with no choice but to embrace entrepreneurship education and prepare for entrepreneurial careers. hence, the expressed intention to engage in entrepreneurship is probably an outcome of the collective influence of entrepreneurship education and a hostile economic outlook. environmental hostility describes a socio-economic, political and cultural environment that is inimical to the pursuit of growth-oriented and sustainable business ventures and thriving entrepreneurship. students described the zimbabwean business environment as non-conducive and not vibrant for the pursuit of economic opportunities. theme 3: entrepreneurship education and entrepreneurship attitudes most participants expressed their desire to engage in entrepreneurship upon completing their programme of study, particularly if they had the financial means to do so. one participant expressed the following sentiment: ‘the current economic situation leaves me with little choice but to settle for anything to eke a living out even if it means being creative enough by doing what we did not learn at school.’ (participant as5, male, aged 24) what can be interpreted from the preceding comment is that economic turbulence can breed a tolerance for ambiguity and uncertainty. this can strengthen one’s resolve to engage in entrepreneurship. however, there is a need to be wary of a potential negative effect on learning which a sense of lack of choice can instil. another participant expressed the following sentiment: ‘yes, entrepreneurship education enlightened me to entrepreneurship as a career. since there are very few good job opportunities available these days, i do not have many options. i have to improvise and do what others are doing to earn a living.’ (participant e2, male, aged 24) from the preceding statement, it is evident that difficult circumstances forced some of the participants to develop personal resilience. thus, hostile circumstances provide the displacement event needed to stir one to find means to survive. while the entrepreneurship education received equipped the participants with some coping mechanisms, these were inadequate for the reality of the actual business environment. the following quote from a participant is worth noting: ‘yes, the entrepreneurship education that we get at college has enhanced my entrepreneurial knowledge. i can draft a business plan but i never got a chance to practically run a proper business.’ (participant b7, female, aged 21) the preceding view stresses the point that entrepreneurship knowledge is a significant but insufficient condition for successful entrepreneurship as practical orientation is equally critical. theme 4: social influence on entrepreneurship career choice another theme which emerged from the research data is the role of social influence on entrepreneurship career. from their responses, participants indicated the various facets of their social life that affected how they viewed pursuing entrepreneurial careers. these aspects were grouped as social approval, social ambivalence and environmental dynamism. these are dealt with individually in subsequent sections of this article. social approval when asked about whether those close to them would approve their interest in entrepreneurial careers, the ensuing views were affirmative. it seems there was a general acceptance of entrepreneurship as a worthwhile career path in the participants’ community as evidenced by the following quotes: ‘definitely, those close to me will support me even though they may be sceptical of my business capabilities. in our community, successful entrepreneurs are admired and enjoy high status.’ (participant as9, female, aged 22) ‘yes, there are many people who have done well in our local vicinity. people socially close to me often make positive insinuations about self-employment.’ (participant e9, female, aged 34) the view expressed in the preceding quotes is a departure from the traditional belief in pursuing a high profile paid job as compared to being an entrepreneurial career. social ambivalence although participants expressed a sense of acceptance of entrepreneurship among those within their social circles, some comments revealed an element of mixed feelings. the following quote is a case in point: ‘those close to me will approve even though my family members often say that they sent me to school so that i can get a high paying job.’ (participant b1, female, aged 21) the preceding comment can be interpreted as a case of social ambivalence. this refers to a situation where an individual’s mind is in a state of conflict which may lead to indecisiveness. in the context of the current study, a conflicted state of mind may undermine entrepreneurship intention. environmental dynamism another important sub-theme which emerged was the role of environmental dynamism in shaping social acceptance and intention to engage in entrepreneurship. what emerged from the respondents’ comments is that a conducive environment fosters a positive psychological disposition for entrepreneurship exploits. this influence can be observed in the following comment which captures the effect of the affirmative action legislation in zimbabwe. ‘they will obviously approve of it given the current indigenisation and black economic empowerment drive. entrepreneurship is currently the in thing!’ (participant e6, male, aged 23) theme 5: pedagogical approaches another theme that emerged from the examination of the participants’ experiences of entrepreneurship education is related to pedagogical approaches. during the interviews, the research participants revealed their perceptions of the teaching and learning methods used in conducting entrepreneurship education at their institution. the meanings attached to these perceptions included passive learning methods, transmission pedagogies and an ambiguity of learning outcomes, thereby uncovering a lack of authenticity and lack of practical orientation. passive learning methods the study findings revealed that participants were not exposed to much practical experience in running a business during the course of their entrepreneurship education programme. they complained about the drudgery of going through lectures in which they would only listen to the lecturer and take notes. the following remarks made by one of the participants provide the evidence to that effect: ‘while our lecturers always emphasised the importance of entrepreneurial careers, we were never attached to any mentors to learn how entrepreneurs operate. neither were established entrepreneurs ever invited to give talks nor motivational lectures on the merits of pursuing entrepreneurial careers.’ (participant e6, male, aged 23) the preceding quote insinuates that when adult learners embark on an educational course of study, they usually have specific expectations about the nature of the learning content and methods which they will be exposed to. if other factors are unchanged, one would expect that students’ frustration in the classroom may undermine the attainment of learning outcomes such as the development of positive attitudes towards entrepreneurship. transmission pedagogies participants pointed out a disgruntlement with the manner in which entrepreneurial knowledge and skills were transmitted to them. the following quote serves as an illustration: ‘yes i learnt how to prepare a business plan, but i am not sure if i can put it into practice. all that i know about entrepreneurship is limited to the notes i got during the lectures.’ (participant b6, male, aged 23) the sentiments expressed here are intricately connected to those noted in the previous sub-theme and they seem to reflect the potentially alienating effect of existing learning methods. however, these sentiments are somewhat a contradiction given the participants’ overwhelming intention to engage in entrepreneurship upon graduating. possibly, other factors like the harsh economic realities could have exerted a greater influence on swaying participants to articulate a positive inclination towards entrepreneurial careers. the ambiguity of learning outcomes a key requirement for meaningful learning to take place in a higher education context is the need to communicate clear learning outcomes to learners. this is particularly relevant in an adult learning context where self-directed and autonomous learning is encouraged. however, the sentiments expressed by some participants in the current study portrayed a picture of ambiguity and learner disinterest. this can be observed in the following quote: ‘i am not sure of what innovative activity i can engage in on graduation. after all, i am only doing secretarial studies. i only did entrepreneurship studies because it is a requirement that i complete the subject as a condition for graduation.’ (participant b2, male, aged 23) the preceding quotation is a classic case of a disengaged and coerced learner whose goal is to graduate and find the available means to achieve that. it would be surprising if such a student would eventually go on to become an entrepreneur as evidenced by an apparent lack of a clear entrepreneurial goal. if anything, the self-professed intention to engage in entrepreneurship in the future may turn out to be not authentic. lack of authenticity an important sub-theme which also emerged during the course of the study is related to the perceived lack of entrepreneurial authenticity in the entrepreneurship education programme which students underwent. the respondents felt that what they learnt did not reflect the reality prevailing in actual entrepreneurship practice. the following remark is an example of such a sentiment: ‘while we learn about what is required to start and run a small business, there are just too many risks involved in running a real business that is not emphasised by our lecturers. i have heard some people, including those already in business, complaining about many risks and challenges associated with operating a business entity. in our case, why can’t the college commit resources towards assisting interested current and former students with settingup new businesses?’ (participant as2, female, aged 21) the remark presented above reflects how adult participants in entrepreneurship education are problem-centred in their perspective. evidently, adult learners are more interested in acquiring knowledge and skills that adequately equip them with the tools to cope with the harsh realities of an actual business environment rather than accumulating basic knowledge about entrepreneurship. it is possible that the entrepreneurial intention expressed by the participants may not be realised if they feel a sense of entrepreneurial inadequacy. lack of a practical orientation the last sub-theme that emerged from the responses is related to the lack of practical orientation. participants mentioned how their entrepreneurial learning was confined to the lecture room and textbook content. what was evident from their sentiments was a desire to experience actual entrepreneurship as part of the learning process. one participant aired the following view: ‘why can’t our lecturers arrange for formal field visits to established entrepreneurial business so that we can visit some established entrepreneurial businesses in our locality. there are plenty of those around. if such trips are too costly for the institution, i don’t think that it would be that expensive to invite some entrepreneurs to come and explain to us how they went about setting up their businesses, the challenges they faced and how their businesses continue to survive.’ (participant as5, male, aged 24) the preceding statement insinuates a need for entrepreneurship educators to depart from the orthodox, passive pedagogies to more engaging, action-oriented and student-centred teaching and learning. in such instances, students learn by doing or experience and are afforded the opportunity to practically develop their skills. discussion of findings the findings section unveiled the various themes that emerged from the study participants’ responses. in this section, these themes are discussed in relation to existing literature on the topic. on the conception and value of entrepreneurship themes, the findings of this study revealed that participants had a constricted and reductionist outlook which limited the appreciation of entrepreneurship to small business ownership and self-employment. the deficiency of this perspective is underscored by some scholars who highlighted the differences between small business ownership and entrepreneurship (carland et al. 2007; cuervo, ribeiro & roig 2007). others highlighted the possibility of large firms and their employees also being able to engage in entrepreneurial behaviour (sharma & chrisman 2007). the source of the simplistic interpretation of entrepreneurship may be traced to the widely distributed publicity messages accompanying some of the zimbabwean government’s recent economic empowerment initiatives. the pitch of most of these communications emphasises only the self-employment and small business ownership aspects of entrepreneurship. as a result, by virtue of being consumers of such communications, the students embraced a similar narrow understanding. against this background, a cautionary tale would be that probably the participants’ professed entrepreneurial intentions were essentially plans to start small-scale survivalist activities as opposed to innovation-driven enterprises. turning to the entrepreneurial attitude and self-efficacy themes, most polytechnic students interviewed in the current study who had undergone entrepreneurial education demonstrated a positive entrepreneurial attitude and self-efficacy. this suggested that exposure to entrepreneurial education through polytechnic lectures and business plans had attracted the students to consider entrepreneurial careers. this finding corroborated robinson et al.’s (1991) claim that positive attitudes could be reinforced and entrenched through educational processes. more so, the findings resonate with previous findings that attitude explained between 30% and 50% of intention to engage in a particular behaviour (autio et al. 2001; packham et al. 2010). moreover, schwarz et al. (2009) also confirmed the significance of attitudes in strengthening the entrepreneurship intentions of university students. nevertheless, researchers should be cautious when interpreting the influence of attitude on entrepreneurship intention. dohman et al. (2011) warn that sometimes individuals (including students) deliberately alter their articulated attitudes because of self-serving biases, lack of serious attention and other strategic motives. against the troubled economic context of zimbabwe, the attitudes expressed by participants in the current study could have been a reflection of desirable aspirant sentiments influenced by the prevailing socio-economic conditions in the country rather than a genuine intention to create new ventures. hence, situated socio-political circumstances such as lack of decent employment, desire for political correctness towards the indigenisation and black economic empowerment programme the zimbabwean government is peddling could have influenced participants’ positive sentiments towards entrepreneurial careers. one of the themes to emerge from the study was entrepreneurial self-efficacy. this relates to individuals’ belief in their own abilities to work towards a targeted goal (bandura 2006) of pursuing entrepreneurship. according to bandura (1994), self-efficacy beliefs reflect the degree to which one is committed to a goal regardless of obstacles encountered on the way. a substantial number of participants in this study expressed some degree of self-belief in their ability to launch and run their own businesses. it is possible that the college students’ exposure to entrepreneurial education at polytechnic level could have provided a displacement event (pull factor) which cemented self-belief about their entrepreneurial capabilities. this corroborated the claims of shapero’s (1982) mee that people could be pushed towards considering entrepreneurship careers if they experienced an eye-opening event, which shook them out of their comfort zone, and convinced them about the feasibility and viability of venturing into entrepreneurship. it is plausible to expect that entrepreneurship education experiences coupled with a hostile economic environment could have exerted pressure on the participants to consider an entrepreneurial career. furthermore, a close analysis of the study findings revealed the emergence of the social valuation theme. in line with some past studies, the results affirmed the roles of the socially close in influencing student expectations to participate in new venture creation in the future. however, such effect depends on the willingness of participants to comply with the significant others’ expectations (souitaris zerbinati & al-laham 2007). some studies confirm that the nature of the entrepreneurship education acquired plays a critical role in shaping normative beliefs and the willingness of respondents to comply with the expectations of the socially closed. this finding contradicts previous research that has shown that compared to the other antecedents of entrepreneurship intention, normative beliefs exert the least effect on intentions and consequently have weak predictive power (autio et al. 2001; fini et al. 2009). however, social approval does not, in the practical sense, translate students’ sentiments into the actual new venture creation. in view of this, the overwhelming social approval of entrepreneurship which was insinuated by participants must not be uncritically affirmed. what is important is the willingness of the participants to comply with such expectations. although the positive role of social approval in modelling entrepreneurship intention is not new (see entrialgo & iglesias 2016; shiri et al. 2017; thomson & minhas 2017), the current study uncovered the important role of social ambivalence and environmental dynamism in the entrepreneurship education–entrepreneurship intention interface. notwithstanding the mixed feelings towards entrepreneurship careers expressed by their socially close participants in this study, the participants were confident of their capacity to succeed in entrepreneurship. this suggests that a supportive environment, just like a hostile environment which increased tolerance for ambiguity and resilience to succeed, can exert a positive psychological disposition towards entrepreneurship. another theme that emerged from the study is the nature of pedagogical approaches used in entrepreneurial education. as far as the methods of instructions employed were concerned, this study reported the predominance of theoretical approaches to teaching entrepreneurship and the absence of a hands-on approach to implementing it. although such methods are a useful point of departure for a jobless economy, they could be counterproductive if no authentic strategies for accomplishing practical entrepreneurship were harnessed to convert entrepreneurial aspirations into reality. this finding buttresses the growing consensus that contemporary entrepreneurship education should have different content and pedagogical foci. it also resonates with williams and gentry’s (2017:9) proclamation that ‘until students are allowed out of their seats to engage in behaviours other than note taking, they will not understand how to act entrepreneurially’. hence, andragogical teaching and experiential learning via games, simulations or even actual venture creation may improve learning outcomes like entrepreneurship intentions (rideout & gray 2013). it also emerged from the study that the participants were discontent with passive teacher-centred approaches to learning, which were dependent on highly decontextualised theoretical content. in addition, some participants complained about the ambiguity of learning outcomes. further, they raised concerns about the lack of authenticity of their learning programmes as demonstrated by what they perceived as the failure of entrepreneurship education to reflect the actual entrepreneurship environment. this revelation highlights the centrality of fulfilling learners’ needs and resonates with contemporary learning theories that propagate the adoption of self-directed and student-centred learning approaches as integral to realising learning outcomes (altinyelken 2011; bron, bovill & veugelers 2016; merriam, caffarella & baumgartner 2012; toh 2016). in addition, the findings demonstrate the emergence of critical learners who enrol in educational programmes not only for certification purposes but also for other skills relevant to their lives. against this background, there is a need to shift orientation from preparing students for examination to transfer of contextualised skills if the meaningful education of future entrepreneurs were to take place. in addition to what has been discussed, the current study made some subtle contributions to the entrepreneurship education–entrepreneurship intention nexus discourse. while many studies stress the role of entrepreneurship education in shaping entrepreneurial intention (fayolle & liñán 2014; hattab 2014; iacobucci & micozzi 2012; malebana & swanepoel 2015), they tend to neglect the influence of environmental hostility in shaping entrepreneurship intention and other associated variables. it emerged that harsh economic circumstances with limited economic choices compelled individuals to have entrepreneurship inclinations. equally important, the study revealed how personal resilience and a tolerance for uncertainty under harsh economic circumstances engendered entrepreneurial intentions. conclusion and recommendations this study provided some important qualitative insights into the influence of students’ experiences of entrepreneurship education on their entrepreneurship intentions in a struggling economy context. while statistical validation could have been an alternative to qualitative research to allow for the interrogation of the significance of these antecedent variables as shown by numerous proximal researchers, the current study was concerned about the crystallisation of collective views of students to provide diverse opinions and comparisons of student perspectives. the qualitative findings suggested that the students’ perceptions of the teaching and learning process influenced their attitudinal beliefs, normative beliefs and entrepreneurial efficacy and subsequently entrepreneurship intentions. the existing educational practices positively influenced the entrepreneurial intentions of participants given the overwhelming student willingness to engage in business. though not undermining the explanatory and predictive power of the tpb, it emerged that the participants showed an inclination towards replicative entrepreneurship activities. only a minority, mostly information technology students, expressed their intention to innovate without doubting their capacity. the explanations for failure to engage in groundbreaking innovative activity included lack of seed funding, the absence of capacity, building support to initiate and deepen venture creation, lack of practical knowledge of innovation and perception of the risky and adventurous nature of new start-ups. following the participants’ explicit desire for active learning processes, entrepreneurship education programmes at zimbabwean polytechnics can be strengthened through a number of ways. for institutions with very restricted budgets to support student entrepreneurship activities, the introduction of business plan competitions for students could be a good starting point. such competitions give participants an alternative and yet compelling source of motivation for preparing business plans apart from developing them for the purpose of earning course marks. monetary rewards that participants win in such competitions can constitute start-up capital required for initiating their businesses. another way of enriching educational programmes is for polytechnic colleges to set up business incubators for the purpose of providing physical space where entrepreneurship students can meet, engage in creative thinking and generate business ideas that serve as springboards for launching their business ventures. at the same time, such incubators should contract business mentors and industry experts who can provide students with practical business advice. in collaboration with external stakeholders, polytechnics can establish entrepreneurship mentorship programmes. networks of experts, captains of industry and successful entrepreneurs can support such programmes by mentoring, supporting and guiding student entrepreneurs with conception, launching and management of their own business ventures. lastly, classroom activities can be enlivened through the use of case studies and computer-based programs, which generate simulated business scenarios that unleash students’ creative thinking and problem-solving capabilities. such an approach can reduce the monotony of the teaching and learning process as well as encourage students to engage in authentic entrepreneurship in the future. policy implications the findings from the study have implications for the appropriateness of current teaching and learning methods for breeding innovative entrepreneurs. precisely, the effect is that there is a need to transform traditional and passive teacher-centred methods of teaching into practically grounded, student-centred approaches to adequately equip and prepare graduates for new and innovative venture start-ups. in addition, curricula developers at polytechnics and other heis should put in place institutional support mechanisms that include student venture funding, business incubators and entrepreneur mentoring schemes to give students the requisite practical innovation experiences. ostensibly, students will get a chance to learn by experimenting in a relatively benign environment before they independently engage in actual and risk-ridden entrepreneurial activities. limitations of the study finally, a number of important limitations need to be considered. firstly, the findings of the study are not transferable to the entire population given that a qualitative approach and convenience sampling were used. secondly, the study focused on the views of participants sampled from a single institution of higher learning. this means that the findings obtained from such participants represented a localised perspective. future studies could be usefully extended to include polytechnic students from other geographical locations in zimbabwe. thirdly, the study did not consider the influence of a number of factors which are relevant to the link between entrepreneurship education and entrepreneurship intentions. for instance, there was no specific consideration of whether: (1) participants were studying full-time or part-time, (2) participants had experience in entrepreneurship prior to undergoing entrepreneurship education at the polytechnic and (3) whether participants were already inclined towards entrepreneurship prior to undergoing entrepreneurship education. thus, future studies should incorporate these factors to get a fuller understanding of the relationship between entrepreneurship education and entrepreneurship intentions. acknowledgements the authors are grateful to the students who responded to this study. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article authors’ contributions t.n. conducted the field work and wrote the introduction, literature review, methodology and findings sections, while p.r. wrote the data analysis section, interpretation and policy implications. references ajzen, i., 1991, ‘the theory of planned behaviour’, organizational behaviour and human decision processes 50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-t ajzen, i., 2015, ‘the theory of planned behaviour: reactions and reflections’, psychology and health (26)9, 1113–1127. altinyelken, h.k., 2011, ‘student-centred pedagogy in turkey: conceptualisations, interpretations and practices’, journal of education policy 26(2), 137–160. https://doi.org/10.1080/02680939.2010.504886 autio, e., keeley, r.h., klofsten, m., parker, g.c. & hay, m., 2001, ‘entrepreneurial intent among students in scandinavia and in the usa’, enterprise and innovation management studies 2(2), 145–160. https://doi.org/10.1080/14632440110094632 bae, t.j., qian, s., miao, c. & fiet, j.o., 2014, ‘the relationship between entrepreneurship education and entrepreneurial intentions: a meta-analytic review’, entrepreneurship: theory & practice 38(2), 217–254. https://doi.org/10.1111/etap.12095 balan, p. & metcalfe, m., 2012, ‘identifying teaching methods that engage entrepreneurship students’, education training 54(5), 368–384. https://doi.org/10.1108/00400911211244678 bandura, a., 2006, ‘guide for constructing self-efficacy scales’, self-efficacy beliefs of adolescents 5(1), 307–337. bandura, a., rumsey, m. & walker, c., 1994, ‘regulative function of perceived self-efficacy, in m.g. rumsey, c.b. walker & j.h. harris (eds.), personal selection and classification, pp. 261–271, erlbaum, hillsdale, nj. baumol, w.j., 2005, ‘education and innovation: entrepreneurial breakthroughs versus corporate incremental improvements’, nber innovation policy and the economy 5(1), 33–56. https://doi.org/10.1086/ipe.5.25056170 belitski, m. & heron, k., 2017, ‘expanding entrepreneurship education ecosystems’, journal of management development 36(2), 163–177. https://doi.org/10.1108/jmd-06-2016-0121 bird, b., 1988, ‘implementing entrepreneurial ideas: the case for intention’, academy of management review 13(3), 442–453. https://doi.org/10.5465/amr.1988.4306970 boyd, n.g. & vozikis, g.s., 1994, ‘the influence of self-efficacy on the development of entrepreneurial intentions and actions’, entrepreneurship theory and practice 18, 63–77. https://doi.org/10.1177/104225879401800404 braunerhjelm, p., 2010, ‘entrepreneurship, innovation and economic growth: past experiences, current knowledge and future policy implications’, working papers series, swedish entrepreneurship forum, pp. 1–75, royal institute of technology, stockholm. bron, j., bovill, c. & veugelers, w., 2016, ‘students experiencing and developing democratic citizenship through curriculum negotiation: the relevance of garth boomer’s approach’, curriculum perspectives 36(1), 1–30. bruton, a., 2014, ‘innovating university-based entrepreneurship in order to inform innovation for the 21st century’, in innovative pathways for university entrepreneurship in the 21st century, pp. 145–170, viewed 07 october 2014, from http://doi.org/10.1108/s1048-473620140000024006 bruton, g.d., ahlstrom, d. & obloj, k., 2008, ‘entrepreneurship in emerging economies: where are we today and where should the research go in the future’, entrepreneurship theory and practice 32(1), 1–14. https://doi.org/10.1111/j.1540-6520.2007.00213.x burnard, p., 1991, ‘a method of analysing interview transcripts in qualitative research’, nurse education today 11(6), 461–466. https://doi.org/10.1016/0260-6917(91)90009-y cohen, l., manion, l & morrison, k., 2007, research methods in education, 6th edn., routledge, london. davies, l.g. & gibb, a.a. (eds.), 1991, recent research in entrepreneurship, avebury, aldershot. dohman, t., falk, a., huffman, d., sunde, u., schupp, j. & wagner, g.g., 2011, ‘individual risk attitudes: measurement, determinants, and behavioral consequences’, journal of the european economic association 9(3), 522–550. https://doi.org/10.1111/j.1542-4774.2011.01015.x entrialgo, m. & iglesias, v., 2016, ‘the moderating role of entrepreneurship education on the antecedents of entrepreneurial intention’, international entrepreneurship and management journal 12(4), 1209–1232. https://doi.org/10.1007/s11365-016-0389-4 fayolle, a. & liñán, f., 2014, ‘the future of research on entrepreneurial intentions’, journal of business research 67(5), 663–666. https://doi.org/10.1016/j.jbusres.2013.11.024 fini, r., grimaldi, r., marzocchi, g.l. & sobrero, m., 2009, ‘the foundation of entrepreneurial intention’, summer conference 2009, frederiksberg, denmark, june 17–19, 2009, 1–37. fulgence, k., 2015, ‘assessing the status of entrepreneurship education courses in higher learning institutions the case of tanzania education schools’, education + training 57(2), 239–258. https://doi.org/10.1108/et-05-2013-0063 griffiths, m., kickul, j., bacq, s. & terjesen, s., 2012, ‘a dialogue with william j. baumol: insights on entrepreneurship theory and education’, entrepreneurship: theory and practice 36(4), 611–625. https://doi.org/10.1111/j.1540-6520.2012.00510.x hattab, h.w., 2014, ‘impact of entrepreneurship education on entrepreneurial intentions of university students in egypt’, journal of entrepreneurship 23(1), 1–18. https://doi.org/10.1177/0971355713513346 heuer, a. & kolvereid, l., 2013, ‘education in entrepreneurship and the theory of planned behaviour’, european journal of training and development 38(6), 506–523. https://doi.org/10.1108/ejtd-02-2013-0019 hosho, n., muguti, e. & muzividzi, d.k., 2013, ‘unlocking zimbabwe’s global competitiveness through compulsory entrepreneurship education: evidence from chinhoyi university of technology’, zimbabwe open university international research conference, harare, zimbabwe, july 30–31, 2012. iacobucci, d. & micozzi, a., 2012, ‘entrepreneurship education in italian universities: trend, situation and opportunities’, education training 54(8), 673–696. https://doi.org/10.1108/00400911211274828 jones, p. & colwill, a., 2013, ‘entrepreneurship education: an evaluation of the young enterprise wales initiative’, education + training 55(8), 911–925. https://doi.org/10.1108/et-04-2013-0052 kaijun, y. & sholihah, p.i., 2015, ‘a comparative study of the indonesia and chinese educative systems concerning the dominant incentives to entrepreneurial spirit (desire for a new venturing) of business school students’, journal of innovation and entrepreneurship 4(1), 1–16. https://doi.org/10.1186/s13731-014-0014-0 koshkaki, e.r. & solhi, s., 2016, ‘the antecedents of entrepreneurial innovative behavior in developing countries, a networked grounded theory approach (case study iran)’, journal of entrepreneurship in emerging economies 8(2), 1–52. krueger, n.f., 2000, ‘the cognitive infrastructure of opportunity emergence’, entrepreneurship theory and practice 24(3), 5–23. https://doi.org/10.1177/104225870002400301 krueger, n. & kickul., 2006., ‘so you thought the intentions model was simple? cognitive style and the specification of entrepreneurial intentions models’, us association for small business and entrepreneurship conference, tucson, az, january 15, 2006, pp. 1–24. krueer, jr., n.f & brazeal, d.v., 1994, ‘entrepreneurial potential and potential entrepreneurs’, entrepreneurship theory and practice 18(3), 91–104. https://doi.org/10.1177/104225879401800307 krueger, jr., n.f., reilly, m.d. & carsrud, a.l., 2000, ‘competing models of entrepreneurial intentions’, journal of business venturing 15(5–6), 411–432. https://doi.org/10.1016/s0883-9026(98)00033-0 krueger, n.f. & carsrud, a.l., 1993, ‘entrepreneurial intentions: applying the theory of planned behaviour’, entrepreneurship & regional development 5(4), 315–330. https://doi.org/10.1080/08985629300000020 lee, j., 2010, ‘partnerships with industry for efficient and effective implementation of tvet’, international journal of vocational education and training 17(2), 39–56. liñán, f., 2004, ‘intention-based models of entrepreneurship education’, piccolla impresa/small business 3, 1–30. lincoln, y.s. & guba, e.g., 1985, naturalistic inquiry, sage, london. malebana, m.j. & swanepoel, e., 2015, ‘graduate entrepreneurial intentions in the rural provinces of south africa’, southern african business review 19(1), 89–111. manstead, a.s.r. & parker, d., 2015, ‘behaviour evaluating and extending the theory of planned behaviour’, european review of social psychology 6(1), 69–95. https://doi.org/10.1080/14792779443000012 marinova, e. & borza, a., 2013, ‘the creative industries and new trends in the economic world’, economia. seria management 16(2), 327–332. maritz, a., 2017, ‘illuminating the black box of entrepreneurship education programmes: part 2’, education + training 59(5), 471–482. https://doi.org/10.1108/00400911311309305 maritz, a. & brown, c.r., 2013, ‘illuminating the black box of entrepreneurship education programs: part 1’, education and training 55(3), 234–252. https://doi.org/10.1108/et-02-2017-0018 mars, m.m., 2013, ‘building toward a holistic model of innovation and entrepreneurship education: transformation before commercialization. a cross-disciplinary primer on the meaning and principles of innovation’, advances in the study of entrepreneurship, technology and innovation 23, 113–124. mauchi, f.n., karambakuwa, r.t., gopo, r.n., njanike, k., mangwende, s. & gombarume, f.b., 2011, ‘entrepreneurship education lessons: a case of zimbabwean tertiary education institutions’, educational research 2(july), 1306–1311. mayhew, m.j., simonoff, j.s., baumol, w.j., wiesenfeld, b.m. & klein, m.w., 2012, ‘exploring innovative entrepreneurship and its ties to higher educational experiences’, research in higher education 53, 831–859. https://doi.org/10.1007/s11162-012-9258-3 mehtap, s., pellegrini, m.m., caputo, a. & welsh, d.h.b., 2017, ‘educational barriers entrepreneurial intentions of young women in the arab world socio-cultural and educational barriers’, international journal of entrepreneurial behavior & research 23(6),880–902. https://doi.org/10.1108/ijebr-07-2017-0214 merriam, s.b., caffarella, r.s. & baumgartner, l.m., 2012, learning in adulthood: a comprehensive guide, john wiley & sons, hoboken, nj. ministry of higher education and technology-zimbabwe, 2010, strategic plan 2010–2015, government printers, harare. mwasalwiba, e.s., 2009, university entrepreneurship education in tanzania: teaching context, students’ profile, expectations and outcome, vrije universiteit amsterdam, amsterdam. nabi, g., fayolle, a., lyon, e.m., krueger, n. & walmsley, a., 2017, ‘the impact of entrepreneurship education in higher education: a systematic review and research agenda’ academy of management learning & education 16(2), 277–299. https://doi.org/10.5465/amle.2015.0026 ndofirepi, t.m., 2016, the impact of technological creativity and entrepreneurship education on the entrepreneurship intentions of students at particular tertiary institutions in zimbabwe and south africa, phd thesis, central university of technology, bloemfontein. nziramasanga, c., 1999, report on the status of the educational sector, government printers, harare. ojastu, d., chiu, r. & olsen, p., 2011, ‘cognitive model of entrepreneurship’, journal of enterprising culture 19(4), 397–434. https://doi.org/10.1142/s0218495811000817 oosterbeek, h., van praag, m. & ijsselstein, a., 2010, ‘the impact of entrepreneurship education on entrepreneurship skills and motivation’, european economic review 54(3), 442–454. https://doi.org/10.1016/j.euroecorev.2009.08.002 packham, g., jones, p., miller, c., pickernell, d. & thomas, b., 2010, ‘attitudes towards entrepreneurship education: a comparative analysis’, education + training 52(8/9), 568–586. https://doi.org/10.1108/00400911011088926 phuthi, n. & maphosa, n., 2007, transforming higher education for effective technical and vocational skills delivery in zimbabwe, viewed 13 april 2017, from http://ir.nust.ac.zw/xmlui/handle/123456789/572 pittaway, l. & edwards, c., 2012, ‘assessment: examining practice in entrepreneurship education’, education + training 54(8/9), 778–800. https://doi.org/10.1108/00400911211274882 rideout, e.c. & gray, d.o., 2013, ‘does entrepreneurship education really work ? a review and methodological critique of the entrepreneurship education’, journal of small business management 51(3), 329–351. https://doi.org/10.1111/jsbm.12021 robinson, p., stimpson, d.v., huefner, j.c. & hunt, h.k., 1991, ‘an attitude approach to the prediction of entrepreneurship’, entrepreneurship theory and practice 15(4), 13–20. https://doi.org/10.1177/104225879101500405 saeed, s., yousafzai, s.y., yani-de-soriano, m. & muffatto, m., 2014, ‘the role of perceived university support in the formation of students’ entrepreneurial intention’, journal of small business management 53(4), 1127–1145. https://doi.org/10.1111/jsbm.12090 schlaegel, c. & koenig, m., 2014, ‘determinants of entrepreneurial intent: a meta–analytic test and integration of competing models’, entrepreneurship theory and practice 38(2), 291–332. https://doi.org/10.1111/etap.12087 schmuck, c., 2017, ‘catching up on studies not employment’, in c. schmuck (ed.), women in stem disciplines, pp. 157–167, springer, zurich. schwarz, e.j., wdowiak, m.a., almer-jarz, d.a. & breitenecker, r.j., 2009, ‘the effects of attitudes and perceived environment conditions on students’ entrepreneurial intent: an austrian perspective’, education + training 51(4), 272–291. https://doi.org/10.1108/00400910910964566 shah, n. & soomro, a.s., 2017, ‘investigating entrepreneurial intention among public sector university students of pakistan’, education + training 59(7/8), 841–855. https://doi.org/10.1108/et-11-2016-0168 sharma p. & chrisman s.j.j., 2007, ‘toward a reconciliation of the definitional issues in the field of corporate entrepreneurship’, in a. cuervo, d. ribeiro & s. roig (eds.), entrepreneurship, pp. 83–103, springer, berlin. shapero, a., 1982, ‘social dimensions of entrepreneurship’, in c. kent, d. sexton & k. vesper (eds.), the encyclopedia of entrepreneurship, pp. 72–90, prentice-hall, englewood cliffs. shiri, n., shinnar, r.s., mirakzadeh, a.a. & zarafshani, k., 2017, ‘cultural values and entrepreneurial intentions among agriculture students in iran’, international entrepreneurship and management journal 13(4), 1157–1179. https://doi.org/10.1007/s11365-017-0444-9 singh, s. & verma, h.l., 2010, ‘impact of entrepreneurship training on the development of entrepreneurs’, interdisciplinary journal of contemporary research in business 1(02), 61–73. souitaris, v., zerbinati, s. & al-laham, a., 2007, ‘do entrepreneurship programmes raise entrepreneurial intention of science and engineering students? the effect of learning, inspiration and resources’, journal of business venturing 22(4), 566–591. https://doi.org/10.1016/j.jbusvent.2006.05.002 taatila, v.p., 2010, ‘learning entrepreneurship in higher education’, education + training 52(1), 48–61. https://doi.org/10.1108/00400911011017672 thompson, e.r., 2009, ‘individual entrepreneurial intent: construct clarification and development of an internationally reliable metric’, entrepreneurship theory and practice, may, 669–694. https://doi.org/10.1111/j.1540-6520.2009.00321.x thomson, g.s. & minhas, w., 2017, ‘enabling entrepreneurship: entrepreneurial intentions among emirati students’, journal of enterprising culture 25(02), 211–237. https://doi.org/10.1142/s021849581750008x toh, y., 2016, ‘leading sustainable pedagogical reform with technology for student-centred learning: a complexity perspective’, journal of educational change 17(2), 145–169. https://doi.org/10.1007/s10833-016-9273-9 ulvenblad, p., berggren, e. & winborg, j., 2013, ‘the role of entrepreneurship education and start-up experience for handling communication and liability of newness’, international journal of entrepreneurial behaviour & research 19(2), 187–209. https://doi.org/10.1108/13552551311310374 urbano, d. & guerrero, m., 2013, ‘entrepreneurial universities : socioeconomic impacts of academic entrepreneurship in a european region’, economic development quarterly 27(1), 40–55. https://doi.org/10.1177/0891242412471973 vincett, p.s. & farlow, s., 2008, ‘start-a-business’: an experiment in education through entrepreneurship’, journal of small business and enterprise development 15(2), 274–288. https://doi.org/10.1108/14626000810871673 von graevenitz, g., harhoff, d. & weber, r., 2010, ‘the effects of entrepreneurship education’, journal of economic behaviour and organization 76(1), 90–112. https://doi.org/10.1016/j.jebo.2010.02.015 weber, r., 2012, evaluating entrepreneurship education, springer, munich. williams, j.l. & gentry, r.j., 2017, ‘keeping it real: the benefits of experiential teaching methods in meeting the objectives of entrepreneurship education’, in d.f. kuratko & s. hoskinson (eds.), the great debates in entrepreneurship, pp. 9–20, emerald publishing limited, west yorkshire. wiseman, a.w. & anderson, e., 2013, ‘international educational innovation and public sector entrepreneurship’, international perspectives on education and society 23, 85–123. https://doi.org/10.1108/s1479-3679(2013)0000023013 appendix 1 table 1-a1: content analysis of interview data. abstract introduction literature review research design and methodology survey results statistical analysis conclusion and implications acknowledgements references about the author(s) elriza esterhuyzen department of operations management, university of south africa, pretoria, south africa citation esterhuyzen, e., 2019, ‘small business barriers to occupational health and safety compliance’, southern african journal of entrepreneurship and small business management 11(1), a233. https://doi.org/10.4102/sajesbm.v11i1.233 original research small business barriers to occupational health and safety compliance elriza esterhuyzen received: 11 dec. 2018; accepted: 11 june 2019; published: 01 aug. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the constitution of south africa indicates that all people have the right to an environment that is not harmful to their health and well-being. this right is reiterated in the occupational health and safety act 83 of 1993. however, small business owners and/or managers experience specific barriers to occupational health and safety (ohs) compliance. the study was conducted in gauteng, kwazulu-natal and the western cape provinces of south africa, as these three provinces account for 82% of active businesses in south africa. objective: this article discusses barriers to ohs compliance as perceived by south african small business owners and/or managers. method: a total of 350 small business owners and/or managers from the three above-mentioned provinces participated in a questionnaire survey, with one section focussing on barriers to ohs compliance. participants rated 11 predetermined barriers to ohs compliance and could indicate and rate additional barriers. descriptive and inferential statistics were used to report on these perceived barriers. results: results indicated that the perceived barriers to ohs compliance can be categorised as human and resource barriers. conclusion: south african small business owners and/or managers experience barriers to compliance that prevent them from full compliance with ohs directives, which can be costly. small business owners and/or managers need to take cognisance of applicable ohs directives as well as identified barriers to compliance. these barriers need to be addressed to allow small businesses to comply with ohs directives and to enhance the sustainability of small businesses. the question is not whether small businesses can afford ohs compliance, but if they can afford not to overcome barriers and comply. keywords: small business; occupational health and safety; ohs; barriers to occupational health and safety compliance; south africa. introduction the south african national development plan emphasises the importance of establishing and growing small businesses. these enterprises are expected to contribute significantly to the growth of the south african economy and the resultant reduction of unemployment (national planning commission 2014:9). however, an increase in the workforce also has financial implications with regard to occupational injuries and illnesses. small businesses can thus ill afford cost-saving with regard to occupational health and safety (ohs) as ohs legal compliance is emphasised (ahonen & hussi 2012:4). all employees enjoy the benefit of the constitution of south africa that stipulates the right to perform their duties in a safe working environment that is not harmful to their health and safety (mojapelo & kok 2017:55). small businesses are considered major contributors to the economic activity in a country (struwig & lillah 2017). even though small businesses in south africa are not always registered and regulated (henning & akoob 2017), such businesses should still comply with ohs legislation. the number of accidents in south africa because of poor levels of adherence to relevant health and safety regulations is deemed to be high, with such accidents negatively impacting the state, employers and employees (mojapelo & kok 2017:58). it is important to understand the challenges that small businesses face in order to enhance their contribution to economic development (van vuuren & alemayehu 2018). this article, therefore, reports on identifying the perceived barriers to ohs compliance as experienced by small business owners and/or managers in south africa as well as the relationship between such barriers and compliance behaviour. as in the case of any other business, small businesses must comply with various legal requirements pertaining to ohs in the workplace. too many laws, however, are killing small businesses (kent 2013:1) and challenges relating to their ohs compliance are often ascribed to lack of financial resources, insufficiency of managerial skills and poor commitment (floyde et al. 2013:70). accidents in the workplace cause serious financial and non-financial problems for both employees and businesses (mojapelo & kok 2017:51). legal obligations pertaining to ohs in small businesses have been indicated as important factors related to limiting unnecessary costs associated with occupational injuries, illnesses and fatalities (maxey 2013:12). both social and economic implications of ohs for individuals, families and communities are globally indicated as major concerns (hermanus 2007:53) thus ohs legal requirements are receiving increasing attention in most countries (chen & zorigt 2013:2321). the successful management and the financial growth of small businesses, in particular, are in part dependent upon full recognition and implementation of ohs directives as specified in applicable legislation (okoye & okolie 2014:21); this is despite limited financial and a managerial resources with regard to ohs (hasle, kines & andersen 2009). research has indicated that small business owners and/or managers need sufficient knowledge and a positive attitude towards ohs as well as the behavioural intent to comply with ohs directives (esterhuyzen 2017). however, even though all of these factors might be present, there are barriers that can hinder ohs compliance (esterhuyzen 2017:11). in order to move from intentional behaviour to actual behaviour, barriers to compliance need to be identified and addressed (probst et al. 2013). in identifying the barriers to ohs compliance, guidelines can be set for future improvement in this regard with a view to enhancing competitiveness (stranks 2010:137–138) as well as to reducing the costs associated with accidents (mojapelo & kok 2017:58). literature review barriers to occupational health and safety compliance businesses, regardless of their size, should have an unwavering commitment to compliance and enforcement (markowitz & gerardu 2012:540–553). however, small businesses in particular are faced with very specific challenges pertaining to the management of health and safety (starren, hornikx & luijters 2013:42). behavioural control refers to the perception of how easy or difficult it is to display a certain behaviour, with barriers adversely influencing the intention of desired behaviour (struwig & lillah 2017). challenges pertaining to the management of health and safety in small businesses include limited resources, inadequate guidance and advice, the lack of a holistic approach to the integration of ohs into business operations, insufficient training opportunities, deficient development of ohs competency, and a lack of cooperation between employers and employees (hermanus 2007:538). relevant literature also points to negligence, carelessness, not adhering to safe working procedures, unskilled employees, and lack of supervisors or skilled supervisors as barriers to compliance with ohs directives (othman 2012:190). the issue of small business owners and/or managers who lack proper knowledge and experience about ohs directives and who do not have the appropriate attitude or motivation related to ohs is also included as a barrier to ohs compliance (ajzen & sheikh 2013:156; probst et al. 2013:126). rules that are not practically workable, unrealistic, too time consuming, and too numerous to maintain may lead to people working to rule and not working safely. such a position might result in a barrier to ohs compliance. furthermore, individual as well as organisational factors can serve as barriers to ohs compliance. individual factors include a lack of planning, self-image and status, whereas organisational factors include oversights and time pressure (hale & borys 2013:208–212). this state of affairs might be exacerbated by group factors such as an emphasis on production rather than ohs as well as ignoring safety risks and the misapplication of effective working rules (reason 2005:17, 2007:75–78). cost of non-compliance with occupational health and safety directives the health and safety of employees is not negotiable (mashwama, aigbavboa & thwala 2018). employers should comply with applicable ohs directives with a view to implementing sufficient health and safety standards in their businesses (mojapelo & kok 2017:54). such health and safety standards are aimed at avoiding or mitigating the risks of injuries and other types of psychological and physical harm to employees (wilson 2018). regardless of the industry in which a business operates or the size of the business, ohs is an essential part of business management practices and should not be neglected or regarded as an unnecessary expense. small businesses are indicated as having additional challenges pertaining to ohs because of factors such as non-compliance with preventive interventions indicated in ohs directives, economic pressure and extended working hours as well as ignorance regarding relevant ohs directives (mayhew 2000:300–301). the south african department of labour has stated the importance of compliance with ohs requirements with a view to saving resources necessary for job creation and sustainable development (dol 2013). such sustainable development requires control over direct and indirect costs pertaining to ohs, which relies on good governance as determined by the rule of law, which, in turn, rests on effective compliance and enforcement (markowitz & gerardu 2012:540). direct costs associated with ohs are those related to damage to machinery, damage claims, legal costs, medical treatment of injured and ill employees, and increased insurance premiums (fuller & vassie 2004:136). indirect costs associated with ohs are those related to loss of income (hermanus 2007:531), finding and training of replacements for ill or injured employees, retraining of employees and damage to the image of the business (goetsch 2014:19–27). direct and indirect costs associated with ohs place a considerable burden on businesses and government, with the international labour organization attributing losses of around 4% of the world’s gross domestic product to such costs (niu 2010:744; international labour organization 2014:3). businesses that do not comply with ohs directives may provide conditions in the workplace that threaten the health, well-being and working capacity of employees, thus affecting the quality of working life and the economic status of employees as well as their families because of direct and indirect costs associated with ohs (who 2007:77, 2017:1). the ratio between direct and indirect costs of ohs-related accidents and incidents in south africa is estimated to be at about 1:7 (pillay 2014:6). small business compliance with ohs directives and resultant ohs measures lead to a reduction in direct and indirect costs associated with ohs, thus contributing to an increase in both production and economic welfare of the business to enhance sustainable development (markowitz & gerardu 2012:553; mashwama et al. 2018; semboja, ahonen & hussi 2012:9). non-compliance with applicable ohs directives can lead to penalties and fines. in addition, a business that is found guilty of not complying with ohs directives suffers more than financial penalties. the trust and credibility of such a business can be seriously compromised, thus requiring resources to restore its damaged reputation. it is therefore suggested that businesses, including small businesses, provide the highest possible working standards for their employees and invest in solutions that can help them to carry out their ohs duties within the applicable legal framework. research design and methodology data were collected via a questionnaire. this questionnaire was designed and developed based on the constructs applicable to the barriers to ohs compliance in small businesses. a homogeneous purposive sampling technique was used to select the sample for this study which limited the respondents pool according to the requirements for a small business as defined for this study (an annual turnover of less than r50 million and fewer than 50 employees) this non-probability sample was extended via the snowballing and referral technique in order to recruit qualifying respondents from the acquaintances of respondents, with the sample consisting of 350 small business owners and/or managers from three provinces in south africa which hosted the highest number (81.8%) of active businesses. these three provinces are gauteng, the western cape and kwazulu-natal (cipc 2013:3). two fieldworkers were trained, assessed and declared competent by the researcher. thereafter, these two fieldworkers took the questionnaire to qualifying small business owners and/or managers in the identified provinces. the fieldworkers ensured that the predetermined number of questionnaires per province, as indicated in table 1, was completed and that fully completed questionnaires were received. table 1: demographic information of participants. the questionnaire was drafted and refined using a flowchart for questionnaire design indicated by cooper and schindler (2011:338). the questionnaire included filter questions to screen respondents, followed by target questions related to barriers to ohs compliance. forced-choice scale questions were used and respondents required to rate barriers to ohs compliance on a likert-type rating scale. the respondents had to rate barriers to ohs compliance as: (1) not a barrier, (2) somewhat of a barrier, (3) moderate barrier, or (4) extreme barrier, with an additional option of (5) do not know. in addition, respondents were provided with the opportunity to add additional barriers and to rate such barriers according to the same rating scale. the questionnaire was pre-tested by a group consisting of two small business owners and/or managers, two academics, two fieldworkers, and a statistician. particular attention was paid to the confirmation of reliability of the questionnaire. reliability testing through statistical analysis of the pre-test results confirmed reliability and internal consistency. data were collected from december 2015 to april 2016, with a response rate of 70%. data analysis included both descriptive and inferential statistics, such as exploratory factor analysis and pearson product–moment correlations. ethical consideration ethics approval was obtained from the department of business management, unisa ethics committee, reference number 2015_crerc_039(fa). the participants’ right to privacy and anonymity was respected, and participants were informed of their right to withdraw at any stage while completing the questionnaires. survey results demographic information table 1 summarises the demographic information related to the survey. screening questions were included in the questionnaire to ensure: that each participant was the owner or manager of the small business, that the provincial location of the small business was in the three provinces identified for this study, that the annual turnover of the small business was less than r10 million per year and that the number of employees was less than 50. the participants also indicated the primary economic sectors in which the small businesses operated, with the primary economic sectors combined as indicated in table 1. statistical analysis the small business owners and/or managers provided information about specific barriers that might make it difficult to comply with ohs directives. participants were requested to rate the effects of these barriers on a scale of 1–4. participants were given two opportunities to provide feedback on barriers to ohs compliance. first, participants rated a list of possible barriers that were identified from relevant literature. next, they were requested to list and rate their own supplied list of additional barriers to comply with ohs directives or requirements. the results of the rating of predetermined barriers are shown in table 2. as the results indicate, no particular barrier to complying with ohs directives was rated as an extreme barrier. ‘laws are too complicated’ was rated the most extreme barrier by only 14.6% of the participating small businesses. a total of 30.0% – 56.3% of small businesses rated 9 out of the total of 11 barriers as not being a barrier at the time of the survey. a group of small businesses ranging from 26.9% to 56.3% rated 9 out of the 11 listed directives as not being a barrier. on average, just over a quarter (26.0%) of small businesses rated most of the barriers as being somewhat of a barrier. table 2: the effect of barriers to compliance with occupational health and safety directives. the following data emerged from the questionnaire as shown in table 2: less than 10.0% of small businesses indicated that they did not know whether certain barriers made it difficult to comply with ohs directives. on average, less than 10.0% of the small businesses rated any of the listed ohs directives as an extreme barrier to comply with ohs aspects. no particular ohs aspect was listed significantly high as a barrier to comply with ohs directives, as all rates were below 33.0%, which applied to somewhat of a barrier, a moderate barrier, and an extreme barrier. the general rating of barriers was approximately 2.0 out of a possible 4.0, which indicated the overall contention of small businesses that no specific aspect made it extremely difficult to comply with ohs directives. small business owners and/or managers were asked to list additional barriers which, in their view, affected their compliance with ohs directives. these views involved open-ended responses and are listed in table 3. noteworthy is the challenge to decide on the categorisation of the barriers listed by participants. the challenge was caused by the fact that participants listed some barriers by using a single word without any proper description. table 3: participant-listed barriers that affect compliance with occupational health and safety directives. the following details were relevant: the listing and rating of barriers did not reveal any dominant barrier at any specific level of effect (i.e. ‘somewhat of a barrier’ through to ‘an extreme barrier’). small business owners and/or managers listed a range of 23 barriers (38 responses) – where some of these were interrelated. almost three quarters (30 out of 38 = 76.3%) of the list provided by respondents were regarded as ‘extreme barriers’. the diverse range and rating of barriers seemed to be related to personal experience and choice. very few (only 5 out of 38 = 13.1%) barriers were rated at more than one level of effect (‘somewhat of a barrier’ through to an ‘extreme barrier’). the results indicated that respondents believed that no specific additional barrier seemed to jeopardise their compliance with ohs directives. therefore, only the 11 predetermined barriers to ohs compliance were analysed further. the inter-correlation of the barriers to ohs compliance indicated that the data were suitable for factor analysis. bartlett’s test of sphericity χ² = 2386.63 (df = 55; p ≤ 0.05) and the kaiser–meyer–olkin measure of sampling adequacy (at 0.88, which is more than 0.6, thus indicating that the data were suitable for factor analysis) indicated the overall significance of correlation within each of the two identified factors (pallant 2011:192). the chi-square value from bartlett’s test of sphericity was statistically significant (p ≤ 0.05) for the barriers to ohs compliance. the initial eigenvalues for the barriers to ohs compliance are indicated in table 4. table 4: table of total variance explained. all the 11 barriers to ohs compliance items were used, with two factor loadings proposed based on the number of eigenvalues larger than unity. the percentage of variance explained was 69.23 on two factors, namely human factors and lack of resources. factor analysis is used to reduce a set of variables to more manageable dimensions or factors based on closely related items (pallant 2011:104). an exploratory factor analysis was conducted on the barriers of compliance identified in this study to ascertain the grouping ability of these barriers. the results are indicated in table 5. table 5: exploratory factor analysis on barriers to occupational health and safety compliance. the cronbach’s alpha for the human factors was 0.94 and for lack of resources 0.95, thus indicating reliability. pearson product–moment correlation can be used to explore the relationship between continuous variables to obtain an indication of the direction, as well as the strength of the relationship (pallant 2011:103). a bivariate analysis was consequently conducted using a pearson product–moment correlation (see table 6) to indicate the relationship between behavioural intent, barriers to ohs compliance (resource and human factors), and actual behaviour. these relationships provided a basis for the multivariate analysis. table 6: pearson product–moment correlation. table 6 shows significant relationships between the various factors as follows (esterhuyzen 2017): there was a small negative relationship between behavioural intent and resource barriers, r = −0.12, n = 350, p ≤ 0.05, with resource barriers negatively affecting behavioural intent with regard to ohs. there was a small negative relationship between behavioural intent and human factor barriers, r = −0.20, n = 350, p ≤ 0.05, with human factor barriers negatively affecting behavioural intent with regard to ohs. there was a medium positive relationship between behavioural intent and actual behaviour, r = 0.43, n = 350, p ≤ 0.05, with behavioural intent positively affecting actual behaviour related to ohs. there was a strong positive relationship between resource barriers and human barriers, r = 0.74, n = 350, p ≤ 0.05, with high levels of resource barriers being associated with high levels of human factor barriers. there was a medium negative relationship between resource barriers and actual behaviour, r = −0.21, n = 350, p ≤ 0.05, with actual behaviour related to ohs negatively affecting resource barriers. there was a medium negative relationship between human factor barriers and actual behaviour, r = −0.32, n = 350, p ≤ 0.05, with actual behaviour related to ohs negatively affecting human factor barriers. based on these correlations it can be deduced that all included factors were positively or negatively related in various degrees (small, r = 0.10–0.29; medium, r = 0.30–0.49 or large, r = 0.50–1.0) to one another (pallant 2011:103). in summary, the predetermined barriers were experienced at various levels in terms of their effects on small businesses. in addition to these barriers, additional barriers were indicated and rated by small business owners and/or managers, but these barriers were not included in the analysis because the respondents felt that no specific additional barrier seemed to jeopardise their compliance with ohs directives. the exploratory factor analysis indicated barriers to ohs compliance as related to human factors and lack of resources. the pearson product–moment correlation, used to explore the relationship between continuous variables and to obtain an indication of the direction and strength of the relationship, confirmed the negative effect of barriers to actual compliance with ohs directives. conclusion and implications various important conclusions can be drawn from the findings of this study, thus contributing to the growing body of knowledge on ohs in south african small businesses. the additional employment created by small businesses leads to additional challenges with regard to ohs in the workplace (mayhew 2000:302). it is estimated that small businesses will contribute 90% of new jobs in south africa by the year 2030 (groepe 2015). emphasis is being placed on increasing penalties for non-compliance with ohs directives as well as on holding individual managers liable for ohs accidents in the workplace (loosemore & andonakis 2007:581). the occupational health and safety act 83 of 1993 of south africa is currently being reviewed, with one of the proposed changes being to increase fines and penalties for non-compliance with its directives. small business compliance with ohs requirements, which seems inadequate in the south african context, might contribute to economic growth, job creation and advancement of the economic environment (dol 2013:1). successful management of small businesses requires compliance with applicable legislation, also with regard to ohs. proper identification of barriers to ohs compliance in small businesses is necessary in order to deal effectively with such barriers and to prevent barriers from leading to non-compliance. the study reported in this article has found, through analysis of the quantitative data, that the barriers to ohs compliance in small businesses can be ascribed to human factors and a lack of resources. significant relationships between behavioural intent, human and resource barriers, and actual behaviour have been proven, thereby indicating that a reduction of the barriers to ohs compliance might enhance positive behaviour towards ohs compliance. therefore, it can be concluded that initiatives to reduce perceived barriers to ohs compliance need to be explored with a view to enhancing ohs compliance and small business sustainability. there also appears to be a need for the south african government to assist small business owners and/or managers in overcoming the barriers to ohs compliance. however, small business owners and/or managers also need to address those barriers that they can overcome themselves. in correspondence with relevant literature, small business owners and/or managers need to be shown how ohs compliance can improve their business performance and reduce direct and indirect costs associated with accidents in the workplace (loosemore & andonakis 2007:584). the question to answer is no longer if small businesses can afford ohs compliance, but rather if they can afford not to comply. this study met all applicable criteria for scientifically validated research, but further research could benefit from adapting the methodology used in this study to provide for even better or more valid results. the inclusion of employees could allow for more than employer-related ohs aspects to be included. the inclusion of all nine provinces in south africa will allow for a comparative analysis between the provinces. also, the questionnaire as single measuring instrument did not allow for data and methodological triangulation, which might be explored in further studies. the limited, non-probability sample did not represent the total population (all small business owners and/or managers in all nine provinces of south africa), thus not allowing for full generalisation. recommendations for further research research that could follow on this study needs to obtain accurate figures of ohs incidents in small businesses in south africa with a view to enhancing the body of knowledge of safety management in the south african context. also, as indicated above, a comparative analysis between ohs in small businesses in all nine provinces of south africa could provide more insight into ohs in small businesses. with the success of small businesses being largely dependent on the competency of the owner/manager, the development of their competencies will provide small businesses with sustainable competitive advantage (irene 2017). applicable ohs training for small businesses should therefore be developed and further investigated, with specific reference to determining the effectiveness of such intervention in terms of ohs compliance and barriers to compliance. acknowledgements the research for this article was undertaken at the university of south africa during the author’s phd studies, available here: http://hdl.handle.net/10500/23028. competing interests the author declares that she has no financial or personal relationship that may have inappropriately influenced her in writing this article. author’s contributions e.e. is the sole author of this article. funding this research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references ahonen, g. & hussi, t., 2012, ‘economics of occupational health and safety’, african newsletter on occupational health and safety 22(1), 4–5. ajzen, i. & sheikh, s., 2013, ‘action versus inaction: anticipated affect in the theory of planned behaviour’, journal of applied social psychology 43, 155–162. https://doi.org/10.1111/j.1559-1816.2012.00989.x chen, j.k.c. & zorigt, d., 2013, ‘managing occupational health and safety in the mining industry’, journal of business research 66, 2321–2331. https://doi.org/10.1016/j.jbusres.2012.04.013 companies and intellectual property commission (cipc), 2013, annual report 2012/2013, viewed 17 october 2014, from http://www.cipc.co.za/files/9513/9989/7347/cipc_annual_report_2013.pdf. cooper, d.r. & schindler, p.s., 2011, business research methods, 11th edn., mcgraw-hill, boston, ma. department of labour (dol), 2013, let’s make compliance with ohs a norm to save resources for job creation on 27 march 2013, viewed 08 may 2018, from http://www.labour.gov.za/dol/media-desk/media-statements/2013/let2019s-make-compliance-with-ohs-a-norm-to-save-resources-for-job-creation-labour. esterhuyzen, e., 2017, ‘occupational health and safety: a compliance management framework for small businesses in south africa’, phd thesis, department of business management, university of south africa, pretoria. floyde, a., lawson, g., shalloe, s., eastgate, r. & d’cruz, m., 2013, ‘the design and implementation of knowledge management systems and e-learning for improved occupational health and safety in small to medium sized enterprises’, safety science 60, 69–76. https://doi.org/10.1016/j.ssci.2013.06.012 fuller, c.w. & vassie, l.h., 2004, health and safety management, prentice hall, london. goetsch, d.l., 2014, the basics of occupational safety: a guide for safety management, pearson, london. groepe, f., 2015, the role of small business in the economy, viewed 05 october 2018, from https://www.resbank.co.za/lists/speeches/attachments/452/role%20of%20small%20business%202015%20.pdf. hale, a. & borys, d., 2013, ‘working to rule, or working safely? part 1: a state of the art review’, safety science 55, 207–221. https://doi.org/10.1016/j.ssci.2012.05.011 hasle, p., kines, p. & andersen, l.p., 2009, ‘small enterprise owners’ accident causation attribution and prevention’, safety science 47, 9–19. https://doi.org/10.1016/j.ssci.2007.12.005 henning, s. & akoob, k., 2017, ‘motivational factors affecting informal women entrepreneurs in north-west province’, the southern african journal of entrepreneurship and small business management 9(1), a91. https://doi.org/10.4102/sajesbm.v9i1.91 hermanus, m.a., 2007, ‘occupational health and safety in mining – status, new developments, and concerns’, the journal of the southern african institute of mining and metallurgy 107(8), 531–538. international labour organization (ilo), 2014, creating safe and healthy workplaces for all, viewed 14 august 2015, from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/scms_305423.pdf. irene, b.n.o., 2017, ‘women entrepreneurship in south africa: understanding the role of competencies in business success’, southern african journal of entrepreneurship and small business management 9(1), a121. https://doi.org/10.4102/sajesbm.v9i1.121 kent, p., 2013, sureswipe md: laws kill small businesses, viewed 19 march 2014, from: http://www.fin24.com/entrepreneurs/news/sureswipe-md-laws-kill-small-businesses-20130604. loosemore, m. & andonakis, n., 2007, ‘barriers to implementing ohs reforms – the experiences of small subcontractors in the australian construction industry’, international journal of project management 25, 579–588. https://doi.org/10.1016/j.ijproman.2007.01.015 markowitz, k.j. & gerardu, j.a., 2012, ‘the importance of the judiciary in environmental compliance and enforcement’, pace environmental law review 29(2), 537–554. mashwama, n., aigbavboa, c. & thwala, w., 2018, ‘occupational health and safety challenges among small and medium sized enterprise contractors in south africa’, online, viewed 05 october 2018, from https://link.springer.com/chapter/10.1007/978-3-319-94000-7_7. maxey, h., 2013, safety and small business, the compass – american society for safety engineers, chicago, il, pp. 12–13. mayhew, c., 2000, ‘ohs in australian “micro” small businesses: evidence from nine research studies’, journal of occupational health and safety 16(4), 297–305. mojapelo, t.j. & kok, l., 2017, ‘adherence to occupational health and safety standards: the case of a south african steel processing company’, african journal of governance and development 6(1), 51–71. national planning commission, 2014, national development plan 2030, government printer, pretoria. niu, s., 2010, ‘ergonomics and occupational safety and health: an ilo perspective’, applied ergonomics 41(6), 744–753. https://doi.org/10.1016/j.apergo.2010.03.004 okoye, p.u. & okolie, k.c., 2014, ‘exploratory study of the cost of health and safety performance of building contractors in south east nigeria’, british journal of environmental sciences 2(1), 21–33. othman, a.a.e., 2012, ‘a study of the causes and effects of contractor’s non-compliance with the health and safety regulations in the south african construction industry’, architectural engineering and design management 8, 180–191. https://doi.org/10.1080/17452007.2012.683242 pallant, j., 2011, spss survival manual: a step by step guide to data analysis using spss, 4th edn., allen and unwin, crows nest, nsw. pillay, k.r., 2014, ‘the costs of construction accidents’, unpublished master’s thesis, cape peninsula university of technology, bellville. probst, t.m., graso, m., estrada, a.x. & greer, s., 2013, ‘consideration of future safety consequences: a new predictor of employee safety’, accident analysis and prevention 55, 124–134. https://doi.org/10.1016/j.aap.2013.02.023 reason, j., 2005, managing the risk of organisational accidents, ashgate, burlington. reason, j., 2007, human error, university press, cambridge. semboja, h.h.h., ahonen, g. & hussi, t., 2012, ‘microeconomics of firms compliant with occupational safety and health’, african newsletter on occupational health and safety 22(1), 6–9. starren, a., hornikx, j. & luijters, k., 2013, ‘occupational safety in multicultural teams and organisations: a research agenda’, safety science 52, 43–49. https://doi.org/10.1016/j.ssci.2012.03.013 stranks, j., 2010, health and safety at work: an essential guide for managers, 9th edn., kogan page, london. struwig, f.w. & lillah, r., 2017, ‘south african small and medium-sized enterprise owners’ intention to implement an environmental management system’, southern african journal of entrepreneurship and small business management 9(1), a104. https://doi.org/10.4102/sajesbm.v9i1.104 van vuuren, j. & alemayehu, b.z., 2018, ‘the role of entrepreneurship in transforming efficiency economies into innovation-based economies’, southern african journal of entrepreneurship and small business management 10(1), a140. https://doi.org/10.4102/sajesbm.v10i1.140 wilson, k., 2018, can you afford non-compliance? viewed 03 october 2018, from https://jesi.io/can-afford-non-compliance-jesi. world health organization (who), 2007, employment conditions and health inequalities, viewed 17 august 2015 from http://who.int/social_determinants/resources/articles/emconet_who_report.pdf?ua=1. world health organization (who), 2017, workplace health promotion, viewed 15 february 2017, from http://www.who.int/occupational_health/topics/-workplace/en/index1.html. abstract introduction unemployment, income and entrepreneurship in south africa linking entrepreneurship to economic growth methodology data issues statistical modelling procedure presentation and discussion of results study limitations and future directions policy suggestions and conclusion acknowledgements references appendix 1 about the author(s) darma mahadea school of accounting, economics and finance and economics, university of kwazulu-natal, south africa irrshad kaseeram department of economics, university of zululand, south africa citation mahadea, d. & kaseeram, i., 2018, ‘impact of unemployment and income on entrepreneurship in post-apartheid south africa: 1994–2015’, southern african journal of entrepreneurship and small business management 10(1), a115. https://doi.org/10.4102/sajesbm.v10i1.115 original research impact of unemployment and income on entrepreneurship in post-apartheid south africa: 1994–2015 darma mahadea, irrshad kaseeram received: 01 nov. 2016; accepted: 06 dec. 2017; published: 22 mar. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: south africa has made significant progress since the dawn of democracy in 1994. it registered positive economic growth rates and its real gross domestic product (gdp) per capita increased from r42 849 in 1994 to over r56 000 in 2015. however, employment growth lagged behind gdp growth, resulting in rising unemployment. aim and setting: entrepreneurship brings together labour and capital in generating income, output and employment. according to south africa’s national development plan, employment growth would come mainly from small-firm entrepreneurship and economic growth. accordingly, this article investigates the impact unemployment and per capita income have on early stage total entrepreneurship activity (tea) in south africa, using data covering the 1994–2015 period. methods: the methodology used is the dynamic least squares regression. the article tests the assertion that economic growth, proxied by real per capita gdp income, promotes entrepreneurship and that high unemployment forces necessity entrepreneurship. results: the regression results indicate that per capita real gdp, which increases with economic growth, has a highly significant, positive impact on entrepreneurial activity, while unemployment has a weaker effect. a 1% rise in real per capita gdp results in a 0.16% rise in tea entrepreneurship, and a 1% rise in unemployment is associated with a 0.25% rise in tea. conclusion: there seems to be a strong pull factor, from income growth to entrepreneurship and a reasonable push from unemployment to entrepreneurship, as individuals without employment are forced to self-employment as a necessity, survival mechanism. overall, a long-run co-integrating relationship seems plausible between unemployment, income and entrepreneurship in south africa. introduction entrepreneurship is currently the focus of policy interest globally. against a backdrop of poverty, income inequality, and rising unemployment in south africa, vigorous entrepreneurship, as partly manifested through the creation and expansion of small and medium enterprises (smes), is critical for economic development (herbst & mills 2015; herrington, kew & kew 2015). entrepreneurship brings labour and capital together, and it is the pathway to employment and economic growth. south africa has had a record of economic expansion since democracy in 1994. accompanying this growth, employment increased by over 3.5 m during the past 20 years. however, more people enter the labour market each year in search of employment, resulting in a rise in the unemployment rate. if one includes the discouraged work effect (about 2.5 million individuals), then unemployment in south africa was close to 34% in 2016, which is extremely high by global standards. even using the narrow ‘official’ definition, the unemployment rate increased from 20% in 1994 to 23% in 2008 to over 26% in 2016; youth unemployment is shockingly higher at 53% in 2016 [south african reserve bank (sarb) 2016]. while in absolute terms employment increased with economic growth over time, more so for skilled labour, there has also been some job destruction with business closures (johnson 2015; kerr winttenberg & arrow 2014). the national development plan (ndp) envisages that, if unemployment is to fall to 14% by 2020 and 6% by 2030, south africa needs an average annual gross domestic product (gdp) growth of 5.4%. it further suggests that entrepreneurship in the small-firm sector would be critical in generating growth in employment and income. the post-apartheid government has put in place various strategies to enhance entrepreneurship and job creation. these include the growth, employment and redistribution strategy, national empowerment fund, accelerated and shared growth initiative of south africa, the small enterprise finance agency, youth development agency, ndp, and a new ministry for small business recently. despite all these initiatives, south africa’s contemporary growth (figure 1) and unemployment rates (figure 2) are worryingly a development concern. encouragingly, in september 2016, the sme fund was launched to stimulate entrepreneurship. this is a ceo initiative, where a group of 90 business executives and leaders from the private sector in south africa established a fund of r1.5b to boost smes and employment, together with the state. figure 1: economic growth in south africa: 1994–2015. figure 2: unemployment rate in south africa: 1994–2015. there is an apparent ‘tension’ in the literature, where arguments have been put forward that entrepreneurship can be ‘bad’ for the economy due to overinvestment by entrepreneurs leading to business failures and other social costs (de meza & webb 1987). the business demise argument is sensitive in the south african context, as vulnerable groups with a low asset base, for example, blacks and women, tend to lose the most from business failures. yet, they are the most targeted groups by entrepreneurship promotion policies. however, the literature and empirical studies also suggest that promoting an entrepreneurship ecosystem spurs competition, innovation, employment, venture development and economic growth as well as reducing poverty (herrington et al. 2015; kantor 2017; naude 2008; nieman & nieuwenhuizen 2014; urban 2013). following schumpeter, entrepreneurship and economic growth are positively related; an increase in the number of entrepreneurs leads to an increase in economic growth and income, largely through their introductions of innovative technologies, products and services in existing and new ventures. new firms create additional business opportunities, boost aggregate demand and generate new employment opportunities (kritikos 2014). south africa is critically in need of vigorous entrepreneurship to address the problems of poverty, income generation and slow economic growth as well as historical imbalances resulting from apartheid (herbst & mills 2015). accordingly, in light of these insights, this article seeks to assess whether a credible long-run cointegrating relationship exists between gdp income, entrepreneurship and unemployment in post-apartheid south africa. the article consists of five sections; the first provides an overview of unemployment, economic growth and entrepreneurship. the second section briefly links entrepreneurship to economic growth via the neoclassical and endogenous growth models. the third section covers the research methodology, and the last two sections discuss the findings and policy directions regarding entrepreneurship. unemployment, income and entrepreneurship in south africa south africa has registered positive economic growth since democracy in 1994, an average economic rate of 3.6% during 1994–2012 and 5% for a couple of years (figure 1). with the positive economic growth rates, income has consistently increased. as a result, real gdp per capita has increased from r42 849 in 1994 to r55 508 in 2012 and to r56 169 in 2015 (sarb 2016). however, employment lagged behind economic growth during the same period. while unemployment decreased between 2004 and 2009, the trend is on the rise (figure 2); unemployment increased from 20% in 1994 to 26% in 2015 despite numerous policy interventions, of which sme entrepreneurship features prominently. in south africa, smes contribute over 40% towards the country’s overall gdp and provide more than 50% of employment to labour (kelly, singer & herrington 2016; parsons 2013). however, according to the global entrepreneurship monitor (gem) reports, south africa, as an efficiency-driven economy similar to countries like russia, brazil, mexico and thailand, has a low level of total early stage entrepreneurship activity (tea). total entrepreneurship activity is the percentage of the adult population who are in the process of starting or have started a business that has been operational for at least 42 months. south africa’s tea ranged from 9.4% in 2001 to 10.6% in 2013; the figure dropped to 6.97% in 2014, but increased to 9.2% in 2015 (kelly et al. 2016). an oecd (2017) report asserts that south africa can unlock significant employment creation and business opportunities through aligning of skills acquisition with labour market needs, addressing skills development and investment for both workers and employers, through on-the-job learning; and policies facilitating the entry of migrants with sought-after scarce skills. this article makes the conceptual argument that an economy that sets up the necessary infrastructure, skill set and investor-friendly policies will advance economic growth which, in turn, will promote small business development. linking entrepreneurship to economic growth within the tradition of the austrian school of entrepreneurship, the entrepreneur is the alert individual who discovers new opportunities, acts on them and introduces change for profitable ends in a market that is never in equilibrium but is always tending to it (mahadea & youngleson 2013; urban 2008). kirzner (1997, 2009) asserts that entrepreneurs are alert in spotting profitable opportunities unnoticed by others, and they harness the necessary resources to exploit those opportunities for business success. in the schumpeterian framework, entrepreneurs are those creative individuals who envision an invention or develop an innovation in the form of a new production function, a new product or process and a combination of ideas to create a new business and expand that business successfully (luiz 2008). schumpeter’s entrepreneurs are distinguished by their ability to create ‘new combinations’ beyond the current production function. through this innovative process, inefficient firms are displaced, but this creative destruction process is ultimately beneficial and is the main force behind productivity gains and economic growth (aghion & howitt 1992; baumol 2011). shane (2003) argues that as an economy operates in a state of disequilibrium, entrepreneurship links opportunities to enterprising individuals. he adds that opportunities always exist in a society but lack an agency; hence human actions are necessary for the opportunities to be exploited by discerning entrepreneurs who recombine resources to create a new business and a new means–end framework for profit. by so doing, they enhance economic growth and bring about changes to the production frontier (audretsch & keilbach 2011; wennerkers & thurik 1999). the production function model, expressing the relationship between economic output and inputs (capital, labour and technology), has dominated growth economics since solow (1956). it is represented by the following equation: the neoclassical model suggests that aggregate output (yt) is a function of capital (kt), labour (lt) and technology (at), and all the variables are time dependent. an advancement in technological innovation makes a given amount of capital and labour more productive. entrepreneurship is considered as part of the residual factor, entering the neoclassical model through the technology variable. although technology is critical in the growth process, it remains exogenous in the solow model. as a response to the limitations of the solow model, in the 1980s the endogenous growth models emerged (mankiw 2014). herein, economic growth arises through internal processes from within the system, such as the enhancement of a society’s human capital (education and training), which in turn leads to new ideas, to research and development, new forms of technology and infrastructure, as well as the advancement of efficiency in production systems. these progressions are underpinned largely by the actions of entrepreneurs (barro 2003; grossman & helpman 1991; romer 1990). economic growth and entrepreneurship can be viewed endogenously as a virtuous circle where innovations and economic advancement, in turn, create more entrepreneurial opportunities which generate incentives for potential entrepreneurs to become alert to them, thus creating wealth and leading to sustained economic growth. parker (2009) asserts that a thriving economy provides greater scope for entrepreneurship expansion (opportunity entrepreneurship). on the other hand, high unemployment may push certain individuals to take the self-employment route to earn an income, out of necessity or desperation (necessity entrepreneurship). high unemployment may also reflect low economic growth and hence low entrepreneurial opportunities (audretsch & keilbach 2011; baumol 2009). according to the occupational choice perspective, one becomes an entrepreneur if wage income from gainful employment is much less than the income benefits and other perks accruing from self-employment (burton, sorensen & dobrev 2016; casson 2003). this study asserts that high unemployment in south africa, low earnings from certain types of gainful employment and insecurity or poor career mobility prospects at the workplace, partly because of employment equity, drive many people to seek refuge in entrepreneurship by opening a small formal or informal business where start-up costs are low. this perspective might explain why there is an expanding informal sector in the south african economy. stats sa has noted the unskilled workers as a group have the highest unemployment rates (sarb 2016). on the other hand, the high wage structure in south africa might encourage the majority of skilled and semi-skilled individuals to opt for secure gainful employment in the private and public sectors instead of delving into entrepreneurship, which is fraught with income uncertainties and risks (lings 2014). this assertion is supported by the gem report (2015), which notes that entrepreneurial activity in south africa is much lower than its emerging market peers. accordingly, this article assesses whether there is a link between income, entrepreneurship and unemployment, using dynamic ordinary least squares (dols) regression. in this regard, two hypotheses were tested, as indicated below. income is proxied by real per capita gdp for the 1994–2015 period, and entrepreneurship by the tea rate post-1994. unemployment is measured according to the narrow official definition, taken as the percentage of the economically active population (aged 15–64) who were available to work and took active steps to seek employment during the preceding 2 weeks but did not succeed and hence did not work (mohr 2016). methodology stemming from the literature discussed above, this article attempts to assess two hypotheses over the long run: an increase in unemployment in the south african economy leads to a rise in entrepreneurial activity a rise in national income creates opportunities for entrepreneurship development. in order to test these hypotheses, this study adopts the following model specified by plehn-dujowich (2011) and ghavidel, farjadi and mahammadpour (2011): where et represents tea entrepreneurship, measuring the proportion of working age population both about to start an entrepreneurial activity and those that have been engaged in one for at most 3.5 years, measured in percentages; ut represents the unemployment rate (unemployed relative to total working age population measured in percentages). the narrow definition of unemployment is used. yt represents the natural log of real gdp at 2010 constant prices; εt represents the error terms, which are assumed to be normally distributed with a zero mean and constant variance. total entrepreneurship activity was obtained from the gem reports and website, while data on the unemployment rate and real gdp were obtained from the south african reserve bank. all data were measured at a yearly frequency. data issues data on tea in south africa is available only from 2001. accordingly, the tea data for 1994–2000 had to be extrapolated. so, the study used simple but robust trend techniques to back-cast the tea series to 1994 to increase the sample size for the purposes of regressing reasonable long-run relationships. the following trend regression was estimated using the 2001–2015 (15 observations) estimates of tea: it is to be noted that both coefficients were statistically significant at the 1% and 5% levels, respectively. the graph in figure 3 depicts the complete (1994–2015) tea dataset used in this study together with real per capita gdp. the first seven data points were generated using equation 3. the extrapolated tea thus ranged from 4.1% (1994) to 5.3% (2000). these points are considered to be plausible since the ushering of the democratic era unlocked business opportunities for all citizens in ‘rainbow’ south africa. both the per capita gdp income and tea series show an upward trend over the period under consideration (figure 3). the 15 data points (2001–2015) used to derive equation 3 show a positive trend, which justifies its use in extrapolating the earlier seven points. figure 3: graph of total entrepreneurship activity and real per capita gross domestic product. statistical modelling procedure since this article deals with an extremely small dataset (21 observations), the stock and watson (1993) dols modelling technique was chosen as a preferred procedure. monte carlo simulations have shown that the dols estimator generates superior results, in small samples, compared to alternative approaches (e.g. johansen var 1991 and fully modified ordinary least squares [ols] of phillips & hansen 1990). this article estimates the long-run relationship as expressed in equation 2, which in the stock and watson (1993) dols form: b = [β0, β1, β2]′, x = [1, ut, yt], where b and x are the long-run coefficient and variable vectors, respectively, which enter into the following dols specification: this dols specification enables the study to estimate the long-run parameters through regressing any i(1) variables on other i(1) variables, any i(0) variables and leads and lags of the first differences of any i(1) variables. however, since the sample size is a constraint, only one lead and lag of a variable was selected. presentation and discussion of results as this study seeks to establish a long–run association between the variables, it is critical to avoid the possibility of spurious regressions. hence, the augmented dickey fuller (adf) unit roots tests were first conducted to ensure that all variables entering the regression are integrated of the same order [i.e. i(1)], commonly known as ‘nonstationary variables’. this is a standard practice in time series econometrics since unrelated variables entering a regression may lead to valid regression results due to common trends in the data, despite there being no economic reason for such relationships. however, in justified long-run economic relationships, regressions involving i(1) variables will generate residuals that tend to be stationary [i.e. i(0)]; such variables are said to be cointegrated in the sense they exhibit a sensible dynamic co-movement over time. table 1 reports the adf unit root tests. these confirm that all the series entering the regression were i(1); since in levels the tau calculated statistics for all three series (−1.93, −2.13, −2.02) are greater than the tau critical at 1% significance, upon first differencing the tau statistic in all cases (−7.57, −2.19, −51.8) are less than their corresponding tau critical values at conventional significance levels. table 1: unit root tests. since all the variables were integrated of the same order, entering them in the dols regression in their levels form was justified. table 2 presents the results of the dols regression. table 2: dynamic ordinary least squares regression results – dependent variable: total entrepreneurship activity. the dols regression results show that both the natural log of real per capita gdp (b = 16.30) and the unemployment rate (b = 0.24) have a positive and statistically significant causal effect on tea (table 2). the coefficient associated with real per capita gdp suggests that a 1% rise in per capita gdp results in a 0.163% rise in tea, perhaps reflecting opportunity entrepreneurship. the coefficient associated with the unemployment rate indicates that a 1% rise in unemployment results in a 0.24% rise in tea. this may reflect a measure of displacement or necessity entrepreneurship, as unemployed individuals are forced to seek refuge by starting up a business, because they have no alternative employment opportunities or no other means to gain income. the entrepreneurship elasticity of unemployment, though significant, is rather low and inelastic, possibly reflecting a lack of relevant skills and resources for venturing into self-employment among the unemployed. the results of table 2 convincingly – especially when considered in conjunction with the confirmation of cointegration in table 3 – demonstrate that a valid long relationship between the variables does exist that is consistent with economic reasoning. the interpretation of the slope coefficients suggests that output growth is a critical factor that explains the rise in entrepreneurial activity in the south african economy. as the theory asserts, a growing economy creates opportunities for new firms to emerge, existing businesses to expand, for new enterprises displacing outdated ones and entirely new innovative concerns taking root, producing hitherto unknown goods and services. as individuals and economies develop, they accumulate income and wealth through economic growth, which promote further entrepreneurship (herrington and kew, 2016). the weak impact of unemployment on tea suggests that in an economy with low growth, employment opportunities are limited. hence, some unemployed individuals by necessity seek refuge as a last resort by venturing into the self-employment route. however, this may not necessarily reflect as high a level of entrepreneurial activity as opportunity entrepreneurship. table 3: cointegration tests. the long-run relationship presented in table 3 is plausible, especially since the engle granger tau and z-statistics confirm that the variables are cointegrated with the respective p-values of 0.59 and 0.043. moreover, these results are corroborated by the phillips-ouliaris cointegration tests, where the tau and z-statistics are significant with the p-values of 0.048 and 0.031, respectively (table 3). overall, since cointegration is confirmed, the regression coefficients are statistically significant, and the diagnostic tests discussed below indicate that the dols model is a robust one. this implies that the estimated regression possesses strong predictive value for the south african economy, consistent with those found for the usa and pakistan by plehn-dujowich (2011) and ghavidel et al. (2011), respectively. diagnostic tests the study considered the diagnostic tests for normality of residuals, serial correlation and heteroscedasticity, which are reported in the appendix. the jarque‑bera statistic reported in figure 1-a1 of the appendix is about 1.04, and the probability of obtaining such a statistic under the normality assumption is 59.4%; thus one does not reject the null hypothesis that the residuals are normally distributed. the q-statistics and their corresponding p-values for the correlogram of the 12 lags of the residuals depicted in figure 2-a1 of the appendix demonstrates that serial correlation is not a problem. figure 3-a1 of the appendix shows the breusch–pagan–godfrey heteroscedasticity test results, demonstrating that the null hypothesis of homoscedasticity should be accepted since the probability of obtaining the f-statistic, n × r2 and the scaled explained sum of squares (ess) statistics are high at 59.96%, 56.2% and 52.51%, respectively. in light of all the diagnostic tests as well as the cointegration tests, one may conclude that the study has generated a credible model to explain the impact of per capita income and unemployment on entrepreneurial activity. however, it should also be pointed out that the limited data on tea is perhaps a limitation of the study. however, this was overcome by the extrapolation method. nevertheless, the results are sufficiently robust, pointing to a policy guidance of a strong long-run relationship between unemployment, income and entrepreneurship in south africa. accordingly, there is support for the two hypotheses formulated earlier. if more employment and entrepreneurial capabilities are to be created, it is critical to have an economy that exhibits high growth rates which in turn generates growth in real per capita income. this is consistent with the ndp’s suggestion that south africa needs higher levels of sme entrepreneurship and economic growth rates to reduce unemployment and inequality. if entrepreneurial capacity, especially among the unemployed youth, can be enhanced, more individuals can be their own job creators by venturing into self-employment and expanding small businesses, rather than be job-seekers as salaried labour. evidently, this entails that the constraints that inhibit business entrepreneurship be identified and addressed. study limitations and future directions in its quest to examine cointegrating relationships between tea, per capita gdp and unemployment, the study was forced to use a small available data set, as tea data on south africa have only been available since 2001. due to the statistical need of maintaining maximum degrees of freedom when running regression models, it was not possible to include control variables. furthermore, the study only focused on south africa. hence, future studies might include other emerging economies in a panel data framework. this will also allow control variables, such as structural reforms, ease of doing business index, political stability and levels of corruption, to mention a few, to be examined and how these generate comparative dynamic relations between economic or income growth, (un)employment and entrepreneurship over time. policy suggestions and conclusion the south african economy is not growing fast enough to absorb the rising annual number of job-seekers. the rising unemployment is likely to push individuals, especially the youth, into entrepreneurship out of necessity to earn an income to survive. however, their aspirations should not be foiled by a hostile regulatory environment. as the results of the present study indicate, the entrepreneurship elasticity of unemployment is rather low, only 0.24%, though significant. this might be a reflection that the unemployed have few requisite skills. they may suffer from serious constraints to make a rational entry into entrepreneurship. banking institutions might not be prepared to offer assistance to such high-risk cases. a related concern to entrepreneurial activity is the quality of the workforce and poor levels of education and training (herrington 2012; lings 2014). the 2014 gem clearly indicates that a strong correlation exists between perceived skills of individuals of all participating countries and tea. according to the world economic forum’s (wef) global competitiveness report 2015/2016, south africa ranks rather low on quality of education (120th out of 140 countries), making it difficult to generate the required type of skills needed for a competitive economy. the education system in south africa is devastating because it is limiting (mashaba 2015). acquisition of a high level of human capital is thus necessary for south africa to move from its present ‘low growth equilibrium’ level to a higher platform of entrepreneurship (fnb 2010; herrington 2012; parsons 2013). it is no surprise that only 10.9% of individuals in south africa have entrepreneurial intentions, although about 74% regard entrepreneurship as a good career (kelly et al. 2016). this low entrepreneurial propensity among certain groups could also arise because of their fear of failure. the corporate or public sector employment then becomes a more attractive and less risky job option. enhancing the quality of education and training can make labour more employable and attract more people of ability to become entrepreneurs (chen & thompson 2016). government ought to adopt technical skills development programmes among the unemployed to improve their self-confidence and prospects of entering into self-employment. on the other hand, as indicated by the gem and world economic forum (wef) reports, environmental factors relating to south africa’s entrepreneurial ecosystem are perceived to be unfriendly. these include high levels of corruption, government regulations and red tape, crimes and violence, poor quality education and levels of productivity, labour market rigidities and adverse labour relations (herrington 2012; parsons 2013). all these augment transaction costs and impose heavy burdens on competitiveness as well as making entrepreneurship less attractive. this is also evidenced by the world bank’s doing business report for 2016, which saw south africa ranked 73rd globally, down five places since 2015. thus, unless a propitious environment is created to address these constraints, our growth potential will remain low, entrepreneurship will not flourish fully and the growing number of jobless youth and unemployed individuals in south africa will have little hope of realising their income and employment aspirations. increases in real per capita gdp income are found, in the present study, to have a highly significant influence on enhancing entrepreneurship. the prospects of real growth in gdp income and poverty alleviation or job creation are weak in a stagnant economy. income increases with economic growth and provides greater scope for entrepreneurship and employment; a 1% increase in gdp per capita income is found to be associated with a 0.16% rise in early stage entrepreneurship. income growth thus has a positive scale effect on enhancing the scope of entrepreneurship. given the strong relationship between gdp and entrepreneurship, the foundation for an entrepreneurial economy needs to be strengthened in south africa. this will call for pragmatic and prudent macroeconomic policies which include low inflation, incentives for entrepreneurs, contained government spending, the provision of infrastructure, addressing corruption and political risks and uncertainties. acknowledgements the authors would like to extend their thanks to the managing editor of this journal and to the reviewers for their feedback and assistance on this article. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions the conceptualisation of the article was done by d.m. and the statistical part was done by i k. both contributed to the writing of the article. references aghion, p. & howitt, p., 1992, ‘a model of growth through creative destruction’, econometrica 60, 323–351. https://doi.org/10.2307/2951599 audretsch, d.b. & keilbach, m., 2011, ‘knowledge spillover entrepreneurship, innovation and economic growth’, in d.b. audretsch, o. falck, s. heblich & a. lederer (eds.), handbook of research on innovation and entrepreneurship, pp. 245–272, edward elgar, cheltenham, uk. barro, r.j., 2003, ‘determinants of economic growth in a panel of countries’, annals of economics and finance 4(2), 231–274. baumol, w.j., 2009, the microtheory of innovative entrepreneurship, princeton university press, princeton, nj. baumol, w.j., 2011, ‘invention and social entrepreneurship: social good and social evil’, in d.b. audretsch, o. falck, s. heblich & a. lederer (eds.), handbook of research on innovation and entrepreneurship, pp. 3–11, edward elgars, cheltenham, uk. burton, m., sorensen, j. & dobrev, s., 2016, ‘a careers perspective on entrepreneurship’, entrepreneurship theory and practice 40(2), 237–248. https://doi.org/10.1111/etap.12230 casson, m., 2003, the entrepreneur: an economic theory, edward elgar, aldershot. chen, l. & thompson, p., 2016, ‘skill balance and entrepreneurship’, entrepreneurship theory and practice 40(2), 289–306. https://doi.org/10.1111/etap.12220 de meza, d. & webb, c., 1987, ‘too much investment: a problem of asymmetric information’, quarterly journal of economics 102, 281–292. https://doi.org/10.2307/1885064 fnb, 2010, the state of entrepreneurship in south africa, fnb, johannesburg. ghavidel, s., farjadi, g. & mahammadpour, a., 2011, ‘the relationship between entrepreneurship and unemployment in developed and developing countries’, in international conference on applied economics, icoae, august 25–27, perugia, italy, pp. 189–192. grossman, g.m. & helpman, e., 1991, ‘growth and welfare in a small open economy’, in e. helpman & a. razin (eds.), international trade and trade policy, pp. 141–163, mit press, cambridge, ma. herbst, j. & gills, g., 2015, how south africa works, macmillan, johannesburg. herrington, m., 2012, ‘african entrepreneurship lacking!’, business brief 17(5), 14. herrington, m. & kew, p., 2016, global entrepreneurship monitorsouth african report 2015/16: is south africa heading for an economic meltdown? development unit for new enterprise, uct, cape town. herrington, m., kew, j. & kew, p., 2015, 2014 gem report sa: the crossroads – a goldmine or a time bomb? dune, western cape government, cape town. johansen, s., 1991, ‘estimation and hypothesis testing of cointegration vectors in gaussian vector autoregressive models’, econometrica 59(6), 1551–1580. https://doi.org/10.2307/2938278 johnson, h.w., 2015, how long will south africa survive? jonathan ball publishers, cape town. kantor, b., 2017, get south africa growing, jonathan ball, johannesburg. kelly, d., singer, s. & herrington, m., 2016, gem 2015/16 global entrepreneurship monitor, south african report, gsb, university of cape town, cape town. kerr, a., wittenberg, m. & arrow, j., 2014, ‘job creation and destruction in south africa’, south african journal of economics 82(1), 1–19. https://doi.org/10.1111/saje.12031 kirzner, i.m., 1997, ‘entrepreneurial discovery and the competitive market process: an austrian approach’, journal of economic literature 35(1), 60–85. kirzner, i.m., 2009, ‘the alert and creative entrepreneur: a classification’, small business economics 32(2), 145–152. https://doi.org/10.1007/s11187-008-9153-7 kritikos, a.s., 2014, ‘entrepreneurship and their impact on jobs and economic growth’, iza world of labour 8, 1–10. lings, k., 2014, the missing piece: solving south africa’s economic puzzle, macmillan, johannesburg. luiz, j.m., 2008, ‘economic perspectives of entrepreneurship’, in b. urban (ed.), frontiers in entrepreneurship, pp. 63–84, heinemann, johannesburg. mahadea, d. & youngleson, j., 2013, entrepreneurship and small business management, pearson, cape town. mankiw, g., 2014, macroeconomics, harvard, worth publishers, new york. mashaba, h., 2015, the capitalist crusader: fighting poverty through economic growth, bookstorm, johannesburg. mohr, p., 2016, economic indicators, van schaik, braamfontein. naude, w., 2008, ‘entrepreneurship in the field of development economics’, in b. urban (ed.), frontiers in entrepreneurship, pp. 85–114, heinemann, johannesburg. nieman, g. & nieuwenhuizen, c., 2014, entrepreneurship: a south african perspective, 3rd edn., van schaik, pretoria. oecd, 2017, getting skills right: south africa, oecd publishing, paris. https://doi.org/10.1787/9789264278745-en parker, s.c., 2009, the economics of entrepreneurship, ncambridge university press, cambridge, uk. parsons, r., 2013, zumanomics, jacana, johannesburg. phillips, p.c.b. & hansen, b.e., 1990, ‘statistical inference in instrumental variables regression with i(1) processes’, review of economics studies 57, 99–125. https://doi.org/10.2307/2297545 romer, p.m., 1990, ‘endogenous technological change’, journal of political economy 98, 71–102. https://doi.org/10.1086/261725 sarb, 2015, south african reserve bank quarterly bulletin, sarb, pretoria, p. 277. sarb, 2016, south african reserve bank quarterly bulletin, sarb, pretoria, p. 280. shane, s., 2003, a general theory of entrepreneurship, edward elgar, northampton, ma. solow, r.m., 1956, ‘a contribution to the theory of economic growth’, quarterly journal of economics 70, 65–94. https://doi.org/10.2307/1884513 stock, j. & watson, m.w., 1993, ‘a simple estimator of cointegration vectors in higher order integrated systems’, econometrica 61(4), 783–820. https://doi.org/10.2307/2951763 urban, b., 2008, frontiers in entrepreneurship, b. urban (ed.), heinemann, johannesburg. urban, b., 2013, ‘influence of the institutional environment on entrepreneurial intentions in an emerging economy’, the international journal of entrepreneurship and innovation 14(3), 179–192. https://doi.org/10.5367/ijei.2013.0122 wennerkers, s. & thurik, r., 1999, ‘linking entrepreneurship and economic growth’, small business economics 13(1), 27–55. https://doi.org/10.1023/a:1008063200484 appendix 1 abstract introduction conceptual framework research methodology, sampling and methods ethical consideration findings, conclusions, recommended model and future direction of research conclusion acknowledgements references about the author(s) teboho pitso centre for innovation and entrepreneurship, vaal university of technology, vanderbijlpark, south africa citation pitso, t., 2019, ‘invigorating innovation and entrepreneurship: insights from selected south african and scandinavian universities’, southern african journal of entrepreneurship and small business management 11(1), a187. https://doi.org/10.4102/sajesbm.v11i1.187 original research invigorating innovation and entrepreneurship: insights from selected south african and scandinavian universities teboho pitso received: 25 apr. 2018; accepted: 14 nov. 2018; published: 28 mar. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: university innovation and entrepreneurship have evolved discretely and struggled with legitimacy, which marginalised them and vitiated their optimal societal impact. however, three recent developments have compelled universities to become innovative and entrepreneurial: workplace demands for creative and innovative graduates, chronic university underfunding and graduate unemployment. therefore, this study sought to understand how universities in different geographic contexts fostered innovation and entrepreneurship. aim: the study aimed to: (1) better understand how innovation and entrepreneurship were fostered in each geographic location, (2) glean lessons for developing a new innovation and entrepreneurship model, (3) develop an integrated innovation and entrepreneurship model. methods: the study used semi-structured interviews conducted with 15 innovation and entrepreneurship senior managers drawn from five scandinavian universities and three south african universities. results: structurally and strategically, the innovation and entrepreneurship units are located outside the core faculty activities: (1) there are no direct linkages between faculty and these units’ activities. (2) creativity and innovation are not explicitly taught in faculties. (3) research agendas of faculties and these units are not mutually inclusive. conclusion: faculty, innovation and entrepreneurship activities are not structurally and strategically linked. keywords: innovation; creativity; entrepreneurship; higher education; commercialisation. introduction universities are important wellsprings of knowledge, part of which contributes towards building and sustaining innovative practices that often lead to entrepreneurial opportunities. however, this university knowledge strength does not always translate into high conversion rates of research output turned into intellectual property (ip) commercialisation, the first stage of a business cycle. there are a number of factors that could be contributing to this challenge, some of which are deeply historical. the humboldtian model of universities, sustained over centuries, entrenched the production of research without the proviso that it contributes to any practical end such as in innovative outputs or increased entrepreneurial activity. this traditional humboldtian university model was also erroneously used to defend an academic model that framed undergraduate studies in terms of known, canonical scientific knowledge. this academic model fostered academic practices with a strong mimetic epistemology that mostly marginalised the development of critical and creative thought in undergraduate curriculum (csikszentmihalyi 2009:23–27; pitso 2015:4–5) as well as students’ entrepreneurial mindsets (benamar 2016:1–2; pitso & lebusa 2015:42). csikszentmihalyi (2009:23–24) argued that most doctoral students often failed to complete their advanced studies because they were unable to contribute original ideas to a selected body of knowledge, which is a key requirement in doctoral level studies. csikszentmihalyi (2009:24) blamed this problem on students’ earlier formal learning orientation that taught them how to answer questions rather than how to pose them. according to csikszentmihalyi (2009:25), a similar pattern of scarcity of originality appears in industry, the business world and civil society, mainly because the kind of graduates they recruited lacked such skills of creativity and innovation. these creativity and innovation skills are often not central in the formal undergraduate learning at most universities. yet, contrary to popular belief, the modern university is the result of an academic vision where students are expected to learn via conducting their own empirical research and becoming creative. when wilhelm von humboldt proposed a new university model in 1809, although some scholars claim earlier conceptions (ash 2006:245–247), he advocated for a research-intensive model that included students’ research projects. students and professors, under this new academic vision, were expected to meet on a weekly basis in seminars to discuss progress that was being made in each student’s research project. von humboldt was vehemently opposed to the curriculum model for academic practices. humboldt’s criticism of the curriculum model was that it resembled, in form and substance, the ancient religious model of education that entrenched didactic learning, hence his new academic vision that focused on students’ research as the effective means of learning. the original religious educational model compelled students to summarise, repeat, recite and imitate the canon, and thus had a strong epistemology of mimesis. in the humboldtian university, dull lectures that transmitted existing knowledge in a curriculum format would cease to exist. unpredictable seminars where students and their professors explored new frontiers of knowledge would become ubiquitous. the most important aspect of these seminars would be their collaborative nature between students and professors. this approach to learning would foster a learning culture of self-renewal and outcomes would be epiphanic, that is, they would not be decided in advance or be certain so that these efforts were open to wherever research might lead. organised this way, academic practices would ensure that both students and professors contributed to science and scholarship. the highly structured, authoritarian and dogma-inclined curriculum model was proposed for german schools rather than their universities. conditions of academic practices that foster students’ research and drive high-impact research are more likely to foster innovation and entrepreneurship under certain specifications. firstly, the fostering of students’ research has to be accompanied by the strong and explicit development of students’ critical and creative thought in teaching and learning. students’ developed critical thought capacitates them to make sound judgements of ideas and to assist in decision-making processes and thus plays a meaningful role in students’ research projects, evaluation of unique ideas and their conversion into tangible results. every research initiative, often a basis for the generation of unique and original ideas, is based on a problem space that delineates the discursive context of the area under focus (scott 2004:4–5). each discursive context outlines systems of meaning in each existing discourse and how those meanings got adapted to a particular context, thus warranting rational analysis and assessment to determine their salience under new historical or contextual conditions. these deconstructions and assessments of specific meaning systems are intended to identify research gaps for further probing and their relevance under different conditions. critical thought, as key in critical analysis and assessment of ideas and systems of meaning (paul & elder 2004:3–4), is thus central to research and for attempts to push knowledge boundaries in respective disciplines or new cross-disciplinary areas. critical engagement with meaning systems of a selected discursive context is intended to situate a research project within other intellectual work and requires huge critical thinking skills. students’ research, as with all other research, has to be premised on a firm grasp of logic, reason and rationality, hence the need to explicitly develop students’ critical thought. critical thought also plays a major role during the ideation stage of an entrepreneurial cycle, as well as during prototype design and testing for efficacy (figure 1). it is thus not clear why critical thought has historically been marginalised in teaching and learning in both undergraduate and postgraduate studies. figure 1: the entrepreneurship cycle. creative thought, on the contrary, draws from sound reasoning and judgement (critical thought) but pays attention to imaginative and intellectual inventiveness as key constructs in the generation of novel ideas that can lead to tangible results. within the framework of innovation, critical and creative thought assists students and even academics to simultaneously produce and assess, as well as generate and judge, ideas for originality and novelty. those ideas that have been judged to be promising then get prototyped and empirically tested for subsequent commercialisation. in this way, critical thought assists students in doing critical assessments of ideas and questions as creativity gives rise to new ideas and poses new, imaginative questions. secondly, it is important that these research initiatives are steered towards a clear university ip strategy. this university ip strategy ought to incentivise high-impact research as well as research conducted collaboratively with students and with industry in highly specialised areas with a clear practical end. the ip strategy has to also provide a framework for increasing the rate and quality of research and development (r&d) that will lead to diversified and high-patent ip portfolios for the university. strong partnerships with industry and other pertinent societal organs are vital for a substantial increase in r&d and innovative practices that could lead to successful commercialisation. in the next section, i provide a conceptual framework that i used, to better understand how innovation and entrepreneurship in universities are conceptualised. the framework also focuses on the general epistemological crisis that innovation and entrepreneurship pose through adding to the plethora of meanings and roles of universities in the digital age. the conceptual framework also played a role in shaping the collection and analysis of data related to innovation and entrepreneurship within universities. conceptual framework the core functions of any university relate to research and teaching. research has always been conducted to advance scholarship of discovery (sod), integration, application and teaching (boyer 1990:15–36). traditionally, research has been conducted unhindered for its own sake, that is, with no clear outcomes so that it has always been about wherever it might lead. this is the research conducted to advance the sod, whose main aim is to search for new frontiers of knowledge that could contribute to new information and new models. the sod is noted by internally and externally funded research projects that mostly pursue research for its own sake and ‘blue-sky’ research. its contribution to innovation and entrepreneurship relates to its new knowledge and models, serving as a baseline for creativity and innovation because these new knowledge and models open up new possibilities that never were accessible to humanity before. creativity and innovation are the major sources of entrepreneurial activities. these new possibilities, as manifest by new knowledge discoveries, i argue, serve to initiate the generation of novel and original ideas that can be converted to tangible results if greater effort is made. more effort can be put towards connecting research outputs of basic research to innovation and entrepreneurship. a credible and dedicated scoping review protocol could be developed for the sole purpose of synthesising the outputs of basic research in ways that feed into fostering creativity and innovation and eventually entrepreneurship. a scoping review protocol is a knowledge synthesis mechanism that explores a research question that is aimed at mapping out key concepts, types of evidence and gaps in research related to a defined area or field through systematic search, selection and synthesis of existing knowledge (heather 2016:5). studies dedicated to scoping review protocols that summarise and disseminate findings of basic research and even make recommendations for future research that could assist ideation, innovation and eventually entrepreneurship may need to be fostered and sustained. this is one of the critical means of steering university basic research outputs towards innovation and ip commercialisation. access to basic research outputs in digestible form, as made possible through relevant scoping review studies, is essential in the generation of top-notch unique ideas that could lead to innovation and feed into the entire value chain of entrepreneurship (see figure 1). the myth that basic research cannot be steered towards innovation and ip commercialisation needs to be eliminated and new models that connect basic research to innovation and ip commercialisation need to be developed. scoping review studies could help bring a firmer connection between basic research and its contribution to innovation and ip commercialisation. another scholarship that needs particular attention in relation to innovation and entrepreneurship is the scholarship of integration (soi). the soi is noted for: synthesis of knowledge from different sources providing overview of findings from different research sources pulling together findings from different disciplines and pointing out their areas of convergence identifying research trends and compelling new ways of seeing knowledge, as well as developing insights that have direct bearing on original research. scholarship of integration is thus synthetic, interpretive, integrative and interdisciplinary. it is facilitated through scoping basic research findings, reviewing literature and conducting meta-analyses of existing knowledge, and as such falls neatly into the scoping studies. it provides a practical framework for developing scoping models that connect basic research with innovation and entrepreneurship in terms of fostering quality generation of unique ideas in the ideas-generation stage of the entrepreneurship cycle as outlined in figure 1. the scholarship of teaching and learning (sotl) has a strong focus on researching curriculum, as well as teaching and learning. it plays a pivotal role in helping universities to search for innovative practices in curriculum, as well as in teaching and learning. scholarship of teaching and learning ought to be central to finding new ways of enacting curriculum and shifting teaching to learning in the digital age. it also ought to situate learning and knowing as internal constituencies that set universities on a constant search for its higher design. when universities make moderate use of a hybrid of face-to-face and online learning in their offerings in which the explicit development of critical and creative thought remains on the periphery of teaching and learning, sotl may be struggling to serve its mandate in the digital age. it may also be that the warning to the sotl community by boshier and huang (2008) that learning cannot remain in the basement in the digital age has not been sufficiently heeded. scholarship of teaching and learning has to turn faculty into a learning space for both professors and students and we are back to humboldt’s model of an academic practice. the humboldtian model of an academic practice ensures that both professors and students contribute to science and scholarship. science and scholarship have always been understood as key in driving collective learning, as well as in building a community of researchers and thinkers. conceptualised this way, sotl positions itself within the framework that sees universities as engaged in epistemologies of a crisis. this crisis emanates from the ofttimes heated debates about the role of academic practices in knowledge-based societies and increasing reliance on digitisation and automation with implications for the nature and form of knowledge that must be produced and shared. within this perspective, our professional development workshops, consultancies, as well as research endeavours in curriculum, teaching and learning could greatly benefit from the use of digital approaches and digital methods of inquiry. they could also build new models of disseminating research findings and knowledge transfers (blogs, open education resources, immersive learning, exploitation of data visualisation, metadata generation and digital publishing). in this sense, sotl opens itself up for contributing to university patent activities and ip commercialisation, as artefacts produced through sotl can be converted to innovation and entrepreneurship activities such that they can be packaged in a sellable way. such innovation and entrepreneurship-inspired sotl practices fit into the entrepreneurship cycle as outlined in figure 1. however, some scholars, such as readings (1996:7–8), caution against the allure of the techno-bureaucracy in universities as it can turn universities into corporations that chase profit margins. readings (1996:8) cautions that universities’ focus on profit margins often comes at the expense of developing a community of critical and creative thinkers whose responsibility is to provide ideal models of a society. in more recent times, hayes (2017:9–11) argues that the techno-bureaucracy in universities has become so entrenched that academic practices have been reduced to factory-like production sites that produce mcdonalised students with fixed graduate attributes and research outputs have been directed towards making money, hence the crisis. there is, however, an embedded romantic nostalgia in their argument that seeks to return universities into academic practices that drive mimetic curriculum, didactic teaching and the production of knowledge without a particular purpose. in an era where universities are no longer exclusive sites of knowledge production, knowledge has become accessible through information and communications technology (ict), global online learning is the reality and the production of knowledge for a purpose is ubiquitous, then their rational justifications of the traditional university model lack soundness. added to that, my suggestions of greater synergies between academic practices and innovation, as well as entrepreneurship are not guided by profit motives or the techno-bureaucratic capture of universities. they are rather directed towards university practices that seriously consider the developmental nature of south african and other developing societies. furthermore, the pulling together of academic practices and innovative as well as entrepreneurial activities is directed towards achieving key goals of social justice, such as better redistribution of collectively produced wealth, elimination of inequality and poverty. this latter position resonates globally because economic neoliberalism generates inequality and poverty wherever it makes its presence felt, including in developed countries; hence, i posit that all forms of scholarship and curriculum enactment ought to be directed towards the entrepreneurial cycle as outlined in figure 1. in figure 1, all activities of entrepreneurship begin with the generation of unique ideas (ideas generation) that result from critical assessment, analysis and imagination. promising ideas get incubated and refined through a series of seminars: those ideas that survive the rigour of seminars then get prototyped and tested through mainly iterative processes until they are ready for commercialisation. my view is that this positioning of universities could generate a new, empowering narrative as new efficiencies are developed. a crisis gets resolved when a new narrative emerges. graduates trained in critical and creative thought in a community of critical and creative thinkers are unlikely to be captured by narrow interests and tend to drive broader agendas. the traditional, liberal graduate was noted for individualism and general disconnect with the realities of mundane worlds (ash 2006:249). this kind of a graduate can barely drive broader social justice agendas, hence my rejection of the call to return universities to the traditional, liberal model of a university. academic practices should also not be reduced to delivering corporate efficiency through producing the so-called employable graduates and generating research that drives industry innovation. broader conceptions of innovation and entrepreneurship are vital. such practices should include new ways of engaging communities, civil society, state and industry, the outcomes of which should contribute to the birth of a socially just society. the next section describes diagrammatically the conceptual framework for this study. diagrammatic representation of the conceptual framework in figure 2, the two main circles represent two distinct activities of universities: those that form the inner core of the university, such as scholarship and curriculum, and those that serve a supporting role, such as innovation and entrepreneurship activities, summed up as enterprise support. figure 2: a fragmented model for entrepreneurship in universities. in this study, these main university activities are used as a framework for analysing and understanding the degree to which these major university activities remain discrete and loosely connected. when maintained as mostly discrete and loosely connected, that is, having a weak to moderate relationship between scholarship and curriculum on the one hand and innovation and entrepreneurship on the other hand, then entrepreneurship in such a university is marginalised. however, when explicit efforts and university strategies, including incentive mechanisms, gently nudge or aggressively push the two circles close together, then a university is likely to exhibit an entrepreneurial behaviour. entrepreneurial university behaviour is thus strongly correlated when academic practices (scholarship and curriculum) are closely connected to enterprise activities. i have attempted, earlier, to describe how these close connections between academic practices and enterprise activities could be achieved so that a convergence of the activities of both circles can be attained to give rise to the third circle in the diagram, that is, the entrepreneurial behaviour circle. in this way, a strong merger of faculty activities and innovation, as well as entrepreneurship units in their various guises should be fostered. this is the level at which innovation and entrepreneurship within universities could be invigorated. this framework was used to better understand and analyse the extent to which innovation and entrepreneurship in selected universities are mapped out. in the next section, i describe the framework of the methods of data collection, its analysis, limitations and practical implications for the worth of this study. research methodology, sampling and methods research design this study used a qualitative research design. this design was chosen because studies that link innovation and entrepreneurship activities to faculty activities, as well as their social impact within higher education are scant. furthermore, models that describe the entire value chain of activities from faculties, innovation hubs and entrepreneurship centres as also being linked to their social impact have not been attempted in any meaningful way. creswell (2003:14, 18) explains that a qualitative research design is often employed when the study’s research problem is generally ‘immature’ and there is a general lack of theory of the topic under investigation. this study thus attempted to use the views and perspectives of senior managers of university innovation and entrepreneurship units in two different geographic contexts for better understanding the relationship between faculty activities and those of innovation and entrepreneurship. the main purpose of eliciting these managers’ views and perspectives was to abstract the theory of a process that would describe the linkages and interrelationships that ought to exist between faculties and university innovation units, as well as between university innovation and entrepreneurship units. this approach used multiple stages of data collection to develop and refine the interrelationships between these universities’ entities through constant juxtaposition and contrasting of data as it emerged in different times of their collection. purposive selection of universities and cognate units to select research participants within the public-funded, research-intensive scandinavian universities, the snowball sampling technique, also called exponential non-discriminatory snowball sampling, was used. exponential non-discriminatory snowball sampling involves the researcher linking up with the first potential research participant who then provides the researcher with multiple referrals which are then explored for relevance to the study. the selected new research participants then provide new multiple referrals until a manageable sampling frame is created (etikan et al. 2016:3–4). in this study and within the context of the scandinavian universities, the researcher linked up with a known colleague within the academic network, who, in turn, introduced the researcher to the deputy vice chancellor (dvc): innovation and collaborations at his university. the dvc suggested names of senior managers of innovation hubs and entrepreneurship centres known to her across scandinavia. additional names were added by the new research participants that were suggested by the dvc until a total of 10 research participants drawn from five scandinavian universities was achieved. the more than 3 months’ stay in scandinavia allowed for securing appointments with these often-busy research participants. within the south african context, the purposive selection of research participants was done through the research study conducted by clarivate analytics on the most innovative universities in south africa (see table 1). five senior managers of the innovation units and business schools of the top three innovative universities in south africa were selected for the study, making the total number of research participants for this study 15. table 1: patent family to publication output comparison, and patent rating for top five innovative south african universities. operational measures of key concepts while this was a qualitative study, it was still important to clarify meanings of key concepts so as to aid the data collection process in terms of knowing which pieces of data were required to address which aspects of the study. the operational meanings of the following key concepts in the study served the purpose of delineating the meaning systems that were signified in each concept and made them measurable for clarity and for possible future research: creative thought, in this study, was understood as, firstly, increased generation of promising ideas that an individual can manage in a given timeframe. this factor refers to fluency in idea generation and plays a major role during the ideation process of an innovation process. the fewer the generated ideas are, the more difficult it is for the next stages of creative thought. secondly, creative thought deals with the determination of the number of different categories that an individual produced during the first stage of fluency. in other words, of the generated ideas during the fluency stage, how many different categories of ideas were generated. this factor is called flexibility in ideas generation and depends on the fluency stage and feeds the next stage of creative thought. in the third stage of the creative thought, generated categories of ideas are tested for statistical and practical rarity. this means that a determination is made whether these categories of ideas are novel, unique and original but also implementable. the most promising original ideas are taken into the next stage of the innovation process, that is, the stage of ideas incubation. in this stage, the promising ideas are elaborated on through research and rigorous evaluation before being converted into prototypes. paul torrance has developed a standardised test to measure these factors of creative thought called the torrance’s tests of creative thinking (ttct). critical thought refers to rational thinking processes that guide the mind towards logical steps and open-mindedness that widen our scope and range of perspectives. it also exposes us to credible data that support our claims and reduce our biases as we eschew blind beliefs so we could make sound judgements. richard paul and linda elder of the critical thinking foundation have developed a number of techniques to assist people to improve their critical thought ranging from unreflective thinker through to a highly reflective thinker. sound judgements and rigorous evaluations of ideas are vital during the ideation stage of the innovation process and this skill serves to support the ideas generation and incubation phases. entrepreneurship refers to all thinking efforts, activities and practices invested in creating new markets and challenging existing ones with new or improved business models, products or services. it is a huge mindset enterprise that compels individuals to think and act proactively, creatively and innovatively in creating markets and becoming more independent. it is a forceful habit of mind that constantly searches for higher designs of existing things and better ways of creating and sustaining human conveniences. such human conveniences include making more people economically active and making people access things that improve their lives in a more affordable, accessible and convenient way. innovation, in this study, refers to activities, actions, practices and units designed to assist people to convert their promising ideas into tangible results whether in the form of new or improved products, services or models. these models could include business models that introduce existing products and services to non-consuming contexts or pay attention to overshot customers, that is, those customers that access products or services in the most expensive or difficult way. it often includes stages of ideation, prototyping, testing and refining new or improved products, services or business models. products include educational technologies that may appear invisible but significantly develop new ways of thinking and doing things. it may also include introducing existing or improved educational models in new contexts. data collection and analysis semi-structured, qualitative interviews were used in this study to elicit the views and perspectives of purposively selected senior managers of innovation and entrepreneurship units drawn from five scandinavian and three south african universities. the structured part of the interview schedule was based on the four master themes developed by corbin and strauss (1990:7–8), which also served to analyse the collected data. the questions focused on the conditions under which each innovation and entrepreneurship university unit functioned and whether such conditions fostered or hindered the development of innovation and entrepreneurship within each university. the questions particularly paid attention to national and institutional policies, and how they guided each unit’s operations and strategies. two sets of data emerged as drawn from two distinctly different contextual situations (scandinavia and south africa), which, in turn, were juxtaposed and contrasted for variation and commonalities. questions also paid attention to interactions that each innovation or entrepreneurship university unit forged with cognate university units, such as faculties, as well as national or regional entities with similar mandates. the interrelationships between faculties and these innovation and entrepreneurship university units came in for sharper focus in terms of their degree of alignment and synergies as understood within the value chain framework. the questions also focused on the possible areas of conflict or disagreements and attempts on resolving them. while the external partnerships were explored under the open-ended questions of the interviews schedule, the data were reserved for future research. the degree to which the activities of each innovation or entrepreneurship university unit were aligned with broader goals of the university was investigated. questions particularly focused on the alignment of each unit’s strategic framework and the strategic goals of the university, as well as the strategic alignment between the innovation and entrepreneurship units. the last sets of questions focused on the intended outcomes of each innovation or entrepreneurship unit and how these outcomes impacted other university units and society. for instance, questions sought answers on how outputs of the innovation unit affected those of the entrepreneurship unit. open-ended questions of the interviews schedule sought to gain more insights into the functioning of the units in terms of resource allocations, staff and access to seed-funding, the role of the university holding company, patents, licensing, out-licensing and ip commercialisation. it was expected that new themes might emerge from these data. the analytic coding technique as undergirded by the grounded theory of corbin and strauss (1990:1–19) was adopted. this technique identifies four master themes – conditions, interactions, strategy and tactics, as well as consequences – as key in analysing qualitative data. under the conditions theme, data were placed into categories of circumstances of operations, situations that prevailed over time as shaped by both internal and external factors, as well as institutional culture and its effects on the unit’s operations. the interaction theme focused on the interrelationship between faculties and innovation units, as well as between innovation units and entrepreneurship centres. data analysis paid attention to the strength of the alignment of activities amongst these university units. the strategy/tactics theme looked into a unit’s goals and intended outcomes and their degree of alignment with institutional and national goals – also understood as social impact. the consequences theme focused on a unit’s outcomes and impact on society however minimal. open-ended data were analysed in terms of whether such data led to contours of a new theme. ethical consideration the actual names of the research fieldwork and research participants are kept anonymous to protect them against any perceived or real threats to their image and branding, even when those threats are not immediately obvious or available in this study. extra effort is made in reporting on this study not to create cues that could point to a particular institution or research participants. findings, conclusions, recommended model and future direction of research findings the results of the study are as follows: in scandinavian universities, funding and resources for innovation units are provided by the national government, whereas such funding and resources for entrepreneurship units come from the universities and numerous other funding agencies spread across scandinavia. in the south african context, innovation and entrepreneurship units tend to receive funding and resources only from the universities and the private sector. in scandinavia, there is a national innovation strategy that is driven at national government level and fully funds innovation units within universities. the university faculties which form the steering core of university activities and offer mainly research and teaching are structurally and strategically located at the plinth of university functioning, with innovation and entrepreneurship units given the status of supporting units in both geographic contexts. critical thinking and creativity as crucial elements of innovation were not, at the time of the interviews, explicitly taught in faculties and no scoping reviews of existing research were conducted within universities in both contexts. innovation and entrepreneurship units of each of these universities in both contexts evolved discretely and independently of each other. in sampled scandinavian universities, holding companies are a permanent feature of the university and are located in innovation units and serve to invest in new business ventures. patents and ip rights in scandinavian universities are nationally legislated as belonging to innovators, with universities benefitting very little from the outcomes of innovation hubs. in the south african context, such rights remain arbitrarily adjudicated by individual universities with the propensity towards university ownership of such rights. conclusion based on the results of the study, the following can be reasonably inferred: the activities of faculties, as well as those of innovation and entrepreneurship units are not structurally and strategically linked in both contexts; therefore, the synergic relations amongst these university entities are generally weak in both contexts. innovation and entrepreneurship units remain mostly on the periphery of core university activities as shown by their locations either in hubs, centres or business schools. resource allocations still favour faculties which receive a huge chunk of university resources. the interrelationship and collaboration between faculties, innovation units and entrepreneurship units are generally weak and often difficult. faculty support of innovation and entrepreneurship is generally weak as demonstrated by the lack of explicit training of students on critical thinking and creativity, as well as the lack of influence of the innovation and entrepreneurship units on the research agenda of the university. the optimal impact of these university activities on society can be enhanced by forging stronger synergies and linkages between faculties and innovation units, as well as between innovation units and entrepreneurship units. recommended ecosystem model for fostering innovative entrepreneurship the buildings blocks of this model (figure 3) are the conversion of research output into knowledge that can be applied to generate original ideas in the ideation stage, as well as for the development of students’ critical and creative thought that could assist with stronger ideas generation. scoping review studies could assist in converting basic research into useable knowledge that may fit into the ideation stage of innovation. curriculum may be modified to accommodate explicit training of students on critical and creative thought as defined in this study. one of the findings of this study shows that researchers’ ideas have a higher technical complexity as compared to those of students. this means that it takes longer, in terms of market readiness, to convert the ideas of researchers into promising commercial projects from which new companies could spin out, hence the need for scoping reviews to mitigate this problem. figure 3: the integrated model for invigorating innovation and entrepreneurship. the scoping reviews and developed students’ critical and creative thought could substantially increase the conversion rate of research output into ip commercialisation. the key advantage of this integrated model is that while cross-pollination, as a result of stronger synergistic ties, between faculties and innovation hubs thrives, the discrete character of faculties does not substantially change. the model is thus unlikely to generate strong resistance as scoping reviews mitigate the technical complexities of basic research and allow for unhindered production of basic research. the model also suggests the modification of curricular activity to accommodate the development of students’ critical and creative thought and does not fundamentally challenge its status quo. the model also gently nudges research and curricular activities towards the developmental agenda of the country. with such high inequality and poverty (the current south african gini coefficient is estimated to be 0.69 by the world bank), faculties can hardly afford not to create some space in their research and curriculum for attending to these societal challenges. the model also shows that while promising ideas are being converted into tangible results (prototyping, testing and ip commercialisation), other parallel activities of protecting these ideas (e.g. patenting, licensing and outlicensing) should also take place. in most of the selected scandinavian universities, these activities are outsourced, while south african universities tend to insource them. limitations of the study this study is based on 5 of 11 public-funded, research-intensive universities in scandinavia and three of five top innovative universities in south africa. its focus was on senior managers’ views and perspectives and other methods of data generation were not used, thus compromising the corroboration and triangulation across rich sources of data, although triangulation was performed on the interviews data. the results of this study, while providing insights and leading to a model, are limited to sampled universities and cannot be generalised across all the universities that formed the population of this study. future direction of research the following areas are worthy of further investigation: the testing and refinement of the model presented in this study the factors that marginalise critical thinking and creativity within faculties the factors that make it difficult for innovation and entrepreneurship units to influence the reserch agenda of faculties and universities the patents and ip rights in the south african context. acknowledgements the author acknowledges the centre for engineering education at lund university, sweden, and prof. thomas olsson in particular for hosting him as a guest researcher for 3 months. competing interests the author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article. references ash, m., 2006, ‘bachelor of what? master of whom? the humboldt myth and historical transformation of higher education in german-speaking europe and the us’, european journal of education 41(2), 245–267. benamar, s., 2016, ‘a case study on undergraduate entrepreneurial constructivist learning in morocco’, published phd thesis, eric, morocco. boshier, r. & huang, y., 2008, ‘in the house of scholarship of teaching and learning, teaching lives upstairs and learning in the basement’, teaching in higher education 13(6), 645–656. boyer, e., 1990, scholarship reconsidered: priorities of the professoriate, the carnegie foundation for the advancement of teaching, new york. corbin, j. & strauss, a., 1990, ‘grounded theory research: procedures, canons, and evaluative criteria’, qualitative sociology 13(1), 1–19. creswell, j., 2003, research design: qualitative, quantitative and mixed methods approaches, 2nd edn., sage, london. csikszentmihalyi, m., 2009, creativity: flow and the psychology of discovery and invention, harper collins e-book, new york. dudhia, z., 2017, a focus on the top 5 innovative universities in south africa, clarivate analytics, johannesburg. etikan, i., musa, s. & alkassim, r., 2016, ‘comparison of convenience sampling and purposive sampling’, american journal of theoretical and applied statistics 5(1), 1–4. hayes, d., 2017, beyond macdonalization: visions of higher education, rutledge, new york. heather, c., 2016, ‘current best practices for the conducting of scoping reviews’, bmc medical research methodology 16(15), 1–24. paul, r. & elder, l., 2004, miniature guide for students and faculty to critical thinking, the foundation for critical thinking, dillon beach, ca. pitso, t., 2015, developing creativity in advanced undergraduates: a design-based research approach, sage research methods cases, london. pitso, t. & lebusa, m., 2015, ‘developing an enabling pedagogy for fostering effectual logic in students’, south african journal of higher education 29(6), 226–241. readings, b., 1996, the university in ruins, harvard university press, boston, ma. scott, d., 2004, conscripts of modernity: the tragedy of colonial enlightenment, duke university press, london. tierney, w. & lanford, m., 2016, conceptualizing innovation in higher education, springer international publishing, switzerland. abstract introduction problem statement literature background research methodology ethical consideration results conclusion and recommendations acknowledgements references about the author(s) lerato e. mohalajeng school of business management, north west university, south africa japie kroon school of business management, north west university, south africa citation mohalajeng, l.e. & kroon, j., 2016, ‘innovation through accelerators: a case for open innovation’, southern african journal of entrepreneurship and small business management 8(1), a107. http://dx.doi.org/10.4102/sajesbm.v8i1.107 original research innovation through accelerators: a case for open innovation lerato e. mohalajeng, japie kroon received: 23 sept. 2016; accepted: 17 nov. 2016; published: 09 dec. 2016 copyright: © 2016. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: open innovation is becoming a progressive business practice in southern africa because it plays a significant role in economic development through promoting the commercialisation of new ideas. the challenge is that while the benefits of open innovation are widely spoken about, not much is understood about the challenges and successes of open innovation accelerators (oias) in taking ideas to market. aim: the purpose of this research was to investigate an oia in south africa for taking ideas to market. setting: the innovation hub is a science park in pretoria, south africa, using open innovation to stimulate entrepreneurship in south africa. through the innovation hub open ix, a web-based platform, an opportunity to investigate the bridging from invention to commercialisation is presented. methods: a qualitative research method using semi-structured, in-depth interviews was applied to collect data. five key stakeholders of the oia were interviewed. results: the findings suggest that stakeholder buy-in is essential for commercialisation through oias in south africa. by involving stakeholders in the initial phases of the open innovation process, the likelihood of a solution being incorporated and fitted into the organisation’s business strategy is increased. conclusion: the insight gained from this research suggests policymakers, research institutions and commercial businesses ought to explore various innovations across industries relevant to their open innovation proficiencies. this research makes a significant contribution to an in-depth understanding of what is needed to bridge the gap from invention to successful commercialisation through open innovation. introduction in today’s globally competitive environment, innovation has become the key measure of a business’s sustainability (manceau et al. 2011:4). businesses are required to increasingly innovate in order to obtain a competitive advantage. in turn, government, universities, research institutions and even individuals have become attracted to forming industry partnerships in the hope of monetising their research (huston & sakkab 2006:2). this implies that businesses and various role-players have become less confidential with their innovation practices and have leaned towards the idea of leveraging each other’s innovation assets. this form of mass collaboration has brought about open innovation (chesbrough 2003:5). this implies the use of purposive inflows and outflows of knowledge to accelerate internal innovation and to expand the markets for external use of innovation, respectively (park & yoon 2013:206). businesses in southern africa, regardless of their industry, are starting to implement open innovation in order to maintain their competitive advantage, maintain more effective product development management and essentially to meet consumer needs (shurrab & el bouassami 2013). open innovation plays a significant role in the economy, as it stimulates total early-stage entrepreneurial activity (tea) through the commercialisation of ideas (iakovleva 2013:18). south africa is a middle-income country with relatively low gdp per capita income (dutta & lanvin 2013:307). in an effort to raise this gdp per capita income, the government has turned towards entrepreneurship and small and medium-sized enterprise (sme) development. there have been a number of initiatives and incentives that aim to achieve this. however, south africa has shown very little early-stage entrepreneurial activity with a mere 9.2% tea rate in 2015, which is still far below the 15% average for efficiency-driven economies – 1.6 times higher than south africa’s tea rate (herrington & kew 2016:28). the low level of early-stage entrepreneurial activity in south africa limits economic growth and job creation in the country. one of the reasons for the low entrepreneurial activity is that, while there have been policy pronouncements at a macro-level, there has been very little follow-up at the meso-level, as well as disinterest from the micro-level (bodhanya 2008:7). the meso-level is made up of government and private agencies, as well as intermediaries who serve to translate government policy into tangible benefits for the micro-level, i.e. entrepreneurs and smmes. contributors in the meso-level include science parks and incubators. while most of these meso-players have concentrated on traditional incubation services, there has been a recent interest in using innovative approaches, such as open innovation, to stimulate entrepreneurship (cunningham, cunningham & ekenberg 2016:2). the innovation hub is a science park in pretoria, south africa. it uses open innovation as one of the methods to implement the gauteng innovation and knowledge economy strategy (gikes). one of the aims of this strategy is to stimulate innovation and successful commercialisation. the innovation hub open innovation solution exchange (referred to as open ix), a web-based platform, presents an opportunity to investigate the bridging or crossing of the chasm from invention to commercialisation (anon 2016). problem statement although the benefits of open innovation are widely spoken of, very little is known about the open innovation intermediaries that help entrepreneurs in commercialising their ideas. investigating the people, products and challenges of the platform can lead to an in-depth understanding of what is needed to bridge the gap from invention or idea to market or successful commercialisation. the purpose of this paper is to investigate an open innovation platform for taking ideas to market. to achieve the purpose of this paper, the following objectives were formulated: to discuss the open innovation platform that is used in southern africa to foster commercialisation. to understand the challenges faced by the key stakeholders of the open innovation platform. to recommend what is needed for the success of the open innovation platform. the research will assist policy-makers in making better decisions about what is needed to improve success in taking ideas to market and in essence promote tea. this research will also assist inventors to make better decisions in taking their ideas to the market by enabling them to better understand the intricacies and complexities of what is required to successfully take an idea to market. literature background the open innovation process traditionally, businesses develop their technology and products internally, resulting in innovation relying solely on internal resources, according to mortara et al. (2009:12). open innovation eradicates these boundaries and allows businesses to share and corporate resources with partner organisations and internal business units. open innovation suggests that a business should not confine its discovered knowledge to its internal market mediums alone, nor should internal pathways necessarily be limited to bringing only the business’ internal knowledge to market (chesbrough 2003). according to bogers et al. (2016:3), open innovation is concluded as a distributed innovation process based on purposively managed knowledge flows across organisational boundaries. it is a form of mass collaboration used to connect the various role-players within government, industry and academia in order to leverage their innovation capabilities (piller & diener 2013:6). the relationship between university, industry and government is referred to as the triple-helix model. it is, in essence, the crossing over of businesses, public research and government regulations. (leydesdorff 2006:3). open innovation entails three core processes: outside-in, inside-out and coupled processes. not all businesses select the same core process, as each business chooses a core process that best suits its strategic objectives (gassmann & enkel 2004:60). outside-in open innovation process outside-in open innovation, as a core process, involves collaborating with suppliers and customers and integrating any external knowledge gained (chesbrough & crowther 2006:229). in an attempt to increase innovation capacity, businesses develop and augment their own knowledge base through integrating suppliers, customers and external knowledge sources (gassmann & enkel 2004:7). businesses screen the industry in order to in-source technology and knowledge over and above their own research and development (r&d) (spithoven, clarysse & knockaert 2009:2). outside-in activities include in-licensing and buying of patents, earlier supplier integration, customer co-development and external knowledge integration (bianchi et al. 2011). by possessing the necessary competence and supplier management capabilities, businesses can extend new product development activities across organisational boundaries (fritsch & lukas 2001:302). inside-out open innovation process inside-out open innovation, as a core process, involves externalising the business’ innovation and knowledge in order to commercialise ideas more rapidly than the business is able to do through internal development (gassmann & enkel 2004:10). it depicts the outward transfer of technology in open utilisation processes (lichtenthaler 2009:318). this situation can arise, for instance, when the business does not have the ability to realise sufficient revenue in its own market or when the technology is a spin-off, which cannot be used for the core business (von nell & lichtenthaler 2011:133). with inside-out processes, businesses gain insights by means of opening their boundaries and increasing their advantage by allowing ideas to flow outwards; as a result, fixed costs of r&d are decreased and risks are shared (gassmann & enkel 2004:11). coupled open innovation process the coupled open innovation process integrates both inside-out and outside-in processes, thereby not only bringing in external knowledge but also bringing ideas to various markets (gassmann & enkel 2004:12). companies that establish the coupled process co-create with corresponding partners through joint ventures, alliances and cooperation and in doing so, jointly develop and commercialise innovation (enkel, gassmann & chesbrough 2009:311). challenges faced in implementing open innovation open innovation has a realistic influence on a business’s innovation strategy and performance and may pose challenges that a business may incur when adopting an open innovation process. the most complex dilemma facing businesses that institute open innovation programmes is the prospect of revealing a business’ intellectual property (ip) (von dyck 2015). a business revealing its ip by disclosing ideas or inviting other businesses into its innovation process is often seen as a weakness (gaskell 2013). furthermore, marais and schutte (2010:106) suggest that with open innovation, the possible decrease of a business’ competitive advantage could result in future planned products or services being blemished. although setting legal agreements involves complex administrative procedures, managing and regulating ip rights effectively can yield optimal outcomes for both innovators and society at large (fisher & oberholzer-gee 2013:174). as ip rights are prioritised, an increased protection of new innovations in south africa will result. collaborative relationships are at the core of open innovation (slowinski & sagal 2010:38). however, encouraging parties within the business to commit is an unstated challenge. according to von dyck (2015), without an internal structure in place, no systematised mechanism for accepting and implementing solicited and/or unsolicited submissions exists. this, in turn, affects the monitoring of the programme and benchmarking of performance. businesses often assume that the source of the innovation, in some cases the open innovation accelerator (oia), will continue with the production and implementation of the innovation within the business (west & gallagher 2006:323). this free-riding behaviour and lack of internal commitment hinder the success of open innovation. additionally, the cognitive, cultural, institutional and organisational differences between the collaborating businesses as well as the lack of resources and skills needed to understand and combine the new innovation with the business’ internal innovation pose a challenge, influencing collaboration (van de vrande et al. 2009:427). the challenges to successful open innovation lie in its involvement in a business’ key functions right through the innovation process (anon 2009:1). open innovation is characterised by its participation in the different stages of the innovation process and not just r&d (mortara et al. 2009:12). while businesses have their own innovation process and r&d departments, they are still inadequate and have limited experience on how to successfully manage open innovation activities. this is because acquiring external ideas and sharing internal ip do not epitomise the core strategy of most businesses (lichtenthaler & ernst 2008). in an effort to overcome the challenges experienced with open innovation, businesses often depend on the support from intermediary services (nambisan & sawhney 2007). intermediaries play a major role in the open innovation procedures and are involved in an estimated 20% of all technology transactions. very little is known about the intermediaries using open innovation to aid in accelerating ideas to the market and/or businesses in commercialising their ideas. these intermediaries are known as oias (piller & diener 2013). an oia, as defined by howells (2006:720), is an organisation or body acting as an agent or broker in any facet of the innovation process. these service providers support businesses in executing open innovation projects and can be from the private or public sectors. oias either run the open innovation project on behalf of their clients (thereby providing a solution to a given task) or aid their clients in building their own open innovation proficiencies (piller & diener 2013:4). an open innovation accelerator in south africa the innovation hub, located in the capital of south africa, pretoria, has piloted one of africa’s first oia s: the innovation hub open innovation solution exchange (now referred to as openix). the openix is a web-based innovation network, which connects experts from various businesses, research scientists, smmes and government to relevant r&d problems across gauteng. businesses or governmental entities with a particular business need, which could not be solved internally, post these needs, referred to as challenges, on the platform. researchers, innovators, entrepreneurs, smmes and larger businesses are invited to respond to these challenges posted on the platform, by submitting potential solutions. these experts are referred to as solution providers or solvers, while businesses posting the challenges are referred to as solution seekers (the innovation hub 2013:6). the methodology of the openix was built upon ninesigma’s open innovation process (the innovation hub 2013). it is referred to as the ‘c4’ methodology. this methodology takes place in four phases, namely challenge definition, connect, consider and commit. challenge definition involves identifying a list of needs within the business and structuring the needs in such a way that it creates a position for specific challenges. huston and sakkab (2006:3) argue that, during this phase, it is imperative that the oia ask the business who is seeking a solution what previously undefined needs the consumer may have. in doing so, the business could possibly increase their product and brand growth. this is needed because often their researchers work on problems that are of interest to them, rather than those that stem from deep consumer insight, thereby leading to increased brand growth (khan 2015). the connect phase involves promoting the challenge by stimulating the local innovation ecosystem. by marketing the challenge and networking, solution seekers are connected to a variety of external possible solution providers who are often new and unknown to the seeker (piller & diener 2013:5). during the consider phase, the proposed solutions are evaluated, shortlisted and feedback is provided to the selected solution providers. huston and sakkab (2006:6) further stress that solutions should be screened through due diligence, information gathering, sampling and testing, scanning patents and meeting with laboratory managers, among others. for the innovation hub open innovation exchange, evaluation is done by following a dashboard approach, testing what has been delivered alongside the defined need. this involves meeting with solution providers, final shortlisting and providing feedback to the selected few (anon 2016). upon shortlistings and feedback from both solution seekers and providers, a commitment by the solution seeker has to be made. this takes place during the commit phase, the last phase of the c4 methodology (the innovation hub 2013:8). the commit phase is a confidential process between the solution seeker and the solution provider, unless the oia is required to facilitate this process. the objective of this phase is to reach some form of agreement where a deal is made. it is clear that, although the platform is web-based, the majority of the tasks related to connecting the seeker with the solver are done by the oia, namely the innovation hub project team. this hand-driven process is vital in assuring that the right solutions are found for the challenges. the project team has to ensure that challenges are defined to their lowest level, because the challenges are campaigned to various stakeholders within the triple-helix. the word campaigning is frequently used in the innovation setting. the project team also ensures that the challenges are distributed across various media platforms, which include telephone calls, e-mailing and advertising to the relevant stakeholders. the evaluation and commitment to solutions are a collaborative effort carried out by the expert facilitators in the project team as well as the solution seeker’s team (the innovation hub 2013:4). research methodology a post-positivism world view was used as it reflects the need to identify and assess the causes that influence outcomes. the knowledge developed through a post-positivist lens is based on careful measurement of the objective reality that exists (creswell 2009:7). the research involved a qualitative approach allowing for data to be collected in the format of semi-structured interviews. interviews were conducted on a one-on-one basis allowing open-ended questions to be asked (bradley 2010:234). asking open-ended questions helped in obtaining an understanding of the cognitive and interpretive processes of key stakeholders of the open innovation platform by learning of their judgements about the experience and issues on the platform and factual information regarding the open innovation platform, i.e., how the platform had been run and what challenges and opportunities had been presented, as well as potential commercialisation opportunities, partnerships and further developments. sample profile nine participants were identified and approached for interviews, of whom five participants agreed to be interviewed. these participants represented the core project team of the open innovation platform. the participants were involved in both the design and management of the open innovation platform in addition to having extensive knowledge on supporting mechanisms for taking ideas to the market through the use of open innovation. participants had an in-depth understanding of open innovation within the south african context, the open innovation platform and the components needed in accelerating ideas (solutions posted onto the platform) into commercialised entities. data analysis process all semi-structured interviews were recorded and transcribed for analysis. when analysing the qualitative component of this research, a content analysis method was utilised. content analysis entails systematically categorising responses with the aim to identify overall trends and patterns (vaismoradi, turunen & bondas 2013:400). the aim of content analysis is to obtain a condensed and broad description of the phenomenon, and the outcome of the analysis is concepts or categories that describe the phenomenon (elo & kyngäs 2008:108). therefore, content analysis served to determine the characteristics of the transcribed interviews’ content by examining who says what, to whom and with what effect (bloor & wood 2006:58). figure 1: list of participants and their responsibilities. consequently, the data underwent a content analysis process that concerned deriving categories from the qualitative data. the data generated through these qualitative interviews were synthesised into three major themes, i.e. oia, commercialisation and open innovation. reliability and validity two issues contributed to the reliability of the qualitative data, namely its dependability and its confirmability (miles, huberman & saldana 2014:312). bias and deceit were avoided because the transcription of the interviews was done by an expert in the specific field of research and also evaluated by the researcher to ensure accuracy. to confirm the originality of the qualitative results, direct quotations were used from the discussions so that recurring themes from different interviews could be seen. the researcher also acknowledged any limitations of the investigation and the potential effects thereof (shenton 2004:73). transferability measures to what extent the results or findings are relevant to a wider population or a different case (matthews & ross 2010:12). the data obtained from the interviews provided detailed information regarding the open innovation platform. therefore, the information provided cannot be applied to different cases, but could serve as a guideline for such cases. the limitation of this research: this research only focused on using an open innovation platform as a method of accelerating commercialisation. other approaches to accelerating commercialisation were not investigated. because of time and financial constraints, the research was only conducted on one open innovation intermediary in southern africa. other open innovation intermediaries within the southern african development community region were excluded. ethical consideration completed in accordance to the nwu ethic guidelines. results the five interviewees, who are stakeholders of the open innovation platform, were asked questions that provided them the opportunity to discuss factual information regarding the platform (objective 1), to share their experiences regarding how the platform had been run and to indicate any challenges (objective 2) and opportunities that had been presented through the platform (objective 3). understanding the open innovation accelerator participants’ feedback regarding openix provided detailed insight into the platform thus far. the insight provided by the participants emerged into four themes, namely, challenge definition, evaluating solutions, marketing and deal-making (table 1). table 1: direct quotations of responses regarding the open innovation accelerator. according to these participants, the oia ensures that a business clearly defines its needs in a manner that ensures the transferability of the needs across domains outside the business’ own. the procurement team, open innovation experts, technical experts and other parties play a role in the transferability of the challenge and plan accordingly during the kick-off meeting. through the kick-off meeting, an increase in the possibility of absorbing the new solution into the business ensured. participants added that the economic and technical feasibility of a solution is always evaluated, while considering the costs and legalities around the solution and the relationship the challenge owner is looking for. the stakeholders further explained that the oia facilitates communication between challenge owners and solution providers when making a deal. this is done by arranging meetings, shortlisting presentations and advising the smmes regarding ip. the solution providers who are shortlisted sign a non-disclosure agreement (nda). signing the nda, according to the participants, ensures that solutions submitted are not published, except between the solution seeker and the provider. to accelerate taking ideas to market, participants explained that the oia uses various networks and industry associations to market the challenges to potential solution providers. marketing the challenges requires from the campaigning team to identify opportunities in the different sectors. this is accomplished by pro-actively identifying emails and telephone numbers of potential solution providers and inviting them to take part in the challenge. the participants then run challenge workshops not only to create awareness of open innovation in southern africa but also to provide detailed information regarding each challenge. the oia’s database is used and grown as each challenge is marketed. apart from this hand-driven process, participants added that challenges are posted onto the website and on newsletters in the hope that potential solution providers will log in and respond to the challenge. table 1 reflects the direct quotations of participants regarding understanding the oia. challenges faced by stakeholders: intellectual property protection and collaborative partnerships three main themes, namely ip protection, collaboration and triple-helix, were identified from the participants’ description of their experiences regarding how the platform had been run and the challenges they face when operating such a platform. the direct quotations regarding these themes are reflected in table 2. table 2: direct quotations of responses regarding the challenges faced when commercialising ideas the open innovation. ip protection should play a vital role in accelerating commercialisation through oias in south africa. the importance of protecting the ip of possible solutions when dealing with oias was emphasised by the stakeholders. according to the participants, the oia plays an advisory role when dealing with the protection of ip. participants stated that oia prevents the leakage of ip by advising the solution providers on what content they should and should not provide. this means that the oia facilitates communication between the solution provider and solution seeker until a nda is signed; thereafter, the deal-making becomes a negotiation between the solution seeker and the solution provider. apart from authenticating the potential solution providers’ credibility by verifying their backgrounds and facts and the reputations of the key contributors involved and investigating the technical competencies of the possible solution, participants added that a more rigorous approach to protecting ip is necessary. open innovation, in its core, is based on collaborative relationships (slowinski & sagal 2010:38). businesses often assume that the source of the external innovation (the solution provider) will continue with its production within the business (west & gallagher 2006:323). however, this is often not the case. participants detailed that obtaining buy-in from stakeholders within the business of the solution seeker was an unstated challenge. participants emphasised that it is difficult to monitor collaboration through technology offers. participants explained that technology offers are a good entry point into various organisations, and therefore broadening partnerships; however, facilitating these technologies has been a passive process as it is relatively under resourced and therefore difficult to monitor. using the website and sending out occasional newsletters regarding technology offers are done, but is not an effective way of promoting and monitoring collaboration. furthermore, the participants emphasised the importance of the involvement of the triple-helix when promoting open innovation. according to the participants, large businesses mainly launched challenges on openix, while academia and smaller businesses posted their innovations onto the platform as technology offers in addition to submitting solutions to the challenges posed by large businesses. government plays the role of the intermediary, enabling open innovation in gauteng. participants mentioned the difficulty of bringing industry and government into the same room. table 2 reflects the direct quotations of participants regarding challenges faced on the open innovation platform. measuring success because open innovation is relatively new in southern africa, participants have focused on other measures of the oia’s success apart from the actual deal-making. table 3 reflects the direct quotations of participants regarding how the success of the platform has been measured. table 3: direct quotations of responses regarding the key success factors. participants indicated that the increased numbers of registrations of the platform, submissions to solutions and visits to the website indicate a better awareness of open innovation over time. they added that the platform’s alignment with the province’s key strategies also serves as a measure of success. openix was launched to boost the gauteng employment growth and development strategy and the gikes (the innovation hub 2013:2). one of the key objectives of gauteng is to stimulate sme development; participants emphasised that the oia provides opportunities for smes as they showcase their technology and, in turn, build their businesses through partnerships and investment. participants stated that innovators, smmes and universities with different interests are also offered the opportunity to collaborate with desired partners by posing their innovations onto the platform in the form of technology offers. this is in addition to posing solutions to challenges. participants also mentioned that the platform encourages technology transfer and partnerships between universities and industry on particular business needs. stakeholders added that, apart from smme development, the oia has tackled service delivery issues by identifying solutions that affect municipalities and are being implemented at the community level. conclusion and recommendations the objective of this research was mainly to investigate an oia in southern africa used to take ideas to market. this was accomplished by firstly discussing factual information regarding the open innovation platform through a literature review and qualitative data; secondly, identifying the challenges faced by the key stakeholders of the open innovation platform; and lastly, identifying the successes of the open innovation platform thus far. from the findings presented in this research, it is apparent that the acceleration of commercialisation through oias such as openix, although relatively new in south africa, should not be overlooked. conclusions and recommendations regarding the research can be made as follows: apart from their own business networks and databases, oias need to build an overall innovation ecosystem. this means having a diverse array of members (triple-helix stakeholders) and resources that contribute to and are necessary for ongoing innovation. these include entrepreneurs, investors, researchers, university faculties, venture capitalists and policy-makers. in addition, stakeholders could also include business development and other technical service providers such as accountants, designers, contract manufacturers and skills training and professional development services. having these different styles of thinking and incongruent understandings will enable oias to operate effectively across multiple clusters of specialisation. these cross-industry associations and wide-spread knowledge regarding industry-specific issues may result in the oia’s increased ability to provide multiple value-added services that hold enough legitimacy to influence the development of technology, thereby establishing a common language of reference and transforming interpretations through innovation. measuring collaboration is quite a challenge for the oia. it is recommended that stakeholders look across a range of tools to tell a holistic story. there cannot be one approach that can measure collaboration on its own. exploring a few different approaches and tools to measure various collaboration efforts is recommended. a strong marketing strategy in addition to collaboration with a media partner is recommended in order to build a culture for and interest in research technologies in south africa over a longer period of time. sustainable partnerships need to be built beyond simply requesting the distribution of the challenge brief to industry associations and research institutions. this will grow the platforms database and contribute to building an open innovation ecosystem. furthermore, a database gap analysis in terms of what is available on the database and what data need to be recruited is recommended. in order to ensure stakeholder buy-in, it is essential that oias involve key stakeholders from the client’s side (the solution seeker) during the challenge definition phase of the open innovation project. when stakeholders are involved at this initial phase of the open innovation process, it increases the likelihood of a solution being incorporated and fitted into the organisation’s business strategy and day-to-day operations. the oia should consider technical measures to actively prevent ip leakage, rather than simply advising the solution providers regarding ip. various ip protection programmes and methods exist and should be looked into as value-added services. in conclusion, businesses need to embrace open innovation as it presents opportunities in this fast-paced knowledge economy, thereby increasing a business’ competitive advantage. no one structure for open innovation is likely to be sufficient in the future. it is recommended that policy-makers, research institutions and businesses explore various technologies across industries relevant to their open innovation proficiencies. flexibility is vital when implementing open innovation. triple-helix role-players embracing open innovation should seek to find approaches of collaboration that are the most appropriate for them and for the open innovation project at hand, keeping in mind that these approaches are likely to change. acknowledgements this study was funded by workwell: research unit for economic and management sciences. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced the in writing this article. authors’ contributions both authors contributed equally to the work presented in this article. references anon, 2009, ‘creating an environment for open innovation’, ifm briefing 1(4), 1–2. anon, 2016, openix: open innovation exchange by the innovation hub, viewed 12 march 2016, from www.openix.theinnovationhub.co.za bianchi, m., cavaliere, a., chiaroni, d., frattini, f. & chiesa, v., 2011, ‘organisational modes for open innovation in the bio-pharmaceutical industry: an exploratory analysis’, technovation 31(1), 22–33. http://dx.doi.org/10.1016/j.technovation.2010.03.002 bloor, m. & wood, f., 2006, keywords in qualitative methods: a vocabulary of research concepts, sage, thousand oaks, ca. bodhanya, s., 2008, systemic competitiveness and local economic development, jörg meyer-stamer, duisburg. bogers, m., zobel, a.k., afuah, a., almirall, e., brunswicker, s., dahlander, l. et al., 2016, ‘the open innovation research landscape: established perspectives and emerging themes across different levels of analysis’, industry and innovation 23 1–33. http://dx.doi.org/10.1080/13662716.2016.1240068 bradley, n., 2010, marketing research: tools and techniques, 2nd edn., oxford university press, new york. chesbrough, h., 2003, ‘open platform innovation: creating value from internal and external innovation’, intel technology journal 7(3), 5–9. chesbrough, h. & crowther, a.k., 2006, ‘beyond high tech: early adopters of open innovation in other industries’, r&d management 36(3), 229–236. http://dx.doi.org/10.1111/j.1467-9310.2006.00428.x creswell, j.w., 2009, research design: qualitative, quantitative and mixed methods approaches, 3rd edn., sage, los angeles, ca. cunningham, p.m., cunningham, m. & ekenberg, l., 2016, ‘factors impacting on the current level of open innovation and ict entrepreneurship in africa’, the electronic journal of information systems in developing countries 73(1), 1–23. dutta, s. & lanvin, b., 2013, the global innovation index: the local dynamics of innovation, cornell university, geneva, switzerland. elo, s. & kyngäs, h., 2008, ‘the qualitative content analysis process’, journal of advanced nursing 62(1), 107–115. http://dx.doi.org/10.1111/j.1365-2648.2007.04569.x enkel, e., gassmann, o. & chesbrough, h., 2009, ‘open r&d and open innovation: exploring the phenomenon’, r&d management 39(4), 311–316. http://dx.doi.org/10.1111/j.1467-9310.2009.00570.x fisher, w.w., iii. & oberholzer-gee, f., 2013, ‘strategic management of intellectual property’, california management review 55(4), 157–183. http://dx.doi.org/10.1525/cmr.2013.55.4.157 fritsch, m. & lukas, r., 2001, ‘who cooperates on r&d?’, research policy 30(2), 297–312. http://dx.doi.org/10.1016/s0048-7333(99)00115-8 gaskell, a., 2013, the commercial benefits of open innovation, viewed 1 march 2016, from www.dzone.com/articles/commercial-benefitsopenwww.dzone.com/articles/commercial-benefits-open gassmann, o. & enkel, e., 2004, towards a theory of open innovation: three core process archetypes, viewed 18 february 2016, from https://www.alexandria.unisg.ch/publikationen/274 howells, j., 2006, ‘intermediation and the role of intermediaries in innovation’, research policy 35(5), 609–766. http://dx.doi.org/10.1016/j.respol.2006.03.005 huston, l. & sakkab, n., 2006, ‘connect and develop: inside procter & gamble’s new model for innovation’, harvard business review 84(3), 58–66. iakovleva, t., 2013, ‘open innovation at the root of entrepreneurial strategy: a case from the norwegian oil industry’, technology innovation management review 3(4)17–22. khan, m.d., 2015, precision innovation: an r&d strategy to drive top-line growth at pepsico, viewed 15 february 2016, from http://cornerstonecapinc.com/2015/06/precision-innovation-an-rd-strategy-to-drive-top-line-growth-at-pepsico/ leydesdorff, l., 2006, the knowledge-based economy: modeled, measured, simulated, universal publishers, boca raton, fl. lichtenthaler, u., 2009, ‘outbound open innovation and its effects on firm performance: examining environmental influences’, r&d management 39(4), 317–330. http://dx.doi.org/10.1111/j.1467-9310.2009.00561.x lichtenthaler, u. & ernst, h., 2008, ‘innovation intermediaries: why internet marketplaces for technology have not yet met the expectations’, creativity and innovation management 17(1), 14–25. http://dx.doi.org/10.1111/j.1467-8691.2007.00461.x manceau, d., moatti, v., fabbri, j., kaltenbach, p. & bagger-hansen, l., 2011, open innovation: what’s behind the buzzword?, viewed 13 october 2014, from http://institut-innovation-competitivite.eu/sites/default/files/what_behind_the_buzzword_i7_institute_accenture_2011_0.pdf marais, s.j. & schutte, c.s.l., 2010, ‘the development of open innovation models to assist the innovation process’, masters dissertation, department of engineering, university of stellenbosch. matthews, b. & ross, l., 2010, research methods: a practical guide for the social sciences, pearson, london, england. miles, m.b., huberman, a.m. & saldana, j., 2014, qualitative data analysis: a methods sourcebook, 3rd edn., sage, thousand oaks, ca. mortara, l., napp, j.j., slacik, i. & minshall, t., 2009, how to implement open innovation: lessons from studying large multinational companies, university of cambridge, great britain. nambisan, s. & sawhney, m., 2007, ‘a buyer’s guide to the innovation bazaar’, harvard business review 85(6), 109–118. park, i. & yoon, b., 2013, ‘identifying potential partnership for open innovation by using bibliographic coupling and keyword vector mapping’, international scholarly and scientific research & innovation 7(2), 206–211. piller, f.t. & diener, k., 2013, the market for open innovation: the 2013 rwth open innovation accelerator survey, lulu publishing, raleigh, nc. shenton, a.k., 2004, ‘strategies for ensuring trustworthiness in qualitative research projects’, journal for education for information 22, 63–75. shurrab, h. & el bouassami, m., 2013, the luxury of open innovation: a case study of whirlpool, viewed 14 march 2016, from http://www.academia.edu/3165935/the_luxury_of_open_innovation_a_case_study_of_whirlpool slowinski, g. & sagal, m.w., 2010, ‘good practices in open innovation’, research technology management 53(5), 38–45. spithoven, a., clarysse, b. & knockaert, m., 2009, building absorptive capacity to organise inbound open innovation in low tech industries, viewed 18 march 2016, from http://feb1.ugent.be/nl/ondz/wp/papers/wp_09_606.pdf the innovation hub, 2013, open innovation solution exchange pilot project case study. the innovation hub management company, viewed 14 march 2016, from http://solexinnovation.com/templates/images/tih%20solution%20exchange%20casestudy.pdf herrington, m. & kew, p., 2016, global entrepreneurship monitor report. south african report 2015/2016, uct, cape town. vaismoradi, m., turunen, h. & bondas, t., 2013, ‘content analysis and thematic analysis: implications for conducting a qualitative descriptive study’, nursing and health sciences 15, 398–405. http://dx.doi.org/10.1111/nhs.12048 van de vrande, v., de jong, j.p.j., vanhaverbeke, w. & de rochemont, m., 2009, ‘open innovation in smes: trends, motives and management challenges’, technovation 29, 423–437. http://dx.doi.org/10.1016/j.technovation.2008.10.001 von dyck, p., 2015, overcoming the challenges to successful open innovation. innovation management, viewed 15 march 2016, from http://www.innovationmanagement.se/2015/03/03/overcoming-the-challenges-to-successful-open-innovation/ von nell, p.s. & lichtenthaler, u., 2011, ‘the role of innovation intermediaries in the markets for technology’, international journal of technology intelligence and planning 7(2), 128–139. http://dx.doi.org/10.1504/ijtip.2011.043198 west, j. & gallagher, s., 2006, challenges of open innovation: the paradox of firm investment in open-source software, r&d management 36(3), 319–331. http://dx.doi.org/10.5172/impp.11.3.279 abstract introduction problem statement empirical literature methodology discussion of results managerial implications recommendations limitations and future research suggestions conclusion acknowledgements references about the author(s) eugine t. maziriri school of economic and business sciences, university of the witwatersrand, south africa miston mapuranga the da vinci institute for technology management, school of managerial leadership, johannesburg, south africa nkosivile w. madinga school of management studies, department of marketing, university of cape town, south africa citation maziriri, e.t., mapuranga, m. & madinga, n.w., 2018, ‘self-service banking and financial literacy as prognosticators of business performance among rural small and medium-sized enterprises in zimbabwe’, southern african journal of entrepreneurship and small business management 10(1), a180. https://doi.org/10.4102/sajesbm.v10i1.180 original research self-service banking and financial literacy as prognosticators of business performance among rural small and medium-sized enterprises in zimbabwe eugine t. maziriri, miston mapuranga, nkosivile w. madinga received: 21 feb. 2018; accepted: 14 sept. 2018; published: 24 oct. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: this investigation breaks new ground by examining an inventive monetary approach (the utilisation of technology-based self-service banking, borrowing financial literacy and budgeting financial literacy) that, if embraced by rural small and medium-sized enterprises (smes), can enhance business performance. despite the expanded readiness of technology, the significance of rural smes has largely been overlooked, particularly in developing countries of southern africa. therefore, the principal objective of this study is to fill this void. aim: the current study aims to investigate the impact of technology-based self-service banking, borrowing financial literacy and budgeting financial literacy on the business performance of rural smes within the agricultural sector of zimbabwe. setting: in this study, data were collected in the rural area of bindura, zimbabwe. method: the study utilised a quantitative research design using a structured questionnaire. data was collected from 151 managers, sme owners and heads of accounting departments within rural smes that are operating in the rural area of bindura. smart partial least squares was used to analyse the data. results: technology-based self-service banking, borrowing financial literacy and budgeting financial literacy had a positive and a significant impact on business performance. therefore, all three hypotheses were supported. hence, the study’s findings validate the assertion that prognosticators such as technology-based self-service banking, borrowing financial literacy and budgeting financial literacy are instrumental in stimulating business performance among rural smes in zimbabwe. a robust relationship was also found between budgeting financial literacy and business performance. conclusion: this study offers fruitful implications to academics by making a significant contribution to finance, accounting and small business management literature by systematically exploring the impact of technology-based self-service banking, borrowing financial literacy and budgeting financial literacy on business performance. this study stands to add new knowledge to the present body of finance, accounting and small business management literature in africa – a context that is often ignored by academics in developing countries. introduction in most economies, small and medium-sized enterprises (smes) are the largest contributors to economic activity (burgstaller & wagner 2015; struwig & lillah 2017). additionally, abor and quartey (2010:218) concur that ‘smalland medium-sized enterprises (smes) form a crucial part of emerging economies’. gama and geraldes (2012) elucidate that in europe, smes are seen as key sources of jobs, and almost two-thirds of jobs are produced by smes. smalland medium-sized entities also develop the innovative entrepreneurial spirit of markets (bishop 2018). globally, smes are seen to be the foundation of economic growth and, as a result, find themselves in a competitive environment as they need to directly compete with larger entities in the same markets (bishop 2018). in the contemporary african business environment, the economy of zimbabwe has struggled to operate on a steady state path since dollarisation in 2009 (nyoni & bonga 2017, nyoni & bonga 2018) and continues to be characterised by company closures, with many workers losing their jobs through retrenchment (nyathi, nyoni & bonga 2018). sibanda, hove-sibanda and shava (2018) have pointed out that since the collapse of the formal economy in early 2000, zimbabwe has experienced unprecedented growth of smes. in addition, sibanda et al. (2018) claimed that the sector became important mainly because the majority of large firms were downsizing and, in the worst scenario, closing shop. however, as a blessing in disguise, the massive loss of jobs has paved the way for the growth and dominance of smes in zimbabwe (nyoni & bonga 2018). in addition, nyathi et al. (2018) are of the view that smes have become the safety net where the majority of zimbabweans have found their means of survival. further, mugozhi and hlabiso (2017) are of the view that, in zimbabwe, smes are indeed a means to many families’ survival because of high levels of unemployment and the continual closure of companies as economic conditions continue to deteriorate. the remarkable development of smes in zimbabwe is mostly because of the general population’s longing to be self-employed and not because it is easy to establish and manage an sme; rather it is a strategy to survive. because smes are such a vital part of the economy of zimbabwe, they are assuming a critical role in the recuperation of the zimbabwean economy. given the growing importance of smes in zimbabwe, numerous authors have examined smes in different settings by focusing on challenges facing smes in zimbabwe (gombarume & mavhundutse 2012); determinants of smes’ failure in zimbabwe (chigusiwa et al. 2011); evaluation of the factors affecting growth of smes in zimbabwe (chiwara 2016); the influence of innovation on the performance of smes in zimbabwe (makanyeza & dzvuke 2015); sme policies and challenges: a comparative analysis of zimbabwe and south korea (majoni, matunhu & chaderopa 2016) and information and communication technology (ict) adoption and use in zimbabwean smes (makiwa & steyn 2016). deducing from the aforementioned, there is a lacuna in studies that have investigated technology-based self-service banking (tbssb), borrowing financial literacy and budgeting financial literacy as prognosticators of business performance among rural smes within the agricultural sector of zimbabwe. therefore, this article suggests a set of variables that are crucial for an sme to enhance business performance among rural smes in zimbabwe. according to bussmann et al. (2015), executives and owners of smes are tracking the many developments in consumer technology in particular, the conveniences brought about by web-based services and mobile apps, and wondering why such features are not available in their interactions with banks. hence, there is a need for tbssb in entrepreneurial ventures to enhance business performance. in addition, agyei (2018) contends that financial literacy levels of owners of smes can influence their financial decisions in the area of control of financial resources, proper allocation of funds and proper selection of investment vehicles and awareness of growth funding options that can enhance the performance of firms. thus, financial literacy (borrowing financial literacy and budgeting financial literacy) may lead to improved business performance. the rest of this article is apportioned as follows: the next section outlines the problem statement. this is followed by the review of literature and the development of the conceptual model as well as the hypotheses. the methodology that guides the study is then discussed. finally, the results of the study, discussions, implications, recommendations and conclusions are provided. problem statement there is an accord among improvement specialists and scholars that the advancement of smes in zimbabwe will launch destitution mitigation and financial development (olawale & garwe 2010). endeavours are being made by the administration and its improvement agents to energise the development of smes. the sme is seen as the foundation of the nation’s monetary recuperation endeavours and an answer to the national issues of business creation and destitution diminishment. in addition to unemployment and poverty problems, lópez and hiebl (2014) illustrate that smes require uncommon care in the area of administrative bookkeeping because they have limited capital; additionally, they often have financial and accounting challenges. be that as it may, there is a need to investigate how innovation-based smes can manage an account; get money-related proficiency and money planning education and the effect this has on business execution among rural smes inside the agricultural sector. hence, this article seeks to critically examine the impact of tbssb, borrowing financial literacy and budgeting financial literacy on business performance among rural smes within the agricultural sector in zimbabwe. empirical literature this section of the literature review discusses the different research variables undertaken as part of this study. technology-based self-service banking the banking sector is the most influential as it searches for methods for relating with clients, to lower costs, enhance effectiveness and separate items and administrations. one pattern in this line is simply the utilisation of self-service technology (perumal & shanmugam 2004). technology is never an idea in retrospect, illuminating and forming association’s methodology, yet it is the genuine reason and driver (kalakota& robinson 1999). branch banking is continuously being supplanted by tbssb. tbssb alludes to saving banking charges by clients utilising electronic money channels, with no communication with bank employees (sindwani & goel 2015). tbssb involves systems such as atms, internet banking, mobile banking and telebanking. borrowing financial literacy the capacity to make credit decisions consistent with customer inclinations requires an understanding of credit terms and markets. individuals with more learning can proficiently scan for lower borrowing rates. money-related information may likewise enhance a borrower’s capacity to oversee credit, making them more attractive to loan specialists (huston 2012). individuals with lower levels of debt literacy pay a higher share of fees on credit cards than borrowers with higher levels of debt literacy (lusardi & tufano 2009). a credit card market study finds that as respondents learn more about their credit cards, they settle on better decisions (agarwal et al. 2008). this research suggests that a person’s finance-related insight and aptitudes impact the smes’ business execution. as indicated by huston (2012), financial literacy is characterised by estimating how well an individual can comprehend and utilise individual bank-related data. nonetheless, little is known about how borrowing financial literacy influences the execution of smes. a few studies incorporate general human capital, estimated through formal training or experience (kim, aldrich & keister et al. 2006), while others incorporate more particular human capital estimated through money-related learning questions (lusardi & tufano 2009; robb & sharpe 2009). credit card studies that incorporate financial knowledge, centre essentially around debt levels, as opposed to borrowing financial literacy. budgeting financial literacy ostergren and stensaker (2011) stated: budgeting can be characterized as a necessary piece of administration control frameworks that goes for advancing coordination and correspondence among sub-units inside a venture, provides a framework for judging performance and finally motivating managers and other employees. (p. 152) warue and wanjira (2013) additionally depicted a budget as an impression of administration assumption with respect to the association’s wage stream and money-related position in fiscal terms. absence of budgeting financial literacy among smes greatly affects their performance. financial literacy is comprehended as the ‘capacity to make educated judgments and to take viable activities with respect to the present and future utilize [sic.] and administration of cash’ (basu 2005:2). financial literacy incorporates the capacity to comprehend monetary decisions. for example, money-related proficiency likewise calls for astute spending. this implies planning budgets, following consumption, paying bills on time and guaranteeing that credit card accounts are paid every month. monetary proficiency influences budgetary basic leadership. obliviousness about fundamental budgetary ideas can be connected to retirement planning, absence of investment in the stock exchange and poor financial conduct (lusardi 2008). studies conducted in zimbabwe by different authors have demonstrated that few smes execute proper budgets. these practices might be utilised to characterise private company monetary administration. these incorporate planning and income administration, account possession, utilisation of credit, investment funds conduct and resource gathering (davis & lopez-carr 2014). budgeting is an essential feature of business and it is viewed as indispensable for administration control. therefore, cohen and karatzimas (2011) contend that constrained utilisation of a budget as a component of execution assessment was the result of a lack of knowledge. be that as it may, warue and wanjira (2013) suggest that one reason why smes fail is an absence of budgeting. business performance understanding the significance of business performance is essential for estimating and overseeing organisational performance (armstrong et al. 2011). according to hove, sibanda and pooe (2014), business performance alludes to how the total innovation-empowered execution impacts every firm action, for example, cost reduction and income improvement. vieira (2010) states that business performance may be characterised as far as taking every necessary step, and in addition, as far as the outcomes are accomplished. reijonen (2008) conducted an empirical study in craft and rural tourism microbusiness. the author characterised business performance as a pointer that measures the business’s productivity and adequacy in accomplishing its objectives. business performance can likewise be examined by a business’s capacity to create connections to set targets (o’regan, sims & gallear 2007). wongrassammee, gardiner and simmons (2003) demonstrate that business performance alludes to how well the business fulfils the needs of workers, clients and different partners, as well as its capacity to accomplish its business objectives. gibson and cassar (2005) embrace a comparative position by expressing that business performance is concerned with how many goals are accomplished. from the above depictions, it can be noted that business performance includes the viability and effectiveness of a business in accomplishing the set objectives and the degree to which the business can exceed expectations in addressing the requirements of every one of its partners. therefore, entrepreneurial ventures need to evaluate their performance as often as possible. conceptual model a conceptual model describes the relationship between variables investigated in the study (gunzler & morris 2015). in addition, sekaran and bougie (2016) add that a schematic diagram of the conceptual model helps the reader to visualise the theorised relationships between the variables in the model and thus to obtain a quick idea about how you think that the management problem can be solved. in this study, the conceptual model suggests that tbssb, borrowing financial literacy and budgeting financial literacy are the independent or predictor variables. according to flannelly, flannelly and jankowski (2014) the term predictor refers to a variable that can predict another variable, that is, the magnitude of the predictor (independent variable) can predict the magnitude of another variable (dependent variable). moreover, the dependent or outcome variable for the current study model is business performance. a dependent or outcome variable is the variable under investigation and is depicted by the letter γ. it is always the predicted or the estimated variable (russell & purcell 2009). based on a synthesis of the converging literature related to the research variables, a conceptual model was proposed to guide the empirical study as shown in figure 1. figure 1: conceptual framework. given the discussion above, the following hypotheses can be stated: h1: technology-based self-service banking has a positive impact on business performance. h2: borrowing financial literacy has a positive impact on business performance. h3: budgeting financial literacy has a positive impact on business performance. methodology the study utilised a quantitative research design using a structured questionnaire. the design was suitable to solicit the required information relating to tbssb, borrowing financial literacy, budgeting financial literacy and business performance. in addition, the approach enabled the examination of the causal relationships with the constructs used in the study. data collection the data for this research was collected from rural smes within the agriculture sector of mashonaland central province in zimbabwe. specifically, the target population was restricted to managers, sme owners and heads of accounting departments within rural smes operating in the rural area of bindura. in terms of the sampling frame, a list of rural smes, registered within the database of small businesses, was used as a sampling frame. the database of the rural smes (small businesses) was obtained from the bindura rural district council (brdc). therefore, a simple random sampling technique was used in this study, because each element of the population had an equal and known chance of being selected as part of the sample (weideman 2014) – for instance, where every name within the list of smes registered within the data of the brdc had an equal chance of selection. the questionnaires clearly stated that the anonymity of the participants would be guaranteed and that the study was purely for academic purposes. the raosoft calculator for sample size was used to calculate the size of the sample (raosoft incorporated 2004). the calculation took into account the population of approximately 301 rural smes officially registered with the brdc in the year 2018, a 5% margin of error, 90% confidence interval and the recommended 50% distribution, and returned a minimum sample size of 170 respondents. of the 170 questionnaires distributed, 151 returned questionnaires were usable, yielding a response rate of 88%. measurement instrument and questionnaire design research scales were operationalised, mainly on the basis of previous work. proper modifications were made in order for them to fit the current research context and purpose. technology-based self-service banking was measured, using a 20-item scale, adapted from sindwani and goel (2015). in addition, borrowing financial literacy was measured, using a five-item scale, adapted from chepngetich (2016). furthermore, budgeting financial literacy was measured, using a four-item scale, also adapted from chepngetich (2016). business performance was measured using a four-item scale from mgxaji (2015). all were measured on a five-point likert-type scale, 1 (strongly disagree) to 5 (strongly agree), in order to express the degree of agreement. respondent profile table 1 displays the depiction of the participants. the respondents were requested to report their demographic data, including gender, age, marital status and kind of business inside the agriculture segment. the respondents were mainly females (57.6%). the average age of the respondents was under 30 years (54.3%). fifty-seven per cent of the respondents were single. around 69.53% of the respondents demonstrated that they were occupied with agro-processing types of businesses, for example, meat butcheries and cooking oil fabrication. in addition, 30.46% of the respondents disclosed that they were occupied with cultivating organisations, for instance, domesticated animal farming, business ranches, dairy cultivating, trim generation and ranger services. table 1: sample demographic characteristics. data analysis the research model developed in the present investigation was tested using partial least squares (pls), a variance-based, structural equation modelling approach (subramaniama, shamsudinb & alshuaibic 2017). monecke and leisch (2012:3) elucidate that ‘smartpls is stand-alone software specialized for pls path models and it is built on a java eclipse platform making its operating system independent’. partial least squares has the ability to facilitate the assessment of both the measurement and structural models (subramaniama et al. 2017). this study utilised pls for two main reasons: firstly, the aim of the study was oriented towards prediction of the dependent variable (chin 2010), and secondly the latent variable scores were used in the subsequent analysis for predictive relevance (hair, ringle & sarstedt 2011). futhermore, hair et al. (2011) further stressed that these arguments have led to the widespread acceptance of pls in research. specifically, this study used the smart pls approach introduced by ringle, wende and will (2005). reliability analysis the researchers checked the measurements’ reliability and validity. reliability was mainly checked using the composite reliability (cr) and cronbach’s alpha values. to ensure convergent validity, the researcher checked if items loaded on their respective (a priori) constructs with loadings greater than 0.5, while discriminant validity was checked by average variance extracted (ave) value and ensuring that there were no significant inter-research variable cross-loadings (chin 1998). moreover, the statistical measures of accuracy tests, as shown in table 2, specify the different measures that were used to assess the reliability and validity of the constructs for the study. table 2: accuracy analysis statistics. factor loadings (standardised regression weights) are required to be above 0.5 to ensure that there is convergent validity, and in the instance that certain factor loadings are below this threshold, they should be removed. because the factor loading scores of two items were below the acceptable threshold, they were removed and did not take part in the statistical analysis process to ensure the study remained valid. these items were tbssb1, tbssb14, tbssb16 and bp3. these items had factor loadings of 0.325, 0.315, 0.413 and 0.430, which are evidently below 0.5 and, therefore, could not be analysed further to ensure statistical accuracy and significance throughout the data analysis and interpretation procedure, as well as to ensure that there was convergent validity. as can be seen (table 2), all items have loadings greater than 0.6 (nunnally & bernstein 1994), indicating that they explain at least 60% of what they expected to measure (convergent validity). the lowest ave value is 0.578, which exceeds the recommended 0.5 (fornell & larcker 1981) – an indication of the existence of discriminant validity. the cr values illustrated in table 2 indicate that all the cr values meet the minimum threshold of 0.6 as they range from cr values of 0.815 to 0.935. according to yang and lai (2010), when conducting reliability analysis, it is recommended that the cr value exceed a value of 0.7, which was clearly achieved as demonstrated in table 2. again, based on the values presented in table 2, it can be concluded that all the measurement instruments are reliable on the basis that the cronbach alpha values are required to be above or equal to 0.6 and, in this case, all the values substantially exceeded this threshold. the values ranged from 0.764 to 0.936 and thus the measurement instruments are deemed reliable (morar, venter & chuchu 2015). according to the accuracy table presented above (table 2), the mean value for all the constructs ranges between 3 and 4, indicating that the majority of the respondents had either a neutral standpoint (3 on the likert scale) or they agreed (4 on the likert scale) with the statements provided. the standard deviation specifies the extent to which the respondents deviated from the mean. preferably, this value should be less than 1 but is recommended to at least encompass a value of less than 2 to ensure that there is not an issue of outliers (drost 2011); however, as seen in the accuracy in table 2, all the remaining constructs had standard deviation values that were substantially below 2. the item to total statistics for each item analysed through spss are required to be above 0.5 to assess convergent validity (morar et al. 2015). according to the accuracy table (table 2), the majority of the instruments met the threshold of 0.5. the inter-construct correlation matrix is used to assess the validity of measurement instruments, specifically discriminant validity. correlations among constructs were evaluated to see if they were lower than 1. the higher the correlation between variables, the lower the validity of those variables. the inter-construct values are required to be below 0.6 and in some cases below 0.85 to indicate discriminant validity. according to table 3, the highest correlation value was 0.578 and the lowest correlation value was 0.401. these correlation values are below 0.6 and, therefore, it can be concluded that there is discriminant validity between all the constructs (morar et al. 2015). discriminant validity was also established by checking if the ave was greater than the highest shared variance value (hsv) (nusair & hua 2010). the hsv was calculated by squaring of the highest correlation coefficient between latent constructs. table 2 shows that all the ave values (0.578, 0.622, 0.704 and 0.598) were above the highest shared variance (hsv) values (0.339, 0.296, 0.195 and 0.269) respectively for all the research constructs, thereby confirming the existence of discriminant validity. table 3: inter-construct correlation matrix. path model results and factor loadings the pls estimation results for the structural model, as well as the item loadings for the research constructs are shown in figure 2. figure 2: measurement and structural model results. outcome of hypotheses testing in this study, testing of the hypotheses was determined by path coefficient values, as well as the t-values for the structural model obtained from the bootstrapping algorithm. according to beneke and blampied (2012), t-values indicate whether or not a significant relationship exists between variables within the model, while path coefficients demonstrate the strength of the relationships in the model. two-tailed t-tests were conducted at the 5% significance level. outcome of testing hypothesis 1: technology-based self-service banking has a positive impact on business performance figure 2 and table 4 indicate that h1 is supported by the hypothesis finding (β = 0.309) and is significant at t-statistics 3.766. the strength of the association is indicated by a path coefficient of 0.309. this implies that tbssb is positively related to business performance in a significant way. table 4: results of structural equation model analysis. outcome of testing hypothesis 2: borrowing financial literacy has a positive impact on business performance figure 2 and table 4 depict that h2 is supported significantly. the t-statistics is 4.397. the strength of the relationship is indicated by the path coefficient of 0.281. this finding suggests that borrowing financial literacy has a direct strong positive effect on business performance. so, the more owners and managers are equipped with borrowing financial literacy skills, the more they are able to enhance their business performance. outcome of testing hypothesis 3: budgeting financial literacy has a positive impact on business performance moreover, it is depicted in figure 2 and table 4 that h3 is supported significantly. the t-statistics is 4.685. the strength of the relationship is indicated by the path coefficient of 0.331. this finding suggests that budgeting financial literacy has a direct strong positive effect on business performance. so the more owners and managers are equipped with budgeting financial literacy skills, the more they are able to enhance their business performance. discussion of results the statistical analysis exposed that technology-based self-service banking has a positive impact on business performance. this finding has ample support from previous empirical research studies, such as that conducted by odawa (2016), who discovered that self-service technologies, such as internet banking, atms, smart cards, credit cards and mobile banking were important for the commercial banks as they resulted in improved service delivery, reduced operating costs, increased convenience to customers and are mostly secure. another closely related study is the one conducted by abbasi and weigand (2017) focusing on the impact of digital financial services on a firm’s performance; in the literature review of their study, the authors emphasised that diversified digital financial services or tbssb help the organisations (service providers) to improve their firm’s performance and to remain competitive in the market. the findings of this study also authenticate the existence of a positive connection between borrowing financial literacy and business performance. the results obtained in the current study are also not without empirical support. in her study, entitled, ‘effect of financial literacy and performance smes. evidence from kenya’, chepngetich (2016) found that borrowing financial literacy has a significant effect on sme performance. empirical evidence was also found in this research that confirmed that there is a positive association between budgeting financial literacy and business performance. the findings obtained from this study are in line with literature; siekei, wagoki and kalio (2013) elucidated that the effective implementations of financial literacy skills lead to improvement in business performance because of an improved ability to track business events from the record systems. joshi, al-mudhaki and bremser’s (2003) examination of budgeting financial literacy by a survey of 54 medium-sized and large companies in bahrain found that an increase in firm size leads firms to implement a more comprehensive budgeting process to achieve better performance. chepngetich (2016) also found that budgeting financial literacy has a significant effect on sme performance. the result obtained from testing this hypothesis is also in agreement with a survey conducted by maziriri and mapuranga (2017), who examined the impact of management accounting practices on the business performance of smes in south africa and found that budgeting positively influences the business performance of smes. moreover, a study conducted by chidi and shadare (2011) in nigeria, focusing on challenges confronting human capital development in smes, found that lack of understanding of the budgeting process was detrimental to the performance of the smes. managerial implications the present study offers implications for academics. for example, an investigation of the research findings indicates that tbssb and business performance have a strong influence on each other, as indicated by a path coefficient of 0.309. therefore, for academics in the field of finance, accounting and small business management, this finding enhances their understanding of the relationship between tbssb and business performance, as this is a useful contribution to existing literature on these two variables. on the practitioners’ side, therefore, this study submits that managers and employees within rural smes in zimbabwe can benefit from the implications of these findings. for example, given the robust relationship between budgeting financial literacy and business performance, as indicated by a path coefficient of 0.331, managers and employees within rural smes in zimbabwe ought to pay attention or should put more emphasis on equipping themselves with budgeting financial literacy skills, so as to improve the business performance of their entrepreneurial ventures within the agricultural sector. recommendations the results of this study cannot be overlooked and may be seen as opportunities for rural smes in zimbabwe. therefore, based on the analysis of the literature, and specifically in the light of the findings of the empirical research, the following recommendations are offered: from the management perspective, sme owners and managers of rural smes need to make use of tbssb because this will change the way they interact with customers or even suppliers. for instance, through cell phone banking, a transaction can be made without physically going to the bank. it is also recommended that rural sme managers need to acquire some financial literacy competencies – specifically, borrowing financial literacy and budgeting financial literacy – in order to make good financial decisions. centres of financial education for entrepreneurs should be established in the rural areas of zimbabwe where sme managers can have financial literacy classes. if financial literacy coaching is obtained, smes would embrace more risky ventures, diversify investments and raise capital to grow and transform into more solid enterprises. limitations and future research suggestions this study has several limitations that should be highlighted. firstly, because of the use of a relatively small sample size, one cannot generalise the findings, even though a number of demographic questions were used in an effort to determine how representative the sample was of the defined target population. in future research, a wider population, including several rural smes, should be studied. all the data in the study were collected quantitatively, which led to the common method bias inherent in quantitative methods. future studies could try to focus on triangulation methods to avoid this bias. future research scholars could also focus on other factors that influence the business performance of rural smes. for instance, future research scholars could investigate the use of mobile technologies, cloud computing and motivation strategies as antecedents to the business performance of smes. furthermore, comparative studies between the results of this study and those obtained from other firms in different sectors or through meta-analyses could also be considered in the future. this could lead to other thought-provoking insights that were not captured in the present study. conclusion this study was conducted with the intention of investigating the impact of tbssb, borrowing financial literacy and budgeting financial literacy on the business performance of rural smes within the agricultural sector of zimbabwe. in addition, the study validates the assumption that factors such as tbssb, borrowing financial literacy and budgeting financial literacy are instrumental in stimulating smes’ business performance. technology-based self-service banking was positively correlated with business performance in a significant way. borrowing financial literacy was found to have a stronger impact on business performance. a robust relationship was also found on the nexus between budgeting financial literacy and business performance. the results support all the postulated hypotheses. managerial implications of the findings were discussed and limitations and future research directions were indicated. above and beyond, this study contributes new knowledge to the existing body of finance, accounting and small business management literature in the african setting – a research context that is neglected in academics. acknowledgements the authors acknowledge the rural sme managers for taking part in this research study. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution e.t.m. was the project leader, formulated the concept, devised the structure of the article, wrote the article and analysed the collected data. m.m. and n.w.m. were responsible for the review of empirical literature, as well as writing the research design and methodology of this article. all the authors conducted the interviews with rural sme managers. references abbasi, t. & weigand, h., 2017, the impact of digital financial services on firm’s performance: a literature review, cornell university library, ithaca, ny, book report, pp. 1–15. abor, j. & quartey, p., 2010, ‘issues in sme development in ghana and south africa’, international research journal of finance and economics 39(6), 215–228. agarwal, a., deepinder, f., sharma, r.k., ranga, g. & li, j., 2008, ‘effect of cell phone usage on semen analysis in men attending infertility clinic: an observational study’, fertility and sterility 89(1), 124–128. agyei, s.k., 2018, ‘culture, financial literacy, and sme performance in ghana’, cogent economics & finance 6(1), 1–16. https://doi.org/10.1080/23322039.2018.1463813 armstrong, g., kotler, p., harker, m. & brennan, r., 2011, marketing: an introduction, prentice hall, upper saddle river, nj. basu, s., 2005, financial literacy and the life cycle, financial planning association, washington, dc. beneke, j. & blampied, s., 2012, ‘driving consumer perceptions through facebook: an investigation into empowering brands in the 21st century’, in j.m.m. van den berg (ed.), pp. 47–61, conference proceedings of the 24th annual conference of saims – 2012, stellenbosch university, stellenbosch, september 09–11, 2012. bishop, w.a., 2018, ‘a project management framework for smalland medium-sized entities: accounting software implementation’, journal of economic and financial sciences 11(1), a183. https://doi.org/10.4102/jef.v11i1.183 burgstaller, j. & wagner, e., 2015, ‘how do family ownership and founder management affect capital structure decisions and adjustment of smes?: evidence from a bank-based economy’, the journal of risk finance 16(1), 73–101. https://doi.org/10.1108/jrf-06-2014-0091 bussmann, j., sandrock, j., roets, m. & schreiber, s., 2015, banks’ small business imperative: new strategies for offering digital services for smes, viewed 19 july 2018, from https://www.strategyand.pwc.com/media/file/banks-small-businessimperative.pdf chepngetich, p., 2016, ‘effect of financial literacy and performance smes. evidence from kenya’, american based research journal 5(11), 26–35. chidi, c.o. & shadare, o.a., 2011, ‘managing human capital development in small and medium-sized enterprises for sustainable national development in nigeria’, international journal of management and information systems 15(2), 95–101. chigusiwa, l., bindu, s., mudavanhu, v., muchabaiwa, l. & mazambani, d., 2011, ‘export-led growth hypothesis in zimbabwe: does export composition matter?’, international journal of economics and research 2(4), 111–129. chin, w.w., 1998, ‘commentary: issues and opinion on structural equation modeling’, mis quarterly 22(1), vii–xvi. chin, w.w., 2010, ‘how to write up and report pls analyses’, in v. esposito vinzi, w.w. chin, j. henseler & h. wang (eds.), handbook of partial least squares: concepts, methods and applications, pp. 655–690, springer-verlag, berlin. chiwara, o.m., 2016, ‘an evaluation of the factors affecting the growth of small and medium enterprises (smes) in zimbabwe: a case study of smes in harare (2009–2015)’, master of business administration dissertation, university of zimbabwe. cohen, s. & karatzimas, s., 2011, ‘the role of the human resources department in budgeting: evidence from greece’, journal of human resource costing & accounting 15(2), 147–166. https://doi.org/10.1108/14013381111157355 davis, j. & lopez-carr, d., 2014, ‘migration, remittances and smallholder decision-making: implications for land use and livelihood change in central america’, land use policy 36, 319–329. https://doi.org/10.1016/j.landusepol.2013.09.001 drost, e.a., 2011, ‘validity and reliability of social science research’, education research and perspectives 19(2), 85–120. flannelly, l.t., flannelly, k.j. & jankowski, k.r., 2014, ‘independent, dependent, and other variables in healthcare and chaplaincy research’, journal of health care chaplaincy 20(4), 161–170. https://doi.org/10.1080/08854726.2014.959374 fornell, c. & larcker, d.f., 1981, ‘structural equation models with unobservable variables and measurement error: algebra and statistics’, journal of marketing research 18(3), 382–388. https://doi.org/10.2307/3150980 gama, a.p.m. & geraldes, h.s.a., 2012, ‘credit risk assessment and the impact of the new basel capital accord on small and medium-sized enterprises: an empirical analysis’, management research review 35(8), 727–749. https://doi.org/10.1108/01409171211247712 gibson, b. & cassar, g., 2005, ‘longitudinal analysis of relationships between planning and performance in small firms’, small business economics 25(3), 207–222. https://doi.org/10.1007/s11187-003-6458-4 gombarume, f.b. & mavhundutse, s., 2012, ‘challenges faced with small to medium scale enterprise. a case study of chitungwiza, zimbabwe’, greener journal of business and management studies 4(4), 103–107. https://doi.org/10.15580/gjbms.2014.4.102113910 gunzler, d.d. & morris, n., 2015, ‘a tutorial on structural equation modeling for analysis of overlapping symptoms in co-occurring conditions using mplus’, statistics in medicine 34(24), 3246–3280. https://doi.org/10.1002/sim.6541 hair, j.f., ringle, c.m. & sarstedt, m., 2011, ‘pls-sem: indeed a silver bullet’, journal of marketing theory and practice 19(2), 137–149. https://doi.org/10.2753/mtp1069-6679190202 hove, p., sibanda, k. & pooe, d., 2014, ‘the impact of islamic banking on entrepreneurial motivation, firm competitiveness and performance in south african small and medium enterprises’, mediterranean journal of social sciences 5(15), 165–171. https://doi.org/10.5901/mjss.2014.v5n15p165 huston, s.j., 2012, ‘financial literacy and the cost of borrowing’, international journal of consumer studies 36(5), 566–572. https://doi.org/10.1111/j.1470-6431.2012.01122.x joshi, p.l., al-mudhaki, j. & bremser, w.g., 2003, ‘corporate budget planning, control and performance evaluation in bahrain’, managerial auditing journal 18(9), 737–750. https://doi.org/10.1108/02686900310500505 kalakota, r. & robinson, m., 1999, e-business: roadmap for success, addison wesley, new york, ny. kim, p.h., aldrich, h.e. & keister, l.a., 2006, ‘access (not) denied: the impact of financial, human, and cultural capital on entrepreneurial entry in the united states’, small business economics 27(1), 5–22. lópez, o. & hiebl, m.r., 2014, ‘management accounting for small and medium-sized enterprises: current knowledge and avenues for further research’, journal of management accounting research 27(1), 81–119. https://doi.org/10.2308/jmar-50915 lusardi, a., 2008, financial literacy: an essential tool for informed consumer choice? (no. w14084), national bureau of economic research, boston, ma. lusardi, a. & tufano, p., 2009, ‘teach workers about the perils of debt’, harvard business review 87(11), 22–24. majoni, t., matunhu, j. & chaderopa, b., 2016, ‘smes policies and challenges: a comparative analysis of zimbabwe and south korea’, international journal of scientific and research publications 6(6), 380–381. makanyeza, c. & dzvuke, g., 2015, ‘the influence of innovation on the performance of small and medium enterprises in zimbabwe’, journal of african business 16, 1–2. https://doi.org/10.1080/15228916.2015.1061406 makiwa, p.j. & steyn, r., 2016, ‘ict adoption and use in zimbabwean smes’, ist-africa week conference, durban, south africa, may 11–13, 2016, pp. 1–8. maziriri, e.t. & mapuranga, m., 2017, ‘the impact of management accounting practices (maps) on the business performance of small and medium enterprises within the gauteng province of south africa’, journal of accounting and management 7(2), 12–25. mgxaji, b., 2015, ‘the predictors of business performance in the investment management industry’, master of management in strategic marketing, university of the witwatersrand, johannesburg. monecke, a. & leisch, f., 2012, ‘sempls: structural equation modeling using partial least squares’, journal of statistical software 48(3), 1–32. morar, a., venter, m. & chuchu, t., 2015, ‘to vote or not to vote: marketing factors influencing the voting intention of university students in johannesburg’, journal of economics and behavioural studies 7(6), 81–93. mugozhi, f. & hlabiso, g., 2017, ‘determinants of small to medium enterprises’ success or failure: an ex-post appraisal of startup business by young entrepreneurs in zimbabwe’, the international journal of humanities & social studies 5(3), 39–46. nunnally, j.c. & bernstein, i.h., 1994, psychological theory, mcgraw-hill, new york. nusair, k. & hua, n., 2010, ‘comparative assessment of structural equation modeling and multiple regression research methodologies: e-commerce context’, tourism management 31(3), 314–324. nyathi, k.a., nyoni, m. & bonga, w.g., 2018, ‘the role of accounting information in the success of small & medium enterprises (smes) in zimbabwe: a case of harare’, dynamic research journals, journal of business and management (drj – jbm) 1(1), 1–15. nyoni, t. & bonga, w.g., 2017, ‘towards factors affecting delays in construction projects: a case of zimbabwe’, dynamic research journal of economics and finance 2(1), 12–28. nyoni, t. & bonga, w.g., 2018, ‘anatomy of the small & medium enterprises (smes) critical success factors (csfs) in zimbabwe: introducing the 3e model’, dynamic research journals, journal of business and management (drj – jbm) 1(2), 1–18. o’regan, n., sims, m.a. & gallear, d., 2007, ‘leaders, loungers, laggards: the strategic-planning-environment-performance relationship re-visited in manufacturing smes’, journal of manufacturing technology management 19(1), 6–21. https://doi.org/10.1108/17410380810843426 odawa, c.a., 2016, ‘technology enabled banking self-services and performance of commercial banks listed in the nairobi securities exchange’, master of business administration dissertation, school of business, university of nairobi, nairobi, kenya. olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–739. ostergren, k. & stensaker, i., 2011, ‘management control without budgets: a field study of “beyond budgeting” in practice’, european accounting review 20(1), 149–181. perumal, v. & shanmugam, b., 2004, ‘internet banking: boon or bane’, journal of internet banking and commerce 9(3), 1–6. raosoft incorporated, 2004, sample size calculator, viewed 27 january 2018, from http://www.raosoft.com/samplesize.html reijonen, h., 2008, ‘understanding the small business owner: what they really aim at and how this relates to firm performance: a case study in north karelia, eastern finland’, management research news 31(8), 616–629. https://doi.org/10.1108/01409170810892172 ringle, c.m., wende, s. & will, a., 2005, smart pls 2.0 (beta), university of hamburg, hamburg, viewed 06 may 2017, from http://www.smartpls.de robb, c.a. & sharpe, d.l., 2009, ‘effect of personal financial knowledge on college students’ credit card behaviour’, journal of financial counseling and planning 20(1), 1–19. russell, b. & purcell, j., 2009, online research essentials: designing and implementing research studies, wiley, hobokken, nj. sekaran, u. & bougie, r., 2016, research methods for business: a skill building approach, wiley, new york, ny. sibanda, k., hove-sibanda, p. & shava, h., 2018, ‘the impact of sme access to finance and performance on exporting behaviour at firm level: a case of furniture manufacturing smes in zimbabwe’, acta commercii 18(1), a554. https://doi.org/10.4102/ac.v18i1.554 siekei, j., wagoki, j. & kalio, a., 2013, ‘an assessment of the role of financial literacy on performance of small and micro enterprises: case of equity group foundation training program on smes in njoro district, kenya’, business & applied sciences 1(7), 250–271. sindwani, r. & goel, m., 2015, ‘the impact of technology based self-service banking service quality on customer loyalty’, international journal of marketing and business communication 4(3), 1–13. https://doi.org/10.21863/ijmbc/2015.4.3.013 struwig, f.w. & lillah, r., 2017, ‘south african small and medium-sized enterprise owners’ intention to implement an environmental management system’, southern african journal of entrepreneurship and small business management 9(1), a104. https://doi.org/10.4102/sajesbm.v9i1.104 subramaniama, c., shamsudinb, f.m. & alshuaibic, a.s.i., 2017, ‘investigating employee perceptions of workplace safety and safety compliance using pls-sem among technical employees in malaysia’, journal of applied structural equation modeling 1(1), 44–61. vieira, v.a., 2010, ‘antecedents and consequences of market orientation: a brazilian meta-analysis and an international mega-analysis’, bar-brazilian administration review 7(1), 40–58. https://doi.org/10.1590/s1807-76922010000100004 warue, b.n. & wanjira, t.v., 2013, ‘assessing budgeting process in small and medium enterprises in nairobi’s central business district: a case of hospitality industry’, international journal of information technology and business management 17(1), 1–11. weideman, a., 2014, ‘innovation and reciprocity in applied linguistics’, literator: journal of literary criticism, comparative linguistics and literary studies 35(1), 1–10. https://doi.org/10.4102/lit.v35i1.1074 wongrassamee, s., simmons, j.e. & gardiner, p.d., 2003, ‘performance measurement tools: the balanced scorecard and the efqm excellence model’, measuring business excellence 7(1), 14–29. https://doi.org/10.1108/13683040310466690 yang, h.l. & lai, c.y., 2010, ‘motivations of wikipedia content contributors’, computers in human behavior 26(6), 1377–1383. abstract introduction research design and methodology research findings discussion conclusions and practical implications acknowledgements references about the author(s) m. anastacia mamabolo gordon institute of business science, university of pretoria, south africa myres kerrin gordon institute of business science, university of pretoria, south africa tumo kele gordon institute of business science, university of pretoria, south africa citation mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘entrepreneurship management skills requirements in an emerging economy: a south african outlook’, southern african journal of entrepreneurship and small business management 9(1), a111. https://doi.org/10.4102/sajesbm.v9i1.111 original research entrepreneurship management skills requirements in an emerging economy: a south african outlook m. anastacia mamabolo, myres kerrin, tumo kele received: 19 oct. 2016; accepted: 14 mar. 2017; published: 24 may 2017 copyright: © 2017. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurship is seen as a driver of sustainable economic growth as entrepreneurs create new businesses and employment. because entrepreneurship contributes to economic growth, it is important to have the skills needed to be successful in business venturing. aim: this study’s aim was to determine skills required by south african entrepreneurs to run their businesses. setting: entrepreneurs who own and run businesses in south africa. method: a sequential exploratory mixed method research design was applied in the study. phase i, which consisted of qualitative interviews with 15 entrepreneurs and 6 national experts, resulted in skills that were used to develop a survey instrument. a survey was conducted in phase ii on 235 entrepreneurs to confirm the skills to a larger population. results: confirmatory factor analysis results showed that entrepreneurs require financial management, human resource management, start-up, social and interpersonal, leadership, personality, marketing, technical and business management skills. conclusion: the identified skills through empirical research will be instrumental in the training of entrepreneurs and as a tool to measure skills in future entrepreneurship skills research. introduction globally, there has been an increasing fascination in understanding entrepreneurs operating in an emerging market context (bruton, ahlstrom & obloj 2008). entrepreneurs in emerging markets contend with formal and informal public and private institutions, which can impact the development of entrepreneurship (ahmad et al. 2010). as a result, the skills that entrepreneurs in this type of context apply to lead their businesses to survival and growth may be distinct from those applied by entrepreneurs in the developed markets (solesvik 2012). morales and marquina (2013) argued that even entrepreneurs from developed countries when compared amongst themselves may have notable differences in skills requirements. south africa as one of the developing markets aims to improve the economy and create employment through entrepreneurship (brière, tremblay & dau 2014). despite efforts to invest in entrepreneurship, south africa is challenged by a low entrepreneurial activity and high unemployment rate compared to the other sub-saharan countries (herrington & kew 2015). the low entrepreneurial activity includes a low percentage of potential and established entrepreneurs. there are also comparatively fewer entrepreneurs who identify opportunities and believe that they have the necessary skills to create business ventures. some of the challenges encountered include the low levels of entrepreneurial skills that are seen as important elements in economic and entrepreneurship development (adendorff, emuze & vilakazi 2013). research on entrepreneurial skills adopts human capital theory perspective, which states that skills are the outcomes of investment in education and work experience (becker 1964; chell 2013; unger et al. 2011). additionally, chell (2013) argued that research on entrepreneurial skills is mainly theoretical, lacking support by empirical evidence. thus, there is no clarity on the specific skills required by entrepreneurs (morales & marquina 2013). some of the complications in researching entrepreneurial skills are the lack of an agreed definition and the clarity of construct as it is often interchanged with entrepreneurial competencies (chell 2013). this highlights that it is important to define and identify skills required by entrepreneurs with the support from empirical research. therefore, this study will clearly define and separate skills from competencies. with regard to the entrepreneurship research in south africa, there is a research gap on specific entrepreneurial skills suitable for entrepreneurs in this context (adendorff et al. 2013). as much as studies on skills in entrepreneurship are increasing elsewhere (deakins, bensemann & battisti 2016; loué & baronet 2012; shabbir, shariff & shahzad 2016), there is little about entrepreneurial skills required by entrepreneurs in south africa. therefore, the aim of this study was to determine the entrepreneurial skills required by entrepreneurs to run their businesses on a day-to-day basis. entrepreneurial skills are one of the significant contributors to the success and performance of any business venture (unger et al. 2011). entrepreneurs in south africa require three types of support, namely human, financial and social capital (brière et al. 2014). with regard to human capital, entrepreneurs would greatly benefit from entrepreneurial skills and training according to their developmental stages and the sector of activity. the lack of entrepreneurial skills may be because of inadequate training (brière et al. 2014) and a poor educational system as the south african public education system is classified as the worst in the world, far worse even than peer developing countries (turton & herrington 2012). the ‘education system has been failing to effectively equip individuals with skills and confidence required to consider entrepreneurship as a valid choice’ (turton & herrington 2012:28). studies conducted in emerging markets have shown that the significance of entrepreneurship education lies in the positive relationship between the level of education and desire to be entrepreneurial (herrington, kew & kew 2014). the educational institutions need to provide learners with practical exposure of entrepreneurship as a career path and put a stronger focus on problem solving skills and self-confidence, which are baseline skills for successful business venturing (herrington et al. 2014). individuals with a higher level of education are more likely to have intentions to start new business ventures (amorós & bosma 2014). according to turton and herrington (2012) one of the requirements to increase a pool of potential entrepreneurs, individuals with entrepreneurial intentions and early-stage entrepreneurs is an effective education system. however, if the skills needed for successful business venturing are identified and training based on the identified skills is conducted, even in a weaker educational system the feasibility and desirability of entrepreneurs can still be increased. the results of the study showed that entrepreneurs require financial management, human resource management, start-up, social and interpersonal, leadership, personality, marketing, technical and business management skills. the identified skills through empirical research will be instrumental in the training of entrepreneurs and as a tool to measure skills in future entrepreneurship skills research. the study presents the reviewed literature that supports the arguments relevant to the academic inquiry. the research methodology is presented, followed by the quantitative findings. the discussions of the findings are argued against the existing literature. the study concludes with the implications for entrepreneurs, training institutions and entrepreneurship scholars. literature review chell (2013) lamented that there has been a loss of sight in the definition and function of skill within the field of entrepreneurship. further, the construct skill is at times confused or interchanged with that of competencies. distinguishing skills from competencies competencies are perceived to be equivalent or the same as abilities, skills and knowledge (chell 2013; hayton & mcevoy 2006), which mean that in many instances these constructs are applied interchangeably (mitchelmore & rowley 2010; smith & morse 2005). the lack of a clear distinction in entrepreneurship literature has resulted in many scholars appearing to confuse entrepreneurial skills with entrepreneurial competencies (chell 2013). consequently, this has impeded the expansion of the theoretical grounding of skills that can be derived from empirical studies. not only do these obscure definitions and affect the field of research, but they also retard the possible practical application and implementations of relevant skills training programmes. competencies are the fundamental characteristics of an individual, which include motives, traits, skills, ability and knowledge that are essential in starting and running a business venture (bird 1995; boyatzis 1982). a different view by hayton and mcevoy (2006) is that competencies mirror the integration of particular knowledge, skills, abilities and other personality characteristics resulting in productive performance. a recent theoretical article defined entrepreneurial competencies as ‘clusters of related knowledge, attitudes and skills which an entrepreneur must acquire to enable him to produce an outstanding performance and maximise profit while managing a business venture’ (lugemwa 2014:76). therefore, competencies are in the context of this study defined as the ability to perform in a manner that satisfies or surpasses the set performance criteria as a result of the combination or integration of knowledge, skills and other personality characteristics. it follows that entrepreneurial competencies are the entrepreneurial capability to perform entrepreneurial activities above the required standard as a result of the combination entrepreneurial personal attributes, knowledge, skills and personality characteristics. defining skills a simple definition refers to skill as the ability to perform a task (mclarty & dousios 2006). in the entrepreneurship domain, defining and specifying skills is ambiguous and complex (chell 2013; morales & marquina 2013). the contributions from practitioner’s training programmes have ‘designed inconsistent entrepreneurial skills lists while trait psychology reduced skills to inherent traits’ (morales & marquina 2013:129). in research, scholars do not clearly define or re-invent the definition of skills and entrepreneurial skills in the context of their studies (pyysiäinen et al. 2006). if skills are properly distinguished from and related to the elements in which they are embedded, this will be useful for empirical evaluation and practical implementation (pyysiäinen et al. 2006) as well as theory development. in the neoclassical approach, thus using human capital theory, skills are obtained through human capital investments in education and work experience (becker 1964). furthermore, human capital theory maintains that skills can be learnt and old ones perfected while training or performing tasks. for skills to be effective they must be applied to the different entrepreneurial tasks (unger et al. 2011). therefore, skills according to human capital theory are results of investments in their acquisition, they can improve through training and development and they need to be proficiently performed. a review of some of the adopted definitions in literature (as seen in table 1) through the human capital theoretical base indicates that skills in the entrepreneurial context are broadly described as the ability to perform a task. the typically shallow definition frame has tended to narrow the scope of skills to whether a person can do some set of tasks or not. further, defining skills in this manner does not acknowledge that, for a person to be able to perform a task, there are some investments or sources needed to produce the skill to perform a task. lastly, that some of skills can be learnt and refined through training and exposure. table 1: definition of skills. based on the characteristics of the skills aligned with human capital theory as portrayed in table 1, skills in this context are defined as: the proficiency in performance of a task, as a result of human capital investments (formal and education, entrepreneurial education, work, industry and entrepreneurship experiences) and can be improved by training, practice and development. the entrepreneurial skills in this context will be: the proficiency in performing tasks in the entrepreneurial phases as a result of human capital investments (formal and education, entrepreneurial education, work, industry and entrepreneurship experiences) and can be improved by training, practice and development. categories of skills defining skills according to the tasks performed has resulted in various categories of skills in entrepreneurship. in an empirical study conducted on jamaican instructors, a panel of experts grouped some of the competencies and skills into eight clusters which included team leadership, perception of trustworthiness, planning and organisation, basic business skills, communication, problem solving skills, personal traits and creativity (dixon et al. 2005). the well-researched categories of skills presented in table 2 are technical, business management, entrepreneurial, personal, social and interpersonal, and behavioural or motivational skills. table 2: skills categories and their sub-sets. an entrepreneur engaged in innovation and production will require skills categorised as production skills. then the category of production skills will be further divided into sub-categories, which may include new ideas, new products and services skills. if the activity of the entrepreneurial phase has to deal with opportunity recognition, then an entrepreneur is required to possess special skills of identifying and choosing opportunities from a variety of available choices, thus opportunity recognition skills (fletcher 2006). besides definitional issues in entrepreneurship skills research, another complexity is to differentiate entrepreneurial from management skills. table 2 presents the six categories of skills derived from the literature, with management skills differentiated from entrepreneurial skills. as noted from the two schools of entrepreneurship, the discipline is founded on innovation or novelty (schumpeter 1934) and opportunity recognition (kirzner 1973). shane and venkataraman (2000) and timmons (1999) agreed that opportunity recognition and exploitation are the fundamental constructs, which separate entrepreneurship from management. in the same vein markman (2007) is of the notion that the core of entrepreneurial skills is opportunity recognition and exploitation. therefore, opportunity recognition differentiates entrepreneurial skills from management skills. table 2 indicates that some of skills identified in literature are not actually skills, but they are more aligned with personality traits or qualities and behaviour. the lack of a proper definition of skills resulted in many skills definitions, characteristics, variables and attributes in the literature appearing to be unclear. for example, risk propensity which is known as an entrepreneurial trait or personality characteristic can be regarded as a skill (chell 2013). this categorisation makes risk propensity to be regarded as multidimensional, thus having the properties of both a trait and skill. baum, locke and smith (2001) highlighted that entrepreneurial personality traits may serve to influence skills sets which are developed. in addition, entrepreneurial personality traits such as self-efficacy, passion, visionary and tenacity may influence the individual’s ability to perform entrepreneurial activities and ultimately impact on the business venture growth. noting this challenge, it is therefore significant to treat personality characteristics or traits and skills as separate entities. however, the entrepreneurship literature does not offer much distinction between the two constructs. research design and methodology the research question that this study intended to answer is: what are the skills needed by entrepreneurs to run their businesses on day-to-day basis? main research objective the main objective was to determine the clusters, categories and sub-skills applied by entrepreneurs when running their businesses. research design the design choice for this study was a mixed method approach. the mixed method originated as triangulation, which is the combination of qualitative and quantitative methodologies in the study of the same phenomenon (denzin 1978; jick 1979). the strategy followed in this study is one of sequential exploratory research whereby qualitative interviews were conducted in phase i followed by a quantitative survey in phase ii (creswell 2009). phase i (qualitative) design and method the qualitative interviews were conducted in phase i to identify skills and use the results of the qualitative phase to develop a survey instrument for measuring skills against a larger population of entrepreneurs. the data were collected through face-to-face interviews with a purposive sample of 15 entrepreneurs and 6 national experts in entrepreneurship. after collecting the qualitative data, the analysis was conducted by using atlas.ti, which is a computer-assisted qualitative data analysis software. the analysis of the data occurred in series of steps whereby the first step was to develop a code book of skills, which included categories of skills, their sub-skills and operational terms. after all the interviews were transcribed, the next step was to closely appraise the data. this step involved reading through all the data to obtain a general sense of the information and to reflect on its overall meaning (creswell 2003). coding is the process of organising the data into chunks or segments of text before bringing meaning to information (creswell 2003). atlas.ti was used to code, organise, compare different codes and sort the significant data that were best in describing the qualitative findings. the last step involved revising and refining the developed skills categories. the data analysis resulted in the categories of skills and their sub-sets, which were used to develop a questionnaire. phase ii (quantitative) design and method in phase ii, the quantitative study was aimed at confirming the skills and the sub-skills that were derived from the qualitative phase. the sample frame for the quantitative study was a list of south african entrepreneurs in all nine provinces, which are as follows: gauteng, northern cape, western cape, eastern cape, free state, mpumalanga, limpopo, kwazulu-natal and north west. after data collection by using an online survey, there were 235 entrepreneurs who participated in the study. the skills that were derived in the qualitative phase were confirmed through confirmatory factor analysis (cfa). this analysis is a way of testing how well the measured items represent a smaller number of constructs. this method was appropriate to test the extent to which the proposed sub-skills pattern of the factor loadings on the pre-specified skills constructs represent the actual data (hair et al. 2010). the models were evaluated for fit in terms of significance and the strength of the parameters, as well as how well the overall model fits the observed data, as indicated by a variety of fit indices. the chi-square and the goodness-of-fit index (gfi), comparative fit index (cfi), tucker–lewis index (tli), normed fit index (nfi) and root-mean square residual (rmsea) indices were used to determine the model fit (kline 2011). through cfa, the categories of skills developed were start-up skills, core business skills (business management, financial management, human resource management and marketing skills), personal and leadership skills (social and interpersonal, leadership and personal skills) and technical skills. in this study, the focus was on skills at a given point in time, thus adopting a cross-sectional study as the time horizon (saunders, lewis & thornhill 2009). research findings qualitative phase results table 3 shows the final skills clusters, categories, sub-skills and their operational definitions. the identified skills were used to develop the survey instrument for data collection in phase ii. table 3: qualitative findings of skills and their sub-categories. reliability and validity of qualitative findings reliability of the data was ensured by minimising the respondents’ bias. the respondents were assured of anonymity in the data collection process, analysis and reporting of the findings (saunders et al. 2009). the transcripts were examined to remove some notable mistakes that were committed during the process of transcription and assure that the interview data are accurately represented. in cases where recorded data were found to be unclear, participants were contacted again for further clarifications and confirmations. during the coding process, the consistency of definitions and meanings of the codes as guided by the code book was maintained. in order to validate the qualitative findings, the use of experts in the field of entrepreneurship and research methodology who gave guidance on the research also helped to lend depth of legitimacy to the process. after the analysis of the data, the findings of the study were verified by presenting them to some of the entrepreneurs who participated in the qualitative interviews. finally, the clusters of the skills were compared with the literature findings. quantitative phase results skills categories the categories that were derived from cfa are shown in table 4. gfi and cfi values of the categories were above the good fit value which is 0.90. rmsea for most of the categories were within the good fit range of 0.05–0.08; however, for the financial management skills were slightly below while the leadership skills were slightly above the values of a good fit. the cronbach’s alpha of each category of skills was above 0.70, indicating that the internal consistency was very good (kline 2011). table 4: confirmatory factor analysis. skills clusters in the second level analysis, some of the categories of skills were clustered together. cfa was run to determine if the clusters were significant. the main clusters of the skills are start-up, personal and leadership, core business and technical skills. the start-up and technical skills were not part of any cluster, therefore remained as standalones. start-up skills: the initial computation of the model had a chi-square = 34.1, df = 5, gfi = 0.946 and cfi = 0.917 and rmsea = 0.158. because the rmsea results were higher than the expected value, the modification indices were examined to check if the model could be improved. the covariates of planning growth, environmental scanning, calculated risks and opportunity recognition were found to be highly related. after correlating the covariates, the model improved with a chi-square = 2.8, df = 2, rmsea = 0.042, cfi = 0.998 and gfi = 0.995. the reliability test of the factors had a cronbach’s alpha of 0.80, indicating that the items measured what the instrument intended to measure. the results indicated that all the variables including planning growth, environmental scanning, new idea generation, taking calculated risks and opportunity recognition had a high loading on start-up skills construct. technical skills: the first model that was computed was a poor fit with chi-square = 124.9, df = 9, gfi = 0.858, cfi = 0.798 and rmsea = 0.234. the modification indices showed that using specialised technology and continuous innovation had low factor loadings, and as a result, they were removed. after correlating the covariates of product development and quality evaluation the global fit indices improved to chi-square = 0.2, df = 1, gfi = 1.00, cfi = 1.00 and rmsea = 0.000. the reliability analysis of the final factors had a cronbach’s alpha of 0.850, which is above the expected. therefore, the measurement items or factors for the technical skills are industry-specific skills, product development, managing production and product quality evaluation. core business cluster: the first computation of the model showed that the data on business management, human resource management, marketing and financial management skills which were grouped together did not fit the model. the initial results had a chi-square = 413.0, df = 178, gfi = 0.852, cfi = 0.892 and rmsea = 0.075. in order to obtain a good fit, factors with the cross-loading variables were removed negotiation, decision-making and positioning the business to ensure discriminant validity. after model trimming there was an improvement of the global model fit indices to chi-square = 221.9, df = 124, gfi = 0.905, cfi 0.945, tli = 0.932 and rmsea = 0.058. the reliability analysis was run on the measurement items and the results showed a cronbach’s alpha of 0.874 for the 18 items in the core business skills cluster. therefore, the core business skills cluster consists of financial management, human resource management, marketing and business management skills. personal and leadership cluster: the social and interpersonal, personality and leadership skills were brought together to form a cluster of personal and leadership skills. the first model that was computed with the three categories (social and interpersonal, personality and leadership) of skills almost met the good fit criteria with chi-square = 180.7, df = 57, cfi = 0.910, rmsea = 0.096 except for gfi = 0.897. the modification indices showed that l1 (crafting a vision) and ls6 (leading responsibly) had poor loadings, and as a result they were removed from the analysis. the model trimming improved the global fit indicators to chi-square = 56.3, df = 38, gfi = 0.958, cfi = 0.983, tli = 0.975 and rmsea of 0.045. the reliability tests of personality and leadership skills cluster had a cronbach’s alpha of 0.860. therefore, based on the results presented above, social and interpersonal, personality and leadership skills form a cluster of personality and leadership skills. the skills codes in the diagram are presented in table 5. table 5 shows the summary of skills clusters, categories and sub-skills that were derived from cfa. table 5: summary of skills from quantitative phase. discussion the study commenced by identifying the skills applied by entrepreneurs in running their businesses. as a result, nine categories of skills were identified from the qualitative data analysis and were validated in the quantitative phase through cfa. start-up skills are necessary for the identification and exploitation of a business opportunity. consistent with the literature these can also be termed ‘entrepreneurial or opportunity recognition skills’ (loué & baronet 2012; wasdani & mathew 2014). the start-up skills include opportunity recognition and exploitation, calculated risk taking, innovation, environmental scanning and planning the growth of the business. technical skills include an understanding of and proficiency in specific activities involving methods, processes and techniques in the business’s line of operation. the technical skills include industry-specific skills, product development, management of operations and quality-monitoring skills. core business skills focus on the internal business environment, which involves financial management, human resource management and technical skills: business management skills are needed to run the business on a daily basis. the business management skills that were considered significant were planning, problem solving, legal skills, decision-making, developing and executing a business model, strategic competence, delegation and business development. financial management skills are required to manage capital in an efficient and effective way so as to accomplish the financial obligations of the business. the financial management skills were pricing products (tangible or service), cash flow management, calculating costs and interpreting financial statements. marketing skills are about communicating the value of the tangible and service products to the customers, for the purpose of selling. therefore, skills under the marketing category are market research, benchmarking competition, positioning the business in the market and selling skills. human resource management skills pertain to the ability to deal with managing people in the business, including designing and implementing workplace policies. the skills under this category were recruitment, employees’ skills assessment, defining job specs, performance management and payment of salaries. personal and leadership skills focus on leading employees to achieve maximum results and interaction with stakeholders. the stakeholders can either be internal, for instance employees or external such as customers and suppliers. the categories of skills within this cluster were social and interpersonal, leadership and personal skills: social and interpersonal skills: in order to interact and form relationships with other people, entrepreneurs need social and interpersonal skills. the significant skills in this category are: people skills, communication skills, listening, building relationships and cultural sensitivity. leadership skills are needed to lead ‘self’ and employees in the business. the sub-skills within this category include crafting vision, inspiring employees, sharing the vision, cultivating excellent performance and leading responsibly. personal skills: the skills under this category are hard work, intuition and self-motivation. the four main clusters of skills derived from this study were consistent with chandler and jansen (1992), man and lau (2000), loué and baronet (2012) and chell (2013). however, the identified clusters had more categories and sub-skills than those already existing in the literature. also, pyysiäinen et al. (2006) noted that there is scarcity of exhaustive list of skills that match the different functional areas in the business. pyysiäinen et al. (2006) argued that skills should be related to the different functions of the business. in each functional area there are activities that need to be performed and those activities have requisite skills. therefore, this study addressed the categories and their sub-sets of skills, which deal with the functional areas such as marketing, finance, human resource, business management and technical functions. besides the skills specific to the functional business areas, there were skills which differentiate entrepreneurs from non-entrepreneurs and these were start-up skills (carland et al. 1984). in addition to start-up skills, there were personal and leadership skills, which can be seen as ‘soft skills’ pertaining to the entrepreneur’s relations and engagements with stakeholders. there were inconsistencies within the identification of sub-skills in the personal skills category. some of the sub-skills identified in the qualitative phase did not load well on the personal skills construct in cfa. the skills which did not load well were assertiveness, passion, single mindedness, emotional coping and accountability. an explanation to this may be that these skills are assumed to be behaviours or personal traits (rauch & frese 2007), and as a result they will load better when classified with other personality traits. baum et al. (2001) separated skills from traits by empirically showing that personality traits may serve to impact the development of skills for running a business. therefore, this study supports the notion that skills should be considered as being different from traits. conclusions and practical implications using both qualitative and quantitative methods this study was able to identify an exhaustive list of skills with operational definitions. the entrepreneurship management skills needed by entrepreneurs are financial management, human resource management, start-up, social and interpersonal, leadership, personality, marketing, technical and business management skills. these categories of skills were found to be consistent with the existing literature but were more exhaustive and included new skills not identified in prior literature. based on the empirical findings presented in the previous sections, this study makes some recommendations. firstly, the identified skills can be used as a questionnaire for empirical testing in an attempt to advance theory on entrepreneurship. secondly, the skills framework can serve as a baseline for skills training, support, mentoring and development programmes to develop practical and critical skills required in the process of entrepreneurship – what cannot be identified, cannot be developed. if entrepreneurship education and training based on the identified skills are implemented, even in a weaker overall educational system, the level of entrepreneurship activity can be improved. finally, for the enterprise development programme, the skills framework can be adapted into a skills tool which can be used for preand post-training assessment of skills. this will assist in determining the skills needs of entrepreneurs before the training and in accessing impact of training on skills development of entrepreneurs. limitations and future research although the categories and skills of clusters may be generalisable in a different contextual setting, a probable limitation is that the sub-sets of the skills may not all be generalisable in a different context of application. the research was positioned in a context, which is characterised by a low entrepreneurial activity and low skills levels; therefore, the study may be less generalisable in contexts where entrepreneurial activity and skills are very high. the empirical evidence of the impact of skills on venture outcomes remains unknown as this study did not have an outcome variable of skills. because this was a cross-sectional study, future research can focus on how skills change over time as the entrepreneurship process unfold with a focus on entrepreneurs at different phases. also, a deeper investigation into the sources of entrepreneurial skills and determine the informal platforms from which entrepreneurs learn skills. the study did not focus on entrepreneurial tasks and their requisite skills, so future studies can discover the requisite skills required to perform those activities. future research should also test the generalisability of the skills framework in a different contextual setting and to a larger population. acknowledgements thanks to the gordon institute of business science (gibs) and national research foundation (nrf) for the financial support. competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions m.a.m. conducted the research study, literature review and wrote the first draft of the article. m.k. and t.k. contributed in the conceptualisation of the theoretical framework and interpretation of the research findings. references adendorff, c., emuze, f. & vilakazi, e., 2013, ‘evaluating the skills of emerging entrepreneurs in a developing economy’, international journal of social entrepreneurship and innovation 2(3), 240–252. https://doi.org/10.1504/ijsei.2013.057019 ahmad, n.h., ramayah, t., wilson, c. & kummerow, l., 2010, ‘is entrepreneurial competency and business success relationship contingent upon business environment? a study of malaysian smes’, international journal of entrepreneurial behaviour & research 16(3), 182–203. https://doi.org/10.1108/13552551011042780 amorós, j.e. & bosma, n., 2014, global entrepreneurship monitor 2013 global report, global entrepreneurship research association, london, united kingdom. baron, r.a. & markman, g.d., 2000, ‘beyond social capital: how social skills can enhance entrepreneurs’ success’, the academy of management executive 14(1), 106–116. https://doi.org/10.5465/ame.2000.2909843 baron, r. a., & tang, j., 2009, “entrepreneurs” social skills and new venture performance: mediating mechanisms and cultural generality’, journal of management 35(2), 282–306. baum, j.r., locke, e.a. & smith, k.g., 2001, ‘a multidimensional model of venture growth’, academy of management journal 44(2), 292–303. https://doi.org/10.2307/3069456 becker, g.s., 1964, human capital: a theoretical and empirical analysis, with special reference to education, national bureau of economic research, new york. bird, b., 1995, ‘towards a theory of entrepreneurial competency’, advances in entrepreneurship firm emergence and growth 2(1), 51–72. botha, m., nieman, g. & van vuuren, j., 2006, ‘enhancing female entrepreneurship by enabling access to skills’, the international entrepreneurship and management journal 2(4), 479–493. https://doi.org/10.1007/s11365-006-0011-2 boyatzis, r.e., 1982, the competent manager: a model for effective performance (bound), wiley, new york. brière, s., tremblay, m. & daou, a., 2014, ‘entrepreneurship in south africa: looking beyond funding’, development and learning in organizations 28(2), 17–19. https://doi.org/10.1108/dlo-08-2013-0052 bruton, g.d., ahlstrom, d. & obloj, k., 2008, ‘entrepreneurship in emerging economies: where are we today and where should the research go in the future’, entrepreneurship theory and practice 32(1), 1–14. https://doi.org/10.1111/j.1540-6520.2007.00213.x carland, j.w., hoy, f., boulton, w.r. & carland, j.a.c., 1984, ‘differentiating entrepreneurs from small business owners: a conceptualization’, academy of management review 9(2), 354–359. chandler, g.n. & jansen, e., 1992, ‘the founder’s self-assessed competence and venture performance’, journal of business venturing 7(3), 223–236. https://doi.org/10.1016/0883-9026(92)90028-p chang, j. & rieple, a., 2013, ‘assessing students’ entrepreneurial skills development in live projects’, journal of small business and enterprise development 20(1), 225–242. https://doi.org/10.1108/14626001311298501 chell, e., 2013, ‘review of skill and the entrepreneurial process’, international journal of entrepreneurial behaviour & research 19(1), 6–31. https://doi.org/10.1108/13552551311299233 creswell, j.w., 2003, research design: qualitative, quantitative, and mixed methods approaches, sage, london, united kingdom. creswell, j.w., 2009, research design: qualitative, quantitative, and mixed methods approaches, sage, london, united kingdom. deakins, d., bensemann, j. & battisti, m., 2016, ‘entrepreneurial skill and regulation: evidence from primary sector rural entrepreneurs’, international journal of entrepreneurial behavior & research 22(2), 234–259. https://doi.org/10.1108/ijebr-12-2014-0240 denzin, n.k., 1978, the research act, 2th edn., mcgraw-hill, new york. dixon, r., meier, r.l., brown, d.c. & custer, r.l., 2005, ‘the critical entrepreneurial competencies required by instructors from institution-based enterprises: a jamaican study’, journal of industrial teacher education 4(42), 25–51. fletcher, d.e., 2006, ‘entrepreneurial processes and the social construction of opportunity’, entrepreneurship and regional development 18(5), 421–440. https://doi.org/10.1080/08985620600861105 hair, j.f., black, w.c., babin, b.j., anderson, r.e. & tatham, r.l., 2010, multivariate data analysis, 7th edn., pearson prentice hall, upper saddle river, nj. hayton, j.c. & mcevoy, g.m., 2006, ‘competencies in practice: an interview with hanneke c. frese’, human resource management 45(3), 495–500. https://doi.org/10.1002/hrm.20126 herrington, m. & kew, p., 2015, gem 2015–2016 south africa report, global entrepreneurship research association, cape town. herrington, m., kew, j. & kew, p., 2014, gem 2014 sub-saharan africa report, global entrepreneurship research association, cape town. hisrich, r.d., peters, m.p. & shepherd, d.a., 2005, entrepreneurship, 6th edn., mcgraw-hill, new york. jick, t.d., 1979, ‘mixing qualitative and quantitative methods: triangulation in action’, administrative science quarterly 24(4), 602–611. https://doi.org/10.2307/2392366 kirzner, i.m., 1973, competition and entrepreneurship, university of chicago press, chicago, il. kline, r.b., 2011, principles and practice of structural equation modeling, guilford press, new york. lashgarara, f., roshani, n. & najafabadi, m.o., 2011, ‘influencing factors on entrepreneurial skills of rural women in ilam city, iran’, african journal of business management 5(14), 5536–5540. lichtenstein, g.a. & lyons, t.s., 2001, ‘the entrepreneurial development system: transforming business talent and community economies’, economic development quarterly 15(1), 3–20. https://doi.org/10.1177/089124240101500101 loué, c. & baronet, j., 2012, ‘toward a new entrepreneurial skills and competencies framework: a qualitative and quantitative study’, international journal of entrepreneurship and small business 17(4), 455–477. https://doi.org/10.1504/ijesb.2012.050164 lugemwa, p., 2014, ‘improving the secondary school curriculum to nurture entrepreneurial competences among students in uganda’, international journal of secondary education 2(4), 73–86. https://doi.org/10.11648/j.ijsedu.20140204.13 man, t.w. & lau, t., 2000, ‘entrepreneurial competencies of sme owner/manager in the hong kong service sector: a qualitative analysis’, journal of enterprising culture 8(03), 235–254. https://doi.org/10.1142/s0218495800000139 markman, g.d., 2007, ‘entrepreneurs’ competencies’, in j.r. baum, m. frese & r.a. baron (eds.), the psychology of entrepreneurship, pp. 67–92, psychology press, new york. mclarty, r. & dousios, d., 2006, ‘dynamics and patterns of skills within small and medium-sized enterprises’, strategic change 15(4), 175–186. https://doi.org/10.1002/jsc.755 mitchelmore, s. & rowley, j., 2010, ‘entrepreneurial competencies: a literature review and development agenda’, international journal of entrepreneurial behaviour & research 16(2), 92–111. https://doi.org/10.1108/13552551011026995 morales, c. & marquina, p.s., 2013, ‘entrepreneurial skills, significant differences between serbian and german entrepreneurs’, the business and economics research journal 6(1), 129–141. https://doi.org/10.7835/jcc-berj-2013-0085 narkhede, b.e., nehete, r.s., raut, r.d. & mahajan, s.k., 2014, ‘impact of entrepreneurial skills on the firm’s performance: evidence from manufacturing smes in india’, international journal of indian culture and business management 8(2), 216–236. https://doi.org/10.1504/ijicbm.2014.059207 pyysiäinen, j., anderson, a., mcelwee, g. & vesala, k., 2006, ‘developing the entrepreneurial skills of farmers: some myths explored’, international journal of entrepreneurial behaviour & research 12(1), 21–39. https://doi.org/10.1108/13552550610644463 rauch, a. & frese, m., 2007, ‘let’s put the person back into entrepreneurship research: a meta-analysis on the relationship between business owners’ personality traits, business creation, and success’, european journal of work and organizational psychology 16(4), 353–385. https://doi.org/10.1080/13594320701595438 saunders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., pearson education, london. schumpeter, j.a., 1934, the schumpttr: theory economic development, harvard university press, boston, ma. shane, s., 2000, ‘prior knowledge and the discovery of entrepreneurial opportunities’, organization science 11(4), 448–469. http://dx.doi.org/10.1287/orsc.11.4.448.14602 shane, s. & venkataraman, s., 2000, ‘the promise of entrepreneurship as a field of research’, academy of management review 25(1), 217–226. https://doi.org/10.5465/amr.2000.2791611 smilor, r.w., 1997, ‘entrepreneurship: reflections on a subversive activity’, journal of business venturing 12(5), 341–346. https://doi.org/10.1016/s0883-9026(97)00008-6 smith, b. & morse, e., 2005, entrepreneurial competencies: literature review and best practices, small business policy branch, industry canada, ottawa, on. solesvik, m., 2012, may, ‘entrepreneurial competencies in emerging economy context’, paper presented at the 17th nordic conference on small business research, helsinki, 23–25 may. timmons, j.a., 1999, new venture creation: entrepreneurship for the 21st century, 5th edn., mcgraw hill, irwin, pa. timmons, j.a. & spinelli, s., 2004, new venture creation: entrepreneurship for the 21st century, 6th edn., irwin, boston, ma. turton, n. & herrington, m., 2012, global entrepreneurship monitor 2012 south africa, global entrepreneurship research association, cape town. unger, j.m., rauch, a., frese, m. & rosenbusch, n., 2011, ‘human capital and entrepreneurial success: a personal-analytical review’, journal of business venturing 26(3), 341–358. https://doi.org/10.1016/j.jbusvent.2009.09.004 van vuuren, j.j & nieman, g., 1999, ‘entrepreneurship education and training: a model for syllabi/curriculum development’, paper presented at the 44th icsb world conference proceedings, italy, 20–23 june. wasdani, k.p. & mathew, m., 2014, ‘potential for opportunity recognition along the stages of entrepreneurship’, journal of global entrepreneurship research 2(1), 7. https://doi.org/10.1186/2251-7316-2-7 wickham, p.a., 1998, strategic entrepreneurship: a decision-making approach to new venture creation and management, pitman, london. microsoft word 2 vanderwalt hrm ent training sajesbm ns 1_1_21-34.doc sajesbm ns volume 1 (2008) issue 1 21 ________________________________________________________________________ entrepreneurial training for human resource practitioners and potential services rendered to small enterprises r. van der walt department of human resources management, university of pretoria ruan.vanderwalt@up.ac.za* s. j. van der walt consultant *to whom all correspondence should be addressed abstract this article examines to what extent current south african university courses/programmes in human resources management and industrial psychology prepare students for a career in entrepreneurship. it is argued that human resources practitioners have much to offer in the line of services and advice to small enterprises on how to succeed. the data of the survey are analysed through a qualitative approach. the findings indicate that entrepreneurship training currently receives limited attention in the training of human resources practitioners and industrial psychologists. key words and phrases: entrepreneurial education, human resources management, industrial psychology introduction depending on the definition used, the unemployment rate in south africa is estimated to be between 29.5 percent and 41.5 percent (barker, 2003:209). the 2007 labour force survey of statistics south africa (statssa) puts the unemployment rate at 25.5 percent in march 2007 (statssa, 2007). in view of such disturbing figures it can therefore be argued that unemployment is one of the biggest challenges facing south africa. in many parts of the world it has been found that small enterprises and the informal sector constitute a significant part of the total employment or have significantly contributed to the increase in total employment opportunities in recent years (liedholm, 2002:227–242). it is estimated by the south african small business annual summit that the country has between 2.8 and 2.5 million small, micro and medium enterprises (smmes) (sabg 2006/2007:172). of great concern is that smmes in south africa have a failure rate of between 70 percent and 80 percent (van eeden, viviers & venter, 2003:13). in south africa one often reads that many of our economic problems such as unemployment could be alleviated by the development of smmes and entrepreneurship (luiz, 2002:53). in view of this it would be sensible for tertiary training institutions to play a significant role in encouraging and training students for entrepreneurship. many tertiary institutions do in fact have programmes or courses in entrepreneurship. duncan randall of first national bank’s progress fund is of the opinion that young entrepreneurs who “make it” are typically in their late 20s, have a tertiary qualification and have work sajesbm ns volume 1 (2008) issue 1 22 ________________________________________________________________________ experience in either the private sector or in semi-government organisations (christianson, 2005:12). this article advocates that tertiary training institutions should seriously encourage entrepreneurship and self-employment career opportunities in all academic disciplines being taught, be they engineering science, agricultural science, the arts, social science, educational science or any other programmes offered. this need is even advocated for music students, with the plea that entrepreneurship training should “strike a chord” with musicians to develop their own entrepreneurial potential (miller, 2007:20). entrepreneurial training of human resources managers could lead to an important role as a collaborative partner in assisting founders of economically sound new ventures (klofsten, 2005:105). the purpose of the present research was to establish whether the programmes or courses in human resources management and industrial psychology taught at south african tertiary institutions are also aimed at entrepreneurship and self-employment, and whether the programmes lead to career options in entrepreneurship and self-employment for students. such training would serve a double purpose for human resources managers: not only would they become more independent and entrepreneurial, but they could simultaneously assist smmes in their entrepreneurial ventures, not only in human resources matters but also entrepreneurial achievements. developing professionals to become entrepreneurs could encourage them to become more proactive in determining their own destinies (miller, 2007:20). research data were collected by means of personal interviews and by examining the web pages of these tertiary training institutions to establish firstly whether the training programmes had entrepreneurship and self-employment as one of their goals, and secondly whether the programmes made students aware of career options in entrepreneurship and self-employment. given south africa’s current situation, it should be clear that all attempts to promote and enhance entrepreneurship and small business ownership should be welcomed and actively encouraged. literature review barker (2003:200–201) points out the following reasons why job creation is of the utmost importance to south africa: unemployment has grave consequences for any country; employment is essential for economic growth and higher standards of living; greater job creation will also address other important social priorities; affirmative action policies are much more difficult to implement successfully without economic growth; unemployment confines people to poverty, especially in rural areas; and high unemployment is having a serious effect on perceptions of the success of the market economy. in essence the proactive proliferation of smmes leads to the creation of jobs, influencing the generation of wealth and social stability (ladzani & van vuuren, 2002:154; van eeden et al., 2003:14). sajesbm ns volume 1 (2008) issue 1 23 ________________________________________________________________________ although somewhat dated, a study by moolman in 1984 (du plessis, 1996:163) examined the importance of smmes in different parts of the world and found that smmes represented between 82 percent and 99.8 percent of the total number of enterprises of the various countries; smmes provided employment opportunities for between 21 percent and 66 percent of the total private-sector labour force; and their contribution to the total turnover in these countries varied from 19 percent to 73 percent. smmes have an indisputable economic and social function in any free-market economy. in south africa smmes are regarded as one of the major instruments for creating jobs, stimulating growth and ensuring equality (ladzani & van vuuren, 2002:154). it has been pointed out in the government’s growth, employment and redistribution (gear) policy that the smme sector is severely underdeveloped in south africa (rsa, 1996:13). the promotion of this sector is a key element in the government strategy for employment creation (rsa, 1998: par.2.4.2.3), and strategies such as improving access to land, finance and support services such as human resources management advice are proposed. as a developing country, south africa faces one of the same dilemmas that confront other developing countries. this is that south africa simply does not have a sufficient number of entrepreneurs and has too few people with entrepreneurial qualities and attributes (pahn, 1993:8). these deficiencies lead to low economic performance, resulting in few succeeding as entrepreneurs. van aardt and van aardt (1997:3) point out that generally south africans are not socially encouraged or educated to become entrepreneurs. they traditionally enter the labour market as employees and become consumers of existing jobs, rather than creating new jobs through their entrepreneurial efforts. an appropriate route to embarking on full-time entrepreneurship would be to work as an employee in a successful enterprise for a period to gain experience and develop entrepreneurial ideas (van aardt & van aardt (1997:3). this route could prevent failures, as many young, enthusiastic entrepreneurs are soon disillusioned when new ventures fail, discovering that technical knowledge alone does not guarantee successful enterprise (tchouvakhina, 2004:233). terblanche (2007:7) points out that small business development is not automatically the solution to joblessness in south africa. he writes that to advise the unemployed that they must start their own business is cruel, as it is many times more difficult to start your own business than to find a job. terblanche (2007:7) uses the case of the failure of the chopchop fried-chicken street-vendor franchise. this was a venture in which the entrepreneur/franchisee set up a portable griller in the street for frying chicken. this author suggests that one of the reasons for the high failure rate by most start-up projects is recruiting the wrong candidates. terblanche (2007:7) quotes ivor blumenthal, the ceo of the service seta and custodian of the new venture creation learnership, who laments the notion that the youth are the best entrepreneurs, because they often fail in their venture because of a lack of experience. it is the experienced older entrepreneurs who understand business finance who are more successful. sajesbm ns volume 1 (2008) issue 1 24 ________________________________________________________________________ von broembsen (2006:13) writes that the potential for tertiary educated adults to create employment is two-and-a-half times greater than for adults who have finished only secondary school. it has been shown that becoming an employee for a period of time to gain experience and develop entrepreneurial ideas is an excellent route to full-time entrepreneurship (von broembsen, 2006:13). it is interesting, however, to note that in a study at macro level it was found that a higher level of education in a country is accompanied by a lower self-employment rate (uhlander & thurik, 2007). the findings of the 2005 global entrepreneurship monitor (gem) study paint a dismal picture of the south african position (von broembsen, wood & herrington, 2005). gem argues that south africa’s overall entrepreneurship ranking has dropped from 20th position in 2004 to 25th out of 35 countries in 2005 (von broembsen et al, 2005:17). the country’s early-stage entrepreneurial activity measure has also declined from 5.4 percent in 2004 to 5.1 percent in 2005 (von broembsen, 2006: 13). in south africa the importance of entrepreneurship has been widely recognised by government, which has therefore made major efforts to identify entrepreneurs, provide them with capital, stimulate their enterprise, support their development and generally make it easier for entrepreneurs to enter the business sector without unnecessary bureaucratic rules and regulations (iseds (integrated small-enterprise development strategy), 2005). the government is fully aware that the development of entrepreneurship is an urgent prerequisite for increasing the standard of living and economic growth in south africa (iseds, 2005). many emerging enterprises do not have the need for, or are often unable to, employ a full-time management specialist in the areas of marketing management, financial management, engineering management, information technology management and human resources management. this is precisely the situation that creates an opportunity for graduates in these disciplines to become entrepreneurs and provide services and products to other entrepreneurs and small enterprises. services which human resources practitioners can provide to smmes many entrepreneurs and owners of smmes are so focused on getting their enterprise off the ground and/or keeping their enterprise on track that “non-essential” aspects such as tax, sales promotion and employee matters are often neglected. understandably, small businesses may not be able to afford full-time human resources staff, but the small business owner should consider obtaining the services of a human resources consultant occasionally or on a regular basis, depending on the business needs and affordability. as a result of misunderstandings and disputes, many entrepreneurs and smmes have learnt costly lessons at the commission for conciliation, mediation and arbitration (ccma) and the labour court. although many of these disputes have a labour relations colour, they have their roots in poor human resources practices (simoncelli, 2007). many of these disputes could have been avoided or dealt with inexpensively had a knowledgeable human resources practitioner been involved at an earlier stage or from the founding of the business. sajesbm ns volume 1 (2008) issue 1 25 ________________________________________________________________________ it has been indicated that many small enterprises fail due to poor management (klofsten, 2005:105; tchouvakhina, 2004:233; van eeden et al., 2003:13). it is therefore most important that small business owners obtain expert advice. literature on the relationship between the entrepreneurial training of human resources managers and smmes seems to be almost non-existent. an exploratory, qualitative investigation (zikmund, 2003:54–55) was conducted to investigate this phenomenon. research methodology two forms of data-gathering were conducted for this study, namely qualitative primary and secondary data analysis (zikmund, 2003:63–64). the primary data were gathered by means of personal interviews with two human resources practitioners. the interviews are described in relation to applicable literature. the secondary data were gathered by investigating the entrepreneurial education of human resource management students in 23 tertiary institutions in south africa. the data sources were academic departments where human resources management and/or industrial psychology are taught at the 23 tertiary institutions. through an examination of their respective web pages we attempted firstly to determine whether their academic programmes are aimed at not only employment in organisations but also self-employment through entrepreneurship, and secondly to establish what type of career opportunities the programmes are preparing students for. the nature of the social phenomenon which is the object of this research project steered the researchers in the direction of qualitative analysis, particularly the approach advanced by miles and huberman (1984; 1994). miles and huberman’s view of qualitative analysis (1984; 1994) is described by punch as “tracing out lawful and stable relationships among social phenomena, based on the regularities and sequences that link these phenomena”. this approach views data analysis as concurrent flows of activity: data collection, data reduction, data display and conclusion drawing/verification (punch, 2005:197). creswell (1998: 142–165) describes the process of qualitative data analysis and interpretation as a spiral image – a data analysis spiral. results primary data interview results according to a personal communication with mr j.l. van der walt (2007), former hr manager and regional chairperson of the institute of personnel management, and a personal communication with mr f. simoncelli (2007), human resources and labour relations consultant, the first major move of human resources practitioners into the world of entrepreneurship in south africa occurred in the late 1970s and 1980s, when some human resources practitioners left the corporate world to become so-called independent labour relations and personnel consultants. this phenomenon was triggered by events in sajesbm ns volume 1 (2008) issue 1 26 ________________________________________________________________________ the labour relations arena and changes in labour-related legislation (finnemore, 2002:19– 32). traditionally the aim of the education and training of the personnel practitioner, the manpower practitioner, human resources practitioner, people management practitioner and industrial psychologist was directed at the delivery of specialised services to organisations, particularly the large corporate organisations which employed hundreds of employees. this was also the situation in south african organisations. (grobler, wärnich, carrell, elbert & hatfield, 2006:2–38); nel, van dyk, haasbroek, schultz, sono & werner, 2004:3–29). following the traditional career path, most students in the human resources management field envisaged their careers developing in a corporate environment, although some entered directly into consultancy firms (van der walt, 2007; simoncelli, 2007). however, as the best financial rewards and development opportunities were perceived to be offered in the corporate world, the majority of human resources practitioners worked and made their contribution to progress and success in that sector (van der walt, 2007; simoncelli, 2007). it is important to bear in mind that many human resources practitioners and consultants were still employees, although some had attained very senior positions (van der walt, 2007; simoncelli, 2007). the move by human resources practitioners to establishing themselves as independent consultants meant that they now had to start thinking as entrepreneurs or small-business owners whose success depended on the delivery of satisfactory services to clients. some practitioners were successful in making this transition to entrepreneurship, while others who could not make this difficult transition have had to fall back to employment in the private or public sector (simoncelli, 2007). it is in our view surprising that very few, if any, of the educational and training institutions took serious note of this phenomenon and adapted the aim and the curricula of the human resources and labour relations management courses they offered to equip their students with the skills needed to become human resources entrepreneurs, and not only employees in the human resources sector of an enterprise. by their failing to prepare their students for this alternative career path in human resources management, valuable human capital has over the years been under-utilised and a possible contribution to the total south african economy substantially reduced. for instance, human resources management consultants could offer essential human resources services to smmes and other entrepreneurs who lack the knowledge and skills to efficiently handle organisational problems. this would greatly contribute to the success of smmes as employment creators in south africa. if south african tertiary institutions fail to react and make these changes they will be ignoring a worldwide trend of the past 35 years to introduce entrepreneurship in universities (dana, 1993:70). williamson (2000:28) used institutional theory to develop a strategic model for small business human resources recruitment. this author introduced the notion of employer legitimacy, which is defined as a generalised perception or assumption held by job sajesbm ns volume 1 (2008) issue 1 27 ________________________________________________________________________ applicants that an organisation is a desirable, proper and appropriate employer, given the system of norms, values, beliefs and definitions that exist within an industry. williamson (2008:28) posits that to the extent that an organisation’s recruitment procedures and other human resources policies are viewed as proper and appropriate by potential job applicants, that organisation will be seen as a legitimate employer. this is where human resources practitioners can make a contribution. in view of the contribution that human resources practitioners could make to the success of smmes, and the fact that tertiary educational institutions do not (but should) inculcate entrepreneurial spirit in all their students, the study outlined below was conducted. secondary data analysis as a departure point, the study included all 23 institutions of higher learning listed in the diaries published by the purchasing consortium southern africa (purco), and each institution was regarded as a separate case and given a number. where possible, the applicable sections of the web page of each institution’s relevant department were printed for later examination and reduction of data. the web pages of two cases could not be accessed, possibly due to technical problems at the time. this left 21 cases for examination. to meet one of the criteria of good qualitative research, namely credibility, through triangulation of multiple sources of data as suggested by lincoln and guba (1985:20), attempts were made to find additional alternative sources of information. the south african qualification authority’s (saqa) information on human resources management qualifications was therefore also examined. unfortunately, this source did not reveal any useful information for purposes of the current study. the data reduction activity of the qualitative analysis process refers to selecting and transforming the “raw” data from written field notes or other sources of data that could be utilised for research purposes (miles & huberman, 1984:36). data are further reduced through focusing and bounding the research, which generally consists of building a conceptual framework, formulating research questions, sampling and instrumentation (miles & huberman, 1984:36). a conceptual framework explains either graphically or in narrative form the main dimensions to be studied – the key factors or variables and the presumed relationships. a framework can be rudimentary or elaborate, theory-driven or commonsensical, descriptive or causal. using the method suggested by miles & huberman (1984:28; 1994:18), a conceptual framework as depicted in figure 1 was developed for purposes of the study. sajesbm ns volume 1 (2008) issue 1 28 ________________________________________________________________________ figure 1: a conceptual framework for examining the aims of human resources management and industrial psychology teaching departments, and career options for which their students are equipped the data collected from each of the cases were used to build a cross-case compilation which displayed the position of each case regarding the aim of the programme/course and possible career options after graduation. miles and huberman (1994:17) refer to these cross-case displays as meta-matrices. they are master charts that gather descriptive data from each of the individual cases in a standard format. table 1 illustrates the result of this step. table 1: a compilation of the extracts of the web page information of some of the departments that teach human resources management and industrial psychology case no aim career opportunities 1 to equip students with the competencies to master the core human resources processes and practices personnel administration, personnel officer, industrial relations officer, training officer, union organiser, labour official or inspector, recruitment specialist 23 institutions departments of hrm / industrial psychology web pages programme/course: aim career options sajesbm ns volume 1 (2008) issue 1 29 ________________________________________________________________________ table 1 continued case no aim career opportunities 2 human resources managers provide the specialised services needed by the management members to make the most effective use of the human resources within an organisation. …. graduates usually start as human resources officers and then become managers after gaining experience. they may work in the general personnel field, or specialise in specific aspects of personnel management, training or industrial relations. 3 industrial/organisational psychology is a special social science discipline within the broad field of psychology that studies human behaviour in the work environment. application of the method, facts and principles of the science of behavioural processes to study the people at work. the aims of the discipline are knowledge and understanding of human work behaviour and to improve work performance. human resources manager, industrial psychologists, lecturer, human resources officer, industrial relations consultant, administrator. 4 industrial psychology, as an applied behavioural science, focuses on the explanation of the development of human behaviour in the work environment. in every organisation people are important whether in the capacity of employee, manager or consumer. however no organisation can be run without other resources such as raw materials, capital, equipment etc. industrial psychologist, personnel manager or labour relations in the public service 5 ...… in this regard pioneered the establishment of an academic capacity to respond to this challenge and elevated the field of human resources management. … a human resources practitioner deals with people in an organisation not indicated 6 the mission of the department of human resources management is to provide the most appropriate career education in two core areas of human resources management and organisational behaviour. no usable/relevant information 7 .... a human resources manager has to meet the organisation’s requirements of an effective work force, whilst simultaneously being concerned with expectations of employees .... no usable/relevant information 8 this degree will equip you to become a human resources practitioner in an organisation. human resources practitioner 9 no usable/relevant information consultant in private practice (human resources management); manager: corporate social responsibility projects; general manager; promotion manager; human resources manager; entrepreneur; labour relations consultant. sajesbm ns volume 1 (2008) issue 1 30 ________________________________________________________________________ table 1 continued case no aim career opportunities 10 to equip students with relevant knowledge and skills to enable them to staff the organisation, design and analyse jobs, develop employees, identify approaches to improve performance, reward employees and maintain sound labour relations. equip learners with the necessary skills and knowledge that would provide a solid foundation for a career in the field of general human resources management industrial psychology undergraduate qualification may lead to employment in industrial relations, ergonomics, marketing and consultancy. 11 to promote the understanding, creation, skills and values relevant and critical to the proper functioning and development of the hrm and lr function in the new south africa, thereby enhancing quality of organizational effectiveness and national development. no usable/relevant information discussion primary data: interviews based on the information obtained by interviews, human resources practitioners could assist smmes with the following services: • establishing human resources requirements; unsuccessful entrepreneurs fail to plan and set goals for their enterprises; • job analysis: job descriptions and job specifications; • recruitment and induction of personnel; • application of labour laws and maintaining good labour relations; employment contracts; • training and development of employees to improve skills and efficiency; • compensation management: establishing a wage and salary structure; • ensuring workplace health and safety; • introducing employee motivation techniques; • introducing performance management systems; and • designing human resources information systems. secondary data analysis as indicated above, only 21 institutions of higher learning were subjected to examination. an investigation into the aim or objective of the human resource training programmes or courses taught by the different tertiary institutions showed only ten with usable or relevant information which had a bearing on the aim of the programmes or courses offered. careful analysis of the ten cases revealed that none of the programmes or courses, according to their respective web pages, is directed at equipping students for entrepreneurship or becoming an entrepreneur. sajesbm ns volume 1 (2008) issue 1 31 ________________________________________________________________________ out of the 21 cases, only 7 had usable or relevant information which indicated possible career options for which students were equipped through the training offered by the respective departments. only one university clearly mentioned the career option of an entrepreneur. this institution is also the only case in which the possibility of a career as a human resources consultant in private practice is clearly indicated. cases 5, 6 and 17 indicated the career option of industrial psychologist, but from the available information it is not clear whether this refers to self-employment in private practice or as an employee in a corporate environment. limitations of the study the current study is limited only to south african tertiary institutions. the scarcity of literature on this topic limits the findings of the study to comparative studies. implications for management departmental management and faculty management should be aware that web pages serve as “display windows” of tertiary institutions, and the information advertised should be carefully considered. furthermore the introduction of an entrepreneurial perspective to their teaching in many disciplines could make an additional career option, namely that of entrepreneur, available to their students. recommendations for south africa the following are a few recommendations to improve this apparent lack of an entrepreneurship approach in the training of human resources practitioners and industrial psychologists of the future. human resources management courses generally consist of various free-standing modules such as economics, accountancy, business management, statistics, marketing, industrial psychology, and human resources management, to name but a few. unfortunately students are currently not taught how to apply many of these modules in a situation where they are self-employed in their own businesses. for example, students are seldom taught how to market their own business or its services, or how to apply for finance for their own business or what the effect of interest rate changes will be on the business financing and demand for products and services. such important factors which impact on business are conspicuously absent from their training. if the above skills are taught to students they are often not able to link the various pieces of knowledge acquired in the different subject disciplines into an integrated whole. it is encouraging that the current secondary school system provides for various themes which are then discussed within the different learning areas. in a particular year, for example, sajesbm ns volume 1 (2008) issue 1 32 ________________________________________________________________________ one of the themes is festivals. festivals are then discussed from a historical, a human and social science perspective, as well as from economic and management sciences and mathematical and scientific perspectives. it is therefore argued that similar models should be followed at tertiary educational institutions in order to obtain an integrated entrepreneurial perspective of all the underlying subject areas. another suggestion for improving the current tertiary teaching situation is to encourage academics to obtain more practical experience and knowledge of small business and selfemployment. the over-emphasis on academic research output is perhaps more suited to first-world environments, where massive unemployment and poverty are not such a pressing issues as is the case in developing countries such as south africa. in view of the above, it could perhaps be argued that the deficiency in entrepreneurial training at tertiary level could be remedied by the introduction of an additional interdisciplinary module such as: how to become self-employed in your discipline. the danger of this approach is that this could easily be viewed as just another additional module in an already overcrowded curriculum and thus totally fail in its aim. it is therefore proposed to rather encourage lecturers to introduce an entrepreneurial and selfemployed perspective in their teaching, based on their own experience and knowledge of entrepreneurship and self-employment. directions for future research future research could investigate the views of departmental staff on including entrepreneurship and self-employment as aims of their programmes, and offering the career options of entrepreneurship and self-employment. past graduates, as the consumers of these programmes, could be questioned on their experience of entrepreneurship and career options after the courses that they completed. conclusion as indicated above, south africa is faced with an unacceptable unemployment rate. entrepreneurs and smmes can contribute to providing job opportunities and assist in counteracting the negative consequences of high unemployment. based on the information obtained from the web pages displaying the curricula of the various human resources and industrial psychology departments surveyed in this study, only one university gives entrepreneurship as a clearly declared aim for its curriculum. only one of the seven cases with usable information on career opportunities for graduates makes any mention of the career option of entrepreneur. these findings are very disappointing considering the huge need for entrepreneurs in south africa. education in entrepreneurship could unlock alternative career options for students in human resources management and industrial psychology and equip them for providing services to smmes to help ensure their success. sajesbm ns volume 1 (2008) issue 1 33 ________________________________________________________________________ references barker, f. 2003. the south african labour market. 4th ed. pretoria: van schaik. creswell, j.w. 1998. qualitative inquiry and research design: choosing among five traditions. thousand oaks, calif: sage. christianson, d. 2005. can entrepreurship save south africa’s youth? enterprise, june 30: 12. dana, l-p. 1993. an international survey of entrepreneurship education. journal of enterprising culture, 1(1):67–92. du plessis p.g. 1996. applied business management: an introductory survey. pretoria: kagiso tertiary. finnemore. m. 2002. introduction to labour relations in south africa. 8th ed. durban: butterworths. grobler, p., wärnich, s., carrell, m.r., elbert, n.f. & hatfield, r. 2006. human resource management in south africa. 3rd ed. london: thompson learning. iseds (integrated small-enterprise development strategy). 2005. department of trade and industry. [online] available from: http://www.thedti.gov.za.html [accessed: 2007–09–14]. klofsten, m. 2005. new venture ideas: an analysis of their origin and early development. technology analysis & strategic management, 17(1):105–119. ladzani, w.m. & van vuuren, j.j. 2002. entrepreneurship training for emerging smmes in south africa. journal of small business management, 40(2):154–161. liedholm, c. 2002. small firm dynamics: evidence from africa and latin america. small business economics, 18:227–242. lincoln, y. & guba, e. 1985. naturalistic inquiry. beverly hills, ca: sage. luiz, j. 2002. small business development, entrepreneurship and expanding the business sector in a developing economy: the case of south africa. the journal of applied business research, 8(2):53–68. miles, m. b. & huberman, a. m. 1984. qualitative data analysis: a source book of new methods. london: sage. miles, m. b. & huberman, a. m. 1994. qualitative data analysis: a source book of new methods. london: sage. miller, k. 2007. teaching musicians to be entrepreneurs. business week online, 03–29–2007:20. [online] available from: http//0-web.ebscohost.com.innopac.up.ac.za/ehost/delivery?vid=6&hid=107&hid=107 &sid=38/html [accessed: 2008-02-07] . nel, p.s., van dyk, p.s., haasbroek, g.d., schultz, h. b., sono. t. & werner, a. 2004. human resource management. 6th ed. cape town: oxford university press. pahn, l. 1993. small business management and entrepreneurship. cape town: maskew miller longman. punch, k. 2005. introduction to social research: quantitative and qualitative approaches. 3rd ed. london: sage. sajesbm ns volume 1 (2008) issue 1 34 ________________________________________________________________________ republic of south africa. 1996. growth, employment and redistribution: a macro-economic strategy (gear strategy). pretoria: government printer. republic of south africa. 1998. creating jobs, fighting poverty: an employment strategy framework. government gazette. 3 july 1998. sabg (south african business guidebook). 2006/2007. small, medium and micro entrepreneurs. south africa business guidebook. [online] available from: http//www.journals.co.za/ej/ejour_ws_sabg.html [accessed: 2008-02-07]. simoncelli, f. 2007. verbal telecommunication with author on 10 september. pretoria. (notes in authors’ possession.) south african qualifications authority. 2007. registered human resources qualifications. [ online] available from: http://reqs.saqa.org.za.html [accessed: 2007-09-21]. statssa (statistics south africa). 2007. labour force survey, march 2007. [online] available from http://www.statssa.gov.za/publications/statkeyfindings.asp?ppn=p0210 &sch=4006.html [accessed: 2007-11-05] tchouvakhina, m. 2004. kfw and the promotion of entrepreneurship training in germany. higher education in europe, 29(2):233-237. terblanche, b. 2007 chop-chop gets the axe: mail and guardian comment. mail and guardian, september 7 to –13:7. uhlander, l. & thurik, r. 2007. postmaterialism influencing entrepreneurial activity across nations. journal of evolutionary economics. [online] available from: http://0-wwwspringerlink.com/html [accessed: 2007-08-08]. van aardt, i. & van aardt, c. 1997. enterprise and new venture management. johannesburg: international thompson publishing. van der walt, j.l. 2007. verbal telecommunication with author on 9 september. pretoria. (notes in authors’ possession.) van eeden, s., viviers, s. & venter, d. 2003. a comparative study of selected problems encountered by small businesses in the nelson mandela, cape town and egoli metropoles. management dynamics, 12(3):13–23. von broembsen, m. 2006. losing the entrepreneurship battle. business day, 15 march: 13. von broembsen, m., wood, e. & herrington, m. 2005. global entrepreneurship monitor: south african report. [online] available from: http://www3. babson.edu/ newsroom/releases/globalgem11206 release .cfm 38k –html [accessed: 2008-02-01]. williamson, i.o. 2000. employer legitimacy and recruitment success in small businesses. entrepreneurship theory and practice, 25(1):27–42. zikmund, w.g. 2003. business research methods.7th ed. london: thomson. abstract introduction literature review conceptual model and hypothesis development methodology results conclusion acknowledgements references about the author(s) watson munyanyi department of business management, college of business and economics, university of johannesburg, johannesburg, south africa david pooe department of business management, college of business and economics, university of johannesburg, johannesburg, south africa citation munyanyi, w. & pooe, d., 2019, ‘the influence of absorptive capacity and networking capabilities on small and medium enterprises’, southern african journal of entrepreneurship and small business management 11(1), a231. https://doi.org/10.4102/sajesbm.v11i1.231 original research the influence of absorptive capacity and networking capabilities on small and medium enterprises watson munyanyi, david pooe received: 10 dec. 2018; accepted: 20 june 2019; published: 07 oct. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: in response to the ever-growing complexity in the business environment that has resulted from the dramatic technological transformation, businesses have altered the way they conduct business. the influence of the external business environment is increasing in significance, rendering traditional methods of operating business outdated and forcing the adoption of new methods. objective: the aim of this study is to investigate how organisational capabilities influence small and medium enterprises’ (smes) operational performance (op), by specifically looking at absorptive capacity (acap), networking capabilities (ncs) and customer relational capabilities (crcs). setting: this study was conducted in zimbabwe and was spread across the 10 provinces, focusing on 388 randomly selected smes. methods: data were collected through self-administering questionnaires to respondents, using the drop-off or pickup technique and making telephonic follow-ups to increase the response rate. analysis of the data in this study was largely quantitative in nature and it was performed using a two-step structural equation modelling approach. results: the results of the study indicate that crcs lead both acap and ncs to improve op. conclusion: this study enlightens both smes’ managers and policymakers on the significance of capabilities, as opposed to resources, in the growth of the smes sector. in light of the results, it is imperative that firms orientate themselves to embrace networking and acap as central tenets of their day-to-day operations while attending to customers timely and innovatively. keywords: absorptive capacity; networking capabilities; customer relational capabilities; smalland medium-sized enterprises; sme; dynamic capabilities; dynamic capability theory. introduction the dramatic technological transformation and the ever-growing complexity in the global business landscape are transforming the way firms must conduct their business to remain competitive (mu et al. 2017:187). traditional methods of operating businesses are slowly becoming outdated and irrelevant, forcing firms to adopt new methods and business models. nowadays, business practitioners must recognise that organisational capabilities are significant in ensuring businesses remain competitive and that such capabilities provide both strategic and competitive advantage to the firm’s supply chains and clusters (garcía-sánchez, garcía-morales & martín-rojas 2018:354). a firm that possesses competencies or resources but lacks the dynamic capabilities may not be able to make it in the long run because it cannot sustain a sustainable competitive advantage (augier & teece 2009:412; nason & wiklund 2018:32). altering the business systems is equally important for small and medium enterprises (smes), because these are the engines of economic growth both in developed and developing countries and globally. they are sources of innovation and usually respond more quickly to market opportunities than large firms (coulibaly, erbao & mekongcho 2018:272). because smes lack abundant financial assets to assess their consumer needs effectively, they must rely on organisational capabilities to remain competitive and achieve superior performance (hsieh & chou 2018:84). in this context, investigating the influence of organisational capabilities on operational performance (op) in the context of smes in a developing country is highly relevant. this study sought to examine the effect of both absorptive capacity (acap) and networking capabilities (ncs) on smes’ op, mediated by customer relational capabilities (crcs) as a way of bringing the model closer to reality. the study contributes to the construction of existing literature by decomposing ncs and acap into four new sub-constructs that enable the identification of the exact source of the influence on op. it addresses some limitations of previous research by linking organisational capabilities to op as opposed to a more generalised firm performance which other researches have focused on. given the policy and managerial implications of the subject of organisational capabilities, an appreciation of the relationship between acap, ncs as predictors, crcs as the mediating variable and op as the outcome variable in smes, is necessary for socio-economic transformation. literature review over the years, attention and academic interest have increased regarding the notion of organisational capabilities, causing a rise in the approaches to and dimensions of these capabilities (chong tan, mavondo & worthington 2011:152). to understand the influence of both acap and ncs on the op of smes, it is imperative to understand what smes are and what each construct entails. small and medium enterprises small and medium enterprises connect with the greater percentage of a country’s population, and as a result they have become part of the societies in which they operate (kato & charoenrat 2018:578). in zimbabwe, as in many developing economies, the number of smes has increased drastically over the past three decades, owing to black empowerment and indigenous laws that the country adopted (nyangara 2013:219). small and medium enterprises also sprang up to fill the void that was left by large firms that had closed down as a result of the economic meltdown. research on smes in sub-saharan africa proves that smes account for at least 60% of the total number of businesses in the economy and contribute to gross domestic product and employment. tumwine et al. (2015:74) state that smes in zimbabwe are responsible for 35% of the gross domestic product and 54% of the private sector personnel employment. closer proximity to customers and suppliers tends to give them a competitive edge and degree of flexibility in operations compared to large firms (sulistyo & siyamtinah 2016:196). however, smes must be inventive and diligent in creating and solidifying their strategies to sustain their competitive advantage. this is largely because they do not enjoy the economies of scale that large firms enjoy (patel & jayaram 2014:35). owners and managers of small and medium enterprises must focus on improving their product offering to levels above their large firm competitors utilising firm-specific knowledge to create effective business processes and routines (zulu-chisanga et al. 2016:51). absorptive capacity one of the most important strategic assets of the firm, which is rooted in the firm’s processes, philosophy and human capital, and which is capable of creating additional capabilities and a competitive advantage, is knowledge (grant 1996:375; morabito 2013:32). existing literature has also acknowledged that the fundamental force behind a firm’s innovation, survival and growth has been the ability to apply commercial external knowledge, often referred to as acap. according to escribano, fosfuri and tribó (2009:101), acap refers to the set of knowledge-related capabilities entrenched within a firm’s routines and strategic processes, including the four dimensions, namely, knowledge acquisition, assimilation, transformation and exploitation. the underlying notion behind the acap construct is that prior related knowledge determines a firm’s ability to remain competitive (hart, gilstrap & bolino 2016:3986). this is further confirmed in the knowledge-based view of the firm, which is an extension of the resource-based view (rbv) and builds on the central role of knowledge in building a competitive edge. absorptive capacity of a firm does not play a leading role only in determining the magnitude and range of knowledge flows, but is an important driver of organisational activities (levi-jakšić, radovanović & radojičić 2013:254). a firm that fronts new knowledge is highly likely to succeed in responding to market changes, through recombining this knowledge with some market information (atuahene-gima, slater & olson 2005:476). the new knowledge relating to a firm’s acap often has a personal touch to it and must be preserved, implying that a firm must create knowledge repositories that are technology and organisational structure enabled (naqshbandi & jasimuddin 2018:703; xie, zou & qi 2018:291). networking capabilities in recent decades, empirical studies have established that interfirm networking and alliances are a strategic tool that can be used to support organisational performance. these network connections with business partners and stakeholders provide the firm with access to vital resources required for a competitive edge and endurance, given the turbulence in the business environment (cygler & sroka 2014:53). networking capabilities refer to a firm’s capacity to identify and create relevant and mutual relationships with business partners with the aim of exchanging critical resources and knowledge for the benefit of the organisation (bengesi & le roux 2014:190). it is an attractive strategic competence that new ventures should possess to gain access to vital external resources, available through business networks interaction (o’toole & mcgrath 2018:128). businesses form part of a network system where they interact commercially with other businesses and in these networks, they exchange goods, roles, ideas, technologies and resources (laage-hellman, landqvist & lind 2018:14). small and medium enterprises with strong nc are better positioned to exploit their structural positions in the network by gain knowledge and technical information, thereby strengthening their operational and innovation output (wang, chen & fang 2018:222). networking has been conceived as a multidimensional concept that involves the coordination of strategic relationships through the use of unique relational skills, partner knowledge and strong communication techniques (parida & örtqvist 2015:281). as the ventures grow, their main challenge evolves around strategising on how to maintain established business networks and resource structures in a business network (la rocca, ford & snehota 2013:1029). customer relational capabilities customer relational capabilities are entrenched in the firm’s ability to recognise beneficial customers and relational prospects, and to initiate and sustain them using attractive incentives so that it is able to leverage on these relationships for profits (morgan, vorhies & mason 2009:909; sigala 2018:2699). in today’s turbulent business environment, firms must recognise the centrality of, and invest in, customer relationship management (crm) as a strategy to manage and develop customer relationships (ascarza et al. 2018:66). the changing customer demands with regard to the quality and novelty of products exert pressure on firms to reorient themselves towards customers. traditionally, firms viewed customers explicitly as a source of sales and revenue, but the changes in the business setting have forced firms to acknowledge that customers are the icons that orientate and direct firm’s strategies (kim, kandampully & bilgihan 2018:248). businesses are progressively becoming aware that concentrating on transacting with customers alone is not enough, but there is a need to create and maintain long-term relationships with each individual customer (shafique et al. 2015:29). they have been pushed to participate in the search, appeal and retention of new and lost customers, while at the same time cultivating and holding on to their current customers (soltani & navimipour 2016:1052). hence, to keep pace with competition, smes must adjust their operational systems so that they are more flexible towards and compliant with customer expectations (alshura 2018:264; mansouri, singh & khan 2018:130). to create sustainable and beneficial customer relationships, businesses need to obtain external knowledge necessary in anticipating the changes in customer needs (hussain et al. 2018:960). according to alshura (2018:264), this construct is multifaceted, encompassing customer interface, relationship upgrading and win-back abilities. operational performance operational performance relates to the efficiency in the activities undertaken by the firm and such efficiencies relate to production cycle, delivery time, customer satisfaction, inventory management and forecasting accuracy (acar et al. 2017:707). owing to the socio-economic globalisation that is coupled with advances in technology, customer expectations have changed drastically, business settings have become more unpredictable and product life cycles have grown shorter. there are several dimensions of performance that a firm must consider to achieve competitive advantage and organisational success. however, there are three main dimensions of performance that are common in empirical literature which the firm should focus on, namely, financial performance, product performance and op (kafetzopoulos & psomas 2015:107). meanwhile, environmental changes have also become impulsive and unpredictable and under such circumstances, a firm must strike a balance between continuity and efficiency to ensure sustained profitability (maijanen & virta 2017:146; yu, cadeaux & luo 2015:190). operational performance becomes a core strategic competency necessary for survival and to achieve new competitive positions. attaining the best firm op requires superior production, marketing, management and supply-chain agility and an improvement in these may potentially improve the revenue and profits levels (kenyon, meixell & westfall 2016:336). conceptual model and hypothesis development this study is rooted in both the dynamic capabilities theory (dct), which stems from the rbv, and the network theory (nt). according to the dct, dynamic capabilities are those distinctive competencies that allow firms to respond to changes in the markets and determine the pace at which the firm aligns and realigns its resources to take advantage of the opportunities that arise in the business environment (teece 2014:8). the nt stipulates that the power of a network lies in its capacity to streamline complex network systems so that the partners in the network can understand better its function as a complete unit (holme 2015:234). these theories, coupled with a review of literature, led to the development of the conceptual model represented in figure 1. figure 1: conceptual model. absorptive capacity and customer relational capabilities over the years, knowledge management has been the focus of empirical research, especially in relation to its influence on firm’s competitive advantage. the knowledge acquisition and assimilation ability of a firm allows it to obtain vital environmental intelligence, hence they are a dynamic source of firm’s competitive advantage (lee et al. 2016:137). in today’s world, where customer needs are constantly changing, the knowledge management dimensions are vital for acquiring, assimilating, transforming and applying customer knowledge to create superior customer relations that are characterised by loyalty (rakthin, calantone & wang 2016:5571). absorptive capacity is necessary because it equips a firm to identify and understand external knowledge and how to use it to attract customers and come up with products that meet their expectations (tzokas et al. 2015:136). the firm’s ability to utilise newly gained knowledge effectively to develop new products and processes is limited because it is unable to develop and reconfigure such resources (najafi-tavani et al. 2018:4). it is evident, therefore, that the external knowledge that a firm gains through its acap is critical for the development of a firm’s crcs. in addition, the knowledge that the firm acquires about its customers and the processes the firm goes through to retain its customers are invaluable (cron et al. 2014:480). the arguments presented above lead to the following hypothesis: h1: there is a positive and significant relationship between acap and crcs. networking capabilities and customer relational capabilities an organisation’s nc has been defined as the firm’s capacity to initiate and exploit interfirm alliances to its own strategic advantage. stronger network management activities will help the firm to clarify customer-specific requirements, upon which the firm can develop solutions ahead of competition (möller & halinen 2017:6). therefore, ncs enable a firm to progress beyond its traditional catchments, gain and manage new customer relations and ultimately create a superior web of commercial relationships. it is therefore appropriate to conclude that to deliver successfully on customer expectations firms need to steer up their ability to network with their strategic partners (mu et al. 2017:187). access to knowledge and information enables a firm to enhance its ability to acquire, assimilate, transform and exploit customer-related knowledge; and for long-term customers, personal knowledge is particularly valuable (berkhout, hartmann & trott 2010:474; nguyen, paswan & dubinsky 2018:127). in terms of interactions with customers, smes have the upper hand over large firms because generally they have a small and limited customer base. this entails a shorter line of communication with customers, and in most cases the owner knows most customers personally. therefore, possessing a higher degree of network capability endowment allows smes to relate better with the other actors in a business network (o’toole & mcgrath 2018:129), hence the following hypothesis: h2: there is a positive and significant relationship between ncs and crcs. customer relational capabilities and operational performance because of the developments in the global market, among them an increase in global competition, firms must constantly refine their capabilities to maintain industrial sustainability and competitiveness (gutierrez-gutierrez, barrales-molina & kaynak 2018:44; roy, lampert & stoyneva 2018:261). in the contemporary business environment, firms must now deal with an increased number of rival firms, so responding quickly to customer needs and establishing satisfactory relationships with them are critical for maintaining an edge over competition (chang, wong & fang 2014:146). empirical research has demonstrated that superior crm significantly improves the performance of the firm, consequently creating ancillary benefits in the form of improved overall firm performance (josiassen, assaf & cvelbar 2014:134; keramati, mehrabi & mojir 2010:1171; wang & kim 2017:21). for instance, customer satisfaction and loyalty are vital ingredients for enhancing several aspects of firm performance such as product performance, thus providing a platform for competitive advantages (rapp, trainor & agnihotri 2010:1229). therefore, a firm with solid customer-orientated capabilities is better placed to create value for their customers, and via the customer the firm maximises its value (landroguez, castro & cepeda-carrion 2018:1141). based on these arguments, the following hypothesis is made: h3: there is a positive and significant relationship between crcs and op. methodology this study adopted a positivist paradigm, and a quantitative approach to data analysis was mainly used to ensure that the objectives of the study were met. a cross-sectional survey research design was used in the quest to understand the cause–effect relationship between the predictor and outcome variables without experimental manipulation (babbie & mouton 2001:335). this research design was chosen because it allows the researcher to answer the ‘what’, ‘who’ and ‘how much’ research questions (bryman & bell 2015:31). study participants according to margaretha and supartika (2016:132), an sme is an independently owned business entity that holds a relatively small market share, usually managed by its owners or part owners. the main factors distinguishing smes from large corporations are the number of employees and the annual turnover (smit & watkins 2012:6325), and these were primarily considered in this study. this study was conducted in zimbabwe and was spread across the 10 provinces while focusing on smes that were listed on the small and medium enterprises association of zimbabwe (smeaz) website. the smeaz is a non-profit-making organisation that champions the cause of smes in zimbabwe, and assists in issues to do with capital formation, training and development. the smeaz had in total 1674 smes in their online directory available on their website, and these formed the sampling frame. the decision to focus on these smes was influenced by the consideration that the smes listed are easily observable and have a visible indication of economic activity. because of the diversity in the sampling frame, the study ended up with a multi-sectoral scope, covering most of the sectors of the economy, including retail, manufacturing, tourism, agriculture and transport. to select the participants, simple random sampling was used, involving random picking of respondents from a sampling frame. this procedure was chosen primarily because it ensures that all the units in the sampling frame have an equal opportunity to be selected. a sample of 837 participants was drawn using the randomizer software, where each sme was allocated from 1 to 1674 and the software selected numbers randomly. of the 837 questionnaires distributed, 388 were collected and deemed duly completed to be included for analysis. this study was carried out between 2016 and 2018, and table 1 shows the demographic characteristics of sample firms. table 1: demographics of the sample firms. the profile of respondents in this study, and their firms, showed that most of them were in the retail sector (26.3%), which was followed by the manufacturing sector with 21.4% of the total respondents. this data suggests that the most prominent activity in the zimbabwean economy is retailing, although there is evidence of significant small-scale manufacturing. around 52.6% of the responding firms had fewer than 50 employees, while 17.01% had more than 151 employees. this can be taken as an indicator that firms are keeping operational costs low by streamlining their labour. with regard to annual turnover, 37.4% (145 firms) were below $5000.00, with only 19.3% indicating that their annual turnover was above $15 000.00. finally, the majority of responding firms (42.3%; 164 firms) had been in business for less than 5 years, while the least number of respondents (106 firms) had had more than 10 years in business. measurement instrument and data collection in preparation for construct item generation, extensive review of theoretical and empirical literature on organisational capabilities and op was conducted. absorptive capacity sub-constructs and items were adapted from the work of tavani, sharifi and ismail (2014), and those on ncs were drawn from an instrument by parida and örtqvist (2015). sub-constructs and items were sourced from the work of yu et al. (2018). the participants were asked four questions per sub-construct, with responses on a five-point likert scale, ranging from ‘1 = strongly disagree’ to ‘5 = strongly agree’. in this study, a questionnaire was used as the data collection instrument. a questionnaire is a document that consists of a set of questions designed explicitly for the collection of data from respondents reliably (bhattacherjee 2012:74). the decision to make use of a questionnaire was motivated by the fact that it is easy to administer, given the many respondents in this study. because of the study objectives, a questionnaire was deemed suitable for the collection of appropriate research data. data were collected through self-administering questionnaires to respondents, using the drop-off/pickup technique and making telephonic follow-ups to increase the response rate. this technique is grounded on the social exchange theory, which posits that personal exchanges kindle reciprocity, which improves the likelihood that a respondent will take part in a survey (dillman, smyth & christian 2014:217). this technique was also chosen because it presented the researcher with an opportunity to explain the research thrust and questions to the respondents, which aided in reducing non-responses. statistical analysis methods the analysis of data in this study were largely quantitative in nature and it was performed using a two-step structural equation modelling (sem) approach. the two-step sem was adopted in data analysis following the recommendations of anderson and gerbing (1988:411), who suggest that a confirmatory factor analysis (cfa) be carried out to test the validity and reliability of the measurement model rigorously before structural path analysis. after the measurement was deemed solid, the structural equation model was then applied to test the acceptability of the research hypotheses. all analyses were conducted using the spss 24.0 and amos 24.0 statistical packages. according to nimako, kwesi and owusu (2014:42), the use of computer-based statistical packages such as spss and amos has become critically essential in business and social research because of their ability to process a high volume of data and their speed and level of accuracy in computational analysis when compared to manual systems. ethical consideration this article followed all ethical standards for a research without direct contact with human or animal subjects. results internal consistency and validity of the measurement instrument internal consistency and validity are two essential measures in evaluating measurement instruments. internal consistency focuses on evaluating the capacity of an instrument to construct measure aspects relating to a construct, while validity relates to the extent to which an instrument measures what it is supposed to measure (tavakol & dennick 2011:51). in a quantitative research, cfa is conducted to confirm reliability and validity. internal consistency refers to the extent to which the several items relating to a construct correlate (sekaran & bougie 2003:162). composite reliability (cr) and the cronbach’s α are the tests usually employed to assess internal consistency (bryman & bell 2007:164). the cr statistic informs both on the reliability and internal consistency of a construct. the minimum recommended values for cr scores that indicate reliability and consistency should be over 0.7 (hair et al. 2010:664). also, a value of 0.7 or more for the α is considered as indicating consistency. more precisely, the generally accepted guiding principles indicate that an α of 0.90 and above indicates high reliability, below 0.90 but above 0.80 moderate reliability and above 0.70 but below 0.80 low reliability (cronbach 1951:298). consequently, the researcher evaluated the reliability of sub-constructs separately. the acap construct had four sub-constructs meant to cover likely dimensions of the construct. this construct showed an α value of 0.831, which was enough to reflect reliability because it is above the threshold of α = 0.7. the nc construct also consisted of four sub-constructs and the construct showed a cronbach’s α = 0.882. the crc construct, with four sub-constructs, also showed enough internal consistency and at α = 0.843. the four sub-constructs of op showed a reliability of α = 0.865. overall, enough internal consistency and reliability was confirmed (table 2). table 2: firstand second-order confirmatory factor analysis for independent and dependent variables. convergent validity is measured in terms of the degree to which measures of a specific construct converge a high percentage of variance in common (ramon-jeronimo, florez-lopez & ramon-jeronimo 2017:1503). it explains the extent to which a scale correlates with other measures of the same construct in the same direction. the assessment of convergent validity is done using the cr and average variance extracted (ave) and a common threshold is cr values greater than 0.7 and ave values above 0.5. in this study, all constructs hold acceptable convergent validity, as shown in table 2, where all cr (ρc) values are above 0.7 and ave values above 0.5, as advocated for by hair et al. (2017:620). conventionally, the measurement instrument’s discriminant validity is evaluated by comparing the constructs’ correlation coefficients and the square root value of ave. an evaluation of discriminant validity using the examination of the criterion (fornell-larcker 1981:45), showed that the root square of variables’ ave value is higher than the correlation of all constructs. this led to the conclusion that all constructs had enough discriminant validity, implying that the study instrument is valid. also, once convergent and discriminant validity have been established, the structural model is considered valid for assessment (hair et al. 2017:629) (table 3). table 3: means and correlations (n = 388). measurement model assessment after successfully evaluating the constructs for their contribution to the overall model, it became necessary to evaluate how well the model fits the observed data. the goodness of fit of a measurement model describes how well the model fits a set of observations and typically summarises the variations between observed values. traditionally, goodness of fit has been evaluated using the chi-square statistic, although it has been criticised for its high sensitivity to the model size, distribution of variables and sample size, creating the possibility of rejecting a valid model erroneously (bentler & bonnet 1980:589). fortunately, the chi-square or degrees of freedom ratio in this study was acceptable at 1.968. the comparative fit index (cfi) and the root mean square error of approximation (rmsea) were also employed to evaluate goodness of fit, and additionally to counter the weaknesses of the chi-square or degrees of freedom ratio. the cfi was made popular by bentler (1990:238) as a modification of the relative noncentrality index (rni), meant to evade the underestimation of goodness of fit in smaller samples. for fitness to be confirmed, cfi values should range from 0 to 1 with bigger values representing a better model (hu & bentler 1999:3). as such, this model showed satisfactory fit as the cfi value was 0.952. the rmsea is a measure that reflects the extent of misfit in a proposed measurement model (browne & cudeck 1993:136). root mean square error of approximation values are between 0 and 1 with satisfactory model fit being achieved by an rmsea value of 0.06 or less (hu & bentler 1999:3). in this study, the rmsea is 0.050, hence good. after a series of goodness of fit tests, the model was regarded as fit in terms of its relation to the observed variables. structural equation modelling: hypotheses testing in sem, structural equations are used, and the coefficients that describe the direction and depth of the relationship between the independent and dependent variables are path coefficients (sharma & govindaluri 2014:161). the sem framework allows the researcher to test the hypotheses proposed in the conceptual model in a manner that simultaneously corrects dilution caused by unreliability (maccallum & austin 2000:201; preacher 2006:523), and also offers a broader method for accounting for missing data, thereby ensuring that the results are more reliable (graafland 2018:275) (table 4). table 4: result of the hypotheses testing. the sem result reveals that acap has a positive and significant influence on crcs (β = 0.821, p ˂ 0.001). these results mean that h1 stands accepted because it is supported by empirical evidence. absorptive capacity is the predictor variable that has the largest impact on crc. the findings are somewhat consistent with cron et al. (2014:488), who argue that acquiring knowledge about a firm’s customers is central to retaining customers and competitiveness. h2 stipulated that there is a positive and significant relationship between ncs and crcs. the results of this study confirm this relationship as the path coefficient was 0.435 at the 0.001 level of significance. in a related, but not identical, study, mu et al. (2017:188) came to similar conclusions that to deliver on customer expectations successfully, firms need to interact and connect with their stakeholders. with regard to the third hypothesis in this study, the path coefficient was 0.754, indicating that the hypothesis was supported. these results are in tandem with josiassen et al. (2014:136), who found that superior crm significantly improves the overall performance of the firm, although the study did not focus on op. conclusion from a dynamic capability and a network perspective, this study empirically examined the relationships between acap, ncs, crcs and op in smes. the research findings support the propositions of both the dct and the nt, which are the theories that underpinned this study. the study increases understanding on the concept of organisational capabilities and particularly their effect on op in smes, a research setting that has partial and inconclusive researches. it therefore partially fills the gap in literature on capabilities and op. stemming from the results of sem, a positive relationship was found between relationships proposed in the conceptual model. customer relational capabilities lead both acap and ncs to improved op. the theoretical outline that was created aids in concluding that better product quality, cost efficiency, operational flexibility and improved delivery time are a direct result of improved crcs, which are attained through an engagement of the firm’s acap and networking abilities. apparently, a firm with a superior knowledge management and ncs is better positioned to improve its crm skills which in turn, can enhance its op. when networking and knowledge management capabilities are in the mainstream of the firm’s operations and strategy, it manages well its customer relations, leading to superior product quality, productivity, operational flexibility and better delivery. this study enlightens both smes’ managers and policymakers on the significance of capabilities, as opposed to resources, in the growth of the smes’ sector. government ought to introduce programmes that promote owner–managers’ capabilities in the utilisation of external knowledge and networks to manage relations with customer relations and achieve superior op. managerial implications in general, the success of this study centres the value and practicality of the managerial commendations made. small and medium enterprises usually do not possess abundant resources to finance growth and must rely on intellectual capital to improve firm performance (mcdowell et al. 2018:326). considering the research findings and conclusions, sme owners and managers are encouraged to recognise and prioritise organisational capabilities as antecedents of better op. because smes operate in a turbulent business environment, assuming a working model that moves away from resource orientation to one that is powered by a combination of organisational capabilities like ncs and acap would lead to improved op. the rate of response and ability to adjust to market changes will enable smes to leverage on the advantages of being small, and innovate to competitiveness (leal-rodríguez & albort-morant 2016:40). the overall implication of this is that when managers are faced with a strategic decision-making situation, they must not undermine the significance of organisational capabilities. small and medium enterprises often heavily invest in intellectual capital through employees and hence can leverage on such investments to improve their operations (maes & sels 2014:143). it is also imperative that smes should orient their employees to embrace networking and acap as central tenets of their day-to-day operations while attending to customers timeously and innovatively. in addition, managers should come up with tailor-made capabilities indices that will be used to evaluate the level of organisation capabilities appreciation within the firm. these staff appraisal tools will be useful as barometers for the evaluation of the general level of absorptive, networking and crcs within the firm. adopting the recommendations from this study will be more advantageous to smes in zimbabwe because the economic situation in the country does not allow them to rely on resource abundancy. limitations and future research notwithstanding the theoretical and managerial contributions, the study has its limitations. the study was quantitative in approach and while there are advantages to this approach, it fails to capture some vital aspects such as perceptions and emotions which could have been captured if the approach had been blended with a qualitative approach and techniques such as interviews and content analysis. as such, the study would have attained richness by employing mixed methods, where research methods complement each other, and this is the direction future studies should take. in addition, sem, which was employed in this study, has been criticised for failing to completely validate causality as it can only propose tentative causal inferences (graafland 2018:275). these methodological insufficiencies reduce the overall generalisability of the research findings, and to address these limitations, future researches should re-evaluate the relationships in this study using other approaches and techniques. despite the limitations mentioned, the insights brought about by this study are enough to stimulate further research on organisational capabilities and op. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. author’s contributions the article is based on w.m.’s phd thesis. d.p. was the supervisor of the phd project. funding this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references acar, m.f., tarim, m., zaim, h., zaim, s. & delen, d., 2017, ‘knowledge management and erp: complementary or contradictory?’, international journal of information management 37(6), 703–712. https://doi.org/10.1016/j.ijinfomgt.2017.05.007 alshura, m.s., 2018, ‘customer relationship management (crm) capabilities & building a sustainable competitive advantage in mobile phone operators in jordan’, international journal of business and management 13(3), 262. https://doi.org/10.5539/ijbm.v13n3p262 anderson, j.c. & gerbing, d.w., 1988, ‘structural equation modeling in practice: a review and recommended two-step approach’, psychological bulletin 103(3), 411–423. https://doi.org/10.1037//0033-2909.103.3.411 ascarza, e., neslin, s.a., netzer, o., anderson, z., fader, p.s., gupta, s. et al., 2018, ‘in pursuit of enhanced customer retention management: review, key issues, and future directions’, customer needs and solutions 5(1–2), 65–81. https://doi.org/10.1007/s40547-017-0080-0 atuahene-gima, k., slater, s.f. & olson, e.m., 2005, ‘the contingent value of responsive and proactive market orientations for new product program performance’, journal of product innovation management 22(6), 464–482. https://doi.org/10.1111/j.1540-5885.2005.00144.x augier, m. & teece, d.j., 2009, ‘dynamic capabilities and the role of managers in business strategy and economic performance’, organization science 20(2), 410–421. https://doi.org/10.1287/orsc.1090.0424 babbie, e. & mouton, j., 2001, the practice of social research, oxford university press, cape town. bengesi, k.m. & le roux, i., 2014, ‘strategic entrepreneurial response of small and medium enterprises in developing economies’, international journal of business and management 9(2), 153. https://doi.org/10.5539/ijbm.v9n2p153 bentler, p.m., 1990, ‘comparative fit indexes in structural models’, psychological bulletin 107(2), 238–246. https://doi.org/10.1037//0033-2909.107.2.238 bentler, p.m. & bonnet, d.c., 1980, ‘significance tests and goodness of fit in the analysis of covariance structures’, psychological bulletin 88(3), 588–606. https://doi.org/10.1037//0033-2909.88.3.588 berkhout, g., hartmann, d. & trott, p., 2010, ‘connecting technological capabilities with market needs using a cyclic innovation model’, r&d management 40(5), 474–490. https://doi.org/10.1111/j.1467-9310.2010.00618.x bhattacherjee, a., 2012, social science research: principles, methods, and practices, university of south florida, south florida. browne, m.w. & cudeck, r., 1993, ‘alternative ways of assessing model fit’, sage focus editions 154, 136–136. bryman, a. & bell, e., 2007, business research methods, oxford university press, new york, ny. bryman, a. & bell, e., 2015, business research methods, oxford university press, new york, ny. chang, h.h., wong, k.h. & fang, p.w., 2014, ‘the effects of customer relationship management relational information processes on customer-based performance’, decision support systems 66(1), 146–159. https://doi.org/10.1016/j.dss.2014.06.010 chong tan, y., mavondo, f. & worthington, s., 2011, ‘organisational capabilities and relationship quality: performance implications for palm oil processors in malaysia’, asia pacific journal of marketing and logistics 23(2), 152–164. https://doi.org/10.1108/13555851111120461 coulibaly, s.k., erbao, c. & mekongcho, t.m., 2018, ‘economic globalization, entrepreneurship, and development’, technological forecasting and social change 127(1), 271–280. https://doi.org/10.1016/j.techfore.2017.09.028 cron, w.l., baldauf, a., leigh, t.w. & grossenbacher, s., 2014, ‘the strategic role of the sales force: perceptions of senior sales executives’, journal of the academy of marketing science 42(5), 471–489. https://doi.org/10.1007/s11747-014-0377-6 cronbach, l.j., 1951, ‘coefficient alpha and the internal structure of tests’, psychometrika 16(3), 297–334. https://doi.org/10.1007/bf02310555 cygler, j. & sroka, w., 2014, ‘structural pathologies in inter-organizational networks and their consequences’, procedia-social and behavioral sciences 110(24), 52–63. https://doi.org/10.1016/j.sbspro.2013.12.847 dillman, d.a., smyth, j.d. & christian, l.m., 2014, internet, phone, mail, and mixed-method surveys: the tailored design method, john wiley, boston, ma. escribano, a., fosfuri, a. & tribó, j.a., 2009, ‘managing external knowledge flows: the moderating role of absorptive capacity’, research policy 38(1), 96–105. https://doi.org/10.1016/j.respol.2008.10.022 fornell, c. & larcker, d.f., 1981, ‘structural equation models with unobservable variables and measurement error: algebra and statistics’, journal of marketing research 18(3), 382–388. https://doi.org/10.1177/002224378101800313 garcía-sánchez, e., garcía-morales, v.j. & martín-rojas, r., 2018, ‘analysis of the influence of the environment, stakeholder integration capability, absorptive capacity, and technological skills on organizational performance through corporate entrepreneurship’, international entrepreneurship and management journal 14(2), 345–377. https://doi.org/10.1007/s11365-017-0436-9 graafland, j.j., 2018, ‘ecological impacts of the iso14001 certification of small and medium sized enterprises in europe and the mediating role of networks’, journal of cleaner production 174(1), 273–282. https://doi.org/10.1016/j.jclepro.2017.10.322 grant, r.m., 1996, ‘prospering in dynamically-competitive environments: organizational capability as knowledge integration’, organization science 7(4), 375–387. https://doi.org/10.1287/orsc.7.4.375 gutierrez-gutierrez, l.j., barrales-molina, v. & kaynak, h., 2018, ‘the role of human resource-related quality management practices in new product development: a dynamic capability perspective’, international journal of operations & production management 38(1), 43–66. https://doi.org/10.1108/ijopm-07-2016-0387 hair, j.f., black, w.c., babin, b.j., anderson, r.e. & tatham, r.l., 2010, multivariate data analysis: a global perspective, pearson education, new jersey. hair, j.f., hult, g.t.m., ringle, c.m., sarstedt, m. & thiele, k.o., 2017, ‘mirror, mirror on the wall: a comparative evaluation of composite-based structural equation modeling methods’, journal of the academy of marketing science 45(5), 616–632. https://doi.org/10.1007/s11747-017-0517-x hart, t.a., gilstrap, j.b. & bolino, m.c., 2016, ‘organizational citizenship behavior and the enhancement of absorptive capacity’, journal of business research 69(10), 3981–3988. https://doi.org/10.1016/j.jbusres.2016.06.001 holme, p., 2015, ‘modern temporal network theory: a colloquium’, the european physical journal b 88(9), 234–267. https://doi.org/10.1140/epjb/e2015-60657-4 hsieh, y.h. & chou, y.h., 2018, ‘modeling the impact of service innovation for small and medium enterprises: a system dynamics approach’, simulation modelling practice and theory 82(1), 84–102. https://doi.org/10.1016/j.simpat.2017.12.004 hu, l.t. & bentler, p.m., 1999, ‘cutoff criteria for fit indexes in covariance structure analysis: conventional criteria versus new alternatives’, structural equation modeling: a multidisciplinary journal 6(1), 1–55. https://doi.org/10.1080/10705519909540118 hussain, j., shah, f.a., rehman, w. & khan, y., 2018, ‘learning orientation and performance: the interaction effect of entrepreneurial orientation’, pakistan business review 19(4), 960–977. josiassen, a., assaf, a.g. & cvelbar, l.k., 2014, ‘crm and the bottom line: do all crm dimensions affect firm performance?’, international journal of hospitality management 36(1), 130–136. https://doi.org/10.1016/j.ijhm.2013.08.005 kafetzopoulos, d. & psomas, e., 2015, ‘the impact of innovation capability on the performance of manufacturing companies: the greek case’, journal of manufacturing technology management 26(1), 104–130. https://doi.org/10.1108/jmtm-12-2012-0117 kato, m. & charoenrat, t., 2018, ‘business continuity management of small and medium sized enterprises: evidence from thailand’, international journal of disaster risk reduction 27(1), 577–587. https://doi.org/10.1016/j.ijdrr.2017.10.002 kenyon, g.n., meixell, m.j. & westfall, p.h., 2016, ‘production outsourcing and : an empirical study using secondary data’, international journal of production economics 171(p3), 336–349. https://doi.org/10.1016/j.ijpe.2015.09.017 keramati, a., mehrabi, h. & mojir, n., 2010, ‘a process-oriented perspective on customer relationship management and organizational performance: an empirical investigation’, industrial marketing management 39(7), 1170–1185. https://doi.org/10.1016/j.indmarman.2010.02.001 kim, s., kandampully, j. & bilgihan, a., 2018, ‘the influence of ewom communications: an application of online social network framework’, computers in human behavior 80(1), 243–254. https://doi.org/10.1016/j.chb.2017.11.015 la rocca, a., ford, d. & snehota, i., 2013, ‘initial relationship development in new business ventures’, industrial marketing management 42(7), 1025–1032. https://doi.org/10.1016/j.indmarman.2013.07.001 laage-hellman, j., landqvist, m. & lind, f., 2018, ‘business creation in networks: how a technology-based start-up collaborates with customers in product development’, industrial marketing management 70(1), 13–24. https://doi.org/10.1016/j.indmarman.2017.07.009 landroguez, s.m., castro, c.b. & cepeda-carrion, g., 2018, ‘creating dynamic capabilities to increase customer value’, management decision 56(7), 1141–1660. leal-rodríguez, a. & albort-morant, g., 2016, ‘linking market orientation, innovation and performance: an empirical study on small industrial enterprises in spain’, journal of small business strategy 26(1), 37–50. lee, v.h., foo, a.t.l., leong, l.y. & ooi, k.b., 2016, ‘can competitive advantage be achieved through knowledge management? a case study on smes’, expert systems with applications 65(1), 136–151. https://doi.org/10.1016/j.eswa.2016.08.042 levi-jakšić, m., radovanović, n. & radojičić, z., 2013, ‘absorptive capacity constituents in knowledge-intensive industries in serbia’, zbornik radova ekonomskog fakulteta u rijeci: časopis za ekonomsku teoriju i praksu 31(2), 253–278. maccallum, r.c. & austin, j.t., 2000, ‘applications of structural equation modeling in psychological research’, annual review of psychology 51(1), 201–226. maes, j. & sels, l., 2014, ‘smes’ radical product innovation: the role of internally and externally oriented knowledge capabilities’, journal of small business management 52(1), 141–163. https://doi.org/10.1111/jsbm.12037 margaretha, f. & supartika, n., 2016, ‘factors affecting profitability of small medium enterprises (smes) firm listed in indonesia stock exchange’, journal of economics, business and management 4(2), 132–137. maijanen, p. & virta, s., 2017, ‘managing exploration and exploitation in a media organisation: a capability-based approach to ambidexterity’, journal of media business studies 14(2), 146–165. https://doi.org/10.1080/16522354.2017.1290025 mansouri, a.a.a., singh, s.k. & khan, m., 2018, ‘role of organisational culture, leadership and organisational citizenship behaviour on knowledge management’, international journal of knowledge management studies 9(2), 129–143. https://doi.org/10.1504/ijkms.2018.091249 mcdowell, w.c., peake, w.o., coder, l. & harris, m.l., 2018, ‘building small firm performance through intellectual capital development: exploring innovation as the “black box”’, journal of business research 88(1), 321–327. https://doi.org/10.1016/j.jbusres.2018.01.025 möller, k. & halinen, a., 2017, ‘managing business and innovation networks: from strategic nets to business fields and ecosystems’, industrial marketing management 67(1), 5–22. https://doi.org/10.1016/j.indmarman.2017.09.018 morabito, v., 2013 ‘organizational absorptive capacity and the use of information’, in v. morabito (ed.), business technology organization: managing digital information technology for value creation the sigma approach, pp. 129–142, springer, berlin, heidelberg. morgan, n.a., vorhies, d.w. & mason, c.h., 2009, ‘market orientation, marketing capabilities, and firm performance’, strategic management journal 30(8), 909–920. https://doi.org/10.1002/smj.764 mu, j., thomas, e., peng, g. & di benedetto, a., 2017, ‘strategic orientation and new product development performance: the role of networking capability and networking ability’, industrial marketing management 64(1), 187–201. https://doi.org/10.1016/j.indmarman.2016.09.007 najafi-tavani, s., najafi-tavani, z., naudé, p., oghazi, p. & zeynaloo, e., 2018, ‘how collaborative innovation networks affect new product performance: product innovation capability, process innovation capability, and absorptive capacity’, industrial marketing management 73(1), 193–205. https://doi.org/10.1016/j.indmarman.2018.02.009 naqshbandi, m.m. & jasimuddin, s.m., 2018, ‘knowledge-oriented leadership and open innovation: role of knowledge management capability in france-based multinationals’, international business review 27(3), 701–713. https://doi.org/10.1016/j.ibusrev.2017.12.001 nason, r.s. & wiklund, j., 2018, ‘an assessment of resource-based theorizing on firm growth and suggestions for the future’, journal of management 44(1), 32–60. https://doi.org/10.1177/0149206315610635 nguyen, t.d., paswan, a. & dubinsky, a.j., 2018, ‘allocation of salespeople’s resources for generating new sales opportunities across four types of customers’, industrial marketing management 68(1), 114–131. https://doi.org/10.1016/j.indmarman.2017.10.006 nimako, s.g., kwesi, f.b. & owusu, e.k., 2014, ‘the impact of pls-sem training on faculty staff intention to use pls software in a public university in ghana’, international journal of business and economics research 3(2), 42–49. nyangara, d., 2013, ‘sme lending: do lending technologies matter? sample evidence from zimbabwe’, world review of business research 3(4), 219–230. o’toole, t. & mcgrath, h., 2018, ‘strategic patterns in the development of network capability in new ventures’, industrial marketing management 70(1), 128–140. https://doi.org/10.1016/j.indmarman.2017.07.003 parida, v. & örtqvist, d., 2015, ‘interactive effects of network capability, ict capability, and financial slack on technology-based small firm innovation performance’, journal of small business management 53(1), 278–298. https://doi.org/10.1111/jsbm.12191 patel, p.c. & jayaram, j., 2014, ‘the antecedents and consequences of product variety in new ventures: an empirical study’, journal of operations management 32(1), 34–50. https://doi.org/10.1016/j.jom.2013.07.002 preacher, k.j., 2006 ‘quantifying parsimony in structural equation modeling’. multivariate behavioral research 41(3), 227–259. rakthin, s., calantone, r.j. & wang, j.f., 2016, ‘managing market intelligence: the comparative role of absorptive capacity and market orientation’, journal of business research 69(12), 5569–5577. https://doi.org/10.1016/j.jbusres.2016.03.064 ramon-jeronimo, j.m., florez-lopez, r. & ramon-jeronimo, m.a., 2017, ‘understanding the generation of value along supply chains: balancing control information and relational governance mechanisms in downstream and upstream relationships’, sustainability 9(1), 1487–1518. http://doi.org/10.3390/su9081487 rapp, a., trainor, k.j. & agnihotri, r., 2010, ‘performance implications of customer-linking capabilities: examining the complementary role of customer orientation and crm technology’, journal of business research 63(11), 1229–1236. https://doi.org/10.1016/j.jbusres.2009.11.002 roy, r., lampert, c.m. & stoyneva, i., 2018, ‘when dinosaurs fly: the role of firm capabilities in the ‘avianization’ of incumbents during disruptive technological change’, strategic entrepreneurship journal 12(2), 261–284. https://doi.org/10.1002/sej.1278 sekaran, u. & bougie, r., 2003, research methods for business: a skill building approach, 5th edn., john wiley & sons, inc., new york, ny. shafique, m.n., ahmad, n., abbas, h. & hussain, a., 2015, ‘the impact of customer relationship management capabilities on organizational performance; moderating role of competition intensity’, arabian journal of business and management review (nigerian chapters) 3(3), 28–47. https://doi.org/10.12816/0014506 sharma, s.k. & govindaluri, s.m., 2014, ‘internet banking adoption in india: structural equation modeling approach’, journal of indian business research 6(2), 155–169. https://doi.org/10.1108/jibr-02-2013-0013 sigala, m., 2018, ‘implementing social customer relationship management: a process framework and implications in tourism and hospitality’, international journal of contemporary hospitality management 30(7), 2698–2726. https://doi.org/10.1108/ijchm-10-2015-0536 smit, y. & watkins, j.a., 2012, ‘a literature review of small and medium enterprises (sme) risk management practices in south africa’, african journal of business management 6(21), 6324–6330. soltani, z. & navimipour, n.j., 2016, ‘customer relationship management mechanisms: a systematic review of the state of the art literature and recommendations for future research’, computers in human behavior 61(1), 667–688. https://doi.org/10.1016/j.chb.2016.03.008 sulistyo, h. & siyamtinah, s., 2016, ‘innovation capability of smes through entrepreneurship, marketing capability, relational capital and empowerment’, asia pacific management review 21(4), 196–203. https://doi.org/10.1016/j.apmrv.2016.02.002 tavakol, m. & dennick, r., 2011, ‘making sense of cronbach’s alpha’, international journal of medical education 2(1),53–55. https://doi.org/10.5116/ijme.4dfb.8dfd tavani, s.n. sharifi, h. & ismail, h.s., 2014 ‘a study of contingency relationships between supplier involvement, absorptive capacity and agile product innovation’, international journal of operations & production management 34(1), 65–92. teece, d.j., 2014, ‘a dynamic capabilities-based entrepreneurial theory of the multinational enterprise’, journal of international business studies 45(1), 8–37. https://doi.org/10.1057/jibs.2013.54 tumwine, s., akisimire, r., kamukama, n. & mutaremwa, g., 2015, ‘a borrowing cost model for effective performance of smes in uganda’, world journal of entrepreneurship, management and sustainable development 11(2), 74–89. https://doi.org/10.1108/wjemsd-03-2014-0009 tzokas, n., kim, y.a., akbar, h. & al-dajani, h., 2015, ‘absorptive capacity and performance: the role of customer relationship and technological capabilities in high-tech smes’, industrial marketing management 47(1), 134–142. https://doi.org/10.1016/j.indmarman.2015.02.033 wang, m.c., chen, p.c. & fang, s.c., 2018, ‘a critical view of knowledge networks and innovation performance: the mediation role of firms’ knowledge integration capability’, journal of business research 88(1), 222–233. https://doi.org/10.1016/j.jbusres.2018.03.034 wang, z. & kim, h.g., 2017, ‘can social media marketing improve customer relationship capabilities and firm performance? dynamic capability perspective’, journal of interactive marketing 39(1), 15–26. https://doi.org/10.1016/j.intmar.2017.02.004 xie, x., zou, h. & qi, g., 2018, ‘knowledge absorptive capacity and innovation performance in high-tech companies: a multi-mediating analysis’, journal of business research 88(1), 289–297. https://doi.org/10.1016/j.jbusres.2018.01.019 yu, k., cadeaux, j. & luo, b.n., 2015, ‘operational flexibility: review and meta-analysis’, international journal of production economics 169(1), 190–202. https://doi.org/10.1016/j.ijpe.2015.07.035 yu, k., luo, b.n., feng, x. & liu, j., 2018, ‘supply chain information integration, flexibility, and : an archival search and content analysis’, the international journal of logistics management 29(1), 340–364. zulu-chisanga, s., boso, n., adeola, o. & oghazi, p., 2016, ‘investigating the path from firm innovativeness to financial performance: the roles of new product success, market responsiveness, and environment turbulence’, journal of small business strategy 26(1), 51–68. abstract introduction literature review methodology discussion conclusions and recommendations acknowledgements references appendix 1 footnote about the author(s) bridget n.o. irene cardiff school of management, cardiff metropolitan university, united kingdom citation irene, b.n.o., 2017, ‘women entrepreneurship in south africa: understanding the role of competencies in business success’, southern african journal of entrepreneurship and small business management 9(1), a121. https://doi.org/10.4102/sajesbm.v9i1.121 original research women entrepreneurship in south africa: understanding the role of competencies in business success bridget n.o. irene received: 26 jan. 2017; accepted: 15 may 2017; published: 27 sept. 2017 copyright: © 2017. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background and aim: environmental factors alone cannot determine the success of small, medium and micro-sized enterprises (smmes) and female entrepreneurs; there is a need to closely examine the internal factors that also contribute to business success. this is necessary because, despite the considerable government support and support of bodies interested in promoting gender equality in all areas (business included), 20% of female-owned businesses still fail annually. consequently, even though, according to a report from the department of trade and industry in south africa, millions of rands have been allocated to support female-owned smmes by way of government funding, training, grants and consultative support services, the failure rates of these female-owned businesses remain high. the main reason for this can be that over-dependence on these incentives often weakens rather than strengthens female entrepreneurs’ ability to manage their businesses and reduces their competitiveness by laying emphasis on external, contextual factors rather than internal, competence variables for success. researchers in the past have suggested that focusing on the internal factors, especially the ‘people issues’ facing the entrepreneurs (in this case female entrepreneurs), may give the business a better chance of success. design/methodology/approach: a ‘mixed-method’ approach, conducted in two parts, was adopted for this study and appropriate tools and techniques were used to collect and analyse the data drawn from a sample of female entrepreneurs in south africa. the study applies culturally instantiated facets of the debate on gender entrepreneurship as part of a detailed and empirically sophisticated consideration of the status of female entrepreneurship within south africa. the qualitative aspect utilised semi-structured interviews and focus group discussions. the quantitative aspect utilised survey questionnaires developed from the findings of the qualitative study. results: all participants agreed that entrepreneurial competencies are vital for business success. the study also makes a clear distinction between the traits approach and competencies approach in understanding business success. arguably, the competency variable is viewed and appreciated differently by female entrepreneurs in south africa. the findings also showed some cultural variations in the application of entrepreneurial competencies among the four dominant racial groups in south africa. conclusion: this study offers a comprehensive analysis of the competency variable in understanding the factors that influence business success in the context of south african female entrepreneurs. it provides a basis for an agenda for focus on training and development of the entrepreneurial competencies of female entrepreneurs in south africa. introduction small, medium and micro-sized enterprises (smmes) are a vital part of the macroeconomic growth in the developing world. because the success of smmes is arguably more dependent upon the owner’s capabilities than is the case with larger enterprises, it is therefore important to develop competencies among entrepreneurs to give the smmes (or micro, small and medium enterprises, msmes, as they are sometimes called) a sustainable competitive advantage (mitchelmore & rowley 2013). irene (2016) affirms this position, arguing that the competencies of the owner-manager in smmes are ‘individually specific’, whereas larger firms are ‘organisationally indexed’. effectively, this means that the competencies of the entrepreneur-manager of smmes can be assumed as the firm’s competencies, thereby allowing the focus of this study to be on the individual entrepreneur as the unit of analysis. previous researchers identified two types of entrepreneurs: opportunity entrepreneurs and necessity entrepreneurs. opportunity entrepreneurs are those who discover or identify an opportunity or gap in the marketplace and embark on the entrepreneurial journey to fill that gap (botha, nieman & van vuuren 2007). by contrast, necessity entrepreneurs embark on the journey out of a need to survive because of a lack of employment, have reached the peak of their careers (glass ceiling) or lack the necessary qualifications to work for other firms. turton and herrington (2012) report on south african entrepreneurship highlights the gender divide between these two types of entrepreneurship, indicating that men are more often ‘opportunity’ entrepreneurs and women are more often ‘necessity’ entrepreneurs. given that ‘necessity’, rather than ‘opportunity’ has been identified as the main reason for women venturing into business ownership in south africa, it can, therefore, be deduced that many women embark on the entrepreneurial journey ill-prepared, with little understanding of the intricacies of business operation and management and possessing few or no skills and competencies. entrepreneurship in south africa is affected by a number of factors like race, gender and location. the statistics on gender in the economy exposes differences between women and men. because of limited opportunities in the formal employment sector, many women, are left with no option but to work in the poorly paid and mostly unregulated informal sector. access to resources and the control of resources is still based on race, gender and class. south africa therefore remains characterised by extreme poverty, social disintegration and mass unemployment with the majority of people excluded from socio-economic development and growth (kehler 2013). according to the 2014 global entrepreneurship report for south africa, female entrepreneurship could be the key to unlocking south african economic growth if more effort is made to support female entrepreneurs in a targeted way. the report maintains that an important way to develop the south african economy is to encourage and improve female self-employment as well as to pursue intervention programmes that are aimed at increasing female participation in business. according to the study, female entrepreneurs are easier to finance and less risky than their male counterparts; female-owned businesses could have a lower business failure rate and create more jobs compared to their male counterparts. despite this, male entrepreneurs are 1.7 times more likely to be involved in early-stage entrepreneurship or become developed business managers than women (which is higher than the global average of 1.6 times). the 2014 total entrepreneurship activity (tea) rate for men was 8.1%, while it is 4.9% for women. this difference could be attributed to the fact that men are more ‘opportunity’ than ‘necessity’ entrepreneurs. the overall tea rate of south africa is lower than the other brics countries (brazil, russia, india, china and south africa), which could be because of the fact that many south africans (men and women) do not believe they have the skills required for venture start-up (gem 2014). the report also concludes that south africa has the lowest rate of new and established firms, thereby suggesting that the contribution of the entrepreneurial sector is below the norm for other developing countries. this can be improved considerably by developing the female entrepreneurial market. the intervention of the government and ngos in gender entrepreneurship has had little effect on female entrepreneurial success, as the failure only went down by 2.9% according to gem (2014) report. this, therefore, raises the need to conduct research into the factors that affect the success or failure of enterprises by focusing on competencies, culture and gender differences rather than focusing on the barriers and challenges that they face (which has been the focus thus far). the findings from the studies of irene (2016) and botha (2006) have highlighted two competing understandings of potential entrepreneurial success regarding individual capabilities: the traits approach (arguing that entrepreneurial traits are innate) and the competency approach (arguing that successful entrepreneurship is an acquired skill). this paper endeavours to close the gap in the existing literature on entrepreneurial competencies by exploring the applicability of the comprehensive model of entrepreneurial competencies and examining its relationship to business success in the context of south african female entrepreneurs. by focusing on the female entrepreneur as the unit of analysis for this study, the paper highlights salient behaviours that delineate competencies for women entrepreneurs, given that studies have shown that behavioural differences exist between men and women. literature review entrepreneurs are portrayed as people that are ‘very passionate about what they do’ (shefsky 2011) and are ‘willing to take risks’ so that their dreams can be transformed into realities. they have been described as a person adept to bring about change, who is not afraid to do things differently, who goes in search of new opportunities and exploits them and converts new thoughts into actuality. the descriptions of entrepreneurs are varied and spread from a broad criteria (i.e. start-ups) to a more defined criteria (risk management, doggedly turning ideas into reality and achieving set goals, innovative). the most common attribute for the entrepreneur is new venture creation; however, some researchers argue that an entrepreneur is more than just a new venture creator, but someone who is innovative, employing strategic management practices to ensure business growth and survival. to this end, miskin and rose (2015) portray entrepreneurs as the inventors of an ‘innovative’ economic organisation for the purpose of gain and growth under conditions of risk and uncertainty. to establish the factors that determine business success in smes, some researchers have undertaken to study the behaviour of the entrepreneur by examining the managerial work of successful leaders. this has been approached through two broad themes. the first is the trait approach, which focuses on personality trait profiling of the entrepreneur (entrialgo et al. 2001; rauch and frese 2007), and the second is the competency approach, which is focused on the competencies of the individual entrepreneur (chell 2013; santandreu-mascarell, garzon & knorr 2013; tan & tan 2012; thongpoon, ahmad & yahya 2012). the focus of this paper is the competency approach and it is discussed further below. the competency approach there is no consensus on the definition of the word ‘competency’, which has led to confusion about the meaning of the concept of competencies (irene 2016). the most common argument relates to the differences between ‘competency’ and ‘competence’. both terms are often used interchangeably, even though they are two distinct concepts by different scholars. rowe (1995), for example, defined ‘competence’ as a skill or standard of performance and argues that ‘competency’ refers to a behaviour that results in performance being achieved. hoffmann (1999), from his extensive review of the various meanings attributed to competencies, concluded that there are three different definitions for competencies: (1) observable performance, (2) the standard of the outcome, or result, of a person’s performance and (3) the underlying attributes of a person, such as their knowledge, skills and abilities. the meanings that have been given to the concept of competency have been drawn from literature on management and entrepreneurship and are based on the use of the concept in either a broad or specified manner as illustrated below. there are four features of competencies that are constant from the definitions above: competencies comprise the complete characteristics of the individual that correlate with the actual performance of a particular job or task. competencies are revealed in the individual’s behaviour; consequently, they can be observed and measured. competencies enable the achievement of goals and objectives. competencies are resources in any organisation and they can be adopted or cultivated. table 1: definitions of competencies. in line with the above definitions, bird (1995), burgoyne (1993) and parry (1998) all agree that utilising the competency approach to understanding business success provides a possible approach to intervention. in a study conducted by wallace (1998) on the impact of small business courses on competencies, it was discovered that training programmes for entrepreneurs could indeed help them develop entrepreneurial competencies. according to mcclelland (1973), when considering the provision of an intervention, the competency approach is vital because it is able to reduce the bias in the traditional personality traits approach. despite the advantages of this approach, however, a caveat to the general endorsement of the competency model of the entrepreneurial success has been identified (sadler–smith et al. 2003). they point out that research so far does not distinguish between entrepreneurial competencies and managerial competencies. therefore, identifying the specific entrepreneurial competency requirements is still an important task. the definition of entrepreneurial competencies used in this paper is that of noor (2007:22), which describes competencies as ‘individual characteristics that include both attitudes and behaviours, enabling the entrepreneur to achieve and maintain business success’. a major challenge in measuring non-behavioural elements is the fact that internal elements, such as the need to achieve, self-efficacy and risk-taking propensities, are difficult to observe and have to be measured through self-reporting, introspection and inference (from the entrepreneur’s behaviour). this study is an extension of man (2001) study, the study of noor (2007) and that of mitchelmore and rowley (2013); therefore, the behaviours that reflected the 12 competency domains remain the focus. the competency domains identified by man (2001) and validated by other researchers were as follows: (1) ‘strategic’, (2) ‘commitment’, (3) ‘conceptual’, (4) ‘opportunity’, (5) ‘organising and leading’, (6) ‘relationship’, (7) ‘learning’, (8) ‘personal’ and (9) ‘technical’. additional competency domains identified by noor (2007) and mitchelmore and rowley (2013) are (10) ‘ethics’, (11) ‘social responsibility’ and (12) ‘familism’. exploring business success in female-owned and managed small, medium and micro-sized enterprises there is a lack of agreement over what comprises the best measure for business success. some researchers advocate the use of only financial indicators, such as profitability, turnover and return on investment (roi) as measures of business success. others, such as ramana, raman and aryasri (2009), posit that entrepreneurial success can be measured financially and non-financially. to this end, in their study of the influence of socio-demographic factors on entrepreneurship, they used growth in total sales and employment as financial measurements, while work experience and competencies were used as non-financial measurements. according to ahmad, wilson and kummerow (2011), the motivation for some smmes do not include job provision (only the need to provide for the immediate family); therefore, business growth is not a vital factor for these entrepreneurs. also, most smmes do not have financial statements and accurate records; business success is consequently measured by self-reporting and perceptions (ahmad et al. 2010). this view is also held by other researchers, such as beaver and jennings (2005), who argue in favor of using non-financial indicators in measuring business success, because, according to them contrary to popular belief and a great deal of economic theory, money and the pursuit of personal financial fortune are not as significant as the desire for personal involvement, responsibility and the independent quality and life-style which many small business owner-mangers strive to achieve. consequently, the attainment of these objectives becomes one of the principal criteria for success, as defined by the entrepreneur/owner-manager. while financial success affords business sustainability and growth, non-financial indicators, such as achievement, accomplishments and attainment of personal goals and objectives, are factors to be considered, according to walker and brown (2004). they have gone on to propose some relevant non-financial indicators such as job satisfaction, greater independence, opportunities creation and encouraging new challenges and the pursuit of personal interest. these factors have also been previously identified as entrepreneurial motivational factors for women. given the arguments above, both financial and non-financial factors are used in this study to measure success in female-owned and managed smes in south africa. therefore, in this study, financial indicators such as turnover (sales), growth (sales), roi and market share are used for the purpose of measuring the success of female entrepreneurs operating in the context of smes in south africa. the non-financial indicators here (based on the work of the aforementioned scholars) are customer satisfaction, retention, the entrepreneur’s satisfaction, reputation and goodwill of the business, employee satisfaction and good working environment or relations. the choice of customer satisfaction and retention as a non-financial indicator for measuring business success is based on the views of adams and sykes (2003), who indicate that customer satisfaction and goodwill are linked to customer loyalty, which impacts customer retention and consequently profitability. methodology this study contributes to the current debate on the entrepreneurial competencies literature by investigating competencies that are perceived as important to the success of women operating in the context of smes. the aim of this research is to examine the innate and acquired competencies of female entrepreneurs in south africa with a view to differentiating the behavioural and non-behavioural elements of competency, which will further lead to the identification and exploration of competency clusters and the associated behavioural pattern. the methodological framework proposed for this study is largely based on a positivist and realist approach to research. the researcher assumes that what exists in the social world is real and can be largely measured and described just as physical scientists measure and describe the physical world. according to lin (1998), positivists seek to identify details with propositions that can be tested by identifying causal relationships present in a data set with some degree of probability. the positivist approach involves trying to decipher which pieces of information in the data sets are associated and then assesses the strength of the association by counterfactual thinking and problems of reliability and representativeness. however, positivism cannot easily explain how the mechanism implied by the causal relationship works or interacts. interpretive works, on the other hand, can produce detailed examinations of causal mechanisms in specific cases and explains how particular variables interact. the combination of both modes of logic adds more functional content, which neither positivism nor interpretivism can produce alone and gives more additional confidence to our conclusions. the sample for this study was drawn from a population of female business owners across four provinces – western cape, gauteng, kwazulu-natal and northern cape. the sampling method for the qualitative aspect of this study was purposive with the initial 50 interviews conducted using open-ended questionnaires that comprised six parts. the findings from these interviews were collated and used to formulate the questions for the focus group discussions. ten focus group discussions involving six to eight participants per session were then undertaken over an 8-month period. the findings from the qualitative study were then used to develop an eight-part questionnaire for the quantification study. the sampling method for the quantitative study was the simple random selection and it utilised a 5-point likert scale questionnaire in which participants were required to (1) highly disagree, (2) disagree, (3) neither disagree nor agree, (4) agree and (5) highly agree. in all, 1200 questionnaires were distributed and 785 usable responses were received. both the qualitative and quantitative aspects involved 1075 female business owners. data collection and analysis the method of data collection for the research elements of this study was mostly based on communication by means of face-to-face interaction with participants. personal interviews were conducted with female entrepreneurs over a period of 5 months, after which focus group discussions were conducted. the information gathered from these interviews and discussions were then used to formulate the questionnaire used for the quantitative study. samples for the quantification study were randomly selected by means of simple random sampling. this method was considered appropriate for this study, given that simple random sampling allows for statistical analysis to be conducted on the samples and, because of its representativeness (it provides an equal opportunity for every member of the population to be selected), generalisations can be made from the results of the sample back to the population. while some of the respondents belonged to various business networks and association, a significant number (480) did not belong to any network. the secondary data were obtained from the review of the literature. given that the data collected in this current study comprised both qualitative and quantitative data, the analysis of the data was also done qualitatively and quantitatively. the qualitative data were tape-recorded and transcribed by professional transcribers in order to ensure accuracy and precision of the transcript. the quantitative data were captured into spss 12.0.1 software. thematic analysis was conducted on the qualitative data, while regression was done on the quantitative data by building a one-factor congeneric model.1 reliability and validity assessment cronbach’s alpha was computed for each of the factors (a one-factor congeneric model was built for each of the 12 competency domains) in order to ascertain the internal consistencies of the constructs. the scales from this study were similar to those reported by morris et al. (2013); therefore, a value of > 0.70 is considered to be good, while a value of > 0.60 is considered to be acceptable. substantial and significant factor loadings can provide evidence of convergent validity with a value of > 0.50 considered as the recommended value. table 2 shows that all the 12 competencies’ loadings were significant and well above the recommended value of > 0.50. the opportunity competency and the social responsibility competency displayed the recommended value of > 0.50, while the strategic competency and organising and leading competency displayed a high value of > 0.80. these results show that from the 100 items used to measure 12 factors (entrepreneurial competency domains) on a 5-point likert scale, the derived factors delivered a good cronbach’s alpha result. table 2: reliability analysis. four dimensions of business success measurement were adopted for this study, comprising both financial and non-financial indicators. all dimensions for the business success construct were subjected to the measurement process such as the one adopted for entrepreneurial competencies and scales derived were similar to those of noor (2007) and morris et al. (2013). the correlations between all four dimensions of business success and entrepreneurial competencies were scrutinised separately, and there proved to be a strong correlation among all dimensions for business success and entrepreneurial competencies. as shown in table 2, all the dimensions of the business success construct showed a strong internal consistency of > 0.80. this shows that all the dimensions for the business success construct can be considered reliable and valid (see appendix 1table 1-a1). to examine the interrelationships among all the variables in this study, a correlation analysis was undertaken. this showed a strong positive correlation among all 12 competency domains (p < 0.01). it also showed a link between the competency domains and the four business success dimensions except in the case of social responsibility, which showed a negative correlation with two of the business success constructs (such as performance relative to competitors and business growth). the strongest correlations, however, were found between the learning and organising competency and the leading, conceptual and strategic competencies (see table 3). table 3: correlations of entrepreneurial competencies and business success. regression summary for the dependent variable as shown in table 4, the entrepreneurial competencies construct was found to have a significant positive relationship with business success operationalised by self-reports of financial and non-financial indicators (four dimensions of measurement). the analysis was done by building a regression model using the results from the computed factor analysis (i.e. entrepreneurial competencies and business success). the model was then fitted using business success as the dependent variable and entrepreneurial competencies as the independent variables. all 12 competency domains had a direct pact with business success with a p-value of ≥ 0.000 (p-value is significant at < 0.05). the result shows that the effect of competencies on business success was strongest for business growth with a coefficient of p 0.0001, while it remained the same on all other measures for the business success construct. based on the results, it can be inferred that there is statistical evidence that entrepreneurial competencies influence business success. table 4: summary of the regression analysis for entrepreneurial competencies and business success. discussion the purpose of this paper was to examine the relationship between entrepreneurial competencies and business success in the context of female-owned businesses in south africa. the analyses of the qualitative data collected identified 817 behaviours associated with entrepreneurial competencies. the behaviours were first grouped under the 12 existing competency domains and showed a degree of cross cultural generalisability. the existing competency domains include strategic, conceptual, commitment, opportunity, organising and leading, relationship, learning, personal, technical, social responsibility, ethical and familism. the qualitative data from this current research provide evidence of the universality of some aspects of entrepreneurial competencies while also generating some evidence of possible cultural or gender undertones or applications of these competencies. it was found that the cultural orientations of the entrepreneurs played a role in the determination of which competency was regarded as important, particularly with regard to the familism competency. it must, however, be emphasised that the purpose of this qualitative study was not to draw a definitive conclusion about the link between business success and entrepreneurial competencies but rather to incorporate the findings into the modification of the research instruments for the subsequent quantification study. the findings of this research show that: (1) entrepreneurial competencies frameworks comprise effective portrayals of business behaviour among south african female entrepreneurs; (2) additional clusters of behaviour exist under these existing models of entrepreneurial competencies, which suggests that female entrepreneurs are sensitive to issues relating to integrity; and (3) the elements of ‘familism’ highlighted implies that gender and cultural issues do have an influence on the women’s entrepreneurship. based on the fact that 817 behaviours delineating entrepreneurial competencies were identified in the qualitative study, it was necessary to further consolidate these behaviours prior to integrating them into the measurement scales for entrepreneurial competencies for the quantification study. the process of consolidation involved taking articles considered limited in range or scope as well as those considered too specific and combining them to offer a non-specific level of behaviour that was reflective of a particular competency domain. therefore, behaviours such as ‘conduct research on a business premise before setting a new branch’; ‘conduct research on a potential client before introducing them to a product/service’ and ‘conduct research on product quality before introducing them to the market’, were grouped under a more generic detail ‘conduct research before proceeding with an investment’. this helped to reduce the number of new items generated from the interviews and focus group discussions intended to be included in the original scale. the findings provide knowledge of the impact of entrepreneurial competencies on the success of female sme operators in south africa and show that those possessing high level of competencies were more likely to impact the success of female-owned businesses. they were also consistent with those of man (2001) and highlights the important role of the owner-manager in the determination of business success of smmes over and above environmental factors. the results support the literature, which suggests that entrepreneurs can minimise the negative effect of the business environment by developing adequate skills and capabilities (competencies). in the framework of this research, individual values were projected to have an impact on the ability to develop entrepreneurial competencies. although the purpose of this study was not to analyse entrepreneurial motivation for south african women, it is essential to appreciate the reasons behind the decisions of women to engage in entrepreneurial activities. this is because, according to buttner and moore (1997), the entrepreneur’s motivations have been found to correlate with their measurement of business success. it also correlates with their business strategy. according to mcclelland et al. (2005), business owners are known to be moved by ‘pull factors’ (inner drive) and ‘push factors’ (outside forces). the ‘pull factors’ relate to the entrepreneurs desire for independence, to be one’s own boss, to pursue a hobby or natural inclination and express one’s own creativity, as well as engage in a passion. in contrast, the ‘push factors’ are associated with elements of necessity, such as forced or early retrenchment or redundancy, inability to secure employment, lack of job satisfaction or poor remuneration. conclusions and recommendations several important conclusions can be drawn from the findings. entrepreneurial competencies play a huge role in the success of female entrepreneurs in south africa. this current study also adds to the growing body of research seeking to establish a link between entrepreneurial competencies and business success. it provides the basis for a model of business success reflecting the realities of entrepreneurial activities by utilising the competency approach, given that the competency approach emphasises the actual behaviour of entrepreneurs concerning technical and managerial undertakings of their businesses. therefore, the problem of unclear association between entrepreneurial traits and performance was overcome by this study. several conclusions could be drawn from the analysis of both the qualitative and quantitative data. firstly, for the internal consistencies, results and composite measures of reliability for all variables were found to be reliable for all data sets. secondly, the positive correlation between business success and entrepreneurial competencies indicates that there is a need to focus on the internal variable of competencies in order to better understand business success among female entrepreneurs in south africa, as focusing only on external variables could be a major drawback in women’s entrepreneurship. thirdly, although new competency domains were not discovered in this study, new behaviours were identified, pointing towards a need for a feministic model of entrepreneurial competencies. the theoretical and statistical significance of these findings suggests the need for an inclusive model that addresses the concerns of female entrepreneurs. this calls for a robust model of entrepreneurial competencies that could provide a better understanding of the behaviours that are prevalent and relevant to the activities of female entrepreneurs in south africa. finally, given the link between entrepreneurial competencies and business success, the role of policymakers should perhaps focus on the development of entrepreneurial initiatives relevant to the development of individual skills and behaviours, such as the recognition of opportunities, ability to respond to opportunities, learning, conceptual thinking and effective personal development. limitations of this study this study was not without its limitations and a few are worth mentioned here. firstly, the source of all measurements for the predictors (competency) and outcome (business success) was the self-report of entrepreneurs. this approach was necessary given the difficulties associated with the independent assessment of each of these variables. self-reporting is not an uncommon component in studies that examine management behaviours and business owner-managers (chandler and hanks 1994; man 2001). according to chandler and jansen (1992), self-reported competencies are valid when measuring entrepreneurial competencies using a structured rating instrument (e.g. survey) with good reliability (such as the one used in this study). however, future studies could use information from multiple sources (i.e. the entrepreneur and independent sources) to reduce the likelihood of response bias. similarly, self-reported financial reports may be problematic and unreliable, as entrepreneurs could rate their individual performance highly and see their business performance as a reflection of their individual performance. however, previous research has shown that managerial assessment of business performance is generally quite consistent with performance data (noor 2007). also, several studies have used the same method of measurement used in this current study to examine performance and success in small businesses. this approach does not require sensitive and financial data to be collected because it is not always available to small businesses (mcgee and peterson 2000). nevertheless, where possible, future studies should assess profit and loss statements for operationalising business success. acknowledgements the research for this article was undertaken at cardiff metropolitan university, united kingdom during the author’s ph. d studies. whilst the writing of this article was initiated and completed while at cardiff metropolitan university, it was submitted for publication while engaged at cornerstone institute, cape town. competing interests the author declares that she has no financial or personal relationship(s) that may have inappropriately influenced her in writing this article. references adams, b. & sykes, v., 2003, ‘performance measures and profitability factors of successful african-american entrepreneurs: an exploratory study’, journal of american academy of business 2(2), 418–424. ahmad, n.h., ramayah, t., wilson, c. & kummerow, l., 2010, ‘is entrepreneurial competency and business success relationship contingent upon business environment?’, international journal of entrepreneurial behaviour & research 16(3), 182–203. https://doi.org/10.1108/13552551011042780 ahmad, n.h., wilson, c. & kummerow, l., 2011, ‘a cross-cultural insight into the competency-mix of sme entrepreneurs in australia and malaysia’, international journal of business and management 4(1), 33. beaver, g. & jennings, p., 2005, ‘competitive advantage and entrepreneurial power: the dark side of entrepreneurship’, journal of small business and enterprise development 12(1), 9–23. https://doi.org/10.1108/14626000510579617 bird, b., 1995, ‘towards a theory of entreprenuerial competency’, in advances in entrepreneurship, firm emergence and growth, vol. 2, p. 21, jai press inc., middlesex, england. botha, m., 2006, ‘measuring the effectiveness of the women’s entrepreneurship programme, as a training intervention, on potential, start-up and established women entrepreneurs in south africa’, ph.d thesis, university of pretoria. botha, m., nieman, g. & van vuuren, j., 2007, ‘measuring the effectiveness of women entrepreneurship programme on potential, start-up and established women entrepreneurs in south africa’, south african journal of economic and management sciences 10(2), 163–183. boyatzis, r.e., 1982, the competent manager: a model for effective performance, wiley, new york. brophy, m. & kiely, t., 2002, ‘competencies: a new sector’, journal of european industry training 26(2), 165–176. https://doi.org/10.1108/03090590210422049 burgoyne, j.g., 1993, ‘the competence movement: issues, stakeholders and prospects’, personnel review 22(6), 6–13. https://doi.org/10.1108/eum0000000000812 buttner, e. & moore, d., 1997, ‘women’s organisational exodus to entrepreneurship: self reported motivations and correlates with success’, journal of small business management 35(1), 34–46. chandler, g.n. & hanks, s.h., 1994, ‘founder competence, the environment and venture performance’, entrepreneurship theory and practice 18(3), 77–89. chandler, g.n. & jansen, e., 1992, ‘the founders self-assessed competence and venture performance’, journal of business venturing 7(3), 223–236. chell, e., 2013, ‘review of skill and the entrepreneurial process’, international journal of entrepreneurial behaviour & research 19(1), 6–31. https://doi.org/10.1108/13552551311299233 entrialgo, m., fernandez, e. & vazquez, c.j., 2001, ‘the effect of the organizational context on sme’s entrepreneurship: some spanish evidence’, small business economics 16(3), 223–236. hoffmann, t., 1999, ‘the meanings of competency’, journal of european industrial training 23(6), 275–286. https://doi.org/10.1108/03090599910284650 irene, b., 2016, gender and entrepreneurial success: a cross cultural study of competencies of female smes operators in south africa, phd thesis, cardiff metropolitan university. irene, b.n.o., 2017, ‘a cross-cultural assessment of the competency needs of women operating in the context of smmes in south africa’, mediterranean journal of social sciences 8(1), 20. https://doi.org/10.5901/mjss.2017.v8n1p20 kehler, j., 2013, ‘women and poverty: the south african experience’, journal of international women’s studies 3(1), 41–53. lin, a.c., 1998, ‘bridging positivist and interpretivist approaches to qualitative methods’, policy studies journal 26(1), 162–180. https://doi.org/10.1111/j.1541-0072.1998.tb01931.x man, t.w.y., 2001, ‘entrepreneurial competencies and the performance of small and medium enterprises in hong kong services sector’, ph.d thesis, hong kong polytechnic university. mcclelland, d.c., 1973, ‘testing for competence rather than for intelligence’, american psychologist 28(1), 1–14. https://doi.org/10.1037/h0034092 mcclelland, e., swail, j., bell, j. & ibbotson, p., 2005, ‘following the pathway of female entrepreneurs: a six-country investigation’, international journal of entrepreneurial behavior and research 11(2), 84–107. mcgee, j.e. & peterson, m., 2000, ‘toward the development of measures of distinctive competencies among small independent retailers’, journal of small business management 38(2), 19. miskin, v. & rose, j., 2015, ‘new venture initiation: factors influencing success’, journal of small business strategy 1(2), 1–9. mitchelmore, s. & rowley, j., 2013, ‘entrepreneurial competencies of women entrepreneurs pursuing business growth’, journal of small business and enterprise development 20(1), 125–142. https://doi.org/10.1108/14626001311298448 morris, m.h., webb, j.w., fu, j. & singhal, s., 2013, ‘a competency-based perspective on entrepreneurship education: conceptual and empirical insights’, journal of small business management 51(3), 352–369. https://doi.org/10.1111/jsbm.12023 noor, h.a., 2007, ‘a cross-cultural study of entrepreneurial competencies and entreprenuerial success in smes in australia and malaysia’, ph.d thesis, the university of adelaide. parry, s.b., 1998, ‘just what is a competency (and why should we care?)’, training 35(4), 58–64. ramana, c.v., raman, k.j. & aryasri, r.a., 2009, ‘influence of socio-demographic factors on entrepreneurial attributes and success’, south asian journal of management 16(4), 111. rauch, a. & frese, m., 2007, ‘born to be an entrepreneur? revisiting the personality approach to entrepreneurship’, in j. r. baum, m. frese & r. a. baron (eds.), the psychology of entrepreneurship, pp. 41–65, psychology press, hove, united kingdom. rowe, c., 1995, ‘clarifying the use of competence and competency models in recruitment, assessment and staff development: preliminary of a british study’, industrial and commercial training 27(11), 12–17. https://doi.org/10.1108/00197859510100257 sadler-smith, e., hampson, y., chaston, i. & badger, b., 2003, ‘managerial behavior, entrepreneurial style, and small firm performance’, journal of small business management 41(1), 47–67. https://doi.org/10.1111/1540-627x.00066 santandreu-mascarell, c., garzon, d. & knorr, h., 2013, ‘entrepreneurial and innovative competences, are they the same?’, management decision 51(5), 1084–1095. https://doi.org/10.1108/md-11-2012-0792 shefsky, l., 2011, entrepreneurs are made not born, mcgraw hill professional, new york city, ny. tan, w.-l. & tan, s.t., 2012, entrepreneurs, managers and the competency approach: do entrepreneurial competencies differentiate entrepreneurs from managers?. paper presented at ccsbe 2012. tett, r.p., guterman, h.a., bleier, a. & murphy, p.j., 2000, ‘development and content validation of a “hyperdimensional” taxonomy of managerial competence’, human performance 13(3), 205–251. https://doi.org/10.1207/s15327043hup1303_1 thompson, j.e., stuart, r. & lindsay, p.r., 1997, ‘the competence of top team members: a framework for successful performance’, team performance management: an international journal 3(2), 57–75. thongpoon, s., ahmad, n.h. & yahya, s., 2012, ‘sustainable performance of thai smes: investigating the entrepreneurial competencies and sufficiency economy philosophy’, asia pacific journal of management & entrepreneurship research 1(2), 5–20. turton, n. & herrington, m., 2012, global entrepreneurship 2012 south africa, uct graduate business school, cape town, south africa. walker, e. & brown, a., 2004, ‘what success factors are important to small business owners?’, international small business journal 22(6), 577–594. wallace, j., 1998, ‘the impact of small business courses on competencies’, paper presented in the 22nd national small business consulting conference, santa fe, new mexico, february 04–07, 1998. woodruffe, c., 1993, ‘what is meant by a competency?’, leadership & organization development journal 14(1), 29–36. https://doi.org/10.1108/eb053651 appendix 1 table 1-a1: inter-correlation analysis of all constructs. footnote 1. the fitting of a one-factor congeneric measurement model was to maximise the reliability of the composite scores. for a one-factor congeneric measurement model, the factor score regression coefficients represent the estimated bivariate regression of the factor on all observed indicator variables. abstract introduction literature review: why dirty workers? entrepreneurial motivation and willingness to become an entrepreneur methodology measures ethical consideration results discussion limitations and future research conclusion, theoretical and managerial implications acknowledgements references appendix 1 about the author(s) herring shava department of business management, university of fort hare, alice, south africa willie t. chinyamurindi department of business management, university of fort hare, alice, south africa citation shava, h. & chinyamurindi, w.t., 2019, ‘the influence of economic motivation, desire for independence and self-efficacy on willingness to become an entrepreneur’, southern african journal of entrepreneurship and small business management 11(1), a234. https://doi.org/10.4102/sajesbm.v11i1.234 original research the influence of economic motivation, desire for independence and self-efficacy on willingness to become an entrepreneur herring shava, willie t. chinyamurindi received: 12 dec. 2018; accepted: 03 june 2019; published: 12 sept. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: employees involved in dirty work lack a desired social identity because of stigma attached to their occupation. pursuing entrepreneurship as a career choice could be one corrective measure they can take to achieve a high-standing position in society. aim: this study was undertaken with the goal of investigating the predictive capacity of desire for independence (di), economic motivation (ecom) and entrepreneurial self-efficacy (ese) regarding willingness to become an entrepreneur (wee) for employees involved in dirty work. setting: although this study is grounded in well-developed theories, the study is of value given that it provides new insights with respect to the impact of ecom, ese and di on wee among employees involved in dirty work who are facing stigma. methods: this study adopted a positivist paradigm. data were gathered through a self-administered questionnaire. to analyse the data, factor analysis and multiple linear regression were used. results: this study found that in the quest to achieve a high-standing position in society by employees involved in dirty work, ecom and ese play more crucial roles than di as far as wee is concerned. conclusion: this study concluded that in the quest to achieve a high-standing position in the society, ecom and ese play more crucial roles than di on wee for employees involved in dirty work. keywords: dirty work; employees; stigma; entrepreneurship; willingness. introduction it is a widespread belief that in the presence of entrepreneurs, economies thrive as jobs are created, leading to poverty reduction and improved living standards. this is because entrepreneurs are individuals who are willing to take calculated risks. above all, entrepreneurs are regarded as people who believe in their capabilities (self-efficacy), are economically motivated and desire independence. scarborough (2012) concurred and mentioned that being driven by the profit motive (economic) and personal growth, and the belief in self, the entrepreneur is an individual who establishes an entrepreneurial entity in an environment characterised by risk and uncertainty. entrepreneurship is a practical activity where the person involved is actually doing something tangible with the hope of achieving economic benefits and personal recognition (carsrud & brännback 2011). as a result, entrepreneurial motivation is the key predictor to a person’s subsequent demonstration of entrepreneurial behaviour. shane, locke and collins (2003:258) argued that it is highly unlikely for a person to demonstrate entrepreneurial behaviour without the ‘willingness to play the game’. in addition, they argued that entrepreneurial motivation plays a critical role in identifying who eventually becomes an entrepreneur. this study put this argument to test by investigating the predictive capacity of economic motivation (ecom), desire for independence (di) and self-efficacy, classified in this study as entrepreneurial motivation, regarding the willingness to become entrepreneurs for employees involved in dirty work, who are facing stigma and contemplating career change. carsrud and brännback (2011) pointed out that research on entrepreneurship has, for a very long period, focused on actions associated with exploiting entrepreneurial opportunities. this has resulted in the dearth of literature on factors that are actually responsible for initiating the process of exploiting opportunities, that is entrepreneurial motivation (carsrud & brännback 2011; shane et al. 2003). this study contributes to the literature through a different dimension. thus, the study investigated the influence of entrepreneurial motivation (ecom, di and self-efficacy) on the willingness to become entrepreneurs for employees involved in dirty work. extant literature continues to present entrepreneurial motivation as an important topic in entrepreneurship research (carsrud & brännback 2011; kim-soon, rahman & nadia 2016). this study also makes a significant contribution to the literature as it investigates the ‘what of’ entrepreneurial motivation and its impact concerning willingness to become an entrepreneur (wee) among employees involved in dirty work facing stigma, and working towards achieving a higher standing in society. therefore, the study argues that employees who are involved in dirty work, classified to be physical (e.g. garbage collectors, cleaners, groundsmen, among others) and who possess a high entrepreneurial motivation score, are more likely to be willing to consider entrepreneurship as a career option (miller et al. 2012). we hope that our findings would go a long way in clearing the mismatch between entrepreneurship-promoting efforts and outcomes as observed by mahto and mcdowell (2018). literature review: why dirty workers? the concept of dirt in a work context, as defined by douglass (1966), refers to physical dirt and any other form of dirt that the community shies away from, for example, crime, danger and immorality. this line of thinking influenced ashforth and kreiner’s (1999) categorisation of dirty work into physically, socially and morally tainted tasks. in this study, researchers focused on people performing physically tainted tasks. the extant literature further classifies physical taint into two categories (ashforth & kreiner 1999, 2013; deery, kolar & walsh 2019). the first category of physically tainted tasks is performed under dangerous conditions, for example, firefighters and soldiers. this category was not considered in this study owing to accessibility challenges. the other category under physically tainted is that of people who on a daily basis directly deal with dirt, for example, garbage collectors, groundsmen, office cleaners, street cleaners and sewer workers (valtorta et al. 2019). researchers in this study reached out to this group for primary data. to answer the posed question, that is, ‘why dirty workers?’, we adopted the model of entrepreneurial motivation, proposed by mahto and mcdowell (2018), that is grounded in the individual identity formation process (ashforth & schinoff 2016; markus & nurius 1986). employees involved in dirty work face stigma attached to their occupation. stigma is defined as ‘an attribute that is deeply discrediting’ (goffman 1963 as cited in weitzer 2017:1). the stigmatisation of dirty workers is a global phenomenon and in south africa, those involved in dirty work, both skilled and semi-skilled, are, to a certain degree, viewed as people who cannot express themselves intelligently, are semi-literate and are always physically dirty (van rooyen et al. 2010). as a result, they occupy a low-standing order in the society. therefore, employees involved in dirty work lack a desired social identity. ashforth and mael (1989) pointed out that a person’s social identity is synonymous with their standing or position in a community. it is our assumption that employees involved in dirty work are in constant search of viable means to achieve a higher standing in society. this thinking is supported by identity literature, for example, trope (1986) and swann (1984) who pointed out that the outcome of self-assessment (identity formation process) may lead individuals to reinforce their existing identity or seek readjustment of their identity. childhood is one vital stage of identity formation and a child is most likely to assume an entrepreneurial identity if raised by entrepreneurial parents. empirical evidence exists in support of this notion based on studies conducted in different countries, all concurring that being raised by entrepreneurial parents contributes significantly to the development of entrepreneurial motivation (chlosta et al. 2012; lindquist, sol & van praag 2015; walter & heinrichs 2015). conversely, other individuals are likely to develop an entrepreneurial motivation because of self-assessment or self-verification, which they perform on a regular basis (ashforth & schinoff 2016; obodaru 2012). there are two possible outcomes linked to the mentioned process, that is, a person is either satisfied or unsatisfied with the ideal self. once a person is satisfied with the ideal self, they are expected to continue with the current identity (blustein, devenis & kidney 1989; strube 1990). however, if the person is not satisfied, chances are high that a corrective action will be pursued (yost & strube 1992). in the context of this study, employees involved in dirty work are assumed to be unsatisfied with the outcome of self-assessment as they lack the desired social identity owing to stigma attached to their occupation. the model of entrepreneurial motivation therefore points out that unsatisfied individuals constantly try to improve their current identity, making them more willing to consider entrepreneurship as a career choice (nicholson & anderson 2005). yost and strube (1992) pointed out that because individual identity is linked to self-preservation instinct, any gap between the individual’s image of self and another’s image of them is sufficient to drive them into pursuing viable means of levelling the status quo (corrective measure). in the context of this study, the corrective action would be considering taking up entrepreneurship as a career option because of the rewards it offers, such as economic benefits, independence, prestige and confidence in self. this thinking is further supported by empirical evidence, which points out that at some point, because people need to feel competent, the corrective measure involves the search of a self-enhancing opportunity where the probability of improving on their current identity, leading to a higher standing in the society, is considered high (see alvesson & willmont 2002; fitz-koch, cooper & discua cruz 2019; liñán, ceresia & bernal 2018; ryan & deci 2000). people desire a higher standing in society because it is associated with multiple benefits, including prestige, authority, power and a high number of followers (ashforth & kreiner 1999). baumeister (1998) echoed similar sentiments and pointed out that benefits associated with a higher standing in society enable the individual to lower uncertainty levels linked to the definition of the self. ibarra and barbulescu (2010) concurred and pointed out that a higher standing in society increases legitimacy for an individual’s description of self. markus and nurius (1986) and ashforth and schinoff (2016) also concurred by pointing out that an individual’s identity affects their motivation and behaviour. in addition, it further affects their career choices (larkin 1987). as stated earlier, pursuing entrepreneurship as a career could reward employees involved in dirty work, classified to be physical, with a better identity in the society. down and warren (2008) agreed with this and argued that entrepreneurship is a career choice for an individual and should be associated with the individual’s identity. mahto and mcdowell (2018:513) pointed out that little empirical evidence exists on how the motivation of a non-entrepreneur (in the context of this study employees involved in dirty work) ‘has hindered our understanding of how non-entrepreneurs develop the motivation to pursue entrepreneurial career options and this has led to misinformed decisions by scholars and policy makers’. this study is unique in that it investigated the impact of ecom, di and self-efficacy on the wee for people involved in dirty work. thus, being guided by the entrepreneurial motivation model, we investigated factors making up entrepreneurial motivation and how they contribute towards wee. the section to follow discusses at length entrepreneurial motivations (i.e. ecom, di and self-efficacy) and their relationship with wee. entrepreneurial motivation and willingness to become an entrepreneur according to santos, caetano and curral (2013:665), ‘entrepreneurial motivations refer to the motives that drive individuals toward typical entrepreneurial activities’. entrepreneurial success is highly dependent on human motivations. thus, the human motivation dimension serves as a significant predictor of new venture success as individuals are mainly driven by their inner desire to demonstrate entrepreneurial activities. motives further drive an individual to put together resources necessary in the demonstration of entrepreneurial activities (santos, curral & caetano 2010; shane et al. 2003). existing literature reveals two specific entrepreneurial motivations: general and task-specific (shane et al. 2003). it is further pointed out that both general and task-specific entrepreneurial motivations influence the entrepreneurial processes and the entity growth process differently (baum et al. 2001). economic and entrepreneurship literature further acknowledges two forms in which motivations to demonstrate entrepreneurial activities can be categorised: intrinsic and extrinsic motivations (carsrud & brännback 2011; deci & ryan 1985; ryan & deci 2000). on the one hand, intrinsic motivation refers to intangible personal factors that drive an individual into demonstrating entrepreneurial behaviour. such factors include di, interest and self-determination, among others (antonioli et al. 2016). on the other hand, extrinsic motivation refers to external factors that drive an individual into demonstrating entrepreneurial behaviour. these factors include monetary rewards, recognition and external control (antonioli et al. 2016). evidence suggests that intrinsic and extrinsic motivations influence individuals in an opposite manner towards the demonstration of certain behaviours (bénabou & tirole 2003). conversely, the study by bowles and polania-reyes (2012) provided evidence suggesting that there are situations at which both intrinsic and extrinsic motivations complement and reinforce each other towards an individual’s demonstration of a given behaviour. furthermore, research by amabile (1997) argued that the demonstration of entrepreneurial activity could be highly stimulated by the synergy between intrinsic and extrinsic motivations. the extant literature reveals three main drivers or dimensions that express entrepreneurial motivations: the di, ecom and entrepreneurial self-efficacy (ese) (santos et al. 2010; shane et al. 2003). santos et al. (2013) developed and validated the entrepreneurial potential assessment inventory (epai) using a sample from portugal and labelled di, ecom and ese as dimensions of entrepreneurial motivation. spagnoli et al. (2016) further validated the epai in italy and concurred with santos et al.’s (2013) remarks. desire for independence the majority of entrepreneurs highlight their desire for making important decisions that have a significant impact on their entrepreneurial activities and entity success. with regard to independence, shane et al. (2003) had this to say: … independence entails taking the responsibility to use one’s own judgement as opposed to blindly following the assertions of others. it also involves taking responsibility for one’s life rather living off the efforts of others. (p. 268) earlier research also concluded that entrepreneurs scored fairly high in the need for independence scores compared to the general population (hornaday & aboud 1971). hisrich (1985) concurred and reported that the major reason for establishing new ventures was the strong di. economic motivation the need to make money has also been singled out as the main driver leading to individuals pursuing entrepreneurial activities (kuratko 2016). entrepreneurial activities, when pursued strategically, have the capacity to generate high revenue leading to significant profit for the entrepreneur to enjoy, thus ecom comes into the picture. generally, entrepreneurs view their own work as more highly profitable than seeking formal employment (brice & nelson 2008). conversely, the study by åstebro (2017) provides evidence that in developed countries, entrepreneurs seem to be earning less than wage earners. the explanation for this phenomenon, according to åstebro (2017), lies in truthful reporting by entrepreneurs in respect of their income. however, after adjusting for underreporting by entrepreneurs, their income rises above that of wage earners by a margin between 10% and 40%. given the above discussion, the demonstration of entrepreneurial activities has the capacity to improve the economic situation of employees in work; this study therefore argues that ecom influences the willingness of employees in dirty work to become entrepreneurs. entrepreneurial self-efficacy according to bandura (1997), people’s belief in their capabilities to pursue set goals with success is crucial. in the context of this study, self-efficacy is critical to the idea of demonstrating entrepreneurial activities. baum and locke (2004) concurred and pointed out that self-efficacy is critical to entrepreneurs as they are often faced with difficult circumstances, where confidence in their abilities to deliver regardless of the situation normally carries the day. people who have high scores in self-efficacy are known to have patience; they persist even though faced with unfriendly situations (zhao, seibert & hills 2005). furthermore, they actively seek means of overcoming such challenges. ironically, some have the habit of seeking challenging opportunities (bandura 1997; baron, mueller & wolfe 2016). it could be that they are also driven by the premise that the higher the risk, the higher the returns. in light of the above, a person would not be surprised to learn that self-efficacy is related to business venture launch and business success. these are not easy circumstances, but materialise owing to self-efficacy, a characteristic found in entrepreneurs (chen, green & crick 1998; hmieleski & baron 2008). as highlighted earlier, individuals who score high on ese are known to pursue tasks that the general population is prepared to let go. willingness to become an entrepreneur willingness is defined in this study as the outcome of a comparison of the opportunity to become an entrepreneur and working as an employee (van praag & van ophem 1995). the interaction between willingness and opportunity is critical to the start-up decision and is negatively influenced by lack of financial, human capital or unfavourable environmental circumstances. according to shane and venkataraman (2000), the concept of opportunity recognition is critical as far entrepreneurship is concerned. they argued that in the absence of opportunity recognition, entrepreneurial activities will not materialise. the debate on the subjectivity or objectivity of opportunities is still ongoing among scholars (asante & affum-osei 2019). the sticking point is whether people create or discover opportunities (davidsson 2017; gonzález, husted & aigner 2017; wood 2017). as pointed out earlier, wee is most likely to exist when an individual perceives entrepreneurship as being more attractive than formal employment. this study contributes to this debate, and we argue that unwillingness to become an entrepreneur can only materialise when employees involved in dirty work perceive themselves as possessing a low entrepreneurial motivation score. hypothesis development several factors drive individuals and lead to them having that willingness to pursue entrepreneurship as a career. in line with the epai, the entrepreneurial motivation dimension comprises the di, ecom and ese, all of which positively influence a person’s wee (rwigema & venter 2004). desire for independence and willingness to become an entrepreneur one of the most mentioned factors that positively influence the willingness to pursue entrepreneurship as a career option is the desire to be independent (douglas & fitzsimmons 2005; kuratko, morris & covin 2011). previous research by lee and wong (2004) echoed similar sentiments, pointing out that people who exhibit a high need for independence are bound to seek careers with more freedom, and boundaryless careers such as entrepreneurship are known to reward people with such highly sought independence. evidence suggests that people who are more willing to pursue entrepreneurship as a career option are driven by the need for independence, for example, studies by wilson, marlino and kickul (2004) and walter and block (2016). in the extant literature, the di is also referred to as the need for autonomy (venter et al. 2015). the need for autonomy and self-directing has been offered as an underlying motive as to why some individuals may be interested in working in smaller firms. in agreement, al-jubari, hassan and hashim (2017) further provided evidence on the importance of autonomy in respect of the idea of pursuing entrepreneurship as a career. furthermore, the need for autonomy has been identified as a predictor of the successful fit of an individual with an entrepreneurial position (bhardwaj & mittal 2017; vecchio 2003). venter et al. (2015) noted that the argument as to why some individuals would prefer to work for smaller firms as opposed to large firms is based on the notion that in large firms, there is limited room for individuals to fully express their skills, personal freedom and potential entrepreneurial initiative. thus, boundaryless careers such as entrepreneurship reward people with the desired independence (hytti 2010; sullivan 1999). given this discussion, it is relatively correct to assume that if employees involved in dirty work desire independence, there is a high probability that they could be willing to pursue entrepreneurship as a career. this study examined this aspect, and the study thus contributes to the literature by indicating the relationship that exists between di and the willingness to pursue entrepreneurship as a career. economic motivations and willingness to become an entrepreneur the extant literature argues that the majority of entrepreneurial ventures are established by their owners based on the belief that pursuing boundaryless careers such as entrepreneurship promises more expected utility than formal work at a given firm or unemployment (douglas & shepherd 2000; van praag & cramer 2001). defillippi and arthur (1996:116) pointed out that ‘boundaryless careers are sequences of jobs opportunities that go beyond the boundaries of single employment settings’. research concurs, pointing out that entrepreneurship provides individuals with the opportunity to take control of their careers and serves as a viable career alternative to precarious circumstances at work (patrick, stephens & weinstein 2016; weller et al. 2016). largely, entrepreneurship is caused by intrinsic and extrinsic motivations (bénabou & tirole 2003; deci & ryan 1985; rajagopala 1989; ryan & deci 2000). intrinsic and extrinsic motivations cause a goal-directed behaviour. the extant literature has pointed out that when an individual is driven by economic rewards towards the demonstration of an entrepreneurial behaviour, extrinsic motivation is assumed to be at play (antonioli et al. 2016). a person’s desire for need of fulfilment leads to the willingness to demonstrate entrepreneurial activities (haivas, hofmans & pepermans 2014). this is because a need creates tension in the individual’s mind. the tension only vanishes when the desired environment has satisfied the need. in the context of this study, the desired environment would be the achievement of significant economic returns, for example, profits that come in the form of rewards for demonstrating entrepreneurial activities (kautonen, kibler & minniti 2017). maslow’s hierarchy of needs has identified various needs such as physiological, safety, social, esteem and self-actualisation. these needs are a trigger for a specific human behaviour. needs always exist in humans and largely act as a compelling force towards an individual’s wee, among other behaviours. thus, given that employees involved in dirty work are driven by economic rewards, this would positively influence their willingness to pursue entrepreneurship as a career option. entrepreneurial self-efficacy and willingness to become an entrepreneur people can have certain orientations towards work that reflect their personal motives, values and talents. these orientations, known as career anchors, are the manifestation of a person’s self-efficacy in their career choice (bandura 1986). one of the career anchors is where the individual’s primary concern is to create something new, involving the motivation to overcome obstacles, the willingness to run risks and the desire for personal prominence in whatever is accomplished (bandura 1997). self-efficacy is a crucial construct in terms of motivation, which influences individual choices, goals, emotional reactions, efforts, coping and persistence. largely, individual self-efficacy beliefs influence the challenges a person is willing to face, including the duration of perseverance. the concept of self-efficacy has so far been extended to ese (venter et al. 2015). entrepreneurial self-efficacy describes people’s beliefs that they are capable of carrying out the various tasks and roles of an entrepreneur. individuals who are high in ese are able to (1) assess the environment to be opportunistic rather than risky, (2) believe in their ability to achieve goals and (3) perceive a low probability of failure (mcshane & von glinow 2003; venter et al. 2015). the study by antoncic, antoncic and aaltonen (2016) further argued that if the probability of new venture start-ups is to increase, ese should be a focus area for practitioners. current research on ese has focused on the role of context, that is, microand macro-environmental factors, in an individual’s beliefs and confidence to start an entrepreneurial venture (eesley & wang 2017; mauer, neergaard & linstad 2009; schmutzler, andonova & diaz-serrano 2019; stam & spiegel 2018; wyrwich, stuetzer & sternberg 2016). the mentioned studies provide evidence suggesting that contextual variables play a critical role independently and collectively in shaping an individual’s beliefs and confidence with regard to their willingness to become entrepreneurs. given this discussion, the role of ese, as far as entrepreneurial behaviour among individuals is concerned, cannot be underestimated. this study seeks to further contribute to this debate by providing evidence by investigating the predictive capacity of ese on wee making use of a unique sample of employees involved in dirty work, classified to be physical. thus, we argue that if employees involved in dirty work perceive themselves to be high in ese, the probability is also high that they could be willing to pursue entrepreneurship as a career choice. given the above discussion, the study hypothesises that: h1: desire for independence, ecom and ese predict wee for employees involved in dirty work. methodology the study adopted the positivist approach, which, according to hacking (1981:1–2), ‘is a scientific investigation based on realism and an attempt to find out about the one real world’. walliman (2016) highlighted that positivists argue that regardless of what people think and cumulative false starts that are common enough, there is always a best explanation of any aspect under investigation. in other words, science builds on what is already known. this study is quantitative by nature and descriptive by design. primary data were gathered through a self-administered questionnaire. six hundred self-administered questionnaires were issued in selected cities and towns of the eastern cape province, south africa, through the help of various municipalities and independent organisations. three hundred and forty-eight employees involved in dirty work, classified to be physical, were able to return completed questionnaires with enough information to proceed to the analysis stage. measures the study relied on the epai tool to determine what constitutes entrepreneurial motivation. being guided by the contents of the epai with regard to di, ecom and ese, we identified different scale items from empirical literature that we adopted and modified for all three explanatory variables. desire for independence was measured through a three-item scale, and an example of the scale items reads as follows: ‘freedom from supervision’ (brice & nelson 2008). to measure ecom, four items from brice and nelson (2008) were used; an example of the scale items reads, ‘making money as a business owner to meet your needs’. to measure ese, six of the scale items developed by de noble, jung and ehrlich (1999) were adopted and modified for this study with an additional seven items being added to form a 13-item scale. an example of the scale item reads, ‘i am comfortable with uncertainty and risk’. to measure wee, we adopted and revised mitchell, seawright and morse’s (2000) 18-item willingness script. the script is originally made up of nine expert cues and nine non-expert cues. a person who is considered willing is expected to choose the expert script and ignore the non-expert cues. following their approach, we revised their scale to a five-point likert scale. thus, both explanatory and dependent variable scale items were measured on a five-point likert scale ranging from 1 = not at all true of myself to 5 = true of myself. ethical consideration the study is being published from a phd theses entitled “the influence of entrepreneurial competencies and intentions on the willingness of dirty workers to become entrepreneurs” and it was cleared by the university of fort hare ethics committee with certificate reference number: chi211ssha01. results the statistical package for social sciences (spss) version 24 was used to analyse the data. the data analysis involved two stages. stage 1, confirmatory factor analysis, was undertaken to identify the entrepreneurial motivation factors. factor analysis is a tool designed to simplify the correlational relationships between a number of continuous variables. the kaiser–meyer–olkin (kmo) of sampling adequacy score of 0.903 with a significance level of 0.000 was found. the observed kmo allowed the authors to proceed with factor analysis and the results indicated that four factors were to be extracted which explained a total variance of 64.22%. factor 1 with six items had an eigenvalue of 12.293 explaining 42.389% of total variance and a reliability score of 0.85. the first factor was named ese. the second factor with five items had an eigenvalue of 2.755 explaining 9.501% of total variance and a reliability score of 0.912 and it was termed ecom. six items clustered under factor 3 with a reliability of 0.924 and an eigenvalue of 2.178 explaining 7.509% of total variance was named di. the last factor clustered under factor 4 with four items was termed wee. factor 4 had a reliability score of 0.721 and an eigenvalue of 1.398 explaining 4.821% of the total variance. multiple linear regression analysis was carried out to examine the predictive capacity of ecom, di and ese regarding wee for employees involved in dirty work. to proceed with the multiple linear regression analysis, the data were first investigated to determine if they met the assumption of independent errors and homoscedasticity, and the data were further investigated for collinearity. to assess if the data met the assumption of independent errors, the durbin–watson test statistic was observed and the score of 1.526 was found. the conservative rule with regard to the durbin–watson statistic outlines that values should not be less than 1 or above 3. however, values close to 2 are most preferred. in this study, we concluded that the value of 1.526 is sufficient to suggest that the assumption of independent errors was almost met. data were further investigated for collinearity, and the variance inflation factor (vif) and tolerance statistics were examined. the vif values were all within the accepted range, that is, below 10 with ecom = 1.762, di = 2.291 and ese = 1.957. the tolerance statistics were all above 0.2, with ecom = 0.568, di = 0.436 and ese = 0.511. given that the vif and the tolerance statistics were within the accepted thresholds, it can be concluded that there is collinearity in the data. finally, the data were analysed to investigate if it satisfied the assumption of linearity and homoscedasticity. the plots of standardised residuals against the predicted values were analysed. the array of dots in the graphs were not funnelling out and no curve was observed. generally, the points between the dots were evenly dispersed throughout the plots. the just described graph outlook, according to field (2013), paints a picture of where the assumption of linearity and homoscedasticity are being met (see figure 1). figure 1: plots of standardised residuals: (a) normal p-p plot of regression standardised residuals; (b) partial regression plots on the relationship between desire for independence and willingness to become an entrepreneur; (c) partial regression plot on the relationship between economic motivation and willingness to become an entrepreneur; (d) partial regression plot on the relationship between entrepreneurial self-efficacy and willingness to become an entrepreneur. multiple linear regression analysis of desire for independence, economic motivation and entrepreneurial self-efficacy from the multiple linear regression results, the pearson’s correlation (r) indicates that all predictors were positively and significantly related with wee as observed by r for di – wee = 0.261, r for ecom – wee = 0.337 and r for ese – wee = 0.349. in other words, employees involved in dirty work with high entrepreneurial motivation as measured by di, ecom and ese are more likely to be willing to become entrepreneurs. table 1 is a summary of multiple linear regression analysis results, indicating beta weights, standard errors and their respective p-values. table 1: linear model of predictors of willingness to become an entrepreneur. the combined effect of three predictor variables resulted in a multiple linear regression model with an r2 = 0.154, f (3, 337) = 20, 488, p < 0.001. however, in the model, only ecom and ese have a unique contribution as observed significant and positive regression weights. desire for independence results indicate that it is negatively and insignificantly related to wee for employees involved in dirty work as observed on negative regression beta weights that are associated with a p-value of 0.341, far above the cut-off limit of p = 0.05. discussion the main contribution of this study to the literature is that instead of adapting the scales items as proposed by santos et al. (2013), we relied on other scales found in the extant literature and they also proved to be reliable in measuring entrepreneurial motivation of employees involved in dirty work. in other words, the study concurs with santos et al. (2013) that to measure entrepreneurial motivation, di, ecom and ese are critical factors. our findings further indicate that ecom plays a critical role in predicting wee for employees involved in dirty work; for example, the results show that as ecom increases by 1 unit, wee for employees involved in dirty work increases by 0.213 units. this finding indicates that employees involved in dirty work accept the personal financial risks, that is, the probability of losing capital that is associated with owning an entrepreneurial venture. however, from these results, it can be concluded that employees involved in dirty work are more focused on economic benefits they are likely to gain from potential success of the entrepreneurial venture leading to their willingness to become entrepreneurs (segal, borgia & schoenfeld 2005). baumol (1990) also suggested that individuals are motivated by the reward structure in the economy leading to them considering entrepreneurship as a viable career. praag and cramer (2001) also found that individuals would consider entrepreneurship as a potential career when expected economic rewards exceed expected income from formal employment. similarly, the study provides evidence that ese is critical concerning wee for employees involved in dirty work. thus, as ese increases by 1 unit, wee for employees involved in dirty work also increases by 0.26 units. rauch and frese (2007) summarised the findings of various studies and provided evidence concurring with our findings that ese for starting a new entrepreneurial venture was a critical factor in increasing the probability of a new venture start-up. the study by drnovšek, wincent and cardon (2010) also pointed out that a common finding among literature that investigated the influence of self-efficacy on formation of entrepreneurial intentions was that people with a high score in ese are more likely to start entrepreneurial ventures. given the study’s findings, chances are high that employees involved in dirty work are more likely to venture into entrepreneurship, as they believe that they are able to carry out all necessary tasks associated with new venture creation with success. however, we also found that di is negatively related to wee. the possible explanation could be that employees involved in dirty work do not find their current work demands or work situation stressing. in addition, it could be that they are able to cope with work demands regardless of the work environment. as a result, they do not place more value on the aspect of being independent. the most interesting aspect is that they place more emphasis on ecom. this could be the result of what they observe in society or their continued interaction with their environment (obodaru 2012). people who run successful entrepreneurial businesses are being rewarded through profits and prestige. resultantly, they occupy a higher standing in society and employees involved in dirty work envy or emulate such individuals, leading to their willingness to consider entrepreneurship as a career choice. similarly, employees involved in dirty work are aware that failure to believe in their capabilities will not benefit them in the face of entrepreneurial challenges. it is our belief that employees involved in dirty work are well aware of what could be a major obstacle in their quest for a higher standing and that is entrepreneurial challenges. their ability to manoeuvre around them surely should result in them gaining prestige and more recognition in the community. down and warren (2008) and mahto and mcdowell (2018) concurred with this and pointed out that entrepreneurship as a career choice for an individual should be associated with the individual’s identity. it is widely known that running a business enterprise is more stressful than most formal jobs, especially if there are few people involved in daily business transactions. as a result, trust and belief in their own capabilities are critical to getting the business off the ground. hence, to achieve a higher standing in the society, employees involved in dirty work see ese as a crucial factor leading to their willingness to become entrepreneurs. in other words, our study gives policy-makers, educators and practitioners clear direction with regard to ‘what of’ entrepreneurial motivation they should emphasise and focus on to enhance willingness among non-entrepreneurs, especially those in dirty work, to kick-start new entrepreneurial ventures. limitations and future research future research should address the limitations of this study, that is, relying on one category of employees in dirty work. dirty work is a broad concept and this study relied on employees involved in physically tainted jobs, but ignored those involved in morally and socially tainted jobs. in other words, the results of the study may not be generalised to the entire population of employees involved in dirty work. in addition, the results should be interpreted with caution even if they are being generalised to those involved in physically tainted jobs, given that the definition of physically tainted jobs is broad and what applies to one community may not be applicable to another. in future, mixed-method research, where results can be triangulated with other sources of data, could be undertaken and prove to be more robust concerning policy and education. conclusion, theoretical and managerial implications this study was undertaken with the goal of identifying the predictive capacity of di, ecom and ese regarding willingness to become entrepreneurs for employees involved in dirty work, classified to be physical. the study adopted the entrepreneurial motivation model to explain and motivate why employees involved in dirty work could consider becoming entrepreneurs. the entrepreneurial motivation model suggested that this revolves around improving a person’s identity or seeking to establish a new and more salient identity. owing to stigma, employees involved in dirty work lack a desired social identity and therefore entrepreneurship as a career is one corrective measure they can pursue to achieve a high-standing position in society. the study found that in the quest to achieve a high-standing position in the society, ecom and ese play more crucial roles than di in wee for employees involved in dirty work. based on the study’s findings, many implications for the public, managers, policy-makers, education and training institutions can be found. thus, the mentioned stakeholders should present ecom and ese as key drivers towards the demonstration of entrepreneurial activities to employees involved in dirty work who are stigmatised. by doing so, employees involved in dirty work who are contemplating career change will be able to evaluate their willingness to become entrepreneurs based on these factors. in addition, policy-makers should motivate employees involved in dirty work and inspire them towards economic rewards associated with entrepreneurial activities, which, in turn, will serve as their high road towards attaining a new social standing in the society. acknowledgements the authors greatly appreciate the cooperation they received from employees involved in dirty work during field work. competing interests the authors declare that they have no financial or personal relationships that could have negatively influenced them in writing this article. author’s contributions h.s. conceptualised the study, did the write-up of the study, and collected and analysed the data. w.t.c. guided the entire writing of the study and supported h.s. during the course of the study. funding this study was partly funded by the national research foundation (nrf). data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references al-jubari, i., hassan, a. & hashim, j., 2017, ‘the role of autonomy as a predictor of entrepreneurial intention among university students in yemen’, international journal of entrepreneurship and small business 30(3), 325–340. https://doi.org/0.1504/ijesb.2017.10002553 alvesson, m. & willmott, h., 2002, ‘identity regulation as organizational control: producing the appropriate individual’, journal of management studies 39(5), 619–644. https://doi.org/10.1111/1467-6486.00305 amabile, t., 1997, ‘entrepreneurial creativity through motivational synergy’, journal of creative behaviour 31(1), 18–26. https://doi.org/10.1002/j.2162-6057.1997.tb00778.x antoncic, b., antoncic, j.a. & aaltonen, h.m., 2016, ‘marketing self-efficacy and firm creation’, journal of small business and enterprise development 23(1), 90–104. https://doi.org/10.1108/jsbed-07-2015-0093 antonioli, d., nicolli, f., ramaciotti, l. & rizzo, u., 2016, ‘the effect of intrinsic and extrinsic motivations on academics’ entrepreneurial intention’, administrative sciences 6(4), 15. asante, e.a. & affum-osei, e., 2019, ‘entrepreneurship as a career choice: the impact of locus of control on aspiring entrepreneurs’ opportunity recognition’, journal of business research 98, 227–235. https://doi.org/10.1016/j.jbusres.2019.02.006 ashforth, b.e. & mael, f., 1989, ‘social identity theory and the organization’, academy of management review 14(1), 20–39. https://doi.org/10.2307/258189 ashforth, b.e. & kreiner, g.e., 1999, ‘how can you do it? dirty work and the challenge of constructing a positive identity’, academy of management review 24(3), 413–434. https://doi.org/10.2307/259134 ashforth, b.e. & kreiner, g.e., 2013, ‘profane or profound? finding meaning in dirty work’, in b.j. dik, z.s. byrne & m.f. steger (eds.), purpose and meaning in the workplace, pp. 127–150, american psychological association, washington, dc. ashforth, b.e. & schinoff, b.s., 2016, ‘identity under construction: how individuals come to define themselves in organizations’, annual review of organizational psychology and organizational behaviour 3, 111–137. åstebro, t., 2017, ‘the private financial gains to entrepreneurship: is it a good use of public money to encourage individuals to become entrepreneurs?’ small business economics 48(2), 323–329. bandura, a., 1986, ‘the explanatory and predictive scope of self-efficacy theory’, journal of social and clinical psychology 4(3), 359–373. http://doi.org/10.1521/jscp.1986.4.3.359 bandura, a., 1997, self-efficacy: the exercise of control, freeman, new york. baron, r.a., mueller, b.a. & wolfe, m.t., 2016, ‘self-efficacy and entrepreneurs’ adoption of unattainable goals: the restraining effects of self-control’, journal of business venturing 31(1), 55–71. https://doi.org/10.1016/j.jbusvent.2015.08.002 baum, j.r. & locke, e.a., 2004, ‘the relationship of entrepreneurial traits, skill and motivation to subsequent venture growth’, journal of applied psychology 89(4), 587–598. https://doi.org/10.1037/0021-9010.89.4.587 baum, j.r., locke, e.a. & smith, k.g., 2001, ‘a multidimensional model of venture growth’, academy of management journal 44(2), 292–303. baumeister, r.f., 1998, ‘the self’, in g.l. gardner (ed.), the handbook of social psychology, vol. 1, 4th edn., pp. 680–726, mcgraw-hill, new york. baumol, w.j., 1990, ‘entrepreneurship: productive, unproductive and destructive’, journal of political economy 98, 893–921. bénabou, r. & tirole, j., 2003, ‘intrinsic and extrinsic motivation’, review of economic studies 70(3), 489–520. bhardwaj, b.r. & mittal, v., 2017, ‘women entrepreneurship: a tool for work life balance’, in international conference on technology and business management, bvimr, new delhi, april 10–12, 2017, pp. 44–50. blustein, d.l., devenis, l.e. & kidney, b.a., 1989, ‘relationship between the identity formation process and career development’, journal of counselling psychology 36(2), 196–202. http://doi.org/10.1037/0022-0167.36.2.196 bowles, s. & polania-reyes, s., 2012, ‘economic incentives and social preferences: substitutes or complements?’ journal of economic literature 50(2), 368–425. https://doi.org/10.1257/jel.50.2.368 brice, j, jr. & nelson, m., 2008, ‘the impact of occupational preferences on the intent to pursue an entrepreneurial career’, academy of entrepreneurship journal 14(1), 13–36. carsrud, a. & brännback, m., 2011, ‘entrepreneurial motivations: what do we still need to know?’ journal of small business management 49(1), 9–26. https://doi.org/10.1111/j.1540-627x.2010.00312.x chen, c.c., greene, p.g. & crick, a., 1998, ‘does entrepreneurial self-efficacy distinguish entrepreneurs from managers?’ journal of business venturing 13(4), 295–316. https://doi.org/10.1016/s0883-9026(97)00029-3 chlosta, s., patzelt, h., klein, s.b. & dormann, c., 2012, ‘parental role models and the decision to become self-employed: the moderating effect of personality’, small business economics 38(1), 121–138. https://doi.org/10.1007/s11187-010-9270-y davidsson, p., 2017, ‘opportunities, propensities, and misgivings: some closing comments’, journal of business venturing insights 8, 123–124. https://doi.org/0.1016/j.jbvi.2017.09.002 deci, e.l. & ryan, r.m. 1985, intrinsic motivation and self-determination in human behaviour, plenum, new york. deery, s., kolar, d. & walsh, j., 2019, ‘can dirty work be satisfying? a mixed method study of workers doing dirty jobs’, work, employment and society 33(4), 631–647. https://doi.org/10.1177/0950017018817307 defillippi, r.j. & arthur, m.b., 1996, ‘boundaryless contexts and careers: a competency-based perspective’, in m.b. arthur & d.m. rousseau (eds.), the boundaryless career, pp. 116–131, oxford university press, new york. douglas, m., 1966, purity and danger: an analysis of the concepts of pollution and taboo, ark paperbacks, london. douglas, e. & shepherd, d.a., 2000, ‘entrepreneurship as a utility maximizing response’, journal of business venturing 15(3), 231–252. https://doi.org/10.1016/s0883-9026(98)00008-1 douglas, e.j. & fitzsimmons, j.r., 2005, ‘entrepreneurial intentions towards individual vs. corporate entrepreneurship’, in seaanz 2005 conference, pp. 25–30, armidale, nsw. down, s. & warren, l., 2008, ‘constructing narratives of enterprise: clichés and entrepreneurial self-identity’, international journal of entrepreneurial behaviour and research 14(1), 4–23. https://doi.org/10.1108/13552550810852802 drnovšek, m., wincent, j. & cardon, m.s., 2010, ‘entrepreneurial self-efficacy and business start-up: developing a multi-dimensional definition’, international journal of entrepreneurial behavior and research 16(4), 329–348. https://doi.org/10.1108/13552551011054516 eesley, c. & wang, y., 2017, ‘social influence in career choice: evidence from a randomized field experiment on entrepreneurial mentorship’, research policy 46(3), 636–650. https://doi.org/10.1016/j.respol.2017.01.010 field, a., 2013, discovering statistics using ibm spss statistics, 4th edn., sage, thousand oaks, ca. fitz-koch, s., cooper, s. & discua cruz, a., 2019, ‘entrepreneurship and rural family identity: understanding portfolio development in a family farm business’, in m. rautiainen, p. rosa, t. pihkala, m. parada & a. cruz (eds.), the family business group phenomenon, palgrave macmillan, cham. goffman, e., 1963, stigma. notes on a spoiled identity, prentice-hall, englewood cliffs, nj. gonzález, m., husted, b.w. & aigner, d.j., 2017, ‘opportunity discovery and creation in social entrepreneurship: an exploratory study in mexico’, journal of business research 81, 212–220. https://doi.org/10.1016/j.jbusres.2016.10.032 hacking, i. (ed.), 1981, scientific revolutions, oxford university press, oxford. haivas, s., hofmans, j. & pepermans, r., 2014, ‘what motivates you doesn’t motivate me: individual differences in the needs satisfaction–motivation relationship of romanian volunteers’, applied psychology 63(2), 326–343. https://doi.org/10.1111/j.1464-0597.2012.00525.x hisrich, r.d., 1985, ‘the women entrepreneur in the united states and puerto rico: a comparative study’, leadership and organisational development journal 5(5), 3–8. https://doi.org/10.1108/eb053558 hmieleski, k.m. & baron, r.a., 2008, ‘when does entrepreneurial self-efficacy enhance versus reduce firm performance?’ strategic entrepreneurial journal 2(1), 57–72. https://doi.org/10.1002/sej.42 hornaday, j. & aboud, j., 1971, ‘characteristics of successful entrepreneurs’, personal psychology 24(2), 141–153. https://doi.org/10.1111/j.1744-6570.1971.tb02469.x hytti, u., 2010, ‘contextualizing entrepreneurship in the boundaryless career’, gender in management: an international journal 25(1), 64–81. ibarra, h. & barbulescu, r., 2010, ‘identity as narrative: prevalence, effectiveness, and consequences of narrative identity work in macro work role transitions’, academy of management review 35(1), 135–154. https://doi.org/10.5465/amr.35.1.zok135 kautonen, t., kibler, e. & minniti, m., 2017, ‘late-career entrepreneurship, income and quality of life’, journal of business venturing 32(3), 318–333. https://doi.org/10.1016/j.jbusvent.2017.02.005 kim-soon, n., rahman, a. & nadia, n., 2016, ‘theory of planned behaviour: undergraduates’ entrepreneurial motivation and entrepreneurship career intention at a public university’, journal of entrepreneurship: research and practice 2016, 1–14. https://doi.org/10.5171/2016.792385 kuratko, d.f., 2016, entrepreneurship, theory, process and practice, 10th edn., cengage learning, boston, ma. kuratko, d.f., morris, m.h. & covin, j.g., 2011, corporate innovation and entrepreneurship: entrepreneurial development within organizations, south-western cengage learning, mason, oh. larkin, l., 1987, ‘identity and fear of success’, journal of counselling psychology 34(1), 38–45. http://dx.doi.org/10.1037/0022-0167.34.1.38 lee, s.h. & wong, p.k., 2004, ‘an exploratory study of technopreneurial intentions: a career anchor perspective’, journal of business venturing 19, 7–28. liñán, f., ceresia, f. & bernal, a., 2018, ‘who intends to enroll in entrepreneurship education? entrepreneurial self-identity as a precursor’, entrepreneurship education and pedagogy 1(3), 222–242. https://doi.org/10.1177/2515127418780491 lindquist, m.j., sol, j. & van praag, m., 2015, ‘why do entrepreneurial parents have entrepreneurial children?’ journal of labour economics 33(2), 269–296. https://doi.org/10.1086/678493 mahto, r.v. & mcdowell, w.c., 2018, ‘entrepreneurial motivation: a non-entrepreneur’s journey to become an entrepreneur’, international entrepreneurship management journal 14(3), 513–526. markus, h. & nurius, p., 1986, ‘possible selves’, american psychologist 41(9), 954–969. mauer, r., neergaard, h. & linstad, a.k.a., 2009, ‘self-efficacy: conditioning the entrepreneurial mind-set’, in a.l. carsrud & m. brännback (eds.), understanding the entrepreneurial mind: opening the black box, pp. 233–257, springer verlag, new york. mcshane, s.l. & von glinow, m.a., 2003, ‘employment relationship and career dynamics’, in s.l. mcshane & m.a. von glinow (eds.), organizational behaviour: emerging realities for the workplace revolution, pp. 552–555, mcgraw-hill, new york. miller, t.l., grimes, m.g., mcmullen, j.s. & vogus, t.j., 2012, ‘venturing for others with heart and head: how compassion encourages social entrepreneurship’, academy of management review 37(4), 616–640. https://doi.org/10.5465/amr.2010.0456 mitchell, r.k., seawright, k.w. & morse, e.a., 2000, ‘cross-cultural cognitions and the venture creation decision’, academy of management journal 43(5), 974–993. https://doi.org/10.2307/1556422 nicholson, l. & anderson, a.r., 2005, ‘news and nuances of the entrepreneurial myth and metaphor: linguistic games in entrepreneurial sense-making and sense-giving’, entrepreneurship theory and practice 29(2), 153–172. https://doi.org/10.1111/j.1540-6520.2005.00074.x obodaru, o., 2012, ‘the self not taken: how alternative selves develop and how they influence our professional lives’, academy of management review 37(1), 34–57. https://doi.org/10.5465/amr.2009.0358 patrick, c., stephens, h. & weinstein, a., 2016, ‘where are all the self-employed women? push and pull factors influencing female labour market decisions’, small business economics 46(3), 365–390. praag, c.m. & cramer, j.s., 2001, ‘the roots of entrepreneurship and labour demand: individual ability and low risk’, economica 68(269), 45–62. rajagopala, d., 1989, ‘entrepreneurial motivation’, in s. uddin (ed.), entrepreneurial development in india, pp. 45–48, mittal publications, new delhi. rauch, a. & frese, m., 2007, ‘let’s put the person back into entrepreneurship research: a meta-analysis on the relationship between business owners’ personality traits, business creation, and success’, european journal of work and organizational psychology 16(4), 353–385. rwigema, h. & venter, r., 2004, advanced entrepreneurship, oxford university press, cape town. ryan, r.m. & deci, e.l., 2000, ‘intrinsic and extrinsic motivations: classic definitions and new directions’, contemporary education psychology 25(1), 54–67. https://doi.org/10.1006/ceps.1999.1020 santos, s.c., caetano, a. & curral, l., 2013, ‘psychosocial aspects of entrepreneurial potential’, journal of small business and entrepreneurship 26(6), 661–685. https://doi.org/10.1080/08276331.2014.892313 santos, s.c., curral, l. & caetano, a., 2010, ‘cognitive maps in early entrepreneurship stages: from motivation to implementation’, the international journal of entrepreneurship and innovation 11(1), 29–44. https://doi.org/10.5367/000000010790772403 scarborough, n.m., 2012, effective small business management: an entrepreneurial approach, 10th edn., prentice hall, upper saddle river, nj. schmutzler, j., andonova, v. & diaz-serrano, l., 2019, ‘how context shapes entrepreneurial self-efficacy as a driver of entrepreneurial intentions: a multilevel approach’, entrepreneurship theory and practice 43(5), 880–920. https://doi.org/10.1177/1042258717753142 segal, g., borgia, d. & schoenfeld, j., 2005, ‘the motivation to become an entrepreneur’, international journal of entrepreneurial behaviour and research 11(1), 42–57. https://doi.org/10.1108/13552550510580834 shane, s., locke, e.a. & collins, c.j., 2003, ‘entrepreneurial motivation’, human resource management review 13(2), 257–279. shane, s. & venkataraman, s., 2000, ‘the promise of entrepreneurship as a field of research’, academy of management review 25(1), 217–226. https://doi.org/10.2307/259271 spagnoli, p., santos, s.c., caetano, a. & lo presti, a., 2016, ‘a contribution towards the validation of the italian version of the entrepreneurial potential assessment inventory’, bpa-applied psychology bulletin (bollettino di psicologia applicata) 64(275), 37–49. stam, e. & spiegel, b., 2018, ‘entrepreneurial ecosystems’, in r. blackburn, d. de clercq, d. heinonen & z. wang (eds.), the sage handbook of small business and entrepreneurship, sage, london. strube, m.j., 1990, ‘in search of self: balancing the good and the true’, personality and social psychology bulletin 16(4), 699–704. https://doi.org/10.1177/0146167290164010 sullivan, s.e., 1999, ‘the changing nature of careers: a review and research agenda’, journal of management 25, 457–484. swann, w.b., 1984, ‘quest for accuracy in person perception: a matter of pragmatics’, psychological review 91(4), 457–477. http://doi.org/10.1037/0033-295x.91.4.457 trope, y., 1986, ‘self-enhancement and self-assessment in achievement behaviour’, in r.m. sorrentino & e.t. higgins (eds.), handbook of motivation and cognition: foundations of social behaviour, pp. 350–378, guilford press, new york. valtorta, r.r., baldissarri, c., andrighetto, l. & volpato, c., 2019, ‘dirty jobs and dehumanization of workers’, british journal of social psychology 2019, 1–16. https://doi.org/0.1111/bjso.12315 van praag, c. & van ophem, h., 1995, ‘determinants of willingness and opportunity to start as an entrepreneur’, kyklos 48(4), 513–540. https://doi.org/10.1111/j.1467-6435.1995.tb01282.x van praag, c.m. & cramer, j.s., 2001, ‘the roots of entrepreneurship and labour demand: individual ability and low risk aversion’, economica 68(269), 45–62. van rooyen, l., du toit, d.h., botha, e. & rothmann, s., 2010, ‘artisan retention in an organisation in south africa’, south african journal of human resource management 8(1), 1–8. https://doi.org/10.4102/sajhrm.v8i1.300 vecchio, r.p., 2003, ‘entrepreneurship and leadership: common trends and common threads’, human resources management review 13(2), 303–327. https://doi.org/10.1016/s1053-4822(03)00019-6 venter, r., urban, b., beder, l., oosthuizen, c., reddy, c. & venter, e., 2015, entrepreneurship, theory in practice, 3rd edn., oxford university press, cape town. walliman, n., 2016, social research methods, 2nd edn., sage, los angeles, ca. walter, s.g. & block, j.h., 2016, ‘outcomes of entrepreneurship education: an institutional perspective’, journal of business venturing 31(2), 216–233. https://doi.org/10.1016/j.jbusvent.2015.10.003 walter, s.g. & heinrichs, s., 2015, ‘who becomes an entrepreneur? a 30-years-review of individual-level research’, journal of small business and enterprise development 22(2), 225–248. https://doi.org/10.1108/jsbed-09-2012-0106 weitzer, r., 2017, ‘resistance to sex work stigma’, sexualities 21(5–6), 717–729. https://doi.org/10.1177/1363460716684509 weller, c.e. wenger, j.b., lichtenstein, b. & arcand, c., 2016, ‘push or pull: changes in the relative growth of entrepreneurship among older households’, the gerontologist 58(2), https://doi.org/10.1093/geront/gnw145 wilson, f., marlino, d. & kickul, j., 2004, ‘our entrepreneurial future: examining the diverse attitudes and motivations of teens across gender and ethnic identity’, journal of developmental entrepreneurship 9(3), 177–197. wood, m., 2017, ‘misgivings about dismantling the opportunity construct’, journal of business venturing insights 7, 21–25. https://doi.org/10.1016/j.jbvi.2017.01.001 wyrwich, m., stuetzer, m. & sternberg, r., 2016, ‘entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: a tale of two regions’, small business economics 46(3), 467–492. yost, j.h. & strube, m.j., 1992, ‘the construction of the self: an evolutionary view’., current psychology 11(2), 110–121. http://doi.org/10.1007/bf02686833 zhao, h., seibert, s.e. & hills, g.e., 2005, ‘the mediating role of self-efficacy in the development of entrepreneurial intentions’, journal of applied psychology 90(6), 1265–1272. http://doi.org/10.1037/0021-9010.90.6.1265 appendix 1 summary of multiple linear regression analysis output table 1-a1: model summary. table 2-a1: anova†. table 3-a1: coefficients†. table 4-a1: collinery diagnostics†. abstract introduction the manufacturing small or medium enterprise and generic critical success factors balanced scorecard and development techniques research method and design results conclusion acknowledgements references appendix 1 appendix 2 appendix 3 about the author(s) arthur reynolds school of accounting, nelson mandela university, south africa houdini fourie school of accounting, nelson mandela university, south africa lourens erasmus department of financial governance, university of south africa, south africa citation reynolds, a., fourie, h. & erasmus, l., 2019, ‘a generic balanced scorecard for small and medium manufacturing enterprises in south africa’, southern african journal of entrepreneurship and small business management 11(1), a193. https://doi.org/10.4102/sajesbm.v11i1.193 original research a generic balanced scorecard for small and medium manufacturing enterprises in south africa arthur reynolds, houdini fourie, lourens erasmus received: 22 may 2018; accepted: 30 oct. 2018; published: 23 jan. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: prior research confirmed that the balanced scorecard (bsc) can be used successfully at manufacturing small and medium enterprises (smes), to assist with sustainability. south african smes have a low survival rate despite being a significant contributor to the local economy with the manufacturing sector in particular hampered by negative growth. aim: the objective of this study was to develop a bsc for manufacturing smes in south africa with measurable key performance indicators (kpis). setting: we conducted a delphi study with cost accounting specialists in different industries. methods: the development of the generic bsc was facilitated with a delphi survey and analytical hierarchy process (ahp). results: the research presents a generic yet flexible bsc for manufacturing smes. a total number of 12 generic and 104 specific kpis were identified. the results revealed a greater emphasis on the financial and customer perspectives that may be conducive to sme sustainability and success. conclusion: a generic bsc that can be adapted to specific organisational and industry requirements has the potential to enhance sme sustainability and success. introduction south african small and medium enterprises (smes) contribute up to 22% of gross domestic product in the economy (bureau for economic research 2016:31). yet the survival rate of south african smes is very low, with nearly 80% of all smes failing over the long term (brink, cant & ligthelm 2003:1; olawale & garwe 2010:729). the manufacturing sector is particularly vulnerable because of higher labour costs in comparison to other sectors, which results in a declined prevalence of manufacturing smes (bureau for economic research 2016:20). the high labour costs are further exacerbated by south african labour laws, which render the lay-off of unproductive and redundant staff cumbersome at best (bureau for economic research 2016:8). in addition, the high crime rate in south africa could hamper the development of manufacturing smes, probably as a result of increased security costs (sesep 2016:44). difficulties obtaining financing and inexperienced entrepreneurs are additional contributing factors to the demise of manufacturing smes (brink et al. 2003:18; olawale & garwe 2010:735). to facilitate the development of smes in south africa, the national development plan (ndp) was introduced by the south african national planning commission (ingle 2014:37). ingle opines that, although the ndp acknowledges the high labour costs and social problems, there may be other factors limiting the growth of smes (ingle 2014:38). as an important contributor to the south african economy, how can smes’ sustainability be improved? the balanced scorecard (bsc) is a measurement tool that may be used by an organisation to measure its financial and non-financial performance (kaplan & norton 1992:71). the bsc could enable an organisation to achieve its long-term strategic goals by managing the short-term targets (okongwu, brulhart & moncef 2015:698). furthermore, it may allow organisations to focus their attention only on those activities that are beneficial to the achievement of its strategic goals (andersen, cobbold & lawrie 2001:7). as a result, the bsc is considered a useful management tool for smes, although its implementation may differ from that of larger organisations (andersen et al. 2001:9; fernandes, raja & whalley 2006:633). critical success factors (csfs) are those factors contributing to an organisation’s long-term survival (rockart 1979:85). extant literature identifies different csfs for smes in developing countries. two primary csfs associated with smes in developing countries are operating costs and access to financial resources (nuntsu, tassiopoulos & haydam 2004:521; sesep 2016:57). it is considered important for smes to identify and address their csfs to ensure sustained growth (brink et al. 2003:19; ng & kee 2012:685; temtime & pansiri 2004:19). in order to address these csfs, the bsc can thus be useful to owners and managers of smes (ayvaz & pehlivanl 2011:146), because the bsc aligns the organisation with its strategic goals (andersen et al. 2001:9). measurements that can be quantified and used to track the csfs of an organisation, are key performance indicators (kpis) (fernandes et al. 2006:624). fernandes et al. (2006:631) suggest that smes should only focus on the essential kpis when implementing the bsc, that is on the quality of kpis rather than increasing the number of kpis. it is thus imperative that csfs for smes be investigated. it is evident from the literature consulted that the high failure rate of smes in south africa has an adverse effect on economic growth (bureau for economic research 2016; ingle 2014; sesep 2016). this may partly be attributable to two key aspects. firstly, the generic csfs for the sustained survival of manufacturing smes in south africa are not clearly outlined in published literature; and secondly, it is not clear how these csfs should be considered in a generic bsc for manufacturing smes’ sustainability. the research objective of this article is to propose measurable kpis that should be considered in a generic bsc for manufacturing smes. in doing so, this article defines the context of the manufacturing sme and its generic functions; identifies the csfs necessary for manufacturing smes to gain a competitive advantage; determines how the csfs can be considered in the bsc; and outlines the kpis to be included in the generic bsc for manufacturing smes. the manufacturing small or medium enterprise and generic critical success factors the modern manufacturing industry likely originated during the british industrial revolution in the 18th century as described by kelly, mokyr and o’grada (2014). the process of manufacturing includes people, machinery and tools in a facility such as a factory to produce a product for a customer (obi 2013:3–4; rajput 2007:1). manufacturing organisations in the sme category in south africa are defined as manufacturing organisations with an annual turnover of less than r163 million, with some factories having a turnover of less than r2 million (statistics south africa 2017:30). literature revealed that six generic functions or activities (or departments) could be identified at a manufacturing sme, namely production and product development; sales and distribution; customer service; purchasing; marketing; and management and administration (jespersen & skjøtt-larsen 2005:18; kahn 2015:46; obi 2013:12). it is likely that csfs can be attributed to specific activities. production was found to be essential and useful to measure performance (bhagwat & sharma 2007:48; gunasekaran, patel & mcgaughey 2004:337; khan & tidke 2013:1; kumar et al. 2016:1300). product development is considered an important function because of its focus on innovation and reduction of costs (dhurup & makhitha 2014:232; mendis & ganga 2013:93). the supply chain management (scm) function consists of the sales and distribution function, customer service and the purchasing function (jespersen & skjøtt-larsen 2005:13). measuring the performance of the scm functions allows managers to direct their focus at areas of improvement (afonso & cabrita 2015:279; callado & jack 2015:288; okongwu et al. 2015:698). measuring the csfs within the bsc could improve the effectiveness of the marketing function (engle 2005:135), which may have a significant influence on the overall performance of a manufacturing sme (mokhtar, yusoff & ahmad 2009:80; mokhtar, yusoff & arshad 2014:57). it is plausible that measuring the six activities within the bsc could enhance the effectiveness of the bsc. the performance of the six activities incorporated in a bsc is affected by the csfs, which is addressed next. owners of smes in south africa often have limited business acumen and the potential failure of smes can likely be attributed to this lack of skill (kirsten, vermaak & wolmarans 2015:32). the competence of the owner and manager of the manufacturing sme can be considered as a csf necessary for its sustainability (asare et al. 2015:32; nkosi, bounds & goldman 2013:9; okpara & kabongo 2009:16; okpara & wynn 2007:33). it can thus be argued that the performance measurement of the management and administration function is important for manufacturing smes’ sustainability. another csf at manufacturing smes that may be of importance to ensure suppliers are paid and production lines are running, is cash flow management (sebone & barry 2009:193). a lack of cash flow may be attributed to the lack of access to financing, which is a common barrier for manufacturing smes (asare et al. 2015:32; ghosh et al. 2001:209; moyo 2003:169; okpara & kabongo 2009:15; okpara & wynn 2007:31; yusuf 1995:72). because of the challenge of obtaining low-cost loans, smes are left with no choice but to opt for more expensive financing options (okpara & wynn 2007:31). the relationship between cash flow and the cost of financing suggests that measurement within a bsc may have to be conducted in parallel. government support can also be regarded as necessary for the sustainability of manufacturing smes, because a lack of government support could contribute to failure to increase their revenues (moyo 2003:169; onaolapo & oladejo 2011:318). failure to increase revenue because of a lack of government support can likely be attributed to a lack of funding to grow the customer base of manufacturing smes. apart from increasing revenues, manufacturing smes can also reduce operating costs to increase profits (hung, hung & lin 2015:200). this suggests that owners could counter a limited revenue base by managing their operating cost. the measurement of revenue, as well as cost, could therefore be regarded as generic csfs for manufacturing smes. to produce a high-quality product, it is vital to ensure the basic elements of total quality management (tqm) (charantimath 2011:76) are adhered to. measuring the effectiveness of tqm can enhance the financial performance of an organisation (mehralian et al. 2017:120). a high-quality product may form a basis for fostering customer relationships that is considered essential for organisational success (ghosh et al. 2001:209; moyo 2003:168). the customer relationship of the manufacturing sme needs to be maintained by a good product and at a competitive price, as well as with an effective aftersales service (benzing, chu & kara 2009:63; ghosh et al. 2001:211; temtime & pansiri 2004:23). customer relationships can also be influenced by the on-time delivery performance of the sme (belekoukias, garza-reyes & kumar 2014:5361; hung et al. 2015:198). there may also be a relationship between customer service delivery and the effectiveness of tqm (mehralian et al. 2017:120). it is plausible that customer requirements such as value for money, quality and acceptable service delivery have to be monitored from the customer’s viewpoint and internally to ensure that the cause and effect of these measures are addressed. these customer requirements could, therefore, be regarded as csfs for manufacturing smes. there may be an argument that resources such as ‘people and machinery necessary for customer satisfaction’ and ‘internal management’ must be managed and monitored. the development of people in the workplace was shown to be a csf for smes (avcikurt, altay & ilban 2011:161; sebone & barry 2009:192). by training people, it is possible to improve labour productivity, which is considered vital for manufacturing sme success (santos-requejo & gonzález-benito 2000:216). labour productivity, customer satisfaction and the organisational performance, in general, can also be improved if employees are satisfied in the working environment (antoncic & antoncic 2011:600; jeon & choi 2012:341). it is likely that non-measurement of people and machinery could have an impact on the csfs mentioned earlier and it may, therefore, have to be considered as a generic csf for manufacturing smes. information and communications technology (ict) is another critical contributing factor to manufacturing smes’ success. the effective implementation and use of ict at manufacturing smes can influence the financial success and market growth of the organisation (dhurup & makhitha 2014:246; gono, harindranath & özcan 2014:14). in addition to ict, the status and relevance of production technology may also be necessary for manufacturing smes to prosper (santos-requejo & gonzález-benito 2000:215). balanced scorecard and development techniques as mentioned earlier, the bsc is used by organisations to review non-financial and financial measures (kaplan & norton 1992:71). the bsc consists of four perspectives (kaplan & norton 1992:71), namely financial, customer, internal, as well as learning and growth, in which several metrics could be evaluated. the financial perspective represents metrics from the shareholders’ point of view and is typically measured in monetary terms. the customer perspective relates to the metrics that could indicate in what manner customer requirements are satisfied. the internal perspective provides an overview of the metrics that evaluate the internal performance of an organisation. the learning and growth perspective reviews the metrics that measure internal growth and development. lin (2015:1239) has suggested that there is a relationship between the results from the non-financial perspectives and profitability. the development of a generic bsc could be an effective tool for manufacturing smes to increase profits by managing the important metrics. the development of the bsc is often used in conjunction with delphi studies and the analytical hierarchy process (ahp). delphi studies, using multiple surveys, are conducted when consensus is required on specific elements (hasson, keeney & mckenna 2000:1008; remenyi 2013:70). a panel of experts is assembled to conduct a delphi study (shelton & creghan 2015:376). the ahp is used for decision making and involves the use of pairwise comparisons (saaty 2008:85). it is suggested that the ahp allows the relative importance of bsc perspectives and metrics to be established (varma, wadhwa & deshmukh 2008:353). a scale of 1–9 is typically used to compare the elements (table 1). table 1: scale of numbers for analytical hierarchy process elements. once a problem is identified for which the ahp can be used, it is necessary to create a hierarchy design (saaty 2008:85). as an example, in the study of ahammed and azeem (2013:6–11), it was required to establish the most suitable solar power system for a rural area. the solar power systems had different power outputs (75 wp, 50 wp, 30 wp), and each of the solar power systems had relative positives with respect to cost, ability and availability (figure 1). these attributes were considered for the decision criteria. figure 1: hierarchy design for decision making. after the pairwise comparisons are conducted, it is possible to commence the ahp analysis. the first step is to calculate the relative weights for each solar power alternative (ax). a comparison matrix (eqn 1) is created for the relative weights. in addition, a relative weight calculation into a normalised matrix (eqn 2) is conducted for each ax by dividing column elements with column averages (ahammed & azeem 2013:8). according to mu and pereyra-rojas (2017:11), the activity of normalising the comparison matrix (relative weight calculation) refers to the approximate ahp method, a simpler form of ahp. the overall priorities as selected by a decision-maker can be calculated by using the average of each row in the normalised matrix. a consideration for pairwise comparisons is the consistency of the selections made by expert panels. the expectation is that selections are reasonably consistent and that perfect consistency is not normal (ahammed & azeem 2013:8). consistency in selections in the ahp process is measured by calculating a consistency index (ci / eqn 3) and a consistency ratio (cr / eqn 4). the variable λmax is calculated by using the priorities calculated for each row and multiplied with the comparison matrix. to calculate λmax the weighted total for each row is divided by the priority for each row (mu & pereyra-rojas 2017:13–14). random consistency (rc / eqn 5) is dependent on the number of alternatives (in the example of ahammed and azeem there are three). the rc increases proportionally with the number of alternatives (ahammed & azeem 2013:9). for example, for n = 3 the value for rc = 0.58, and for n = 5 the value for rc = 1.12 (ahammed & azeem 2013:9). it is acceptable to have cr ≤ 0.10 and to review (or reject) selections where cr > 0.10 (ahammed & azeem 2013:8). however, in practice it is not uncommon to accept cr > 0.10 and cr < 0.20, which is still considered reasonable (pauer et al. 2016:5). after review, the final decision matrix that represents the basis for relative weights for the alternatives can be calculated. the calculation of the relative weights for the illustrated example is also presented (ahammed & azeem 2013:9), where: a − cx= alternatives for selection criteria cost (x) a − cy= alternatives for selection criteria demand (y) a − cz= alternatives for selection criteria availability (z) in the example of ahammed and azeem, the relative weights for the alternatives were calculated by multiplying the decision matrix with the weighting of each selection criteria (eqn 6 & 7): in the example from ahammed and azeem (the solar power system), 30 wp is calculated to be the most desirable option because of the relative importance of low price (cp = 0.5940). the same principle can be applied to the bsc where the relative importance of each of the perspectives and kpis can be related to the underlying weighting for each bsc metric. the findings of this research could provide manufacturing sme managers and owners with little or no accounting knowledge, with a generic bsc template that could serve as a management tool. furthermore, it would contribute to existing literature by providing a framework to develop generic bscs in any context. the research method followed is explained next, followed by the results of the delphi study, the findings and the conclusion. research method and design methodology the research was conducted in a mixed-method research paradigm using a delphi study over a period of 10 months. according to bryman (2016:635), a mixed-method approach uses the principles of both quantitative and qualitative research techniques. in this study, qualitative data (open-ended responses), as well as quantitative data (close-ended responses) were collected. furthermore, the data were analysed using qualitative techniques (thematic coding) and quantitative techniques such as ahp and descriptive statistics. the research therefore adopted a pragmatic stance that included significant interpretivist interaction with delphi panel members. a comprehensive literature review was first conducted. purposive, heterogeneous sampling was used to identify the 27 panel members for the delphi study. the 27 panel members represented cost accounting experts from academia and practice, representing a range of industries. holloway and galvin (2016:146) describe heterogeneous sampling as when individual members can be differentiated from each other by a distinct characteristic. in this case, the panel members could be divided into two distinct groups: cost accounting academics and cost accounting industry experts. the sample of participants was sourced from previously established networks, social networks and universities. the study used descriptive statistics, content analysis and the ahp to analyse the feedback from the panel members. validity and reliability the concepts used for the data analysis such as descriptive statistics, content analysis and ahp were adequately understood by the authors as demonstrated in the development of the generic bsc to ensure the validity of the statistical analysis. to ensure the reliability of the content analysis in round 2, the final analysis was reviewed by an independent accounting expert. furthermore, the microsoft excel for mac template, developed for the ahp analysis conducted after the conclusion of round 3, was reviewed and confirmed as applicable by an independent academic with expertise on the concepts of ahp. causal reliability was demonstrated by the literature review that illustrated that ahp can be effectively used to develop the bsc because of its hierarchical structure. external validity is addressed by the use of a heterogeneous expert panel from different industries, as well as academics. as a result, the development of the research instruments (surveys) was based on past literature and the feedback from a delphi panel made up of people who can be considered experts in the field of cost accounting. development of the generic balanced scorecard the surveys used as part of the delphi study were conducted on an online survey platform (surveymonkey) over three rounds, after which it was possible to present the generic bsc for manufacturing smes. the development of the generic bsc commenced with the identification of the 27 expert panel members and proceeded with an iterative process of research instrument design, surveys and data analysis. the process concluded with the development of the generic bsc after the completion of round 3. the development of the generic bsc is outlined in figure 2. figure 2: delphi process used to develop the generic balanced scorecard. delphi study round 1: measurability of critical success factors within activities as mentioned previously, the generic csfs and activities for manufacturing smes as identified in literature were adopted as a starting point for the delphi study (figure 3). as depicted in figure 3, the five generic csfs were allocated to each of the four bsc perspectives for a total of 20 potential kpis. however, if the six generic manufacturing sme activities are considered for the generic bsc and there is a possibility to assign a kpi for each bsc perspective, generic csf and activity combination, the total number of kpis can potentially total 120 (excluding kpis not reserved for any activity). this number of kpis would not be practical for a manufacturing sme and it was therefore decided to use round 1 to eliminate the number of kpis that could be measured within activities. figure 3: generic critical success factors for manufacturing small and medium enterprises. expert panel members were asked to assign the degree of measurability of each perspective, csf and activity combination using a likert-type scale (1 = not measurable at all; 2 = slightly measureable; 3 = moderately measurable; 4 = fully measurable; and 5 = extremely measurable). of the 27 panel members, 23 participated in the survey (85% response rate). the response rate was considered more than sufficient for the purpose of the study. to establish which activity metric combination should be included in the generic bsc it was decided to only consider responses of 4 (fully measurable) or 5 (extremely measurable) as representing consensus. activity metric combinations with an overall consensus of less than 70% were excluded from the generic bsc. an additional qualification criterion (mean ≥ 4) was included. therefore, a combination of perspective and measurement category was only considered if it satisfied both the criteria of consensus and mean. an overview of the analysis and the results is provided in appendix 1. delphi study round 2: identifying specific key performance indicators in round 1 expert panel members were requested to select the degree of measurability for each perspective–kpi category–activity combination. on conclusion of the survey, the number of potential measurement categories at activity level was reduced from 120 to 9. the next step was to consider the specific kpis that can be measured in the generic bsc. although the purpose of the study was to develop a generic bsc, it was considered that some flexibility must be available for manufacturing sme entrepreneurs and managers to adapt the bsc to their specific circumstances. the survey was divided into the four perspectives with the five kpi categories assigned to each metric. each perspective was further divided into two sections: factory-level metrics and activity-level metrics. expert panel members were requested to identify at least one kpi per metric category. round 2 had a significantly lower response rate than round 1. only 11 of the 27 panel members that were approached responded (41% response rate). despite the lower response rate, a total number of 104 kpis could be identified from the responses of the panel members. because of the nature of the open-ended responses, the individual responses from the panel members were analysed using content analysis (available on request). an additional column was created where each specific kpi identified from the responses was entered. a further 11 columns were then created to capture responses. a corresponding response from a respondent was entered next to a specific kpi where it is found to be similar or identical. any response was considered if it was judged to be specific and measurable; for example, ‘quality control report’ could not be included as it cannot be measured. the 104 specific kpis identified from the content analysis were divided into 16 homogeneous metric groups representing generic kpis (appendices 2 and 3). the purpose of the generic kpis was to provide the option of selecting appropriate specific kpis to owners and managers of manufacturing smes. delphi study round 3: rating the relative importance of balanced scorecard elements in round 2, expert panel members were requested to identify specific and measurable kpis that were grouped into 32 homogeneous metric groups (16 general kpis identified from round 2 on factory and activity levels). the purpose of round 3 was to further reduce the number of general kpis and to determine the number of kpis that should be included in the bsc for the manufacturing sme. the first question on the survey requested panel members to identify the number of kpis to be included in the bsc for manufacturing smes. a drop-down list was used for this purpose. the remainder of the survey used pairwise comparisons to enable panel members to decide on the relative importance of bsc perspectives and general kpis within the categories (factory or activity level). the pairwise comparisons were scaled using the following terms: 1 – equal importance; 3 – moderately more important; 5 – essentially more important; 7 – very strong importance (over another kpi); and 9 – absolute importance (over another kpi). of the 27 panel members, a total of 17 completed the survey (63% response rate). the improved response rate from round 2 can be attributed to the use of questions requiring closed-ended responses in round 3 instead of the open-ended responses used in round 2. developing the generic balanced scorecard the generic bsc for manufacturing smes was developed using the following general steps: step 1: calculate the number of kpis suitable for manufacturing smes from the responses received from the panel members. step 2: apply the ahp to calculate the relative weights of the bsc perspectives, categories and kpis. step 3: allocate the correct number of kpis to each perspective and category. step 4: rank each kpi by its overall weighting, as well as the maximum weighting achieved for a single segment (combination of perspective and category). step 5: calculate a combined ranking for the overall weighting and the maximum segment weighting. step 6: assign the kpis to the bsc individually by starting with the highest ranking kpi and assigning it to the segment with the highest relative weight that is still available. to calculate the number of general kpis, the median (m = 12) was deemed appropriate because of the high standard deviation (s = 7.09) in the sample. the mean (x̅ = 14.76) was affected by three outliers as extremely high values (30; 25; 25). the total number of general kpis to be included in the generic bsc for manufacturing smes is therefore 12. the next step was to use the ahp to calculate the weighting for the bsc perspectives and categories (factory or activity). at first, the data collected from the decision-makers were organised in a comparison matrix and a total was calculated for each column (table 2 upper section). the relative weight for element in the comparison matrix was then calculated for the normalised matrix by dividing each element by the relevant total from the comparison matrix (table 2 lower section). this process was repeated for each decision-maker as a basis for the priority weight calculations. table 2: comparison and normalised matrix. the priority weights for each criterion were calculated from the average of each row in the normalised matrix. for example, the priority weight for the financial perspective was calculated as (0.192 + 0.318 + 0.313 + 0.125) / 4 = 0.237. to calculate λmax, the priority weights are transferred to a weighted comparison matrix where it is multiplied with the comparison matrix (table 3). the row total is then divided by the average to determine a consistency measure that is used to calculate λmax. ultimately the average value of four consistency measures were used. for example, the consistency value for customer is calculated as 0.331 (priority weight) divided into 1.407 (sum of row weighted comparison) = 4.25. the 4.30 that was calculated for λmax could also be calculated by using the matrix product function (mmult) in microsoft excel for mac using the parameters (comparison row and priority column) and then dividing by the average. table 3: weighted comparison matrix with λmax. the next step was to calculate the consistency index and consistency ratio using the formulae as identified in literature (eqn 8 – 10): it was established from literature that selections with cr < 0.10 should be accepted but that cr < 0.20 can also be considered as appropriate in some cases. it was calculated from the ahp calculation that if different cr criteria are applied (between < 0.10 and < 0.20) that the results only differ marginally across a range of criteria (table 4). the overall results were calculated by using the arithmetic mean for qualifying responses. the financial and customer perspective were preferred over the internal perspective ranging from 63% combined for cr < 0.20 to 72% combined for cr < 0.10 as qualifying criteria. the number of qualifying responses increased from 6 to 9 (out of 15 selections) if cr inclusion rate is relaxed from < 0.100 to < 0.125 and only increased again by another 2 when cr < 0.20 is applied. it appears that adequate consistent and sufficient data collection may be applicable if cr is set between < 0.125 and < 0.175. based on this premise and the relative consistency of the results across the different inclusion criteria, the remainder of the ahp discussion will be based on the result from cr < 0.150. table 4: perspective overall weighting for different acceptance criteria of consistency ratio. from the ahp calculation based on cr < 0.15, it was possible to calculate the overall weights and segment weights for each general kpi. the next step was to assign the 12 generic kpis to each perspective and segment (factory and activity level). it was already established that the financial and customer perspectives (of relative equal stature) are preferred by decision-makers in a ratio of approximately 2:1. therefore, a total number of 8 general kpis (out of 12) were assigned to the financial and customer perspectives in equal measure. the remaining four general kpis were assigned in equal measure to each of the four segments for the internal and learning perspectives. because only one general kpi was available for the learning activity-level segment and it was considered more important than the other three segments, it was considered the only appropriate strategy. the preceding approach is outlined in figure 4. figure 4: number of key performance indicators for balanced scorecard with cr < 0.15. †learning and growth activity level only has one generic key performance indicator available. the next step was to divide the eight generic kpis assigned to the financial and customer perspectives to the four activity segments (figure 5). the expert panel preferred 66.06% of kpis in the financial perspective to be assigned to the activity level. three generic kpis were assigned to the activity level and the remaining kpi were assigned to the factory level. the result for the customer perspective was closer and the kpis were therefore equally assigned to the factory level and the activity level. the generic bsc were therefore established to include four financial perspective kpis (one factory and three activity), four customer perspective kpis (two each for factory and activity), two internal perspective kpis (one each for factory and activity) and two learning perspective kpis (one each for factory and activity). figure 5: number of key performance indicators to financial and customer perspectives. to establish a priority ranking for the general kpis it was considered that an important general kpi within a lowly weighted perspective might be eliminated by a general kpi within a highly weighted perspective. the general kpis were ranked by means of a combination ranking, which is a combination of overall ranking and highest segment weighting. the next step was to assign the general kpis individually to the bsc in order of combined ranking by its highest available segment weight (table 5). in this case, the first general kpi that could be assigned is manufacturing performance. it was assigned to the learning and growth perspective in the production activity, with a segment weighting of 1.000 as it was the only element in this context. using this approach, it was possible to assign 12 general kpis (out of 16) to the generic bsc. three generic kpis in the learning and growth perspective on factory level (employee education, information technology and employee satisfaction) would not be assigned as only one general kpi was required in the segment, which in this case was production technology; it had an average ranking of eight, and an overall ranking of seven. furthermore, the general kpi cost of obtaining funds was ranked last (16) in all measures and was therefore not included. table 5: ranking of general key performance indicators for the generic balanced scorecard with consistency ratio < 0.15. ethical consideration ethical clearance was obtained prior to the commencement of the research from the nelson mandela university (ref: h-15-bes-acc-020). the cost accounting experts were supplied with an information booklet outlining the purpose and scope of the study. a section where the participant was required to provide informed consent was provided for at the beginning of each survey. the surveys did not require the participants to divulge their names or any personal details. furthermore, the internet protocol (ip) addresses of the participants were not tracked during the process of conducting the surveys to maintain their anonymity. results in round 1, the expert panel only assigned nine perspective and generic csf combinations to activities constituting a small proportion (7.5%) of all combinations (table 6). in the financial perspective, revenue growth was paired with the sales and distribution function, which is consistent with the functionality of this activity (jespersen & skjøtt-larsen 2005:138). the purchasing function was associated with cost savings by expert panel members. it confirms the importance of the purchasing function for a manufacturing sme to ensure that profit margins are maximised (hung et al. 2015:199). the customer perspective and the internal perspective each found three activities associated with performance measurement. service delivery was associated with the customer service function, which is described as a core activity in the scm function (jespersen & skjøtt-larsen 2005:18). delivering a quality product was considered significant in the context of the production and product development function. although quality is relevant across an organisation (benzing et al. 2009:63; ghosh et al. 2001:211), the expert panel may have wanted to focus scarce resources on the primary activities. cost reduction (as an internal activity, as opposed to monetary result) was considered important in the production activity as well as in the purchasing function. furthermore, on-time delivery was considered relevant for the sales and distribution function. in the learning and growth perspective, only production measure could be associated with an activity. in this case, it was associated with production and product development. table 6: combinations selected in round 1. the expert panel identified 104 specific kpis for manufacturing smes in round 2. it was necessary to group the specific kpis into 16 categories (general kpis) for further evaluation (appendix 2 and 3). it was found that the expert panel identified specific kpis that were fundamentally similar but could be used in different settings. it is likely that various manufacturing smes may have slightly different preferences with regards to the selection of specific kpis. therefore, it was established that a generic bsc should have sufficient flexibility within a formal structure. it was found that the bsc implementation may fail if a structured approach is not followed for the design of the bsc (andersen et al. 2001:6; fernandes et al. 2006:627). the generic bsc (figure 6) conforms to this belief by only including 12 metrics for manufacturing smes’ performance measurement, yet it still allows the entrepreneurs the flexibility of selecting appropriate kpis for their industry. it is suggested that the effectiveness of the generic bsc for manufacturing smes should be empirically tested to determine the suitability in different manufacturing industries. it is possible that an empirical study of this nature could adapt and improve the generic bsc even further. furthermore, it is recommended that a similar study be conducted with alternative development techniques not used in this research. figure 6: the generic balanced scorecard for small and medium manufacturing enterprises in south africa. kpi, key performance indicator. the results from the ahp calculation enabled the 12 general kpis to be included in the generic bsc for manufacturing smes to be allocated according to the preference from the expert panel. in round 3 it was found that the financial and customer perspectives were considered more important to the expert panel compared to the internal and learning perspectives (table 4). the rationale behind the generic bsc is that owners and entrepreneurs of manufacturing smes select a specific kpi relevant to their organisation from the data collected in round 2, for example, cash flow is required to be measured once in the generic bsc. however, manufacturing smes can also select one of the following kpis, namely cash availability, cash conversion cycle, inventory value, creditors versus debtor’s days, number of days with positive cash flow, cash flow from operations or availability of overdraft facility. the generic bsc is presented in figure 6, listing the specific kpis that manufacturing smes can select for each of the 12 generic kpis. conclusion the primary purpose of the research was to develop and present a generic bsc for manufacturing smes in south africa. the basis for the development of the generic bsc was the generic csfs identified in the literature review. the generic csfs were classified in broadly the same categories as the four bsc perspectives. furthermore, the generic bsc was developed to allow flexibility for manufacturing smes that may have slightly different requirements. this was achieved by including the 12 general kpis in the generic bsc that each includes numerous specific kpis, as identified by the expert panel. in general, the findings from the expert panel during development of the generic bsc confirmed the premise that the bsc for manufacturing smes should be uncomplicated and easy to use. the ability to adapt the generic bsc to the needs of the manufacturing smes, by incorporating sufficient flexibility, represents a management tool that could be adapted to many settings. furthermore, using cost accounting experts to develop the generic bsc ensures that the final instrument has a sound development basis and can be reliably used in practice. the researchers are therefore confident that an appropriate performance measurement system has been developed for manufacturing smes, representing a significant contribution to existing literature. recommendations and suggestions for future research it is recommended that owners and management of manufacturing smes adapt the generic bsc with due consideration of the specific kpis applicable to their organisations. it is also advised that easily measurable kpis be selected that do not require additional resources. furthermore, it is suggested that future research attempt to measure the suitability of the generic bsc by means of an implementation case study. it is proposed that a case study be performed for a period of time and the suitability of integrating with costing systems be established. acknowledgements the authors are grateful for the contributions from all the cost accounting experts who participated in this research. funding was received from a post-graduate bursary for phd studies from nelson mandela university. competing interests the authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article. the views expressed in the submitted article are the authors’ own and do not necessarily reflect the official position of the listed institutions. authors’ contribution a.r. constructed the article from the research conducted during the phd study; h.f. was responsible for academic insight and review; and l.e. was responsible for academic insight and review. references afonso, h. & cabrita, m.d.r., 2015, ‘developing a lean supply chain performance framework in a sme: a perspective based on the balanced scorecard’, procedia engineering 131(1), 270–279. https://doi.org/10.1016/j.proeng.2015.12.389 ahammed, f. & azeem, a., 2013, ‘selection of the most appropriate package of solar home system using analytic hierarchy process model in rural areas of bangladesh’, renewable energy 55(1), 6–11. https://doi.org/10.1016/j.renene.2012.12.020 andersen, h., cobbold, i. & lawrie, g., 2001, ‘balanced scorecard implementation in sme’s: reflection on literature and practice’, 2cg conference paper, 4th sme international conference, may 2001, allborg university, denmark. antoncic, j.a. & antoncic, b., 2011, ‘employee satisfaction, intrapreneurship and firm growth: a model’, industrial management & data systems 111(4), 589–607. https://doi.org/10.1108/02635571111133560 asare, r., akuffobea, m., quaye, w. & atta-antwi, k., 2015, ‘characteristics of micro, small and medium enterprises in ghana: gender and implications for economic growth’, african journal of science, technology, innovation and development 7(1), 26–35. https://doi.org/10.1080/20421338.2014.979651 avcikurt, c., altay, h. & ilban, m.o., 2011, ‘critical success factors for small hotel businesses in turkey: an exploratory study’, cornell hospitality quarterly 52(2), 153–164. https://doi.org/10.1177/1938965509341288 ayvaz, e. & pehlivanl, d, 2011, ‘the use of time driven activity based costing and analytic hierarchy process method in the balanced scorecard implementation’, international journal of business and management 6(3), 146–158. https://doi.org/10.5539/ijbm.v6n3p146 belekoukias, i., garza-reyes, j.a. & kumar, v., 2014, ‘the impact of lean methods and tools on the operational performance of manufacturing organisations’, international journal of production research 52(18), 5346–5366. https://doi.org/10.1080/00207543.2014.903348 benzing, c., chu, h.m. & kara, o., 2009, ‘entrepreneurs in turkey: a factor analysis of motivations, success factors, and problems’, journal of small business management 47(18), 58–91. https://doi.org/10.1111/j.1540-627x.2008.00262.x bhagwat, r. & sharma, m.k., 2007, ‘performance measurement of supply chain management: a balanced scorecard approach’, computers & industrial engineering 53(1), 43–62. https://doi.org/10.1016/j.cie.2007.04.001 brink, a., cant, m. & ligthelm, a., 2003, ‘problems experienced by small businesses in south africa’, small enterprise association of australia and new zealand 16th annual conference, ballarat, australia, 28 sept. – 01 oct., 2003, pp. 1–20. bryman, a., 2016, social research methods, 5th edn., oxford, new york. bureau for economic research, 2016, the small, medium and micro enterprise sector of south africa commissioned by the small enterprise development agency, viewed 22 may 2018, from http://www.seda.org.za/publications/publications/the%20small,%20medium%20and%20micro%20enterprise%20sector%20of%20south%20africa%20commissioned%20by%20seda.pdf callado, a.a. & jack, l., 2015, ‘balanced scorecard metrics and specific supply chain roles’, international journal of productivity and performance management 64(2), 288–300. https://doi.org/10.1108/ijppm-05-2014-0071 charantimath, p.m., 2011, total quality management, 2nd edn., pearson education, new delhi. dhurup, m. & makhita, k.m., 2014, ‘reflections on the constraints in entrepreneurial development among emerging survivalist and micro craft enterprises in gauteng’, journal of contemporary management 11(1), 230–250. engle, r.l., 2005, ‘global marketing management scorecard: a tale of two multinational companies’, problems and perspectives in management 3(1), 128–136. fernandes, k., raja, v. & whalley, a., 2006, ‘lessons from implementing the balanced scorecard in a small and medium size manufacturing organisation’, technovation 26(1), 623–634. https://doi.org/10.1016/j.technovation.2005.03.006 ghosh, b.c., liang, t.w., meng, t.t. & chan, b., 2001, ‘the key success factors, distinctive capabilities, and strategic thrusts of top smes in singapore’, journal of business research 51(1), 209–221. https://doi.org/10.1016/s0148-2963(99)00047-8 gono, s., harindranath, g. & özcan, g.b., 2014, ‘understanding the impact of ict adoption and use in south african manufacturing and logistics smes: a firm, market and regulatory (fmr) context perspective’, in proceedings of isbe 2014 conference, manchester, england, 05–06 november, 2014, pp. 1–20. gunasekaran, a., patel, c. & mcgaughey, r.e., 2004, ‘a framework for supply chain performance measurement’, internal journal of production economics 87(1), 333–347. https://doi.org/10.1016/j.ijpe.2003.08.003 hasson, f., keeney, s. & mckenna, h., 2000, ‘research guidelines for the delphi survey technique’, journal of advanced nursing 32(4), 1008–1015. holloway, i. & galvin, k., 2016, qualitative research in nursing and healthcare, 4th edn., john wiley & sons, chichester. hung, s.c., hung, s.w. & lin, m.j., 2015, ‘are alliances a panacea for smes? the achievement of competitive priorities and firm performance’, total quality management & business excellence 26(1–2), 190–202. https://doi.org/10.1080/14783363.2014.927133 ingle, m., 2014, ‘an analysis of factors impeding smme performance in south africa’, africa insight 44(2), 37–50. jeon, h. & choi, b., 2012, ‘the relationship between employee and customer satisfaction’, journal of services marketing 26(5), 332–341. https://doi.org/10.1108/08876041211245236 jespersen, b.d. & skjøtt-larsen, t., 2005, supply chain management: in theory and practice, copenhagen business school press, copenhagen. kahn, k.b., 2015, product planning essentials, 2nd edn., routledge, new york. kaplan, r.s. & norton, d.s., 1992, ‘the balanced scorecard: measures that drive performance’, harvard business review jan–feb, 71–79. kelly, m., mokyr, j. & o’grada, c., 2014, ‘precocious albion: a new interpretation of the british industrial revolution’, annual review of economics 6(1), 363–389. https://doi.org/10.1146/annurev-economics-080213-041042 khan, a.j. & tidke, d.j., 2013, ‘designing facilities layout for small and medium enterprises’, international journal of engineering research and general science 1(2), n.p. kirsten, e., vermaak, f. & wolmarans, h., 2015, ‘performance measurement in small and medium enterprises: south african accountants view’, journal of economic and financial sciences 8(1), 13–34. kumar, v., verma, p., onkar, s.p.s. & katiyar, j., 2016, facility and process layout analysis of an sme using simulation: a case study of a manufacturing company, viewed 22 may 2018, from http://ieomsociety.org/ieom_2016/pdfs/354.pdf lin, h.f., 2015, ‘linking knowledge management orientation to balanced scorecard outcomes’, journal of knowledge management 19(6), 1224–1249. https://doi.org/10.1108/jkm-04-2015-0132 mehralian, g., nazari, j.a., nooriparto, g. & rasekh, h.r., 2017, ‘tqm and organizational performance using the balanced scorecard approach’, international journal of productivity and performance management 66(1), 111–125. https://doi.org/10.1108/ijppm-08-2015-0114 mendis, g.h. & ganga, g.m., 2013, ‘predicting success in product development: the application of principal component analysis to categorical data and binomial logistic regression’, journal of technology management & innovation 8(3), 83–97. https://doi.org/10.4067/s0718-27242013000400008 mokhtar, s.s., yusoff, r.z. & ahmad, a., 2014, ‘key elements of market orientation on malaysian smes’ performance’, international journal of business and society 15(1), 49–64. mokhtar, s.s., yusoff, r.z. & arshad, r., 2009, ‘market orientation critical success factors of malaysian manufacturers and its impact on financial performance’, international journal of marketing studies 1(1), 77–84. https://doi.org/10.5539/ijms.v1n1p77 moyo, t., 2003, ‘critical success factors for microenterprise development in africa: an overview’, transformation 20(3), 166–170. https://doi.org/10.1177/026537880302000310 mu, e. & pereyra-rojas, m., 2017, ‘understanding the analytical hierarchy process’, practical decision making, springer briefs in operational research, pp. 7–22, springer, cham. https://doi.org/10.1007/978-3-319-33861-3_2 ng, h. & kee, d., 2012, ‘the issues and development of critical success factors for the sme success in developing countries’, international business management 6(6), 680–691. https://doi.org/10.3923/ibm.2012.680.691 nkosi, e., bounds, m. & goldman, g., 2013, ‘skills required for the management of black-owned small enterprises in soweto’, acta commercii 13(1), 1–10. https://doi.org/10.4102/ac.v13i1.186 nuntsu, n., tassiopoulos, d. & haydam, n., 2004, ‘the bed and breakfast market of buffalo city (bc), south africa: present status, constraints and success factors’, tourism management 25(4), 515–522. https://doi.org/10.1016/s0261-5177(03)00125-0 obi, s.c., 2013, introduction to manufacturing systems, 1st edn., authorhouse, bloomington, in. okongwu, u., brulhart, f. & moncef, b., 2015, ‘causal linkages between supply chain management practices and performance: a balanced scorecard strategy map perspective’, journal of manufacturing technology management 26(5), 678–702. https://doi.org/10.1108/jmtm-01-2013-0002 okpara, j.o. & kabongo, j.d., 2009, ‘an empirical evaluation of barriers hindering the growth of small and medium sized enterprises (smes) in a developing economy’, journal of emerging trends in economics and management sciences 5(7), 1–6. okpara, j.o. & wynn, p, 2007, ‘determinants of small business growth constraints in a sub-saharan african economy’, sam advanced management journal spring, 72(2), 24–35. olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new sme’s in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. onaolapo, a.a. & oladejo, m.o., 2011, ‘effectiveness of millennium development goal programmes on entrepreneurial development: an appraisal of the nigerian experience’, journal of emerging trends in economics and management sciences 2(4), 310–319. pauer, f., schmidt, k., babac, a., damm, k., frank, m. & von der schulenburg, j.-m.g., 2016, ‘comparison of different approaches applied in analytic hierarchy process – an example of information needs of patients with rare diseases’, bmc medical informatics and decision making 16(1), 117, viewed 22 may 2018, from https://www.ncbi.nlm.nih.gov/pmc/articles/pmc5016921/ rajput, r.k., 2007, a textbook of manufacturing technology: manufacturing processes, laxmi, new delhi. remenyi, d., 2013, field methods for academic research, 3rd edn., academic conferences and publishing, london. rockart, j., 1979, ‘chief executives define their own data needs’, harvard business review 57(2), 81–93. saaty, t.l., 2008, ‘decision making with the analytic hierarchy process’, international journal of services sciences 1(1), 83–98. https://doi.org/10.1504/ijssci.2008.017590 santos-requejo, l. & gonzález-benito, o., 2000, ‘economic success factors in spanish small retail businesses. an analysis based on sector-relative definitions’, small business economics 15(3), 209–222. https://doi.org/10.1023/a:1008109512688 sebone, m.f. & barry, m.l., 2009, ‘toward determining critical success factors for sme electrical contractors in the construction industry in south africa’, south african journal of industrial engineering 20(1), 185–195. sesep, c., 2016, ‘growth barriers facing south african manufacturing small and medium enterprises’, master of commerce dissertation, faculty of management, university of johannesburg, viewed 22 may 2018, from https://ujcontent.uj.ac.za/vital/access/manager/repository/uj:22829. shelton, k. & creghan, k.a., 2015, ‘demystifying the delphi method’, in v.c.x. wang, handbook of research on scholarly publishing and research methods, pp. 375–396, igi global, hershey, pa. statistics south africa, 2017, ‘quarterly financial statistics (qfs): statistical release, viewed 22 may 2018, from http://www.statssa.gov.za/publications/p0044/p0044march2017.pdf temtime, z.t. & pansiri, j., 2004, ‘small business critical success/failure factors in developing economies: some evidence from botswana’, american journal of applied science 1(1), 18–25. https://doi.org/10.3844/ajassp.2004.18.25 varma, s., wadhwa, s. & deshmukh, s.g., 2008, ‘evaluating petroleum supply chain performance: application of analytical hierarchy process to balanced scorecard’, asia pacific journal of marketing and logistics 20(3), 343–356. https://doi.org/10.1108/13555850810890093 yusuf, a., 1995, ‘critical success factors for small business: perceptions of south pacific entrepreneurs’, journal of small business management april, 33, 68–73. appendix 1 table 1-a1: activity metric evaluation round 1. appendix 2 table 1-a2: specific metrics identified in round 2 (part 1). appendix 3 table 1-a3: specific metrics identified in round 2 (part 2). abstract introduction the zimbabwean context for female entrepreneurship cultural influences and traditional roles methodology ethical consideration findings and discussion conclusion acknowledgements references about the author(s) nomusa b. mazonde graduate school of business administration wbs (wits), university of the witwatersrand, south africa teresa carmichael graduate school of business administration wbs (wits), university of the witwatersrand, south africa citation mazonde, n.b. & carmichael, t., 2016, ‘the influence of culture on female entrepreneurs in zimbabwe’, southern african journal of entrepreneurship and small business management 8(1), a101. http://dx.doi.org/10.4102/sajesbm.v8i1.101 original research the influence of culture on female entrepreneurs in zimbabwe nomusa b. mazonde, teresa carmichael received: 31 aug. 2016; accepted: 25 oct. 2016; published: 01 dec. 2016 copyright: © 2016. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: there is an increasing interest in female entrepreneurship, not only to realise the potential for economic growth, but also in light of the opportunities for female expression, emancipation, agency and empowerment. literature has found that many female entrepreneurs are profoundly affected by the traditional sociocultural context in which they operate, and that they have needed to work around patriarchal barriers in order to succeed. this study explores the ways in which they do this. aim: the aim of this paper was to contribute to an understanding of how female entrepreneurs in a patriarchal african society can work within cultural constraints to achieve success within their own terms of reference. setting: the study took place in zimbabwe among female entrepreneurs who had recently formalised their businesses methods: using a qualitative interpretive research design, in-depth, face-to-face interviews were conducted with 43 african female entrepreneurs running their own businesses in the zimbabwean cities of harare and bulawayo. results: the complex interplay of macro(national cultural characteristics), meso(institutional and social factors), and micro(individual identity) level factors shaped the ways in which the women dealt with the shackles of patriarchy, inequality and high power distance that had historically impeded their economic participation. through their own agency, they mobilised their public and private identities separately, balancing the seemingly incompatible roles of home-maker vs entrepreneur. conclusion: zimbabwean women successfully managed the interaction between their different social roles and identities to balance domestic obligations with income generation to better the lives of their families. introduction there is an increased focus on female entrepreneurship globally in light of tangible evidence of the significance of new business creation for economic growth and development (bergmann, müller & schrettle 2014; jamali 2009; langowitz & minniti 2007; lock & lawton-smith 2016). besides the contribution to economic growth and job creation, female entrepreneurs augment the diversity of entrepreneurship of any economy (huarng, mas-tur & yu 2012; reed, storrud-barnes & jessup 2012) in addition to making inroads into female expression, fulfilment (bahmani, sotos & garcía 2012; huarng et al. 2012), agency, emancipation and empowerment (goss et al. 2011; ramadani, hisrich & gërguri-rashiti 2015). as female entrepreneurship talent and potential remain poorly tapped in many contexts, there remains a great deal of benefit to be leveraged (baughn, chua & neupert 2006; ramadani et al. 2015). studies of female entrepreneurs in developing countries (particularly black female entrepreneurs) are still relatively few compared to those in developed countries (brush & cooper 2012; link & strong 2016). this is possibly because, historically, most entrepreneurs in the formal sector have been male (saridakis, marlow & storey 2014), and an awareness of the importance of female entrepreneurship has only relatively recently been highlighted (moses et al. 2016). this lack of visibility is of concern, as female entrepreneurs in developing countries may follow an entrepreneurial path that differs from that of the developed countries because of sociocultural factors (baah, amani & abass 2015; mboko & smith-hunter 2009). for example, in pakistan, a patriarchal society like zimbabwe, many women choose entrepreneurship over formal employment for flexibility as a coping mechanism to meet family and community obligations in addition to being economically active (rehman & azam-roomi 2012). in many countries, sociocultural factors do not act in favour of women, where their traditional role is subordination to men, often in patronising relationships in which the woman’s place is in the home rather than the workplace (hechavarria & ingram 2016; yusuf 2013). approximately 52% of the population of zimbabwe are women (zimstat 2012). they are therefore potentially major participants in zimbabwe’s economy by virtue of their number. whilst some studies on female entrepreneurs have been completed in zimbabwe (chitsike 2000; mboko & smith-hunter 2009; nani 2013; nyamwanza et al. 2012; van eerdewijk & mugadza 2015), there is limited knowledge about the role of culture and social structure on female entrepreneurs and female entrepreneurship in this particular context. in this study, it has been assumed that studies conducted in other parts of southern africa may have some relevance. zimbabwean women had an especially torrid time during the 2007–2009 period of hyperinflation (siziba 2010) and many of them elected the daily income of the entrepreneurial option, as it was impossible to survive with inflation at 231 million percent and price increases at least three times per day. thus, the primary entrepreneurial motivation relates to ‘push factors’ as articulated by ramadani et al. (2015), and therefore fits into necessity, rather than opportunity, entrepreneurship. this is in line with other reports about transitioning and developing economies (maden 2015). furthermore, studies on how the challenges experienced by female entrepreneurs could be overcome, worked around or turned into enablers are under-researched in zimbabwe. the aim of this paper is to contribute to an understanding of how female entrepreneurs in a patriarchal african society can work within cultural constraints to achieve success within their own terms of reference. the zimbabwean context for female entrepreneurship zimbabwe is a patriarchal society, with men having more (social) rights to ownership of resources and decision-making authority (matondi 2013). this is despite a great deal of legislation around women’s rights having been embedded into the 2013 constitution (gaidzanwa 2016), which has resulted in a female representation in parliament of 33%. thus, many of the determinants of female entrepreneurship lie in the interaction of micro-individual, mesoand macro-level factors (baughn et al. 2006; de bruin, brush & welter 2007; henry et al. 2015; lock & lawton-smith 2016). the interconnectedness of these factors can be detected even in making distinctions between these levels (de bruin et al. 2007). the way that the embeddedness and context specificity shape the experience of female entrepreneurship (langevang et al. 2015) appears to have been underestimated (van eerdewijk & mugadza 2015). fayolle et al. (2015) reached a similar conclusion to de bruin et al. (2007), who suggested that existing theoretical debates overlook possible gender disparities in entrepreneurship, which points to the value of harmonising diverse views on female entrepreneurship in different contexts. as mboko and smith-hunter (2009) note, some entrepreneurial behaviour can be attributed to environmental factors. an integrated approach that is sensitive to the differential effect of micro-, mesoand macro-level factors will facilitate the study of female entrepreneurs (ilo 2009). an adaptation of the relational framework suggested by syed and ozbilgin (2009) and reinforced by henry et al. (2015) is proposed as the basic theoretical framework for this study, with the incorporation of hofstede’s six and the nine globe (ozgen 2012) dimensions of culture (figure 1). figure 1: a narrowed adaptation of syed and ozbilgin’s framework with hofstede’s six dimensions and the nine globe dimensions incorporated. the national context includes structural and institutional conditions, including social ideologies, education, socio-political factors, legal frameworks and religious dogma; it is the all-inclusive area inside which all others exist (henry et al. 2015; syed & ozbilgin 2009). for this study, the outer circle represents a single component of syed and ozbilgin’s model, that of national cultural dimensions. the meso-level involves both organisational and social practices that intercede between employment opportunities based on individual capabilities and contextual circumstances (bullough, renko & abdelzaher 2014; syed & ozbilgin 2009). this level, which includes policy frameworks, has been very favourable towards women in zimbabwe in the past 10 years or so, at least in leadership and management positions because of legislation specifically geared towards getting women (particularly black women) into senior positions in organisations (booysen & nkomo 2010; gaidzanwa 2016). however, this does not necessarily translate into favourable entrepreneurial conditions because of societal influences and micro-level gendered behavioural expectations; vossenberg (2013:2) surmised that: women’s entrepreneurship promotion undoubtedly benefits individual women, but when the main problem for the persistence of the gender gap is left unchallenged – which is that entrepreneurs, men and women alike, operate in patriarchal, gender-biased economies and societies, efforts remain in vain and without any significant macroeconomic and social change. the micro-individual domain includes factors like individual agency, motivation, and identity, and influences individual capabilities and opportunities. at this level, family (nuclear and extended) plays a significant role, together with other social contacts. the characterisation of different levels of analysis as interdependent and inter-related implies that entrepreneurship is socially (meso-level) and historically (macro-level) embedded, but also at the micro-level, individually constructed and negotiated (jamali 2009). it is in this context that the research explores female entrepreneurship in zimbabwe, using an adapted relational multilevel framework design. cultural influences and traditional roles research suggests that cultural context can shape entrepreneurial attitudes and intentions (shinnar, giacomin & janssen 2012), particularly in the early stages (zhao, li & rauch 2012) and less so in established ventures. this implies that knowing how culture shapes entrepreneurial intentions could be useful to understanding the gender gap in entrepreneurship and possibly for identifying strategies to reduce it. a definition of what constitutes culture is necessary at this juncture. a unesco declaration (2001:4) states that: culture should be regarded as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs. this definition is not dissimilar to that of hofstede (2011:3), who offers, ‘culture is the collective programming of the mind that distinguishes members of one group or society from those of another’. accordingly, culture is, therefore, a combination of social practices, traditions and beliefs that influence the mindset of individuals, groups and nations (baah et al. 2015; hofstede 2011; liyanage, dale & dulaimi 2016). a culture informed by the underlying value systems that are unique to a group or society and that motivate individuals to behave in certain ways, such as when starting a new business (stephan & pathak 2016). concerning gender relations, cultural and social traditions help influence who becomes an entrepreneur (espíritu-olmos & sastre-castillo 2012). for instance, social circumstances in some countries restrain women from starting their own businesses (world bank 2014) and shape social gender roles and stereotypes in terms of occupations considered suitable for women (azmat & fujimoto 2016; maden 2015), such as personal services (e.g. beauty salons and child care), web design, education and retail. in zimbabwe, the prevalence of gender-based discrimination is still a predicament for female entrepreneurs (mutanana & bukaliya 2015). before 1980, females were considered to be minors, with no acknowledgement of their role in the overall development of the country. this situation changed in 1982, with the inception of the legal age of majority act (1982). whilst the law (at the meso-level) now recognises women as adults, cultural barriers still exist, and these negate the intended use of this law (chitsike 2000). traditionally and informally, in zimbabwe, women are perceived as inferior to men irrespective of their age or educational status (booysen & nkomo 2010). evidence from other patriarchal countries (azmat 2013; maden 2015) also suggests that women are expected to be subservient, supportive and submissive. it is easy to see that these conventional feminine qualities are in direct conflict with the more masculine cultural indicators required for a traditionally defined entrepreneur and required to succeed in business (hechavarria & ingram 2016). in addition, for traditional patriarchal reasons, women are not readily accepted as entrepreneurs running and managing an enterprise (van eerdewijk & mugadza 2015). the patriarchal system of social structures and practices allows men to dominate, oppress and exploit women (hechavarria & ingram 2016; shinnar et al. 2012), negatively affecting women’s self-assurance and achievement motivation, and contributing to barriers to female entrepreneurial success. a woman is typically not expected to make economic decisions such as opening a business of her own. those who make it find it difficult to circumvent cultural barriers (ewoh 2014). in a way, women’s subconscious resistance to taking opportunities is embedded in their upbringing (brush, de bruin & welter 2009; fayolle et al. 2015). amoako-kwakye (2012) and azmat (2013) suggest that the patriarchal society expects women to be both producers and reproducers, carrying a double load of full-time work and domestic responsibilities. social structures rather than individuals are made responsible for this systematic oppression. the indications of this systematic censorship can be observed in women’s unequal opportunities to enjoy rights, goods, and resources (rubio-bañón & esteban-lloret 2016; shinnar et al. 2012). the greatest barrier for female entrepreneurs in developing countries is to overcome resistance from family (sätre 2016) and prevailing cultural conditions (mckay 2001; shinnar et al. 2012). according to amoako-kwakye (2012), women usually rely upon family support to get time for the business, but that the needs of extended family and the robust tradition of co-operation and reciprocity place an enormous burden on women to help relatives. mcgowan et al. (2012) found that firms owned by women were at a commercial disadvantage because of pressures on them to prioritise family responsibilities over their entrepreneurial career. as a result, they were often discriminated against when applying for finance, seeking resources or getting permissions (amin 2016). nyamwanza et al. (2012) had observed that female entrepreneurs’ businesses in gweru, zimbabwe, were both smaller and grew much more slowly than those of their male counterparts, possibly attributable to cultural barriers. women have shown that they can overcome challenges arising from cultural context, and they should therefore not be seen as ‘victims’ in an inflexible system with little or no power over their lives (ezzedeen & zikic 2015). female entrepreneurs are drawing on their cultural attributes such as the importance of family and community, hard work, thriftiness, religious beliefs and conformity to social ethics in their entrepreneurial activities (dhaliwal, scott & hussain 2010; leung 2011). the cultural dimensions, proposed by hofstede (2011) and extended in the globe study (ozgen 2012), have been analysed and studied further by various authors, including in the gem research, which is updated annually (bosma 2013). a note of caution is that questions have been raised about the validity of hofstede’s vsm94 questionnaire in south africa (kruger & roodt 2003), which may apply to other southern african nations such as zimbabwe. in addition, zhao et al. (2012) have pointed out that various empirical results investigating the relationship between culture and entrepreneurship are contradictory (as seen in the points below), which they posit may be at least partly due to gdp as a moderating factor, and that the effects of culture on female entrepreneurship differs whether the venture is early stage or established. thus, it is quite difficult to draw definitive conclusions from the literature about the cultural dimensions in zimbabwe. in the section below, the descriptions of each dimension are drawn from ozgen (2012). based on these studies, the following outline of the dimensions as they apply to entrepreneurs in various developing countries is given, although still inconclusive because of paucity of data about individual african countries, particularly split by gender: uncertainty avoidance (uai). a high uai means low tolerance for risk, ambiguity, and unpredictability, which is managed by having a great number of rules in place, and is not considered ‘good’ for entrepreneurship. in south africa, white managers scored low and black managers scored high on this dimension (thomas & bendixen 2000). low uai is favourable only for early stage female entrepreneurship (zhao et al. 2012). collectivism (idv). in-group and institutional collectivism, split out in the globe study, are discussed together here to reduce complexity; it reflects the degree to which groups are loyal, collective and cohesive. where collectivism is low, higher barriers to business can be expected for female entrepreneurs (ozgen 2012), and high in-group collectivism leads to more entrepreneurial activity (zhao et al. 2012), but only in low to medium gdp countries. the concept of ubuntu, prevalent in sub-saharan african countries (including zimbabwe) typically has ‘high in-group solidarity, paternalistic leadership and humane orientation’ (wanasika et al. 2011:234). bullough et al. (2014) have shown that in-group collectivism is particularly important for women entrepreneurship, although her sample only included one african country: south africa. gender egalitarianism (ge) is the extent to which men and women are seen to have equal stature, with minimal gender differences. sub-saharan africa, including zimbabwe, shows low ge (ozgen 2012), which would tend to reduce entrepreneurial activity amongst women. however, zhao et al. (2012) found that low ge encourages female entrepreneurship in low gdp countries, which they suspect could be because formal employment opportunities are limited. zimbabwe has a low gdp (zimstat 2012). performance orientation (po) is the extent to which a society measures and rewards good performance. it has been suggested (ozgen 2012) that where there is a low po, female entrepreneurs are less likely to flourish due to low levels of support. power distance (pdi), in which high pdi indicates hierarchies and inequality. zimbabwe has been described as hierarchical (mutanana & bukaliya 2015), although the contrary was found in other southern african states such as swaziland ((dlamini & migiro 2014) and south africa (thomas & bendixen 2000). zhao et al. (2012) report that, in low-medium gdp countries, high pdi encourages female entrepreneurship and the reverse in high gdp countries. assertiveness (as) is the extent to which people face up to and challenge one another; it is associated with the masculinity dimension (hofstede 2011). low-assertive countries tend to be more cooperative, with relationships being more important than competitiveness (ozgen 2012), and women fitting in with gender stereotypes. zhao et al. (2012) found that increasing assertiveness encouraged female entrepreneurship only in high gdp countries, not in low-medium gdp countries. humane orientation (ho) is the degree to which fairness and generosity are rewarded. it has been postulated that high scores on this dimension are associated with greater entrepreneurial activity (zhao et al. 2012) and that there is more community support for entrepreneurs in such cultures. femininity/masculinity (mas) included assertiveness and willingness to confront in hofstede’s original dimensions, but the two characteristics were split out separately in the globe study (hofstede 2011). in less assertive societies, women may take fewer entrepreneurial opportunities (ozgen 2012). long-term (future) orientation (lto) is the extent to which people plan and invest, rather than ‘live for today’ only. zimbabwean female entrepreneurs show ‘short-term focus and situational reactivity’ (nyamwanza et al. 2012:100), although future orientation is associated with intensified entrepreneurial activity. figures directly from hofstede’s website, (hofstede & hofstede 2015) report lto for zimbabwe to be 15 on a scale of 0–100, which appears inconsequential. indulgence/restraint (ir): hofstede (2011) only added this dimension recently, so it has not yet been investigated in this context. he refers to it as the extent to which a society allows or restricts gratification of fundamental human desires; for example, having fun. figures directly from hofstede’s website (hofstede & hofstede 2015) report ir for zimbabwe to be 28 on a scale of 0–100, which is low, suggesting restraint. hechavarria and ingram (2016) recently pointed out that the cultural dimensions of high power distance, high assertiveness and high inequality are strongly associated with gender issues in entrepreneurship, so it is difficult to discuss the dimensions as being fully independent of one another. methodology an interpretive, qualitative research design was chosen to facilitate understanding of culture and its effects on female entrepreneurship in zimbabwe. the philosophical worldview used to guide this study is social constructivism, which highlights the distinctiveness of situational and contextual depth (hay 2016). the backdrop against which this study was carried out was turbulent for zimbabwean women seeking emancipation. in the decade after independence in zimbabwe (1980), the government appeared to be working towards formulating policies to address discrimination against women, but the many women’s groups that had formed for support, empowerment and development (van eerdewijk & mugadza 2015) became frustrated with the direction and pace of change. although policies have become more liberal in terms of women’s rights, there is still much change needed in day-to-day exchanges that reveal the cultural inequality plaguing zimbabwean women. the economic situation in zimbabwe has continued to worsen since independence, and today the country ranks 125 out of 140 countries on the global competitiveness index (schwab 2015) and ranks last in the world in the availability of basic requirements. population and sampling the field work was conducted in harare and bulawayo, the capital and second major cities, respectively, in zimbabwe. bulawayo was once the backbone of the economy housing major companies that have since relocated to harare because of the deteriorating economic situation in the country. these two cities, by virtue of their size and stature, provide a base for the female entrepreneurs and their entrepreneurial endeavours. an exploration of the tribal variations between the two regions is beyond the scope of this study, although this could be an area for future research. a sample of 43 female entrepreneurs was purposively selected (bluhm et al. 2011) and interviewed in-depth, in face-to-face encounters. all respondents were black people, as there is scant research reporting on this particular group – gender research is very seldom split by race, although there are reports of different cultural orientations in some sub-saharan african (ssa) communities; for example, afrocentric versus eurocentric (booysen 2001; shrivastava et al. 2014). all of the women were running their own businesses and had started their entrepreneurial activities in the informal sector, then formalised, or were in the process of formalising their businesses. ten interviews took place in bulawayo and the rest in harare. the respondents were selected on the basis that they owned a minimum of 50% of the company, were involved in the set-up of the organisation and managed the entrepreneurial endeavour themselves. data collection and analysis very open-ended questions and requests were asked, such as ‘please tell me about your entrepreneurial journey’, ‘how do you manage both your business and home responsibilities?’ and ‘who do you turn to for advice or help?’ with prompts like ‘and what happened then?’ or ‘how did you deal with that?’. these centred on each woman’s unique situation and her experiences in the context of transitioning from the informal to the formal economy. guidance was given only to keep the dialogue on track, and the conversations flowed naturally. guarantees of respondent anonymity facilitated open discussion. almost all of the interviews took place in the participants’ offices, workplaces or homes. the interviews were recorded with prior approval from the respondents, and verbatim transcripts were created and analysed using atlas.ti© software. the analysis process involved several readings of each transcript for familiarisation, which was accompanied by memo writing to extract meaning and the main themes. after that, codes were extracted (line by line) using the software, and constant comparison within and between transcripts took place to refine the codes and develop categories for discussion. ethical consideration ethics approval was obtained from the university of the witwatersrand non-medical ethics committee #r14/49. findings and discussion whilst the research is on the female entrepreneurs’ experiences as they transitioned to the formal economy, an issue that came to the fore was the historical and cultural context in which they were embedded. the foremost cultural factors that emerged from the analysis were: dedication to work, (to deliver a ‘double workload’ (azmat & fujimoto 2016:19), conformity to social value patterns, dependability, thrift and reliance on family values, which helped to explain their priorities, choices and behaviour (watts et al. 2007). perceptions of the role of cultural factors in moderating their values and behaviour determined whether these factors acted as enablers or barriers to success (azmat 2013; dhaliwal et al. 2010). strong work ethic in all of the conversations with the female entrepreneurs, the cultural attribute of ‘hard work’ was evident, and this was embedded in their upbringing and learned mainly from their mothers. this point is illustrated in the following verbatim quotes from three of the respondents: ‘… as a woman it is important to use the gift that god gave you ‘sebenza nemaokoako’ (put your hands to good use) so that you can get something for yourself in life.’ [participant 1, female] ‘… i find inspiration from my late mother … she instilled in us that you have to wake up and work hard especially as a girl child.’ [participant 2, female] ‘as women, we must appreciate to ‘work with our hands’ so that we avoid being people with a dependency syndrome. you see problems when women are dependent, but if we come out of that, everything will work out.’ [participant 3, female] hard work and industriousness have been highlighted elsewhere (amin 2016) as being important characteristics for success amongst female entrepreneurs in developing countries. the trait of ‘hard work’ is typically associated with a high lto (ozgen 2012). this is on the basis that hard work is for the purpose of investing for future gains, although the literature (nyamwanza et al. 2012) has reported that some female zimbabwean entrepreneurs spend their business earnings on family and community needs rather than investing it. this was certainly found to be the case amongst the respondents in this study, and may represent a balancing mechanism to justify their participation in an essentially masculine activity, by directing it for an essentially feminine purpose. additionally, fang (2003) reminds us that respect for tradition, certainly evident in this study, is typical of low lto and that zimbabwe was found to have a low lto. in the minds of the women, a strong work ethic was associated with being entrepreneurial, as described by beugelsdijk and noorderhaven (2005) and that working hard is more than a woman’s duty; it is her prerogative. this view allowed the women to be the personal custodian of their destiny, an important and empowering mental shift. one woman reported that working hard also helped to overcome obstacles such as poor access to capital: ‘in most cases, business requires capital, but other things do not require capital. you just keep working hard so that you can attain your goals and reach your destination.’ [participant 4, female] this woman continued to seek creative ways to raise capital whilst continuing to work hard. this approach implies both ‘hard work’ (persistence and physical intensity) and ‘smart work’, encompassing mental intensity and choice (coad 1996). it has been reported that the main reason for individuals who want to be self-employed and who are not is a lack of capital (blanchflower, oswald & stutzer 2001); therefore, the fact that this woman was not deterred shows a character that finds ways to succeed. godsell (1991), dia (1996) and steel and webster (1991) all found that ingenuity and initiative on the part of the entrepreneur can compensate for the need for additional capital. working hard is part of the core value system of these women, and rather than being a burden it becomes an enabler of entrepreneurship, as suggested by leung (2011) and confirmed by amin (2016). henry et al. (2015) describe and refute the suggestion that one reason for women’s poor success rate in obtaining finance is that they are perceived to ‘not take business as seriously as men’ (p. 581); similarly, this study also found that women entrepreneurs take both of their responsibilities very seriously. family and community for female entrepreneurs, their domestic role in the family is not negotiable. it is something that they do without hesitation or thought. leung (2011), reinforced by the findings of ettl and welter (2012), presents the view that women can draw from the values and knowledge embedded in their normative gender roles when they embark on entrepreneurial endeavours. the female entrepreneurs interviewed did not contest the assumption that, as women, they were expected to carry a full load of domestic responsibility, with its associated cultural concepts of sacrifice and duty to family. their traditional gender roles have been built around the stereotype of submissive wife and nurturing mother. for example: ‘… family comes first, and their issues have to be attended to first, be it nuclear or extended family. you cannot tell the family that you are busy with work when your services or your presence is required …’ [participant 5, female] and, ‘… because, if the woman is clever enough and takes the lead, the whole family will be uplifted. … when you can provide for your children, there will be peace at home and fewer squabbles.’ [participant 3, female] family commitment (in-group support) was also an enabler of female entrepreneurship. dhaliwal et al. (2010) established that, besides providing support for start-ups of their female relatives’ entrepreneurial endeavours, the family could also provide monetary assistance to enable them to take necessary, considered business risks. one of the women shared: ‘my husband is my business partner; he was the one who had the cash. so into the business he brought the cash, and i brought the know-how. then, in terms of management, we work together. he does the accounts for the business. i could not have found myself a better partner. he is very helpful and supportive, and it is an advantage to have him in the business.’ [participant 6, female] unfortunately, this was not true in all cases, as the husbands of most of the women interviewed rather looked down on their wives’ entrepreneurial activities. as amoako-kwakye (2012) and chitsike (2000) suggested, one of the women’s roles in society is to foster peace, and these women realise that fighting the patriarchal system would not get them anywhere. in their quest to keep the family intact as well as continue to run their entrepreneurial endeavours, the female entrepreneurs were willing to bow to patriarchy. in this way they balance the visibility/invisibility dichotomy described by harrison, leitch and mcadam (2015) in which female entrepreneurs switch between their dual roles. the zimbabwean women showed a deeply embedded acceptance of a high masculinity, low ge and high power distance culture as described by hofstede (2011) and in the globe studies (ozgen 2012). institutional and social factors at the meso-level, zimbabwe’s institutional environment affects the endeavours of the female entrepreneurs, as, despite many laws designed to emancipate women, culturally linked behaviours and practices often override them. for example, zimbabwean law requires that any business entity having two or more directors needs to be registered, and it is a common practice for a married woman to designate her spouse as the other director. thus, it would appear to the outside world that the male is dominant (a culturally rooted assumption), and the cultural status quo is maintained. so, although the company is owned by both parties, in reality, the woman runs and manages the business, as well as being responsible for all family and household duties. thus cultural patriarchy (the macro-level illustrated in figure 1) strongly influences practices (micro-level), despite policies (meso-level) favouring gender equity. none of the women expressly admitted to the breadwinner versus subordinate anomaly in their dual roles, and would turn a blind eye to ‘save face’, as described by nguyen and frederick (2014). perhaps female entrepreneurs in zimbabwe are fortunate, as in many developing countries there are still policy frameworks that inhibit business activity amongst women (brush & cooper 2012; dlamini & migiro 2014; oya & sender 2009; syed & ozbilgin 2009). sense of identity the dual sense of identity that the women had developed was the main reason that they were able to reconcile the contradictory expectations from the two roles that they played. an important aspect was that, unlike women in other patriarchal societies such as india (azmat & fujimoto 2016), they were not under the same cultural pressures of inferiority, weakness and in need of protection. there was no evidence in this study to suggest that the women were perceived as being incapable of running their own business, so it was easier for them to develop self-confidence in their own abilities and actually deliver on the double workload expectation. they were proud of their ability to deliver in both life spheres. zimbabwean women entrepreneurs’ ability to apparently switch seamlessly between roles is an important coping factor. in a manner similar to that described by hechavarria and ingram (2016), the women portrayed their ‘emphasized femininity’ (p. 246) in their home role, and took on the leadership role in a more traditionally ‘hegemonic masculine’ (p. 246) way when running their business ventures. current laws in zimbabwe favour female emancipation (mutanana & bukaliya 2015), so, at the meso-level, doors are open for women to participate in the more masculine and individualistic endeavour of commercial entrepreneurship (hechavarria & ingram 2016), without losing the integrity of maintaining their traditionally feminine, collectivistic responsibilities. this idea of balance between collectivism and individualism amongst women entrepreneurs is well illustrated by bullough et al. (2014), where it is explained to optimise women’s business ownership because they can pursue their personal goals (individualistic) and still serve their in-group (collectivistic). conclusion gender-differentiated cultural studies focusing on black female entrepreneurs in zimbabwe are scarce, although there are some reports. it is evident that the cultural dimensions, described by hofstede (2011) and expanded in the globe studies (ozgen 2012), do play a role in female entrepreneurship in zimbabwe, although it would be beneficial to conduct research into the cultural profiles of a greater number of specific african countries, taking gender into account. it is evident from the literature that, although there are some commonalities between african countries and between developing countries, specific contexts vary considerably, and these affect the ways in which cultural variables are perceived and handled. women entrepreneurs’ identities were initially disenfranchised as they were shackled by patriarchy, inequality and high power distance. this identity is not static and changed with changing circumstances, that is, it is constantly being reconstructed. identities are linked with the different social roles (e.g. public vs. private) that women entrepreneurs must play, and these identities interact with one another. public identities incorporate the entrepreneurial identity, including those linked with previous occupational experiences, with entrepreneurial activity of the enterprise, community roles and occupational gender related issues. private identities include childhood experiences and family roles such as those of mother and wife. it is also evident that, although the vast majority of the women willingly demonstrate adherence to the cultural expectations of a patriarchal society, they nonetheless can display characteristics of assertiveness, po and long-term orientation when running their businesses; however, they do this in such a way as to never emasculate their male partner. in this way, they work around the barriers to entrepreneurship of the cultural norms and use them to their advantage where possible, for example, to raise funding (azmat 2013), in addition to demonstrating (even covertly) atypical cultural attributes. thus, despite the attempts to empower zimbabwean women at the meso-level in terms of policies, the cultural norms at the macro-level still influence behaviours at the micro-level. however, zimbabwean women have balanced their dual roles by shifting identity roles as required, enabling them to reconcile the inherent contradictions therein. importantly, these women view entrepreneurship as self-fulfilling, allowing them the flexibility and freedom to balance work and family obligations, whilst earning an income to better the lives of their families and the community. acknowledgements thank you to the two reviewers for their detailed and helpful comments and the bradlow foundation phd scholarship for dr mazonde. competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions n.b.m. prepared the proposal and conducted the research under t.c.’s supervision. n.b.m. did all the fieldwork herself, in zimbabwe. n.b.m. wrote the early drafts of the paper, and t.c. did the majority of the article after that, including conceptualising and constructing the consolidated culture model in figure 1. references amin, n.b., 2016, women entrepreneurship: a cross country comparative study (bangladesh, pakistan and india), phd thesis, university of dhaka, dhaka, india, viewed 17 october 2016, from http://repository.library.du.ac.bd:8080/handle/123456789/869 amoako-kwakye, f.y., 2012, ‘background characteristics and determinants of performance of women’s business operations in agona and asikuma-odoben-brakwa districts, ghana’, journal of management policy & practice 13(3), 129–148. azmat, f., 2013, ‘opportunities or obstacles? understanding the challenges faced by migrant women entrepreneurs’, international journal of gender and entrepreneurship 5(2), 198–215. http://dx.doi.org/10.1108/17566261311328855 azmat, f. & fujimoto, y., 2016, ‘family embeddedness and entrepreneurship experience: a study of indian migrant women entrepreneurs in australia’, entrepreneurship & regional development, 1–27, viewed 16 october 2016, from http://www.tandfonline.com/doi/abs/10.1080/08985626.2016.1208279 baah, r.a., amani, d. & abass, m. 2015, ‘cultural theory elaborations without predictive utility’, african journal of political science and international relations 9(2), 42–48. http://dx.doi.org/10.5897/ajpsir2012.0007 bahmani, s., sotos, f.e. & garcía, i.p., 2012, women, research, and entrepreneurship in women’s entrepreneurship and economics, vol. 1000, springer, new york. baughn, c., chua, b.l. & neupert, k., 2006, ‘the normative context for women’s participation in entrepreneurship: a multi-country study’, entrepreneurship theory and practice 30(5), 687–708. http://dx.doi.org/10.1111/j.1540-6520.2006.00142.x bergmann, h., müller, s. & schrettle, t., 2014, ‘the use of global entrepreneurship monitor data in academic research: a critical inventory and future potentials’, international journal of entrepreneurial venturing 6(3), 242–276. http://dx.doi.org/10.1504/ijev.2014.064691 beugelsdijk, s. & noorderhaven, n., 2005, ‘personality characteristics of self-employed; an empirical study’, small business economics 24(2), 159–167. http://dx.doi.org/10.1007/s11187-003-3806-3 blanchflower, d.g., oswald, a. & stutzer, a., 2001, ‘latent entrepreneurship across nations’, european economic review 45(4), 680–691. http://dx.doi.org/10.1016/s0014-2921(01)00137-4 bluhm, d.j., harman, w., lee, t.w. & mitchell, t.r., 2011, ‘qualitative research in management: a decade of progress’, journal of management studies 48(8), 1866–1891. http://dx.doi.org/10.1111/j.1467-6486.2010.00972.x booysen, l., 2001, ‘the duality in south african leadership: afrocentric or eurocentric’, south african journal of labour relations 25(3 & 4), 36–64. booysen, l.a. & nkomo, s.m., 2010, ‘gender role stereotypes and requisite management characteristics: the case of south africa’, gender in management: an international journal 25(4), 285–300. http://dx.doi.org/10.1108/17542411011048164 bosma, n., 2013, ‘the global entrepreneurship monitor (gem) and its impact on entrepreneurship research’, foundations and trends in entrepreneurship 9(2), 143–248. http://dx.doi.org/10.1561/0300000033 brush, c. & cooper, s.y., 2012, ‘female entrepreneurship and economic development: an international perspective’, entrepreneurship & regional development 24(1–2), 1–6. http://dx.doi.org/10.1080/08985626.2012.637340 brush, c.g., de bruin, a. & welter, f., 2009, ‘a gender-aware framework for women’s entrepreneurship’, international journal of gender and entrepreneurship 1(1), 8–24. http://dx.doi.org/10.1108/17566260910942318 bullough, a., renko, m. & abdelzaher, d., 2014, ‘women’s business ownership operating within the context of institutional and in-group collectivism’, journal of management 1–28, viewed 16 october 2016, from http://jom.sagepub.com/citmgr?gca=spjom%3b0149206314561302v1. http://dx.doi.org/10.1177/0149206314561302 chitsike, c., 2000, ‘culture as a barrier to rural women’s entrepreneurship: experience from zimbabwe’, gender & development 8(1), 71–77. http://dx.doi.org/10.1080/741923408 coad, a., 1996, ‘smart work and hard work: explicating a learning orientation in strategic management accounting’, management accounting research 7(4), 387–408. http://dx.doi.org/10.1006/mare.1996.0022 de bruin, a., brush, c.g. & welter, f., 2007, ‘advancing a framework for coherent research on women’s entrepreneurship’, entrepreneurship theory and practice 31(3), 323–339. http://dx.doi.org/10.1111/j.1540-6520.2007.00176.x dhaliwal, s., scott, j. & hussain, j., 2010, ‘help or hindrance – south asian women in the family firm’, journal of family business studies 4(1), 5–23. dia, m., 1996, african management in the 1990s and beyond: reconciling indigenous and transplant institutions, washington, dc, viewed 24 january 2016, from http://documents.worldbank.org/curated/en/251021468760493162/africas-management-in-the-1990s-and-beyond-reconciling-indigenous-and-transplanted-institutions dlamini, n.b. & migiro, s., 2014, ‘the relationship between national culture and perception of women in leadership in swaziland’, asbm journal of management 7(1), 70–81. espíritu-olmos, r. & sastre-castillo, m.a., 2012, ‘why women claim to be less entrepreneurial than men’, in m.-a. galindo & d. ribeiro (eds.), women’s entrepreneurship and economics: new perspectives, practices, and policies, pp. 111–124, springer, new york. ettl, k. & welter, f., 2012, ‘women entrepreneurs and success’, women’s entrepreneurship and economics 1000, 73–88. http://dx.doi.org/10.1007/978-1-4614-1293-9_6 ewoh, e., 2014, female entrepreneurs performance: a systematic literature review of forces influencing the performance of african female entrepreneurs. master thesis, university of jyvaskyla, finland, viewed 10 october 2015, from https://jyx.jyu.fi/dspace/bitstream/handle/123456789/43564/urn%3anbn%3afi%3ajyu-201405271839.pdf?sequence=1 ezzedeen, s.r. & zikic, j., 2015, ‘finding balance amid boundarylessness an interpretive study of entrepreneurial work–life balance and boundary management’, journal of family issues 1–31, viewed 14 october 2016, from http://jfi.sagepub.com/content/early/2015/08/14/0192513x15600731.full.pdf+html fang, t., 2003, ‘a critique of hofstede’s fifth national culture dimension’, international journal of cross cultural management 3(3), 347–368. fayolle, a., yousafzai, s., saeed, s., henry, c. & lindgreen, a., 2015, ‘special issue on: contextual embeddedness of women’s entrepreneurship: taking stock and looking ahead’, entrepreneurship & regional development 27(9–10), 670–674. http://dx.doi.org/10.1080/08985626.2016.1099788 gaidzanwa, r.b., 2016, ‘women and land in zimbabwe: state, democracy and gender issues in evolving livelihoods and land regimes’, in a. pallotti & c. tornimbeni (eds.), state, land and democracy in southern africa, pp. 149–166, routledge, new york. godsell, g., 1991, ‘entrepreneurs embattled: barriers to entrepreneurship in south africa’, in b. berger (ed.), the culture of entrepreneurship , pp. 85–97, ics press, san francisco, ca. goss, d., jones, r., betta, m. & latham, j., 2011, ‘power as practice: a micro-sociological analysis of the dynamics of emancipatory entrepreneurship’, organization studies 32(2), 211–229. http://dx.doi.org/10.1177/0170840610397471 harrison, r., leitch, c. & mcadam, m., 2015, ‘breaking glass: toward a gendered analysis of entrepreneurial leadership’, journal of small business management 53(3), 693–713. http://dx.doi.org/10.1111/jsbm.12180 hay, c., 2016, ‘good in a crisis: the ontological institutionalism of social constructivism’, new political economy 21(6), 520–535. http://dx.doi.org/10.1080/13563467.2016.1158800 hechavarria, d.m. & ingram, a.e., 2016, ‘the entrepreneurial gender divide: hegemonic masculinity, emphasized femininity and organizational forms’, international journal of gender and entrepreneurship 8(3), 242–281. http://dx.doi.org/10.1108/ijge-09-2014-0029 henry, c., foss, l., fayolle, a., walker, e. & duffy, s., 2015, ‘entrepreneurial leadership and gender: exploring theory and practice in global contexts’, journal of small business management 53(3), 581–586. http://dx.doi.org/10.1111/jsbm.12174 hofstede, g., 2011, ‘dimensionalizing cultures: the hofstede model in context’, online readings in psychology and culture 2(1), 1–26. http://dx.doi.org/10.9707/2307-0919.1014 hofstede, g. & hofstede, g., 2015, dimension data matrix, viewed 11 october 2016, from http://geerthofstede.nl/dimension-data-matrix huarng, k.-h., mas-tur, a. & yu, t.h.-k., 2012, ‘factors affecting the success of women entrepreneurs’, international entrepreneurship and management journal 8(4), 487–497. http://dx.doi.org/10.1007/s11365-012-0233-4 ilo, 2009, the informal economy in africa: promoting transitions to formality: challenges and strategies, viewed 17 october 2016, from http://www.ilo.org/emppolicy/pubs/wcms_127814/lang--en/index.htm jamali, d., 2009, ‘constraints and opportunities facing women entrepreneurs in developing countries: a relational perspective’, gender in management: an international journal 24(4), 232–251. http://dx.doi.org/10.1108/17542410910961532 kruger, t. & roodt, g., 2003, ‘hofstede’s vsm-94 revisited: is it reliable and valid?’, sa journal of industrial psychology 29(1), 75–82. http://dx.doi.org/10.4102/sajip.v29i1.85 langevang, t., gough, k.v., yankson, p.w., owusu, g. & osei, r., 2015, ‘bounded entrepreneurial vitality: the mixed embeddedness of female entrepreneurship’, economic geography 91(4), 449–473. http://dx.doi.org/10.1111/ecge.12092 langowitz, n. & minniti, m., 2007, ‘the entrepreneurial propensity of women’, entrepreneurship: theory & practice 31(3), 341–364. http://dx.doi.org/10.1111/j.1540-6520.2007.00177.x leung, a., 2011, ‘motherhood and entrepreneurship: gender role identity as a resource’, international journal of gender and entrepreneurship 3(3), 254–264. http://dx.doi.org/10.1108/17566261111169331 link, a.n. & strong, d.r., 2016, ‘gender and entrepreneurship: an annotated bibliography’, foundations and trends® in entrepreneurship 12(4–5), 287–441. liyanage, c., dale, j.m. & dulaimi, m.f., 2016, ‘cultural competence–a success factor in ngo projects?’, built environment project and asset management 6(2), 232–246. http://dx.doi.org/10.1108/bepam-08-2014-0038 lock, r. & lawton-smith, h., 2016, ‘the impact of female entrepreneurship on economic growth in kenya’, international journal of gender and entrepreneurship 8(1), 90–96. http://dx.doi.org/10.1108/ijge-11-2015-0040 maden, c., 2015, ‘a gendered lens on entrepreneurship: women entrepreneurship in turkey’, gender in management: an international journal 30(4), 312–331. http://dx.doi.org/10.1108/gm-11-2013-0131 matondi, p.b., 2013, ‘scope for empowering women through entrepreneurial development in the fresh fruit and vegetable (ffv) sector in zimbabwe’, harare, zimbabwe, viewed 17 october 2016, from www.trustafrica.org/icbe mboko, s. & smith-hunter, a.e., 2009, ‘women entrepreneurs in zimbabwe: a case study’, journal of global business issues 3(1), 157–169. mcgowan, p., redeker, c.l., cooper, s.y. & greenan, k., 2012, ‘female entrepreneurship and the management of business and domestic roles: motivations, expectations and realities’, entrepreneurship & regional development 24(1–2), 53–72. http://dx.doi.org/10.1080/08985626.2012.637351 mckay, r., 2001, ‘women entrepreneurs moving beyond family and flexibility’, international journal entrepreneurial behaviour and research 7(4), 148–165. http://dx.doi.org/10.1108/eum0000000005764 moses, c., olokundun, a.m., falola, h.o., ibidunni, a.s., amaihian, a. & inelo, f., 2016, ‘a review of the challenges militating against women entrepreneurship in developing nations’, mediterranean journal of social sciences 7(1), 64–69. mutanana, n. & bukaliya, r., 2015, ‘women empowerment and gender related programmes implementation in hurungwe district, zimbabwe’, international journal of research in humanities and social studies 2(2), 1–12. nani, g.v., 2013, urban zimbabwean women entrepreneurs: challenges and opportunities, amagugu publishers, bulawayo. nguyen, c. & frederick, h., 2014, ‘female entrepreneurship in rural vietnam: an exploratory study’, international journal of gender and entrepreneurship 6(1), 50–67. http://dx.doi.org/10.1108/ijge-04-2013-0034 nyamwanza, t., mapetere, d., mavhiki, s. & dzingirai, c., 2012, ‘financial management: case study of gweru women entrepreneurs’, international journal of business and social science 3(18), 99–106. oya, c. & sender, j., 2009, ‘divorced, separated, and widowed women workers in rural mozambique’, feminist economics 15(2), 1–31. http://dx.doi.org/10.1080/13545700902729516 ozgen, e., 2012, ‘the effect of the national culture on female entrepreneurial activities in emerging countries: an application of the globe project cultural dimensions’, international journal of entrepreneurship 16(special), 69–92. ramadani, v., hisrich, r.d. & gërguri-rashiti, s., 2015, ‘female entrepreneurs in transition economies: insights from albania, macedonia and kosovo’, world review of entrepreneurship, management and sustainable development 11(4), 391–413. http://dx.doi.org/10.1504/wremsd.2015.072066 reed, r., storrud-barnes, s. & jessup, l., 2012, ‘how open innovation affects the drivers of competitive advantage’, management decision 50(1), 58–73. http://dx.doi.org/10.1108/00251741211194877 rehman, s. & azam-roomi, m., 2012, ‘gender and work-life balance: a phenomenological study of women entrepreneurs in pakistan’, journal of small business and enterprise development 19(2), 209–228. http://dx.doi.org/10.1108/14626001211223865 rubio-bañón, a. & esteban-lloret, n., 2016, ‘cultural factors and gender role in female entrepreneurship’, suma de negocios 7(15), 9–17. http://dx.doi.org/10.1016/j.sumneg.2015.12.002 saridakis, g., marlow, s. & storey, d., 2014, ‘do different factors explain male and female self-employment rates?’, journal of business venturing 29(3), 345–362. http://dx.doi.org/10.1016/j.jbusvent.2013.04.004 sätre, a.-m., 2016, ‘women’s entrepreneurship in russia: impacts from the soviet system’, journal of enterprising communities: people and places in the global economy 10(1), 53–69. http://dx.doi.org/10.1108/jec-08-2015-0045 schwab, k. (ed.), 2015, the global competitiveness report 2015–2016, columbia university, geneva, switzerland. shinnar, r.s., giacomin, o. & janssen, f., 2012, ‘entrepreneurial perceptions and intentions: the role of gender and culture’, entrepreneurship: theory & practice 36(3), 465–493. http://dx.doi.org/10.1111/j.1540-6520.2012.00509.x shrivastava, s., selvarajah, c., meyer, d. & dorasamy, n., 2014, ‘exploring excellence in leadership perceptions amongst south african managers’, human resource development international 17(1), 47–66. http://dx.doi.org/10.1080/13678868.2013.857510 siziba, m., 2010, ‘strategies on women entrepreneurship survival: a case study of women entrepreneurs in zimbabwe between 2007 and 2009’, journal of women’s entrepreneurship & education (3–4), 71–79. steel, w.f. & webster, l.m., 1991, small enterprises in ghana: responses to adjustment. industry and energy department working paper no. 33, world bank, washington, dc. stephan, u. & pathak, s., 2016, ‘beyond cultural values? cultural leadership ideals and entrepreneurship’, journal of business venturing 31(5), 505–523. http://dx.doi.org/10.1016/j.jbusvent.2016.07.003 syed, j. & ozbilgin, m., 2009, ‘a relational framework for international transfer of diversity management practices’, international journal of human resource management 20(12), 2435–2453. http://dx.doi.org/10.1080/09585190903363755 thomas, a. & bendixen, m., 2000, ‘the management implications of ethnicity in south africa’, journal of international business studies 31(3), 507–519. http://dx.doi.org/10.1057/palgrave.jibs.8490919 unesco, 2002, ‘records of the general conference’, paper presented at the 31st session of the unesco general conference, paris, france, 15th october–3rd november, 2001, p. 62, http://unesdoc.unesco.org/images/0012/001271/127162e.pdf van eerdewijk, a. & mugadza, t., 2015, resilience in adversity: the changing face of women’s activism in zimbabwe 2000–2014, knowledge programme hivos, the hague, netherlands. vossenberg, s., 2013, women entrepreneurship promotion in developing countries: what explains the gender gap in entrepreneurship and how to close it? working paper, maastricht school of management, maastricht, netherlands, viewed 4 october 2016, from ftp://ftp.repec.org/opt/redif/repec/msm/wpaper/msm-wp2013-08.pdf wanasika, i., howell, j.p., littrell, r. & dorfman, p., 2011, ‘managerial leadership and culture in sub-saharan africa’, journal of world business 46(2), 234–241. http://dx.doi.org/10.1016/j.jwb.2010.11.004 watts, n., trlin, a., white, c. & north, r., 2007, ‘immigration cultural capital in business: the new zealand experience’, in l.p. dana (ed.), handbook of research on ethnic minority entrepreneurship: a co-evolutionary view on resource management , pp. 279–243, edward elgar, cheltenham. world bank, 2014, gender equality at work: a global priority, viewed from washington, dc, viewed 18 october 2016, from http://www.worldbank.org/en/results/2014/04/14/gender-equality-at-work-global-priority yusuf, l., 2013, ‘influence of gender and cultural beliefs on women entrepreneurs in eveloping economy’, scholarly journal of business administration 3(5), 117–119. zhao, x., li, h. & rauch, a., 2012, ‘cross-country differences in entrepreneurial activity: the role of cultural practice and national wealth’, frontiers of business research in china 6(4), 447–474. zimstat, 2012, zimbabwe national statistical agency, government, harare, viewed 13 january 2016, from http://www.zimstat.co.zw/ final revisions van zyl& van rooyen harvesting_edited_clean _25_7_2010_publish sajesbm volume 3, (2010) www.sajesbm.com article no 103 16 the role of the business environment in harvesting strategies deidré van rooyen * and jan h. van zyl * centre for development support, university of the free state, south africa p.o. box 339, bloemfontein, south africa, 9300 griesd.ekw@ufs.ac.za abstract harvesting is made up of many different strategies that can be used by entrepreneurs to exit their business. this is a long-term ambition to create real value to the business. in beaufort west, a uranium mining development is going to take place and thus create opportunities for existing and new businesses. this study investigates how the changing business environment will influence this harvesting choice made by the entrepreneur. recommendations indicate that entrepreneurs need more information and training regarding the specific harvesting concept and strategies that are available, because no specific harvesting strategy was noted as important by the entrepreneurial respondents. keywords and phrases: business environment; harvesting; exit; business; entrepreneur; uranium sajesbm volume 3, (2010) www.sajesbm.com article no 103 17 introduction / background levels of unemployment in south africa have remained high over the past few years and have resulted in the creation of numerous social problems. south africa has resources – infrastructure, businesses, people with knowledge and skills, institutions that contribute in building the country and significant financial resources. however, the current rate of the usage of these resources is not producing the annual growth rates needed to empower large numbers of people that are poverty-stricken and unemployed (sapa, 2008). the lack of entrepreneurial and management skills is, above all, the main impediment to creating and establishing sustainable and distinctive businesses. the global entrepreneurship monitor (gem) south african report (2008), compiled by the centre for innovation and entrepreneurship at the university of cape town, revealed that south africa has a total entrepreneurial activity rate 50% lower than that of almost 40 developing and developed countries that participated in the gem (maas & herrington 2006: 20). the gem also found that people aged between 25 and 44 years were more involved in entrepreneurial activity, but people with low education levels (without matric) were less likely to perceive themselves as entrepreneurs. one way to address the high rate of unemployment and maturing economy is to educate and assist people to create sustainable entrepreneurial ventures. when an entrepreneur starts a new business it is usually an attempt to utilize a market opportunity. in other words, there is a “gap” in the market to satisfy consumer’s needs, which are then not adequately satisfied (money biz, 2007). existing firms also have to be on the look-out for new growth and expansion opportunities to ensure long-term survival and a return on investment. for some entrepreneurs, the primary source of returns may only occur at the end of their relationship with the venture, when they want to “cash out” and harvest the profit. some entrepreneurs do not like to think about the harvesting strategy. there are even entrepreneurs that do not know what the real meaning of harvesting is. harvesting is a strategic method entrepreneurs and investors use to get out of a business and, ideally, reap the value of their investment (cash-out) in the business (longenecker, moore, petty & palich, 2006: 239; faulkner, 2009: 22). it is similar to the concept of “begin with the end in mind” in stephen covey’s book the seven habits of highly effective people (covey, 1989). a harvesting goal is not just a goal of selling and leaving the business (longenecker et al. 2006: 239). rather, harvesting is part of a strategy and a long-term ambition to create real value for the sajesbm volume 3, (2010) www.sajesbm.com article no 103 18 business and to gain from it (o’hara, 2009: 60). it is more than just an exit strategy; it considers a process for achieving an end goal that will repay the entrepreneur for the hard work and inputs. research concerning the notion of harvesting is relatively scarce (detienne, 2010: 203). because harvesting is such an important strategy and it has been neglected by the entrepreneur, the researchers saw an opportunity to gain some information regarding the strategies used with the establishment of a uranium mine in a relatively small town like beaufort west. it has lead to the very significant investigation beforehand, to determine the knowledge that the entrepreneur has of the strategic aspects of expanding an existing or establishing a new business in a changing business environment. furthermore, the opinion of the entrepreneurs about the changing environment as a result of the impact that the mining activities may have on the business environment was determined. this would in turn also ultimately impact the harvesting strategies in the future. literature review harvesting retiring from a regular job seems to be well understood in the field of normal employment and life in general. it can generally be defined as an employee leaving his or her employment at the end of his or her career (mindbullets, 2003). thus, if an employee terminates his or her working career, it ends a phase in such an employee’s personal life. likewise, a farmer sows maize seeds with the aim of harvesting a maize crop at a later stage. at the end of the harvesting process, the maize crop is sold to make a profit. the harvest is therefore the end goal of the whole strategic farming process. if the harvest was not successful because the yield was not good, the whole strategic objective of the farming process is defeated (nieman & nieuwenhuizen, 2009: 342). planning a business strategically is more or less the same as the example of farming mentioned above. in the back of every average business owner’s mind lurk thoughts of eventually leaving the business. the owner also usually worries about who will carry on with the business, whether it can be sold at a profit and, equally important, how much of any profit from the sale or transfer of the business will remain in the owner’s pocket (battersby, 2008: 74; faulkner, 2009: 22). harvesting is a strategic goal and requires a strategy for achieving it. for those business owners willing to engage in a little strategic planning, the answers to all these questions, and quite a few others the business owner may not have thought of, emerge (robbins, 2008; flanagan, 2009: 5). best of all, planning a harvesting strategy may mean the difference between leaving your aggregate business on your sajesbm volume 3, (2010) www.sajesbm.com article no 103 19 own terms or with a planned higher return (battersby, 2008: 74; o’hara, 2009: 60). understanding the dynamics of the harvesting process brings insight to the entrepreneur in order to meaningfully anticipate, plan and execute a successful harvest strategy (flanagan, 2009: 5). harvesting is a process to achieve an end goal that will repay the entrepreneur for the hard work and inputs (longenecker et al. 2006: 239). the end goal is important for decisionmaking that is done during the life cycle of the business venture. the entrepreneur should understand that harvesting is part of the strategy for the business; it cannot happen overnight. the best harvesting strategy is the one that best fits each small business and the entrepreneur’s personal goals (ward, 2008a; flanagan, 2009: 5). the entrepreneur must also monitor the process and adapt his or her strategy according to a changing environment. it is thus important for any entrepreneur to know exactly what to plan for in terms of harvesting the business. when the entrepreneur has a clear understanding of this plan, he or she can then gain from additional environmental situations along the way to increase the planned profit-making goal a little further. a case study in beaufort west, south africa, is an ideal situation to test the harvesting knowledge of entrepreneurs and their thinking processes regarding harvesting. reasons for harvesting reasons for harvesting a business can vary widely (detienne, 2010: 210; faulkner, 2009: 22). harvesting depends on many aspects, ranging from personal to environmental issues, as well as the different harvesting strategies that exist (nieman & nieuwenhuizen, 2009: 342). when analysing the harvesting process, the following reasons are important for the entrepreneur to do his or her planning for the best harvesting result: � personal goals of the entrepreneur – this can be retirement at a planned age, succession of children (quatre, 2007: 33; houck, 2008: 32), what is being sold of the business and some other personal reasons like wanting to make a change in pursuing another opportunity that he or she identified (pretorius, 2003: 291; flanagan, 2009: 5). � financial reasons – the performance levels of a business plays an important part in the harvesting success. lower performance is associated with a less beneficial harvest. the best opportunity to harvest is when the venture is performing well in terms of sales revenue and profits. a crucial part of the performance levels of a business is also stage of the life cycle. the stage of the life cycle in which the business is at harvesting time will also determine the success of harvesting. sajesbm volume 3, (2010) www.sajesbm.com article no 103 20 � environmental issues – environmental issues can be categorized into micro-, mesoand macro-environmental aspects. environmental issues may influence the planned strategy of the entrepreneur along the line of running and harvesting the business (bhp information solutions, 2009). it is thus important for the entrepreneur to stay in touch with these environmental issues and plan the outcomes of each environmental issue for the best harvesting strategy. harvesting strategies many different harvesting strategies exist for the entrepreneur and it is also essential that the entrepreneur knows the outcomes of each strategy to plan the best strategy for his or her business in terms of the harvest (kensinger, martin & petty, 2000; battersby, 2008: 74–76; holmes, 2007: 108; nieman, hough & nieuwenhuizen, 2003: 291; detienne, 2010: 210; houck, 2008: 32). harvesting alternatives cannot be contemplated for a venture that has slipped down the failure road too far. this slip will drive the selling price down. similarly, harvesting becomes difficult for a business that has moved to the maturity and especially the decline stage of its life cycle (nieman & nieuwenhuizen, 2009: 347). although many closely held businesses have buy/sell agreements already in place to provide a mechanism for valuing, few provide the exact strategy for the retirement of the owner, partner or principal shareholder (robbins, 2008). the outright sale is the most obvious route to follow for the entrepreneur, but not always the best strategy (ward, 2008b). the outright sale requires that the entrepreneur take a decision to sell the venture to any willing buyer. when a business is sold outright, the seller’s goal usually is to reap as much of the proceeds as capital gains as possible. for individuals, including sole proprietors, net capital gains are subject to tax rate of 25% in south africa. this forms the downside of any capital transaction in the outright sale strategy (battersby, 2008: 74). often there are other businesses in the same or related industries that want to expand their operations and want to grow through acquisition (robbins, 2008). buying an existing business in a related industry could be beneficial and involves less risk for the buying entrepreneur. according to the theory of porter (ehlers & lazenby, 2007: 112-119) it is important in this expansion process that the entrepreneur that wants to sell his or her business should enquire from suppliers whether they might be interested in forward integration. other potential buyers may be some of the larger customers who are interested in backward integration. forming an alliance with another venture is different in that no one takes up equity in the other business, as with a merger or joint venture (nieman, hough & nieuwenhuizen, 2003: 297). the entrepreneur can follow the alliance route as an sajesbm volume 3, (2010) www.sajesbm.com article no 103 21 interim step that can lead to a complete takeover in the long run (ward, 2008b). the merger is a quicker route than the alliance but is very similar. in the merger a formal combination of the two enterprises takes place either through forming a new enterprise or for taking up shares in each other’s venture (longenecker et al. 2006: 241). the “capital cow” strategy refers to the entrepreneur proceeding with the business but using the cash that it generates as capital to establish an alternative venture or use it as retirement funding (nieman & nieuwenhuizen, 2009: 351). there are certain harvesting strategies that are not applicable to use by a small and some medium entrepreneurs in the beaufort west area. the three strategies not applicable are: � the management buyout strategy – not enough management staff that has the capital, knowledge and risk orientation to buy the business and make a success; � employee share strategy – not enough employees with capital, knowledge and risk orientation to buy the business; and � public offering strategy not possible because of the size and the growth potential of the business (battersby, 2008: 75-76). it is questionable whether a change in the environment alone is sufficient to determine the best choice for harvesting. normally, the strategies mentioned above interact with each other and a change in a few complementary factors may influence the harvesting strategy significantly. what entrepreneurs think and expect to do to make use of the environmental aspects to create the best strategy for the business harvesting process is noteworthy. the beaufort west case has some significant factors that can have an influence on many entrepreneurial businesses harvesting strategy. a new development has been initiated in beaufort west – the mining of uranium. beaufort west may become the centre of the uranium mining boom and its economy is expected to grow substantially. rising property prices are already the first sign of the booming economy (business trust and department of local government, 2007: 43). but the overall viability of mining operations in the district is heavily dependent on global commodity prices and the rand-dollar exchange rates. in terms of job creation, agriculture and tourism are the two sectors with the highest current potential, whereas mining is the sector with the highest future potential for significant economic growth within the entire town and surrounding area. several companies are interested in mining the substantial uranium deposits around beaufort west and the direct value of the uranium is estimated to be r620 billion (business trust and department of local government 2007: 34). “the mining companies are serious sajesbm volume 3, (2010) www.sajesbm.com article no 103 22 about their development plans and are currently investing 1 billion rand in the region” (business trust and department of local government, 2007: 9). the development in the region will create many opportunities for existing and new businesses. the development will also have an impact on the business environment and especially the microand market environment. foregoing opportunities and prospects that will develop in the next couple of years, will afford various new and existing business owners the opportunity to seize the occasion with both hands and expand their trading resources. the question that arises is whether these entrepreneurs truly realise that they are proceeding with development strategies accompanied by capital investment, or whether they are envisioning the end result, when the business is sold or ownership is changed and a return of investment capital occurs. identification of problem because a harvesting goal is not just an aspiration to sell and leave the business, it is necessary to gain some understanding of the entrepreneurs’ comprehension of the harvesting concept and also the strategies that the entrepreneur implements to create real value for the business and also ensure a big enough retirement package. since limited literature currently exists on harvesting, this study wants to contribute by determining if entrepreneurs in the beaufort west area have a harvesting goal as part of their entrepreneurial process. if they have briefly thought of harvesting, it would be necessary to note what strategy they will consider. more specifically, the influence of environmental changes on the entrepreneurs’ judgment and their opinion or choice of their harvesting strategy should be investigated. aim of study the main aim of this study was to investigate whether the entrepreneurs have any knowledge of harvesting and if so, to reveal the harvesting strategies that they may follow. the study also investigated how the business environment influenced this harvesting choice and ultimately how the environment impacts on harvesting in the future. ultimately, the following propositions could be investigated in the study: p1: entrepreneurs understand the concept of harvesting p2: entrepreneurs considered harvesting strategies during start-up p3: entrepreneurs think that it is important to consider a harvesting process sajesbm volume 3, (2010) www.sajesbm.com article no 103 23 p4: the environmental changes influenced how entrepreneurs judged their opinion / choice of harvesting strategy method this formal research study was exploratory in nature. this type of research is designed primarily to explore what is going on (babbie & mouton, 2001: 80; trochim, 2006). in the present study the researchers wanted to observe and explore entrepreneurs in beaufort west. a quantitative research approach was used because it implies an iterative process whereby evidence is evaluated, and theories and research questions are refined (hancock, 1998: 2). measuring instrument a survey was conducted as it gave the researcher a picture of what the people think (neuman, 2000: 31). face-to-face interviews with a questionnaire covering the micro-, macroand meso-environment of the business were conducted with as many businesses in beaufort west as possible. this questionnaire was developed by the researcher from several other example business surveys. the community development workers from the beaufort west district municipality assisted as fieldworkers to gain experience and also gain access to information about the businesses in the area. community development workers are a cadre of civil servants with specific and limited levels of training. they are deployed at the community level and are community-based resource persons for government. the researcher also tried to establish a database of businesses in beaufort west that could possibly be used for further studies. sample there is no list of businesses available in the small towns of the karoo and therefore the telkom (landline communication services in south africa) telephone book was used as a guideline for finding the businesses in the town. there are (according to the telephone book) approximately 330 businesses in beaufort west. convenience sampling was used because the list of businesses is very small and as many entrepreneurs as possible were interviewed. a total of 129 questionnaires were completed during the last week of november 2007. therefore the response rate was 39,1%. furthermore, there was no co-operation from (14,5%) of the businesses (for example, they repeatedly requested fieldworkers to “come back the next day”), the owner was too busy and did not have time to complete the questionnaire (10,1%), the owner was never available (9,6%), there was no responsible person at the office to leave the questionnaire with (8,1%) and many of the businesses are owned by the sajesbm volume 3, (2010) www.sajesbm.com article no 103 24 same owner, and they had already completed a questionnaire (8,4%). the response rate is low for a business survey of a small town in the karoo. findings and discussion demographic profile of respondents the majority of the respondents (53,3%) that were interviewed were the owner and manager of the business. these people are responsible for building the harvesting strategy. therefore, the results reflect the financial as well as the managerial views of business in the area. eighty-five percent of the respondents were in their peak of their business career (between the ages of 26 and 55 years). a relatively even distribution of white (53,1%) and “black” (35,2% coloured and 10.2% black) owned or managed business people were interviewed. almost 70% of the respondents received a good education (matric (38%), diploma or certificate and even a degree (31%)). there were also entrepreneurs who received very little formal training (3.2% no education, grade 1 and grade 2). although several respondents owned businesses in brick structures next to the home (6%), in shacks next to the home (3%) and working within the home (10%), respondents mostly owned or managed formal businesses that were located in the central business district (63%) and the industrial area (13%). respondents’ harvesting strategies this study’s main aim is to explore the knowledge of the entrepreneur in terms of their choice of starting a business with a harvesting strategy in mind, the influence of some environmental aspects on harvesting as well as their choice of a harvesting strategy. harvesting strategy in this case considers the context or environment (micro, market and macro), as well as well as the business and its performance within the environment (nieman, hough & nieuwenhuizen, 2003: 291). table 1 shows the entrepreneurs’ thinking on a harvesting strategy when starting their business. only 24% of the entrepreneurs from beaufort west that were interviewed noted that they thought about a harvesting strategy when starting their business. a further 13,6% have thought of a harvesting strategy but are unsure of which strategy to use. the remaining 62,4% of the entrepreneurs mentioned that they have not thought about harvesting at all when starting their business. this is a worrying aspect because the entrepreneur should consider harvesting when they start up a new business. a strategy, even a broad one, will help the entrepreneur to be alert to any sajesbm volume 3, (2010) www.sajesbm.com article no 103 25 opportunities that might open to optimise a potential harvest or to make the harvest more significant (nieman, hough & nieuwenhuizen, 2003: 302). table 1: thinking of harvesting strategy when starting the business n % yes, sure i have 30 24.0 yes, but unsure about strategy 17 13.6 no, not at all 78 62.4 total 125 100.0 above all, market environmental issues are the macro environmental aspects like the political, economical, social, technological, international and physical factors that govern the market environment. for the few entrepreneurs in beaufort west that thought of a harvesting strategy when starting their business, the environmental factors as well as the severity of the situation may influence their chosen strategy when a harvest strategy is selected. as soon as a macro-environmental factor like the economy of beaufort west is going to change, some of these market factors mentioned are also going to change. the entrepreneur who is aware of the influence of the change on his or her harvesting strategy, can make some adjustments to gain the best benefits from their harvesting strategy. those beaufort west entrepreneurs (more than 75%) that are unsure of the harvesting strategy and do not think of any strategy, will not be making any adjustments to their current business or business strategy. therefore, the entrepreneurs (in beaufort west) have not clearly thought about the strategy they would use but only do that when prompted to give an opinion afterwards. table 2 indicates their outlooks. their harvest will be influenced negatively or positively according to the environmental changes, but because they did not make any planning adjustments, the end result could have been better. sajesbm volume 3, (2010) www.sajesbm.com article no 103 26 table 2: respondents’ awareness of the importance of harvesting strategies harvesting strategy very important important less important not at all important total n % n % n % n % n % outright sale 33 28.2 12 10.3 7 6.0 65 55.6 117 100.0 looking for acquisition 11 9.6 15 13.0 14 12.2 75 65.2 115 100.0 selling to competitor 7 5.9 12 10.2 9 7.6 90 76.3 118 100.0 do a management buyout 5 4.3 14 12.0 8 6.8 90 76.9 117 100.0 employee share option 6 5.2 11 9.5 11 9.5 88 75.9 116 100.0 forming alliance with other venture 4 3.5 11 9.6 7 6.1 92 80.7 114 100.0 merging with other venture 4 3.5 15 13.0 5 4.3 91 79.1 115 100.0 proceed with professional manager 15 12.6 23 19.3 9 7.6 72 60.5 119 100.0 capital cow 9 8.0 14 12.5 11 9.8 78 69.6 112 100.0 public offering 11 9.6 14 12.2 2 1.7 88 76.5 115 100.0 divestment alternatives 6 5.2 14 12.2 6 5.2 89 77.4 115 100.0 sajesbm volume 3, (2010) www.sajesbm.com article no 103 27 when asked which strategy they would follow, depending on the strategy, between 60 and 80 per cent of the beaufort west entrepreneurs did not find the harvesting strategy important. those that made a choice of which harvesting strategy to use seemed to prefer the outright sale (28,2%) (see table 2). in terms of theory, it can be seen that the entrepreneur that chooses outright sale as a strategy, is not well informed and needs to rethink his or her harvesting strategy. although 65% of entrepreneurs in beaufort west showed no interest in an acquisition at all, they ranked it as an important choice. the entrepreneurs were also asked to rank their choice – an outright sale was ranked number 1 (no.1), looking for acquisition method as number 2 (no.2) and selling to a competitor, as well as capital cow as number 3 (no.3). a strategy that can be of more importance for entrepreneurs who want to avoid the tax option in the shorter term is to plan in the long run to train and place an employee with enough knowledge as a manager to operate the business while the owner withdraws his or her involvement. this strategy was chosen by 12,6% of the respondents in beaufort west. in most smaller and medium size businesses this strategy is workable for the owner that wants to retire but while the business and the environment around the business, like in beaufort west, is positive. use the growth of the business to earn more harvesting capital in the long run while in the meantime still making a profit and keeping the business going at the same level and quality. the greatest number of entrepreneurs (80,7% and 79,1% alternatively) would not choose ‘forming an alliance with other ventures’ or ‘merging with another venture’ at all as a choice for a harvesting strategy. the business community in beaufort west seems to be very positive about the economy and trading conditions in the town of beaufort west. this is possibly the influence of the uranium mine that should be opening soon. a total of 78,7% of the entrepreneurs stated that the economy of beaufort west is improving. over 63% of the entrepreneurs also thought that the general business conditions are good, the number of clients has increased (68,8%), sales have increased (69,8%) and their profitability has improved (60,7%). the entrepreneurs seemed more divided when asked whether the current trading conditions were good, fair or poor because 52% noted that the conditions were good and 42% recorded that these conditions were fair. the entrepreneurs also rated the confidence they have in their own business (average of 8,43) as well as the confidence they have in the beaufort west economy (average of 7,97). nearly fifty per cent of the entrepreneurs gave a rating of 10 out of 10 for the confidence they have in their own business and 62% gave a rating of between eight and 10 for the confidence in the beaufort west economy. therefore, a sajesbm volume 3, (2010) www.sajesbm.com article no 103 28 change in the macro environment (uranium mine) could influence the optimism in the business community of a small town. when looking at harvesting strategies, entrepreneurs must not let only the macro environmental conditions such as the economy influence them to choose different harvesting strategies. this is now the time for every entrepreneur to strategically plan his or her harvesting strategies because in this positive climate and growth opportunities in beaufort west, the best deal can be made. look for acquisitions, alliances, train managers to run a specific strategic unit of the business with the aim to let him or her run the whole business over the long-term, look for a capital cow (a certain strategic business unit) that can be expanded to generate more profit with less input are some of the better strategies to be considered. limitations of the study and future research in general, entrepreneurs or business owners do not have a lot of background knowledge in terms of the harvesting concept and harvesting strategies. they are not always aware of the fact that harvesting should be planned when starting up the business. therefore, it is often difficult to incorporate questions concerning harvesting in a business survey. the concept sometimes first has to be explained to the entrepreneur in detail before the question can be answered in full. this study has a relatively small sample because there are usually only a few entrepreneurs in a small town. often a single entrepreneur also owns several of the small businesses in the same town. moreover, these entrepreneurs are not aware of the harvesting concept and do not have a strategy planned. also, no comparative studies have been performed on this concept in south africa. the knowledge of the entrepreneurs has not been tested and the research conducted in this field has been minimal. in addition, there is very little user-friendly information available for entrepreneurs or business owners to become acquainted with the concept. ideally, the researcher should develop a longitudinal study by investigating the harvesting issue repeatedly in the study area. only descriptive statistics were reflected in the results because the study was purely explorative. it could merely give a “snap shot” of what the few entrepreneurs reported on (aylmer & gill, 2003: 4). if many more entrepreneurs were interviewed at certain intervals – more statistical analysis would be possible. ultimately, more research is required in terms of harvesting world-wide, but particularly in south africa. this is necessary so that the entrepreneur and business owner can become familiar with the concept and recognise why certain strategies are better than others. sajesbm volume 3, (2010) www.sajesbm.com article no 103 29 conclusion this project focused on the harvesting goal that is an alternative to simply selling and leaving the business. harvesting is a strategy used by entrepreneurs to exit their business and, ideally, reap the value of their investment. in the beaufort west area, a new mining development is currently underway that would generate many business opportunities for existing and new business owners. it was thus the ideal research environment in which to investigate the harvesting concept among the business people and to identify their perspectives on the impact of the environment on their harvesting strategies. this study indicates that entrepreneurs need more information and training regarding specific harvesting concepts and strategies that are available. one main reason for this is that between 60% and 90% of the entrepreneurs did not find some of the harvesting strategies important. because the mine is coming, the entrepreneurs paint a positive picture for the future and do not think about or consider harvesting their business. entrepreneurs also do not make use of the correct harvesting strategy. the outright sale is not always the best strategy (tax deduction) and this is the harvesting strategy that is opted for most often. entrepreneurs in this case should rather have made use of the ‘forming of an alliance’ or ‘looking for acquisition’ approach with ‘strategic businesses’ or ‘train an employee’ to run and manage the business over the long run. references aylmer, c. & gill, t. 2003. business surveys and economic activity. research discussion paper. economic analysis department, reserve bank of australia. babbie, e. & mouton, j. 2001. the practice of social research. south african ed. cape town: oxford university press. battersby, m.e. 2008. an exit strategy for all occasions. rock products magazine. march: 74-76. [online] available from: http://rockproducts.com/mag/exit_strategy_occasions_0301 [accessed: 2009-06-15]. business hotline publications (bhp) information solutions. 2009. planning your exit from your business. [online] available from: http://www.icaew.co.uk/enterprise/db/pdf/cfexits.pdf [accessed: 2009-06-10]. business trust and department of local government. 2007. nodal economic profiling project. central karoo. cape town: business trust. [online] available from: http://www.btrust.org.za/poverty.aspx [downloaded: 2009-06-15]. sajesbm volume 3, (2010) www.sajesbm.com article no 103 30 covey, s. r.w. 1989. the seven habits of highly effective people. new york: free press. detienne, d.r. 2010. entrepreneurial exit as a critical component of the entrepreneurial process: theoretical development. journal of business venturing, 25 (2): 203-215. ehlers, t. & lazenby, k. (eds). 2007. strategic management: southern african concepts and cases. 2nd ed. pretoria: van schaik. faulkner, j. 2009. an exit strategy builds your business’ value. independent processor, december: 22. flanagan, c. 2009. help small business customers develop an exit strategy. north western financial review, 7 january 2009: 5. hancock, b. 1998. trent focus for research and development in primary health care. an introduction to qualitative research. university of nottingham: trent focus group. holmes, t.e. 2007. a graceful (arid lucrative) exit. succession planning lets you profit from your business even after you leave, ”black enterprise, november 2007. [online] available from: www.blackenterprise.com [accessed: 2009-06-15]. houck, t.e. 2008. the great escape. accounting today, october 2008: 32. kensinger, j.w., martin, j.d. & petty, j.w. 2000. harvesting value from entrepreneurial success. journal of applied corporate finance, 12(4): 81-93. longenecker, j.g., moore, c.w., petty, j.w. &. palich, l.e. 2006. small business management, an entrepreneurial emphasis. thompson: south-western. maas, g. & herrington, m. 2006. global entrepreneurship monitor, south african report. cape town: university of cape town, graduate school of business. [online] available from: http://www.gemconsortium.org/document.aspx?id=558 [downloaded: 2009-06-15]. mindbullets. 2003. insight on retirement – a future scenario. cape town: pathfinder, strategic resources. [online] available from: http://www.strategicpathfinder.com/retirement.html [accessed: 2009-06-15]. money biz. 2007. what is an entrepreneur? johannesburg: money biz. [online] available from: http://www.moneybiz.co.za/my_business/biz_entrepreneurship.asp [accessed: 2009-06-15]. nieman, g., hough, j. & nieuwenhuizen, c. 2003. entrepreneurship, a south african perspective. pretoria: van schaik publishers. sajesbm volume 3, (2010) www.sajesbm.com article no 103 31 nieman, g. & nieuwenhuizen, c. 2009. entrepreneurship, a south african perspective. 2nd edition. pretoria: van schaik publishers. neuman, w.l. 2000. social research methods qualitative and quantitative approaches. 4th edition. boston: allyn and bacon. o’hara, b. 2009. creating an exit strategy. advisor today, march 2009: 60. pretorius, m. 2003. harvesting. in nieman g., hough, j. & nieuwenhuizen, c. (eds). entrepreneurship: a south african perspective. pretoria: van schaik. p. 290-301. quatre, t. 2007. it’s never too soon: starting early on a successful exit plan, physical training magazine,. 15(10): 30-33. robbins, s. 2008. exit strategies for your business. entrepreneur.com: entrepreneur media. [online] available from: http://www.entrepreneur.com/management/operations/article78512.html [accessed: 2009-06-15]. sapa. 2008. unemployment rate hits record low. south african good news, 27 march 2008. [online] available from http://www.sagoodnews.co.za/employment/unemployment_rate_hits_record_low.htm l [accessed: 2009-06-15]. trochim, w.m.k. 2006. research methods knowledge base. web centre for social research methods. [online] available from: http://www.socialresearchmethods.net/kb/index.php [accessed: 2006-06-15]. ward, s. 2008a. exit strategy. about.com. small business: canada. [online] available from: http://sbinfocanada.about.com/od/businessplanning/g/exitstrategy.htm [accessed: 2009-06-15]. ward, s. 2008b. exit strategies for your small business. pick the exit strategy that’s the best fit. about.com. small business: canada.[online] available from: http://sbinfocanada.about.com/od/businessplanning/a/exitstrategies.htm [accessed: 2009-06-15]. abstract introduction theoretical framework and development of hypotheses research design ethical consideration results and discussion conclusion and recommendation acknowledgements references appendix 1 appendix 2 appendix 3 footnotes about the author(s) juan-pierré bruwer graduate centre for management, cape peninsula university of technology, cape town, south africa philna coetzee college of accounting sciences, university of south africa, pretoria, south africa jacolize meiring department of taxation, university of south africa, pretoria, south africa citation bruwer, j-p., coetzee, p. & meiring, j., 2019, ‘the perceived adequacy and effectiveness of internal control activities in south african small, medium and micro enterprises’, southern african journal of entrepreneurship and small business management 11(1), a148. https://doi.org/10.4102/sajesbm.v11i1.148 original research the perceived adequacy and effectiveness of internal control activities in south african small, medium and micro enterprises juan-pierré bruwer, philna coetzee, jacolize meiring received: 28 july 2017; accepted: 02 apr. 2019; published: 22 aug. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: south african small, medium and micro enterprises (smmes) add significant socio-economic value to the national economy. unfortunately, up to 80% of these business entities fail after being in existence for only 4 years. previous research shows that a probable reason for the latter dispensation is that these business entities make use of ineffective and/or inadequate internal control systems which, inter alia, comprises inadequate internal control activities. objectives: this study seeks to ascertain whether internal control activities implemented in south african smmes have an effect on the perceived adequacy and effectiveness of their overall internal control systems. method: though exploratory in nature, this study followed an empirical stance through the assistance of survey research. data were collected from 119 smme managers and 98 employees of south african smmes operating in the fast-moving consumer goods industry. results: although only 18 of the 64 tested relationships are found to be statistically significant, none of the formulated hypotheses can be rejected as relevant statistically significant predictions can be made in relation to the perceived adequacy and effectiveness of internal control systems when applicable internal control activities of these business entities are taken into account. conclusion: this study provides a foundation for future studies to both scrutinise and enhance the internal control environment in south african smmes, ultimately improving the sustainability rate of south african smmes. keywords: internal control systems; internal control activities; smmes; adequacy; effectiveness. introduction although south african small, medium and micro enterprises (smmes) were only formally recognised by the national government in 1996 through the publication of the national small business act no. 102 of 1996 (south africa 1996), these business entities have added significant socio-economic value1 to the national economy from as early as the 1980s (rogerson 1997; visagie 1997). however, since the early 2000s, south african smmes have been found to have one of the worst sustainability rates in the world (wiese 2014), with up to 80% of these business entities failing after being in existence for only 4 years (cant & ligthelm 2002; cant & wiid 2013; moloi 2013; van eeden, venter & viviers 2003). according to bruwer and coetzee (2016), the latter dispensation can partially be blamed on the inadequate and/or ineffective utilisation of internal control activities. internal control systems are collections of various inter-related elements that should collectively provide reasonable assurance to management surrounding the attainment of relevant business objectives (agbejule & jokipii 2009; lee 2013; spira & page 2003). one of these elements is internal control activities, which are those activities, as implemented by management, that should assist management with the mitigation of risks by either preventing risks from occurring and/or detecting loss events after risks have materialised (committee of sponsoring organizations of the treadway commission [coso] 2013; mcnally 2013). these activities can be manual and/or automatic in nature and are generally demarcated into five categories, namely, adequate document usage and design, proper authorisation activities, safeguarding of assets, segregation of duties and independent checks (coso 2013). however, siwangaza (2013) found that south african smmes have inadequate and/or ineffective internal control systems because they do not provide reasonable assurance in relation to the attainment of relevant business objectives. bruwer (2016) found that south african smmes predominantly make use of customised internal control activities that primarily consist of preventive measures, which are strongly associated with the categories of ‘independent checks’ and the ‘safeguarding of assets’. because smmes are mainly informal in nature (ifc 2013), it is unsurprising that these business entities have mostly unstructured systems and processes (lee & ahn 2009; majid, dora & kamarudin 2008). even so, research supports that, at a minimum, business entities should have basic internal control activities (tazilah & hussain 2015) to ensure that internal control systems will be able to support management in achieving their business objectives, supporting the sustainability of the business. as mentioned before, research has been conducted in understanding the internal control system and internal control activities implemented within south african smmes. however, a gap exists in the current body of knowledge with reference to the effect of individual control activities implemented on the adequacy and effectiveness of the adequacy and effectiveness of internal control activities, as well as on the adequacy and effectiveness of the overall internal control system. when taking into account that the element of ‘internal control activities’ is a critical part of a sound internal control system, which directly affects the ability of a business entity to mitigate risks (petersen 2018), it is important to understand this relationship – both from a practicaland theoretical perspective. to this end, the main objective of this study is to determine whether internal control activities implemented in south african smmes have an effect on the perceived adequacy and effectiveness of their overall internal control systems. this study aims to (1) provide insight into south african smme management regarding the relationship between their business entities’ internal control activities and their business entities’ systems of internal control, and (2) provide empirical evidence to policymakers that south african smmes are in need of a flexible, affordable and relatively formal internal control framework. for the remainder of this study, relevant discussion takes place under the following headings: theoretical framework and development of hypotheses, research design, methodology and methods, results, discussion, conclusion and recommendations. theoretical framework and development of hypotheses a system of internal control is usually underpinned by the agency theory (jensen & meckling 1976) where the ‘principle’ (owner) of a business is separated from its business by employing an ‘agent’ (e.g. manager) to tend to internal control matters.2 notwithstanding the latter, within the management of smaller businesses (such as smmes), where management and owners are much closer or even the same individual(s), this theory becomes obsolete, and internal control systems may most likely be viewed within the context of the neo-institutional theory. the neo-institutional theory (dimaggio & powell 1983), building on the institutional theory, explains the similarity and stability of organisational arrangements within a given population or field of organisations (greenwood & hinings 1996), such as smmes. internal control implementations within a smme-landscape are thus viewed from the influence of institutionalised rules (e.g. coso framework) and environments (e.g. sound internal control system that is mandated by numerous legislation and governance guidance documents, worldwide) (heugens & lander 2007). dimaggio and powell (1983) identified three influential mechanisms that affect the latter, namely, coercive mechanisms (societal and organisational pressures), normative mechanisms (professionalism) and mimetic mechanisms (building on best practices or successful role models). with regard to internal control evident n smmes, it is therefore highly probable that existing business entities imitate successful business entities and adopt aspects of an array of internal control systems, with the main intent to assist in the achievement of their objectives (coase 1937; etzioni 1964) – referring to the mimetic mechanisms. more importantly, coercive measures, resulting from, inter alia, legitimated rules and structures, such as a sound internal control system that is based on a formal framework, underpin this study, referring to understand the adequacy and effectiveness of the internal control system (greenwood & meyer 2008). adequacy and effectiveness within the internal control concept, the terms ‘adequacy’ and ‘effectiveness’ have a very specific context (iia 2019). the term ‘adequacy’ refers to a type of state of being reasonable, fair or acceptable (cambridge dictionaries online 2019a). in layperson’s terms, it relates to whether something is ‘good enough’. in turn, the term ‘effectiveness’ can be defined as the ability to be successful or producing intended results (cambridge dictionaries online 2019b). in layperson’s terms, it relates to whether something is ‘working as intended’. it is therefore first important to ensure that a specific internal control activity(ies) (and collectively the internal control system) is(are) adequate to mitigate (a specific) risk(s), meaning that a specific activity can mitigate numerous risks. thereafter these activities can be tested for their effectiveness in reaching its objective in mitigating such risks. these two measures are used in this study as a proxy in determining whether internal control activities, as well as internal control systems, are sound. internal control systems although most businesses around the globe have some form of an internal control system in place to ensure that relevant objectives are met, whether these systems are actually achieving their objectives is questionable, especially because research over the years has resulted in mixed findings. chenhall (2003) concludes that in order for internal control systems to be successful, it must be designed within the organisational context and have a formal structure. however, stacey (2016) avers that the same success can be achieved through implementing carefully, thought-through, customised internal control systems. the importance of a sound internal control system is placed in perspective by previous studies (langfield-smith & smith 2003; simons 2013) where it was found that a sound system of internal control is non-negotiable to renew business strategies, adapt to ever-changing environments and build trust with relevant stakeholders. studies support that for an internal control system to help a business achieve its objectives, it should: (1) enhance the effectiveness, efficiency and economy of business operations; (2) assist with the compliance with applicable rules, regulations, policies and procedures; (3) safeguard relevant assets, and (4) fortify the integrity of both financial information and non-financial information (adeniyi & aramide 2014; iia 2013). in addition, such an internal control system needs to be both adequate and effective in its approach (agbejule & jokipii 2009; mcnally 2013; nicolăescu 2013; rose 2015). to improve the internal control systems, to meet both relevant adequacy and effectiveness measures, many bodies have developed formal internal control frameworks over the years such as criteria of control framework (coco) of 1995 as developed by the canadian institute of chartered accountants (1995); the control objectives for information and related technology (cobit) framework of 1996 (last updated in 2013) as developed by the information systems audit and control association (isaca 2012); and the integrated internal control framework of 1992 (last updated in 2013) as developed by the committee of sponsoring organisations (coso 2013). as one of the first developed internal control frameworks, it seems that the coso integrated internal control framework is the most widely used framework in the world (martin, sanders & scalan 2014). this framework is a structured process that consists of five inter-related elements, which, in turn, should, if implemented correctly, provide reasonable assurance to management surrounding the attainment of business objectives in the foreseeable future. the five inter-related elements comprise the following: (1) control environment (overall attitude of management towards internal control), (2) risk management (identification, evaluation and treatment of risks), (3) internal control activities (mitigating risks through preventive and detection initiatives), (4) information and communication (sharing of information with stakeholders), and (5) monitoring (ensuring that the system of internal control functions as intended). in a south african dispensation, siwangaza (2013) found that the internal control systems in smmes are inadequate and/or ineffective, with bruwer (2016), as well as bruwer and siwangaza (2016), concluding that the control environment and the internal control activities, both elements of a sound internal control system, evident in south african smmes, were customised and displayed characteristics of inadequacy and/or inefficiency. hence, clear tangent planes emerge that the overall adequacy and/or effectiveness of south african smmes’ internal control systems and the adequacy and/or effectiveness of their relevant inter-related elements may be strongly related. internal control activities as previously mentioned, internal control activities, as one of the five inter-related elements of a sound system of internal control, are those activities that management implements to provide reasonable assurance that business objectives will be achieved by adequately and efficiently mitigating risks, which may prevent such risks from realising. internal control activities fall into the following five major categories (al-thuneibat, al-rehaily & basodan 2015; coso 2013; kobelsky 2014): adequate document usage and design: source documents are used to vindicate the occurrence of transactions, and should make provision for an array of details (e.g. dates, signatures, product/service descriptions and so on) while also being pre-numbered. as rule of thumb, original source documents are issued by businesses to those entities that receive products, services or cash, while duplicate source documents are kept as proof by such business entities (e.g. tax invoice, receipt, goods received note and so on). other documents may also include internal documents (e.g. memos and reports). proper authorisation activities: before any transaction can take place, it needs to be properly authorised. more often than not, authorisation activities are performed by management; however, management may delegate authority to non-managerial staff, if appropriate. safeguarding of assets: the safeguarding of assets entails the mitigation of risks, which may adversely influence a business’ premises (location where it is based), people (employees and customers) and equipment. this is generally done by means of implementing preventive and/or detective control measures (e.g. locks on doors, alarm systems and so on). segregation of duties: for the sake of mitigating internal risks (e.g. collusion, theft, embezzlement and so on), the person responsible for authorising a transaction (person a) should not be the same person that performs the transaction (person b) and should not be the same person that records the transaction (person c). independent checks: by making use of random and/or periodic intervals, independent checks can be performed mitigate risks. this can include, inter alia, physical stock counts, monitoring of staff, supervision of staff, performing quality checks and periodic staff reviews. research on individual internal control activities is limited. a probable reason for the latter dispensation is that in a study conducted by sahd and rudman (2016), it was found that many proactive internal control activities in large organisations are becoming more reactive in nature because of the rapid evolution of technology. the latter has been ongoing since the early 2000s when many conventional (manual) internal control activities were started being replaced by computerised controls (stringer & carey 2002). whether this is applicable for smmes is debatable as these types of business entities may be less structured and less complex than larger business entities. furthermore, research (tazilah & hussain 2015) supports the component ‘internal control activities’ as the one crucial element that should be present to ensure a sound internal control system. based on a study by bruwer (2016), it was found that south african smmes made use of (manual) preventive controls to safeguard assets while also making mostly use of (manual) independent checks to strengthen their internal control systems, with limited use of source documents (original and duplicate), detective controls to safeguard assets and proper authorisation activities – rendering their implemented internal control activities as customised. although customised internal control activities can add value in relation to business culture and business values (christ et al. 2012), whether this is the case in south africa smmes is debatable and needs to be investigated further. however, it is first important to understand which specific internal control activities add the most value to the perceived value of the adequacy and effectiveness of internal control activities, which leads to the following hypotheses: h1: individual internal control activities have a positive effect on the perceived adequacy of the element ‘internal control activities’ in south african smmes. h2: individual internal control activities have a positive effect on the perceived effectiveness of the element ‘internal control activities’ in south african smmes. in the second place, it is important to understand which specific internal control activities will improve the perceived value of the overall internal control system, leading to the following hypotheses: h3: individual internal control activities have a positive effect on the perceived adequacy of existing internal control systems in south african smmes. h4: individual internal control activities have a positive effect on the perceived effectiveness of the existing internal control systems in south african smmes. research design survey research was conducted to obtain insight from various smme managers and their employees. although it was not possible to measure the adequacy and effectiveness of internal control activities and internal control systems because of limited reporting structures and information available, the perceptions of management and employees were used to test the perceived adequacy and effectiveness of existing internal control activities and implemented internal control systems. this is a limitation in the study and can be further investigated. moreover, because this study was exploratory in nature, only basic and manual features of the element ‘internal control activities’ were focused on. the reasoning behind the latter was that if a correlation(s) existed between the perceived effectiveness and/or adequacy of implemented internal control activities and internal control systems, it would allow for further research (more descriptive in nature) to be conducted in future. the scope of this study was limited to the cape metropole because of time and budget constraints. data were collected using a mixture of non-probability sampling methods to obtain rich data, namely, purposive sampling and convenience sampling, from 120 smmes. in core, this resulted in responses being received from 119 south african smme managers (individuals that were responsible for implementing and/or managing internal control within their respective business entities) and 98 employees (individuals that were responsible for operational activities in these business entities) which were based in the fast-moving consumer goods (fmcg) industry3 (second largest sub-sector in the national economy). all sampled south african smme managers were actively involved in their business’ operations while simultaneously being regarded as owners and/or managers – having relevant managerial experience and authority to make business-related decisions. in addition, all sampled south african smme employees had no authority to make business decisions. data were collected through means of surveys. each survey consisted of a briefing session to explain relevant concepts to respondents (which may sometimes be complex) before being asked to complete the survey. to mitigate the risk of research bias, an independent data collection firm was used. all field workers of the independent data collection firm were trained before being sent into the field. to measure the adequacy and effectiveness (dependent variables) of both internal control activities and internal control systems, four statements were used to measure respondents’ perceptions. these four statements were used as a proxy to measure the perceived adequacy and effectiveness of the internal control activities and the internal control system. for the independent variables, viewed through the lens of the neo-institutional theory, specifically coercive measures, relevant internal control activities of the coso integrated framework (coso 2013) were used, comprising 45 items. to answer the four hypotheses, exploratory factors analysis and logistic regression analyses were used. firstly, using exploratory factor analysis, the 45 items were reduced to nine factors and seven items (see appendix 1) through the conducting of principal component and principal axis factoring analyses. secondly, logistic regression analyses, which pertain to the study of a relationship between one outcome variable and one or more predictor variables (joliffe & morgan 1992; peng & so 2002), were conducted, namely, the relationship between the implemented individual internal control activities and the perceived adequacy and effectiveness of internal control activities and the overall internal control systems. demographical information out of the 217 respondents, a total of 119 (54.48%) were members of management of south african smmes and had full business making decision rights. moreover, the respondents could be described as follows: there were 96.64% south africans and 3.36% non-south africans. of the respondents, 62.15% had between 1 and 5 years of managerial experience, and 37.85% had more than 5 years of managerial experience. about 18.49% had the highest qualification lower than grade 12 (final year of the secondary schooling system), 48.74% had the highest qualification of grade 12 qualification and 32.77% had a tertiary qualification. the employees of south african smmes, 98 out of the 217 respondents (45.16%), had no decision-making rights and could be described as follows: those who were employed on a full-time basis constituted 83.54% and those who were employed on a part-time basis represented 16.46%. eighty-one per cent had been employed between 1 and 5 years and 19% were employed for more than 5 years. of the respondents, 41.77% had the highest qualification lower than grade 12 (final year of the secondary schooling system), 45.57% had the highest qualification of grade 12 qualification and 12.66% had a tertiary qualification. the smmes of respondents were regarded as non-franchised and operated in the fmcg industry. these business entities could be described as follows: 6.57% were private companies, 11.62% were close corporations, 14.14% were partnerships and 67.68% were sole traders. 76.26% had one outlet, and 23.74% had more than one outlet. 13.64% employed between 11 and 50 employees (medium), 27.78% employed between 6 and 10 (very small) employees and 58.59% employed less than 6 employees (micro). 45% were in existence for between 1 and 5 years, and 55% were in existence for 6 years or more. construct validity and reliability of measures to measure variables, respondents were asked to provide responses through a five-point likert scale (1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree, and 5 = strongly agree). all variables measuring the dependent variables (perceived efficiency and perceived adequacy of implemented internal control activities and implemented internal control systems) underwent exploratory factor analysis using principal axis factoring and promax rotation. a total of 45 items were reduced to nine factors and seven items. whether a factor analysis is appropriate depends on the results of the kaiser–meyer–olkin (kmo) measure of sampling adequacy. if a factor achieves a kmo value which is greater than 0.500, it is deemed to be a suitable factor (field 2009). all kmo test values of 0.600 or higher are required to justify the appropriateness of a factor when exploratory factor analysis is performed while simultaneously being supported by a p < 0.001 for bartlett’s test of sphericity (cohen & sayag 2010; field 2009). in terms of reliability of a factor, a cronbach’s alpha above 0.700 is normally deemed satisfactory; however, in the case of exploratory research, a cronbach alpha of 0.600 is deemed as acceptable (hair et al. 2010). the factorisation is summarised in appendix 1 – all factors met the applicable criteria. model specification using the results from the exploratory factor analysis as a basis, relevant logistic regression analyses were performed. the standard logistic regression model4 used to test the four hypotheses above was structured as follows (see equation 1): for this study, a total of four models were used to empirically test the hypotheses. all relevant responses from the dependent variables obtained were transformed to read as either ‘yes’ or ‘no’ by converting values less than 3 to ‘no’ and converting all remaining values to ‘yes’ (see appendix 2). ethical consideration relevant ethical considerations were taken into account for this study. all respondents were safeguarded from physical harm, all respondents provided informed consent, all information provided by respondents were treated with the highest levels of confidentiality and all respondents were guaranteed anonymity. results and discussion using the results of the logistic regression analyses as basis (see appendix 3), the results are textually depicted below for each of the four models. model 1 using the hosmer–lemeshow as a basis, it appears that the logistic regression model has an acceptable fit5 to the data with a recorded p-value of 0.738. in addition, there was an improvement when taking into account the correct classification percentage of 87.1% (83%). taking into account the results of the logistic regression analysis, all statistically significant relationships had a positive relationship and referred to the perceived adequacy of the internal control activities, namely, the safeguarding of people and equipment (pe) (β = 0.740); the location of the business (location) (β = 0.550); when management in south african smmes were solely responsible for authorising transactions (manaut) (β = 1.045) and when internal control activities that had sound characteristics (e.g. adaptability, suitability and supportiveness) (oica) were used (β = 2.224). model 2 again, the hosmer–lemeshow test shows that the logistic regression model has an acceptable fit to the data with a recorded p-value of 0.901. moreover, there was an improvement when taking into account the correct classification percentage of 87.6% (84.7%). taking into account the results, if south african smmes made use of internal control activities in relation to the safeguarding of pe, it had a statistically significant and positive effect (β = 1.109) on the perceived effectiveness of implemented internal control activities (ica_effect). this is also true for the location of the business (location) (β = 0.552); when employees of south african smmes were monitored (stafmon) (β = 1.772) and when south african smmes made use of internal control activities that had sound characteristics (oica) (β = 1.866). on the contrary, a negative effect is reported when employees in south african smmes authorised transactions based on policies in the business (emaut) (β = ‒1.466) and when employees were supervised in the business (stafsup) (β = ‒1.393). model 3 based on the hosmer–lemeshow test, the logistic regression model has an acceptable fit to the data with a recorded p-value of 0.982. there was an improvement when taking into account the correct classification percentage of 94.6% (92.3%). this resulted in the following regarding the perception of adequacy of internal control systems: if south african smmes made use of internal control activities in relation to the safeguarding of pe, as well as when internal control activities that had sound characteristics (e.g. adaptability, suitability and supportiveness) (oica) were used, it had a statistically significant and positive effect (β = 1.650 and 2.388, respectively) on the perceived adequacy of implemented internal control systems (ics_adeq). in contrast, if employees in south african smmes authorised transactions based on policies in the business (emaut), it had a statistically significant and negative effect (β = -3.401) on the perceived adequacy of implemented internal control systems (ics_adeq). model 4 the hosmer–lemeshow test also shows that the logistic regression model has an acceptable fit to the data with a recorded p-value of 0.248. furthermore, there was an improvement when taking into account the correct classification percentage of 92.3% (90.5%). taking into account the results of the logistic regression analysis, the following is evident regarding the perceptions of the effectiveness of implemented internal control systems: if south african smmes made use of internal control activities in relation to the safeguarding of pe, it had a statistically significant and positive effect (β = 1.490) on the perceived effectiveness of implemented internal control systems (ics_effect). this is also true when the smmes made use of reconciliation activities in the business (recon) (β = 0.875); were performance measured in the business (stafperf) were applied (β = 1.510) and when internal control activities that had sound characteristics (e.g. adaptability, suitability and supportiveness) (oica) were used (β = 3.435). negative correlations were reported when employees in south african smmes authorised transactions based on policies in the business (emaut) (β = -2.420). taking into account the results from the logistic regression analyses, it is apparent that out of the 64 tested associations, only 18 were found to be statistically significant; 14 being positive and four being negative notwithstanding the fact that most tested associations were statistically insignificant, none of the developed hypotheses can be rejected. this is especially supported by the fact that the following statistically significant predictions can be made: the odds were 2.096 times greater for south african smmes to have perceived adequate internal control activities if internal control activities related to the safeguarding of assets, in relation to people and equipment, were rated one unit higher. the odds were 1.733 times greater for south african smmes to have perceived adequate internal control activities if internal control activities related to the safeguarding of assets, in terms of location, were rated one unit higher. the odds were 2.844 times greater for south african smmes to have perceived adequate internal control activities if only management was responsible for authorising transactions. the odds were 9.244 times greater for south african smmes to have perceived adequate internal control activities if internal control activities with sound characteristics were rated one unit higher. the odds were 3.031 times greater for south african smmes to have perceived effective internal control activities if internal control activities related to the safeguarding of assets, in relation to people and equipment, were rated one unit higher. the odds were 1.733 times greater for south african smmes to have perceived effective internal control activities if internal control activities related to the safeguarding of assets, in terms of location, were rated one unit higher. the odds were 5.882 times greater for south african smmes to have perceived effective internal control activities the monitoring of employees were rated one unit higher. the odds were 9.244 times greater for south african smmes to have perceived effective internal control activities if internal control activities with sound characteristics were rated one unit higher. the odds were 5.209 times greater for south african smmes to have perceived adequate internal system activities if internal control activities related to the safeguarding of assets, in relation to people and equipment, were rated one unit higher. the odds were 9.244 times greater for south african smmes to have perceived adequate internal control system if internal control activities with sound characteristics were rated one unit higher. the odds were 4.438 times greater for south african smmes to have perceived effective internal control systems if internal control activities related to the safeguarding of assets, in relation to people and equipment, were rated one unit higher. the odds were 2.399 times greater for south african smmes to have perceived effective internal control systems if internal control activities related to reconciliations were rated one unit higher. the odds were 4.525 times greater for south african smmes to have perceived effective internal control systems if the performance measurement of employees were rated one unit higher. the odds were 31.046 times greater for south african smmes to have perceived effective internal control systems if internal control activities with sound characteristics were rated one unit higher. conclusion and recommendation although the literature on internal control activities and internal control systems are extensively developed, a gap exists on the adequacy and effectiveness of these mechanisms within an smme environment. especially where this phenomenon is usually viewed through the lens of the agency theory, it is not necessarily applicable within the smme environment, as the line between managers and owners becomes blurred. therefore, in this study, the gap is viewed through the lens of the neo-institutional theory, using one of the most well-known and respected guidance documents on internal control as a basis. it became apparent that internal control activities in south african smmes have limited influences on the adequacy and effectiveness of the internal control system. out of the 64 tested associations for the perceived adequacy and effectiveness, respectively, only 14 were positive and statistically significant. although this study partially addresses phenomena, which smmes need to take into account to implement a sound internal control system, based on a formal framework(s), more questions need to be answered. to this end, future studies could focus on aspects such as to why only a few internal control activities influence the perceived adequacy and effectiveness of implemented internal control systems in south african smmes, ultimately supporting the sustainability of smmes in south africa. furthermore, when specific internal control activities are scrutinised, it is interesting to note a clear pattern. three specific internal control activities are the most influential, namely, the safeguarding of people and equipment (positive in four models), the location of the business (positive in two models) and internal control activities that had sound characteristics, such as adaptability, suitability and supportiveness (positive in four models) – referring to a flexible internal control system. in contrast, when employees authorise transactions (even if this is within the business policies), it had a negative influence on the perceived adequacy and effectiveness of the internal control system (negative in three models). this adds a practical contribution to the body of knowledge and should be taken into account by owners or managers of south african smmes when implementing internal control systems. acknowledgements competing interests the authors have declared that no competing interests exist. author’s contributions j-p.b. and p.c. contributed towards the introduction, literature review, research design and methodology and the conclusion sections. j.m. contributed towards the results and discussion sections. funding this research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors. data availability statement data sharing is applicable to this article as new data were created or analysed. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adeniyi, a. & aramide, a., 2014, ‘enhancing the performance of electricity distribution companies in nigeria via internal control system’, research journal of finance and accounting 5(22), 197–214. agbejule, a. & jokipii, a., 2009, ‘strategy, control activities, monitoring and effectiveness’, managerial auditing journal 24(6), 500–522. https://doi.org/10.1108/02686900910966503 al-thuneibat, a.a., al-rehaily, a.s. & basodan, y.a., 2015, ‘the impact of internal control requirements of profitability of saudi shareholding companies’, international journal of commerce and management 25(2), 196–217. https://doi.org/10.1108/ijcoma-04-2013-0033 bruwer, j.-p., 2016, ‘the relationship(s) between the managerial conduct and the internal control activities in south african fast moving consumer goods smmes’, unpublished dtech (internal auditing) thesis, cape peninsula university of technology, cape town, south africa. bruwer, j-p. & coetzee, p., 2016, ‘a literature review of the sustainability, the managerial conduct of management and the internal control systems evident in south african small, medium and micro enterprises’, problems and perspectives in management 14(2), 201–211. https://doi.org/10.21511/ppm.14(2-1).2016.09 bruwer, j-p. & siwangaza, l., 2016, ‘is the control environment a basis for customised risk management initiatives in south african small, medium and micro enterprises?’, expert journal of business and management 4(2), 105–117. cambridge dictionaries online, 2019a, adequacy, viewed 01 march 2019, from http://dictionary.cambridge.org/dictionary/english/adequacy. cambridge dictionaries online, 2019b, effectiveness, viewed 01 march 2019, from http://dictionary.cambridge.org/dictionary/english/effectiveness. canadian institute of chartered accountants, 1995, guidance on control, canadian institute of chartered accountants, toronto. cant, m. & ligthelm, a., 2002, ‘small business problems in the south african context: a proactive entrepreneurial approach’, paper delivered at the 7th asia-pacific decisions science institute conference, bangkok, thailand, 24–27th july. cant, m.c. & wiid, j.a., 2013, ‘establishing the challenges affecting south african smes’, international business and economics research journal 12(6), 707–716. https://doi.org/10.19030/iber.v12i6.7869 chenhall, r.h., 2003, ‘management control systems design within its organizational context: findings from contingency-based research and directions for the future’, accounting, organizations and society 28(2), 127–168. https://doi.org/10.1016/s0361-3682(01)00027-7 christ, m.h., emett, s.a, summers, s.l. & wood, d.a., 2012, ‘the effects of preventive and detective controls on employee performance and motivation’, contemporary accounting research 29(2), 432–452. https://doi.org/10.1111/j.1911-3846.2011.01106.x coase, r.h., 1937, ‘the nature of the firm’, economica 4(16), 386–405. https://doi.org/10.2307/2626876 cohen, a. & sayag, g., 2010, ‘the effectiveness of internal auditing: an empirical examination of its determinants in israeli organizations’, australian accounting review 20(3), 296–307. https://doi.org/10.1111/j.1835-2561.2010.00092.x committee of sponsoring organizations of the treadway commission (coso), 2013, internal control – integrated framework: executive summary, viewed 17 november 2016, from https://na.theiia.org/standards-guidance/topics/documents/executive_summary.pdf dimaggio, p.j. & powell, w.w., 1983, ‘the iron cage revisited: institutional isomorphism and collective rationality in organizational fields’, american sociological review 48(2), 147–160. https://doi.org/10.2307/2095101 dixit, s., 2006, ‘the flavour and fragrance industry today: a perspective’, chemical weekly, november, 6p. esarey, j. & pierce, a., 2012, ‘assessing fit quality and testing for misspecification in binary-dependent variable models’, political analysis 20(4), 480–500. https://doi.org/10.2307/23359643 etzioni, a., 1964, modern organizations, englewood cliffs, nj, prentice-hall. field, a., 2009, discovering statistics using spss, sage, london. greenwood, r. & hinings, c.r., 1996, ‘understanding radical organizational change: bringing together the old and new institutionalism’, academy of management review 21(4), 1022–1054. https://doi.org/10.2307/259163 greenwood, r. & meyer, r.e., 2008, ‘influencing ideas: a celebration of dimaggio and powell (1983)’, journal of management inquiry 17(4), 258–264. https://doi.org/10.1177/1056492608326693 hair, j.f., black, w.c., babin, b.j. & anderson, e.e., 2010, multivariate data analysis, 7th edn., macmillan, prentice hall. heugens, p. & lander, m.w., 2007, testing the strength of the iron cage: a meta-analysis of neo-institutional theory, erim report series, ers-2007-007-org, viewed n.d., from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=962252. ifc, 2013, closing the credit gap for formal and informal micro, small and medium enterprises, viewed 29 mar 2017, from https://www.ifc.org/wps/wcm/connect/4d6e6400416896c09494b79e78015671/closing+the+credit+gap+report-finallatest.pdf?mod=ajperes. iia, 2013, the revised standards for the professional practice of internal auditing, viewed 11 march 2015, from https://na.theiia.org/standards-guidance/public%20documents/ippf%202013%20english.pdf. iia, 2019, governance, risk & control, viewed 15 april 2019, from https://na.theiia.org/standards-guidance/topics/pages/governance-risk-and-control.aspx. isaca, 2012, comparing cobit 4.1 and cobit 5, viewed 19 may 2015, from https://www.isaca.org/cobit/documents/compare-with-4.1.pdf. jensen, m.c. & meckling, w.h., 1976, ‘theory of the firm: managerial behaviour, agency costs and ownership structure’, journal of financial economics 3(1), 305–360. https://doi.org/10.1016/0304-405x(76)90026-x ji, s.w., yu, z.z., zhang, z.h. & gao, y.h., 2013, ‘the double-closed-loop quality model of fast moving consumer goods supply chain based on quality house’, advanced materials research 694–697(1), 3484–3487. https://doi.org/10.4028/www.scientific.net/amr.694-697.3484 joliffe, i.t. & morgan, b.j.t., 1992, ‘principal component analysis and exploratory factor analysis’, statistical methods in medical research 20(1), 141–151. https://doi.org/10.1177/096228029200100105 kobelsky, k.w., 2014, ‘a conceptual model for segregation of duties: integrating theory and practice for manual and it-supported processes’, international journal of accounting information systems 15(4), 304–322. https://doi.org/10.1016/j.accinf.2014.05.003 langfield-smith, k. & smith, d., 2003, ‘management control systems and trust in outsourcing relationships’, management accounting research 14(3), 281–307. https://doi.org/10.1016/s1044-5005(03)00046-5 lee, s. & ahn, h., 2009, ‘structural equation model for edi controls: controls design perspective’, expert systems with applications 36(2), 1731–1749. https://doi.org/10.1016/j.eswa.2007.12.008 lee, y.f.l., 2013, ‘managerial philosophy of chinese ceos in modern businesses: a cross-cultural study’, tékhne: review of applied management studies 11(2), 54–63. https://doi.org/10.1016/j.tekhne.2013.09.001 majid, i.a., dora, m.t. & kamarudin, m.f., 2008, ‘factors influencing the formation of business ventures’, journal of human capital development 1(1), 29–40. https://doi.org/10.1068/a151395 martin, k., sanders, e. & scalan, g., 2014. ‘the potential impact of coso internal control integrated framework revision on internal audit structured sox work programs’, research in accounting regulation 26(1), 110–117. https://doi.org/10.1016/j.racreg.2014.02.012 mcnally, j.s., 2013, ‘the 2013 coso framework and sox compliance: one approach to an effective transition’, viewed 09 november 2016, from http://www.coso.org/documents/coso%20mcnallytransition%20article-final%20coso%20version%20proof_5-31-13.pdf. moloi, n., 2013, ‘the sustainability of construction small-medium enterprises (smes) in south africa’, unpublished msc (building) dissertation, university of the witwatersrand, johannesburg, south africa. montandon, a., 2013, ‘retail in south africa: profile and future prospects’, european retail research 27(2), 125–152. mouloungui, s.m.k.e., 2012, ‘assessing the impact of finance on small business development in africa: the cases of south africa and gabon’, unpublished mtech: comparative local development dissertation, tshwane university of technology, pretoria, south africa. ncr, 2011, literature review on small and medium enterprises’ access to credit and support in south africa, underhill corporate solutions, pretoria, viewed 23 november 2016, from http://www.ncr.org.za/pdfs/literature%20review%20on%20sme%20access%20to%20credit%20in%20south%20africa_final%20report_ncr_dec%202011.pdf. nicolăescu, e., 2013, ‘the need for effective internal audit as part of good corporate governance practices’, psychosociological issues in human resource management 1(1), 108–113. peng, c.y.j. & so, t.s.h., 2002, ‘logistic regression analysis and reporting: a primer’, understanding statistics 1(1), 31–70. https://doi.org/10.1207/s15328031us0101_04 petersen, a., 2018, ‘the effectiveness of internal control activities to combat occupational fraud risk in fast moving consumer goods small, medium and micro enterprises (smmes) in the cape metropole’, unpublished mtech: internal auditing thesis, cape peninsula university of technology, cape town, south africa. rogerson, c.m., 1997, smmes and poverty in south africa. input report for the national project on poverty and inequality, viewed 28 july 2017, from http://www.smmeresearch.co.za/smme%20research%20general/conference%20papers/smmes%20and%20poverty%20in%20sa.pdf. rose, r.v., 2015, ‘a lesson from hipaa: adequate policies and procedures are equally as important for foreign corrupt practices act compliance’, the edp audit, control, and security newsletter 51(3), 1–5. https://doi.org/10.1080/07366981.2015.1031561 sahd, l.m. & rudman, r., 2016, ‘mobile technology risk management’, the journal of applied business research 32(4), 1079–1096. http://doi.org/10.19030/jabr.v32i4.9723 simons, r., 2013, levers of control: how managers use innovative control systems to drive strategic renewal, harvard business press, boston, ma. siwangaza, l., 2013, ‘the status of internal controls in fast moving consumer goods smmes in the cape peninsula’, unpublished mtech: internal auditing thesis, cape peninsula university of technology, cape town, south africa. south africa, 1996, national small business act no. 102 of 1996, government printer, pretoria, viewed 27 november 2016, from http://www.thedti.gov.za/sme_development/docs/act.pdf. spira, l.f. & page, m., 2003, ‘risk management: the reinvention of internal control and the changing role of internal audit’, accounting, auditing and accountability journal 16(4), 640–661. https://doi.org/10.1108/09513570310492335 stacey, r., 2016, the chaos frontiercreative strategic control for business, butterworth-heinemann limited, wiltshire. stringer, c. & carey, p., 2002, ‘internal control re-design: an exploratory study of australian organisations’, accounting, accountability & performance 8(2), 61–86. https://doi.org/10.1108/maj-08-2013-0910 tazilah, m.d.a.b. & hussain, n.b.c., 2015, ‘the importance of internal control in smes: fraud prevention and detection’, international conference on business, accounting, finance and economics, malaysia, 9th october 2015. van eeden, s., viviers, s. & venter, d., 2003, ‘a comparative study of selected problems encountered by small businesses in the nelson mandela, cape town and egoli metropoles’, management dynamics 12(3), 13–23. visagie, j.c., 1997, ‘smmes’ challenges in reconstructing south africa’, management decision 35(9), 660–667. https://doi.org/10.1108/00251749710186496 wiese, j.s., 2014, ‘factors determining the sustainability of selected small and medium-sized enterprises’, unpublished mba dissertation, north-west university, potchefstroom, south africa. zwikael, o. & smyrk, j., 2015, ‘project governance: balancing control and trust in dealing with risk’, international journal of project management 33(4), 852–862. https://doi.org/10.1016/j.ijproman.2014.10.012 appendix 1 table 1-a1: summary of principle axis factoring for factors included. appendix 2 table 1-a2: description of variables used in logistic regressions. appendix 3 table 1-a3: logistic regression analyses results. footnotes 1. south african smmes contribute up to 57% of the national gross domestic product and provide employment opportunities to approximately 61% of the national workforce (mouloungui 2012; ncr 2011). 2. risks may realise in a business when the ‘principle’ and ‘agent’ have different views and/or attitudes toward the treatment of risks (zwikael & smyrk 2017). 3. it is an industry that is characterised by high levels of competition relating to the selling of fmcg, predominantly situated within the wholesale and retail industry, operating in at least one of the following two sub-sectors: (1) retail trade, except motor vehicles and motorcycles, repairs of personal household goods, and (2) catering and accommodation (dixit 2006; ji et al. 2013; montandon 2013). 4. πi is the probabilitythat the dependent variable takes on a value of 1, χi represents the control variables included in the regression, βc represents the coefficients of the control variables and α is an intercept parameter. 5. all hosmer and lemeshow values which are greater than 0.05, only shows an acceptable fit and not necessarily a good fit (esarey & pierce 2012). abstract introduction research methodology and design ethical consideration data analysis and results discussion conclusion acknowledgements references about the author(s) courage gwena department of business management, faculty of management and commerce, university of fort hare, south africa willie t. chinyamurindi department of business management, faculty of management and commerce, university of fort hare, south africa citation gwena, c. & chinyamurindi, w.t., 2018, ‘effects of knowledge management on innovation capabilities amongst small and medium enterprises in south africa: the case of buffalo city metropolitan municipality’, southern african journal of entrepreneurship and small business management 10(1), a177. https://doi.org/10.4102/sajesbm.v10i1.177 original research effects of knowledge management on innovation capabilities amongst small and medium enterprises in south africa: the case of buffalo city metropolitan municipality courage gwena, willie t. chinyamurindi received: 11 feb. 2018; accepted: 16 oct. 2018; published: 28 nov. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: south africa is witnessing a growth in small and medium enterprises (smes). given this rise in smes, there is a need to pay attention to those factors that influence how these enterprises perform. aim: the purpose of the study was to investigate the effects of knowledge management (km) on innovation capabilities (ic) in smes with a special focus on buffalo city metropolitan municipality. setting: this study is the first to investigate the effects of km on ic in smes operating in south africa. given the scarcity of studies on km in smes in the sub-saharan region, this study contributes to the literature on the effects of km on ic. method: a quantitative research approach was followed in carrying out this study. descriptive and inferential statistics were performed to answer the research questions and test the hypotheses of the study. the respondents (n = 280) were sme representatives operating in the buffalo city metropolitan municipality. results: knowledge management is found to exert a positive effect on smes’ ic. conclusion: findings from the study can assist various practitioners, directly or indirectly involved with development of business, to develop strategies that improve smes’ growth and sustainability. these practitioners include strategic management researchers, policymakers, sme owners and managers and lecturers. introduction background small and medium enterprises (smes) are becoming an increasingly influential factor behind economic growth across the world (comeig, fernández-blanco & ramírez 2015). it is assumed that this is a result of the smes’ capacity to invent new products and services, generate large volumes of goods, increase exports, develop entrepreneurship skills and solve unemployment problems (khan, awang & zulkifli 2013). as a result, the south african government in 2014 created the ministry of small business development with the aim of supporting smes, maintaining and promoting growth and sustainability in small business (maziti, chinyamurindi & marange 2018). however, regardless of the support mechanisms put in place by the south african government to promote and maintain small business growth, statistics indicate that 50% of smes in south africa fail within 24 months of their establishment (govender & mtembu 2015). it has been discovered that to attain success and organisational growth, smes must sustain and create a stable base of knowledge resources. this necessitates instituting of knowledge management (km) as a strategic move (teece, pisano & shuen 1997). strategic management practitioners and academics agree on the view that knowledge has become the epicentre of new opportunities (barnes 2015). knowledge management focuses on locating and creating knowledge, ensuring its flow and eventual utilisation for the realisation of organisational long-term goals (valdez-juárez, garcía-pérez & maldonado-guzmán 2016). in addition, km practices such as knowledge acquisition (ka) (the process of obtaining knowledge from within and outside an organisation) (ha, lo & wang 2016) and knowledge sharing (ks) (transfer of information amongst employees and departments within an organisation) are credited with enhancing innovation capabilities (ic) of an enterprise (sulistiyani & harwick 2016). we define km as a process by which a firm acquires knowledge from external sources through such activities as collaborations, hiring new employees and joining professional networking platforms. the acquired knowledge is then shared amongst employees within the firm to improve its ic. in investigating km, the research also considered absorptive capacity (ac) as a ‘catalyst’ of how km improves enterprises’ ic, referring to organisations’ dynamic capabilities that enable them to develop new products, processes and services (altuntas, dereli & kusiak 2016). in this study, ic is defined as a firm’s ability to develop new products and services, leadership processes based on knowledge acquired from external sources and shared with an organisation. cohen and levinthal (1990:128) defined ac as the ‘ability to recognise the value of new external information, assimilate it, and apply it to commercial ends’. existing literature also shows that researchers and policy developers of the 21st century view km as the panacea to the challenge of sme failure (zheng et al. 2011; zhou & li 2012). interestingly, it has emerged that studies that examine effects of km from the sme dimension, especially in developing countries, are limited and those available provide fragmented insights (e.g. dursty & edvardsson 2012; dwivedi et al. 2011; ribiere & christian 2013). above that, wang and yang (2016) noted that km studies have been concentrated on large corporations only as opposed to smes. this study explores the effects of km on ic in smes. the focus is put on the two dimensions of km, namely ka and ks, and their effects on ic and ac. this study also investigated the effects of ac on ic in smes. in south africa, an sme is defined by the national small business act of 2003 and 2004 as: … a separate and distinct business entity, including co-operative enterprises and non-governmental organisations, managed by one or more owners which, including its branches or subsidiaries, if any, is predominantly carried out in any sector or sub-sector of the south african economy. (republic of south africa 2004:3) literature review existing literature was reviewed on the interaction and relationship between the constructs under investigation in this research. the literature reviewed includes publications on the link and connection between km and ac, ac and ic, km and ic. the reviewed literature assists in formulation of the study’s research hypotheses. the literature attempts to provide a secondary answer to the main research question, which reads as follows: what are the effects of ac and km on ic of smes in south africa? knowledge management and absorptive capacity according to wang and yang (2016), a firm’s ac is reliant on available knowledge within an enterprise. hung and chen (2010) sustain that ac is maintained as an end product of continuous acquisition and application of new knowledge within a firm. generated knowledge should be shared with all employees through either a formal or informal network to improve understanding and creativity (abdallah, khalil & divine 2012). it is also argued that effective information sharing within an enterprise determines the level of its ac (suppiah & sandhu 2011). a sound ac allows a firm to process, understand, analyse and interpret information and knowledge acquired from external sources (jeon, kim & koh 2011). in an empirical study conducted in taiwan to investigate the achievements of km in smes, wang and yang (2016) suggested that smes should absorb knowledge from external sources so that they can leverage it to solve their problems and exploit new opportunities. in this study, it is proposed that ac is a critical factor that enhances the effects of km on firms’ innovative capabilities. knowledge management and ac have the same intention, which is to improve sustainability and performance (nowacki & bachnik 2016). however, km practices instituted by an organisation have an impact on its ability to assimilate information shared from within and acquired from external sources (suh, you & kim 2013). based on all that has been discussed, it can be hypothesised that: h1a: ka has a positive effect on smes’ ac. h1b: ks has a positive effect on smes’ ac. absorptive capacity and innovation capabilities absorptive capacity is the underlying mediating factor responsible for determining how much information a firm can assimilate and then convert to commercial use (stock & greis 2010). furthermore, existing studies underscore the importance of ac in an understanding of tacit knowledge acquired from external sources (nonaka 1994; polanyi 1957). it is assumed that high levels of ac help an enterprise to comprehend tacit and explicit knowledge, making it the decisive basis on which innovative capabilities are enriched, resulting in the development of diverse products, markets, processes and systems (arpaci 2017). similarly, colombo, foss and rosso-lamastra (2012) concluded that smes’ capacity to innovate increases if available knowledge is accompanied by a sound ac. additionally, lee and lan (2011) noted that enterprises that employ people with higher levels of training and experience are likely to have greater levels of ac and enhanced innovative capabilities. hence, based on what has been discussed it can be hypothesised that: h2: ac has a positive effect on smes’ ic. knowledge management and innovation capabilities the link between km and ic is that of input and an output, respectively (chiu & fogel 2014). santoro et al. (2017) discovered that knowledge is the key component of an enterprise’s innovative behaviour and capabilities. the first step in the relationship is acquiring knowledge from outside sources and sharing it internally; that knowledge is subsequently transformed into a basis from which diverse and new opportunities, products and services, processes and markets are developed. javernick-will (2013) found that ka exerts a positive impact on ic, but moustaghfir and schiuma (2013) argue that ka is indirectly influenced by ic. according to sohrabi and mirali (2014), platforms and mechanisms that facilitate acquisition and sharing of knowledge should be put in place to enhance learning and improve innovation abilities. knowledge management is designed to convert individual knowledge (tacit knowledge) to organisational knowledge through sharing, which is then utilised to enhance an enterprise’s ability to attain its strategic objectives (sigala & chalkiti 2015). explicit knowledge such as market research, market analysis and prediction reports enable a firm to react to expected and unexpected changes in the business environment using its innovative capabilities (sohrabi & mirali 2014). in light of the assertion by mezghani, exposito and dria (2016) that km precedes a firm’s ic, it is conceptually proposed that the two km practices (ka and ks) will positively trigger and affect innovation abilities. based on all that has been discussed, it can be hypothesised that: h3a: ka has a positive effect on smes’ ic. h3b: ks has a positive effect on smes’ ic. figure 1 shows a model illustrating the proposed relationship amongst km dimensions, ac and ic. knowledge acquisition and ks are km dimensions that will be measured in this study. figure 1: research model. research methodology and design a quantitative approach was used because of its strength and merits with regards to numerically measuring relationships between different constructs (wiid & diggines 2013). quantitative researches are also a reliable and effective way of determining the nature of relationships amongst variables as opposed to the qualitative approach (wiid & diggines 2013). a cross-sectional research design was used because the study involved carrying out a once-off survey on smes operating in the buffalo city metropolitan municipality. sampling and data collection data was gathered from 280 sme representatives in the capacity of either a manager or owner. the participants were drawn from start-ups operating in various sectors such as retail, agriculture, wholesale, services and manufacturing. the start-ups from which the participants were drawn from should have existed for a period of 1–10 years. a questionnaire was administered to sme managers and owners, and the researcher obtained informed consent before the respondents were handed the questionnaire for completion. after respondents were done with answering the questions on the questionnaire, they were subsequently collected for analysis. the decision to collect data from smes in buffalo city metropolitan municipality was based on convenience and accessibility factors to the researcher. measures the instrument used in this study includes scales adopted from other studies, (abdallah et al. 2012; lee et al. 2016; liao fei & chen 2006). the questionnaire contains seven demographic questions and four measurement scales adding up to 40 items. respondents gave responses to measurement scales on a five-point likert scale by circling the appropriate response. reliability and validity the coefficient alpha, developed by cronbach (1951), is the most commonly used index for estimating the reliability of measurement instruments such as scales, multiple item tests and questionnaires. following are the results for the internal consistency of the data collection instrument. table 1 shows the reliability of each scale as it relates to the variable measured. the cronbach’s alpha for the scales ranged from 0.836 to 0.906, which showed high-reliability coefficients for the study constructs. table 1: reliability analysis. ethical consideration this research study adhered to standard ethical considerations that should be observed by researchers within the university. to ensure this, the researcher applied for and obtained an ethical clearance from the university’s ethics committee. anonymity, confidentiality and the right to withdraw from the study if they felt like doing so, were guaranteed to the respondents. in addition, permission and informed consent were sought from start-ups to administer the survey questionnaire to the managers in cases where the business owners were not available. data analysis and results data collected was analysed using the statistical package for social sciences version 24. all tests were carried out at the 5% level of significance. a descriptive analysis was used to describe the study’s demographic features. graphical illustrations are presented in the form of tables and bar charts. demographic profile of the respondents before detailed data analysis commenced, basic distributions according to gender, ethnicity, age, educational level, industry category, age of firm and firm’s capital size were initially performed. a descriptive approach was used to describe the demographic variables of the study (see table 2). table 2: descriptive statistics for biographical variables (n = 280). hypothesis testing from the three hypothesised frameworks the results of the correlational analysis indicate that a statistically significant correlation exists between all of the study variables. it is therefore imperative to use simple linear regression models to test these hypothesised frameworks. the durbin–watson test for auto-correlation was used, and to test the assumption of homoscedasticity and normality of residuals, special plots (q-q plots) were used. results of the simple linear regression models are presented in table 3. table 3: simple linear regression model fit and summary for knowledge acquisition on small and medium enterprises’ absorptive capacity. to determine whether ka exerts a positive effect on smes’ ac, a simple linear regression model was examined. knowledge acquisition was modelled as an explanatory or independent variable and this resulted in a significant model (f = 148.379; p = 0.000). the model fit and model summary statistics are presented in table 3. in this model, ka explained a significant amount of the variance in smes’ ac (r2 = 0.243, adjusted r2 = 0.346). the durbin–watson value, d = 1.456, is between the two critical values of 1.5 < d < 2.5 and therefore it may be assumed that there is no first order linear auto-correlation in the linear regression data. table 4 shows that the parameter estimates of the resultant model – both the constant term (β0 = 1.638; t = 9.036; p = 0.000) and the main effect of ka (β1 = 0.550; t = 12.181; p = 0.000) – are all statistically significant. because the β1 coefficient is significant, there is sufficient evidence at the 5% level of significance to conclude that ka does exert a positive effect on smes’ ac. thus, the resultant unstandardised regression equation is as follows (equation 1): table 4: parameter estimates for the knowledge acquisition of small and medium enterprises’ absorptive capacity model. concerning hypothesis 1b, ks was modelled as an independent variable on smes’ ac in order to determine if there exists any statistically significant positive effect on smes’ ac. table 5 shows the simple linear regression model summary and overall fit statistics. the analysis found that the adjusted r² of the model was 0.182, which means that the linear regression explains only 18.2% of the variance in the dependent variable. the resultant model revealed a significant fit (f = 62.991; p = 0.000). the test for auto-correlation shows that there is no first order linear auto-correlation in the data (d = 1.487). table 5: simple linear regression model fit and summary for knowledge sharing on small and medium enterprises’ absorptive capacity. the parameter estimates in table 6 reveal that ks has a statistically significant positive effect on smes’ ac (β1 = 0.552; t = 7.937; p = 0.000). thus, at the 5% level of significance the conclusion is that ks exerts a positive effect on smes’ ac. the resultant model is as follows (equation 2): table 6: parameter estimates for the knowledge sharing on small and medium enterprises’ absorptive capacity model. concerning hypothesis 2, the test was to determine whether ac exerts a positive effect on smes’ ic. for this, a simple linear regression model was examined. the model fit statistics in table 7 shows that the resultant model was highly significant (f = 219.679; p = 0.000). also in the same table is the model summary statistics, which reveal that ac explains 44.1% of the variation in smes’ ic (r2 = 0.441; adjusted r2 = 0.439). the assumption is that there is no auto-correlation in the linear regression data because the durbin–watson test gave a statistic that is between the two critical values of 1.5 < d < 2.5 (d = 1.979). table 7: simple linear regression model fit and summary for absorptive capacity on small and medium enterprises’ innovation capabilities. parameter estimates (table 8) show that both the constant term and ac have a statistically significant effect on smes’ ic. the regression coefficients are β0 = 1.467 (p = 0.000) and β1 = 0.641 (p = 0.000), respectively. because the main effect is positive and statistically significant the conclusion is that ac exerts a positive effect on smes’ ic. thus, the resultant unstandardised regression equation is as follows (equation 3): table 8: parameter estimates for the absorptive capacity on small and medium enterprises’ innovation capabilities model. concerning hypothesis 3a, the test was to determine whether ka exerts a positive effect on smes’ ic. a simple linear regression model was examined. knowledge acquisition was modelled as an explanatory variable and this resulted in a significant model (f = 137.487; p = 0.000). the model fit and model summary statistics are presented in table 9. in this model, ka explained a significant amount of the variance in smes’ ic (r2 = 0.331, adjusted r2 = 0.328). the durbin–watson value, d = 2.005, is between the two critical values of 1.5 < d < 2.5 and therefore it can be assumed that there is no first order linear auto-correlation in the linear regression data. table 9: simple linear regression model fit and summary for knowledge acquisition on small and medium enterprises’ innovation capabilities. table 10 shows that the parameter estimates of the resultant model are all statistically significant (β0 = 1.861; t = 10.509; p = 0.000 and β1 = 0.518; t = 11.725; p = 0.000). because the β1 coefficient is positive, there is sufficient evidence at the 5% level of significance to conclude that ka has a statistically significant positive effect on smes’ ic. thus, the resultant unstandardised regression equation is as follows (equation 4): table 10: parameter estimates for knowledge acquisition on small and medium enterprises’ innovation capabilities model. finally, concerning hypothesis 3b, ks was modelled as an independent variable on smes’ ic. the aim here was to determine if there exists any statistically significant positive effect between the two variables. table 11 shows the simple linear regression model summary and overall fit statistics. the analysis revealed that the adjusted r² of the model was 0.152, which means that the linear regression explains 15.2% of the variance in the data. the resultant model revealed a highly significant fit (f = 92.483; p = 0.000). the test for auto-correlation showed that there is no first-order linear auto-correlation in the data (d = 2.145). table 11: simple linear regression model fit and summary for knowledge sharing on small and medium enterprises’ innovation capabilities. the parameter estimates in table 12 reveal that ks has a statistically significant positive effect on smes’ ic (β1 = 0.619; t = 9.617; p = 0.000). thus, at the 5% level of significance the conclusion is that ks exerts a positive effect on smes’ ic. the resultant simple regression model is as follows (equation 5): table 12: parameter estimates for the knowledge sharing on small and medium enterprises’ innovation capabilities model. discussion this section discusses the results of the present research and explores similarities or differences of the current study with previous research studies. the discussion addresses each hypothesis and also compares the present findings with those from previous studies. the overall discussion also answers the study’s three research questions. knowledge management and absorptive capacity the research aimed to establish the effects of km on ac. therefore, the first two hypotheses were formulated to test whether ka and ks had a positive effect on smes’ ac, respectively. to be specific, the hypotheses read as follows: h1a: ka has a positive effect on smes’ ac. h1b: ks has a positive effect on smes’ ac. knowledge acquisition and absorptive capacity with regard to the effect of ka on smes’ ac, simple linear regression model analysis revealed that ka exerts a positive effect on smes’ ac. the results also revealed that ka explained a significant amount of variance in smes’ ac. these results provided sufficient evidence to reach a conclusion that ka positively influences ac in smes. these results corroborate findings of an investigation that was undertaken by valentim, lisboa and franco (2015) in portugal on a sample of 260 smes, which established that km practices, including ka, positively impacts a firm’s ac. to support these results, hung and chen (2010) state that ac is maintained as an end product of continuous acquisition and application of new information within a firm. valentim et al. (2015) state that smes acquire knowledge that originates from internal and external sources through ac. in a recent study, wang and yang (2016) concluded that smes that practise km and engage in collaborations with other businesses acquire more knowledge from external stakeholders. abdallah et al. (2012) hold that knowledge generated and acquired should be shared with all employees through either formal or informal networks, thus summarising the link between km and ac, as well as the effect of ka on ac. in essence, this study’s statistical results with regard to the effect of ks on smes’ ac confirm findings from a majority of empirical studies carried out elsewhere (hung & chen 2010; valentim et al. 2015; wang & yang 2016). as a result, in light of the statistical results on the effect of ka on smes’ ic, the study concludes that ka has a positive effect on smes’ ac. this confirms the assumption of the study that ka enhances a firm’s ac. knowledge sharing and absorptive capacity this research also sought to establish the effects of ka on smes’ ac. based on the presented statistical results, the study established that ks, that was modelled as an independent variable on smes’ ac, exerts a statistically significant positive effect on smes’ ac. these results were in line with arguments by suppiah and sandhu (2011) that effective ks within an enterprise determines the level of its ac. in addition, this result is in line with those of a study conducted by valentim et al. (2015) in portugal on a sample of 260 smes, which established that km practices that include ks and acquisition positively impact a firm’s ac. mcadam et al. (2010) stated that to enhance their ac, firms should hire new, experienced experts who in turn share their expertise with other employees within the business. as a result of sharing expertise, a firm’s ac is enhanced. in addition, this study also corresponds with conclusions by shamim, cang and yu (2017) that ac relies on sound km practices, ks included, that facilitate easy transfer and assimilation of information. based on the statistical results, this study concludes that ks has a positive effect on smes’ ac. absorptive capacity and innovation capabilities the study objective was to investigate the effects of ac on smes’ ic. this subsection discusses the findings and conclusions with regard to the effects of ac and ic. to determine whether ac exerts a positive effect on smes’ ic, a simple linear regression was performed. the research established that the main effect was positive and statistically significant. therefore, it can authoritatively be concluded that ac exerts a positive effect on smes’ ic. these results are in agreement with those of a study that was aimed at investigating the influence of ac on ic in business organisations (enkel et al. 2017). additionally, a number of previous studies have underscored the importance of ac in an understanding of tacit knowledge acquired from external sources (nonaka 1994; polanyi 1957), which in turn is used to come up with various innovations within an enterprise. knowledge management and innovation capabilities the research also aimed to establish the effects of km on smes’ ic. two hypotheses were formulated: h3a: ka has a positive effect on smes’ ic. h3b: ks has a positive effect on smes’ ic. each hypothesis is discussed in detail in the following. knowledge acquisition and innovation capabilities the research aimed to determine the effects of ka on smes’ ic. to achieve this objective a simple linear regression model was examined. the coefficients were found to be positive, and it was concluded that ka had a statistically significant positive effect on smes’ ic. the results of the current study bear some resemblance to those of a previous study by javernick-will (2013), which revealed that ka has a positive impact on ic. although moustaghfir and schiuma (2013) argue that ka is indirectly influenced by ic, this study did not investigate the reverse effect of ic on ka. knowledge acquisition has also been found to enable an enterprise to react to changes in the business using its innovative capabilities (sohrabi & mirali 2014). for instance, acquiring knowledge about customer needs, customer tendencies and prevailing market trends, may lead to awareness and eventual development of productions that fit well in the prevailing conditions (bojica & fuentes 2012). furthermore, acquiring knowledge through hiring experts has been established to improve an enterprise’s ability to innovate because only people with the relevant know-how can develop particular services and products. unlike other studies that focused on technology as the best way to acquire knowledge that eventually leads to improved ic (okanga 2017; razali et al. 2017), this study did not go that far. knowledge sharing and innovation capabilities the last objective of the research was to ascertain the effects of ks on smes’ ic. here, the study sought to investigate and establish how ks amongst employees and colleagues within an sme can affect its ic. the research hypothesised that ks has a positive effect on smes’ ic. to establish the actual effect of ks on smes’ ic, simple linear regression analysis was performed. it was subsequently established that ks has a statistically significant positive effect on smes’ ic. the results of the current study confirm the assertions made by koloniari and fassoulis (2017) that ks is an important component of a firm’s km that facilitates the speed and effectiveness of the ic. another previous study that corresponds with the current one is that of salleh et al. (2017), which identified ks as the principal determinant of increase in the innovation of various products and services. although salleh et al. (2017) focused on larger firms and the current study on smes, the effect of ks on both categories of firms remains the same – positive. several studies have also established positive effects of ks on ic in firms of differing sizes (mohsam & van brake 2014; sigala & chalkiti 2015; sohrabi & mirali 2014). implications of the study this section unpacks and provides a discussion on the implications of the study based on empirical evidence drawn from the study’s statistical results. the implications are presented in a way that explains how the results of this study affect theoretical dimensions of the studied phenomenon, practitioners (sme managers, owners and employees) and policymakers. in essence, this section presents and discusses theoretical, practical and policy implications of the study, as well as recommendations on what might need to be implemented to improve innovation in smes and their subsequent capabilities. theoretical implications the most important theoretical contribution of this study is that it helped to extend knowledge and understanding of the effects of km on smes’ ic from a south african perspective. the findings build on existing empirical knowledge as seen in several previous studies on km and its effects (bojica & fuentes 2012; popoola & fagbola 2014; razali et al. 2017). this study broadened the frame of information in the area of km and its influence on ic within south african smes. as a result, it adds more literature that dwells on km and ic as well as further explaining how km impacts smes’ ac and how the ac affects smes’ ic. absorptive capacity has often been investigated as a mediating factor; however, this research proved that if employed as a linear variable, it has positive effects on ic. although previous studies noted that there is still confusion on whether there is a difference between km and ac, this study cemented the view that the two are different research variables that can have effects on each other. specifically, the current study established that km practices (ks and ka) positively affect ic within smes. this discovery answered the study’s research questions. by answering the questions, this study filled in knowledge gaps that existed in the realm of km in smes, specifically in the south african context and to some extent a sub-saharan perspective. this work also advances an understanding into a phenomenon that is not often researched outside the western and asian contexts. this study is one of the few that have been conducted in sub-saharan africa that probes and explores the effects of km in smes on ic. it adds a south african sme dimension to studies on km, which are largely concentrated outside the sub-saharan region (europe and asia) and on large firms (e.g. dursty & edvardsson 2012; dwivedi et al. 2011; ribiere & christian 2013; santoro et al. 2017). furthermore, it showed that there was statistical evidence that supports the researchers’ assumption that km has a positive effect on smes’ ic and ac. practical implications the study’s findings add practically useful knowledge to the existing insights by revealing that km practices such as ka and ks activities have a positive effect on smes’ ability to create new products, services and processes. the results, which show that ka positively affects smes’ ic, suggest that managers and owners should promote ka activities to improve enterprises’ ic. according to cho and korte (2014), useful ka activities include collaborations amongst firms or with universities, employment of experts, joining formal and informal networks, attending seminars, exhibitions and participating in business incubations. this, therefore, implies that managers and sme owners need to create conducive environments where these ka activities flourish. with regards to ks, the results of this study imply that there is need to promote ks robustly within an sme to enhance its ic and ac. small and medium enterprises’ management should, therefore, ensure that experts and experienced employees are encouraged to share their expertise with colleagues so as to improve the level on which a firm provides solutions to new market demands and needs. methods through which knowledge is shared within an enterprise include activities such as mentoring, seminars, workshops, internal refresher courses or simple observations (arpaci 2017). to strategic management academics, the study advises that they intensively integrate the topic of km in the university curriculum so as to equip current and prospective sme owners with adequate and appropriate km skills. with the advent of the knowledge economy, it is only wise that academics promote research in the area of km and provide more insights regarding its benefits to practitioners in the industry. furthermore, it is also advisable for sme managers and owners to employ knowledge experts or introduce a department in the organisational structure that is solely responsible for improving and advancing km practices. this will allow robust implementation of km practices in the sme. the reviewed literature showed that km has been empirically proven to be an antidote to sme failure. limitations of the study according to wiid and diggines (2013), no research study is without constraints and challenges. this section presents and discusses challenges faced in this research study. notable shortcomings of this research include the fact the data collection was confined to one municipality: buffalo city metropolitan municipality (bcmm). confining data collection to bcmm limits the generalisability of this study’s results. collecting data from different municipalities would have made the results more generalisable to the entire sme population in the eastern cape province or south africa at large. secondly, the research only considered a single respondent in an organisation in the form of sme owners or managers, ignoring other members of the organisation. if the study had considered more than one respondent per organisation, the results would have clarified the information about the organisations better. thirdly, lack of a reliable list of current smes operating within the bcmm implies that some possible smes might have been left out the study. in addition, it might have negatively affected the determination of the research sample size because the sample size of this study was calculated based on the 2016 list of smes operating in the bcmm. the fourth limitation of this research is that the instrument used to collect data is made of scales that were adapted from studies performed outside south africa. a south african-generated instrument would have captured all the necessary and appropriate elements that fit the south african context of km, ac and ic. lastly, this study followed the quantitative research approach only, which meant that conclusions were drawn based solely on numerical data. if the research had followed both the qualitative and quantitative data, both numerical and qualitative data would have been collected. this would have made sure that weakness of each method was covered by the strength of the other. therefore, based on the limitations and constraints of this research, the results should be treated with caution. recommendations for future study because this study followed a quantitative approach, it is recommended that future research follow a qualitative research method to gain more insight into the effects of km on ic. furthermore, this study recommends that future studies be carried out with the main aim of developing a south african-oriented instrument in relation to this topic. this research collected data from smes from various sectors. therefore, future research should focus on investigating the effects of km on smes from a single sector, for example, smes from the manufacturing sector only. lastly, future research should use the same independent variables versus a different dependent variable. this will help establish the importance of km on different business objectives and goals. conclusion the overall discussion of the results of this study showed that km has a positive effect on smes’ ic. the study noted the methodological limitation, which might limit the generalisability of this study’s results. the research concluded by recommending options for further research, which included using a different research methodology. based on the results of the study, it is recommended that south african smes take km seriously if they are to successfully enhance their ic. acknowledgements the authors acknowledge with gratitude the feedback from the journal and its reviewers. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution c.g. was a master’s student, with w.t.c. as supervisor. w.t.c. assisted in conceptualising the study and supporting c.g. during the course of his studies. references abdallah, s., khalil, a. & divine, a., 2012, ‘the impact of knowledge sharing on innovation capability in united arab emirates organizations’, international journal of social, behavioral, educational, economic, business and industrial engineering 6(12), 201–211. altuntas, s., dereli, t. & kusiak, a., 2016, ‘computers and industrial engineering assessment of corporate innovation capability with a data-mining approach: industrial case studies’, computers and industrial engineering 102, 58–68. https://doi.org/10.1016/j.cie.2016.10.018 arpaci, i., 2017, ‘computers in human behavior antecedents and consequences of cloud computing adoption in education to achieve knowledge management’, computers in human behavior 70, 382–390. https://doi.org/10.1016/j.chb.2017.01.024 barnes, y.l.j., 2015, ‘knowledge acquisition and product innovation flexibility in smes’, business process management journal 21(6), 1257–1278. https://doi.org/10.1108/bpmj-05-2014-0039 bojica, a.m. & fuentes, m., 2012, ‘knowledge acquisition and corporate entrepreneurship: insights from spanish smes in the ict sector’, journal of world business 47(3), 397–408. https://doi.org/10.1016/j.jwb.2011.05.007 chiu, h. & fogel, j., 2014, ‘the impact of manager influence tactics on innovation implementation of a knowledge management system’, international journal of innovation science 6(4), 185–203. https://doi.org/10.1260/1757-2223.6.4.185 cho, s.w. & korte, b., 2014, ‘the evaluation on the three critical models of absorptive capacity: a case study on logistics company in korea’, universal journal of industrial and business management 2(5), 119–125. cohen, w.m. & levinthal, d.a., 1990, ‘absorptive capacity: a new perspective on learning and innovation’, administrative science quarterly 35(1), 128–152. https://doi.org/10.2307/2393553 colombo, m., foss, n. & rossi-lamastra, c., 2012, ‘organizational design for absorptive capacity linking individual and organizational levels’, paper presented at the druid 2012 on june 19 to june 21 at cbs, copenhagen, denmark. comeig, i., fernández-blanco, m.o. & ramírez, f., 2015, ‘information acquisition in sme’s relationship lending and the cost of loans’, journal of business research 68, 1650–1652. https://doi.org/10.1016/j.jbusres.2015.02.012 cronbach, l.j., 1951, ‘coefficient alpha and the internal structure tests’, psychometrika 16(3), 297–334. https://doi.org/10.1007/bf02310555 dursty, s. & edvardsson, i.r., 2012, ‘knowledge management in smes: a literature review’, journal of knowledge management 16(6), 879–903. https://doi.org/10.1108/13673271211276173 dwivedi, y.k., venkitachalam, k., sharif, a.m., al-karaghouli, w. & weerakkody, v., 2011, ‘research trends in knowledge management: analyzing the past and predicting the future’, information systems management 28(1), 43–56. https://doi.org/10.1080/10580530.2011.536112 enkel, e., heil, s., hengstler, m. & wirth, h., 2017, ‘exploratory and exploitative innovation: to what extent do the dimensions of individual level absorptive capacity contribute?’, technovation 60, 29–38. https://doi.org/10.1016/j.technovation.2016.08.002 govender, l.n. & mtembu, v.n., 2015, ‘perceptions of employers and unemployed youth on the proposed youth employment wage subsidy incentive in south africa: a kwazulu-natal study’, south african journal of human resource management 13(1), 653–659. ha, s., lo, m. & wang, y., 2016, ‘relationship between knowledge management and organizational performance: a test on smes in malaysia’, procedia – social and behavioral sciences 224, 184–189. https://doi.org/10.1016/j.sbspro.2016.05.438 hung, s.w. & chen, c.j., 2010, ‘to give or to receive? factors influencing members’ knowledge sharing and community promotion in professional virtual communities’, journal of information management 47(4), 226–236. https://doi.org/10.1016/j.im.2010.03.001 javernick-will, a., 2013, ‘local embeddedness and knowledge management strategies for project-based multi-national firms’, engineering management journal 25(3), 16–26. https://doi.org/10.1080/10429247.2013.11431979 jeon, s., kim, y.g. & koh, j., 2011, ‘an integrative model for knowledge sharing in communities-of-practice’, journal of knowledge management 15, 251–269. https://doi.org/10.1108/13673271111119682 khan, n.r., awang, m. & zulkifli, c.m., 2013, ‘small and medium enterprises and human resource practices in pakistan’, international journal of asian social science 3(2), 460–471. koloniari, m. & fassoulis, k., 2017, ‘knowledge management perceptions in academic libraries’, the journal of academic librarianship 43(2), 135–142. https://doi.org/10.1016/j.acalib.2016.11.006 lee, m.r. & lan, y.c., 2011, ‘toward a unified knowledge management model for smes’, expert systems with applications 38(1), 729–735. https://doi.org/10.1016/j.eswa.2010.07.025 lee, v.h., foo, a.t.l., leong, l.y. & ooi, k.b., 2016, ‘can competitive advantage be achieved through knowledge management? a case study on smes’, expert systems with applications 65, 136–151. https://doi.org/10.1016/j.eswa.2016.08.042 liao fei, w. & chen, c., 2006, ‘knowledge sharing, absorptive capacity and innovation capability: an empirical study of taiwan’s knowledge intensive industries’, journal of information science 20(10), 1–20. maziti, l., chinyamurindi, w.t. & marange, c., 2018, ‘the relationship between strategic leadership, innovation performance and competitive advantage amongst a sample of small businesses in south africa’, journal of contemporary management 15, 368–394. mcadam, r., miller, k., mcmacken, n. & davies, j., 2010, ‘the development of absorptive capacity-based innovation in a construction sme’, the international journal of entrepreneurship and innovation 11(3), 231–244. https://doi.org/10.5367/000000010792217308 mezghani, e., exposito, e. & drira, k., 2016, ‘a collaborative methodology for tacit knowledge management: application to scientific research’, future generation computer systems 54, 450–459. https://doi.org/10.1016/j.future.2015.05.007 mohsam, f. & van brakel, p.a., 2014, ‘information and knowledge sharing trends of small and medium-sized enterprises in the western cape, south africa research problem’, south african journal of information management 13(1), 1–10. moustaghfir, k. & schiuma, g., 2013, ‘knowledge, learning, and innovation: research and perspectives’, journal of knowledge management 17(4), 495–510. https://doi.org/10.1108/jkm-04-2013-0141 nonaka, i., 1994, ‘a dynamic theory of organisational knowledge creation’, organisation science 5(1), 14–37. https://doi.org/10.1287/orsc.5.1.14 nowacki, r. & bachnik, k., 2016, ‘innovations within knowledge management’, journal of business research 69(5), 1577–1581. https://doi.org/10.1016/j.jbusres.2015.10.020 okanga, b., 2017, ‘smalland medium-sized enterprises’ knowledge management systems as edifiers of new value innovations’, south african journal of information management 19(1), 1–11. https://doi.org/10.4102/sajim.v19i1.786 polanyi, k., 1957, the great transformation: the political and economic origins of our time, beacon press, boston, ma. popoola, s.o. & fagbola, o.o., 2014, ‘innovation capability of managers in nigerian large-scale manufacturing companies’, south african journal of information management 16(1), 593–603. https://doi.org/10.4102/sajim.v16i1.593 razali, n.b.m., mamun, a.a., zakaria, m.n., malarvizgi, c.a. & nawi, n.b.c., 2017, ‘knowledge management system for decision centric for manufacturing smes: a conceptual framework’, american scientific publishers 23, 2938–2941. https://doi.org/10.1166/asl.2017.7612 ribiere, v. & christian, w., 2013, ‘10 years of knowledge management theory and practices’, knowledge management research and practice 11(1), 4–9. https://doi.org/10.1057/kmrp.2012.64 salleh, s.m., ismail, n.s., hamazah, m.f.s., zahari, m.s.a., mohammed, h.n. & abdullah, n., 2017, ‘knowledge sharing and organizational commitment in organization’, journal of applied environmental bio-sciences 7(58), 37–40. santoro, g., vrontis, d., thrassou, a. & dezi, l., 2017, ‘the internet of things: building a knowledge management system for open innovation and capacity’, technological forecasting & social change march, 1–7. https://doi.org/10.1016/j.techfore.2017.02.034 shamim, s., cang, s. & yu, h., 2017, ‘supervisory orientation, employee goal orientation, and knowledge management among front line hotel employees’, international journal of hospitality management, 62, 21–32. sigala, m. & chalkiti, k., 2015, ‘knowledge management, social media and employee creativity’, international journal of hospitality management 45, 44–58. https://doi.org/10.1016/j.ijhm.2014.11.003 sohrabi, s. & mirali, s.n., 2014, ‘the interaction of explicit and tacit knowledge’, in j. rooney & v. murthy (eds.), proceedings of the international conference on intellectual capital, knowledge management & organizational learning, sydney, australia, 6–7 november, 2014, pp. 363–369. stock, g.n. & greis, n.p., 2010, ‘absorptive capacity and new product development’, the journal of high technology management research 12, 77–91. https://doi.org/10.1016/s1047-8310(00)00040-7 suh, y., you, j. & kim, p., 2013, ‘the effect of innovation capabilities and experience on cross-border acquisition performance’, global journal of business research 7(3), 59–74. sulistiyani, r. & harwiki, w., 2016, ‘how smes build innovation capabilities based on knowledge sharing behavior? phenomenological approach’, procedia – social and behavioral sciences 219, 741–747. https://doi.org/10.1016/j.sbspro.2016.05.070 suppiah, v. & sandu, m.s., 2011, ‘organizational culture’s influence on tacit knowledge-sharing behaviour’, journal of knowledge management 15, 462–477. https://doi.org/10.1108/13673271111137439 republic of south africa, 2004, ‘national small business amendment act’, viewed 25 nov. 2017, from https://www.thedti.gov.za/business_regulation/acts/small_business_amendment_act.pdf teece, d.j., pisano, g. & shuen, a., 1997, ‘dynamic capabilities and strategic management’, strategic. management journal 18(7), 509–533. https://doi.org/10.1002/(sici)1097-0266(199708)18:7%3c509::aid-smj882%3e3.0.co;2-z valdez-juárez, l.e., garcía-pérez de lema, d. & maldonado-guzmán, g., 2016, ‘management of knowledge, innovation and performance in smes’, interdisciplinary journal of information, knowledge, and management 11, 141–176. valentim, l., lisboa, j.v. & franco, m., 2015, ‘knowledge management practices and absorptive capacity in small and medium-sized enterprises: is there really a linkage?’, r & d management 46(4), 713–717. wang, m. & yang, t., 2016, ‘investigating the success of knowledge management: an empirical study of smalland medium-sized enterprises’, asia pacific management review 21(2), 79–91. https://doi.org/10.1016/j.apmrv.2015.12.003 wiid, j. & diggines, c., 2013, marketing research, 2nd edn., juta and company ltd, cape town. zheng, s., zhang, w., wu, x. & du, j., 2011, ‘knowledge-based dynamic capabilities and innovation in networked environments’, journal of knowledge management 15(6), 1035–1051. https://doi.org/10.1108/13673271111179352 zhou, k.z. & li, c.b., 2012, ‘how knowledge affects radical innovation: knowledge base, market knowledge acquisition, and internal knowledge sharing’, strategic management journal 33(9), 1090–1102. https://doi.org/10.1002/smj.1959 69 corporate entrepreneurship – distilling the concept colene hind * hindc@unisa.ac.za renier steyn steynr@unisa.ac.za unisa graduate school of business leadership *to whom correspondence should be addressed abstract background: corporate entrepreneurship (ce) is credited for many positive organisational outcomes, including systemic growth and increased revenue. several terms associated with ce, including strategic renewal, corporate venturing and intrapreneurship are frequently used interchangeably and often confuse scholars, researchers and practitioners. the lack of clarity about the exact meaning of these terms is detrimental to the synergy in the current body of knowledge and the development of models involving these concepts. objective: the aim of this paper was to describe ce as a unique concept, distinguishable from related concepts. methodology: several definitions of ce as well as the related terms were dissected, to identify core elements associated with each of them. the validity of these comprehensive definitions was tested by requesting 68 master’s degree students to classify the definitions. inter-rater reliabilities were calculated in order to assess the level of agreement in the classification of the constructs. results: the results indicate that ce is difficult to distinguish from strategic renewal and corporate venturing, but that intrapreneurship seems to be better defined and separate from the other constructs. conclusion: these results emphasise the conceptual confusion that exists around ce and the need for further clarification of terminology. key words corporate entrepreneurship, strategic renewal, corporate venturing, intrapreneurship. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 mailto:hindc@unisa.ac.za mailto:steynr@unisa.ac.za 70 introduction increasingly research is confirming the importance of establishing corporate entrepreneurship (ce) as an essential success strategy (hornsby, kuratko, holt & wales, 2013:937), and has a direct positive influence on organisational performance (bojica & del mar fuentes fuentes, 2012: 397 & urbano & turro, 2013: 379). engaging in ce is credited for many positive organisational outcomes, including increased shareholder value, creating and sustaining corporate competitiveness and innovation. with regard to shareholder value zahra, neck and kelly (2004: 145) find that ce skills development has become essential if organisations are to create value for their shareholders by competing in new markets. zahra (1996: 1713) makes a similar link, with reference to the value for shareholders. the author finds a positive association between executive ownership of company stock and ce, as well as long-term institutional ownership by using data from 127 fortune 500 companies. ce can be seen as a valuable wealth creation process (ireland, hitt, camp & sexton, 2001: 49). a literature review by antonic and hisrich (2004: 518) makes it is clear that ce is imperative to corporate vitality and wealth generation in the present world economy. with reference to creating and sustaining corporate competitiveness, barringer and bluedorn (1999: 421) point out that ce is a significant contributor to the rejuvenation of organisations, and in cases their survival. covin and miles (1999: 47) and goodale, kuratko, hornsby and covin (2011: 116) add that ce can be utilised to improve an organisations’ competitive positioning through transformation of industries, products and markets or exploiting value-creating innovation. teng (2007: 119) states that for a firm to successfully and consistently be faster than its competitors, collective ce activity is essential. covin and miles (1999: 47) further suggest that certain generic forms of ce can be successfully utilised as methods towards competitive advantage. as for innovation, given the challenges in developing future competencies balanced with nurturing present competencies, modern-day firms increasingly rely on ce as a means of coping (kuratko, ireland & hornsby, 2004: 7). roffe sajesbm volume 7 (2015) www.sajesbm.co.za article 148 71 (1999: 227) finds innovation to be a crucial element in the wellbeing of organisations. the practice of ce enhances an organisation's ability to practise this crucial element of innovation. zahra (1991: 259) and coad and rao (2008: 633) use the term “super-star” growth when observing growth in high-tech sectors, and state that this type of growth is inseparable form innovation. many more positive outcomes are associated with ce. these include job creation (christensen, 2005: 305), successful international venturing (yiu, lau & burton, 2007: 519; zahra & garvis, 2000: 469), stimulating while at the same time capitalising on creative thinkers (hisrich, peters & shepherd, 2010: 36) and a positive association with financial and overall organisational performance (zahra, 1991: 259; zahra, 1995: 43). zahra (2005: xv), in the introduction of a special journal edition on corporate entrepreneurship expresses frustration at the absence of a “unified and widely excepted” definition of the concept of ce. several terms associated with ce can be found in the academic literature, including strategic renewal, corporate venturing and intrapreneurship. however, the existence of a general, agreed on definition is difficult to find (van wyk & andonisi, 2012: 66) and ambiguities in terminology used exist (sharma & chrisman, 1999: 13). barreira, dhliwayo, luiz, naude and urban (2012: 139) echoes this and suggest that authors do not distinguish between the terms "corporate entrepreneurship" and "intrapreneurship". parker (2011: 19) demonstrates this ambiguity and notes that intrapreneurship is also known as corporate entrepreneurship or corporate venturing. hornsby, kuratko and zahra (2002: 254; seminal authors in the field of ce) further illustrate these ambiguities when they state that ce is also referred to as corporate venturing or intrapreneurship. from the aforementioned, and stated by covin and miles (1999: 48), the term ce is sometimes used broadly, to refer to multiple concepts, and sometimes very specific, referring to well-defined concepts. even though there are some agreement on what ce is, authors use different terms when expressing themselves on this topic (sharma & chrisman, 1999: 11). sajesbm volume 7 (2015) www.sajesbm.co.za article 148 72 fifteen years ago, sharma and chrisman (1999: 11) notes that for researchers to be able to build on existing work it is imperative that the research concept be clearly defined. the authors extend this importance beyond the academic field to practitioners. sharma and chrisman (1999: 11) state that only when concepts are clearly defined can practitioners decide whether research findings are indeed applicable to them. this concern is still valid and cooper and schindler (2011: 54) stated that clarity regarding a concept also saves future time and money spent on research efforts. research the aim of this research was to present definitions unique to ce and the related terms of strategic renewal, corporate venturing and intrapreneurship. this aim was achieved with cognisance of similar research on differentiating between ce-related terms done by nath (2007, no page) and sharma and chrisman (1999: 11). literature review before exploring definitions of terms in the field of ce, let us briefly turn to its root term, namely entrepreneurship, and progress made in distilling the meaning of this concept. a significant amount of studies in the field of entrepreneurship exists, yet the debate regarding an agreed upon definition for this root construct is very much alive (howorth, tempest & coupland, 2005: 24). davidsson (2003: 316) states that the literature is lavished with definitions, however all these definitions differ along several dimensions. these dimensions include dispositions, outcomes, behaviour and even to which domain the discipline belongs. hansen, shrader and monllor (2001: 285) note the presence of not only ambiguities in definitions but even contradictions. it is clear that agreement on exactly what constitutes entrepreneurship is still lacking (landstrom, harirchi & astrom, 2012: 1154). despite the above-mentioned confusion, some authors agree on certain mutual elements in the definition of entrepreneurship. nieman, hough and nieuwenhuizen (2003: 9), for example, summarise the key concepts derived from a number of definitions. these concepts are: the entrepreneurs’ ability to sajesbm volume 7 (2015) www.sajesbm.co.za article 148 73 identify an opportunity, the novelty of the opportunity (creativity and innovation), the entrepreneurs’ ability to gather the necessary resources, and then creating and growing the venture, a propensity for risk-taking, management ability and finally some kind of reward as a result of the entrepreneurs' efforts. the fact that there is growing consensus regarding the meaning of what entrepreneurship entails brings forth hope that, with time and discussion, concepts such as ce will be used with more precision. however, it must be acknowledged that small differences would continue to exist, based on the specific disciplinary lens applied in each study on ce. strategic renewal, corporate venturing and intrapreneurship seem to be the terms most used in the literature when referring to corporate entrepreneurship. definitions of the concepts associated with ce are presented below to obtain a comprehensive understanding of these concepts as presented in literature. the presented list of verbatim definitions was limited to four due to space constraints. however, references are made to other authors who have defined the concepts, and whose definitions were read. following the presentation of the definitions found in the literature, a comprehensive and distinct definition of each of the concepts was developed. these definitions were formulated with due consideration of the core elements of those provided and cognisance of the definitions of the related terms. this process will be explained further in the methodology section. corporate entrepreneurship (ce) the following are definitions of ce. these definitions were selected from a long list of definitions based on recency as well as comprehensiveness. … is seen as the sum of a company’s innovation, renewal, and venturing efforts (ce1; zahra,1995: 227). … is generally believed to refer to the development of new ideas and opportunities within large or established businesses, directly leading to the improvement of organizational profitability and an enhancement of sajesbm volume 7 (2015) www.sajesbm.co.za article 148 74 competitive position or the strategic renewal of an existing business (ce2; may, 2014: no page). … the term used to describe entrepreneurial behavior in an established, larger organization. … to gain a competitive advantage by encouraging innovation at all levels in the organization (ce3; burns, 2008: 13). … the process by which teams within an established company conceive, foster, launch and manage a new business that is distinct from the parent company but leverages the parent’s assets, market position, capabilities or other resources. it differs from corporate venture capital, which predominantly pursues financial investments in external companies (ce4; wolcott & lippitz, 2007: 75). barreira, dhliwayo, luiz, naude and urban (2012: 139), barringer and bluehorn (1999: 139), birkinshaw (1997: 208), corbett, covin, o’connor and tucci (2013: 812), covin and miles (1999: 49), gomez-haro, aragon-correa and cordon-pozo (2001: 1678), guth and ginsburg (1990: 5), hornsby, kuratko and zahra (2002: 254), kuratko, morris and covin (2011: 110), morris, kuratko and covin (2008: 11), sharma and chrisman (1999: 18), zahra (1995: 260–261), zahra (1996: 1714–1715) and zahra and covin (1995: 44) also provide definitions of ce. the aforementioned list of definitions, as well as the verbatim definitions, and definitions of the related terms, were considered when formulating a unique ce definition. ce was defined as “a broad concept which refers to strategic organizational adaptation to improve an organization’s position”. strategic renewal strategic renewal can be defined as follows: (the) phenomenon whereby the organization seeks to redefine its relationship with its markets or industry competitors by fundamentally altering how it competes (sr1; covin & miles, 1999: 52). sajesbm volume 7 (2015) www.sajesbm.co.za article 148 75 an evolutionary process associated with promoting, accommodating, and utilizing new knowledge and innovative behaviour in order to bring about change in an organization’s core competencies and/or change in its product market domain (sr2; hopkins, malette & hopkins, 2013: 77). … involves the creation of new wealth through new combinations of resources (sr3; guth & ginsberg, 1990: 6). … corresponds to a broader array of entrepreneurial initiatives that do not necessarily involve new businesses being added to the firm. all forms of this phenomenon have one thing in common: they all involve organizationally consequential innovations that are adopted in the pursuit of competitive advantage (sr4; kuratko et al, 2011: 97). corbett, covin, o’connor and tucci (2013: 812), dess, ireland, zahra, floyd, janney and lane (2003: 335), sáez-martínez and gonzález-moreno (2011: 44), agarwal and helfat (2009: 282), and flier, van den bosch and volberda (2003: 2168) also provide definitions of strategic renewal and their definitions, with the definition of the related constructs, were considered when defining the construct. strategic renewal was defined as “primarily internal changes to the organisation which occurs as a result of strategic organisational adaptation”. corporate venturing the following definitions of corporate venturing are typical of those used in literature and are quoted as examples: … the process of actively investing in small start-up business by large firms (cv1; birkinshaw, van batenburg & murray, 2002: 11). sajesbm volume 7 (2015) www.sajesbm.co.za article 148 76 it involves investment in high-risk activities that generate new business within or closely related to the activities of the parent corporation (cv2; husted & vintergaard, 2004: 296). …concerned with larger businesses needing to manage new, entrepreneurial business separate from the mainstream activity (cv3; burns, 2008: 13) (it) involves entrepreneurial efforts in which established business organizations invest in and/or create new businesses (cv4; sharma & chrisman, 1999: 18). basu and wadhwa (2013: 965), birkinshaw (1997: 208), guth and ginsberg (1990: 6), kuratko, montagno and hornsby (1990: 50), miles and covin (2002: 21), kuratko et al (2011: 86) and thornhill and amit (2000: 26) also provide definitions of the concept. given these and the other definitions provided in this section, corporate venturing was defined as to refer to “the creation or acquisition of new business units with the aim to improve the organisation's position”. intrapreneurship the following are definitions of intrapreneurship: … individual or individuals (who) champion new product ideas within a corporate context (i1; covin & miles, 1999: 48). the act of behaving like an entrepreneur while working within a large organization (i2; murray, 2012). individuals who are typically defined as intra-organizational revolutionaries entrepreneurs within established organizations (i3; teltumbde, 2006: 129). sajesbm volume 7 (2015) www.sajesbm.co.za article 148 77 …a peculiar mix of skills that combine attributes of the entrepreneur with those of corporate managers (i4: sayeed & gazdar, 2003:76). definitions of the concept are also provided by burns (2008: 13), kuratko, montagno and hornsby (1990:49), moriano, molero, topa & levy mangin (2014: 103) villiers-scheepers (2011: 250) and subramanium (2005: 488). given the aforementioned literature, intrapreneurship was defined as to refer to “the employee activities which facilitates entrepreneurial activity within an organization”. methodology an exploratory study was conducted. this is necessary with ce, because there is a lack of clarity relating to the concept and this justifies such exploration (cooper & schindler, 2011: 143). the first objective was to develop simple yet comprehensive definitions of ce and the related terms. the unit of analysis was direct or verbatim quotes of definitions of the concepts under discussion, namely ce, corporate venturing and entrepreneurship. these concepts were selected because of their prominence in the ce literature and specifically the reference of hornsby et al. (2002; a seminal work in the area of ce), who states that these concepts are used interchangeably. the definitions were primarily from journal articles, but some academic textbooks were also used. in total 43 definitions were collected. the definitions were listed by the authors in table form to ease the analysis process. similarities and differences were identified and summarised. this was done on a concept level and across concepts. based on this analysis comprehensive definitions were developed by the authors. the aim was capturing the essence of each of the concepts. in table 1 the results of this process are reported. to determine if these new definitions of the concepts effectively capture the essence of the constructs and allow readers to effectively differentiate between the constructs, the assistance of master’s degree students were sajesbm volume 7 (2015) www.sajesbm.co.za article 148 78 requested. those willing to participate were asked to classify the source definitions (those used to develop the new definitions) according to the new, comprehensive definitions. the verbatim source definitions were provided to the students with the reference of the concept being defined left out. table 2 resembles the design of the form on which the respondents indicated their answers. next, a statistical test was sourced to determine to what extent the respondents were able to classify the source definitions to correspond with those definitions developed by the authors. inter-rater reliability, as described by shaughnessy, zechmeister and zechmeister (2009: 122) was used. they state that inter-rater reliability is simply the number of times observers agreed divided by the times they had the opportunity to agree, presented as a percentage. they also state that “although there is no hard-and-fast percentage of agreement that defines low inter-rater reliability, researchers generally report estimates of reliability that exceed 85%” (shaughnessy at al, 2009: 122). this margin was set as the margin of acceptance in this research. should this level be achieved, it will be indicative of the success of the comprehensive definition in capturing the essence of the construct. findings the first group of findings are the comprehensive definitions developed from literature. these are presented in table 1. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 79 table 1 comprehensive definitions of ce, strategic renewal, corporate venturing and intrapreneurship concept definitions ce ce is a broad concept which refers to strategic organizational adaptation to improve an organization’s position. strategic renewal strategic renewal is primarily internal changes to the organisation which occurs as a result of strategic organisational adaptation. corporate venturing corporate venturing is the creation or acquisition of new business units with the aim to improve the organisation's position. intrapreneurship intrapreneurship is the employee activities which facilitates entrepreneurial activity within an organisation. the respondents were asked to classify source definitions under the headings of the definitions provided in table 1. table 2 presents data on the consensus about the representivity of these definitions. the matches are presented in bold. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 80 table 2 respondent’s classification of source definitions comprehensive definitions source definitions ce sr cv i 1 sr1 33 28a/68b = 0.411c 7 0 2 i1 4 3 13 48/68 = 0.705 3 cv1 7 2 51/68 = 0.750 8 4 ce1 28/68 = 0.411 24 14 2 5 sr2 23 34/68 = 0.500 5 6 6 ce2 26/68 = 0.382 23 12 7 7 cv2 8 8 49/68 = 0.720 3 8 i2 5 1 3 59/68 = .867 9 sr3 7 18/38 = 0.264 39 4 10 i3 2 1 2 63/68 = 0.926 11 cv3 14 13 38/68 = 0.558 3 12 cv4 5 7 51/68 = 0.750 5 13 ce3 25/68 = 0.367 14 1 28 14 sr4 26 33/68 = 0.485 7 2 15 i4 8 1 3 56/68 = 0.823 16 ce4 16/68 = 0.235 22 23 7 average reliability 0.349 0.415 0.694 0.830 athe number of individuals who could pair the source definition with the new definition. bthis is n = the number of individuals who could have paired the definitions correctly. cthe inter-rater reliability . from table 2 it can be observed that the average reliability for ce, strategic renewal and corporate venturing was far below the margin set by shaughnessy et al (2009: 122). although close to the margin of .85, the value of intrapreneurship was below this level. in no cases did the respondents agree, to the satisfaction of the set guideline, with the creators of the sajesbm volume 7 (2015) www.sajesbm.co.za article 148 81 comprehensive definition, that the source definitions feed into the comprehensive definitions. discussion the authors of this paper went to great lengths to create a simple yet comprehensive definition of ce and the related terms. the authors were convinced, as many before them, that their definitions captured the essence of the source information they used. they were also convinced that the definitions were developed in such a way as to be unambiguous, leaving no doubt as to what is defined. testing the validity of this conviction, the authors engaged 68 master’s degree students, to assess to what extent they concur. the expectations of the authors were not met, and in none of the cases did the respondents concur sufficiently with the authors on the way they applied the source definitions. recommendations the authors failed to provide definitions that were seen as representative of ce and the related terms. respondents were still confused about how the final definitions related to their presumed sources. a way to address the problem of not being able to distinguish between terms may be addressed by shying away from the use of the terms (say ce, entrepreneurship, intrapreneurship) and rather using descriptions when dealing with these matters. it may be more useful to say “i am investigating a broad concept which refers to strategic organizational adaptation to improve an organization’s position” than “i am investigating ce”. limitations of the study the use of students as respondents is also limiting, firstly as they had very little to gain from participating in the study and as such legitimate questions may be asked about their motivation to engage in the material. the motivation of the participant could be enhanced by offering incentives to participate or linking their participation to their own learning or projects in which they are involved. secondly participants were students enrolled in a master's course that covers material on general business aspects. the course material does sajesbm volume 7 (2015) www.sajesbm.co.za article 148 82 not cover specific information on entrepreneurship or corporate entrepreneurship. thus, their lack of background knowledge in the field could be seen as a limitation. conclusion the last word on how to define ce, and the related terms, has not been written yet. as is the case with entrepreneurship, the road to finding some clarity on how to define ce may be a long road. the authors take comfort in the fact that use of a term such as entrepreneurship still confuses academics and practitioners alike. “examine your words well, and you will find that even when you have no motive to be false, it is a very hard thing to say the exact truth.” george eliot, adam bede references agarwal, r & helfat, ce. 2009. strategic renewal of organisations. organisation science, 20(2):281-293. barreira, j, dhliwayo, s, luiz, j, naude, w & urban, b. 2012. frontiers in entrepreneurship. (5th ed). johannesburg: heinemann publishers. barringer, br & bluedorn, ac. 1999. the relationship between corporate entrepreneurship and strategic management. strategic management journal, 20: 421–444. basu, s & wadhwa, a. 2013. external venturing and discontinuous strategic renewal: an options perspective. journal of product innovation management, 30(5): 956-975. birkinshaw, j. 1997. entrepreneurship in multinational corporations: the characteristics of subsidiary initiatives. strategic management journal, 18(3): 207–229. birkinshaw, j, van batenburg, r & murray, g. 2002. venturing to succeed. business strategy review, 13(4): 10–17. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 83 bojica, am & del mar fuentes fuentes, m. 2012. knowledge acquisition and corporate entrepreneurship: insights from spanish smes in the ict sector. journal of world business, 47(3): 397-408. burns, p. 2008. corporate entrepreneurship. building the entrepreneurial organization. (2nd ed) london. palgrave macmillan. christensen, ks. 2005. enabling intrapreneurship: the case of a knowledgeintensive industrial company. european journal of innovation management, 8(3): 305–322. coad, a & rao, r. 2008. innovation and firm growth in high-tech sectors: a quantile regression approach. research policy, 37: 633–648. cooper, rc & schindler, ss. 2011. business research methods. london: mcgraw-hill education. corbett, a, covin, jg, o’connor, gc & tucci, cl. 2013. corporate entrepreneurship: state-of-the-art research and a future agenda. journal of product innovation management, 30(5): 812-820. covin, jg & miles mp. 1999. corporate entrepreneurship and the pursuit of competitive advantage. entrepreneurship theory & practice, spring: 47–63. davidsson, p. 2003. the domain of entrepreneurship research: some suggestions. advances in entrepreneurship, firm emergence and growth, 6: 315–372. dess, gg, ireland, rd, zahra, sa, floyd, sw, janney, jj & lane, pj. 2003. emerging issues in corporate entrepreneurship. journal of management, 29(3): 351–378. flier, b, van den bosch, faj & volberda, hw. 2003. co-evolution in strategic behaviour of british, dutch and french financial incumbents: interaction of environmental selection, institutional effects and managerial intentionality. journal of management studies, 40(8): 2163–2187. gomez-haro, s, aragon-correa, ja & cordon-pozo, e. 2011. differentiating the effects of the institutional environment on corporate entrepreneurship. management decision, 49(10): 1677–1693. goodale, cj, kuratko, df, hornsby, js, covin, jg. 2011. operations management and corporate entrepreneurship: the moderating effect of operations control on the antecedents of corporate entrepreneurial activity in sajesbm volume 7 (2015) www.sajesbm.co.za article 148 84 relation to innovation performance. journal of operations management, 29: 116–127. guth, wd & ginsberg, a. 1990. guest editors’ introduction: corporate entrepreneurship. strategic management journal, 11: 5–15. hansen, dj, shrader, r & monllor, j. 2001. defragmenting definitions of entrepreneurial opportunity. journal of small business management, 49(2): 283–304. hisrich, rd, peters, mp & shepherd, da. 2010. entrepreneurship. (9th ed.). new york: mcgraw-hill. hopkins, we, malette, p & hopkins, sa. 2013. proposed factors influencing strategic inertia/strategic renewal in organisations. academy of strategic management journal, 12(2): 77–94. hornsby, js, kuratko, df, holt, dt & wales, wj. 2013 assessing the measurement of organizational preparedness for corporate entrepreneurship. journal of product innovation management, 30(5): 937-955. hornsby, js, kuratko, df and zahra, sa. 2002. middle managers’ perception of the internal environment for corporate entrepreneurship: assessing a measurement scale. journal of business venturing, 17: 253–273. howorth, c, tempest, s & coupland, c. 2005. rethinking entrepreneurship methodology and definitions of the entrepreneur. journal of small business enterprise development, 12(1): 24–40. husted, k & vintergaard, c. 2004. stimulating innovation through corporate venture bases. journal of world business, 39: 296–306. ireland, rd, hitt, ma, camp, m & sexton, l. 2001. integrating entrepreneurship and strategic management actions to create firm wealth. academy of management perspectives, 15(1): 49–63. kuratko, df, ireland, rd & hornsby, js. 2004. corporate entrepreneurship behaviour among managers: a review of theory, research and practice. advances in entrepreneurship, firm emergence and growth, 7: 7–45. kuratko, df, montagno, rv & hornsby, js. 1990. developing an intrapreneurial assessment instrument for an effective corporate entrepreneurial environment. strategic management journal, 11: 49–58. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 85 kuratko, df, morris, mh & covin, jg. 2011. corporate innovation and entrepreneurship. (3rd ed). canada. cengage learning. landstrom, h, harirchi, g, & astrom, f. 2012. entrepreneurship: exploring the knowledge base. research policy, 41: 1154–1181. may, r. 2014. corporate entrepreneurship and its importance in large companies. retrieved from: http://www.businessdictionary.com/article/726/corporate-entrepreneurshipand-its-importance-in-large-companies/ accessed: 04-02-2014. miles, mp & covin, jg. 2002. exploring the practice of corporate venturing: some common forms and their organisational implications. entrepreneurship theory and practice, spring: 21-40. moriano, ja, molera, f, topa, g & levy mangin, j-p. 2014. the influence of transformational leadership and organizational identification on intrapreneurship. international entrepreneurship management journal, 10(2014): 103-119. morris, mm, kuratko, df & covin, jg. 2008. corporate entrepreneurship and innovation. (2nd ed). mason. thomson higher education. murray, s. 2012. get the boss to embrace your innovation. retrieved from: http://www.ft.com/cms/s/0/ab16a1a6-87b8-11e1-ade200144feab49a.html#axzz2slddcuzg accessed: 04-02-2014. nath, cl. 2007. corporate entrepreneurship: a strategic and structural perspective. paper presented at the seventh biennial conference on the new frontiers of entrepreneurship, 21–23 march, gandhinagar, india. nieman, g, hough, j & nieuwenhuizen, c. 2003. entrepreneurship: a south african perspective. (1st ed). pretoria: van schaik publishers. parker, sc. 2011. intrapreneurship or entrepreneurship. journal of business venturing, 26: 19–34. sáez-martinez, fj & gonzalez-moreno, a. 2001. strategic renewal, cooperation, and performance: a contingency approach. journal of management and strategy, 2(4): 43–55. sayeed, ob & gazdar, mk. 2003. intrapreneurship: assessing and defining attributes of intrapreneurs. journal of entrepreneurship, 12: 75–88. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 http://www.businessdictionary.com/article/726/corporate-entrepreneurship-and-its-importance-in-large-companies/ http://www.businessdictionary.com/article/726/corporate-entrepreneurship-and-its-importance-in-large-companies/ http://www.ft.com/cms/s/0/ab16a1a6-87b8-11e1-ade2-00144feab49a.html#axzz2slddcuzg http://www.ft.com/cms/s/0/ab16a1a6-87b8-11e1-ade2-00144feab49a.html#axzz2slddcuzg 86 sharma, p & chrisman, jj. 1999. toward a reconciliation of the definitional issues in the field of corporate entrepreneurship. entrepreneurship theory and practice, 23(3): 11–27. shaughnessy, jj, zechmeister, eb & zechmeister, js. 2009. research methods in psychology. (8th ed). new york: mcgraw-hill. subramanian, n. 2005. the economics of intrapreneurial innovation. journal of economic behavior & organization, 58: 487–510. teltumbde, a. 2006. entrepreneurs and intrapreneurs in corporations. vikalpa: the journal for decision makers, 31(1): 129–132. teng, b-s. 2007. corporate entrepreneurship activities through strategic alliances: a resource-based approach toward competitive advantage. journal of management studies, 44(1): 119–142. thornhill, s. & amit, r. 2000. a dynamic perspective of internal fit in corporate venturing. journal of business venturing, 16: 26–50. urbano, d & turro, a. 2013. conditioning factors for corporate entrepreneurship: an in(ex)ternal approach. international entrepreneurship management journal, 9(2013): 379-396. van wyk, r & andonisi, m. 2012. ascendants of corporate entrepreneurship. south african journal of business management, 43(3): 65–78. villiers-scheepers, mj. 2011. motivating intrapreneurs: the relevance of rewards. industry and higher education, 25(4): 249–263. wolcott, rc & lippitz, mj. 2007. the four models of corporate entrepreneurship. mitsloan management review. retrieved from: http://sloanreview.mit.edu/article/the-four-models-of-corporateentrepreneurship/ accessed: 04-02-2014. yiu, dw, lau, c & burton, gd. 2007. international venturing by emerging economy firms: the effects of firm capabilities, home country networks, and corporate entrepreneurship. journal of international business studies, 38: 519–540. zahra, sa. 1991. predictors and financial outcomes of corporate entrepreneurship: an exploratory study. journal of business venturing, 6: 259–285. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 87 zahra, sa. 1995. corporate entrepreneurship and financial performance: the case of management leveraged buyouts. journal of business venturing, 10(3): 225-247. zahra, sa. 1996. governance, ownership, and corporate entrepreneurship: the moderating impact of industry technology opportunities. academy of management journal, 39(6): 1713–1735. zahra, sa. 2005. corporate entrepreneurship and growth. cheltenham: edward elgar publishing limited. zahra, sa. & covin, jg 1995. contextual influences in the corporate entrepreneurship-performance relationship: a longitudinal analysis. journal of business venturing, 10(1): 43–58. zahra, sa & garvis, dm. 2000 international corporate entrepreneurship and firm performance: the moderating effect of international environmental hostility. journal of business venturing, 15(5-6): 469–492. zahra, sa, neck, hm & kelly, dm. 2004. international corporate entrepreneurship and the evolution of organizational competence: a knowledge-based perspective. advances in entrepreneurship, firm emergence and growth, 7: 145–171. sajesbm volume 7 (2015) www.sajesbm.co.za article 148 abstract introduction literature review problem investigated research design and methodology research findings ethical consideration discussion of findings conclusion and practical implications acknowledgements references about the author(s) cordelia kunaka department of business management, university of pretoria, pretoria, south africa menisha n. moos department of business management, university of pretoria, pretoria, south africa citation kunaka, c., & moos, m.n., 2019, ‘evaluating mentoring outcomes from the perspective of entrepreneurs and small business owners’, southern african journal of entrepreneurship and small business management 11(1), a214. https://doi.org/10.4102/sajesbm.v11i1.214 original research evaluating mentoring outcomes from the perspective of entrepreneurs and small business owners cordelia kunaka, menisha n. moos received: 02 aug. 2018; accepted: 08 oct. 2018; published: 12 mar. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: mentoring as support for both the business and the individual entrepreneur or small business owner is important for the continued perseverance of the entrepreneurial journey. aim: different mentoring outcomes were evaluated to establish what is being gained from the mentoring relationships to encourage other entrepreneurs and small business owners to pursue mentoring relationships. setting: south african entrepreneurs and small business owners who were currently being mentored or had been mentored. method: the study used a survey research design that consisted of 209 qualifying entrepreneurs and small business owners. an online questionnaire was used to collect the data. results: the results show that there is a relationship between the different mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes). in addition, it was established that as the mentoring relationship goes through the different phases of initiation, cultivation, separation and redefinition, mentoring outcomes such as skills transfer and entrepreneur resilience are independently attained. conclusion: understanding the outcomes of mentoring will encourage more participation in the field of mentoring for south african mentors, entrepreneurs and small business owners through awareness of the benefits thereof as well as how mentoring can form a strong supporting mechanism. this research makes a theoretical contribution by naming and grouping mentoring outcomes into four categories, such as skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes. introduction mentoring is important for entrepreneurs and small business owners to develop sustainable businesses that create jobs (botha & esterhuyzen 2012; herrington & kew 2015). previous studies on mentoring in a south african context focused on profiling mentors (martin 2008; watson 2004), evaluating the effectiveness of mentoring programmes (swanepoel, strydom & nieuwenhuizen 2010), perceptions of mentoring on venture growth (ayer 2010) and self-efficacy (cline 2011). botha and esterhuyzen (2012) suggest using keen, skilled small business owners as mentors to increase the existing number of mentors that can help emerging entrepreneurs to grow successful businesses. they established the willingness of small business owners to act as business mentors. each entrepreneur or small business owner is different and requires diverse types of mentoring support and skills (memon et al. 2015). there is always a need for effective support mechanisms for all stages of the entrepreneurial process to advance the continued existence of businesses (st-jean & audet 2012). challenges encountered, such as selling, marketing and raising funds (han et al. 2012), require that the entrepreneur seeks external advice to remain relevant and successful. kamyabi and devi (2011) revealed the use of external accountants as support by small and medium enterprises (smes) to fill an internal human resource gap and be competitive in their environments. entrepreneurs intending to improve knowledge and skills in areas such as marketing, business management, profits, turnover, employment and market coverage are more likely than others to pursue and benefit from external advice or support (davies 2017; kyrgidou & petridou 2013). understanding mentoring outcomes will encourage more participation in mentoring for south african mentors, entrepreneurs and small business owners through awareness of the benefits and how mentoring forms a strong support mechanism. as suggested by nieman and nieuwenhuizen (2009:13), ‘although entrepreneurs have the natural ability to identify opportunities and establish the business, successful management of the business might require the assistance of specialists, training and employees’. aligning expectations, understanding the mentoring process and mentoring outcomes enhance the mentoring relationship (matabooe, venter & rootman 2016). key concepts used in this study include mentoring, mentoring outcomes, entrepreneur, entrepreneurship and small business. mentoring consists of one-on-one support, influencing entrepreneur behaviour as a form of training shown to increase the confidence and risk-taking capacity of entrepreneurs (koopman 2013; radu lefebvre & redien-collot 2013; st-jean & audet 2012; triodos facet 2011). in reviewing organisational and individual outcomes, mckevitt and marshall (2015:266) describe outcomes as ‘actionable knowledge’ which rises from mentoring because it is a relationship. an entrepreneur appreciates and follows opportunities through gathering and organising resources to create high-potential businesses. they accept and manage risk, developing markets through creativity and innovation (nieman & nieuwenhuizen 2009; timmons & spinelli 2009). entrepreneurship is defined as the process of transformation of opportunities using existing resources and it involves identifying an opportunity, making a product, growing the venture, taking risks and producing reward/s for the entrepreneur and stakeholders (ayer 2010; gwija, eresia-eke & iwu 2014; nieman & nieuwenhuizen 2009). the national small business act (1996) defines a small business as: …a separate and distinct business entity including cooperative enterprises and non-governmental organisations managed by one owner or more which including its branches or subsidiaries if any, is predominantly carried on in any sector or subsector of the economy and can be classified as micro, very small, small or medium enterprises by satisfying the criteria opposite the relevant size or class. (p. 2) in the next section, the literature review will be discussing mentoring and the social cognitive learning theory, mentoring outcomes and the phases of mentoring. literature review mentoring and social cognitive learning theory recognising the importance of learning for entrepreneurs and small business owners, this study refers to bandura’s social cognitive learning theory as it emphasises behavioural learning. harinie et al. (2017) exhibit three underlying assumptions of the social cognitive learning theory as: individuals learn by imitating behaviour displayed by models in their environment learning occurs through the linkage between behaviour, the individual and the environment the outcome of learning behaviour is visually and verbally coded from everyday behaviour. furthermore, bayron (2013) highlights that learning occurs through interaction with others, reinforcement, observation of role models and imitating behaviour. learning occurs when a person observes another individual, or models behaviour in a certain way. illustrating learning within the environment, steele (2016) explains that learning ought to suit the context of the business and the entrepreneur’s preferred approach. brien and hamburg (2014) link social learning to how smes favour interaction and learning by the doing-approach, in addition to the formal methods. this is further demonstrated by entrepreneurs in a study by stavropoulou and protopapa (2013), who promote learning from a mentor’s experience and the likelihood of transferring meaningful, necessary new learning to business. mentoring can be considered as a form of social learning for the entrepreneurs and small business owners; their interaction, observation and imitation of mentors can accentuate entrepreneurial behaviour. mentoring outcomes outcomes can be what the mentee stands to gain, such as support, knowledge and expert advice. rigg and o’dwyer (2012) highlight mentoring outcomes as knowledge transfer, reflection and construction of knowledge. nicoleta and chioncel (2014) confirm that competences, skills and abilities can be transferred through mentoring. other words used to describe mentoring outcomes were investigated. mentoring outcomes are sometimes referred to as benefits (brien & hamburg 2014; makin 2012; sijde & weijman 2013), the value of mentoring (poulsen 2013) and the consequences or impacts of mentoring (mills, barakat & vyarnam 2013; st-jean & audet 2009). therefore, mentoring outcomes can be knowledge, expert advice, competencies, skills and abilities. entrepreneurship articles with these descriptions were reviewed, a list made and then categorised. the literature review on mentoring outcomes is presented in four categories, which is summarised as skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes, as presented in table 1. table 1: categories of mentoring outcomes. skills transfer outcomes assist entrepreneurs to identify and evaluate possible business opportunities, develop clearer business vision, have the ability to manage a business and achieve goals and networks. knowledge transfer outcomes will result in understanding accounts, managing operations and human resource management. entrepreneur resilience outcomes involve validating entrepreneurial self-image, increasing self-efficacy and confidence, fostering entrepreneurial culture and encouraging personal development. business outcomes include increased productivity levels, improved post-sales follow-up, increased product range, increased sales revenue, increased profitability, reduced costs and improved business survival. from the literature the following research hypothesis was formulated: research hypothesis 1: there is a relationship between the different mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes). to test the different mentoring outcomes, the following six statistical hypotheses were formulated: h1a: there is a relationship between skills transfer outcomes and knowledge transfer outcomes. h1b: there is a relationship between skills transfer outcomes and entrepreneur resilience outcomes. h1c: there is a relationship between skills transfer outcomes and business outcomes. h1d: there is a relationship between knowledge transfer outcomes and entrepreneur resilience outcomes. h1e: there is a relationship between knowledge transfer outcomes and business outcomes. h1f: there is a relationship between entrepreneur resilience outcomes and business outcomes. phases of mentoring the phases of the mentoring relationship are significant; any relationship goes through a formation period when people get to know each other, a time when the relationship is operating at an efficient level and then a time when it needs to be dissolved. the phase in which the mentee is interviewed for the study could also influence their response. mentees in different phases of mentoring will perceive different levels of support from their mentors as the interaction levels change in every phase. table 2 summarises the phases of mentoring highlighted by kram (1983), memon et al. (2015) and poulsen (2013). table 2: phases of mentoring. in a seminal paper, kram (1983) describes four distinct phases of mentoring: the initiation stage, the cultivation stage, the separation phase and the redefinition phase. poulsen (2013) also describes four phases of mentoring: the preparation phase, the establishing the relationship phase, the learning and developing phase and the ending phase. leidenfrost et al. (2014) position kram’s phases from the mentee’s perspective in their study of peer mentoring on mentees. the importance of kram’s phases of mentoring is revealed as creating effective mentoring relationships with every relationship going through the different phases, although the time taken in each of the phases might differ (memon et al. 2015). the researcher uses the phases of mentoring, as described by kram, influenced by the positioning done by leidenfrost et al. (2014) and memon et al. (2015), as this research is from the mentee’s perspective (entrepreneurs and small business owners). the literature posits that entrepreneurial learning starts in the cultivation stage (memon et al. 2015). although the mentoring outcomes are not specified in the different stages, the following hypotheses were formulated to guide the study: research hypothesis 2: there is a relationship between the phases of mentoring and the different mentoring outcomes. to test the phases of mentoring with each separate mentoring outcome, the following statistical hypotheses were formulated: h2a: there is a relationship between the phases of mentoring and skills transfer outcomes. h2b: there is a relationship between the phases of mentoring and knowledge transfer outcomes. h2c: there is a relationship between the phases of mentoring and entrepreneur resilience outcomes. h2d: there is a relationship between the phases of mentoring and business outcomes. problem investigated mentoring outcomes have not been properly illustrated in the south african context. evaluating the mentoring outcomes for entrepreneurs and small business owners will gather reasons to encourage support through mentoring. it will give credence to the different organisations offering mentoring in south africa, such as banks, corporate companies, government support institutions, industry trade organisations and private support organisations. research design and methodology the research question of the study is: ‘how has mentoring previously assisted or is currently assisting entrepreneurs and small business owners to attain mentoring outcomes’? the primary research objective is to evaluate mentoring outcomes from the perspective of entrepreneurs and small business owners. the secondary research objectives are as follows: to determine if there is a relationship between the skills transfer outcomes and each of the other mentoring outcomes (knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes) to determine if there is a relationship between the knowledge transfer outcomes and each of the other mentoring outcomes (skills transfer outcomes, entrepreneur resilience outcomes and business outcomes) to determine if there is a relationship between the entrepreneur resilience outcomes and each of the other mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes and business outcomes) to determine if there is a relationship between the business outcomes and each of the other mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, and entrepreneur resilience outcomes) to determine if there is a relationship between the phases of mentoring and the different mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes). research design the quantitative research design was utilised. the study adopted a probability sampling strategy as inferences can be made for the population from the cases surveyed (cooper & schindler 2011). entrepreneurs and small business owners that are being mentored or that have been mentored before were considered. the study’s sample was collected using a simple random sampling method. the sampling was done without replacement; a unique code was generated for each participant. once the participant had completed the survey to the end, they were not allowed to repeat the survey. two disqualifying questions were added into the survey to ensure that only the people who fall within the target group completed the survey. the disqualification questions were as follows: ‘do you currently own a business?’ ‘have you been mentored before or are you currently being mentored?’ if a participant replied with ‘no’ to either of these questions, they were immediately disqualified from completing the survey. research method email invitations to participate in the online survey were sent out to entrepreneurs and small business owners. this was a communication study and the qualifying respondents proceeded to complete the online questionnaire. the following characterised the data collection: qualifying participants that completed the survey were 209 of the 300, therefore 91 left the survey incomplete. the completion rate was 70%. the questionnaire was informed by the literature reviewed. questions were adjusted as per the short descriptions of the mentoring outcomes in the literature review section of this article. the respondents were asked to choose from a scale of 1 (totally disagree) to 5 (totally agree) and 6 (not applicable). a likert-type scale was used to enable easy data analysis. during data analysis, data for the mentoring outcomes in the likert scales were reduced to nominal values, for example: strongly disagree + disagree = disagreement; and strongly agree + agree = agreement. measurement of research questionnaires mentoring outcomes have been divided into the following four categories: skills transfer outcomes, consisting of a combined score measuring opportunity identification and evaluation, clearer business vision, ability to manage a business, achieve goals, developing a business plan and networking. knowledge transfer outcomes, consisting of a combined score measuring financial management, operations management and human resource management. entrepreneur resilience outcomes, made up of a combined score measuring validation of one’s entrepreneurial self-image, lowered sense of isolation, increased sense of self-efficacy and confidence, perseverance, fostering entrepreneurial culture and personal development. business outcomes, made up of a combined score measuring increases in productivity levels, improved after-sales follow-up, increased product range, increases in sales revenue, increases in profitability, reduced costs and business survival. data analysis pilot testing of the questionnaires was done to assess, prior to data collection, whether the research instrument measured what it was supposed to measure and would supply dependable results. the researcher followed the three steps that assess content validity through judgement and careful definition of the topic, the items to be scaled and the scales to be used (cooper & schindler 2011). reliability was enhanced by using online databases of entrepreneurs and small business owners. only fully completed surveys were used for data analysis. construct validity was performed using factor analysis. this seeks to investigate whether several variables belong together and can be grouped together into a set, called a factor. they are then treated as belonging to a statistically similar concept (lee 2015). in this study, confirmatory factor analysis (cfa) was used. a set of constructs that belong together were put into spss (statistical package for social sciences) computer software to test the appropriateness of the researcher’s assumptions of how they fit together. an exploratory factor analysis was conducted, using principal component extraction and varimax rotation, to determine the unidimensionality of each of the mentoring outcome constructs. the kaiser–meyer–olkin measure of sampling adequacy was between 0.797 and 0.910, which are all above the recommended threshold of 0.5. the bartlett’s test of sphericity was significant (p < 0.001) for each of the constructs, therefore indicating that a factor analysis was appropriate (beavers et al. 2013). the analysis confirmed unidimensionality for all the mentoring outcome constructs, as the analysis identified only one factor based on the eigenvalue criterion (eigenvalue greater than 1), respectively, for all the constructs. the factor explains between 61.736% and 73.538% of the variance. the results of the factor analysis are shown in table 3. table 3: factor analysis. using cronbach’s alpha, the internal consistency (reliability) for the four constructs was found to be between 0.894 and 0.931. as these values are above the acknowledged threshold of 0.7, it was deemed satisfactory. factor-based scores were subsequently calculated as the mean score of the variables included in each factor. the majority of the measurement scales were dichotomous, nominal or ratio and this data will be represented through tables and graphs using frequency and percentages. mentoring outcomes of interval data and correlations will be presented. the software spss will be used to conduct relevant statistical modelling required. pearson’s correlation coefficient pearson’s r is a method for investigating relationships between interval/ratio variables; a correlation exists when one variable increases and another variable either increases or decreases. being either positive or negative indicates the direction of the relationship. the closer the coefficient is to one (1), the stronger the relationship; the closer to zero (0), the weaker the relationship (bryman & bell 2015). a positive number indicates a positive correlation, as one variable increases, the other variable also increases. a negative correlation as one variable increases, the other variable decreases with a correlation of +1 or -1 indicating a perfect correlation (leedy & omrod 2013). regression analysis regression enables the researcher to estimate association between the variables (lee 2015). in this study, regression will be conducted with mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes) being the dependent variables. the independent variables are phases of mentoring and number of mentoring relationships. research findings in this section, data will be presented based on the response to the questions presented to the entrepreneurs and small business owners that participated in the online survey. descriptive statistics demographics of the research sample table 4 highlights the demographic variables of the entrepreneurs and small business owners including gender, ethnic group and level of education. details of the business venture included the number of full-time and part-time paid employees and industry. table 4: demographics of research sample. the demographic profile of the gender of the 209 entrepreneurs and small business owners that responded to the survey comprised 69.90% (146) males and 30.10% (63) females. the results of the current study indicate that 69.40% (145) of the respondents were black people, 19.1% (40) were white people, 6.2% (13) were mixed-race people and 3.2% (8) were indian people. this racial composition is consistent with black entrepreneurs being more likely to seek mentoring in south africa as they form the largest number of early-stage entrepreneurs (herrington & kew 2015). education increases self-efficacy and self-confidence, increasing chances of people starting up and surviving in business. in relation to this study, education would increase the transfer of mentoring outcomes. herrington and kew (2015) accentuate the importance of all forms of education in developing entrepreneurial competencies. demographic details of the business venture number of employees and industry were evaluated to ascertain demographic details of the business venture. entrepreneurs and small business owners play an important role of contributing towards job creation (botha & esterhuyzen 2012). early-stage entrepreneurs with medium-to-high growth objectives in one particular study were expected to create six or more jobs (herrington & kew 2015). in this study, indicating the number of full-time or part-time employees, it was ascertained that 44% (92) respondents had full-time paid employees and 45.5% (95) respondents had part-time paid employees. in a review of effectiveness of a mentorship programme, makhado (2015) observed that 8.3% of the respondents work alone, 75% of the businesses had 2–5 employees and 16.7% had 6–20 employees. the results align to this study where most of the entrepreneurs and small business owners employed 1–4 full-time or part-time paid employees. figure 1 presents the 12 categories as per the schedule in the national small business act of 1996 that were used to analyse the industry that the entrepreneurs and small business owners participate in. figure 1: industry that surveyed entrepreneurs and small business owners are involved in. from figure 1, finance and business services was the most common single industry with 72 (34.4%) respondents, the lowest was retail and motor and repair services with 4 (1.9%) respondents. analysing industry, herrington and kew (2015) show that south african businesses are active in the overtraded consumer services industry, which reduces their profit margins. equipped with this knowledge, mentors could consider redirecting entrepreneurs and small business owners to diversify into more profitable industries such as communication, financial services and technology. operating in vulnerable industries decreases the sustainability of businesses but people often start businesses that have low barriers to entry in terms of skills and capital required. support is required so that more entrepreneurs and small business owners can operate in the robust profitable industries. findings regarding mentoring entrepreneurs and small business owners sometimes engage in more than one mentoring relationship. results for the number of mentoring relationships are presented in figure 2. figure 2: number of mentoring relationships. the majority of the respondents 73.7% (154) had one or two mentoring relationships. only 8.10% (17) had more than five mentoring relationships. reviewing whether or not the entrepreneurs and small business owners were currently in a mentoring relationship, 53.6% (112) were currently in a mentoring relationship while 46.6% (97) had been in a mentoring relationship in the past. findings indicated that a strong majority (78.5% [164]) of respondents had male mentors. this is generally consistent with the research done by watson (2004), which found that 81.1% of mentors in south africa were male and only 18.9% were female. however, this survey reveals a slight increase in female mentors. this could be as a result of more women being involved in entrepreneurship. other entrepreneurs or small business owners were providing the most mentoring, with 34% (71) of mentees having received or currently receiving mentoring from other entrepreneurs or small business owners. the results in this study highlight that other entrepreneurs and small business owners are being used more as mentors than formal institutions. this could be as a result of the need of mentees to learn from the experience of mentors that have an appreciation of business (moulson 2015). ethical consideration the data collection process only commenced after the ethical clearance application was approved, and a permit number 12292550/2016 authorising the study was issued. each respondent was required to provide their consent prior to completing the online questionnaire. the purpose of the study, accentuating that participation in the study was voluntary and that the respondent could withdraw at any time, as well as providing assurances of anonymity and confidentiality was explained in a cover letter. furthermore, no incentives were given to respondents for their participation in the study. discussion of findings research hypothesis 1: mentoring outcomes each of the six possible relationship combinations of mentoring outcomes will be tested separately. as the data were continuous, pearson’s correlation coefficient for all pairs of variables was calculated. the pearson correlation coefficient, statistical significance and the number of observations used are shown in table 5. table 5: correlations between the different mentoring outcomes. from table 5, the results show that: the correlation coefficients (r) between skills transfer outcomes and each of the other three variables – knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes – are (0.637), (0.616) and (0.720), respectively. these coefficients show a strong positive linear relationship between skills transfer outcomes and the other three types of outcomes the correlation coefficients (r) of knowledge transfer outcomes with the other two types of outcomes are entrepreneur resilience outcomes (0.519) and business outcomes (0.745). these coefficients also show a strong positive linear relationship the correlation coefficient (r) of entrepreneur resilience outcomes with business outcomes is (0.627). the coefficient shows a strong positive linear relationship. all the calculated pearson correlation coefficients were statistically significant at the 1% level of significance (p = 0.000 for all coefficients). all the relationships showed a strong positive correlation as summarised in table 6. table 6: correlations between mentoring outcomes. research hypothesis 1 was supported. it was establishing that there is a relationship between the different mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes). this is a practical finding because skills transfer outcomes such as setting direction for the business/accomplishing what was planned lead towards knowledge transfer outcomes such as running the business, recruiting, developing and managing staff. these result in business outcomes, such as increase in sales revenue, profitability and productivity levels, as well as improved after-sales follow-up and reducing costs, which can all increase the chances of the business surviving. as the business continues to survive, the entrepreneur or small business owner develops greater feelings of capability and encouragement not to give up. the literature does not show the relationships between the different mentoring outcomes; therefore, the findings illustrated in this study are making a theoretical contribution to the field of mentoring in small business and entrepreneurship. research hypothesis 2: phases of mentoring and mentoring outcomes regression analysis was conducted for the phases of mentoring as independent variables and each of the mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes) as the dependent variable. the values indicating phases of mentoring had no numerical mathematical value, so dummy variables had to be created to split up the phases of mentoring variable. as described by lee (2015), dummy variables are used to divide up one categorical variable, with value 1 indicating membership in a specific category and 0 showing non-membership in the specific category. as the phase of mentoring was a categorical variable, three dummy variables were created with phase 1 as the reference as follows: dum_phase2 = 1 if the phase = 2 and 0 otherwise dum_phase3 = 1 if the phase = 3 and 0 otherwise dum_phase4 = 1 if the phase = 4 and 0 otherwise. table 7 highlights the phases 2, 3 and 4 with reference to phase 1. the results show that phase of mentoring has a statistically significant effect (p = 0.026, 0.020 and 0.036) with predictors of skills transfer outcomes; the relationship being positive but weak (standardised beta values = 0.247, 0.287 and 0.266) phase of mentoring does not have a statistically significant effect (p = 0.501, 0.269 and 0.315) with predictors of knowledge transfer outcomes; the relationship being positive but weak (standardised beta values = 0.075, 0.137 and 0.129) phase of mentoring has a statistically significant effect (p = 0.015, 0.032 and 0.002) with predictors of entrepreneur resilience outcomes; the relationship being positive but weak (standardised beta values = 0.269, 0.261 and 0.401) phase of mentoring does not have a statistically significant effect (p = 0.153, 0.165 and 0.202) with predictors of business outcomes; the relationship being positive but weak (standardised beta values = 0.160, 0.172 and 0.164). table 7: regression analysis: phases of mentoring and mentoring outcomes. in reviewing the results of the statistical tests for research hypothesis 2, it is concluded that the phases of mentoring have a relationship with skills transfer outcomes and entrepreneur resilience outcomes independently but not with knowledge transfer outcomes or business outcomes. in reviewing the results of the statistical tests for hypothesis 2a, it is concluded that the phases of mentoring have a relationship with skills transfer outcomes. in reviewing the results of the statistical tests for hypothesis 2b, it is concluded that the phases of mentoring do not have a relationship with knowledge transfer outcomes. in reviewing the results of the statistical tests for hypothesis 2c, it is concluded that the phases of mentoring have a relationship with entrepreneur resilience outcomes. in reviewing the results of the statistical tests for hypothesis 2d, it is concluded that the phases of mentoring do not have a relationship with business outcomes. therefore, research hypothesis 2 was partially supported, finding that the phases of mentoring have a relationship with skills transfer outcomes and entrepreneur resilience outcomes independently but not with knowledge transfer outcomes or business outcomes. in this study, the phases of mentoring are bundled for testing and the outcomes highlighted, whereas memon et al. (2015) indicate that the cultivation stage is the first stage of entrepreneurial learning although they do not specify what is learnt. therefore, the findings in this study support the indication that learning occurs during the stages although the phases are not specified. conclusion and practical implications the study makes a theoretical contribution through naming and grouping mentoring outcomes into four categories, namely, skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience and business outcomes. it is concluded that there is a relationship between the mentoring outcomes (skills transfer outcomes, knowledge transfer outcomes, entrepreneur resilience outcomes and business outcomes). furthermore, the study showed that phases of mentoring have a positive relationship with skills transfer outcomes and entrepreneur resilience outcomes, respectively, but not with knowledge transfer outcomes and business outcomes. this suggests that the respondents should make sure that they continue through all phases of long-term mentoring relationships. as the mentoring relationship goes through the different phases (which are initiation, cultivation, separation and redefinition), skills transfer outcomes and entrepreneur resilience outcomes would be independently attained. as highlighted by mckevitt and marshall (2015:266), ‘mentoring is a relationship and relationships are understood as giving rise to actionable knowledge’. limitations of the study the data rest on entrepreneurs and small business owners’ perceptions of learning through the mentoring relationship. it was not possible to verify what the person was saying as this was an online survey; however, there is no interviewer bias as the survey was self-administered. it appears most mentees have had more than one mentoring relationship, but the research did not interrogate each relationship separately. prior knowledge as an extraneous variable was not tested, as it could affect the outcomes of mentoring. the research assumed that the respondents would relate their answers to the most recent mentoring relationship. as stated by mejia and gopal (2015:4), ‘entrepreneurship requires embedding the researcher within the institutional environment’. this study was not done for a specific institution. the survey was sent to any entrepreneurs or small business owners who had been mentored or were still being mentored. the differences in mentoring organisations could account for differences in mentoring satisfaction and mentoring outcomes. recommendations for future research practical recommendations entail creating honest relationships with mentees who are not transactional by understanding mentees’ business environment to give appropriate advice. furthermore, establishing mentoring programmes that ensure transfer of skills, knowledge, entrepreneur resilience and business outcomes. also, by increasing the employment of mentors who have run businesses before and also engaging existing entrepreneurs and small business owners to become mentors. the focus of this study was on the mentees’ perspective (entrepreneurs and small business owners). future research could include a qualitative, longitudinal study that addresses perspectives of both mentors and mentees. in light of mentees having been in more than one mentoring relationship, future research needs to interrogate each mentoring relationship separately. acknowledgements the views expressed in this article are our own and not an official position of the institution or funder. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution c.k. is the first author who conceptualised the research article, conducted literature review, handled data collection and analysis and wrote the article and was completed under the guidance of m.n.m. references ayer, n., 2010, ‘learning from mentors: perspectives of south african entrepreneurs’, unpublished master’s dissertation, university of pretoria, pretoria. barnir, a., watson, w.e. & hutchins, h.m., 2011, ‘mediation and moderated mediation in the relationship among role models, self-efficacy, entrepreneurial career intention, and gender’, journal of applied social psychology 41(2), 270–297. https://doi.org/10.1111/j.1559-1816.2010.00713.x barrett, r., 2006, ‘small business learning through mentoring: evaluating a project’, education + training 48(8/9), 614–616. https://doi.org/10.1108/00400910610710047 bayron, c.e., 2013, ‘social cognitive theory, entrepreneurial self-efficacy and entrepreneurial intentions: tools to maximize the effectiveness of formal entrepreneurship education and address the decline in entrepreneurial activity’, griot 6(1), 66–77. beavers, a.s., lounsbury, j.w., richards, j.k., huck, s.w., skolits, g.j. & esquivel, s.l., 2013, ‘practical considerations for using exploratory factor analysis in educational research practical assessment’, research & evaluation 18(6), 1–13. botha, m. & esterhuyzen, e., 2012, ‘the perceived capabilities and willingness of south african small business owners to act as business mentors’, african journal of business management 11(4), 12101–12113. brien, e.o. & hamburg, i., 2014, ‘supporting sustainable strategies for smes through training, cooperation and mentoring’, higher education studies 4(2), 61–69. https://doi.org/10.5539/hes.v4n2p61 bryman, a. & bell, e., 2015, business research methods, 4th edn., oxford university press, oxford, united kingdom. cline, m., 2011, ‘paying it forward: the relationship between mentoring and perceived ese of jewish south african entrepreneurs’, unpublished master’s dissertation, university of witwatersrand, johannesburg. cooper, d.r. & schindler, p.s., 2011, business research methods, 11th edn., mcgraw-hill, new york. davies, c., 2017, ‘formal mentorship and entrepreneurial learning the case of a support programme in the western cape clothing sector’, unpublished master’s dissertation, university of the western cape, western cape. gwija, s.a., eresia-eke, c. & iwu, c., 2014, ‘assessing the impact of support structures and initiatives to youth entrepreneurship development in a selected township in the western cape province of south africa’, mediterranean journal of social sciences, viewed 05 november 2014, from http://www.mcser.org/journal/index.php/mjss/rt/printerfriendly/1879/0 han, l., benson, a. chen, j.j. & zhang, s., 2014, ‘the use and impacts of bank support on uk small and medium-sized enterprises’, international small business journal 32(1), 61–80. https://doi.org/10.1177/0266242612455008 harinie, l.t., sudiro, a., rahayu, m. & fatchan, a., 2017, ‘study of the bandura’s social cognitive learning theory for the entrepreneurship learning process’, social sciences 6(1), 1–6. https://doi.org/10.11648/j.ss.20170601.11 herrington, m. & kew, j., 2015/2016, gem south african report 20 years of democracy, viewed 20 january 2017, from http://ideate.co.za/wp-content/uploads/2016/05/gem-south-africa-2015-2016-report.pdf kamyabi, y. & devi, s., 2011, ‘use of professional accountants’ advisory services and its impact on sme performance in an emerging economy: a resource-based view’, journal of management and sustainability 1(1), 43–55. https://doi.org/10.5539/jms.v1n1p43 koopman, r.g.m., 2013, ‘coaching and mentoring entrepreneurs: more definitions won’t work’, in rent xxvii-research in entrepreneurship and small business 2013: entrepreneurship, institutions and competitiveness, viewed 22 january 2015, from https://ris.utwente.nl/ws/portalfiles/portal/13051070 kram, k.e., 1983, ‘phases of the mentor relationship’, academy of management journal 26, 608–625. https://doi.org/10.2307/255910 kyrgidou, l.p. & petridou, e., 2013, ‘developing women entrepreneurs’ knowledge, skills and attitudes through e-mentoring support’, journal of small business and enterprise development 20(3), 548–566. https://doi.org/10.1108/jsbed-04-2013-0061 laukhuf, r.l. & malone, t.a., 2015, ‘women entrepreneurs need mentors’, international journal of evidence based coaching and mentoring 13(1), 70–86, viewed 18 august 2015, from http://www.business.brookes.ac.uk/research/areas/coachingandmentoring lawless, m., 2009, ‘the influence of life coaching on entrepreneurs’ goal planning and attainment’, unpublished master’s dissertation, waterford institute of technology, waterford, ireland. lee, g.j., 2015, business statistics made easy in sas, 1st edn., silk route press, randtjiesfontein, south africa. leedy, p.d. & ormrod, j.e., 2013, practical research planning and design, 10th edn., pearson, boston, ma. leidenfrost, b., strassnig, b., schütz, m., carbon, c.c. & schabmann, a., 2014, ‘the impact of peer mentoring on mentee academic performance: is any mentoring style better than no mentoring at all?’, international journal of teaching and learning in higher education 26(1), 102–111. radu lefebvre, m. & redien collot, r., 2013, ‘“how to do things with words”: the discursive dimension of experiential learning in entrepreneurial mentoring dyads’, journal of small business management 51(3), 370–393. https://doi.org/10.1111/jsbm.12022 makhado, a.e., 2015, ‘the effectiveness of mentorship programme of mogale city local municipality for small, medium and micro enterprises’, unpublished master’s dissertation, university of pretoria, pretoria. makin, l., 2012, the benefits of business mentoring to business owners of established small businesses in the united kingdom (research findings summary report), viewed 22 january 2016, from http://makinithappen.co.uk/research.html martin, r.l., 2008, ‘an investigation into the knowledge requirements for entrepreneur and small business support practitioners’, unpublished doctoral thesis, university of pretoria, pretoria. matabooe, m.j., venter, e. & rootman, c., 2016, ‘understanding relational conditions necessary for effective mentoring of black-owned small businesses: a south african perspective’, acta commercii-independent journal in the management sciences 16(1), 1–11. https://doi.org/10.4102/ac.v16i1.327 mckevitt, d. & marshall, d., 2015, ‘the legitimacy of entrepreneurial mentoring’, international journal of entrepreneurial behaviour & research 21(2), 263–280. https://doi.org/10.1108/ijebr-05-2014-0089 mejia, j. & gopal, a., 2015, now and later? mentorship, investor ties and new venture performance in entrepreneurial seed-accelerators, working paper, robert h. smith school of business, university of maryland. memon, j., rozan, m.z.a., ismail, k., uddin, m. & daud, d., 2015, ‘mentoring an entrepreneur: guide for a mentor’, sage open 5(1), 1–10. https://doi.org/10.1177/2158244015569666 mills, j., barakat, s. & vyakarnam, s., 2013, ‘impact of mentoring and peer-learning within a global entrepreneurship programme’, unpublished paper delivered at the conference of the institute for small business and entrepreneurship (isbe 2013), viewed 30 july 2015, from http://www.academia.edu/3272663/impact_of_mentoring_and_peer-learning_within_a_global_entrepreneurship_programme moulson, n., 2015, ‘how millennial generation entrepreneurs use mentors to improve business performance’, doctoral dissertation, walden university. nicoleta, g. & chioncel, c.p., 2014, ‘the role of mentoring in entrepreneurship training premio case study’, unpublished paper delivered to the 17th national conference on electrical drives (cnae 2014), viewed 07 august 2015, from http://anale-ing.uem.ro/2014/331.pdf nieman, g.h. & nieuwenhuizen, c., 2009, entrepreneurship: a south african perspective, 2nd edn., van schaik, pretoria. poulsen, k.m., 2013, ‘mentoring programmes: learning opportunities for mentees, for mentors, for organisations and for society’, industrial and commercial training 45(5), 255–263. https://doi.org/10.1108/ict-03-2013-0016 purcell, g., 2013, ‘entrepreneurial assistance across the ocean: an examination of the effectiveness of international mentoring as a support service for entrepreneurs in samoa: a thesis presented in partial fulfilment of the requirements for the degree of master of philosophy in development studies at massey university, palmerston north, new zealand’, doctoral dissertation, massey university. republic of south africa, 1996, national small business act of 1996, viewed 21 march 2015, from https://www.thedti.gov.za/sme_development/docs/act.pdf rigg, c. & o’dwyer, b., 2012, ‘becoming an entrepreneur: researching the role of mentors in identity construction’, education + training 54(4), 319–329. https://doi.org/10.1108/00400911211236181 schlosser, f., 2012, ‘taking an active approach in entrepreneurial mentoring programmes geared towards immigrants’, journal of entrepreneurship 21(2), 201–221. https://doi.org/10.1177/0971355712449411 sijde, p. & weijman, g., 2013, ‘benefits and impact of mentoring for entrepreneurs: the entrepreneur’s perspective’, international journal of human resource studies 3(4), 194–204. https://doi.org/10.5296/ijhrs.v3i4.4581 stavropoulou, o. & protopapa, s., 2013, ‘a strengths-based approach to mentoring women entrepreneurs: how to free the strengths within them’, journal of innovation and entrepreneurship 2(13), 1–10. https://doi.org/10.1186/2192-5372-2-13 steele, p.k., 2016, effective general entrepreneurial learning programs for sme development, capstone collection, paper 2903, viewed 12 november 2016, from http://digitalcollections.sit.edu/capstones st-jean, e. & audet, j., 2009, ‘factors leading to satisfaction in a mentoring scheme for novice entrepreneurs’, international journal of evidence based coaching and mentoring 7(1), 148–161. st-jean, e. & audet, j., 2012, ‘the role of mentoring in the learning development of the novice entrepreneur’, international entrepreneurship and management journal 8(1), 119–140. https://doi.org/10.1007/s11365-009-0130-7 swanepoel, e., strydom, j.w. & nieuwenhuizen, c., 2010, ‘an empirical analysis of a private company’s corporate social investment in smme development in south africa’, south african business review 14(1), 58–78. timmons, j.a. & spinelli, j., 2009, new venture creation: entrepreneurship for the 21st century, 8th edn., mcgraw-hill irwin press, new york. triodos facet, b.v., 2011, lessons on virtual business incubation services, information for development program, world bank, the netherlands. van auken, h. & carraher, s., 2013, ‘influences on frequency of preparation of financial statements among smes’, journal of innovation management 1(1), 143–157. watson, g.e.h., 2004, ‘a situational analysis of entrepreneurship mentors in south africa’, unpublished master’s thesis, university of south africa, pretoria. abstract introduction literature review methodology discussion of the findings conclusion limitations recommendations for future research acknowledgements references about the author(s) melodi botha department of business management, university of pretoria, pretoria, south africa tom j. carruthers department of business management, university of pretoria, pretoria, south africa marc w. venter department of business management, university of pretoria, pretoria, south africa citation botha, m., carruthers, t.j. & venter, m.w., 2019, ‘the relationship between entrepreneurial competencies and the recurring entrepreneurial intention and action of existing entrepreneurs’, southern african journal of entrepreneurship and small business management 11(1), a214. https://doi.org/10.4102/sajesbm.v11i1.191 original research the relationship between entrepreneurial competencies and the recurring entrepreneurial intention and action of existing entrepreneurs melodi botha, tom j. carruthers, marc w. venter received: 09 may 2018; accepted: 14 feb. 2019; published: 23 may 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: many scholars focus their research efforts on the entrepreneurial intention of students and non-entrepreneurs, yet most of these scholars found empirical evidence that intention does not necessarily lead these individuals to start businesses (entrepreneurial action). possible explanations for this could be that: (1) previous studies focused on the wrong samples; (2) they measured entrepreneurial intention as a single construct; and (3) there is a missing link between intention and action. aim: to address these gaps, we determine the relationship between recurring entrepreneurial intention attitudes and action as well as entrepreneurial intention behaviours and action of 154 existing entrepreneurs in south africa. by focusing on a sample of existing entrepreneurs who have already started a business, we shed light on the set of entrepreneurial competencies as a missing link between intention and action. this article is of academic importance as it focuses on the recurring process that entrepreneurs follow instead of the initial intention that is often overemphasised in literature. as far as could be determined, no other studies have investigated the relationships between entrepreneurial competencies, recurring entrepreneurial intention attitudes, recurring entrepreneurial intention behaviours and recurring entrepreneurial action. setting: the research was conducted on 154 existing entrepreneurs in south africa. methods: a self-administered survey was used and the findings indicate that entrepreneurial competencies have a positive relationship with recurring entrepreneurial action, recurring entrepreneurial intention behaviours and recurring entrepreneurial intention attitudes. results: there was no significant relationship between entrepreneurial action and recurring entrepreneurial intention behaviours. this is an unexpected finding as a positive relationship was expected for a sample that had prior entrepreneurial experience and already engaged in prior behaviours. however, this study contributes to the entrepreneurial intention–action literature by suggesting that existing entrepreneurs with recurring intention should also be measured in these relationships, in comparison to other research that mainly focused on the intentions of students and non-entrepreneurs. conclusion: the practical contribution of this article is in the identification of specific entrepreneurial competencies, such as creative problem-solving, opportunity recognition and value creation that existing entrepreneurs relied on the most when engaging in entrepreneurial action. potential, nascent, existing and serial entrepreneurs could focus on these competencies if they wish to engage in entrepreneurial action as well as recurring entrepreneurship. keywords: entrepreneurial competencies; recurring entrepreneurial intention behaviours; recurring entrepreneurial intention attitudes; recurring entrepreneurial action; survey; south africa. introduction intentions are indicators of the degree to which individuals are willing to put in an effort to perform a specific behaviour (ajzen 1991:181); more specifically, entrepreneurial intentions have been found to mediate the behaviours of an entrepreneur to start a business (kautonen, gelderen and fink 2015:657). thompson (2009) defines entrepreneurial intention as the self-acknowledged belief that an individual will start a new business in future. however, herrington, kew and mwanga (2017) point out that the entrepreneurial intention rate of 10.1% in south africa is considerably lower than that of other african countries and almost half when compared to developed countries. although numerous studies have been conducted on the determinants of entrepreneurial intention (choo & wong 2006:47–64; mitchell et al. 2000:974–993; schlaegel & koenig 2014:291–332), limited research exists regarding the behaviours that lead to entrepreneurial action. segal, borgia and schoenfeld (2005:52) agree that often the intention is there for individuals to become entrepreneurs; yet it is by no means true that action will automatically follow on from this intention (fayolle & degeorge 2006:78). nabi, walmsley and holden (2013:2) and smith and beasley (2011:725) concur and state that students’ ratings of intention towards self-employment and actual business start-up (action) are not aligned. in most of these previous works, entrepreneurial intention was treated and measured as a single construct (fayolle & degeorge 2006; thompson 2009); intention attitudes and behaviours were not measured. furthermore, previous research on entrepreneurial intention has mainly focused on measuring the entrepreneurial intentions of students (nabi et al. 2013; smith and beasley 2011) and non-entrepreneurs such as managers (thompson 2009). could it be that we have been focusing on the wrong sample when measuring entrepreneurial intention and action? in early years, macmillan (1986:241) determined that for scholars to really learn about entrepreneurship, they need to study entrepreneurs who engage in recurring entrepreneurship, for example when existing entrepreneurs start another business. it was found that recurring entrepreneurs measured much higher in certain characteristics compared to those who only started one business (boyatzis 1982:139; carland, carland & stewart jr 2000:15). at the same time, scott and rosa (1996:86) suggested that researchers should study recurring entrepreneurs because they are a core part of understanding the entrepreneurial process. westhead, ucbasaran and wright (2005) agree that there is a need to learn from the previous independent business ownership experiences of existing and serial entrepreneurs. one way of doing this is by studying existing entrepreneurs with the intention of starting another business and measuring the relationship between recurring intention and action. entrepreneurial action is defined as the process of bringing together actions that are continuous and interdependent into sequences that produce sensible results (weick 1979:3). the two action models this article incorporates are the rubicon model of action (rma) and the action regulation theory (art) (frese & zapf 1994:271–340; gollwitzer 1990:53–92). the art includes antecedents of action: (1) the goal (intention of the individual); (2) action knowledge (to practically apply competencies such as opportunity recognition, networking and resource leveraging); and (3) self-efficacy (one’s belief in his or her competencies) (frese & zapf 1994:273–278). the art and personality theory suggest that the missing link between intention and action might be entrepreneurial competencies, as they are important for businesses to succeed (morris et al. 2013b:354). although various competencies are mentioned in the literature, morris et al. (2013b:362) were able to identify specific competencies that were important for entrepreneurial action. these competencies are consistent with those described in other research (duckworth & quinn 2009:167; liñán, rodríguez-cohard & rueda-cantuche 2011:214; morris et al. 2013b:357; tang, kacmar & busenitz 2012:82). for the purpose of this article, seven of the entrepreneurial competencies as identified by morris kuratko and cornwall (2013a), morris et al. (2013b) were tested as a set. zahra, nielsen and bogner (1999:175) are of the opinion that the competencies of existing entrepreneurs who have recurring entrepreneurial intentions or who have taken recurring actions may have developed over time, potentially through the experience of operating their first business. in this article, three research problems have been identified. firstly, as there is often the intention to start a business, but action does not necessarily follow from the intention (segal et al. 2005:52; shane, locke & collins 2003:271), it might be that students, non-entrepreneurs and potential entrepreneurs are not the samples that should be focused on when investigating the intention–action relationship. furthermore, most of the previous studies measured entrepreneurial intention as a single construct with items testing entrepreneurial intention attitudes. in this article we measure entrepreneurial intention by testing both entrepreneurial intention attitudes as well as entrepreneurial intention behaviours. lastly, as far as could be determined, no studies have investigated the relationships between entrepreneurial competencies, recurring entrepreneurial intention and recurring entrepreneurial action of existing entrepreneurs. morris et al. (2013a:352–369) investigated the role of competencies but did not specifically focus on recurring entrepreneurial intention and recurring entrepreneurial action. we address these problems by investigating the following research objectives: to determine the relationship between recurring entrepreneurial intention (attitudes and behaviours) and recurring entrepreneurial action of existing entrepreneurs to determine the relationship between entrepreneurial competencies and recurring entrepreneurial intention (attitudes and behaviours) of existing entrepreneurs to determine the relationship between entrepreneurial competencies and recurring entrepreneurial action of existing entrepreneurs to determine which entrepreneurial competencies the existing entrepreneurs relied on the most when engaging in recurring entrepreneurial action. this article makes several contributions. it contributes to the entrepreneurial intention–action literature by investigating more complex relationships between recurring intention (attitudes and behaviours) and action. this article highlights that students or novice entrepreneurs are not necessarily the only samples that should be focused on when measuring entrepreneurial intention–action relationships, and it sheds light on understanding these relationships from an existing entrepreneur sample that has already taken the leap towards entrepreneurial action. in this article we argue that it might be worth focusing on recurring entrepreneurs, as their entrepreneurial experience can teach us which competencies we should rely on when engaging in entrepreneurial action. the article contributes to entrepreneurial intention as a construct by measuring both entrepreneurial intention attitudes as well as entrepreneurial intention behaviours. by doing so we can test the individual relationships of recurring entrepreneurial intention attitudes and recurring entrepreneurial intention behaviours with recurring action. in fact we did find that a positive relationship exists between recurring entrepreneurial intention attitudes and recurring action but not between recurring entrepreneurial intention behaviours and recurring action. this study suggests that future studies on entrepreneurial intention should measure this construct by testing attitudes and behaviours separately. this study contributes to entrepreneurial education research by further testing the competencies that are identified by morris et al. (2013b:352–369) but in a recurring developing country entrepreneurship context. most of the research on entrepreneurial competencies is conducted in developed countries (morris et al. 2013a, 2013b; liñán et al. 2011), and we answer the call for more entrepreneurship research in an african context (george et al. 2016). lastly, the necessary entrepreneurial competencies for recurring entrepreneurial action that existing entrepreneurs rely on are identified, providing a more conclusive understanding of which entrepreneurial competencies are necessary for recurring entrepreneurs. identifying and measuring entrepreneurial competencies have valued consequences for the advancement of entrepreneurial education and improvement of the practice of entrepreneurship (morris et al. 2013b:353). this article is structured as follows: a literature review that is focused on entrepreneurial intention and recurring intention as well as associated frameworks, entrepreneurial action (and recurring action) and entrepreneurial competencies. hypotheses are formulated based on previous literature. this is followed by a discussion of the methodology conducted for the study. the article then reports on the study’s findings, followed by a final discussion of those results and a conclusion. literature review recurring entrepreneurial intention entrepreneurial intention has been an important area for researchers and studies (shapero & sokol 1982:72–90), and several studies have incorporated the theory of planned behaviours (tpb) into different events for predicting intentions and behaviours(al-debei, al-lozi & papazafeiropoulou 2013:43–54; francis et al. 2004). the tpb seeks to explain which factors (motivational and ability) influence an individual’s behaviours. the other main theory for predicting entrepreneurial intentions is the entrepreneurial event model (eem) (see figure 1), which correlates highly with tpb (ajzen 1991:179–211; shapero & sokol 1982:72–90). in this article the antecedents of the tpb and eem on entrepreneurial intention are used as the underlying framework that will influence the intention–action relationship. among the more important variables of these theories are the perceived behavioural control (pbc) and the perceived feasibility of the individual. this is the belief that the individual has in his or her own abilities to perform a certain behaviour (ajzen 1991:185; krueger, reilly & carsrud 2000:149), and our contention in this article is that this behaviour can be measured as one of the entrepreneurial intention constructs, in particular, entrepreneurial intention behaviours. perceived behavioural control and perceived feasibility are often compared, while social norms and the attitude towards the behaviours are similar to perceived desirability (krueger et al. 2000:419). this attitude towards behaviours is the positive or negative view the individual has of becoming an entrepreneur (ajzen 1991:182–188). often a change in attitude is significant in changing behaviours and intentions and can have an influence on subsequent entrepreneurial activities (krueger et al. 2000:414). we agree with these scholars that attitudes can be considered a significant determinant for influencing behavioural intentions (boyd & vozikis 1994:64). when explaining the similarity between pbc, perceived feasibility and self-efficacy, rodrâiguez-cohard and rueda-cantuche (2011:199) stated that ‘[i]n all three instances, the important thing is the sense of capacity regarding the fulfilment of firm creation behaviours’. figure 1: the theory of planned behaviour and entrepreneurial event model influences on entrepreneurial intention and action. a recurring entrepreneur can be defined as an entrepreneur who through previous experiences of business has gathered the necessary information to enable him or her to effectively identify opportunities and be able to learn from the mistakes of previous business experience (westhead et al. 2005:396). these opportunities could be to start another business (recurring entrepreneurial action) or to develop new areas within an existing business. at the same time the terms ‘recurring’ and ‘serial’ entrepreneurs, referring to those who start multiple businesses, are often used interchangeably. the importance of studying serial entrepreneurs is emphasised by simmons et al. (2016:606), who suggest that the experience that an entrepreneur gains from starting and running a business influences the future behaviours of the entrepreneur. as far as can be determined, no other studies have incorporated the full tpb or eem when predicting recurring entrepreneurial intention. there is, however, evidence of studies that draw on certain variables, such as self-efficacy and attitude influence from those theories (krueger et al. 2000:414). wood and bandura (1989:364–365) argue that people’s self-efficacy is easily influenced by previous experience and can affect and forecast succeeding motivation towards certain behaviours. in this article, these behaviours might be recurring entrepreneurial intention. we draw evidence from these studies that suggests that there is a positive relationship between prior entrepreneurial experience and self-efficacy and that the higher the entrepreneurial self-efficacy before exiting the business, the higher the subsequent entrepreneurial intention (hsu 2011:21; hsu, wiklund & cotton 2017:23). as prior entrepreneurial experience, self-efficacy and entrepreneurial intention are strongly correlated, it is our belief that the recurring entrepreneurial intention of existing entrepreneurs might be high because of their prior entrepreneurial experience and self-efficacy levels. recurring entrepreneurial action entrepreneurial action is the process of transitioning to business ownership and is often referred to as business start-up (jayawarna, rouse & macpherson 2014:286). mcmullen (2015:652) further goes on to say that entrepreneurial action is an entrepreneurial process involving numerous transactions and interactions with various stakeholders, each transaction involving an exchange between parties and entrepreneurial action of turning an idea into a viable product offering. most studies on entrepreneurship acknowledge that entrepreneurial action is a process rather than a single step (baron 2007:167; gartner 1985:697; gollwitzer 1990:55; kautonen et al., 2015:659; weick 1979). similarly, it is said that creating a new business involves multiple activities that are complex, interdependent and can be performed in any sequence (lichtenstein et al. 2007:239). accordingly, frese (2009:438) states that all definitions of entrepreneurship ultimately imply actions. some of the definitions are based on theoretical frameworks. one such framework is the rma proposed by gollwitzer (1990:53–92). this model seeks to explain actions as specific phases that start with one’s desire towards a behaviour before a goal is set and end with one’s evaluation of the achieved goal (gollwitzer 1990:55). action regulation theory is another framework that posits that action can progress from a goal to a plan, leading to execution and feedback. in this manner, it overlaps greatly with the rma. the first step in the process is goal development. like the rma, the goal starts out as a wish that the individual has and is pulled by the individual’s cognitive and motivational aspects. following this in the process is orientation, whereby the individual orientates himself or herself towards the goal, which is a novelty for him or her and the first level of analysing situational and object conditions. for this to happen, the individual will need the antecedents of action. the first is action knowledge, which is the knowledge a person, gained through competencies, has about the potential actions and the environment they act in. in other words, it refers to what they have to do to take action and how they practically apply the competencies to take action, for example being able to recognise a new opportunity and knowing how one should take advantage of that opportunity. the next antecedent is self-efficacy, which is mentioned previously as a determinant of entrepreneurial intention. the subsequent step in the process is plan generation and decision-making. a plan is usually developed before the action is performed and is also a known competency (anokhin, grichnik & hisrich 2008:130). lastly, the individual executes the action or behaviour (frese & zapf 1994:273–278). therefore competencies, specifically entrepreneurial competencies, are included and explored in the relationship with recurring entrepreneurial intention and recurring entrepreneurial action. while kautonen et al. (2015:660) suggest that entrepreneurial action does not follow entrepreneurial intention, at some point the entrepreneur must have taken action intentionally to start a business. in their study, kolvereid and isaksen (2006:873, 882) did not find support for the contention that intentions predicted entry into self-employment. however, they did find that the entrepreneurial process is in many cases an ongoing process. a study found that one in three entrepreneurs who stated they had recurring entrepreneurial intention when their business closed did own a business again in the following seven years (ucbasaran, westhead & wright 2009:107). evidence from guerrero and peña-legazkue (2018:1) states that more than 25% of entrepreneurs end up re-engaging in business creation after having previous business failures and then proceeding to start up a new business. further, they proposed that increased levels of entrepreneurial experience leads to a greater chance of becoming a serial entrepreneur (stam & schutjens 2006:7, 11). the relationship between recurring entrepreneurial intention and action because there will always be some level of intention that precedes action, it is important to show the correlations between the intention and action models (kautonen et al. 2015:660). the rma links with the tpb and the eem in the sense that the pre-actional phase is the intention to engage in a behaviour, and the actional phase links with entrepreneurial action by actually performing the behaviours that were intended. thus, in the pre-actional phase it is said that one must plan to start taking action (gollwitzer 1990:57). the rma state that when entrepreneurial implementation difficulties arise, people become concerned about how to achieve the intended goal and consider giving up on it. furthermore, the model suggests that intention becomes action when the commitment towards the goal is strong. wright, robbie and ennew (1997:252) point out that entrepreneurs do not stop and that they continue the process of entrepreneurship over many years. the tpb states that it should be expected that intentions will impact action to the degree that the individual possesses behavioural control (skills), and performing an action should increase the behavioural control. further, the model states that self-efficacy with intention directly predicts action (ajzen 1991:181–196). in their study, bagozzi, baumgartner and yi (1989:44, 59) claim that the best predictor of planned behaviour (action) is intention, which they found significant support for using multiple studies. lastly, incorporating the tpb in their study, krueger et al. (2000:414) state that a strong entrepreneurial intention should produce an attempt to start a business. the tpb suggests that a person’s intention is based on his or her potential behaviour, which in turn can be influenced by the attitudes a person has (kautonen et al. 2015:658). therefore when measuring intention (refer to figure 2) in this article, we distinguish between entrepreneurial intention attitudes and entrepreneurial intention behaviours. figure 2: the relationship between recurring entrepreneurial intention and recurring entrepreneurial action. entrepreneurial intention attitudes can be described as the way an individual feels towards the work, risk, independence and income from being self-employed (douglas & shepherd 2002:82). by contrast, entrepreneurial intention behaviours can be described as independent thinking, risk-taking and radical thinking (eroglu & piçak 2011:146). it is important to distinguish between feelings and thinking when measuring an individual’s entrepreneurial intention. thinking, which is described as intentional behaviour, is a prerequisite for entrepreneurial action to occur. based on the discussion above we assume that if an entrepreneur has recurring entrepreneurial intention attitudes and behaviours it most probably will lead to recurring entrepreneurial action. figure 2 suggests how recurring entrepreneurial intention and its antecedents influence recurring entrepreneurial action. thus, on the evidence provided by the literature, we propose the following hypotheses: h1a: there is a positive relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action. h1b: there is a positive relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action. entrepreneurial competencies entrepreneurial competencies as defined by ahmad (2007:22) are the ‘individual characteristics that include both attributes and behaviours, enabling the entrepreneur to achieve and maintain business success’. anokhin et al. (2008:126) found that entrepreneurs with higher levels of general skills, such as communication skills and networking, are more likely to start multiple businesses. this is supported by the personality theory, as it considers the motivations and traits of an entrepreneur holds (robinson et al. 1991:14). boyatzis (2008:10) and mischel (1973:267) made important breakthroughs in personality theory research and determined that looking at competencies as opposed to the traditional traits and motivations was a far better method for assessing an individual’s likelihood of success than solely looking at their personality. as entrepreneurial competencies are comprised of opportunity identification, networking skills and risk-taking propensity this makes the business and entrepreneur more adaptable to environmental changes, consumer preferences, technological developments and competitor moves (kellermanns et al. 2008:5). brandstätter (2011:225–226) was able to confirm that many personality constructs and competencies were indeed directly linked to the intention that an entrepreneur had. for the purpose of this article, seven entrepreneurial competencies were included as a set of competencies, as they were identified as the ones that morris et al. (2013b:352–369) suggested would lead to entrepreneurial action. in another study, these same competencies were positively related to entrepreneurial intention (rodrâiguez-cohard & rueda-cantuche 2011:195–218). they are as follows: opportunity recognition: the ability to filter and refine information effectively and quickly in order to be able to respond to favourable circumstances that could result in a profitable outcome (wihler et al. 2017:1392–1393). perseverance: the cognitive ability or characteristic that enables individuals to continue their efforts and exhibit persistent behaviours to overcome setbacks, uncertainty and resistance (brinckmann and kim, 2015:155). problem-solving: as spivack, mckelvie and haynie (2014:661) point out, a major part of being an entrepreneur is being able to ‘accomplish opportunities’ that would not have come around were it not for problem-solving. resource leveraging: allowing entrepreneurs to access resources that are not theirs in order to achieve the goals of the organisation (morris et al. 2013a:47). value creation: lee and lee (2015:893) state that it is important that an entrepreneur be able to ‘harvest the value’ somewhere, in order to make the recurring process worthwhile and to actually create value. networking: (morris et al. 2013b:354) define networking as the interaction and social skills between individuals that allows for the establishment and development of relationships that help with the advancement of careers and work. self-efficacy: the ability to maintain a sense of self-confidence regarding one’s ability to accomplish a task or attain a level of performance (morris et al. 2013b:352). the relationship between entrepreneurial competencies and recurring entrepreneurial intention the preceding discussion confirms that self-efficacy and perceived behavioural control from the theory of planned behaviours and the entrepreneurial event model link competencies to entrepreneurial intention. from the personality theory, chell (2008:157) argues that competencies can be developed from experiences in the real world, such as previous entrepreneurial experience. this can also come from an entrepreneur’s personality traits, which are often relevant in being able to predict entrepreneurial intention (brandstätter 2011:222). a person’s personality can include various factors, which can encompass a person’s attitudes as well as their abilities or competencies (boyd & vozikis 1994:69). zahra et al. (1999:175) state that for further activities to be successful, there must be some form of competence development, and this development can often come through learning in a business (boyatzis 2008:10). previous research suggests that the experience an entrepreneur gains by starting and running a business will influence their future behavioural intention and attitudes (ucbasaran, westhead & wright 2008:169). figure 3 indicates the relationship between behaviours and attitudes of entrepreneurs and how certain competencies within this relationship influence the recurring entrepreneurial intention. it is expected that recurring entrepreneurs will draw upon their previous business experience; they will also exhibit more effective opportunity recognition and information search than start-up and novice entrepreneurs (westhead et al. 2005:398). this implies that superior entrepreneurial intention often leads to recurring entrepreneurial intention. figure 3: the relationship between entrepreneurial competencies and recurring entrepreneurial intention. thus, based on the evidence from the literature surrounding competencies and entrepreneurial intention, we hypothesise that: h2a: there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention behaviours. h2b: there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention attitudes. the relationship between entrepreneurial competencies and recurring entrepreneurial action action regulation theory suggests that the starting point of actions includes intentions, but to achieve action other action regulatory factors are necessary to translate intentions into actions (frese & zapf 1994:273). gielnik et al. (2015:69–94) used art to test whether training could increase the antecedents of individuals and whether those antecedents led to entrepreneurial action. to understand the set of competencies measured in this article, the relationship between each of the individual entrepreneurial competencies and entrepreneurial action is briefly discussed. opportunity recognition: pretorius and le roux (2011:1–13) suggest that even though entrepreneurs are engaged in an existing business they are still prepared to take action towards a new one by focusing on opportunity recognition. perseverance: if entrepreneurs persevere with their ventures, they are more likely to have confidence in their beliefs and the prospect of a new venture, compared to those entrepreneurs who do not persevere as confidently with a new venture (hayward et al. 2010:5). creative problem-solving: it is interesting that anokhin et al. (2008:139) note that in novice entrepreneurs, if their problem-solving is high, they are less likely to become recurring entrepreneurs. this is because they will have often invested their full commitment and are confident in their current strategy through problem-solving. contrastingly, if the entrepreneur’s problem-solving is high but still develops through their experience, the results may differ and recurring action may be taken (presutti, onetti & odorici 2008:14). value creation: in previous research, there was often a limitation on recurring entrepreneurs in terms of their value creation (alsos, kolvereid & isaksen 2006:47). this is because they have shared value creation priorities with their old and new businesses. this is important for this study as it contributes to supporting the theory that value creation is still important for recurring entrepreneurs, be it through the new or old business. resource leveraging: regarding resource leveraging, alsos et al. (2006:46) were able to determine that for new ventures, entrepreneurs who were taking recurring action were much more capable of obtaining resources compared to first-time entrepreneurs. networking: the competency of networking skills can be developed through education and practice such as a previous business venture. in support, smeltzer, van hook and hutt (1991:11) found that entrepreneurs’ access to networks is a significant factor in predicting new business ventures. most importantly, there is evidence that entrepreneurs who more frequently use networks regarding their business are more likely to engage in recurring entrepreneurship (wiklund & shepherd 2008:707). support for the relationship between the other five entrepreneurial competencies and recurring entrepreneurial action was also found and is briefly summarised. self-efficacy: experience in overcoming setbacks through continuous determination is required to increase one’s self-efficacy (wood & bandura 1989:364). as a result of the success in an activity and increased self-efficacy, individuals are more likely to engage in similar behaviours or activities (bandura 1991:257–259). in support, hsu (2011:21) found significant evidence for the relationship between entrepreneurial self-efficacy and subsequent entrepreneurial intention. furthermore, it is argued that a central part of self-efficacy is shaped by having successfully performed behaviours in the past (bandura 1977:194). segal et al. (2005:54) noted that through self-efficacy, recurring performance is more likely from an entrepreneur. this strength is determined by the goal’s desirability and feasibility (self-efficacy) (gollwitzer 1990:57). thus, self-efficacy influences both intentions and actions. finally, presutti et al. (2008:4) point out that for new businesses to be successful in taking action, the competencies that are present in recurring entrepreneurs are learnt from their previous ventures, which are vital. thus, based on this evidence, we hypothesise that: h3: there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial action. methodology research design and sampling the research design consisted of a quantitative approach whereby a structured research questionnaire (survey) was administered. the target population consisted of existing entrepreneurs who had started their own businesses and operated these businesses in south africa. herrington et al. (2017) define existing entrepreneurs as start-up (early stage) or established entrepreneurs who own a business venture (i.e., exploited an entrepreneurial opportunity), regardless of whether they are early-stage entrepreneurs or established entrepreneurs (who started a business many years ago). the study focused on the entrepreneurial competencies, recurring entrepreneurial intention and recurring entrepreneurial action, of individual entrepreneurs who had taken previous entrepreneurial action, thus the individual entrepreneurs were the units of analysis. sampling method, selection criteria and sample size this study made use of a non-probability, convenience sampling method in which respondents were chosen based on their convenience (cooper & schindler 2014:359). in order to achieve representivity, the following selection criteria were used to include the respondents in the sample: the respondents must be existing entrepreneurs (owning a business at the time of the research). the respondents could either be: early-stage or start-up entrepreneurs – owned a business for 3 years or less (herrington et al. 2017) established entrepreneurs – owned a business for 3 years or longer (herrington et al. 2017). the respondents must be business owners within the borders of south africa. the respondents could operate in any industry and in any of the nine provinces in south africa. as the emphasis of this study is on determining recurring intention and action, the respondents should have answered the screening question: have you taken any action to start another business? furthermore, the respondents for this study consisted of entrepreneurs with businesses that had available e-mails listed on south african business directories. these directories included the cylex business directory, brabys, yalwa, south african business directory, gauteng business directory and business directory. it was specified in the e-mail and consent form that the survey would be required to be completed by the owner of the business. this allowed contact with numerous respondents to increase the response rates for the survey, to compensate for the expected low response rate of e-mail surveys. an attempt was made to limit sample selection bias by sending e-mails to all those respondents with available e-mails and not specifically selecting which respondents to send the survey to (creswell & clark 2011:102). this study aimed to achieve a minimum sample size of 200 respondents, and therefore 260 surveys were distributed. the number of usable questionnaires was 154, and the response rate was 59%. data collection pretesting the pretesting of the data collection instrument was done in two phases. the first phase was a collaborative participant pretesting done with five participants who came from the target population of current entrepreneurs who had previously taken entrepreneurial action (cooper & schindler 2014). the second phase of pretesting was a time and survey method test. we tested the viability of our self-administered questionnaire, as well as the time taken to complete the questionnaire (cooper & schindler 2014). no substantial changes were needed for either phase of pretesting. data collection data was collected during september to november 2017. the predominant data collection method used (250 responses) was a self-administered internet survey that was hosted on qualtrics. the survey link was e-mailed to the respondents. internet survey was an appropriate choice of survey method as it allowed an increase in the volume of the responses received, as the respondents were otherwise inaccessible (cooper & schindler 2014:228). the second data collection method used was a self-administered intercept survey. the questionnaire was handed out to 10 respondents who were in close proximity and were listed in the previous directories. respondents were asked to fill in the questionnaire and have it ready for collection the following week. survey measures recurring entrepreneurial intention recurring entrepreneurial intention behaviours were measured using the scale developed by kautonen et al. (2015:681) using a five-point likert scale, which required respondents to rate three statements about themselves from 1 (strongly disagree) to 5 (strongly agree). recurring entrepreneurial intention attitudes were measured using a semantic differential scale rating six opposite word pairs from 1 to 7, such as ‘attractive’ and ‘unpleasant’, relating to intention. a high score on both scales indicates that the respondent has a strong intention to start another business as well as having positive attitudes towards the idea of starting another business. an averaging method was used to calculate the composite scores across the scale items. the cronbach’s alpha for recurring entrepreneurial intention behaviours was 0.95, and for recurring entrepreneurial attitudes the cronbach’s alpha was 0.96. these values indicate that there was acceptable internal consistency; they were in line with previous research conducted by kautonen et al. (2015:665). recurring entrepreneurial action recurring entrepreneurial action was measured with the scale used by kautonen et al. (2015:681). respondents were required to rate statements about starting another business from 1 (very little) to 5 (a great deal), with an option of 6 (don’t know). a high score on this scale indicated that the respondent had taken a great deal of recurring action. an averaging method was used to calculate the composite score across the scale items. the cronbach’s alpha for recurring entrepreneurial action was 0.88, which indicates that there was acceptable internal consistency, and this value is also in line with previous research conducted by kautonen et al. (2015:665). entrepreneurial competencies the seven independent competencies that were used were taken from the study by morris et al. (2013b:359). these authors determined the core list of entrepreneurial competencies by implementing a multi-round delphi technique. each of these competencies was also supported by using other scholars’ measuring scales, for example: opportunity recognition was measured using the scale as adapted by tang et al. (2012:82). perseverance was measured using the scales that were adapted by duckworth and quinn (2009:167) and hmieleski and corbett (2006:52). creative problem-solving was measured using the scales developed by hmieleski and corbett (2006:52) and zampetakis and moustakis (2006:418). resource leveraging was measured using scales by politis, winborg and dahlstrand (2012:667–668) and winborg and landström (2001:247). value creation was taken from the scale used by dyer, gregersen and christensen (2008:338). networking was measured by adapting the scale by forret and dougherty (2001:306–307). self-efficacy was taken from the scale used by liñán et al. (2011:214). the entrepreneurial competencies were all measured using a five-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). an averaging method was used to calculate the composite scores across each scale item. apart from resource leveraging, each entrepreneurial competency had a cronbach’s alpha value of above 0.7, which suggests acceptable internal consistency. with resource leveraging included, the cronbach’s alpha value across all the competencies was 0.934, which suggests acceptable internal consistency. findings demographic profile of respondents from the total sample of n = 154, 102 were male and 52 were female, which equated to the majority of the respondents being male (66%). the respondents held the following qualifications: 26.3% held a grade 12 certificate; 61.8% of respondents held a qualification above grade 12; 15.1% held an honours degree; 10.5% held a master’s degree; and 1.97% held a doctoral degree. further, the majority of the respondents had started two to three businesses (48%), where 9% of the respondents had between four and six businesses, and 7% of the respondents had started more than six businesses. the majority of the sample were serial entrepreneurs (64%), while 36% of the respondents had one business. the majority of the respondents were from pretoria (35.3%) and johannesburg (35.3%),whereas the rest of the candidates were from the other areas in south africa (22.66%), and 10 international candidates (6.66%) were surveyed. confirmation of the constructs overall, the perception of recurring entrepreneurial intention behaviours was lightly negative for entrepreneurs (mean [m] = 2.91, standard deviation [sd] =1.45). contrastingly, the data suggests that entrepreneur attitudes about recurring entrepreneurial intention were overall positive (m = 4.46, sd = 2.06). following this, the data suggests that recurring entrepreneurial action was slightly positive (m = 3.29, sd = 1.14). this means that on average entrepreneurs had taken a great deal of action in starting another business. furthermore, to determine which competencies the existing entrepreneurs relied on most when engaging in recurring action, we measured the composite scores of each individual competency as shown in table 1. it is evident that the existing entrepreneurs on average scored slightly positive on the set of entrepreneurial competencies that they possessed (m = 3.77, sd = 0.46). additionally, creative problem-solving, opportunity recognition and value creation were the strongest competencies possessed by the existing entrepreneurs. interestingly, perseverance had the lowest composite score (m = 3.618, sd = 0.635), and this could mean that the existing entrepreneurs relied heavily on their entrepreneurial experience and other competencies, such as creative problem-solving and so on, when engaging in recurring entrepreneurial action. table 1: the mean and standard deviation of each composite score for each competency. hypothesis tests test for hypothesis 1a the stated hypothesis was directional and was tested at a 5% level of significance, where α = 0.05. to test h1a(there is a positive relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action), the results of the kolmogorov–smirnov test indicated that there was not a normal distribution for recurring entrepreneurial intention behaviours (p = 0.0005), recurring entrepreneurial intention attitudes (p = 0.0005) and recurring entrepreneurial action (p = 0.033). the assumption of linearity was tested using a scatter plot. figure 4 confirms that there is a positive linear relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action (r2 = 0.084). figure 4: scatter plot showing the relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action. based on the results of these assumption tests, we made use of spearman’s rank-order correlation. table 2 presents spearman’s rank-order correlation for recurring entrepreneurial intention behaviours and recurring entrepreneurial action. table 2: results of spearman’s rank-order correlation. the p-value for recurring entrepreneurial action (p = 0.059) indicates that the null hypothesis is not rejected. this suggests that there is no relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action. tests for hypothesis 1b to test h1b (there is a positive relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action), figure 5 indicates that there is a positive linear relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action (r2 = 0.109). figure 5: scatter plot showing the relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action. table 3 shows the results for the spearman’s rank-order correlation (spearman’s rho) for recurring entrepreneurial intention attitudes and recurring entrepreneurial action. table 3: results of spearman’s rank-order correlation. the p-value for recurring entrepreneurial action (p = 0.002) indicates that the null hypothesis is rejected. this suggests that there is a positive relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action. test for hypothesis 2a to test h2a (there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention behaviours), a scatter plot is constructed in figure 6. the figure confirms that there is a positive linear relationship between recurring entrepreneurial intention behaviours and entrepreneurial competencies (r2 = 0.108). figure 6: scatter plot showing the relationship between recurring entrepreneurial intention behaviours and entrepreneurial competencies. table 4 shows the results of the spearman’s rank-order correlation for recurring entrepreneurial intention behaviours and entrepreneurial competencies. table 4: results of spearman’s rank-order correlation. tests for hypothesis 2b to test h2b (there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention attitudes), the scatter plot in figure 7 confirms that there is a positive linear relationship between recurring entrepreneurial intention attitudes and entrepreneurial competencies (r2 = 0.129). figure 7: scatter plot showing the relationship between recurring entrepreneurial intention attitudes and entrepreneurial competencies. table 5 indicates the results for the spearman’s rank-order correlation for recurring entrepreneurial intention attitudes and entrepreneurial competencies. table 5: results of spearman’s rank-order correlation. the p-value for entrepreneurial competencies (p = 0.001) indicates that there is a positive relationship between recurring entrepreneurial intention attitudes and entrepreneurial competencies. hypothesis 3 to test h3 (there is a positive relationship between entrepreneurial competencies and recurring entrepreneurial action), the scatter plot in figure 8 indicates that there is a positive linear relationship between recurring entrepreneurial action and entrepreneurial competencies (r2 = 0.146). figure 8: scatter plot showing the relationship between recurring entrepreneurial action and entrepreneurial competencies. the recurring entrepreneurial action and competencies were measured at an interval level where the appropriate parametric test would be pearson’s product–moment correlation. if the assumptions of this test cannot be satisfied, spearman’s rank-order correlation would be conducted as a non-parametric alternative (kotzé 2012:34). table 6 shows the results of the pearson’s product–moment correlation for recurring entrepreneurial action and entrepreneurial competencies. table 6: results of pearson’s product–moment correlation. the p-value for entrepreneurial competencies (p = 0.000) indicates that there is a positive relationship between recurring entrepreneurial action and entrepreneurial competencies. discussion of the findings the findings indicate that when measuring entrepreneurial intention, recurring entrepreneurial intention behaviours do not have a statistically significant relationship with recurring entrepreneurial action. therefore we cannot accept h1a(there is a positive relationship between recurring entrepreneurial intention behaviours and recurring entrepreneurial action). this finding is unexpected and contrasts with a certain number of the tpb models found in the literature, which indicate that behavioural intention is a result of attitudes around certain behaviours, in this case starting a business (ajzen 1991:181; boyd & vozikis 1994:64; krueger et al. 2000:414). yet it confirms the overall notion by other scholars such as fayolle and degeorge (2006:78), nabi et al. (2013:2) and smith and beasley (2011:725) that intentional behaviours do not necessarily lead to action, even for existing entrepreneurs. yet recurring entrepreneurial intention attitudes do have a statistically significant positive relationship with recurring entrepreneurial action, and we can accept h1b (there is a positive relationship between recurring entrepreneurial intention attitudes and recurring entrepreneurial action). the average for recurring entrepreneurial intention behaviours was slightly negative (m = 2.91, where the neutral value was 3), compared to the attitudes, which were overall positive (m = 4.46, where the neutral value was 4). thus, even though their attitudes may indicate that they intend to start another business, their actual behaviour related to starting the business is not as confounding. as anokhin et al. (2008:139) pointed out, if an entrepreneur encompasses a certain number of competencies, he or she is more likely to be successful in their first venture. hence, they may still have positive attitudes (higher perceived desirability) with regard to starting another business, but their current situation does not necessarily require them to have real behavioural intention (lower perceived feasibility) in this regard and consequently negates a need for the entrepreneurs to take further action (rodríguez-cohard & rueda-cantuche 2011:198–199). in terms of entrepreneurial competencies, there is a statistically significant positive relationship towards the behaviours and attitudes that entrepreneurs have related to recurring entrepreneurial intention. we can, therefore, accept both h2a(there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention behaviours) and h2b(there is a positive relationship between a set of entrepreneurial competencies and recurring entrepreneurial intention attitudes). because of the experience that entrepreneurs have gained from their previous entrepreneurial ventures, entrepreneurs have potentially seen development of their competencies (chell 2008:157). the success or failure of a previous business can also encourage recurring intention from the entrepreneur, depending on their enjoyment of success or desire to rectify a failure (bandura 1977:194; pretorius & le roux 2011:1–13). it is potentially these experiences from previous business ventures that support the result that competencies and recurring entrepreneurial intention have a positive relationship. finally, the findings also indicate that there is a positive relationship between recurring entrepreneurial action and entrepreneurial competencies, and we accept h3. as presutti et al. (2008:4) point out, the competencies that were learnt from previous business experience are vital for entrepreneurs to be successful in taking future action. the close association of growth and performance, which leads to economic development, can be attributed to entrepreneurial competencies and the various drivers that make up these entrepreneurial competencies (mitchelmore & rowley 2010:4). entrepreneurial competencies allow the emergence of a new venture by providing the ability to construct a set of resources that would be necessary to build a venture (danneels 2002:1095; rasmussen, mosey & wright 2014:6). having a competency such as self-efficacy allows entrepreneurs to persevere with an activity that non-entrepreneurs may struggle to pursue (bandura 2012:14). further, baron (2004:227) states that recurring entrepreneurs are often able to easily recognise opportunities that may at first seem like unrelated opportunities, but recurring entrepreneurs are able to convert these opportunities into valuable components of a business. from the preceding findings it is evident that entrepreneurial competencies play a significant role in the intention–action relationship. conclusion the main purpose of this article was to investigate that relationship that entrepreneurial competencies have with recurring entrepreneurial intention (attitudes and behaviours) and recurring entrepreneurial action. although other studies have focused on each of these constructs independently, as far as could be determined, no research had been conducted that investigated the relationship between all three of these constructs, especially recurring intention and action. this is important, as recurring entrepreneurs are a significant part in understanding the process that entrepreneurs undertake (scott & rosa 1996:86). furthermore, this article found that entrepreneurial competencies play a significant role in the recurring entrepreneurial intention and action that existing entrepreneurs face when looking at starting another business venture. the findings of this article advance that it is crucial to include the seven entrepreneurial competencies (opportunity recognition, perseverance, problem-solving, resource leveraging, value creation, networking and self-efficacy) in the relationship between recurring intention and action, as they can provide possible improvements to the practice of entrepreneurship and to the advancement of entrepreneurial education (morris et al. 2013b:353). the first contribution of this article is towards the entrepreneurial intention–action literature in the sense that recurring entrepreneurial intention (attitudes and behaviours) and recurring entrepreneurial action can be measured on existing entrepreneurs. previous literature indicated that there is a gap between intention and action and that entrepreneurial intention does not necessarily lead to action. however, previous intention research was conducted on student, potential, novice and non-entrepreneurs such as managers. it is our contention that we might have neglected some samples when measuring the intention–action relationships. by focusing on existing entrepreneurs, we were able to learn from a group that had already taken the leap towards intent and action or had taken that step again. we furthermore measured a set of competencies with recurring intention and action and found positive relationships between these constructs. by understanding which competencies existing entrepreneurs rely on the most when engaging in recurring action, educators and policymakers can ensure that these competencies are present and developed in start-up training and support programmes. the next contribution of this article is towards the construct of entrepreneurial intention. by measuring both entrepreneurial intention attitudes, as well as entrepreneurial intention behaviours in this article, we were able to test separately the individual relationships of recurring entrepreneurial intention attitudes and recurring entrepreneurial intention behaviours with recurring action. this article’s findings revealed that recurring entrepreneurial intention behaviours do not have a positive relationship with recurring action, and we confirmed that even for existing entrepreneurs intentional behaviours do not necessarily lead to action. entrepreneurial competencies might be the missing link between these constructs, as a positive relationship was found between both entrepreneurial intention attitudes, behaviours and competencies as well as entrepreneurial action and competencies. existing entrepreneurs with a recurring intention must focus on their commitment to taking action. although their attitudes may indicate that they have the intention to start a business, their behavioural intention to start another business is often not as strong. this can lead to a lack of focus for an entrepreneur, possibly on their current business, as they have their focus elsewhere. this can also apply to their potential new business, as they are not necessarily fully committed to making it happen. as alsos et al. (2006:47) point out, this ‘value creation’ can often be an issue for entrepreneurs, because by attempting to create value through numerous ventures, focus can be lost on their initial core business. this does not suggest that entrepreneurs cannot have intentions for new businesses; it rather points to the fact that they must ensure that attention is given to all ventures that are undertaken. thirdly, this study investigated the entrepreneurial competencies of existing entrepreneurs in a developing country context. most of the research on entrepreneurial competencies has been conducted in developed countries, and we answered the call for more entrepreneurship research in an african context. other developing countries with low entrepreneurial activity levels can learn from this article and also focus on existing entrepreneurs and encourage them to engage in recurring entrepreneurial action. at the same time, the competencies identified that were the most relied on by existing entrepreneurs could also be developed and enhanced in developed countries. finally, students, aspiring and novice entrepreneurs can use the finding in this article that the entrepreneurial competencies such as creative problem-solving, opportunity recognition and value creation should be developed if they wish to engage in entrepreneurial action. developing these competencies may provide increased performance in their current situation, as well as for the expansion of a new venture. limitations the major limitation of this study was the sampling method used. as only existing entrepreneurs were included in the measurement, it means that the results of this study cannot be generalised to the entire population (cooper & schindler 2014:358). there is also low external validity for the research when non-probability sampling is used (creswell & clark 2011:101). this study was also limited by the total number of respondents. this could be because of the data collection method used, as internet surveys have very low response rates (kotzé 2017). to counter this, a larger volume of e-mails should have been distributed to account for these anticipated low response and completion rates. the final limitation that could have occurred is response bias, and specifically unconscious misrepresentation. the respondents taking part in the study wanted to provide the truth, but the information that they provided may not have been completely reflective of the actual truth (university of pretoria 2016:2). the respondents may have believed they were answering the questions correctly but may have overor underestimated their competencies and intentions compared to their actual representation. however, this is a common problem in scientific research of this nature. recommendations for future research the first recommendation for future research could be to draw a comparison of competencies of existing entrepreneurs and those who are nascent entrepreneurs, or people who have no intention at all to become entrepreneurs. the differences in competency levels could further assist to determine the competencies that potential entrepreneurs will need to develop to become serial or recurring entrepreneurs. as we found a positive relationship between recurring entrepreneurial intention attitudes and recurring action but not between recurring entrepreneurial intention behaviours and recurring action, this study suggests that future studies on entrepreneurial intention should measure this construct by testing attitudes and behaviours separately. investigating the possibility of introducing demographic variables such as age, gender and level of education as mediators and moderators in the relationship between entrepreneurial intention behaviours and action could enhance this relationship. another potential recommendation for future research could be comparing the competencies of entrepreneurs depending on the number of businesses that they have owned. as anokhin et al. (2008:138) point out, if the entrepreneur has effective competencies, specifically problem-solving, during their first venture, it is unlikely that they will engage in recurring entrepreneurship because of their first venture having a higher likelihood of success. determining whether those entrepreneurs who have started one business have higher levels of the individual entrepreneurial competencies compared to those who have started multiple businesses could be an interesting area of future research. furthermore, the results of this study could be compared to research conducted in developed countries to study the recurring intention-action relationship of existing entrepreneurs. it would also be interesting to determine whether the competencies that entrepreneurs in developed countries rely on in this recurring relationship differ from the competencies found in this article for entrepreneurs in a developing country. the methodology and research design can also be improved in future research. firstly, depending on the target group, sampling could be done in a different manner and attempting to increase the sample size. if a research design is followed based on the previous recommendations, quota sampling could potentially be used as a sampling method. this would allow the researchers to select the correct number of grouping respondents in their study. furthermore, although internet surveys can provide volume, the response rates will still be low, so alternative data collection methods should be considered. conducting self-administered questionnaires may be a better solution for future researchers to reach their sample size. looking at the data collection instrument, it might be a good idea to make it shorter. to do this, future researchers could be more selective in the competencies that they choose to research or could reduce the number of items under each competency. this may assist in achieving a greater response rate. acknowledgements competing interests the authors have declared that no competing interests exist. author’s contributions t.c. and m.v. were bcom (hons) students and completed this research article as part of their studies. they collected the data and compiled the initial literature review. m.b. was their supervisor and completed and rewrote the article to get it into a publishable format. references ahmad, n.h., 2007, a cross cultural study of entrepreneurial competencies and entrepreneurial success in smes in australia and malaysia, pp. 1–323, university of adelaide, australia. ajzen, i., 1991, ‘the theory of planned behavior’, organizational behavior and human decision processes 50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-t al-debei, m.m., al-lozi, e. & papazafeiropoulou, a., 2013, ‘why people keep coming back to facebook: explaining and predicting continuance participation from an extended theory of planned behaviours perspective’, decision support systems 55(1), 43–54. https://doi.org/10.1016/j.dss.2012.12.032 alsos, g.a., kolvereid, l. & isaksen, e.j., 2006, ‘new business early performance: differences between firms started by novice, serial and portfolio entrepreneurs’, managing complexity and change in smes: frontiers in european research 35–49. anokhin, s., grichnik, d. & hisrich, r.d., 2008, ‘the journey from novice to serial entrepreneurship in china and germany: are the drivers the same?’, managing global transitions 6(2), 117–142. bagozzi, r.p., baumgartner, j. & yi, y., 1989, ‘an investigation into the role of intentions as mediators of the attitude-behavior relationship’, journal of economic psychology 10(1), 35–62. https://doi.org/10.1016/0167-4870(89)90056-1 bandura, a., 1977, ‘self-efficacy: toward a unifying theory of behavioral change’, psychological review 84(2), 191–251. https://doi.org/10.1037/0033-295x.84.2.191 bandura, a., 1991, ‘social cognitive theory of self-regulation’, organizational behavior and human decision processes 50(2), 248–287. https://doi.org/10.1016/0749-5978(91)90022-l bandura, a., 2012, ‘on the functional properties of perceived self-efficacy revisited’, journal of management 38(1), 9–44. https://doi.org/10.1177/0149206311410606 baron, r.a., 2004, ‘the cognitive perspective: a valuable tool for answering entrepreneurship’s basic “why” questions’, journal of business venturing 19(2), 221–239. https://doi.org/10.1016/s0883-9026(03)00008-9 baron, r.a., 2007, ‘behavioral and cognitive factors in entrepreneurship: entrepreneurs as the active element in new venture creation’, strategic entrepreneurship journal 1(1–2), 167–182. https://doi.org/10.1002/sej.12 boyatzis, r., 2008, ‘competencies in the 21st century’, journal of management development 27(1), 5–12. https://doi.org/10.1108/02621710810840730 boyatzis, r.e., 1982, the competent manager: a model for effective performance, john wiley, hoboken, nj. boyd, n.g. & vozikis, g.s., 1994, ‘the influence of self-efficacy on the development of entrepreneurial intentions and actions’, entrepreneurship theory and practice 18, 63–63. https://doi.org/10.1177/104225879401800404 brandstätter, h., 2011, ‘personality aspects of entrepreneurship: a look at five meta-analyses’, personality and individual differences 51(3), 222–230. https://doi.org/10.1016/j.paid.2010.07.007 brinckmann, j. & kim, s.m., 2015, ‘why we plan: the impact of nascent entrepreneurs’ cognitive characteristics and human capital on business planning’, strategic entrepreneurship journal 9(2), 153–166. https://doi.org/10.1002/sej.1197 carland, j.c., carland, j.w. & stewart, w.h., 2000, ‘the indefatigable entrepreneur: a study of the dispositions of multiple venture founders’, journal of business and entrepreneurship 12(1), 1–18. chell, e., 2008, the entrepreneurial personality: a social construction, routledge, hove. choo, s. & wong, m., 2006, ‘entrepreneurial intention: triggers and barriers to new venture creations in singapore’, singapore management review 28(2), 47. cooper, d.r. & schindler, p.s., 2014, business research methods, 12th edn., mcgraw-hill, singapore. creswell, j. & clark, v.p., 2011, collecting data in mixed methods research. designing and conducting mixed methods research, pp. 171–202, sage publications, thousand oaks, ca. danneels, e., 2002, ‘the dynamics of product innovation and firm competences’, strategic management journal 23(12), 1095–1121. https://doi.org/10.1002/smj.275 douglas, e.j. & shepherd, d.a., 2002, ‘self-employment as a career choice: attitudes, entrepreneurial intentions, and utility maximization’, entrepreneurship theory and practice 26(3), 81–90. https://doi.org/10.1177/104225870202600305 duckworth, a.l. & quinn, p.d., 2009, ‘development and validation of the short grit scale (grit-s)’, journal of personality assessment 91(2), 166–174. https://doi.org/10.1080/00223890802634290 dyer, j.h., gregersen, h.b. & christensen, c., 2008, ‘entrepreneur behaviors, opportunity recognition, and the origins of innovative ventures’, strategic entrepreneurship journal 2(4), 317–338. https://doi.org/10.1002/sej.59 eroglu, o. & piçak, m., 2011, ‘entrepreneurship, national culture and turkey’, international journal of business and social science 2(16), 146–151. fayolle, a. & degeorge, j.m. (eds.), 2006, ‘attitudes, intentions, and behaviours: new approaches to evaluating entrepreneurship education’, international entrepreneurship education: issues and newness, pp. 74–89, edward elgar publishing limited, cheltenham. https://doi.org/10.4337/9781847201652.00011 forret, m.l. & dougherty, t.w., 2001, ‘correlates of networking behavior for managerial and professional employees’, group & organization management 26(3), 283–311. https://doi.org/10.1177/1059601101263004 francis, j., eccles, m.p., johnston, m., walker, a., grimshaw, j., foy, r. et al., 2004, constructing questionnaires based on the theory of planned behaviours: a manual for health services researchers, viewed 04 march 2017, from http://openaccess.city.ac.uk/1735/1/tpb%20manual%20final%20may2004.pdf. frese, m., 2009, ‘towards a psychology of entrepreneurship: an action theory perspective’, foundations and trends in entrepreneurship 5(6), 437–496. https://doi.org/10.1561/0300000028 frese, m. & zapf, d., 1994, ‘action as the core of work psychology: a german approach’, in h.c. triandis, m.d. dunnette & l.m. hough (eds.), handbook of industrial and organizational psychology, 2nd edn., consulting psychologists press, palo alto, ca. gartner, w.b., 1985, ‘a conceptual framework for describing the phenomenon of new venture creation’, academy of management review 10(4), 696–706. https://doi.org/10.5465/amr.1985.4279094 george, g., corbishley, c., khayesi, j.n., haas, m.r. & tihanyi, l., 2016, ‘bringing africa in: promising directions for management research’, academy of management journal 59(2), 377–393. https://doi.org/10.5465/amj.2016.4002 guerrero, m. & peña-legazkue, i., 2018, ‘renascence after post-mortem: the choice of accelerated recurring entrepreneurship’, small business economics, pp. 1–19. gielnik, m.m., frese, m., kahara-kawuki, a., wasswa katono, i., kyejjusa, s., ngoma, m. et al., 2015, ‘action and action-regulation in entrepreneurship: evaluating a student training for promoting entrepreneurship’, academy of management learning & education 14(1), 69–94. https://doi.org/10.5465/amle.2012.0107 gollwitzer, p.m., 1990, ‘action phases and mind-sets’, handbook of motivation and cognition: foundations of social behavior 2, 53–92. hayward, m.l., forster, w.r., sarasvathy, s.d. & fredrickson, b.l., 2010, ‘beyond hubris: how highly confident entrepreneurs rebound to venture again’, journal of business venturing 25(6), 569–578. https://doi.org/10.1016/j.jbusvent.2009.03.002 herrington, m., kew, p. & mwanga, a., 2017, global entrepreneurship monitor (gem): can small businesses survive in south africa?, viewed 21 february 2018, from https://www.researchgate.net/profile/jacqui_kew/publication/317566088_gem_south_africa_2009_tracking_entrepreneurship/links/593ff940aca272876dc422d0/gem-south-africa-2009-tracking-entrepreneurship.pdf. hmieleski, k.m. & corbett, a.c., 2006, ‘proclivity for improvisation as a predictor of entrepreneurial intentions’, journal of small business management 44(1), 45–63. https://doi.org/10.1111/j.1540-627x.2006.00153.x hsu, d.k., 2011, toward a theory of serial entrepreneurship: decomposing entrepreneurial experience, pp. 73–76, syracuse university, syracuse, new york. hsu, d.k., wiklund, j. & cotton, r.d., 2017, ‘success, failure, and entrepreneurial reentry: an experimental assessment of the veracity of self-efficacy and prospect theory’, entrepreneurship theory and practice 41(1), 19–47. https://doi.org/10.1111/etap.12166 jayawarna, d., rouse, j. & macpherson, a., 2014, ‘life course pathways to business start-up’, entrepreneurship & regional development 26(3–4), 282–312. https://doi.org/10.1080/08985626.2014.901420 kautonen, t., gelderen, m. & fink, m., 2015, ‘robustness of the theory of planned behavior in predicting entrepreneurial intentions and actions’, entrepreneurship theory and practice 39(3), 655–674. https://doi.org/10.1111/etap.12056 kellermanns, f.w., eddleston, k.a., barnett, t. & pearson, a., 2008, ‘an exploratory study of family member characteristics and involvement: effects on entrepreneurial behavior in the family firm’, family business review 21(1), 1–14. https://doi.org/10.1111/j.1741-6248.2007.00107.x kolvereid, l. & isaksen, e., 2006, ‘new business start-up and subsequent entry into self-employment’, journal of business venturing 21(6), 866–885. https://doi.org/10.1016/j.jbusvent.2005.06.008 kotzé, t.g., 2012, spss workshop 2, department of marketing management, university of pretoria, pretoria, viewed 07 june 2017, from https://clickup.up.ac.za. kotzé, t.g., 2017, contact session 8 for nme 704: research methodology, slides presented to the nme 704 class on 2017-04-03, department of business management, university of pretoria, pretoria, viewed 17 june 2017, from https://clickup.up.ac.za. krueger, n.f., reilly, m.d. & carsrud, a.l., 2000, ‘competing models of entrepreneurial intentions’, journal of business venturing 15(5–6), 411–432. https://doi.org/10.1016/s0883-9026(98)00033-0 lee, s.m. & lee, b., 2015, ‘entrepreneur characteristics and the success of venture exit: an analysis of single-founder start-ups in the us’, international entrepreneurship and management journal 11(4), 891–905. https://doi.org/10.1007/s11365-014-0324-5 lichtenstein, b.b., carter, n.m., dooley, k.j. & gartner, w.b., 2007, ‘complexity dynamics of nascent entrepreneurship’, journal of business venturing 22(2), 236–261. https://doi.org/10.1016/j.jbusvent.2006.06.001 liñán, f., rodríguez-cohard, j.c. & rueda-cantuche, j.m., 2011, factors affecting entrepreneurial intention levels: a role for education’, international entrepreneurship and management journal 7(2), 195–218. https://doi.org/10.1007/s11365-010-0154-z macmillan, i.c., 1986, ‘executive forum: to really learn about entrepreneurship, let’s study habitual entrepreneurs’, journal of business venturing 1(3), 241–243. https://doi.org/10.1017/s1744137413000386 mcmullen, j.s., 2015, ‘entrepreneurial judgment as empathic accuracy: a sequential decision-making approach to entrepreneurial action’, journal of institutional economics 11(3), 651–681. https://doi.org/10.1017/s1744137413000386 miralles, f., giones, f. & riverola, c., 2016, ‘evaluating the impact of prior experience in entrepreneurial intention’, international entrepreneurship and management journal 12(3), 791–813. https://doi.org/10.1007/s11365-015-0365-4 mischel, w., 1973, ‘toward a cognitive social learning reconceptualization of personality’, psychological review 80(4), 252–283. https://doi.org/10.1037/h0035002 mitchell, r.k., smith, b., seawright, k.w. & morse, e.a., 2000, ‘cross-cultural cognitions and the venture creation decision’, academy of management journal 43(5), 974–993. mitchelmore, s. & rowley, j., 2010, ‘entrepreneurial competencies: a literature review and development agenda’, international journal of entrepreneurial behavior & research 16(2), 92–111. https://doi.org/10.1108/13552551011026995 morris, m.h., kuratko, d.f. & cornwall, j.r., 2013a, entrepreneurship programs and the modern university, edward elgar publishing, cheltenham. https://doi.org/10.4337/9781782544630 morris, m.h., webb, j.w., fu, j. & singhal, s., 2013b, ‘a competency-based perspective on entrepreneurship education: conceptual and empirical insights’, journal of small business management 51(3), 352–369. nabi, g., walmsley, a. & holden, r., 2015, ‘pushed or pulled? exploring the factors underpinning graduate start-ups and non-start-ups’, journal of education and work 28(5), 481–506. https://doi.org/10.1080/13639080.2013.805189 politis, d., winborg, j. & dahlstrand, a.l., 2012, ‘exploring the resource logic of student entrepreneurs’, international small business journal 30(6), 659–683. https://doi.org/10.1080/13639080.2013.805189 presutti, m., onetti, a. & odorici, v., 2008, serial entrepreneurship and born-global new ventures: a case study, viewed 09 june 2017, from https://ssrn.com/abstract=1145202. pretorius, m. & le roux, i., 2011, ‘successive failure, recurring entrepreneurship and no learning: a case study: original research’, sa journal of human resource management 9(1), 1–13. https://doi.org/10.4102/sajhrm.v9i1.236 rasmussen, e., mosey, s. & wright, m., 2011, ‘the evolution of entrepreneurial competencies: a longitudinal study of university spin-off venture emergence’, journal of management studies 48(6), 1314–1345. https://doi.org/10.1111/j.1467-6486.2010.00995.x robinson, p.b., stimpson, d.v., huefner, j.c. & hunt, h.k., 1991, ‘an attitude approach to the prediction of entrepreneurship’, entrepreneurship theory and practice 15(4), 13–31. https://doi.org/10.1177/104225879101500405 rodríguez-cohard, j.c. & rueda-cantuche, j.m., 2011, ‘factors affecting entrepreneurial intention levels: a role for education’, the international entrepreneurship and management journal 7(2), 195–218. https://doi.org/10.1007/s11365-010-0154-z schlaegel, c. & koenig, m., 2014, ‘determinants of entrepreneurial intent: a meta-analytic test and integration of competing models’, entrepreneurship theory and practice 38(2), 291–332. https://doi.org/10.1111/etap.12087 scott, m. & rosa, p., 1996, ‘opinion: has firm level analysis reached its limits? time for a rethink?’, international small business journal 14(4), 81–89. https://doi.org/10.1177/0266242696144006 segal, g., borgia, d. & schoenfeld, j., 2005, ‘the motivation to become an entrepreneur’, international journal of entrepreneurial behavior & research 11(1), 42–57. https://doi.org/10.1108/13552550510580834 shane, s., locke, e.a. & collins, c.j., 2003, ‘entrepreneurial motivation’, human resource management review 13(2), 257–279. https://doi.org/10.1016/s1053-4822(03)00017-2 shapero, a. & sokol, l., 1982, ‘social dimensions of entrepreneurship’, in c.a. kent, d.l. sexton & k.h. vesper (eds.), encyclopedia of entrepreneurship, prentice-hall, englewood cliffs, nj. simmons, s.a., carr, j.c., hsu, d.k. & shu, c., 2016, ‘the regulatory fit of serial entrepreneurship intentions’, applied psychology 65(3), 605–627. https://doi.org/10.1111/apps.12070 smeltzer, l.r., van hook, b.l. & hutt, r.w., 1991, ‘analysis of the use of advisors as information sources in venture startups’, journal of small business management 29(3), 10. smith, k. & beasley, m., 2011, ‘graduate entrepreneurs: intentions, barriers and solutions’, education and training 53(8/9), 722–740. https://doi.org/10.1108/00400911111185044 spivack, a.j., mckelvie, a. & haynie, j.m., 2014, ‘habitual entrepreneurs: possible cases of entrepreneurship addiction?’, journal of business venturing 29(5), 651–667. https://doi.org/10.1016/j.jbusvent.2013.11.002 stam, e. & schutjens, v., 2006, ‘starting anew: entrepreneurial intentions and realizations subsequent to business closure’, erasmus research institute of management, pp. 1–23. tang, j., kacmar, k.m. & busenitz, l., 2012, ‘entrepreneurial alertness in the pursuit of new opportunities’, journal of business venturing 27(1), 77–94. https://doi.org/10.1016/j.jbusvent.2010.07.001 thompson, e.r., 2009, ‘individual entrepreneurial intent: construct clarification and development of an internationally reliable metric’, entrepreneurship theory and practice 33(3), 669–694. https://doi.org/10.1111/j.1540-6520.2009.00321.x ucbasaran, d., westhead, p. & wright, m., 2008, ‘opportunity identification and pursuit: does an entrepreneur’s human capital matter?’, small business economics: an entrepreneurship journal 30(2), 153–173. ucbasaran, d., westhead, p. & wright, m., 2009, ‘the extent and nature of opportunity identification by experienced entrepreneurs’, journal of business venturing 24(2), 99–115. https://doi.org/10.1007/s11187-006-9020-3 university of pretoria, 2016, different forms of survey error, department of business management, university of pretoria, pretoria, viewed 07 june 2016, from https://clickup.up.ac.za. weick, k., 1979, the social psychology of organizing, 2nd edn., sage, thousand oaks, ca. westhead, p., ucbasaran, d. & wright, m., 2005, ‘decisions, actions, and performance: do novice, serial, and portfolio entrepreneurs differ?’, journal of small business management 43(4), 393–417. https://doi.org/10.1111/j.1540-627x.2005.00144.x wihler, a., blickle, g., ellen, b.p. iii, hochwarter, w.a. & ferris, g.r., 2017, ‘personal initiative and job performance evaluations: role of political skill in opportunity recognition and capitalization’, journal of management 43(5), 1388–1420. https://doi.org/10.1177/0149206314552451 wiklund, j. & shepherd, d.a., 2008, ‘portfolio entrepreneurship: habitual and novice founders, new entry, and mode of organizing’, entrepreneurship theory and practice 32(4), 701–725. https://doi.org/10.1111/j.1540-6520.2008.00249.x winborg, j. & landström, h., 2001, ‘financial bootstrapping in small businesses: examining small business managers’ resource acquisition behaviors’, journal of business venturing 16(3), 235–254. https://doi.org/10.1016/s0883-9026(99)00055-5 wood, r. & bandura, a., 1989, ‘social cognitive theory of organizational management’, the academy of management review 14(3), 361–384. https://doi.org/10.5465/amr.1989.4279067 wright, m., robbie, k. & ennew, c., 1997, ‘serial entrepreneurs’, british journal of management 8(3), 251–268. https://doi.org/10.1111/1467-8551.00064 zahra, s.a., nielsen, a.p. & bogner, w.c., 1999, ‘corporate entrepreneurship, knowledge, and competence development’, entrepreneurship theory and practice 23(3), 169–189. https://doi.org/10.1177/104225879902300310 zampetakis, l.a. & moustakis, v., 2006, ‘linking creativity with entrepreneurial intentions: a structural approach’, the international entrepreneurship and management journal 2(3), 413–428. abstract introduction literature review methodology findings discussion conclusion acknowledgements references about the author(s) andria c. du toit department of business management, university of pretoria, south africa marius pretorius department of business management, university of pretoria, south africa wesley rosslyn-smith department of business management, university of pretoria, south africa citation du toit, a.c., pretorius, m. & rosslyn-smith, w., 2019, ‘small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility’, southern african journal of entrepreneurship and small business management 11(1), a149. https://doi.org/10.4102/sajesbm.v11i1.149 original research small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility andria c. du toit, marius pretorius, wesley rosslyn-smith received: 01 aug. 2017; accepted: 06 sept. 2018; published: 24 jan. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurs often face distress in their businesses; as one way to address it, they can file for business rescue. the companies act 71 of 2008 requires the appointed business rescue practitioner (brp) to place before the court facts proving ‘reasonable prospect’. this often seems determined mainly by the subjective opinion of practitioners, who rely on their experience and knowledge in rescue and business management. this appears to be in direct contrast to the requirements for factual evidence set out by several court judgements. there are many questions surrounding the determination of reasonable prospect, as there seems to be no benchmark for entrepreneurs and brps to work towards or a prescribed process to be followed. aim: this article investigates different methods of factually determining reasonable prospect and guiding the decision-making process during the pre-filing and initial stages of the rescue of small, medium and micro-enterprises (smmes). setting: the study was conducted using south african case law and financial models relevant to smmes in south africa. methods: qualitative analysis of existing financial models and case law to better understand how brps determine initial reasonable prospect when working with smmes. results: the research report methods of determining financial distress and decline within the relevant case law. conclusion: reasonable prospect relies heavily on experience and opinion. factually proving reasonable prospect remains problematic because of information asymmetry and the lack of data integrity. affected parties (including entrepreneurs) could benefit from the insights obtained in this study. identifying methods that could assist with the factual determination of reasonable prospect could contribute to entrepreneurial education, as well as address the current conflict that surrounds the subject. ‘change is not a threat, it’s an opportunity. survival is not the goal; transformative success is.’ seth godin introduction according to the regulator’s quarterly report of 30 september 2015, the number of business rescue filings (the bulk of which were smmes) amounted to 1121 between 2011 and 2014 (an average of 39 filings per month), with only 270 reported cases that ended in the termination of business rescue proceedings (section 132[2][b]) or the substantial implementation of the business rescue plan (section 132[2][c][ii]). this emphasises the intense need for improved business rescue practices to increase the number of businesses that leave rescue successfully. as prescribed by the companies act 71 of 2008 (hereafter referred to as the act), section 129(1)(a) and (b), the presence of financial distress and reasonable prospect (of rescue) must be evident in order for a business to file for rescue (conradie & lamprecht 2015:2; gribnitz & appelbaum 2015:99). business rescue practitioners (brps) and affected parties struggle to determine these variables. to a large extent, they depend on subjective thought processes, which differ from one individual to the next, contributing to the accumulation of conflict in the industry (baird & lorence 2012). affected parties (section 128[a]) are regularly forced to make important decisions on a matter such as reasonable prospect, under liabilities of information asymmetry and poor data integrity (lee et al. 2004:89; pretorius & holtzhauzen 2008:100; wang 1998:60). for the purposes of this study, the reasonable prospect is described as the initial evaluation by the brp to determine the immediate prospect of the smme (feasibility of the possible rescue). it is also of critical value to entrepreneurs and smme owners who, when filing, must officially declare their business in distress and their belief that reasonable prospect exists. thus, prospect remains the main driver for the brp to undertake the rescue and/or the court to place the business under rescue. it is important to note that reasonable prospect is dynamic in nature and must be evaluated continuously throughout the rescue proceedings. by completing an in-depth study of relevant literature and other written works on the subject, the researchers were able to determine the aspects of reasonable prospect and different methods from the law, finance and management perspective in business rescue and its related decision-making processes. understanding of this complex phenomenon could clarify the comprehensive thought process followed during the business rescue process and decision making by practitioners. business rescue, as a young industry, could benefit from improved guidelines for decision making, especially those regarding initial reasonable prospect. the purpose of this article is to identify and explore methods available to entrepreneurs and the brp during investigation and determination of the distressed company’s initial reasonable prospect. literature review business rescue: short history and overview formal turnaround management from a south african perspective is still in its early stages (holtzhauzen 2010:29). judicial management, a form of formal turnaround (loubser 2010:2), was first introduced in south africa in 1926 and was widely regarded as unsuccessful because it presented no catalyst to pursue rehabilitation of the organisation over liquidation. nevertheless, the van wyk de vries commission regarded it as sufficiently helpful to recommend that it be retained in the 1973 companies act (joubert 2013:552). in the light of mounting international pressure, south africa introduced a modern turnaround regime, known as business rescue (chapter 6 of the companies act 71 of 2008) (burdette 2011; rosslyn-smith & pretorius 2015:8). business rescue, as defined by the act, refers to the proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for the temporary supervision of the company and the management of its affairs, business and property, as well as a temporary moratorium on the rights of claimants against the company or in respect of the property in its possession (chapter 6 of companies act 71 of 2008). the initial objective of business rescue is to keep companies alive in order to extract greater value for stakeholders such as employees, shareholders and creditors (conradie & lamprecht 2015:2; joubert 2013:550). business rescue can also serve a second objective, in that when there is no possibility of rehabilitation of the firm and its continuing existence on a solvent basis, the business rescue will result in better returns for creditors and affected parties (section 128[1][b][iii] of the act), compared with the returns from an immediate liquidation (levenstein 2008:13). chapter 6 of the act came into effect on 1 may 2011, allowing rescue procedures vaguely comparable to those of chapter 11 in the united states (balovich 2002) and administration in the united kingdom (parliament of the united kingdom 2006). according to chapter 6 of the act, in order to file for business rescue, firms must be ‘financially distressed’. the meaning of financially distressed as defined in section 128(1)(f) includes the requirement that the company is unable to pay creditors or will become unable to pay creditors in the next 6 months (levenstein 2008:12). the act describes the following two ways of entering business rescue: the first option is voluntary filing by the board of the company (section 129[1]) if the company adheres to the requirements set out in section 129(1)(a) and (b). the second option described is an application to court by an affected person (section 128[a]) to place the company under supervision and commence rescue proceedings. it is important to note that in both cases reasonable prospect is a requirement. after considering the application, the court may decide to place the company in business rescue if the requirements of section 131(4)(a) are met or to dismiss the application according to section 131(4)(b) (conradie & lamprecht 2015:5). during voluntary filing, the distressed company nominates (section 129[3][b]) a brp in accordance with section 138, or the affected person (section 131[5]) who brought about the court application, or the court (interim brp) may nominate a brp in accordance with section 138 of the act. a brp is an independent and qualified person who acts as an officer of the court (section 140[3][a]) as prescribed by the act and is appointed to navigate the company back to financial health, so that it continues to exist on a solvent basis (conradie & lamprecht 2015:5). the brp is required to bring a variety of skills to the business (pretorius 2014). as an officer (agent) of the court, the brp has the responsibilities, duties and liabilities of a director of the company, as set out in sections 75 (financial interests), 76 (conduct) and 77 (liabilities) of the act. all the above takes place within the ‘supreme task’ of compliance with the act and its procedures (pretorius 2014). the brp has total control of the firm until he or she presents the plan to the creditors, when the power is shifted to the creditors via their votes. if the creditors vote in favour of the business rescue plan, the rescue proceedings continue and the brp is in control again, implementing the plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity (pretorius & rosslyn-smith 2014). a business rescue plan has various requirements and standards to uphold, and it plays an integral part in the successful turnaround of the business. twenty-five business days, with possible extensions, are granted to the brp after appointment to formulate and disclose a feasible business plan. the objective of the plan is to detail the procedures and strategies to be used for the company to overcome its financial adversities and resume normal commercial operations on a solvent basis (pretorius & rosslyn-smith 2014:27). in the event that this is not possible, the implementation of the proposal must result in a better return for the company’s affected parties than would result from immediate liquidation of the company. section 150 of the act prescribes the content to be presented in the business rescue plan. the overarching mandate is to provide satisfactory direction to the affected parties for them to reach a judgement regarding its ratification. section 150(2) details distinct fundamentals to be included in the document; however, these only result in the bare minimum required for compliance, and it is generally accepted that the plan should go beyond them (pretorius & rosslyn-smith 2014:29). all the above can only take place if reasonable prospect was established at the onset of the process. asymmetric information and lack of data integrity decision making during business rescue depends on the quality of information provided (pretorius 2014:9). data integrity refers to correctness, completeness, wholeness, reliability and truthfulness of the data available for decision making (lee et al. 2004:89; wang, ziad & lee 2006:60). for more than a century, formal economic models of decision-making mechanisms were based on the hypothesis of perfect information, where information asymmetries were rejected (connelly et al. 2011:42). asymmetry of information is said to exist when one party to a transaction possesses more information than the other. according to stiglitz (2000), there are two types of information where asymmetry is particularly relevant, namely information about quality and information about intent. in the business rescue industry, internal data used for critical decision making are often subject to misrepresentation, obscuring and suppression for several reasons (pretorius &holtzhauzen 2008). examples include inflated debtors’ data to improve balance sheets, overestimated sales projections that inflate demand figures, manipulated inventory projections, overvalued assets, incorrect attribution of causes to protect positions and the withholding of certain information to protect vulnerable projects and questionable decision making from the past. although some of these might be intentional, there are also some that are unintentional because of biases, heuristics or perceptive shortcuts in the perception of those presenting it (pretorius & holtzhauzen 2008:100). there are two main types of data needed during the business rescue process: financial data, including income statements, balance sheets and transaction records, and management records, such as supply reports and data interpretations (lee et al. 2004:90) – which are highly susceptible to inaccuracies and human error, limitations and biases. verification and authentication of data is a time-consuming process, and time is not abundantly available during business rescue. data integrity therefore depends on the brp’s ability to verify and authenticate data for decision making. the reluctance to verify data regularly leads to assumptions and contributes to poor strategy choices (pretorius & holtzhauzen 2008:101). an argument by barker and barr (2002:963) highlights the fact that top management has a large impact, as the key contributor to the downswing and ultimate failure of the business if it fails to adapt strategies. top management’s apprehensions are important influences on decisions affecting organisational performance. these authors suggest that the way in which the top management team perceives the causes of failure determines the extent of its recovery actions (pretorius & holtzhauzen 2008:101). brps are dependent on the apprehensions of management, which is a fundamental source of information. management may frame the requested information according to self-serving benefits or the members’ specific knowledge structures, influencing the data integrity. management’s beliefs are also contingent on subjective opinions of subordinate management through overconfidence (shepherd 2005:125), escalation of commitment (shepherd 2005:129), risk perception and misconceptions (le roux, pretorius & millard 2006). in order to succeed in rescuing a deteriorating firm, the practitioner must identify and conquer these obstacles. according to engelbrecht (2014), in order to identify foul play in financial statements, it is advisable that the practitioner compare statements with at least 6 months’ formal banking transaction statements. in doing so, the practitioner (or his accountant) may promptly determine whether the provided data mirrors the true position of the firm, before commencing with reasonable prospect determinations and calculations. reasonable prospect as discussed by pretorius (2014), judging reasonable prospect is a major source of conflict between different parties in the business rescue industry. distinguishing reasonable prospect relies on numerous moderators and mediators of judgement, and the opinions of individuals clash frequently, as there is no standardised method for determining reasonable prospect, which is mentioned in the act but not clearly defined. ‘reasonable prospect’ (a term not defined in the companies act) does not necessarily mean reasonable possibility; however, it means a prospect based on reasonable grounds and not speculative suggestions or vague averments (southern palace investments 265 [pty] ltd v midnight storm investments 386 [pty] ltd). the presence of reasonable prospect is a prerequisite for business rescue practices to commence, and the reliability of the information used to determine reasonable prospect is crucial to ensure the trustworthiness of the prospect being determined. an applicant is required to place before the court a factual foundation for the existence of a reasonable prospect: that business rescue is likely to achieve the primary object or the secondary object of business rescue. whether or not ‘reasonable prospect’ has been established is a factual inquiry to be made on a case-by-case basis, bearing in mind that the primary object of business rescue is to facilitate the continued existence of a company that is in a state of insolvency (section 128[1][b][iii]); the secondary object of business rescue is, in the event that the primary object is not viable, to facilitate a better return for the creditors of a company (section 128[1][b][iii]), as described in the act. currently, reasonable prospect often depends on subjective thought processes with no formal framework of objective facts that can be used to ratify it from a business perspective (oakdene square properties [pty] ltd and others v farm bothasfontein [kyalami] [pty] ltd [sca]). the reluctance of affected parties to share reliable financial and/or other information contributes to the stagnant and complex process. courts have to decide whether distressed businesses are to be liquidated or placed into rescue, using mainly the subjective opinions of rescue practitioners and/or opposing parties in court. we proceed by highlighting the research methodology of the current study, with emphasis on the researchers’ epistemology and ontology. methodology epistemology with the objective of answering the research questions in mind, the researchers were aware of their own methodological beliefs (including values and assumptions) and the fact that these beliefs would unmistakably influence their research and probably create bias in interpreting the data. the following information is provided to inform the reader about the ‘intellectual climate’ in which the research was conducted. the theory of knowledge (epistemology) of the researchers describes how one can discover underlying principles about social phenomena and clearly shows the existence thereof (pretorius & holtzhauzen 2013:474). the interpretive (constructionist) paradigm was followed during this research – it focuses on the world from the point of view of an individual or group interacting in and with it (denicolo & becker 2012). interpretivist research can also be described as research with collectiveness; descriptive or qualitative research is usually conducted when theory or previous research is lacking. in this case, the factual determination of (initial) reasonable prospect in business rescue has only been researched vaguely. interpretive research emphasises the understanding of a social reality in a specific context, from the participants’ view of sense making. this paradigm depicts multiple realities, depending on the context and content of the situation, demanding a holistic approach to address the variables in the system being analysed. hypothesis testing is not relevant in this paradigm, but the answering of the research questions stated is of utmost importance. the data will more often be qualitative in nature (berniker & mcnabb 2011), but the paradigm does not exclude quantitative data or findings. verification of data is important and can be accomplished by comparing findings from different sources through triangulation (decorp 1999); for example, comparing findings of interviews with findings of observation or questionnaire responses (denicolo & becker 2012). for this study, the researchers preferred the interpretivist over the positivist paradigm, because they set out to uncover the practices of brps and not a relationship that might occur as a result of certain phenomena during the business rescue process. ontology the ontological position consists of the researchers’ views on the very nature and essence of research reality (maedche 2002:13). the researchers are acceptant rationalists (katz 1998), who believe that knowledge sprouts from overlapping findings after investigations or experimentations by numerous individuals in different situations. if these findings support one another, they can be seen as patterns, some of which may form precedents. rationalism views the main source and test of knowledge to be reason; the theory in which the criterion of truth is not sensory but intellectual and deductive – reality has a logical structure. we pursued open-minded, non-biased analysis of data. an acceptance of the findings, even when against one’s beliefs and norms, is critical to deliver conclusions congruent with actual practice. if a researcher finds it difficult to conduct objective research, structured data-gathering methods are a safe choice to prevent contamination of the study, and these were opted for in this research. causes and responses differ in certain situations, and patterns are not always black or white; grey areas (multiple realties) do exist and need to be addressed as well. the context and content of a situation influences studies, which cannot rely on simple observations (loewenstein, thompson & bazerman 1989). the research design followed is presented here by means of a shortened yin table 1. table 1: summarised research design components. findings law, finance (accounting) and management are important perspectives in business rescue procedures and a working knowledge of these fields does benefit the brp in his or her endeavours. it is also important to understand the different approaches followed by these perspectives when (initial) reasonable prospect is the topic at hand. there are relevant methods and calculations reported in the various bodies of knowledge available to brps from a finance (accounting) and management perspective. for the purpose of this article, we focused on more practical methods used to measure business decline and sustainability in smmes. altman (1968; altman & narayanan 1997) followed a more pessimistic approach when developing the z-score to predict business decline, whereas timmons and spinelli (2003) chose a more optimistic approach, identifying the elements essential for a business to exist. the courts, however, only require that the evidence should be factual. we expand on this in the next section. law perspective the first reported business rescue judgement was on 30 may 2011 (the same month that the new act came into effect) and was made by judge makgoba in ra swart v beagles run investments 25 (pty) ltd. the matter was brought and decided on an argument basis and was contended by creditors as an abuse of process. the creditors argued that the application was the climax of attempts by the firm to sidestep debtors’ payments. makgoba ruled in favour of the creditors and argued that the interests of creditors should carry the day, if they are weighed against the interests of the firm itself. makgoba also argued that the requirement of a ‘reasonable prospect’ for rescuing a company must mean a ‘reasonable probability’ of rescue; he then went on to follow the law relating to the judicial management of companies, which was the previous regime for financially distressed companies in south africa, abolished by the provisions of the new act. in the exercise of his discretion, after weighing the facts as to whether there was such a ‘reasonable probability’ of rescue, judge makgoba denied the application for business rescue to proceed. unsurprisingly, the judgement that became the locus classicus of judicial interpretations of the requirements for business rescue applications did not follow makgoba when it was handed down 6 months later by judge eloff in the southern palace investments 265 (pty) ltd v midnight storm investments 386 (pty) ltd. eloff argued that the requirements for reasonable prospect of recovery must mean something less than that and the partial recovery should be a ‘reasonable probability’. the judge remarked that the business rescue provisions heralded a new era and that the old mindset of the creditor being almost entitled to a winding-up order, as if of right, was inappropriate. business rescue was to be preferred to liquidation. however, even though he held that the substantive test (referring to the requirements of section 129[1]) that must be adhered to has a lower threshold than for judicial management, it still lies within the discretion of the court whether or not to grant an application for business rescue. the requirements of a ‘reasonable prospect’ for rescuing the company must be read with the definition of business rescue, section 128(1)(b). if the applicant stated that the company would recover, the court demands that such allegations must contain some ‘concrete and objectively ascertainable details going beyond mere speculation’ of the following facts: the probable costs of rendering the company capable of resuming its business, the probable availability of the necessary cash resources and any other resources necessary, and why the proposed plan would have a reasonable prospect of success. on the facts (or the lack thereof), the application was denied. as mentioned by floor (2013), the southern gauteng high court in oakdene square v farm bothasfontein (kayalami) denied the application to place the company that owned the kayalami race track under business rescue and ruled that the dearth of recent financial statements would make it improbable for the brp to successfully restructure the operations of the company. the court also sanctioned the indication by the majority of shareholders that they would vote against any manifestation by the brp. in another court case, ag petzetakis international holdings ltd v petzetakis africa (pty) ltd, the court found, based on the facts available to the court, that the company under discussion was beyond rescue unless it received a large financial injection (otherwise known as post-commencement finance); there was no indication present that such a financial injection would be forthcoming. therefore, the court denied the application to be put under business rescue because of there being no reasonable prospect. the prospects for a successful rescue may vary from case to case; as a general rule, however, the company filing for business rescue is required to present objectively ascertainable details showing that the company has a reasonable prospect of being rescued successfully (floor 2013). what those details entail, however, is not stated. based on the court cases mentioned, factual, concrete, objective and ascertainable details appear to be the basic requirements. the evidence reported in these cases points to the absence of these, hence the research questions of this study. this article proceeds to integrate literature on business-related tools to determine reasonable prospect in smmes under significant time constraints. business management perspective in order for the brp to determine the feasibility of a rescue, he or she must determine whether the distressed smme at hand has all the components needed to function as a profitable business after the proposed rescue proceedings have ended. some of these components can be introduced during the rescue if they are absent, whereas others are integral to the existence of a business at the start of rescue proceedings and cannot be added later on during the life cycle of the business. relevant (basic) entrepreneurial and business management principles are helpful to define these components. opportunity analysis the main objective of the opportunity analysis (oa), as broadly discussed by timmons and spinelli (2003:79–113), is to establish whether an opportunity exists for doing meaningful business. the analysis explores six areas of opportunity, unexampled for every business in its specific context. the oa originated when research was conducted on new business opportunities and the buying or selling of an existing business, and we considered it applicable for determining the presence of reasonable prospect under distress situations in businesses. the start-up opportunity appears closely related to the rescue opportunity and therefore might enhance the understanding of reasonable prospect. during the oa, all aspects of the business are looked at separately, dividing all operations into five main business model groups, namely: demand for concept offering (value propositions), team and resources, competitive environment (profitability) and finance. the oa then judges the potential of the proposed start-up venture through its feasibility. by using this analytical approach for a distressed firm where the same principles apply, the weakest link in the business chain can be identified and improved to obtain better returns or to establish reasonable prospect. the oa lends itself to the use of determining reasonable prospect from a feasibility perspective, as it questions whether the elements crucial for a reorganised business to exist are present at the specific time (nieman & pretorius 2004). an opportunity scorecard can be used to analyse the different business elements of a venture (choi & shepherd 2004; shepherd 1999). the scorecard includes the following fields of analysis: value proposition and venture support, product or solution demand, competitive environment, economic model, cash-flow issues and managerial resource fit. each of these elements can be judged and then interpreted accordingly, ranging from an excellent opportunity to a dangerous opportunity. the ‘do we have a business?’ test the ‘do we have a business?’ test (dwab test) was built on the foundations of the feasibility principles and the oa and still builds on the pillars provided by these analytical methods. basically, the ‘test’ comprises five questions, covering the elements needed for a business to exist, to be answered by a reasonable and experienced business person. these elements must be properly managed in order for the venture to be operated profitably (timmons & spinelli 2003:79–113). the questions covered in the test include whether there is demand for the product and/or service. this refers directly to the concept offering and the significance of the demand for this. this demand can be defined as the utility of goods or service from an economic agent. does the capacity exist to deliver on the demand? capacity can also be described as the output capability over a specific period, infrastructure and the human resource capacity. is there a profitable business case in motion? this question refers to the reasoning behind initiating the business or project and whether there is economic logic supporting the business model. are the cash-flow projections positive? this can be described as the amount of liquidity moving through the business and/or the ability of the business to pay immediate creditors. are there potential flaws (caveats) in the business model that may render the other factors useless? these caveats can be any constraints to the optimal functioning of the business. these questions are progressive in that a negative answer to one can have an eliminating power. this analysis overlaps with the oa, previously explored, to a large extent suggesting that the elements to be tested are the right ones. these models focus on the requirements of early judgements concerning feasibility to be followed up by validity testing and due diligence type analyses (gillman 2001). financial management (accounting) perspective as set out in the introduction of this article, the definite presence of financial distress is required for business rescue proceedings to commence. therefore, the study also explored some popular methods of determining distress from a financial perspective, namely financial ratios, the altman z-score and discriminant models, as well as general cash-flow ratios as predictors. financial ratio analysis when analysing traditional financial or accounting ratios, a definite variation can be observed between the ratios of financially healthy and deteriorating firms (altman 1968:590). altman’s study implied a definite potential of ratios as ‘predictors of bankruptcy’. the most significant indicators include ratios measuring profitability, liquidity and solvency as shown in table 2. table 2: financial ratios: determining the main problem areas of a distressed business. although viewed as a handy tool for measuring the financial position of a firm, ratios can be susceptible to ‘faulty interpretation and [be] potentially confusing’ (altman 1968:591). any ratio analysis needs to be done in accordance with the specific industry of the firm. comparing ratios of two firms from contrasting industries would be idle. other major determinants of effective measurement through ratios are the size of the firm and the current economic climate in which it operates. financial ratios tend to deflate ratio statistics and therefore a large part of the size effect may be lost. in essence, when calculating ratios of a firm, one embarks on an in-depth analysis of the firm’s results compared with the industry benchmark or norm, taking into account the size of the firm as well as the current economic climate prevailing at the time (jooste 2006:7). analysing ratios depend on financial figures (data) that are trustworthy, following some viability testing and potentially due diligence (gillman 2001:3). the existence of reasonable prospect is required mostly before such processes have been embarked upon, thus it is associated with early feasibility judgements. financial ratios are a handy tool to be used by brps to determine the area of distress in a business, after which it might be easier to establish reasonable prospect. international financial reporting standards (ifrs) are principles-based standards, interpretations and the framework adopted by the international accounting standards board. international financial reporting standards represent a set of internationally accepted accounting and financial management procedures, which have been required from all south african listed firms since 2005 (available online: http://www.ifrs.org/pages/default.aspx). multiple discriminant analysis and the z-score analysis multiple discriminant analysis (mda) has been regarded as the most popular technique (altman & narayanan 1997:2) to predict financial failure among firms, as researchers have tested numerous other techniques with disappointing outcomes. multiple discriminant analysis seems to be the de facto benchmark for the comparison of distress prediction models for various reasons (altman & narayanan 1997:2). it is important to view altman’s z-score model hand-in-hand with the mda model; edward altman is famous for using discriminant analysis in developing his renowned z-score analysis. the discriminant function used is as follows (altman 1968:594; paston, harmon & gramlich 2011:46): where x1 = working capital/total assets, x2 = retained earnings/total assets, x3 = earnings before interests and tax/total assets, x4 = market value of equity/book value of total debt, x5 = sales /total assets and z = overall index + once the z-score has been determined, it is compared with table 3 for interpretation. table 3: interpretation of the altman z-score. when interpreting the z-score, evaluators are required to be cognisant of two issues: firstly, less time and effort would be spent on firms scoring a high z-value (> 3.0) than firms scoring low z-values and would signal a very thorough investigation (altman 1968:608). secondly, firms scoring a z-value under the ‘zone of ignorance’ experience a decline in their stock of up to 45%, from date of analysis to date of actual failure, an average period of 15 months where documented (altman 1968:608). in 1997 altman published an evolved version of the z-score model, which provides the opportunity for companies under analysis to be grouped into two homogeneous categories, namely developed country models, characterised by the detailed history of prediction failure, accessible corporate financial data, minimal government intervention and sophisticated regulations to protect investors; and developing country models, characterised by the absence of a free market economy, greater government interference and the absence of conditions prevalent in developed countries (altman & narayanan 1997:3). altman also used a larger amount of financial data to investigate the firms and found that models with several years of data available outperformed a similar model (model of 1968) with data from only 1 year prior to failure (altman & narayanan 1997:6). the use of absolute financial statements (1–8 years), provided by an external accounting firm, contributed to the accuracy of classification – it is of absolute importance that the data used are reliable and a true version of the actual operations within the business. in business rescue, however, such data are rarely available. moreover, data integrity has proved to be lacking in most cases (pretorius & holtzhauzen 2008). the altman z-score is a handy tool when failure prediction is the main objective of the brp (altman 1968), but since the business is already in distress when rescue proceedings are initiated, calculating the company z-score seems less useful, unless its aim is to use it in a scorecard for sustainable implementation. within the realm of data integrity, or the lack thereof, one expects its application to be rare. cash-flow ratios various studies have stressed the importance of cash-flow information. cash flow can be seen as the heart of the business and the essence of its very existence (jooste 2006). cash flow directly measures a firm’s ‘ability to pay’ shortor medium-term debt and offers amplitudes to evaluate performance. a sign of being on the continuum of failure is the problem of irregular cash flow, indicating underperformance (boyatzis 1982). cash-flow ratios therefore tend to measure (confirm) and support the existence of financial distress rather than indicate reasonable prospect directly. in 1993 a study was conducted by giacomino and mielke to evaluate firms’ performance via the use of cash-flow ratios. they sampled companies of the chemical, food and electronics industries, among the fortune 500 (of that specific year). they calculated ratio averages over 3 years for comparison, from financial statements provided by the companies, compliant with sfas 95. see table 4 for a summary of cash-flow ratios they found most significant in the determination of financial health among firms in the highly related industry. table 4: cash-flow ratios (healthy vs. distressed). in summary, there are numerous variables prerequired for cash flow ratios (cfrs) to be useful when using cash-flow ratios as an indicator of a firm’s financial health (jooste 2006:6–10). firstly, industry norms are required, preferably averages over three or more years, for comparison. when calculating norms, financial statements of years with similar economic climates must be used. firms from developing countries and first-world countries cannot be compared, nor firms from different industry segments. lastly, firms with a significant difference in size cannot be compared. cash-flow statements can merely indicate or confirm a problem area in the business which is already in distress, not indicate reasonable prospect. discussion the usefulness of the models explored in this article appears somewhat limited for determining reasonable prospect in smmes factually; some are less useful than others. timmons and spinelli’s (2003) oa and dwab test do support the determination of initial reasonable prospect but cannot be used in isolation. the ifrs liquidity and solvency ratios provide guidance to finding the origin of distress, but their usefulness regarding the determination of initial reasonable prospect is limited, yielding only vague conclusions. as regards the altman z-score, there are some drawbacks to applying the z-score to determine reasonable prospect. these drawbacks include the requirement of data to calculate the z-score, which is often lacking as a result of an asymmetry of information and lack of data integrity, and the fact that the z-score is predictive in nature, whereas reasonable prospect must be determined after financial distress is already reigning. although there are numerous ways available to pursue initial reasonable prospect in smmes, the fact that data integrity is seldom guaranteed forces brps to exploit more than one type of analysis and/or process during their investigations. the practitioner’s experience and expertise will determine which of the above analogies can be utilised, and in what combination. there will always be inaccuracy when working with data processed by individuals as a result of error and bias in human nature, but by using more than one method of analysis, this span of error can be narrowed down. every business is unique and must be analysed as a whole in its environment and industry, compared with similar and competing organisations. conclusion in conclusion, the quick but factual measurement of initial reasonable prospect in smmes still remains elusive. reasonable prospect is a complex phenomenon and brps require much experience and knowledge in the different fields of business to accurately determine reasonable prospect under inadequate information conditions. the brp’s main field of experience (law, management or finance and/or accounting) may influence (bias) the perspective with which the brp approaches the determination of reasonable prospect. these perspectives each have their own cues or signals that brps use to make sense during the initial stages of business rescue. by taking advantage of these signals, the uncertainties associated with asymmetric information conditions can be reduced and certain cues can be used to help guide decision making. limitations and future research this article is limited to theoretical conclusions and court judgements only and includes no real-time observations by individuals in the business rescue industry. it is evident that none of the methods discussed are of any value if the data used are unreliable. data integrity is of the utmost importance in the financial calculations and evaluation of a businesses’ financial health. in order for business rescue to be successful, the determination of a trustworthy reasonable prospect is crucial, and this is only possible if the data provided is sufficient and therefore reliable and true to reality. this study focused only on the objective (factual) ways available to determine initial reasonable prospect in smmes, but what about the subjective aspects of this process? furthermore, how can the subjective determination be identified, measured and presented in courts with sufficient validity? the fact remains that the determination of reasonable prospect is required early in the business rescue process and generally in the face of a lack of data integrity after the fact of financial distress, which makes it difficult to apply ‘factual detail’ to support reasonable prospect. it is therefore important that research be extended to include ‘human effects’ in decision making, such as signalling theory and the use of heuristics. signalling theory could assist the process of analysing the reactions and interpretations of decision makers when working in environments of incomplete and/or asymmetric information conditions (berg et al. 2012). signalling theory may be of assistance during decision making in business rescue, especially during the determination of (initial) reasonable prospect, as it utilises the subjective thought process that may be of use to brps when factual determinations are lacking. acknowledgements competing interests the authors declare that they have no competing interests with regard to the writing of this article. authors’ contribution a.c.d.t. made conceptual contributions, conducted all the interviews and was largely responsible for the preparation and write up of the research. m.p was the research supervisor, made conceptual contributions and contributed substantially to the research design. w.r-s. was the research co-supervisor, made conceptual contributions and contributed to the research design. references ag petzetakis international holdings ltd v petzetakis africa (pty) ltd and others (2011/35891) zagpjhc 24; 2012 (5) sa 515 (gsj). altman, e., 1968, ‘financial ratios, discriminant analysis and the prediction of corporate bankruptcy’, journal of finance 13(4), 589–609. https://doi.org/10.1111/j.1540-6261.1968.tb00843.x altman, a.i. & narayanan, p., 1997, ‘an international survey of business failure classification models’, financial markets, institutions & instruments 6(2), 1–57. https://doi.org/10.1111/1468-0416.00010 baird, s. & lorence, m., 2012, ‘predicting success: a doctoral research study’, journal of corporate renewal, november/december, 20–23. balovich, d., 2002, chapter 11 confirmation, viewed 12 march 2013, from http://www.creditworthy.com/3jm/articles/cw42402.html barker, v.l. & barr, p.s., 2002, ‘linking top manager attributions to strategic reorientation in declining firms attempting turnarounds’, journal of business research 55, 963–979. https://doi.org/10.1016/s0148-2963(00)00217-4 berg, d.d., connelly, b.l., ketchen, d.j. & shannon, l.m., 2012, ‘signalling theory and equilibrium in strategic management research: an assessment and a research agenda’, journal of management studies 51(8), 1334–1360. https://doi.org/10.1111/joms.12097 berniker, e. & mcnabb, d.e., 2011, ‘dialectical inquiry: a structured qualitative research method’, the qualitative report 11(4), 643–664. boyatzis, r.e., 1982, the competent manager: a model for effective performance, wiley, new york. burdette, d.a., 2011, legislative framework for the facilitation of turnarounds in south africa. turnaround management and corporate renewal: a south african perspective, wits university press, johannesburg. choi, y.r. & shepherd, d.a., 2004, ‘entrepreneurs’ decisions to exploit opportunities’, journal of management 30(3), 377–395. https://doi.org/10.1016/j.jm.2003.04.002 connelly, b.l., certo, s.t., ireland, r.d. & reutzel, c.r., 2011, ‘signalling theory: a review and assessment’, journal of management 37(1), 39–67. https://doi.org/10.1177/0149206310388419 conradie, s. & lamprecht, c., 2015, ‘business rescue: how can its success be evaluated at company level?’ southern african business review 19(3), 1–28. decorp, a., 1999, ‘triangulation of qualitative tourism research’, tourism management 20, 157–161. https://doi.org/10.1016/s0261-5177(98)00102-2 denicolo, p. & becker, l., 2012, developing research proposals, sage, london. engelbrecht, e., 2014, ‘business rescue’, paper presented at the business rescue seminar, university of pretoria, pretoria, 07 october 2014. floor, j., 2013, business rescue: is there a reasonable prospect for a successful rescue? floor swart inc., viewed 01 october 2014, from http://www.floorswart.com/insight.aspx?id=1006 giacomino, d.e. & mielke, d.e., 1993, ‘cash flows: another approach to ratio analysis’, journal of accountancy 175(3), 55. gillman, l.f., 2001, due diligence: a financial and strategic approach, butterworths, durban. gribnitz, k.j. & appelbaum, r.l., 2015, g & a compass methodology to business rescue and compromise offers, g&a compass publishing, johannesburg. holtzhauzen, g., 2010, modelling business turnaround strategies using verifier determinants from early warning signs theory, university of pretoria, pretoria. ifrs official website, international accepted financial ratios, viewed 26 october 2014, from http://www.ifrs.org/pages/default.aspx jooste, l., 2006, ‘cash flow as a yardstick for evaluating financial performance in african businesses’, journal of managerial finance 32(7), 569–579. https://doi.org/10.1108/03074350610671566 joubert, t., 2013, ‘reasonable possibility versus reasonable prospect: did business rescue succeed in creating a better test than judicial management?’, journal of contemporary roman-dutch law 76, 550–563. katz, j.j., 1998, realistic rationalism, massachusetts institute of technology, cambridge. lee, y.w., pipino, l., strong, d.m. & wang, r.y., 2004, ‘process-embedded data integrity’, journal of database management 15(1), 87–103. https://doi.org/10.4018/jdm.2004010104 le roux, i., pretorius, m. & millard, s., 2006, ‘the influence of risk perception, misconception, illusion of control and self-efficiency on the decision to exploit a venture opportunity’, southern africa business review 10(1), 51–69. levenstein, e., 2008, ‘business rescue: help is at hand’, without prejudice, 8(10): 12–14. loewenstein, g.f., thompson, l. & bazerman, m.h., 1989, ‘social utility and decision making in interpersonal contexts’, journal of personality and social psychology 57, 426–441. https://doi.org/10.1037/0022-3514.57.3.426 loubser, a., 2010, ‘the business rescue proceedings in the companies act of 2008: concerns and questions (part 1)’, tsar 3, 501–514. maedche, a.d., 2002, ontology learning for a systematic web, kluwer academic, new york. nieman, g. & pretorius, m., 2004, managing growth: a guide for entrepreneurs, juta, cape town. oakdene square properties (pty) ltd v farm bothasfontein (kyalami) (pty) ltd (609/2012) zasca 68. paston, k.m., harmon, w.k. & gramlich, j.d., 2011, ‘a test of financial ratios as predictors of turnaround versus failure among financially distressed firms’, journal of applied research 10(1), 41–56. pretorius, m., 2014, ‘a competency framework for the business recue practitioner profession’, acta 12(2), 87–107. pretorius, m. & holtzhauzen, g.t.d., 2008, ‘critical variables of venture turnaround: a liabilities approach’, southern business review 12(2), 87–107. pretorius, m. & holtzhauzen, g.t.d., 2013, ‘business rescue decision making through verifier determinants: ask the specialists’, south african journal of economic and management sciences 16(4), 468–485. https://doi.org/10.4102/sajems.v16i4.450 pretorius, m. & rosslyn-smith, w., 2014, ‘expectations of a business rescue plan: international directives of chapter 6 implementation’, southern african review 18(2), 108–122. republic of south africa, 2008, companies act no. 71 of 2008, government gazette, 32121(421), government printer, pretoria. rosslyn-smith, w. & pretorius, m., 2015, stakeholder expectations of the business rescue plan from a south african perspective, the southern african journal of entrepreneurship and small business management 7, 1–35. https://doi.org/10.4102/sajesbm.v7i1.4 shepherd, d.a., 1999, ‘venture capitalists’ assessment of new venture survival’, management sciences 45(5), 621–632. shepherd, d.a., 2005, ‘the theoretical basis for my plenary speech about our success and failures at research on business failure’. proceedings: regional frontiers of entrepreneurial research, brisbane, february, 12–14, 2015, pp. 123–134. southern palace investments 265 (pty) ltd v midnight storm investments 386 (pt) ltd (15155/2011) zawchc 442; 2012 (2) sa 423 (wcc). stiglitz, j.e., 2000, ‘the contributions of the economics of information to the twentieth century economics’, quarterly journal of economics 115, 1441–1478. https://doi.org/10.1162/003355300555015 swart v beagles run investments 25 (pty) ltd and others (2011 (5) sa 422 (gnp)) zagpphc 103; 26597/2011. timmons, j.a. & spinelli, s., 2003, new venture creation: entrepreneurship for the 21st century, 6th edn., mcgraw-hill, new york, ny. united kingdom, 2006, companies act of 2006, viewed 15 march 2013, from legislation.gov.uk. wang, r.y., 1998, ‘a product perspective on total data quality management’, communications of the acm 41(2), 58–65. https://doi.org/10.1145/269012.269022 wang, r.y., ziad, m. & lee, y.w., 2006, data quality, kluwer academic publishers, new york, boston, ma. yin, r.k., 2003, case study research. design and methods: applied social research methods, 3rd edn., sage, london. 102 factors influencing pricing in the accommodation sector in south africa sajesbm volume 4, (2011) 24 www.sajesbm.com article no 102 factors influencing pricing in the accommodation sector in south africa engelina du plessis * institute for tourism and leisure studies school for business management north-west university (potchefstroom campus) private bag x6001 potchefstroom (south africa) 2520 tel: 018 299 1980 cell: 073 943 2829 fax: 018 299 4140 e-mail: 10811281@nwu.ac.za prof. melville saayman institute for tourism and leisure studies school for business management north-west university (potchefstroom campus) private bag x6001 potchefstroom (south africa) 2520 tel: (018) 299 1810 cell: 082 880 7655 fax: 018 299 4140 e-mail: 10201424@nwu.ac.za * to whom correspondence should be addressed abstract price is a significant factor of competitiveness. price is a complex issue and is determined by a variety of demand and supply factors. these factors also differ from industry to industry. the purpose of this article is to determine the factors that influence pricing in the south african accommodation sector. in order to generate proper data, a survey was conducted at various south african accommodation establishments that were obtained from the databases of the three major associations in the accommodation sector. two-hundred and forty seven questionnaires completed by sajesbm volume 4, (2011) 25 www.sajesbm.com article no 102 managers from accommodation establishments were used in this research. principal component factor analyses with varimax rotation in statistica were carried out. these resulted in ten factors, namely environmental qualities, amenities, image, management factor, positioning, quality service factor, infrastructure service factor, location, marketing and product quality factor. the results revealed that the major factors in pricing are service quality, image and product quality. consequently this article can be used to assist managers in pricing and in obtaining a better competitive position in the industry by revising management structures and marketing campaigns. keywords and phrases: tourism industry, price competitiveness, service quality, image, product quality, entrepreneur and factor analysis. introduction the tourism industry has become a key sector in the world economy and a major driver of economic growth and employment worldwide (blanke & chiesa, 2008:3). despite the realities presented by the economic slowdown 2008 remained a buoyant year for the south african tourism industry with international tourist arrivals increasing by 5,4%. the domestic tourism market has also grown since 1991 (south african tourism, 2008:1). this has led to price increases especially in popular tourist destinations such as cape town and johannesburg. this situation makes these destinations inaccessible for many local tourists who cannot afford these prices (saayman 2001:5). adding to the dilemma of price increases is the fact that the bulk of accommodation establishments are smmes (small, medium and micro-enterprises) (department of environmental affairs and tourism, 2004:24; van der westhuizen & saayman, 2007:123). as such entrepreneurs find it difficult to enter this sector. this is largely because of the absence of the necessary pricing guidelines (du plessis, 2010:76), since viability studies are based on faulty information and this leads to ‘price following’. price following, as described by rogers (1995:220), is a means of coping with the complexity of price decision-making and the price set by the market leaders becomes the ceiling by which entrepreneurs are forced to operate. supply and demand was a contributing factor to the average price increase despite warnings by the world travel and tourism council (world travel & tourism council, 2007:2) that the demand for global travel and tourism is expected to slow down because of issues like increases in fuel prices and rising transport costs. it seems that managers and entrepreneurs find it easier to apply ’price following‘ to cope with the complexity of price and reap the benefits of the market trends and high prices. ‘price following’, as a pricing method, cannot be seen as a sustainable strategy over a long period and cannot be promoted since the factors influencing price sajesbm volume 4, (2011) 26 www.sajesbm.com article no 102 differ from one accommodation establishment to the next (collins & parsa, 2006; thrane, 2005). according to cassidy and guilding (2007:278), the significance of continued price increases in the accommodation sector can leave the tourism industry in a competitive crisis, considering that food, transport, and entertainment are not yet included in travel packages. it is also essential to bear in mind that the south african tourism industry is by no means immune to the effects of the international economic crisis (south african tourism, 2008:1). the absence of guidelines in terms of pricing adds to the problem faced by south african managers and entrepreneurs in determining prices for different accommodation types with similar grading status (haarhoff, 2007:56). prices that are set too high or too low can have a devastating impact on the feasibility of the business. therefore, value for money is paramount, especially from a tourist perspective (dwyer, edwards, mistilis, roman & scott, 2009:68). this also applies to entrepreneurs entering the market who need to decide what prices to charge (rogers, 1995:220; bulhalis, 2000:110). prices send clear a message to tourists as to what to expect concerning the quality of accommodation offered (schindehutte & morris, 2001:41). getting the balance right is the key to being perceived by tourists as a value-for-money product (wilkens, merrilees & herington, 2007:841) since accommodation plays such a crucial role in tourism (tassiopoulos 2000:4), the aim of this research is to identify the factors influencing pricing in the accommodation sector in south africa and provide entrepreneurs with the ability and knowledge to choose the correct combination of factors in establishing prices that contribute to the unique characteristics of every establishment and its manager or owner. identification of problem cassidy and, guilding (2007:276) and porter (1989:11) identify price as a significant factor in competitiveness and emphasise that pure competitive advantage may take one of two basic forms, namely low cost or differentiated products that are sold at premium prices. schindehutte and morris (2001:41) showed that, historically, managers have taken price for granted concluding that its principal function was to cover cost and generate a reasonable rate of return. cassidy and guilding (2007:276) also point out that pricing issues can be influenced by the diversity of managers’ perceptions of prices and that these can result in complications and a lack of responsibility toward other roleplayers with respect to setting a competitive price. researchers, such as lockyer (2005), chadee and mattson (1995), bolton and drew (1991), haarhoff (2007), kim and crompton (2002), laarman and gregerson (1996), and rogers, henderson and ginsburg (1993), describe pricing as a complex concept with significant impact on sustainability. lumsdon (1997:153) defines price as the amount of money consumers or tourists are willing to pay for the exchange of benefits of having or using a service. monroe (1990:7) adds to this stating that price is the amount of money that consumers exchange for an sajesbm volume 4, (2011) 27 www.sajesbm.com article no 102 assortment of products and services provided by sellers or, in this case, accommodation establishments. keller (1997:12) points out that the tourist and accommodation establishment attach different meanings to price. to the tourist, price represents the amount of money that is being paid for a product or service and thus for the need satisfaction that is received. the tourist will view price as acceptable if the value equals the amount of money that is being paid for the product. to the establishment price relates directly to income and profitability. travel and tourism prices are not always as straightforward to determine as they may appear. various tourism products have different values to tourists, namely monetary value and the value of satisfying needs. these perceived benefits often relate directly to the product and the decision to visit and pay for the advantage (haarhoff, 2007:6; bennett, jooste & strydom, 2005:43-44). in setting the most sustainable competitive price, the literature review (george, 2004; kotler, 2000; porter, 1990; haarhoff; 2007) identified a number of main aspects that managers and entrepreneurs need to understand and take into consideration. these researchers (george, 2004; kotler, 2000; porter, 1990; haarhoff; 2007) further propose the pricing process as shown in figure 1. it is clear that demand comes from both the international and domestic tourist and that the price charged for accommodation is influenced by various factors, for example, external values which include competition, demand, consumers’ perceptions, environmental factors and pricevalue; while internal values include establishments’ objectives, costs, marketing mix, and product-quality leadership. all these values must be taken into account to achieve a sustainable growth rate in tourism and, at the same time, for the industry to be competitive (kotler, bowen & makens, 2003:376-388). the following conceptual pricing framework is based on proposals from the literature review: external aspects influencing price sustainability demand supply international market domestic market competitiveness price internal aspects influencing price sajesbm volume 4, (2011) 28 www.sajesbm.com article no 102 figure 1: conceptual framework for a competitive price the situation is complicated by this aspect – that different people have different perceptions– with the result that managers take different factors into consideration when prices are determined. experts, such as lewis and chambers (2000), dwyer, forsyth and rao (2000), cassidy and guilding (2007) and ritchie and crouch (1993), rate pricing and price competition as the biggest problem facing managers and entrepreneurs in the tourism industry. according to middelton and clarke (2001:139), pricing is the least understood aspect in the management task; yet it is the most controllable tool. rogers et al. (1993:34), lewis and schoemaker (1997:45), middleton and clarke (2001:138) and haarhoff (2007:34) concur that price is a management tool that relates to the pursuit of business objectives and that it is also a tactical tool concerned with the management of demand and supply factors. koc (2006:860) explains that managers and entrepreneurs of accommodation establishments have three main goals; firstly, to be profitable; secondly, to be competitive; and thirdly, to sustain the first two goals. if the dynamics of price are understood, better choices can be made to control and use factors to determine price and to find a solution for the problem of competitiveness and sustainability (kotler et al., 2003:375). when setting a price, managers must consider the suggestion made by porter (1990:129) and butcher (1997:33) namely, to also keep the product affordable to the domestic market since it remains a key market. dwyer et al. (2000:10), mangion, durbarry and sinclair (2005:46), middleton and clarke, (2001:139) and lewis and chambers (2000:200) also stress that ’pricing is more art than science‘ because of the variety of factors that influence pricing. factors of demand and supply are critical for pricing since these aspects differ from industry to industry, and also from destination to destination. nevertheless they remain the two most important forces that determine price (saayman, 2006:140). mcintosh, goeldner and ritchie (1995:297) indicated that the tourists’ willingness to travel (demand) and choice will largely be determined by factors such as psychographic profile, socioeconomic status and demographic variables such as population, income in country of origin, leisure time, education, occupation and family orientation. choice is also influenced by the number of children and their preferences. in addition, alegre and pou (2006), divisekera (2003), athiyaman (1997), lim (1997a, 1997b, 1999,), mangion et al., (2005), morley (1998), ong (1995), crouch (1995), de keyser and vanhove (1994), gonzález and moral (1995) gomezelj and milhalič, (2008) and dwyer, forsyth and rao (2002:330) indicated the cost of transport, relative prices, exchange rates, availability and quality of accommodation, availability of tour services, quality of food and beverage, variety of entertainment, children’s facilities and qualitative factors. the latter comprise variables such as tourist appeal image, quality of tourist services, destination marketing, promotion and cultural ties. research by saayman and saayman (2008:84) identified a number of aspects that play a role in the demand of inbound tourism to south africa, namely income of service sajesbm volume 4, (2011) 29 www.sajesbm.com article no 102 market, relative prices, transport cost, exchange rates, marketing expenses, qualitative factors (including tourists’ attributes, which influence time available for travel), trade and cultural links between the countries, destination attractiveness, events taking place at the destination and social threats and supply factors. the combination, availability and quality of tourism products and infrastructure supplied to tourists influences tourism demand. based on the research of saayman and saayman (2008:86), the most significant determinants of tourism demand were identified as the income of tourists, relative prices, travel cost, climate and capacity (bed and aircraft). from a supply point of view, de keyser and vanhove (1994:22), sirše and mihalic (1999:36) and saayman (2006:33) indicated the following factors influence pricing: the availability of cultural events, beauty and quality of beaches, number of sunshine days, climate, architecture, variety of events, scenic beauty, wildlife, entertainment, exchange rate, accessibility, cost, attractions, price levels, labour supply and infrastructure. gomezelj and milhalič (2008:295) and laarman and gregerson (1996:247) found that over and above this list of aspects, ’green‘ and more environmentally friendly attractions and accommodation facilities play an increasingly important role in the minds of consumers. managers realise the importance of supplying free range products, of supporting the effort to minimise the human carbon footprint on the environment and of managing the establishment in such a manner as to provide environmentally friendly products and experiences. ruta and pedrosa (2005:275) divided the factors that influence pricing into four qualitatively distinct groups, namely (1) services, which include variables that directly affect the visitor’s ’well-being‘; (2) location variables, describing the establishment’s location regarding major attractions, shopping malls and entertainment; (3) environmental variables, which affect the quality of the area near the accommodation facility; and (4) infrastructural service variables, which are expected to impact positively on accommodation prices. the features raised above support the notion that pricing is a complex issue, especially in the accommodation sector, even though management theory states that price is generally determined by fixed and variable cost where after profit is added (saayman, 2009:253). tourism literature clearly shows that this is not sufficient since the final product entails an experience (lubbe, 2005:112). this experience is influenced by several factors such as ambiance, location, and climate uniqueness and so on. from the literature review it becomes clear that limited research in the accommodation sector, from a supply side, has been conducted and this study will add to discourse on pricing. method of research the method of research used is discussed under the following headings: (і) the exploratory research done by means of a structured questionnaire, (ii) samples and (iii) the statistical analysis. sajesbm volume 4, (2011) 30 www.sajesbm.com article no 102 the questionnaire the questionnaire consisted of two sections. section a focused on the demographic details (type of accommodation, price per person, number of beds, grading, province, level of training and primary market), while section b contained likert scale type questions. respondents had to indicate to what extent they agreed or disagreed (1=not at all important; 2=less important; 3=no opinion; 4=important; 5=very important and 6=extremely important) with each of the 47 statements (tustin, ligtelm, martins & van wyk, 2005:408). the questionnaire was based primarily on the studies by ruta and, pedrose (2005:275) and mangion et al. (2005:64) including factors identified in the literature review. this article concentrated on the information obtained from section b. the sample the research was conducted at various south african accommodation establishments, selected from the databases of the three major associations in the accommodation market, namely: � satsa (south african tourism service association), one of the largest associations in the tourism industry. it is a member-driven association representing the private sector of the incoming tourism industry in southern africa and it also includes members that provide accommodation. � fedhasa (federated hospitality association of southern africa). since 1949, fedhasa has been representing the south african hospitality industry at a local, provincial, national and global level to protect the interests of all stakeholders in the industry, thereby enabling members to achieve their objectives. � tgcsa (tourism grading council of south africa). tgcsa was established in september 2000 to set a standard of quality in providing grading across all services and facilities offered by the south african tourism industry. a sample of 238 members of the satsa database (n= 936) was randomly selected and questionnaires were distributed to them electronically with the help of satsa administration staff, as indicated in table i. fedhasa sent questionnaires to the entire database (n=660) of the association via email. the researcher selected every fifth member on the tgcsa database (n=6695), to eliminate inclusion of establishments that could also be represented in other databases, and distributed questionnaires via email to the respondents. therefore, a total of 2457 questionnaires were distributed by electronic mail to the accommodation establishments over a period of five months. the questionnaires were returned via email or fax to the researcher. sajesbm volume 4, (2011) 31 www.sajesbm.com article no 102 table i shows that 247 usable questionnaires were completed and returned; representing an overall response rate of 1.8 percent, which is a representative sample for this population (cooper & emory, 1995:126). table i: questionnaires distributed, completed and analysed association number of members sampling size total of questionnaires received satsa 936 238 fedhasa 660 660 tgcsa 6695 1559 total 8291 2457 247 statistical calculations descriptive statistics were used to gain insight into the research. a principal component factor analysis with varimax rotation in statistica was used with pair-wise deletion of missing data. the factor analysis grouped the 47 individual statements into ten components that influence pricing in the accommodation sector in south africa. to determine the appropriateness of principal components analysis (data reduction procedure) for the collected data, a correlation matrix for the motivational data was used to calculate the kaiser-meyer-olkin measure of sampling adequacy and the bartlett test of sphericity. the kaiser-meyer-olkin measure of sampling adequacy aims to examine whether the relationship between variables is strong enough to proceed to a factor analysis. the bartlett test was found to be significant (p <0.00001), indicating that there is correlation between items. therefore, the data reduction by principal components would be legitimate. a factor analysis with varimax rotation was performed. an eigenvalue of 1,0 was used for factor extraction criterion and loadings above .3 were used for item inclusion. cronbach’s coefficients were also examined for each factor to check the reliability of the data and to serve as a measure of internal consistency among the sajesbm volume 4, (2011) 32 www.sajesbm.com article no 102 items. all but one of the factors had a value of more than 0.60. the exception was positioning, which had a value of 0.49 (table ii). a factor analysis is undertaken to establish whether a latent construct underlies statements in the questionnaire, which can be grouped together as one factor. results the factor analysis identified ten factors (table ii), which were labelled according to items that contributed to it. these factors were labelled as environmental qualities (factor 1), amenities (factor 2), image (factor 3), management (factor 4), positioning (factor 5), quality service (factor 6), infrastructure service (factor 7), location (factor 8), marketing (factor 9) and product quality (factor 10). sajesbm volume 4, (2011) 33 www.sajesbm.com article no 102 table ii: results of the factor analysis pattern matrix factors 1 environmental qualities 2 amenities 3 image 4 management factor 5 positioning 6 quality service 7 infrastructure service factor 8 location 9 marketing 10 product quality facility located in natural surroundings .794 quality of air .719 the remoteness of the facility .613 environmentally friendly operation .605 quality of the water .642 sajesbm volume 4, (2011) 34 www.sajesbm.com article no 102 variety of attractions .672 climate .681 location .415 lift .446 facility has a casino .918 facility has a disco .891 facility has a golf course .780 facility has at least one tennis court .705 kids’ facilities .524 sajesbm volume 4, (2011) 35 www.sajesbm.com article no 102 recreation facilities (pools, snack bar etc.) .424 shops at the facility .535 facility is disabled-friendly .329 the status (well known, famous) of the facility .733 the percentage profit desired .394 uniqueness attributed by the product .610 the target market .504 the total experience offered by the facility .525 the cost incurred to develop the facilities .522 sajesbm volume 4, (2011) 36 www.sajesbm.com article no 102 demand .472 quality of basic infrastructure .391 distance to shopping malls .532 what competitors offer .439 situated close to or part of a major attraction .672 product quality .559 quality of food .609 level of hygienic conditions .821 personal safety .766 sajesbm volume 4, (2011) 37 www.sajesbm.com article no 102 variety of food (dbb, half board etc.) .506 supply of electricity .554 accessibility of facility .507 distance from airport .538 distance from beach .708 quality of the beach .696 the marketing expenses .420 seasonality .345 psychological considerations .600 sajesbm volume 4, (2011) 38 www.sajesbm.com article no 102 exchange rate in the case of foreigners .717 postal and banking services with money changing facilities .622 room density .479 the facility’s grading status .443 services (air-conditioning, dstv, internet, etc.) .671 privacy of rooms .532 cronbach alphas .894 .813 .750 .706 .491 .801 .808 .781 .745 .611 mean values 4,37 3,19 4,87 4,29 4,55 5,06 4,46 3,59 3,87 4,78 sajesbm volume 4, (2011) 39 www.sajesbm.com article no 102 discussion relationship between the findings and the literature • factor 1: environmental qualities the environmental qualities include aspects such as the natural surroundings, location, climate, quality of the air and water, whether the operation is environmentally friendly, the remoteness of the facility, and the variety of attractions. this research therefore confirms research by dwyer, mellor, livaic, edwards and kim (2004:94) and cassidy and guilding (2007:277), who indicated that the natural environment as well as climate conditions (see saayman & saayman, 2008) are important attributes of a destination and therefore play a significant role when price is being decided. when establishments are located in a popular area or destination, the entrepreneur or manager has the scope to ask a higher price. these results also show that managers are taking tourists’ growing environmental concerns into consideration when determining price. it also correlates with findings by de keyser and vanhove (1994:19) and gomezelj and milhalič (2008:295). this factor had a mean value of 4,37, which is the 6th highest value. • factor 2: amenities amenities had the lowest mean value (3,19) and included facilities such as a lift, casino, disco, tennis court, children’s facilities, recreation facilities and facilities that are disabled friendly. the tourist facilities are those elements in tourist products that do not necessarily provide the motivation for tourist flow, but the absence of which may deter the tourist from travelling to enjoy the attraction and accommodation (das, sharma, mohapatra & sarkar, 2007:106; mangion et al. 2005:56). these results confirm research by gomezelj and milhalič (2008:298), who indicated these aspects as important in determining price. it therefore seems that a higher priority is given to amenities from the demand side. in this regard, white (2006:135) confirms that amenities addressing children’s needs urge parents to pay more. the greatest advantage of a wide variety of amenities is that it caters for more markets. • factor 3: image researchers, such as kim (1998:340) and knowles (1994:89), identified image as an important factor when determining a price. this is confirmed by this research. it may be regarded as crucial, since this factor had the second highest mean value (4,87). image includes variables such as the status (well known, famous) of the facility, uniqueness of the facility, the percentage profit desired, the total experience offered and the target market. according to bolton and thompson (2004:16), image is created by word-of-mouth, previous visits, publicity and the marketing campaign. this factor stresses the importance of quality service in creating a favourable image (koc, 2006:865). • factor 4: management sajesbm volume 4, (2011) 40 www.sajesbm.com article no 102 factor 4 has a mean value of 4,29, the seventh highest, and includes costs incurred to develop the facilities, demand, quality of the basic infrastructure and distance from shopping malls. slabbert and saayman (2003:98) concur that these aspects should be taken into consideration when determining prices; however, they found that in most cases managers and entrepreneurs do not take these aspects into account. • factor 5: positioning positioning included aspects such as what competitors offer and where the facility is located in terms of other major attractions. ruta, pedrosa (2005:275) and saayman (2006:137) also found positioning to be an important factor in determining price. it had a mean value of 4,55 and is rated fourth. • factor 6: quality service quality service had the highest mean value (5,06) and consists of product quality, quality food, hygiene and safety. all four factors contribute to the overall service that a tourist experiences while visiting a tourist establishment and supports research by stevens (1992:44), crouch and ritchie (1999:140), and mangion et al. (2005:56). furthermore, du plessis (2002), haarhoff (2007), van der westhuisen and saayman (2007) clearly indicated that these aspects are paramount in determining price and that they are also a key success factor in managing accommodation establishments. entrepreneurs and managers need to focus on achieving and monitoring quality since the latter contributes to a positive word-of-mouth recommendation. • factor 7: infrastructure service factor the provision of basic infrastructure to tourists can influence the attractiveness of the destination and can have an influence on pricing (ruta & pedrosa, 2005:275; mcintosh et al., 1995:270). infrastructure has a mean value of 4,46 and is seen as an important demand factor for accommodation (see saayman & saayman, 2008:77). • factor 8: location location as a factor influencing price has been identified by cassidy and guilding (2007:279), mangion et al. (2005:56) and botha, fairer-wessels and lubbe (2006:18). their findings are confirmed by this research where the factor of location has a mean value of 3,59. location included distance from an airport, distance from a beach and the quality of the beach. entrepreneurs and developers need to take these aspects into consideration. • factor 9: marketing saayman and saayman (2008:184) concluded that marketing expenses play an important role in determining the demand from inbound tourists and therefore also the pricing. this factor has a mean value of 3,87 but encapsulates aspects such as seasonality and psychological considerations, which are all key aspects in tourism (gomezelj & milhalič, 2008:298). sajesbm volume 4, (2011) 41 www.sajesbm.com article no 102 • factor 10: product quality factor the product quality factor includes a facility’s grading status, services like airconditioning, dstv, internet, room service, en-suite rooms and the privacy of rooms. lockyer (2005:348) and crouch and ritchie (1999:120) emphasise the importance of these aspects and argue that the quality (that is demonstrated in grading status) and availability of the products at the establishments can add to the perception of value for money and therefore have a significant influence on the pricing of the accommodation. this factor has the third largest mean value of 4,78. implications for management the above findings have the following implications: firstly, entrepreneurs and managers take a combination of demand and supply factors into consideration when determining price. it is also clear that a wide variety of factors play a role in determining price, and managers cannot base their prices on merely a few aspects as is generally believed. consequently, determining input cost plus a percentage for profit is not sufficient. it is therefore essential that managers, and especially entrepreneurs, starting new accommodation ventures receive training on price determination. the livelihood of an accommodation establishment, like all tourism ventures, is its income, which is derived from the price that customers have to pay. therefore, this aspect should be seen as extremely important and implies that curriculums’ of training institutions involved in the training of tourism managers and entrepreneurs should be reviewed accordingly. secondly, with regard to the three most important factors, as indicated by the mean values, namely quality service, image and product quality, it is clear that tourists’ needs and perceptions have to be taken into consideration when price is being determined. mangion et al. (2005) go further by stating that it should be a priority for this to happen and that both entrepreneurs and managers need to keep track of market trends and changes. thirdly, the research highlights the importance of quality, especially in the minds of managers, when price is being determined. a follow-up study is necessary to determine whether tourists have the same perception of quality as managers of accommodation establishments. this finding implies a greater understanding of quality aspects in the accommodation sector as well as focus on the curriculum and training of tourism managers. fourthly, the results support the notion that managers are also taking into consideration the growing environmental concerns. therefore, managers should adapt an alternative management approach that could result in product modification. examples include the use of alternative energy resources, environmentally friendly building designs, the use of environmentally friendly building materials, conservation of the environment through supplying organic amenities, eco-friendly products, free range products, controlling noise, water and air pollution and supporting local environmental concerns. furthermore, managers have the responsibility to educate workers and tourists about recycling, reuse and conserving natural resources. sajesbm volume 4, (2011) 42 www.sajesbm.com article no 102 lastly, this research also adds an additional group to the four groups identified by ruta and pedrosa (2005) that influence pricing, namely marketing variables, which include image, positioning and marketing itself. directions for future research this study recommends that further research be done to test the identified factors from the point of view of the tourist (demand side). this can provide important insights into adapting marketing strategies and product development, which can in turn result in a sustainable competitive advantage. it is also strongly recommended that research be undertaken to investigate the management policies regarding environmental concerns and the implementation of alternative methods and products to provide a service and to satisfy needs through an environmentally friendly experience. conclusions the purpose of this study was to identify the factors influencing pricing in the accommodation sector in south africa. results of this research indicated that managers and entrepreneurs in the south african accommodation sector identified ten factors that play a role in pricing. a similar combination of variables could not be found in existing literature, which confirms the notion that pricing is a complex issue and that various factors can influence pricing, especially in different circumstances and countries. this research therefore contributes to the scholarly debate on pricing. if pricing is not done properly it will eventually lead to the financial suicide of a business. furthermore the research contributes to the existing work done by ruta and pedrosa (2005). the findings support the importance of quality in tourism and stress the necessity of south african managers and entrepreneurs developing and improving the overall quality by sufficient training. relevant training can result in better prices and secure the sustainability of the facility. it is also clear from the findings that global market trends, such as environmental concerns, economic conditions and changing demand factors, contribute to managers’ dilemma to set competitive prices. as external environments become less predictable and more uncontrollable, it is necessary for managers to be more strategic in pricing behaviours in order to survive. the ten factors identified in this study can contribute such as planned pricing strategies. sajesbm volume 4, (2011) 43 www.sajesbm.com article no 102 references alegre, j. and pou, l. 2006. the length of stay in the demand for tourism. tourism management, 27:1343-1355. athiyaman, a. 1997. knowledge development in tourism: tourism demand research. tourism management, 18(4):221-228. bennett, a., jooste, c. and strydom, l. 2005. managing tourism services: a southern african perspective. 3rd ed. pretoria: van schaik. 411 p. blanke, j. and chiesa, t. 2008. the travel & tourism competitiveness report 2008. geneva: world economic forum. 25 p. http://www.weforum.org/ ttcr08browse/index.html. accessed: 16 february 2009. bolton, b. and thompson, j. 2004. entrepreneur: talent, temperament, technique. 2nd ed. oxford: elsevier. 415 p. bolton, r.n. and drew, j.h. 1991. a multistage model of customers’ assessments of service quality and value. journal of customer research, 17:375-384. botha, m., fairer-wessels, f. and lubbe, b. 2006. tourism entrepreneurship. cape town: juta and co ltd. 134 p. bulhalis, d. 2000. marketing the competitive destination of the future. tourism management, 21:97-116. butcher, j. 1997. sustainable development or development. (in stabler, m.m., ed. tourism sustainability: principles to practice. new york: cab international. p. 5072.) cassidy, k. and guilding, c. 2007. tourist accommodation price setting in australian strata titled properties. hospitality management, 26:277-292. chadee, d. and mattson, j. 1995. measuring customer satisfaction in tourist service encounters. journal of travel & tourism marketing, 4(4):97-107. collins, m. and parsa, h.g. 2006. pricing strategies to maximize revenues in the lodging industry. hospitality management, 25:91-107. cooper, d.r. and emory, c.w. 1995. research methods. homewood, ill.: irwin. 691 p. crouch, g.i. 1995. a meta-analysis of tourism demand. annals of tourism research, 27(1):103-118. crouch, g.i. and ritchie, j.r.b. 1999. tourism, competitiveness, and societal prosperity. journal of business research, 44:137-152. sajesbm volume 4, (2011) 44 www.sajesbm.com article no 102 das, d., sharma, s.k., mohapatra, p.k.j. and sarkar, a. 2007. factors influencing the attractiveness of a tourist destination: a case study. journal of service research, 7(1):103-134. de keyers, r. and vanhove, n. 1994. the competitive situation of tourism in the caribbean area: methodological approach. tourism review, 49(3):19-22. divisekera, s. 2003. a model of demand for international tourism. annals of tourism research, 30(1):31-49. du plessis, e. 2002. competitiveness of south africa as a tourist destination. potchefstroom: pu for che. (ma dissertation) 120 p. du plessis, e. 2010. pricing framework for the accommodation sector in south africa: a focus on supply. potchefstroom: north west university (phd thesis) 125 p. dwyer, l., edwards, d., mistilis, n., roman, c. and scott, n. 2009. destination and enterprise management for a tourism future. tourism management, 30:63-74. dwyer, l., forsyth, p. and rao, p. 2000. the price competitiveness of travel and tourism: a comparison of 19 destinations. tourism management, 21:9-22. dwyer, l., forsyth, p. and rao, p. 2002. destination price competitiveness: exchange rate changes versus domestic inflation. journal of travel research, 40:328-336. dwyer, l., mellor, r., livaic, z., edwards, d. and kim, c. 2004. attributes of destination competitiveness: a factor analysis. tourism analysis, 9(1):91-101. george, r. 2004. marketing south african tourism. cape town: oxford. 216 p. gomezelj, d.o. and mihalič, t. 2008. destination competitiveness: applying different models, the case of slovenia. tourism management, 29:294-307. gonzález, p. and moral, p. 1995. an analysis of the international tourism demand in spain. international journal of forecasting, 11:233-251. haarhoff, r. 2007. an analysis of the price competitiveness of south africa as an international tourist destination. bloemfontein: central university of technology. (dtech thesis) 411 p. keller, p. 1997. tourism and environment: towards a new tourist culture. (proceedings, strasbourg (france), 21-23 november 1996. published by council of europe. 62 p.) kim, h. 1998. perceived attractiveness of korean destinations. annals of tourism research, 28(2):340-367. sajesbm volume 4, (2011) 45 www.sajesbm.com article no 102 kim, s. and crompton, j.l. 2002. the influence of selected behavioral and economic variables on perceptions of admission price levels. journal of travel research, 41:144-152. knowles, t. 1994. hospitality management: an introduction. london: pitman. 225 p. koc, e. 2006. total quality management and business excellence in services: the implications of all-inclusive pricing system on internal and external customer satisfaction in the turkish tourism market. total quality management & business excellence, 17(7):857-877, sep. kotler, p. 2000. marketing management. new york: prentice hall. 816 p. kotler, p., bowen, j. and makens, j. 2003. marketing for hospitality and tourism. 3rd ed. upper saddle river, n.j.: prentice hall. 932 p. laarman, j.g. and gregersen, h.m. 1996. pricing policy in nature-based tourism. tourism management, 17(4):247-254. lewis, r.c. and chambers, r.e. 2000. marketing leadership in hospitality. 3rd ed. new york: wiley. 923 p. lewis, r.c. and shoemaker, s. 1997. price-sensitivity measurement: a tool for the hospitality industry. cornell hotel and restaurant quarterly, 38(2):44-54. lim, c. 1997a. review of international tourism demand models. annals of tourism research, 24(4):835-849. lim, c. 1997b. the functional specification of international tourism demand models. mathematics and computers in simulation, 43:535-543. lim, c. 1999. a meta-analytic review of international tourism demand. journal of travel research, 37:273-284. lockyer, t. 2005. the perceived importance of price as one hotel selection dimension. tourism management, 26:529-537. lubbe, b. 2005. tourism management in southern africa. cape town: ctp. 279 p. lumsdon, l. 1997. tourism marketing. london: international thompson press. 290 p. mangion, m., durbarry, r. and sinclair, m.t. 2005. tourism competitiveness: price and quality. tourism economics, 11(1):45-68. mcintosh, r.w., goeldner, c.r. and ritchie, j.r. 1995. tourism: principles, practices, philosophies. 7th ed. new york: wiley. 551 p. sajesbm volume 4, (2011) 46 www.sajesbm.com article no 102 middleton, v. a clarke. j. 2001. marketing in travel and tourism. 3rd ed. oxford: butterworth-heinemann. 487 p. monroe, k.b. 1990. pricing: making profitable decisions. 2nd ed. new york: mcgraw-hill. 436 p. morley, c.l. 1998. a dynamic international demand model. annals of tourism research, 25(1):70-84. ong, c. 1995. tourism demand models: a critique. mathematics and computers in simulation, 39:367-372. porter, m.e. 1989. the competitive advantage: creating and sustaining superior performance. london: free press. 855 p porter, m.e. 1990. competitive advantage of nations. new york: free press. 855 p. ritchie, j.r.b. and crouch, g.i. 1993. competitiveness in international tourism: a framework for understanding and analysis. (proceedings of the 43rd annual congress of the international association of scientific experts in tourism (aiest), argentina, october 17-23, 1993. p. 23-71.) rogers, h.a. 1995. pricing practices in tourist attractions: an investigation into how pricing decisions are made in the uk. tourism management, 16(3):217-224. rogers, m.r., henderson, s.w. and ginsburg, d.m. 1993. consumer prices: examining housing rental components. economic review federal reserve bank of atlanta, 78(3):32-46. ruta, g. and pedroso, s. 2005. a tale of two tourism paradises: puerto plata and punta cana – the determinants of room price in the dominican republic using a hedonic function approach. (in lanza, l., markandya, a. & pigliaru, f., eds. the economics of tourism and sustainable development. northampton: edward elgar. p. 269-288.) saayman, m. 2001. tourism growth and tourism policy: the case of an emerging market. (51st association of international experts in tourism conference malta, 2-6 september.) saayman, m. 2006. marketing tourism products and destinations: getting back to the basics. 2nd ed. potchefstroom: leisure consultants and publications. 234 p. saayman, m. and saayman, a. 2008. the determinants of inbound tourism to south africa. tourism economics, 14(1):81-96. saayman, m. 2009. hospitality, leisure and tourism management. 2nd ed. potchefstroom: leisure consultants and publications. 533 p. sajesbm volume 4, (2011) 47 www.sajesbm.com article no 102 schindehutte, m. and morris, m.h. 2001. pricing as entrepreneurial behavior. business horizons: 41-48, jul-aug. sirše, j. and mihalic, t. 1999. slovenian tourism and tourism policy: case study. tourism review, 54(3):34-47. slabbert, e. and saayman, m. 2003. guesthouse management in south africa. 2nd ed. potchefstroom: institute for tourism and leisure studies. 264 p. south africa. department of environmental affairs and tourism. 2004. the global tourism competitiveness project: a report on the global competitiveness of the south african tourism sector. pretoria: government printer. 27 p. south african tourism. 2008. it’s been great year for the tourism industry, and things are going to get even better. speech by minister van schalkwyk. news release. www.southafrica.net/satourism/media/newsreleasedetail accessed: 17 february 2009. stevens, b.f. 1992. prime values perceptions of travelers. journal of travel research, 31(2):44-48. tassiopoulos, d. 2000. event management: a professional and developmental approach. landsdowne: juta education. 494 p. thrane, c. 2005. hedonic price models and sun-and-beach package tours: the norwegian case. journal of travel research, 43(3):302-308, feb. tustin, d.h., ligthelm, a.a., martins, j.h. and van wyk, h.j. 2005. marketing research in practice. pretoria: unisa press. 749 p. van der westhuizen,t. and saayman, m. 2007. key success factors for developing and managing guesthouses: a case of a touristic town. south african journal for research in sport, physical education and recreation, 29(2):121-130. white, r. 2006. adults are from earth: children are from the moon. play meter: 135-139, nov. wilkins, h., merrilees, b. and herington, c. 2007. towards an understanding of total service quality in hotels. hospitality management, 26(2007):840-853. world travel and tourism council (wttc). 2007. executive summary: travel & tourism, navigating the path ahead. the 2007 travel & tourism economic research of the world travel & tourism council (wttc) and accenture. wttc see world travel and tourism council abstract introduction literature review methodology conclusions limitations of the study and areas for future research acknowledgements references about the author(s) edes osakpamwan d. amadasun department of business, faculty of business and management globalization, limkokwing university of creative technology, maseru, lesotho ashley t. mutezo department of finance, risk and banking, college of economic and management sciences, university of south africa, tshwane, south africa citation amadasun, e.o.d. & mutezo, a.t., 2023, ‘factors of market-driven strategies and access to finance effect on smes competitive performance in lesotho’, southern african journal of entrepreneurship and small business management 15(1), a663. https://doi.org/10.4102/sajesbm.v15i1.663 original research factors of market-driven strategies and access to finance effect on smes competitive performance in lesotho edes osakpamwan d. amadasun, ashley t. mutezo received: 15 nov. 2022; accepted: 05 apr. 2023; published: 26 june 2023 copyright: © 2023. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurship literature indicates a high rate of small and medium-sized enterprises (smes) failure in lesotho, especially those operated by basotho in major districts. critical factors of market-driven strategies and access to finance are suggested strategic solutions to address this challenge. aim: this article empirically investigates the influence of market-driven strategies and access to finance factors on smes’ competitive performance in lesotho. setting: the study was conducted in the four lesotho districts of butha-buthe, leribe, mafeteng and maseru where basotho sme enterprises dominate. methods: a questionnaire was used to obtain the data from the surveyed districts. the study adopted the descriptive correlation design and used the stratified random sampling in selecting 400 smes owners and managers in the four districts in lesotho. data analysis was conducted using descriptive and inferential statistics. results: the analysis of the data showed a positive and significant relationship between some factors of market-driven strategies and access to finance and as such influenced basotho smes’ capacity to attain competitive performance in lesotho. conclusion: the findings showed that the technological dynamics and competitive intensity strategies play crucial roles in increasing smes’ capacity to attain competitive performance. smes’ incapacity is further compounded by the challenges associated with high collateral requirements by banks and inadequate access to financial information. contribution: the complementarity of the relevant factors of market-driven strategies and access to finance contribute significantly to smes’ capacity to attain competitive performance. keywords: market-driven strategies; access to finance; technological dynamics; competitive intensity; financial information access; collateral requirement; sme competitive performance. introduction market-driven strategy is defined as the enterprises’ capacity to create, disseminate and act autonomously in responding to information about market forces, and how they deal with market conditions better than less market-driven rivals (tufa, belete & patel 2021:439). the entrepreneurship literature regards market-driven strategy as a technique that advances the enterprise’s competitiveness, the hallmark trait that revolves around strategic market orientations and a business culture that facilitates entrepreneurs achieving sustainable competitive performance, and creating superior customer value (van gelderen et al. 2020:107). market-driven strategies accentuate that managers or entrepreneurs must understand that their business environment is continually changing, regardless of the geographic location. therefore, the competitive pressure demands small and medium-sized enterprises (smes) to be proactive in creating and doing something new to remain, maintain and enhance the enterprise’s market share (nawaser & jahanshahi 2018:107). competitive pressure increases the market-driven strategic approach of entrepreneurs and managers to continuously adapt to the business environment. this allows smes that represent more than 90% of all enterprises in most developed countries to identify their market preferences and to be adaptable (pech & vrchota 2020:1). one unique facet that characterises the market-driven strategic phenomenon is the ability of the entrepreneur or manager to predict market and customer preferences, which eases the enterprise’s capacity to create the desired product and/or service through innovation for the target market (jahanshahi, nawaser & brem 2019:2). in the last decade, records indicate that more than 39% of basotho smes have been constrained because of a lack of capacity to effectively and efficiently respond, offer and deliver unique satisfaction to target market than their competing enterprises (amadasun 2020:13). less than 10% of basotho smes survive and attain competitive performance within the first 5 year period of existence, and this could be attributed to issues related to market-driven strategies (amadasun & mutezo 2022:2). furthermore, less market-driven strategies could further explain the inability of most basotho enterprises’ inability to take the opportunity to offer products that yield value proposition, meet the ever-changing customer tastes and preferences at competitive prices. for the purposes of this article, the concept of ‘market-driven strategies’ rests on strategic factors such as market orientation, competitive intensity, and the technological dynamics that smes need to influence their competitive operation in the business environment. basotho smes are further constrained because of inability to access adequate credit from banks. despite the market-driven strategic influence affecting the basotho enterprises effective operation in a dynamic business environment, this article opined that the inability of smes to gain superior competitive advantage is compounded by the challenges associated with issues related to access to finance. although smes are seen as a significant subsector given their contribution towards job creation, poverty mitigation and economic growth, access to finance is seen as one of the major challenges smes face in accessing the needed credit, to respond to a market-driven strategic operation in lesotho. finance is mainly accessed from banks in most sub-saharan economies (nyoni & moos 2022:1). rawat, doshi and ranjan (2021:158) and amadasun and mutezo (2022:3) opined that the competitive performance of smes depends upon smes financial situation and access to needed funds. access to finance is defined as the constraints that impede smes’ access to the needed credit to be able to respond to the dynamic market in lesotho. thus, ‘access to finance’ is measured by the following facets: financial information access, bank and business support services, the structure of the bank, and collateral requirements. thus, this study argues that to effectively operate market-driven strategies in the enterprisesinvolve cost of adopting new technology, exploiting the current and new markets, and implementing market models. although there is plenty of literature on smes performance most studies have focused on either intrinsic issues or extrinsic factors that constrain smes capacity to attain competitive performance in lesotho (amadasun & mutezo 2022; benedict et al. 2021). this study opines that to address the perennial challenges of smes capacity to market responsiveness and operate dynamically in the ever changing business environment, the complementarity of market-driven strategies and access to finance could significantly influence the enterprises’ capacity to attain competitive performance. in the specific lesotho context, this study opines that the complementarity of market-driven strategies and access to finance will influence most basotho smes’ capacity in gaining superior competitive performance. therefore, to gain and sustain a significant market-driven strategic operation it is essential for smes to have access to finance to facilitate the enterprise’s effectiveness and to maintain their market share over competitors. hence, the relationship between market-driven strategies and access to finance is a complementary unison that could affect smes capacity to attain competitive performance. the knowledge gap this research addressed was to establish whether a relationship exists between market-driven strategies factors and access to finance factors to influence smes competitive performance. hence, the nexus between the factors of market-driven strategies and access to finance can be explained from the following perspectives. firstly, as seen from the viewpoint of the resource-based view (rbv) on smes market flexibility and competitiveness require that an enterprise has access to flexible resources such as ‘finance’ to be flexible in coordinating the market-driven strategies to ensure the enterprise’s competitive performance (asah & louw 2021:2). this study found that excellent market orientation, strategic competitiveness and superior technology strategies are unlikely to produce competitive performance of smes if enterprises do not have access to needed finance to operate in the competitive business environment. this view is consistent with molina-sanchez, garcia-perez-de-lema and lopez-salazar’s (2022), ‘internal capabilities and enterprises performance’, benedict et al. (2021) ‘financial determinants of smes performance’ and tufa et al. (2021) ‘entrepreneurial capability and firm performance’. secondly, the relationships and the joint implementation of market-driven strategies and access to finance enhance the enterprise’s competitive performance in the context of smes. this implies that smes’ competitive performance in a continuous and dynamic market environment requires access to adequate finance (benedict et al. 2021:3). furthermore, studies such as that of chilembo (2021:438) and iwara et al. (2021:2) emphasised that financial constraints continue to play a major role in entrepreneurship, and constrain smes’ competitive performance in sub-saharan africa, leading to their inability to compete and gain sustainable performance. venter and hayidakis (2021:2) added that inadequate finance is the likelihood of less market-driven strategic operation in smes. centobelli, cerchione and singh (2019:5) accentuated that the market-driven strategic approach significantly effects on the enterprise’s technological operations and innovative activities (such as process innovation effects product innovation), skills of the employees, training, and staff productivity, to such a degree that, for all their operations to be effective, smes need access to finance from the financial market. in particular, marketing performance of manufacturing smes in developing countries is more likely to be strategically market-driven and require access to finance to attain competitive performance (riswanto et al. 2020:2). literature review market orientation in the small and medium-sized enterprise several strategic perspectives suggest that market orientation is motivated by the enterprise’s ability to sense, evaluate and offer new products or services that suit the target market preferences (chipunza 2020:2). venter and hayidakis (2021:3) acknowledged market orientation as a tactical concept that places the customer at the core of its strategy and the typology that emphasises the target market as the cornerstone of its market operation. a novelty concept consistent with jones and rowley (2011:31) second-order multidimensional paradigm is shaped by three facets, namely customer orientation, competitor orientation and inter-functional coordination. customer orientation refers to an enterprise focusing on the target market’s perceptions and desires to satisfy its adopted supply. competitor orientation emphasises the enterprise’s capacity to be familiar with competing firms’ market opportunities, strategies, strengths and weaknesses, and to configure and refigure strategic responses. inter-functional coordination defines the capability of entrepreneurs or managers to harness and be efficient in using the enterprise’s resources to provide better value to its customers. in strategic literature, the assessment of market-driven strategic facets of market orientation effects on smes’ competitive performance has remained inconclusive, as the few available findings range from significantly positive to insignificant effects. riswanto et al. (2020:1950) found a positive and significant relationship between market orientation and enterprise’s financial performance. studies such as that of chipunza (2020:7) and ho et al. (2018:158) found a significant positive relationship between market orientation and smes’ competitive performance. venter and hayidakis (2021:9) findings reveal that the general concept of market orientation enhances the enterprises competitive performance. in addition, venter and hayidakis (2021:9) findings indicated the smes exhibit significant performance when they poses high level of customer-focused market orientation. thus, this article opines that smes with market orientation strategies will increase their capacity to refigure and configure their market core strategies, meet customers’ needs proactively and attain competitive performance in the dynamic market, as expressed in the following hypothesis: h1: smes with market orientation may attain competitive performance. competitive intensity a review of the strategic literature shows that there is a lack of research into the competitive intensity concept in smes. according to mkhonza and sifolo (2022:1), the increase in the level of competition in the various markets has made many smes that are engaged in entrepreneurship unable to consistently formulate, implement market strategies and strategically take advantage of business opportunities. this is because most entrepreneurs or managers lack the understanding that the main thrust of competitive intensity anchors on the sme’s capacity to focus on the dynamic market, configure and refigure strategic marketing concepts that can adapt, that secure an imitable position in meeting customers’ preferences, and that expand product and/or service lines. in general, competitive intensity is seen from both the degree of competition in the market that the enterprise faces, and the upsurge in the current market where many products and services have become increasingly ferocious, making it difficult for the sme to secure a unique position in the target market’s minds. consistent with strategic literature, it is not surprising that smes that adopt effective competitive intensity strategy benefit from business growth (zhou et al. 2021). in particular for those smes that coped during and the post long-term crises such as the covid-19 pandemic (mkhonza & sifolo 2022:2). molina-sanchez et al. (2022:3), weller (2020:8), garcía-guiliany et al. (2019), and agyapong, essuman and yeboah (2021:31) reveal that competitive intensity has a positive and significant effect on the strategic and financial competitive performance of smes. this article opines that the incapacity of the sme to consistently cope with the dynamic market preferences, understand the needs and deliver satisfaction more effectively and efficiently than competitors, suggests the enterprise’s lack of competitive intensity strategies in the market environment. as competition increases in the business environment, the inability of the sme to influence its strategic process through a market-driven approach generally decreases its capacity to attain competitive performance. this is because competitive intensity stresses the smes’ capacity to secure a unique position in the customers’ minds in an uncertain market scenario. therefore, the following hypothesis has been formulated: h2: smes with a competitive intensity strategy may attain competitive performance. technological dynamics gheitarani et al. (2022:3) defined technological dynamics as the capacity of the enterprise to compete in local and international markets. this is anchored on smes’ technological capacity to configure inimitable products or services unique to the target market. this means that the sme’s technological dynamics refer to the degree of the enterprise’s dynamism to create and adjust to the dynamic business environment by continuously offering radical products or services that alter the status quo of the market through novel processes and technologies. edeh, badeshi and ramos-hidalgo (2020) argued that the enterprise’s technological dynamics account for the innovativeness that drives its ability to continuously create radically new products for the market, meet the target market’s dynamic tastes and preferences, which directly effects sme’s performance. a study by rachapaettayakom et al. (2020:2) and munyanyi and pooe (2019:7) found that technological dynamic enterprises experience significant market operation, both in terms of business success (sales of the sme) and competitive performance that are based on superior skills and distinctive capabilities of entrepreneurs or managers. gheitarani et al. (2022:30) indicated that the enterprise’s continuous responsiveness is a technologically innovative practice derived from technical and practical improvements to the methods and procedures necessary to produce the products or services that meet customers’ demands. however, silveira-martins (2019:197) and molina-sanchez et al. (2022:2) suggest that because of a lack of better technology, most smes are denied the opportunity to effectively leverage costs, achieve high production capacity, and maximise optimal profits. it was therefore hypothesised that: h3: smes with technological dynamics may attain competitive performance. inadequate financial information access to small and medium-sizeds financial information access has become a particularly challenging issue for both sme loan applicants and for banks in most sub-saharan economies. according to engidaw (2021:5) access to finance significantly affects the overall performance when smes have access to adequate financial information. for the purposes of this article, this facet serves as a stimulus to evaluate the financial information constraint in terms of credit grants by banks to smes, which possibly influences enterprises’ incapacity to attain competitive performance in the business environment. finance literature presents a well-documented explanation regarding finance issues experienced by smes in terms of the ‘financing gap analysis of the credit rationing theory’ of stiglitz and weiss (1981:393) as observed by alkahtani, nordin and khan (2020:4). the financing gap theory argues that information asymmetries are one of the major reasons why smes are constrained in terms of access to finance. from the paradigm of the informational problem, many commercial banks see most smes as high-risk and consider them to be highly insolvent with a diminished capacity to repay debt promptly. as a result, this discourages banks from supplying the necessary lending information to sme loan applicants. consequently, as a result of the inadequate financial information tailored to smes because of their type of ownership, most loan officers continue to see them as being highly risky to finance. the loan officers perception of the smes as highly risky deny sme applicants the chance to access needed loan, which constrained their opportunity to effectively respond to market operation and attain competitive performance. however, benedict et al. (2021:5) argued that the enterprise’s financial information access accounts for significant access to adequate information and allows sme applicants to identify the potential supplier of credit funds in the financial market and operate competitively in the dynamic market. cicchiello et al. (2021:2) maintained that financial information access influences enterprises’ access to finance, improve bank financial services even to underserved smes applicants’ and when adequately utilised can influence enterprise performance. thus, loan applicants’ (smes) inadequate access to necessary information and awareness of available and supply of credit funds contribute to their access of needed loans from banks and such influence on their business operations and capacity to attain competitive performance, and this study suggests that: h4: financial information access constraint in terms of access to finance, influence smes capacity to attain competitive performance. inadequate bank and business support services bank and business support services have become a particularly challenging issue in terms of smes’ operational capacity and in their efforts to attain competitive performance. according to alkahtani et al. (2020:4), bank and business support services enable the entrepreneurial operational activities such as training, marketing, financial services, and other related business consultancy services that improve the smes’ effective capacity and allow them access to needed credit and growth. eton et al. (2021:5) argued that such enabling services range from the management training skills, government service support, adequate information and integrated communication technology capabilities of entrepreneurs or managers in the business to ensuring adequate performance. according to kunene (2020:5), the poor performance of smes is attributed to a lack of enabling services required for their formidable operation. alkahtani et al. (2020:10) and kassa and mirete (2022:5) found a positive and significant relationship between the smes’ business management training skills and significant performance. akeyewale’s (2018:8) findings indicated a significant and positive relationship between the integrated technology capability training that entrepreneurs possess and the enterprises’ access to loans from the banks. this article regards the inability of smes to access the necessary credit as fundamental institutional neglect from private and public agencies, which prevents most smes’ from attaining competitive performance. in lesotho, this is considered a fundamental constraint to most basotho smes’ accessing bank loans, and it may have exacerbated the credit rationing that persists in the credit market. thus, the article argues that: h5: smes with business support services access may attain competitive performance. structure of the bank in the context of access to finance, the ‘structure of banks’ refers to the financial structures of banks in the financial market. according to amadasun (2020:92), the structure of a bank is defined as the level of competition in the financial market that determines the prices of loans or services that banks offer to clients. thus, entrepreneurial literature indicates that the level of competition in the financial market determines the prices of financial products or services offered to sme loan applicants (abdisa & hawitibo 2021:2; osano & languitone 2016:6). this suggests that competition in the banking industry may positively affect loan applicants, particularly smes’ access to the needed credit from banks. therefore, a lack of competition in the financial market compromises the competitive cost of credit to sme loan applicants. according to abdisa and hawitibo (2021:1), low competition in the banking industry directly affects a high regulatory regime that relies extensively on the country’s regulatory services, financial and institutional system, rather than on the actual market of a country. a well-developed and flexible bank structure makes a country attractive destination to domestic entrepreneurs of all sizes, across sectors and to foreign investors’ willingness to invest. abdisa (2019) and osano and languitone (2016:13) found a positive and significant relationship between the structure of banks and smes’ access to finance. similarly, abdisa (2018:116), found that low competition in the banking industry is an implication of a high regulatory regime that constrains many sme loan applicants’ access to the needed credit from banks. although the strategic literature presents various factors, which constrain smes’ access to finance, this study argues that the degree of competition in the banking industry significantly affects the prices of loans that banks offer to smes. in lesotho, the level of competition seems to be very low because there are only three major commercial banks of which basotho indigenes control minimal share ownership. the likelihood that the bank structure may favour the practice of financial exclusion because of acute information asymmetry, the unwillingness to finance smes based on the perception that smes are highly risky, and bias associated with enterprise ownership are high possibilities. therefore, if the competitive costs of loans or services in the financial market is the influence of the structure of the bank, then: h6: the structure of bank in lesotho constraints smes’ the capacity to attain competitive performance. collateral requirement and competitive performance entrepreneurship literature shows an immense amount of studies on access to finance, particularly regarding the collateral requirements of banks before granting loans to smes. sriyono, biduri and proyogi (2021:3) argued that banks rely on various criteria while making lending decisions. among these criteria, banks usually underpin the assessment of the trustworthiness of the borrower’s capability to repay the principal and interest. entrepreneurship literature stresses that where a high level of trust cannot be assured, transaction costs, adverse selection, and the collateral requirements increase. prihantoro and nuryakin (2020:220) indicated that because of a poorly resourced judiciary that protects the rights of creditors, banks tend to insist on collateral deposits up to the credit loan they intend to grant to smes. meresa’s (2018:70) study indicated that many small enterprises are denied access to loans because of collateral deposits in sub-saharan africa. kassa (2021:4) confirmed that because of collateral deposits, most smes in north wollo and waghimira zones of ethiopia are denied loans. osano and languitone (2016:13) found a positive association between the collateral requirement and smes’ access to a loan in mozambique. according to boushnak et al. (2018:6), collateral requirement is the biggest obstacle of smes access to finance and constrain their capacity to attain significant performance in zimbabwe. going by the general norm that smes generally have limited resources, most smes in developing countries, such as lesotho, can hardly afford the needed collateral deposit required by banks for a loan application; hence, they lack sufficient finance to grow and to effectively compete and in diversifying their businesses (prihantoro & nuryakin 2020:223). thus, this article argues that: h7: collateral requirement by banks constrains smes’ ability to attain competitive performance. competitive performance strategic literature indicates that enterprises’ competitive performance can be measured using internal indicators, business capacity in developing new or existing products, new markets to influence turnover, employee numbers and assets (nyoni & moos 2022:3). according to zhou et al. (2021:5), competitive performance is measured by an increase in employee numbers and increase in sales. in this study, competitive performance is defined as a measure of smes’ pecuniary and non-pecuniary measures. pecuniary measures include trade, commerce and asset returns, and non-pecuniary measures include the assessed target market satisfaction and the entrepreneur’s growth in competitive advantage. methodology the study focused on smes in five sectors: construction, manufacturing, retail, service and tourism. self-administered questionnaires were used to collect data in the four districts where smes are concentrated in lesotho, namely butha-buthe, leribe, mafeteng, and maseru. this study is descriptive-correlational that tests the effect of the factors of market-driven strategies and access to finance on the competitive performance of smes. research design this article adopted a quantitative method for the empirical study and was skewed to the positivist approach to investigate the extent the factors of market-driven strategies and access to finance influence smes’ competitive performance in some districts in lesotho. in terms of this study, the quantitative method ideally stays within the traditions of post-positivism, which involves testing objective theories deductively, objectively examining the relationships among variables and generalising and replicating results (creswell & plano clark 2018:24). current data from the ministry of small business, cooperative and marketing and basotho enterprise development cooperative (bedco) indicated that lesotho currently hosts about 13 899 formal micro-, small and medium-sized enterprises (msmes). of the 13 899 formal msmes, fewer than 5000 are active basotho smes in the four selected districts of lesotho (gol 2016:5). thus, 5000 was adopted in this article as the study population. research strategy adopted the seven likert-scale structured questionnaires to collect from smes owners and managers in the four districts of lesotho. yamane’s (1967) formula was used to calculate the sample size, which was rounded up to 400 for this study. the 400 sample size was used to determine the study’s total respondents, consisting of sme entrepreneurs and managers. it was selected using stratified random sampling. from the stratified random samples of the 400 respondents selected in the survey, 384 questionnaires were validated and used for the analysis. table 1 indicates the proportions of the distribution of smes in the four districts of lesotho that were sampled. table 1: selection of sample size (n = 5000). data analysis the study’s descriptive-correlational design focused on the relative descriptive, predictive, and model-testing design factors of market-driven strategies and access to finance that influence sme’s competitive performance. the predictor items from various authors such as riswanto et al. (2020), osano and languitone (2016), weller (2020), edeh et al. (2020), amadasun (2020), eton et al. (2021), kassa (2021) were selected as measures and because they represent market-driven strategies and access to finance as relevant to the context of this study. various tests, such as the confirmatory factor analyses (cfa) and exploratory factor analyses (efa) were performed to ensure minimal measurement errors of factors. the cfa results confirmed that the conceptual dimension of factors of market-driven strategies and access to finance matches the data. the eigenvalues of all the factors of market-driven strategies (i.e. market orientation, competitive intensity and technological dynamics) and access to finance (financial information access, structure of bank, bank and business support services and collateral requirement) indicated indicated that each loads within each independent construct. the exploratory factor analysis was used to identify the factor pattern of the data. the bartlett test and the kaiser–meyer–olkin (kmo) indicated that all scales conformed to and addressed the hypothesis in each construct. the result of the total value of kmo was 0.847, bartlett’s test of sphericity and determinant of the association matrix were degrees of freedom and 0.000, respectively. the results indicated that all observed factors loaded as anticipated supported the principal component analysis (pca) method and predicted numbers of factors. in line with the exploratory factor analysis, the pca generated seven constructs for market-driven strategies and access to finance factors. the pca method with varimax and kaiser normalisation for the market-driven strategies and access to finance predictors showed that all items of both predictors were loaded to form seven predictors. to check for reliability, cronbach’s alpha estimated the internal consistency reliability of the scale of the seven factors; all scale scores had an alpha coefficient between 0.694 and 0.939. this suggested sufficient reliability scales for exploratory research (hair et al. 2014:123, 2019). presentation and discussion of results data analysis considered the spearman’s correlation and the multiple regression analysis to explain how factors of market-driven strategies and access to finance affect smes’ competitive performance in lesotho. correlation analysis correlation analysis established the degree of association between all market-driven strategic and access to finance predictors’ market orientation, competitive intensity, technological dynamics, financial information access, structure of bank, bank and business support services, and collateral requirement, and the extent to which each is related to the competitive performance of smes are presented in table 2. table 2: spearman’s correlations of market-driven strategies and access to finance factors on competitive performance. table 2 shows the spearman’s correlation results that test for the direction and strength of the association between factors of market-driven strategies, access to finance, and smes’ competitive performance. the spearman’s correlation results indicated that positive and significant associations were observed between the following factors: technological dynamics and competitive intensity (r = 0.37; moderate influence, p < 0.05), competitive intensity, and financial information access (r = 0.76; strong influence, p < 0.05), structure of bank (r = 0.25; low influence, p < 0.05), and collateral requirement (r = 0.30; moderate influence, p < 0.05). the results indicated positive associations between technological dynamics and financial informational access (r = 0.32; moderate influence p < 0.05), business support services (r = 0.27; low influence; p < 0.05) and collateral requirement (r = 0.30; moderate influence, p < 0.05). furthermore, a positive correlation between bank and business support services and structure of bank (r = 0.33; moderate influence, p < 0.05), collateral requirements (r = 33; moderate influence p < 0.05), and a positive correlation between structure of the bank and collateral requirement (r = 0.39; moderate influence, p < 0.05). furthermore, positive and significant associations were observed between competitive intensity and competitive performance (r = 0.55; strong influence, p < 0.55), technological dynamics and competitive performance (r = 0.78; strong influence, p < 0.05), financial information access and competitive performance (r = 0.54; strong influence, p < 0.05), structure of bank and competitive performance of smes (r = 0.36; moderate influence, p < 0.05), and collateral requirement and competitive performance (r = 0.74, strong influence, p < 0.05). this result (table 2) indicates that the factors of market-driven strategies and access to finance show a high and moderate association and are each associated with the competitive performance of smes. thus, the analysis shows that inadequate technological dynamics and competitive intensity capabilities in smes are associated with basotho smes’ inability to attain competitive performance. similarly, the inadequate financial information access, bank and business support services, regulatory inflexible structure of the banking system, and high collateral requirement by banks are related to smes’ inability to attain competitive performance. this suggests that fewer constraints related to the factors of market-driven strategies and access to finance could be associated with the capability and capacity of sme entrepreneurs or managers to attain competitive performance. regression analysis results regression analyses such as model summary, analysis of variance and standardised coefficient were adopted to determine the degree of relationship between the factors of market-driven strategies and access to finance validity fit and to establish the effect on smes’ competitive performance. model summary after testing for the durbin–watson statistic for autocorrelation, the value 2 was obtained, which indicates no autocorrelation detected in the data. table 3 explains the measure of the proportion of the variance of competitive performance (dependent factor), as explained by the seven factors of market-driven strategies and access to finance. the regression model is significant at the 95% level of significance and p < 0.05. table 3: model summary of coefficient of determination (r2). the model summary result indicates r = 0.922 that reflects the level of a positive and significant relationship between some of the predictors and the dependent factor (competitive performance), r2 of 0.850 indicates the total variation of competitive performance explained by the model regression. adjusted r2 = 0.847 explains 84.7% of the variance of market-driven strategies and access to finance factors on smes’ competitive performance. thus, the adjusted r2 of 0.847 indicates that the data fit well and that four predictors of market-driven strategies and access to finance contribute positively and significantly to smes’ competitive performance. analysis of variance in terms of the f-ratio, this analysis of variance provides the statistical test for the overall model fit. using the values obtained from the factors of market-driven strategies and access to finance, the error is reduced by 84.99% (176.765 ÷ 207.979). this reduction is considered statistically significant with the f-ratio of 265.453, and at a significance level of 0.000. this means the result is significant at (f (7, 375) = 265.453, p < 0.001). standardised coefficient table 5 shows how well each of the seven factors of market-driven strategies and access to finance contributed to the final equation. the significant column showed that the following factors contributed to the competitive performance of smes. from the highest contribution, technological dynamic contributed 42.1%, collateral requirement 38.8%, competitive intensity 16.1%, and financial information access, 13.5%. thus, table 5 indicates that technological dynamic capacity contributed the highest to smes’ ability to attain competitive performance. from the strategic literature, it is evident that the technological dynamic ability of managers or entrepreneurs affects the enterprise’s capacity to continuously configure and reconfigure strategies to offer unique goods or services to satisfy the target market and make competitors reactive. however, market orientation had a −6.4% magnitude, which negatively affects smes’ competitive performance. this suggests that for basotho enterprises, being market-oriented (scale −6.4%) do not directly affect smes’ competitive performance. this is in contrast with evidence from the literature, which suggests that market orientation is a key factor that influences an enterprise’s significant operation in the business environment. the non-significant effect could be attributed to basotho small entrepreneurs’ inability to understand that being market-oriented is a veritable market strategy that affects effective and efficient business performance. similarly, table 5 indicates that the structure of banks does not have a direct effect on the competitive performance of smes. the negative scale suggests that the structure of banks has a major effect on smes’ access to finance but that it is unlikely to affect enterprises’ capacity to attain competitive performance. table 4: analysis of variance (anova). table 5: standardised coefficient. this study empirically investigated the relationship between the factors of market-driven strategies and access to finance that effect on smes’ competitiveperformance in some districts in lesotho. the findings of this article indicated that factors of market-driven strategic resources (technological dynamics and competitive intensity) and access to finance (collateral requirement and financial information access) have a positive and significant effect on smes’ capacity to attain competitive performance in lesotho. the result of the regression summarily showed that technological dynamics play a crucial role in increasing smes’ capacity to attain competitive performance. this finding suggests that the low degree of dynamism among sme entrepreneurs or managers to create and adjust to the dynamic market shows that they are unable to continuously offer radical new target market tastes and preferences that alter the status quo of the market in terms of novel processes and technologies and negatively affects their ability to attain competitive performance. furthermore, the analyses suggest that most basotho smes lack the innovativeness that drives the enterprise’s ability to continuously create radically new products to satisfy the constantly changing target market tastes and preferences. thus, this result is consistent with donbesuur et al. (2020), rachapaettayakom et al. (2020), and gheitarani et al.’s (2022:30) finding that technological dynamic enterprises experience significant market operation in terms of business sales and competitive performance, which can be accrued to superior skills and distinctive competences of managers or entrepreneurs. the findings showed that competitive intensity has a unique statistical contribution influence on smes’ capacity to attain competitive performance in lesotho. the analysis suggests that as managers and entrepreneurs face increasing pressure because of their incapability to configure and refigure the marketing concept to adapt and secure an inimitable position in offering products or services, which meet customers’ preferences, the competitive intensity strategy emphasises that operators of smes need to be equipped with market strategic resources to enable them to always secure a unique position in the minds of the target market. therefore, the findings revealed that entrepreneurs or managers with greater competitive intensity strategies can consistently cope with the dynamic market preferences and are able to deliver customer needs in the increasingly ferocious market more efficiently than their competitors. consistent with this finding are the studies of molina-sanchez et al. (2022), garcía-guiliany et al. (2019) and agyapong et al. (2021), which found that a competitive intensity strategy has a positive and significant influence on sme competitive performance. furthermore, the findings indicate that the collateral requirements by banks are a major factor constraining and discouraging most basotho smes from accessing bank loans. the results indicated that the high collateral requirements by banks deny most sme applicants from seeking the needed bank credits and constrains their capacity to attain competitive performance in lesotho. the findings of kassa (2021), prihantoro and nuryakin (2020:223), boushnak et al. (2018), and osano and languitone (2016:13) are consistent with this result. in addition, the analysis showed that financial information access is a particularly challenging issue for most sme loan applicants from banks, and as such, affects their ability to attain competitive performance in the business environment. the inability to access adequate financial information is seen to constrain most basotho sme applicants to identify potential bank lenders of loans in the financial market. this suggests that adequate financial information access influences enterprises’ access to bank loans, and when adequately utilised, can affect business competitive performance. this result is in congruence with the findings of benedict et al. (2021:10), cicchiello et al. (2021:9) and osano and languitone (2016:14), which indicated that financial information access influences smes’ access to finance and performance. nonetheless, the regression analysis indicated that market orientation does not have a positive significant effect on sme competitive performance and was contrary to the expectations of the researcher. according to the entrepreneurial literature being market-oriented is a strategic factor of effective operation of smes to attain growth. this result was in contrast to that of chipunza (2020), riswanto et al. (2020) and venter and hayidakis (2021). furthermore, the findings indicated that the structure of the bank factor did not have a positive significant effect on sme competitive performance. in reference to this study’s literature, the structure of bank significantly constrains smes’ access to the needed funds from the financial market, but does not affect their capacity to attain competitive performance in lesotho. this result was in contrast to that of abdisa and haritibo (2021), abdisa (2018) and osano and languitone (2016:14) findings, and it suggests that the concept ‘structure of bank’ is perhaps a new concept not familiar to most basotho smes respondents. equation 1 explains the extent each of the seven factors of market-driven strategies and access to finance contribute to the sme’s competitive performance in the analysis: conclusions the relevant factors of market-driven strategies and access to finance contribute significantly to smes’ capacity to attain competitive performance. firstly, the survival and competitive performance of smes depend on entrepreneurs’ or managers’ willingness and capability to adopt a higher level of technological dynamics and competitive intensity strategies to ensure competitive operation and performance. secondly, policies on the harmonisation of collateral requirements are necessary, and as such, they would afford sme applicants access to the needed funds, increase their effective operations, and enable them to attain competitive performance. thus, banks may promote policies on financial information programmes directed to ease sme applicants’ access to loans in both the rural and urban areas of lesotho. the implementation of such policies may decrease the problems of asymmetric information in the banking sector, and ease sme owners or managers’ access to needed credit loans to improve their enterprises’ operations. limitations of the study and areas for future research this article poses a few limitations that present the prospect for new lines of future research. the first limitation of this study is the predictors. this article only focused on and empirically analysed seven competitive variables (i.e. market orientation, competitive intensity, technological dynamics, financial information access, bank and business support services, structure of bank and collateral requirements). the second is the survey areas of this study which were limited to four selected districts of the 10 districts that make up lesotho. a future study could consider other fascinating factors, and for more robust findings, a similar study may be conducted across the 10 districts in lesotho to see if the same results would be obtained. lastly, this study examined basotho smes in four districts, so the same study could be surveyed for all smes owned and managed by all nationals to see if the results are replicated and generalisable to all smes in lesotho. acknowledgements competing interests the authors have declared that no competing interest exists. authors’ contributions the first author e.o.d.a. did the preliminary writing, and the co-author a.t.m. supervised the study and reviewed the manuscript. funding information the university of south africa funded the survey as a bursary for the candidate’s phd study. therefore, this article utilises the data obtained during the survey from the four districts of lesotho (namely, butha-buthe, leribe, mafeteng and maseru) in 2019. ethical considerations ethical clearance to conduct this study was obtained from the university of south africa college of economic and management sciences research ethics review committee (no. 2017_cems_dfrbm_014). data availability the data generated and analysed in this study are included in this published article (and in the supplementary files). disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abdisa, l.t., 2018, ‘power outages, economic cost, and firm performance: evidence from ethiopia’, utilities policy 53(c), 111–120. https://doi.org/10.1016/j.jup.2018.06.009 abdisa, l.t., 2019, firm performance under infrastructure constraints: evidence from sub-sahara african firms, munich personal archive, viewed 18 october 2022, from https://mpra.ub.uni-muenchen.de/95758/. abdisa, l.t. & hawitibo, a.l., 2021, ‘firm performance under financial constraints: evidence from the sub-saharan african countries’, innovation entrepreneurship 10(28), 1–17. https://doi.org/10.1186/s13731-021-00177-1 agyapong, a., essuman, d. & yeboah, a.k., 2021, ‘performance implications of strategic planning and marketing capability in micro and small businesses in an emerging african economy: a contingent resource-based view’, journal of small business and entrepreneurship 33(1), 29–48. https://doi.org/10.1080/08276331.2018.1507415 akeyewale, r., 2018, who are the winners and losers in africa’s continental free trade area? world economic forum, viewed 18 october 2022, from www.weforum.org/agenda/2018/10. alkahtani, a., nordin, n. & khan, r.u., 2020, ‘does government support enhence the relation between networking and structure and sustainable competitive performance among smes?’, journal of innovation and entrepreneurship 9(14), 1–13. https://doi.org/10.1186/s13731-020-00127-3 amadasun, e.o.d., 2020, ‘the influence of market-driven strategies and access to finance on competitive growth of small and medium-sized enterprises in selected districts of lesotho’, unpublished doctoral thesis, university of south africa (unisa), pretoria. amadasun, e.o.d. & mutezo, a.t., 2022, ‘effect of market-driven strategies on the competitive growth of smes in lesotho’, journal of innovation and entrepreneurship 11(21), 1–17. https://doi.org/10.1186/s13731-022-00217-4 asah, f.t. & louw, l., 2021, ‘guidelines and criteria used by formal financial institutions to assess credit applications from small and medium enterprises in south africa’, southern african journal of entrepreneurship and small business management 13(1), a373. https://doi.org/10.4102/sajesbm.v13i1.373 benedict, a., gitonga, j.k., agyeman, a.s. & kyei, b.t., 2021, ‘financial determinants of smes performance. evidence from kenya leather industry’, small business international review 5(2), 1–17. https://doi.org/10.26784/sbir.v5i2.389 boushnak, e., rageb, m.a., ragab, a.a. & sakr, a.m., 2018, ‘factors influencing credit decision for lending smes: a case study on national bank of egypt’, open access library journal 5(11), e4996. https://doi.org/10.4236/oalib.1104996 centobelli, p., cerchione, r. & singh, r., 2019, ‘the impact of leanness and innovativeness on environmental and financial performance: insights from indian smes’, international journal of production economics 212(1), 111–124. https://doi.org/10.1016/j.ijpe.2019.02.011 chilembo, t., 2021, ‘a study of the factors affecting small and medium enterprises (smes) access to finance. a case of lusaka based smes’, american journal of industrial and business management 11(5), 437–460. https://doi.org/10.4236/ajibm.2021.115028 chipunza, l.t., 2020, ‘innovation in small accommodation businesses: a comparative study of zimbabwe and south africa’, acta commercii 20(1), 1–10. https://doi.org/10.4102/ac.v20i1.796 cicchiello, a.f., kazemikhasragh, a., monferrá, s. & giron, a., 2021, ‘financial inclusion and development in the least developed countries in asia and africa’, journal of innovation and entrepreneurship 10(1), 1–13. https://doi.org/10.1186/s13731-021-00190-4 creswell, j.w. & plano clark, v.l., 2018, designing and conducting mixed methods research, 3rd edn., sage, thousand oaks, ca. donbesuur, f., ampong, g.o.a., owusu-yirenkyi, d. & chu, i., 2020, ‘technological innovation, organizational innovation and international performance of smes: the moderating role of domestic institutional environment’, technological forecasting and social change 161, 120252. https://doi.org/10.1016/j.techfore.2020.120252 edeh, j.n., obodoechi, d.n. & ramos-hidalgo, e., 2020, ‘effects of innovation strategies on export performance: new empirical evidence from developing market firms’, technological forecasting and social change 158(1), 120167. https://doi.org/10.1016/j.techfore.2020.120167 engidaw, a.e., 2021, ‘the effect of external factors on industry performance: the case of lalibela city micro and small enterprises, ethiopia’, journal of innovation and entrepreneurship 10(10), 1–24. https://doi.org/10.1186/s13731-021-00147-7 eton, m., mwosi, f., okello-obura, c., turyehebwa, a. & uwonda, g., 2021, ‘financial inclusion and the growth of small medium enterprises in uganda: empirical evidence from selected districts in lango sub-region’, journal of innovation and entrepreneurship 10(1), 23. https://doi.org/10.1186/s13731-021-00168-2 garcía guiliany, j.e., durán, s.e., hernández, j.c. & moreno, m.e., 2019, ‘estrategias gerenciales para fomentar las competencias laborales en el sector hotelero de la costa caribe colombiana’, revista deinvestigación sigma 5(2), 8. https://doi.org/10.24133/sigma.v5i02.1251 gheitarani, f., guevara, r., nawaser, k. & jahanshahi, a.a., 2022, ‘identifying dimension of dynamic technological capability: a systematic review of the last two decades of research’, international journal of innovation and technology management 19(4), 1–37. https://doi.org/10.1142/s0219877022300026 government of lesotho (gol), 2016, the finscope msme survey lesotho 2015, finscope maseru. hair, j.f., hultt, g.t.m., ringle, c. & sarstedt, m., 2014, a primer on partial least squares structural equation modeling (pls-sem), sage, munich hair, j.f., risher, j.j., sarstedt, m. & ringle, c.m., 2019, ‘when to use and how to report the results of pls-sem’, european business review 31(1), 2–24. https://doi.org/10.1108/ebr-11-2018-0203 ho, k.l.p., nguyen, c.n., adhikari, r., miles, m.p. & bonney, l., 2018, ‘exploring market orientation, innovation, and financial performance in agricultural value chains in emerging economies’, journal of innovation & knowledge 3(3), 154–163. https://doi.org/10.1016/j.jik.2017.03.008 iwara, i.o., kilonzo, b.m., zuwarimwe, j. & netshandama, v.o., 2021, ‘entrepreneurs’ endogenous attributes necessary for small enterprise success in vhembe rural areas, south africa’, southern african journal of entrepreneurship and small business management 13(1), a331. https://doi.org/10.4102/sajesbm.v13i1.331 jahanshahi, a.a., nawaser, k. & brem, a., 2019, ‘the effects of customer capital on customer response speed and innovativeness: the mediating role of marketing capability’, international journal of innovation management 23(6), 1–25. https://doi.org/10.1142/s1363919619500580 jones, r. & rowley, j., 2011, ‘entrepreneurial marketing in small businesses: a conceptual exploration’, international small business journal 29(1), 25–36. https://doi.org/10.1177/0266242610369743 kassa, e.t., 2021, ‘socioeconomic determinants of micro and small enterprise growth in north wollo and waghimira zone selected towns’, journal of innovation and entrepreneurship 10(28), 1–14. https://doi.org/10.1186/s13731-021-00165-5 kassa, e.t. & mirete, t.g., 2022, ‘exploring factors that determine the innovation of micro and small enterprises: the role of entrepreneurial attitude towards innovation in woldia, ethiopia’, journal of innovation and entrepreneurship 11(26), 1–16. https://doi.org/10.1186/s13731-022-00214-7 kunene, n.l., 2020, the dimensions of the impact of covid-19 on small and micro businesses in south africa, university of kwazulu-natal, viewed 16 september 2022, from https://ndabaonline.ukzn.ac.za/ukzndabastory/vol8-issue14/dimensions%20of%20the%20impact%20of%20covid19%20on%20small%20and%20micro%20businesses%20in%20sa/. malgas, m. & zondi, w.b., 2020, ‘challenges facing small business retailers in selected south african townships’, the southern african journal of entrepreneurship and small business management 12(1), a202. https://doi.org/10.4102/sajesbm.v12i1.202 meresa, m., 2018, ‘factors affecting the performance of small-scale enterprise (restaurant and hotels) inraya azebo wereda: the case of mohoni, maychew and korem’, international journal of managerial studies and research (ijmsr) 6(1), 68–92. https://doi.org/10.20431/2349-0349.0601010 mkhonza, v.m. & sifolo, p.p., 2022, ‘investigating small, medium and micro-scale enterprises strategic planning techniques in johannesburg central business district post covid-19 lockdown’, southern african journal of entrepreneurship and small business management 14(1), a483. https://doi.org/10.4102/sajesbm.v1411.483 molina-sanchez, r., garcia-perez-de-lema, d. & lopez-salazar, r., 2022, ‘determining factors in msmes success: an empirical study in mexico’, small business international review 6(1), 1–13. https://doi.org/10.26784/sbir.v6i1.384 munyanyi, w & pooe, d., 2019, ‘the influence of absorptive capacity and networking capabilities on small and medium enterprises’, the southern african journal of entrepreneurship and small business management 11(1), 1–10. https://doi.org/10.4102/sajesbm.v11i1.231 nawaser, k. & jahanshahi, a.a., 2018, ‘the antecedents of firm innovativeness: empirical evidence from small-sized firms’, middle east journal of management 5(2), 105–120. https://doi.org/10.1504/mejm.2018.10012113 nyoni, m. & moos, m., 2022, ‘the relationship between small business owners’ practice of effectuation and business growth in gauteng townships’, the southern african journal of entrepreneurship and small business management 14(1), 1–11. https://doi.org/10.4102/sajesbm.v14i1.453 osano, h.m. & languitone, h., 2016, ‘factors influencing access to finance by smes in mozambique: case of smes in maputo central business district’, journal of innovation and entrepreneurship 5, 13. https://doi.org/10.1186/s13731-016-0041-0 pech, m. & vrchota, j., 2020, ‘classification of small and medium-sized enterprises based on the level of industry 4.0 implementation’, applied science 10, 1–22. https://doi.org/10.3390/app10155150 prihantoro, l.t. & nuryakin, c., 2020, ‘does collateral affect the access and loan payment behavior of msmes?’, journal of economics, business, and accountancy ventura 23(2), 218–225. https://doi.org/10.14414/jebav.v23i2.2336 rachapaettayakom, p., wiriyapinit, m., cooharojananone, n., tanthanongsakkun, s. & charoenruk, n., 2020, ‘the need for financial knowledge acquisition tools and technology by small business entrepreneurs’, journal of innovation and entrepreneurship 9(1), 25. https://doi.org/10.1186/s13731-020-00136-2 rawat, p., doshi, b.m. & ranjan, s.k., 2021, ‘development of small and medium scale enterprises: protagonist of commercial banks funding’, wesleyan journal of research 14(1), 158–163. riswanto, a., rasto, r., hendrayati, h., saparudinc, m., abidin, a. & primafira, a., 2020, ‘the role of innovativeness-based market orientation on marketing performance of small and medium-sized enterprises in a developing country’, management science letters 10(1), 1947–1952. https://doi.org/10.5267/j.msl.2020.2.019 silveira-martins, e., 2019, ‘dynamic technological capability of a university as source of academic performance’, international journal of business innovation and research 19(2), 183–201. https://doi.org/10.1504/ijbir.2019.100073 sriyono, biduri, s. & proyogi, b., 2021, ‘acceleration of performance recovery and competitiveness through non-banking financing in smes based on green economy: impact of covid-19 pandemic’, journal of innovation and entrepreneurship 10(1), 1–10. https://doi.org/10.1186/s13731-021-00166-4 stiglitz, j.e. & weiss, a., 1981, ‘credit rationing in markets with imperfect information’, the american economic review 71(3), 393–419. tufa, t.l., belete, a.h. & patel, a.a., 2021, ‘the autonomous side of eo and firm performance: the role of professional experience and entrepreneurial engagement’, african journal of economic and management studies 12(3), 439–452. https://doi.org/10.1108/ajems-09-2020-0445 van gelderen, m., shirokova, g., shchegolev, v. & beliaeva, t., 2020, ‘striving for entrepreneurial autonomy: a comparison of russia and the netherlands’, management and organization review 16(1), 107–138. https://doi.org/10.1017/mor.2019.24 venter, e. & hayidakis, h., 2021, ‘determinants of innovation and its impact on financial performance in south african family and non-family small and medium-sized enterprises’, southern african journal of entrepreneurship and small business management 13(1), a414. https://doi.org/10.4102/sajesbm.v13i1.414 weller, j., 2020, ‘las transformaciones tecnológicas y el empleo en américa latina: oportunidades y desafíos’, revista de la cepal 130, 7–27. https://doi.org/10.18356/ce83a6d1-es yamane, t., 1967, statistics, an introductory analysis, 2nd edn., harper and row, new york, ny. zhou, l.l., ayegba, j.o., ayegba, p.m. & jie, z.x., 2021, ‘impact of dynamic capacities on the performance of food and beverage enterprises in lagos, nigeria’, journal of innovation and entrepreneurship 10(50), 1–24. https://doi.org/10.1186/s13731-021-00169-1 abstract introduction literature review and hypotheses methodology analysis, discussion and limitations discussion, limitations and directions for future research acknowledgements references about the author(s) jurie van vuuren faculty of economic and management sciences, university of pretoria, south africa binyam z. alemayehu faculty of economic and management sciences, university of pretoria, south africa citation van vuuren, j. & alemayehu, b.z., 2018, ‘the role of entrepreneurship in transforming efficiency economies into innovation-based economies’, southern african journal of entrepreneurship and small business management 10(1), a140. https://doi.org/10.4102/sajesbm.v10i1.140 original research the role of entrepreneurship in transforming efficiency economies into innovation-based economies jurie van vuuren, binyam z. alemayehu received: 15 june 2017; accepted: 27 feb. 2018; published: 18 apr. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurship is believed to be a major driver of economic development. while it is right to consider entrepreneurship as a development tool, it is also crucial to identify the kind of entrepreneurship that contributes meaningfully towards economic development. extant research revealed a u-shaped relationship between entrepreneurship and economic development and claimed that entrepreneurship in efficiency economies is dwarfed in terms of its contribution to economic development. aim: to identify and explain factors that would assist efficiency-based countries to transform their economies using entrepreneurship as a major policy tool. setting: we compared two structurally separate groups of countries. each group consists of three countries and 9 years of data were extracted from global entrepreneurship monitoring (gem) and united nation (un) datasets. methods: we examined the relationship between entrepreneurship and economic development using comparative research design. bivariate correlation analysis was used to detect associations and various descriptive statistical tools were applied to examine and compare the entrepreneurial tendencies of countries included in our study. results: the results indicated that entrepreneurship in efficiency economies is unfairly undervalued by academic commentators and that our findings pose a serious question as to the u-shaped relationship argument. the analysis revealed that the relationship between entrepreneurship and economic development is positive in both contexts, albeit the strength of the correlation is much more pronounced for innovation-driven economies compared to efficiency-driven countries. furthermore, the analysis revealed that the rate of total early-stage entrepreneurial activity (tea) is strongly correlated with perceived opportunity and entrepreneurial intention scores in both contexts. conclusion: it is concluded that countries seeking to transform their economy need to promote the emergence and sustenance of tea through well-designed policy frameworks and initiatives. introduction entrepreneurship has attracted substantial interest from different parties and is regarded as an engine of economic growth (albulescu & tămăşilă 2016; chowdhury, terjesen & audretsch 2015). it sets out a robust platform for economic development through triggering innovation, job creation, productivity, and economic and social growth (driga, lafuente & vaillant 2009; johnson, freeman & staudenmaier 2015; thornton, ribeiro-soriano & urbano 2011; wennekers et al. 2010). entrepreneurship serves both as an engine driving economic growth and a strategy that promotes the discovery, dissemination and application of innovative ideas. by so doing, it aims at ensuring efficient utilisation of resources and expanding the boundaries of economic activities (oecd 1998) while serving as a conduit for a spillover of knowledge that leads to the shifting of resources towards more productive activities (bruton, ahlstrom & si 2015). moreover, various studies have also shown an inherent relationship existing between entrepreneurship and forces that shape economic prosperity. galindo and méndez (2014), for instance, identified a virtuous cycle type of relationship between innovation, entrepreneurship and economic growth in which all the variables exert positive effects on one another. improving one of the factors could induce a positive change in another. on a different but related note, pech (2016) asserted that innovation triggers a competitive edge in technology, design engineering and entrepreneurship. he also alluded to the reverse relationship that exists between entrepreneurship and innovation. given the above-mentioned robust relationship between entrepreneurship and economic development and the positive connotation associated with entrepreneurship, economies across the world have given considerable attention to the development and proliferation of entrepreneurial activities. however, despite strong support from various stakeholders, countries still fail to maintain comparable levels of entrepreneurial activity (hechavarría 2016; pinillos & reyes 2011). the disparity between developed and developing countries, in particular, is rather large and persistent. conventionally, it is innovation-based countries that record stronger and better quality entrepreneurial activities than any other economies, including efficiency-driven economies (baptista & thurik 2007). researchers who attempted to explain this disparity identified an array of causes including quality of entrepreneurship (baumol & strom 2007), economic conditions, legal and tax frameworks (yolaç 2015), culture (linan & fernandez-serrano 2014; pinillos & reyes 2011) and the quality of education (guerrero, urbano & fayolle 2016) on the other hand, efficiency economies are known for their less friendly entrepreneurial environment and rampant structural barriers stifling the growth of the sector. despite entrepreneurship in efficiency economies not being well-developed, we cannot repudiate its contribution to the economic development of those nations (stam & stel 2009). however, we contend that if such economies were cognisant enough about the challenges that entrepreneurs are facing and more able to provide a hospitable entrepreneurial environment, the contribution would have been much better than what we see today. therefore, in this article we argue that efficiency economies could make much more of their entrepreneurship by encouraging more people to identify entrepreneurial opportunities and pursue their entrepreneurial intention. we identified a moderate correlation between total early-stage entrepreneurial activity (tea) and gross domestic product (gdp) in efficiency economies and, from what we have seen in innovation-driven countries, this association could improve if greater numbers of opportunity entrepreneurs with high-growth potential were to be supported. in the conclusion and discussion sections, we have provided practical guidelines and inputs for policymakers regarding how that might be achieved. by furnishing these, the current study fills the gaps in the existing literature. despite the strong urge to explicate how an efficiency economy could build an innovation-centred economy, extant research has focused excessively on studying the relationship between entrepreneurship and economic development and the peculiarities of entrepreneurship in each setting. to the best of our knowledge, no prior research has investigated the association between entrepreneurship and economic development using two structurally different economies and described how the less developed economy can improve to a higher economic level using entrepreneurship as a major enabling tool. this makes our study unique amongst existing studies. we utilised the world economic forum (wef) countries’ economic categorisation in order to create the two sets of economies (innovation-driven and efficiency-driven economies). the usa, uk and germany were the three sample states chosen to represent the innovation-driven economies, whereas the efficiency-driven economies group was represented by china, brazil and south africa. economic development was measured by gdp, while the entrepreneurial dynamics were measured and represented by tea rates. in addition, the perception of opportunity and entrepreneurial intention scores of each country were correlated with tea rates of the sample countries to identify factors that influence entrepreneurial activities using 9 years of gem data. the article is structured as follows. the next section provides findings from extant literature and subsequently presents the resulting hypotheses. in the ‘methodology’ section, the methodology of the research is discussed, while the final part elucidates the results of the analysis, discussion and limitations and offers recommendations for future research. literature review and hypotheses entrepreneurship and economic development entrepreneurship plays a critical role in national and regional economic development (linan & fernandez-serrano 2014; matejovsky, mohapatra & steiner 2014). entrepreneurship, as a driver of an economy, determines the prospects of the economy and sets the pace of economic growth through creating employment opportunities, spurring innovation, facilitating effective and creative ways of utilising resources, expanding and extending economic boundaries and, ultimately, improving social welfare and growth (driga et al. 2009; johnson et al. 2015; thornton et al. 2011; wennekers et al. 2010). notwithstanding the advantages that entrepreneurship provides to economic growth, there is a concern about the kind of entrepreneurship that countries need to promote. research has attested that the contributions of different kinds of entrepreneurship vary from one economy to another (vallierea & peterson 2009). apparently, meaningful early entrepreneurial activities are stronger in well-developed economies than in economies in transition or efficiency-driven economies. researchers found that the significant investments in research and development, strong technological environments and robust economic standards of innovation-driven economies enabled them to create entrepreneurs with high impact (colovic & lamotte 2015). as a result, they enjoy an abundance of high-impact technological entrepreneurs to a greater extent than economies dominated by necessity entrepreneurs. this creates a formidable basis for new entrepreneurs to meaningfully contribute to their country’s economic development (koster & rai 2008; pfeifer & sarlija 2010). according to many researchers, innovation-driven economies are benefiting greatly from the proliferation of high-growth-expecting firms (vallierea & peterson 2009). as per these researchers, high-growth entrepreneurs basically represent opportunity-motivated ones (lecuna, cohen & chavez 2017) because opportunity entrepreneurs are always keen for growth and recognise opportunities arising from innovative ideas, whereas necessity entrepreneurs intentionally avoid growth because their ultimate goal is survival (capelleras et al. 2010; valdeza et al. 2011). having recognised the strong contribution opportunity entrepreneurship makes to economic growth, many researchers question why innovation-driven economies are a fertile ground for high-impact entrepreneurs while others are not. the results have never been conclusive. some attribute this to the well-entrenched entrepreneurial culture of these countries. the culture in developed economies encourages a significant portion of their population to become self-employed (krasniqi 2009) and to focus mainly on technological breakthroughs that create added value in high-tech and knowledge-intensive sectors (herrmann & kritikos 2013). apart from the culture, their success signifies the availability of quality institutions that promote impactful entrepreneurship. various studies have confirmed that fostering innovation and a robust entrepreneurial environment, which will make a meaningful contribution to the economy, is impossible without the prevalence of strong institutional frameworks and infrastructures (feki & mnif 2016; martinez-fierro, biedma-ferrer & ruiz-navarro 2016; mendonça & grimpe 2016). thus, we can take the strong economic system that promotes new technology, increased pace of innovation and a short product life cycle (baptista & thurik 2007) as a solid manifestation of the robust and supportive institutional frameworks that these countries have built over some years. moreover, the advantages of such institutions, culture and infrastructure are not limited just to the support that they provide to existing entrepreneurs; they also encourage the rise of many new wealth creators. as autio and fu (2015) argue, improved economic and political institutions boost formal entrepreneurship and reduce informal entrepreneurship tendencies. this implies that in well-structured economies, such as those in innovation-driven countries, the chance of obtaining subsistence entrepreneurship that relies on the informal sector is greatly limited. thus, in developed economies, the u-shaped relationship between nascent opportunity entrepreneurship and economic development holds true, indicating the creation of many new ventures that focus mainly on innovation (wennekers et al. 2010). research suggests that economies (innovation-driven economies) which foster the creation of firms that are inspired by innovation and high-growth potential see their actions lifting their gdp significantly (aubry, bonnet & renou-maissant 2015; wong, ho & autio 2005). this condition is further reinforced through favourable institutional frameworks, helping innovators to have a remarkable impact on economic growth attempts (amaghouss & ibourk 2013). based on the above-mentioned information, we contend that innovative economies have higher propensities and capacities for producing teas that could meaningfully contribute to their gdp. hence, we hypothesise a positive and strong relationship between the tea rate and economic development as measured by gdp. h1a: in innovation-driven economies, tea and gdp are positively and strongly correlated. treating the entrepreneurial conditions of efficiency economies from the standpoint and vantage point of developed countries could lead to some terrible mistakes and may be considered as being in complete ignorance of the peculiarities of the two economic contexts. indeed, the relationship between entrepreneurship and economic growth is stable across different categorisations of economies, but the level and magnitude of the impact differs significantly. for this reason, vallierea and peterson (2009) remarked that entrepreneurship matters, but it matters differently for emerging and developed countries. contrary to innovation-based economies, entrepreneurship in efficiency-driven economies is characterised by decreasing rates of self-employment (acs, desai & hessels 2008), high levels of volatility (pfeifer & sarlija 2010), economic unpredictability (ahlstrom & bruton 2010), low entrepreneurial culture (lee & peterson 2000) and rampant numbers of necessity entrepreneurs who are mainly motivated by the lack of job opportunities or some other push factors (yalcin & kapu 2008) as well as low growth prospects and low aspirations (capelleras et al. 2010). however, these economies are known for the abundance of untapped opportunities, although exploitation is a major problem (yalcin & kapu 2008) because of the lack of strong and quality institutions that support the contributions of entrepreneurial initiatives (ahlstrom & bruton 2010; smallbone & welter 2001). in addition to this, entrepreneurship initiatives in these economies are constrained by the scarcity of resources (ahlstrom & bruton 2010) and the finance required to carry out innovative projects (smallbone & welter 2001). in these economies, although the venture creation speed is relatively fast, the growth is slow (capelleras et al. 2010). consequently, it is concluded that starting and maintaining the survival of new ventures in less affluent, developing and transitional economies is burdensome (yalcin & kapu 2008). as a result, the contribution of entrepreneurial start-ups to economic growth is not as strong as it should be (aubry et al. 2015; baptista & thurik 2007), while, sadly, the relationship between entrepreneurial activity and economic development is negative (acs et al. 2008). contrary to these results, there are, however, authors who argue the other way around (see, for instance, hashi & krasniqi 2011; govindarajan & ramamurti 2011). these researchers contend that entrepreneurial activities in efficiency-based countries are contributing a great deal to economic growth and development, to the extent of influencing large multinationals in the developed world. we believe that entertaining the two contrasting views is important in doing research of this nature. therefore, it is hypothesised that a positive but weak correlation between new entrepreneurial start-up rates and gdp of efficiency economies exists. h1b: in efficiency-driven economies, tea and gdp exhibit a positive but weak correlation. the relationship between total early-stage entrepreneurial activity with perceived opportunity and entrepreneurial intention as stipulated in the gem framework, tea represents the share of adults in the total population of 18 to 64 years old, who are actively involved either in starting a new business (nascent entrepreneurship) or in managing a business that is less than 42 months old (reynolds et al. 2005). the prevalence of teas is found to be high in developing economies; however, their contribution is not as strong as their counterparts in well-developed economies (kelley, singer & herrington 2016; wennekers et al. 2010). as described in our previous discussion, the rates of early entrepreneurial activities differ from economies to economies, raising the question of what this difference means. according to many research findings, it reveals variations in countries’ domestic productivity and economic growth (aubry et al. 2015; hashi & krasniqi 2011; stel et al. 2005). these findings imply that every single new entrant adds value in some form and helps countries to expand and boost their production. new firms, particularly those in transition economies, displace obsolete incumbents, fill existing market gaps and create new value (stam & stel 2009). moreover, such entrepreneurial activities are found to be essential to commercialise innovative technologies and for healthy development of the business population (stel et al. 2005). hence, any new addition always connotes a possible improvement in gdp and enhanced growth prospects. however, there are several scholars who assert that the number does not matter, but the quality does. shane (2009), who is a strong proponent of this claim, says countries need to focus on quality entrepreneurship that will make significant contributions to economic growth and, therefore, stresses the importance of focusing entirely on firms with high-growth potential. mason and brown (2013), concurring with his reasoning, have clarified policy measures that need to be taken to effectively support these firms. yet, shane’s view was not insulated from criticisms. for instance, daunfeldt, elert and johansson (2014) argued that policymakers should focus on conditions for new firm formation and early growth of new firms rather than targeting particular high-growth firms. they claimed that it is impossible for policymakers to know which firm will become a high-growth firm, ex ante. despite the inconsistencies with regard to where the focus must be, both research perspectives are in agreement on the importance of the rise and formation of new firms. even mason and brown (2013) said policymakers cannot ignore support for start-ups, despite the strong support needed for high-growth firms. therefore, countries aiming to expand and strengthen their economy are strongly advised to maintain an entrepreneurial environment that encourages citizens to pursue and allow their entrepreneurial ideas and intentions to materialise. identifying the factors that trigger individuals to pursue the entrepreneurial path is substantive to this discussion. we expect two factors to play a critical role with respect to this: an individual’s ability to perceive opportunities and his or her entrepreneurial intention. it is solely when an entrepreneur possesses competencies such as the ability to perceive opportunities (barazandeh et al. 2015) and the intention to act entrepreneurially (río‑rama et al. 2016) that business ideas become a reality. johnson et al. (2015) argue that decisions to start and engage in entrepreneurial activities are not just driven by manic tendencies. such activities are initiated by recognising an opportunity, which is apparently influenced by many factors (wasdani & mathew 2014), and by having the commitment to materialise the said perceived opportunity (po). thus, we can say that hoping for a strong tea rate without a significant percentage of people with the required capacity to see opportunities and the intention to pursue their entrepreneurial aspirations, is an illusion. what then do we mean by opportunity perception and entrepreneurial intention? let us first consider and explain opportunity perception and then the latter. following the debate on the nature and source of entrepreneurial opportunity, opportunity perception becomes a very problematic concept. in this article, our intention is not to delve deep into the inconsistencies; thus, we have adopted the simplest definition. opportunity perception is a perception of what can be done to earn a profit (lewin 2012). it is also viewed as a process of identifying business opportunities, which normally represent market imperfections that give agents, entrepreneurs, the chance to obtain economic benefit by introducing new and/or improved products, the better to serve customer needs (alvarez, barney & anderson 2013). perceived opportunity triggers entrepreneurial actions through identifying what can be done in light of market gaps. with regard to the impact of po, herrington, kew and kew (2014) describe it as one of the two critical factors that force a person to consider starting their own business. perceived opportunity, in the gem conceptual framework, denotes ‘the percentage of individuals aged 18–64 involved in any stage of entrepreneurial activity excluded who see good opportunities to start a business in area where they live’ (singer, amorós & arreola 2015:23). global entrepreneurship monitor (gem) reports consistently indicate that perceptions favouring the existence of good business opportunities are higher in factor-driven economies, while the strength of these perceptions declines as we move towards innovation-driven economies (herrington et al. 2011). the findings suggest the existence of a large pool of people who could possibly take action to exploit the identified opportunity in efficiency countries compared to innovation-based countries. therefore, we expect higher tea rates in efficiency-driven countries than in innovation-driven countries because of the strong association between recognising opportunities and engaging in early entrepreneurial activities. based on this assumption, we developed the following two hypotheses: h2a: tea is positively and strongly correlated with po in efficiency-driven economies. h2b: tea is positively and weakly correlated with po in innovation-driven economies. the other major force that paves the way for a high tea is strong entrepreneurial intention. the latter intention is defined as a conscious and planned resolve that drives the actions necessary to start a business (thompson 2009). entrepreneurial intention (ei) does not refer to a whimsical desire to have a business; rather, it signifies a self-acknowledged conviction to set up a business and intentionally plan to do so at some point in the future (thompson 2009). thus, it can be said that a genuine intent is action oriented and this action is expected to result in nascent entrepreneurship. this is why entrepreneurial intention is depicted as a force that has a significant impact on new venture organising activities (hopp & sonderegger 2015). as presented by gem, entrepreneurial intention refers to people who intend to start a business in the next 3 years; the intent is considered critical in the entrepreneurial process given its strong association with actual entrepreneurial behaviour (herrington et al. 2014). and likewise, with the association discussed between po and tea, researchers found that entrepreneurial intention is higher among factor-driven economies and lower among innovation-driven countries (singer et al. 2015). based on this elucidation, we propose the following two hypotheses to examine the relation between tea and ei, both in efficiencyand innovation-driven economies: h3a: tea is positively and strongly correlated with ei in efficiency-driven economies. h3b: tea is positively and weakly correlated with ei in innovation-driven economies. transforming an efficiency economy into an innovation economy: entrepreneurship as enabler countries always aspire to attain the next higher economic level. to achieve this substantial vision, they employ various macroand micro-level economic and business strategies. in situations where there is a need to bring the majority of actors on board and to generate capital that would allow people at the bottom of the hierarchy to benefit, entrepreneurship remains as the most satisfactory solution (bruton et al. 2015). in addition to the job opportunity, increasing money flow and the sense of accomplishment that entrepreneurship provides at the individual level, it also plays a crucial role at national level through improving competitiveness among countries, promoting economic growth and increasing employment opportunities (feki & mnif 2016). these virtues make entrepreneurship the best strategy and/or enabler compared to any other macro interventions aimed at transforming economic structures. entrepreneurship in efficiency-driven economies remains the major driver of economic growth (stam & stel 2009). if we consider the brics countries (brazil, russia, india, china, and south africa), which, with the exception of india, are good representatives of efficiency-driven economies, entrepreneurial activities at small and medium business level are contributing a great deal to employment creation and the gdp. in brics countries, smalland medium-scale enterprises (smes) are the major employers, absorbing 60% of job seekers and making 42% of their gdp (hoeppli 2013). yet the quality of entrepreneurship in efficiency-driven economies is a matter of concern for many. for years, the relationship between gdp and tea reported to be u-shaped, wherein entrepreneurial activity tended to be higher for affluent and developing economies and less in transition economies (pfeifer & sarlija 2010). this relationship implies an increasing and growing trend of entrepreneurial activities in developing countries because of an increase in necessity-based entrepreneurship, when innovation-driven economies take advantage of their strong institutions and infrastructure to promote opportunity-driven entrepreneurs (wennekers et al. 2010). according to this relationship, efficiency economies apparently experience a decrease in self-employment and exhibit a negative relationship between entrepreneurial activities and economic development (acs et al. 2008). the question which then arises focuses on why the relationship is inverse in efficiency economies. the causes are too numerous to mention all. institutional barriers (hashi & krasniqi 2011), a preference for waged employment because of the higher opportunity cost of starting one’s own business (koellinger & thurik 2012), an unfavourable institutional framework (ahlstrom & ding 2014), the lack of a welfare system that supports entrepreneurs (chowdhury et al. 2015) and institutional instability (ahlstrom & bruton 2010) are some of the factors that appear frequently. it is understood that transformation is impossible given all these deficiencies. thus, many researchers call for an improvement in the overall entrepreneurial climate of transition economies (koster & rai 2008) and in the transformation process, they stress the role of governments (martinez-fierro et al. 2016). accordingly, they argue that governments need to take the central role in creating an entrepreneurial environment that promotes and fosters innovation (maradana et al. 2017), high-growth potential entrepreneurs (koster & rai 2008; shane 2009) and export-oriented firms (lecuna et al. 2017). moreover, it is the government’s responsibility to develop supportive institutions that encourage a competitive business environment by reducing the burden imposed by formal institutions (krasniqi & desai 2016), improving the social image of entrepreneurs (barazandeh et al. 2015), ensuring corruption-resistant structures, strong property rights and reducing tax and administrative burdens (chowdhury et al. 2015). in this attempt, improving the quality of institutions stands out as a priority area. as argued by autio and fu (2015), economic and political institutional quality has a strong and meaningful relationship with the emergence and type of entrepreneurship. they claim that one standard deviation improvement in the quality of economic and political institutions could double formal entrepreneurship and reduce informal entrepreneurship by half. the other frequently aired suggestion revolves around promoting innovation. according to this line of research, promoting innovation creates a comfortable platform for the generation of opportunity entrepreneurs who will make a meaningful contribution to economic growth (aubry et al. 2015). in support of this claim, some suggest rechanneling entrepreneurship support programmes from necessity entrepreneurs to high-growth potential firms (shane 2009) and encouraging policymakers to give due care to activities that help improve the quality of entrepreneurship and the emergence of ventures with strong growth prospects (bruton et al. 2015; koster & rai 2008). in addition to the roles that governments could play, extant research also stresses the part played by existing entrepreneurial firms. the latter must be an integral part of the transformation endeavour and they must assume a leadership role (aubry et al. 2015). it is suggested that private firms must be prepared to develop the capabilities that would allow them to differentiate their offerings and focus on strategic leadership that could help them build the competencies and resources necessary to compete and respond to the changes that the transformation brings (gonzález-corzo 2015). generally, researchers call for well thought out and controlled government interventions in order to create a conducive entrepreneurial ecosystem (fuerlinger, fandl & funke 2015) accompanied by a reallocation of capital and promotion of innovation (bradley et al. 2012), careful management of money supply and interest rates (galindo & méndez 2014) and revisiting of regulatory requirements (gupta et al. 2014) as well as readjusting economic structure from one that places emphasis on efficiency and scope to one that appreciates effectiveness (baptista & thurik 2007). measurements and operationalising key terms entrepreneurial activities we have adopted the gem definition. global entrepreneurship monitor defines entrepreneurial activities as: … an output of the interactions of an individual’s perception of an opportunity and capacity (motivation and skills) to act upon this and the distinct condition of the respective environment in which the individual is located. (singer et al. 2015:20) from the above definition, we can identify three major building blocks. the first one is the perception of opportunity, the second one is (having) the capacity and the last one is the environment in which the entrepreneur operates. seamless integration of the three aspects of entrepreneurial activities could help develop an entrepreneurial atmosphere that is able to contribute effectively to the advancement of economies. as morrison, breen and ali (2003) have argued, creating a growing small business requires a balanced alignment of the entrepreneur’s intention, the abilities of the business and an opportunity environment. economic growth in the same manner, gem describes economic growth: … as the result of individuals’ (wherever they are located and regardless of whether they are self-employed or the size of the businesses) personal ability to identify and seize opportunities and that this process is taking place in the interaction with the environment. (singer et al. 2015:18) this basic assumption implies that any entrepreneurial activity occurring in the environment could exert a significant effect on the growth prospect of economies. consistent with this claim, various research findings have confirmed the relationship between entrepreneurial activities and economic growth and development. aubry, bonnet and renou-maissant (2015) have noted that changes in gdp are the indicators of new start-ups. total early-stage entrepreneurial activity this includes individuals in the process of starting a venture and those running a new business less than 3.5 years old. in other words, it represents a ‘percentage of individuals aged 18–64 who are either nascent entrepreneurs or owner-managers of a new business’ (singer et al. 2015:24). perceived opportunities ‘percentage of individuals aged 18–64 involved in any stage of entrepreneurial activity excluded who see good opportunities to start a business in the area where they live’ (singer et al. 2015:24). entrepreneurial intentions ‘percentage of individuals aged 18–64 involved in any stage of entrepreneurial activity excluded who are latent entrepreneurs and who intend to start a business within three years’ (singer et al. 2015:24). gross domestic product it is an estimate of market throughput, adding together the value of all final goods and services that are produced and traded for money within a given period of time (costanza et al. 2009). methodology a challenging and crucial part of a study is deciding on the kind of research design that the research follows. creswell (2014) claims that research designs provide specific direction for procedures. this claim entails that subsequent procedures and actions need to be in agreement with the chosen design to maintain the coherence and logical flow of ideas. throughout this article, we have followed a comparative research method, one that affords an opportunity to detect similarities and variances of two different groups (mills, bunt & bruijn 2006). as mills et al. (2006) have argued, comparative analysis can include both qualitative and quantitative comparison of entities; its underlying goal is to search for similarities and variances. they assert that if researchers are able to deal with the limitations, such as construct equivalence, the method provides sensible and valid results. we paid considerable attention to minimising the methodological limitations of this design. pursuant to this we took maximum care while developing the two sets (efficiency-driven vs. innovation-driven economies). the selection was made on the basis of three major criteria. the first criterion was availability of relatively complete data within the selected time period; the second criterion was the level of economic development and, lastly, the comparability of gdp of the countries that make up the two sets. based on these inclusion criteria, and as previously mentioned, we selected the united states of america, great britain and germany to comprise the innovation-driven economies and china, brazil and south africa to form the efficiency-driven set. the data for this study, as indicated previously, came from a gem adult population survey data set and the un database. as mentioned, we utilised the wef countries’ economic categorisation in order to form the two sets. we measured the economic development by gdp, which is the most widely accepted measure of economic progress (costanza et al. 2009), while the entrepreneurial dynamics were measured and are represented by po, ei and tea rates. nine years (2006–2014) of data regarding entrepreneurial dynamics of countries were extracted from gem adult population data sets, whereas the gdps of countries were taken from the united nations database. a bivariate correlation analysis was employed to detect the relationship between tea and gdp and tea with po, and the ei rating of countries as well as the hypotheses. two separate correlation analyses have been performed for the two economic contexts; inferences are made based on the strength of the correlation in each scenario. analysis, discussion and limitations the results of the analysis are discussed in two parts. the first part reports the results of the correlation of tea and gdp and tea with po, and ei in innovation-driven economies and discusses the implication of the results. similarly, the second part addresses the correlation results of the same variables in efficiency-driven economies and explains the implications. correlations between the gdp and tea, as well as measures of entrepreneurial tendencies (po and ei) with tea for innovation-driven economies, are listed in table 1. table 1: correlations between gross domestic product and total early-stage entrepreneurial activity (tea), and tea with perceived opportunity and entrepreneurial intentions in innovation-based economies. entrepreneurial context in innovation-driven economies as depicted in table 1, the correlation between gdp and the measure of entrepreneurial activities is positive and strong. as we proposed, the correlation between gdp and tea is significant at the 99% confidence interval and the relationship is very strong (r = 0.795, p < 0.01). the result supports our first hypothesis (h1a) which states that tea and gdp are positively and strongly correlated in innovation-driven economies. the result implies that any new entrepreneurial activity in an innovation economy will make a positive and strong contribution to economic development. our result agrees with the many research works that explored the relationship between the two factors (aubry et al. 2015; feki & mnif 2016; stel et al. 2005; yolaç 2015). as argued by aubry et al. (2015), fluctuations in gdp in developed countries could be an indicator of early entrepreneurial activities. the strong relationship between gdp and tea also reflects the eutaxy of entrepreneurial activities developed in innovation-based economies. furthermore, we believe that the strong presence of firms expecting high-growth (vallierea & peterson 2009), a prevalence of innovative and knowledge firms (zsuzsannaa & hermana 2012), the presence of favourable institutions (amaghouss & ibourk 2013), a strong and quality institutional infrastructure (oecd 2008) and a well-developed entrepreneurial culture (pinillos & reyes 2011) are contributing greatly to this. moreover, having noted the emphasis given to opportunity entrepreneurship (valdeza et al. 2011) and the high prevalence of a voluntary mindset that encourages the development of innovative teas (urbano & alvarez 2014), we expect this trend to continue. the other result that deserves attention is the correlation among the three measures of entrepreneurial characteristics. as may be perceived from table 1, the three factors exhibit positive and strong significant correlations among each other. total early-stage entrepreneurial activity has a positive significant and strong correlation with ei and po at a 99% confidence interval (r = 0.863, p < 0.01; r = 0.633, p < 0.01, respectively). these results partially support our hypotheses (hypotheses h2b and h3b), implying the existence of an inherent relationship between early entrepreneurial activities and entrepreneurial intention and po, despite the lesser prevalence of ei and po in innovation-driven countries as argued by herrmann and kritikos (2013). however, our result supports prior findings such as the claim by baumol and strom (2007), who argue that only when individuals are able to notice and have the intention to exploit opportunities, entrepreneurial activities that reduce waste, improve macro-economic performance, increase productivity and enhance total welfare start to emerge. the result also reinforces the notion that it is impossible to think in terms of a strong tea rate when countries are characterised by an entrepreneurial atmosphere which is fragile and a populace which is incapable of acting entrepreneurially. more importantly, this relationship can be taken as the manifestation of the strong entrepreneurial culture enshrined in innovation-driven countries. entrepreneurial context in efficiency-driven economies table 2 presents the correlation between gdp and tea rate of efficiency-driven economies. it also exhibits the correlation between factors identified as drivers of tea (po and ei) and tea rate of efficiency-driven countries. table 2: correlation between gross domestic product and total early-stage entrepreneurial activity (tea), and tea with perceived opportunity and entrepreneurial intentions in efficiency-based economies. the correlation between gdp and tea in efficiency-based countries reveals results similar to that of innovation-based economies, albeit the correlation is not as strong as it is in the latter. as shown in table 2, tea and gdp are significantly correlated at a 99% confidence interval and the correlation is moderate in terms of strength (r = 0.570, p < 0.01). this result partially supports our hypothesis (h1b) which states that the correlation between tea and gdp in efficiency-driven economies is positive but weak. the result opposes findings that posit entrepreneurial activities in an efficiency economy as being less of a contributor to economic development (acs et al. 2008; aubry et al. 2015), but supports many other prior research findings (hashi & krasniqi 2011; stam & stel 2009; zhang & duysters 2010) that stress the role of early entrepreneurial initiatives in economic development in transition economies. our result implies that despite the less accommodative entrepreneurial environment of efficiency-driven economies, every entrepreneurial initiative plays a positive and satisfactory role in the economic development endeavours of these countries. nonetheless, the need for opportunity and/or high-growth entrepreneurs is still pressing and the contribution of the existing entrepreneurial activities cannot be undermined. they assist the economies to prosper by providing millions of jobs (ayyagari, demirguc-kunt & maksimovic 2014), fostering reverse innovation (govindarajan & ramamurti 2011), creating efficient utilisation of resources and developing positive externalities (gonzález-corzo 2015). yet comparing the result with innovation economies suggests the existence of considerable differences. we presume that the difference is rooted in factors inherent to the economic structure, institutional arrangements that are hostile for the growth of entrepreneurial attempts (ahlstrom & bruton 2010), an immature entrepreneurship culture (lee & peterson 2000), the proliferation of marginal entrepreneurs (stel et al. 2005) and an underdeveloped welfare system for supporting entrepreneurs (chowdhury et al. 2015). generally speaking, the overall economic, entrepreneurial and societal environment is crippling entrepreneurs in efficiency economies, thereby preventing them from contributing much to the economic development there. the other interesting result evident from table 2 is that of the correlation among the three entrepreneurial factors. as can be inferred, each of these variables has positive and significant relationships among themselves. we found a strong positive correlation between ei and tea at the 99% confidence interval (r = 0.855, p < 0.01). similarly, the correlations between tea and po are significant and positive at the 95% confidence interval (r = 0.405, p < 0.05). both results provide partial support for hypothesis h2a and fully support hypothesis h3a. the results imply that governments aiming to improve their tea rate need to work on boosting the skills of citizens to perceive opportunity and foster an entrepreneurial intention that could encourage people to pursue entrepreneurial paths. discussion, limitations and directions for future research in the existing literature, we came across many findings that explicate the relationship between entrepreneurship and economic development. our study will attempt to build on this knowledge base and expand the knowledge frontier by examining the relationship taking two structurally different contexts and to identify areas where efficiency economies must improve to advance into the next economic stage. our analysis demonstrates that entrepreneurship and economic development are positively related both in efficiencyand innovation-driven contexts, although the magnitude of the relationship is much stronger in innovation-driven countries. in addition, we have established a strong correlation between tea rates and factors leading to business formation. the result indicates that total early entrepreneurial activities are strongly associated with po and entrepreneurial intention. the correlations support the relevance of expanding institutions, platforms and systems that encourage identifying opportunities and instil the intention of pursuing an entrepreneurial route so that there are as many people as possible preferring to start their own business and create wealth for their country. efficiency-driven economies need to enhance their tea rate by training and exposing citizens to entrepreneurship and addressing structural constraints that cripple entrepreneurial intention. furthermore, if entrepreneurship is to contribute in its full capacity to economic growth, efficiency-driven economies need to pay due attention to the total entrepreneurial atmosphere. improving the quality of entrepreneurship and fostering innovation have to be the central agenda. creating a favourable institutional framework is the prerequisite for doing this (amaghouss & ibourk 2013). it is crucial to shift from scale, scope and experience into structures that intensify dependence on resources such as adjustment and effectiveness (baptista & thurik 2007). however, promoting such kinds of entrepreneurial activities demands concrete actions from governments in developing and ensuring favourable institutional frameworks that encourage innovation. moreover, it is important to heed the necessity of revisiting regulatory requirements, normative dimensions and cultural-cognitive dimensions to encourage entrepreneurs and boost entrepreneurial activities (gupta et al. 2014; urbano & alvarez 2014). careful attention needs to be paid to ensuring conducive regulatory systems; small business development and the enhancement of entrepreneurial skills, improving media coverage and the advancement of entrepreneurial confidence and developing entrepreneurial networks should be an area of special attention. yet, the focus must not be placed simply on numbers because job creation and economic growth are not only driven by the number of entrepreneurs. the development programmes must focus on the formation of high-quality and high-growth companies (shane 2009). while we stress special attention must be given to high-growth potential, it is also relevant to be aware of the possible side effects of such activities. as argued by daunfeldt et al. (2014) and mentioned above, we do not know which firm will become a high-growth firm ex ante; hence, policymakers are advised to focus on formation of firms and early growth activities. the impact of macro-level decisions on the proliferation of entrepreneurship, particularly entrepreneurship that emphasises innovation, must be considered. central banks will have an essential role in promoting innovation and entrepreneurship through regulating the money supply and interest rates. reducing the supply of money is expected to result in higher interest rates and promote savings, which will in turn aid financial institutions to maintain ample resources for entrepreneurs. such monetary measures are expected to promote entrepreneurial behaviour and innovation. however, higher interest rates could result in a downside to entrepreneurship and investing in innovation (galindo & méndez 2014). hence, countries wanting to promote innovation and entrepreneurship should find a balance and use their monitory policy as a single effective tool. if the aspiring entrepreneurs are to benefit from the growing economy, the growth should be inclusive and broad-based. this can be achieved only when the economic systems allow for reallocation of capital and promotion of innovation at various stages of the economy (bradley et al. 2012). thus, efficiency-based economies need to design various support mechanisms that encourage the distribution of capital through improved education, access to various social ties, accessible and affordable finance, and programmes that encourage and spur innovation. while the role of government and its level of involvement are quite debatable, we too, concurring with the view of fuerlinger et al. (2015), hold the view that the active involvement of governments in creating institutions and a conducive entrepreneurship ecosystem are relevant. policy measures that promote research, autonomous higher education institutions emphasising innovation, business environment reforms which aim at nurturing entry and growth of innovative firms, financial systems that encourage innovation and a special focus on intellectual property rights protection must be put in place if these economies are to be transformed into the innovation-driven category (fuerlinger et al. 2015; herrmann & kritikos 2013). however, if government’s involvement is not controlled and well managed, it will result in unintended consequences. hence, we endorse the claim that stress: … should be placed on diminishing government involvement as strong educational institutions flourish, the physical infrastructure improves, a supportive financial service sector develops and a favourable attitude towards entrepreneurship becomes convincingly positive. (phan, zhou & abrahamson 2010:186) despite its strengths, our study is limited in some respects. the first limitation emanates from the limited sample considered. we have included just six countries, three in each category, to study such a vast and complex relationship. although we took maximum care to reasonably represent each economic context, we do not consider this classification as a perfect representation of the two contexts. hence, we advise future researchers to consider a substantial number of economies to minimise the errors that may arise because of under-representation. the complications involved in the relationship between entrepreneurship and economic development and in using entrepreneurship as a major development tool create a fertile ground for research. our research examined merely the tip of this complex relationship by systematically focusing solely on innovationand efficiency-driven economies. we believe that detecting the interaction of these variables in factor-driven economies could provide some useful additional insights; hence, future researchers should consider adding factor-driven economies to the analysis and explicate areas of congruence and departures. another limitation of our research was the use of just one measure to represent economic development. future researchers might detect the relationship either by using other competing economic development measures such as per capita income or a combination of other economic development measurements. in addition, we encourage using different variables, in addition to tea, that are able to explain the entrepreneurship dynamics of economies. the third limitation of our research emanates from the methods applied and data used. we used gem data, which comprise survey data, and applied a bivariate correlation analysis to them. however, we are of the view that utilising multiple sources of data would give the investigator the chance to triangulate and obtain a complete and much clearer picture of the issues under consideration. thus, future researchers are advised to tap into different data sources to substantiate the data they obtain from gem. in addition, using multiple statistical tools could help examine the context from distinct perspectives and acquire rich insights from the data. therefore, we recommend that future researchers should apply different econometric models to analyse the role of entrepreneurship in transforming economies and forces that drive entrepreneurial activities. acknowledgements competing interests the authors declare that there were no conflicts of interest during the writing of this article. authors’ contributions both authors contributed equally to the writing of this article. references acs, z.j., desai, s. & hessels, j., 2008, ‘entrepreneurship, economic development and institutions’, small business economics 31, 219–234. https://doi.org/10.1007/s11187-008-9135-9 ahlstrom, d. & bruton, g.d., 2010, ‘rapid institutional shifts and the co-evolution of entrepreneurial firms in transition economies’, entrepreneurship theory and practice 34(3), 531–554. https://doi.org/10.1111/j.1540-6520.2010.00373.x ahlstrom, d. & ding, z., 2014, ‘entrepreneurship in china: an overview’, international small business journal 32(6), 610–618. https://doi.org/10.1177/0266242613517913 albulescu, c.t. & tămăşilă, m., 2016, ‘exploring the role of fdi in enhancing the entrepreneurial activity in europe: a panel data analysis’, international entrepreneurship management journal 12(3), 629–657. https://doi.org/10.1007/s11365-015-0360-9 alvarez, s.a., barney, j.b. & anderson, p., 2013, ‘forming and exploiting opportunities: the implications of discovery and creation processes for entrepreneurial and organizational research’, organization science 24, 301–317. https://doi.org/10.1287/orsc.1110.0727 amaghouss, j. & ibourk, a., 2013, ‘entrepreneurial activities, innovation and economic growth: the role of cyclical factors’, international business research 6(1), 153–162. aubry, m., bonnet, j. & renou-maissant, p., 2015, ‘entrepreneurship and the business cycle: the “schumpeter” effect versus the “refugee” effect – a french appraisal based on regional data’, the annals of regional science 54(1), 23–55. https://doi.org/10.1007/s00168-014-0645-x auriol, e., biancini, s. & paillacar, r., 2012, intellectual property rights protection in developing countries, s.l., viewed from http://www.etsg.org/etsg2012/programme/papers. autio, e. & fu, k., 2015, ‘economic and political institutions and entry into formal and informal entrepreneurship’, asia pacific journal of management 32(1), 67–94. https://doi.org/10.1007/s10490-014-9381-0 ayyagari, m., demirguc-kunt, a. & maksimovic, v., 2014, ‘who creates jobs in developing countries?’, small business economics 43, 75–99. https://doi.org/10.1007/s11187-014-9549-5 baptista, r. & thurik, a.r., 2007, ‘the relationship between entrepreneurship and unemployment: is portugal an outlier?’, technological forecasting & social change 74, 75–89. https://doi.org/10.1016/j.techfore.2006.04.003 barazandeh, m., parvizian, k., alizadeh, m. & khosravi, s., 2015, ‘investigating the effect of entrepreneurial competencies on business performance among early stage entrepreneurs global entrepreneurship monitor (gem 2010 survey data)’, journal of global entrepreneurship research 5(18), 1–12. https://doi.org/10.1186/s40497-015-0037-4 baumol, w.j. & strom, r.j., 2007, ‘entrepreneurship and economic growth: moderator comments’, strategic entrepreneurship journal 1, 233–237. https://doi.org/10.1002/sej.26 bradley, s.w., mcmullen, j.s., artz, k. & simiyu, e.m., 2012, ‘capital is not enough: innovation in developing economies’, journal of management studies 49(4), 684–717. https://doi.org/10.1111/j.1467-6486.2012.01043.x bruton, g.d., ahlstrom, d. & si, s., 2015, ‘entrepreneurship, poverty, and asia: moving beyond subsistence entrepreneurship’, asia pacific journal of management 32(1), 1–22. https://doi.org/10.1007/s10490-014-9404-x capelleras, j.-l., greene, f.j., kantis, h. & rabetino, r., 2010, ‘venture creation speed and subsequent growth: evidence from south america’, journal of small business management 48(3), 302–324. https://doi.org/10.1111/j.1540-627x.2010.00296.x chowdhury, f., terjesen, s. & audretsch, d., 2015, ‘varieties of entrepreneurship: institutional drivers across entrepreneurial activity and country’, european journal of law and economics 40(1), 121–148. https://doi.org/10.1007/s10657-014-9464-x colovic, a. & lamotte, o., 2015, ‘technological environment and technology entrepreneurship: a cross-country analysis’, creativity and innovation management 24(4), 617–628. https://doi.org/10.1111/caim.12133 costanza, r., hart, m., posner, s. & talberth, j., 2009, beyond gdp: the need for new measures of progress, vol. 4, the pardee papers, boston university the frederick s. pardee center, boston, ma. creswell, j.w., 2014, research design: aualitatitive, quantitative and mixed research approaches, sage, riverside county, ca. daunfeldt, s.-o., elert, n. & johansson, d., 2014, ‘the economic contribution of high-growth firms: do policy implications depend on the choice of growth indicator?’, journal of industry, competition and trade 14(3), 337–365. https://doi.org/10.1007/s10842-013-0168-7 driga, o., lafuente, e. & vaillant, y., 2009, ‘reasons for the relatively lower entrepreneurial activity levels of rural women in spain’, european society for rural sociology 49(1), 70–96. https://doi.org/10.1111/j.1467-9523.2008.00475.x feki, c. & mnif, s., 2016, ‘entrepreneurship, technological innovation, and economic growth: empirical analysis of panel data’, journal of the knowledge economics 7(4), 984–999. https://doi.org/10.1007/s13132-016-0413-5 fuerlinger, g., fandl, u. & funke, t., 2015, ‘the role of the state in the entrepreneurship ecosystem: insights from germany’, triple helix 2(3), 1–26. galindo, m.-á. & méndez, m.t., 2014, ‘entrepreneurship, economic growth, and innovation: are feedback effects at work?’, journal of business research 67, 825–829. https://doi.org/10.1016/j.jbusres.2013.11.052 gonzález-corzo, m.a., 2015, ‘entrepreneurship in transition economies: selected characteristics and relevant lessons for cuba’, journal of enterprising culture 23(1), 91–115. https://doi.org/10.1142/s0218495815500041 govindarajan, v. & ramamurti, r., 2011, ‘reverse innovation, emerging markets, and global strategy’, global strategy journal 1, 191–205. https://doi.org/10.1002/gsj.23 guerrero, m., urbano, d. & fayolle, a., 2016, ‘entrepreneurial activity and regional competitiveness: evidence from european entrepreneurial universities’, journal of technology transfer 41, 105–131. https://doi.org/10.1007/s10961-014-9377-4 gupta, v.k. et al., 2014, ‘institutional environment for entrepreneurship in rapidly emerging major economies: the case of brazil, china, india, and korea’, international entrepreneurship and management journal 10(2), 367–384. https://doi.org/10.1007/s11365-012-0221-8 hashi, i. & krasniqi, b.a., 2011, ‘entrepreneurship and sme growth: evidence from advanced and laggard transition economies’, international journal of entrepreneurial behaviour & research 17(5), 456–487. https://doi.org/10.1108/13552551111158817 hechavarría, d.m., 2016, ‘the impact of culture on national prevalence rates of social and commercial entrepreneurship’, international entrepreneurship and management 12, 1025–1052. https://doi.org/10.1007/s11365-015-0376-1 herrington, m., kew, j. & kew, p., 2014, 2014 gem south africa report: the crossroads – a goldmine or a time bomb? university of cape town, cape town. herrington, m., kew, j., simrie, m. & turton, n., 2011, global entrepreneurship monitor 2011 south africa report, graduate school of business, university of cape town, cape town. herrmann, b. & kritikos, a.s., 2013, ‘growing out of the crisis: hidden assets to greece’s transition to an innovation economy’, iza journal of european labor studies 2(14), 1–32. hoeppli, t., 2013, ‘economic conditions and business environment in brics’, professional accountant 12–14. hopp, c. & sonderegger, r., 2015, ‘understanding the dynamics of nascent entrepreneurship – prestart-up experience, intentions and entrepreneurial success’, journal of small business management 53(4), 1076–1096. https://doi.org/10.1111/jsbm.12107 johnson, s.l., freeman, m.a. & staudenmaier, p.j., 2015, ‘manic tendencies are not related to being an entrepreneur, intending to become an entrepreneur,or succeeding as an entrepreneur’, journal of affective disorders 173, 154–158. https://doi.org/10.1016/j.jad.2014.10.049 kelley, d., singer, s. & herrington, m., 2016, gem 2015/16 global report, global entrepreneurship monitor, s.l. koellinger, p.d. & thurik, a.r., 2012, ‘entrepreneurship and the business cycle’, the review of economics and statistics 94(4), 1143–1156. https://doi.org/10.1162/rest_a_00224 koster, s. & rai, s.k., 2008, ‘entrepreneurship and economic development in a developing country: a case study of india’, the journal of entrepreneurship 17(2), 117–137. https://doi.org/10.1177/097135570801700202 krasniqi, b.a., 2009, ‘personal, household and business environmental determinants of entrepreneurship’, journal of small business and enterprise development 16, 146–166. https://doi.org/10.1108/14626000910932935 krasniqi, b.a. & desai, s., 2016, ‘institutional drivers of high-growth firms: country-level evidence from 26 transition economies’, small business economics 47, 1075–1094. https://doi.org/10.1007/s11187-016-9736-7 lecuna, a., cohen, b. & chavez, r., 2017, ‘characteristics of high-growth entrepreneurs in latin america’, international entrepreneurship and management journal 13, 141–159. https://doi.org/10.1007/s11365-016-0402-y lee, s.m. & peterson, s.j., 2000, ‘culture, entrepreneurial orientation, and global competitiveness’, journal of world business 35(4), 401–416. https://doi.org/10.1016/s1090-9516(00)00045-6 lewin, p., 2012, viewed 31 march 2017, from https://organizationsandmarkets.com linan, f. & fernandez-serrano, j., 2014, ‘national culture, entrepreneurship and economic development: different patterns across the european union’, small business economics 42(4), 685–701. https://doi.org/10.1007/s11187-013-9520-x maradana, r.p. et al., 2017, ‘does innovation promote economic growth? evidence from european countries’, journal of innovation and entrepreneurship 6(1), 1–23. https://doi.org/10.1186/s13731-016-0061-9 martinez-fierro, s., biedma-ferrer, j.m. & ruiz-navarro, j., 2016, ‘entrepreneurship and strategies for economic development’, small business economics 47(4), 835–851. https://doi.org/10.1007/s11187-016-9738-5 mason, c. & brown, r., 2013, ‘creating good public policy to support high-growth firms’, small business economics 40, 211–225. https://doi.org/10.1007/s11187-011-9369-9 matejovsky, l., mohapatra, s. & steiner, b., 2014, ‘the dynamic effects of entrepreneurship on regional economic growth: evidence from canada’, growth and change 45(4), 611–639. https://doi.org/10.1111/grow.12055 mendonça, j. & grimpe, c., 2016, ‘skills and regional entrepreneurship capital formation: a comparison between germany and portugal’, journal of technology transfer 41(6), 1440–1456. https://doi.org/10.1007/s10961-015-9444-5 mills, m., bunt, g.g. & bruijn, j.d., 2006, ‘comparative research: persistent problems and promising solutions’, international sociology 21(5), 619–631. https://doi.org/10.1177/0268580906067833 morrison, a., breen, j. & ali, s., 2003, ‘small business growth: intention, ability and opportunity’, journal of small business management 41(4), 417–425. https://doi.org/10.1111/1540-627x.00092 organisation for economic co-operation and development (oecd), 1998, fostering entrepreneurship, oecd publications, paris. organisation for economic co-operation and development (oecd), 2008, oecd entrepreneurship review of denmark, oecd publishing, paris. pech, r.m., 2016, ‘achieving the innovative edge in technology, engineering design, and entrepreneurship’, journal of innovation and entrepreneurship 5(6), 1–18. pfeifer, s. & sarlija, n., 2010, ‘the relationship between entrepreneurial activities, national and regional development and firm efficiency – global entrepreneurship monitor (gem)-based evidence from croatia’, the journal of entrepreneurship 19(1), 23–41. https://doi.org/10.1177/097135570901900102 phan, p., zhou, j. & abrahamson, e., 2010, ‘creativity, innovation, and entrepreneurship in china’, management and organization review 6(2), 175–194. https://doi.org/10.1111/j.1740-8784.2010.00181.x pinillos, m.-j. & reyes, l., 2011, ‘relationship between individualist–collectivist culture and entrepreneurial activity: evidence from global entrepreneurship monitor data’, small business economics 37(1), 23–37. https://doi.org/10.1007/s11187-009-9230-6 reynolds, p. et al., 2005, ‘global entrepreneurship monitor: data collection design and implementation 1998–2003’, small business economics 24, 205–231. https://doi.org/10.1007/s11187-005-1980-1 río‑rama, m.d.l.c.d., peris‑ortiz, m., álvarez‑garcía, j. & rueda‑armengot, c., 2016, ‘entrepreneurial intentions and entrepreneurship education to university students in portugal’, technology, innovation and education 2(7), 1–11. shane, s., 2009, ‘why encouraging more people to become entrepreneurs is bad public policy’, small business economics 33(2), 141–149. https://doi.org/10.1007/s11187-009-9215-5 singer, s., amorós, j.e. & arreola, d.m., 2015, global entrepreneurship monitor 2014 global report, global entrepreneurship monitor, london. smallbone, d. & welter, f., 2001, ‘the distinctiveness of entrepreneurship in transition economies’, small business economics 16(4), 249–262. https://doi.org/10.1023/a:1011159216578 stam, e. & stel, a.v., 2009, types of entrepreneurship and economic growth, unu-wider, maastricht. stel, a.v., carree, m. & thurik, r., 2005, ‘the effect of entrepreneurial activity on national economic growth’, small business economics 24, 311–321. https://doi.org/10.1007/s11187-005-1996-6 thompson, e.r., 2009, ‘individual entrepreneurial intent: construct clarification and development of an internationally reliable metric’, entrepreneurship theory and practice 33(3), 669–694. https://doi.org/10.1111/j.1540-6520.2009.00321.x thornton, p.h., ribeiro-soriano, d. & urbano, d., 2011, ‘socio-cultural factors and entrepreneurial activity: an overview’, international small business journal 29(2), 105–118. https://doi.org/10.1177/0266242610391930 tsai, k.-h., chang, h.-c. & peng, c.-y., 2016, ‘refining the linkage between perceived capability and entrepreneurial intention: roles of perceived opportunity, fear of failure, and gender’, international entrepreneurship and management journal 12(4), 1127–1145. https://doi.org/10.1007/s11365-016-0383-x urbano, d. & alvarez, c., 2014, ‘institutional dimensions and entrepreneurial activity: an international study’, small business economics 42, 703–716. https://doi.org/10.1007/s11187-013-9523-7 valdeza, m.e., doktorb, r.h., singerc, a.e. & danad, l.-p., 2011, ‘impact of tolerance for uncertainty upon opportunity and necessity entrepreneurship’, human systems management 30, 145–153. vallierea, d. & peterson, r., 2009, ‘entrepreneurship and economic growth: evidence from emerging and developed countries’, entrepreneurship & regional development 21(5–6), 459–480. https://doi.org/10.1080/08985620802332723 wasdani, k.p. & mathew, m., 2014, ‘potential for opportunity recognition along the stages of entrepreneurship’, journal of global entrepreneurship research 2(7), 1–24. https://doi.org/10.1186/2251-7316-2-7 wennekers, s., stel, a.v., carree, m. & thurik, r., 2010, ‘the relationship between entrepreneurship and economic development: is it u-shaped?’, foundations and trends in entrepreneurship 6(3), 167–237. https://doi.org/10.1561/0300000023 wong, p.k., ho, y.p. & autio, e., 2005, ‘entrepreneurship, innovation and economic growth: evidence from gem data’, small business economics 24, 335–350. https://doi.org/10.1007/s11187-005-2000-1 yalcin, s. & kapu, h., 2008, ‘entrepreneurial dimensions in transitional economies: a review of relevant literature and the case of kyrgystan’, journal of developmental entrepreneurship 13(2), 185–204. https://doi.org/10.1142/s1084946708000922 yolaç, s., 2015, ‘an empirical study regarding entrepreneurship in europe and central asia’, procedia – social and behavioral sciences 195, 1097–1103. https://doi.org/10.1016/j.sbspro.2015.06.154 zhang, y. & duysters, g., 2010, entrepreneurship development and the role of economic transition in entrepreneurial activities in china, unu-merit working paper-036, united nations university maastricht economic and social research institute on innovation and technology (merit), maastricht. zsuzsannaa, s.k. & hermana, e., 2012, ‘innovative entrepreneurship for economic development in eu’, procedia economics and finance 3, 268–275. https://doi.org/10.1016/s2212-5671(12)00151-7 sociodemographic_analysis_of_festival_jonker_saayman_revisedetrchangescleanpublish sajesbm volume 3, (2010) www.sajesbm.com article no 101 1 socio-demographic analysis of festival entrepreneurs in south africa jonker, e. and saayman, m. institute for tourism and leisure studies, north-west university, potchefstroom campus, private bag x6001, 2520 south africa melville.saayman@nwu.ac.za abstract the purpose of this article is to examine the socio-demographic differences between entrepreneurs at national arts festivals in south africa. language, and specifically afrikaans, english and african languages, was used as the dependent variable. the klein karoo national arts festival (kknk) in oudtshoorn and the grahamstown national arts festival (gnaf) are the two largest arts festivals in south africa. the research was conducted by means of a questionnaire survey (n=500). the data from kknk and gnaf were combined and factor analyses were applied to determine the role and attributes of entrepreneurs. cross-tabulation analyses were used to illustrate the comparison of language with socio-demographical variables (marital status, qualification, province, family business, personal attributes, business premises and resourcefulness) and the role and attributes of entrepreneurs. in addition, the association of language with independent variables was examined by means of one-way anova for the three language groups. findings suggest that there are significant differences in festival entrepreneurs from different cultures (languages), especially in terms of socio-demographic variables such as marital status, education, province, business and personal attributes (resourcefulness). keywords and phrases: klein karoo national arts festival, grahamstown national arts festival, festival entrepreneur, factor analysis, cross-tabulation analysis, anova, entrepreneurs, language sajesbm volume 3, (2010) www.sajesbm.com article no 101 2 introduction festivals, as stated by allen, o’toole, harris and mcdonnell (2008:15), contribute a great deal to the social and cultural life of a community, and are an important expression of human activity. festivals are also increasingly linked with tourism to generate business activity and income for the host communities. an arts festival, according to allen et al. (2008:15), is the most common type of festival, which can include mixed art forms at multiple venues. these festivals can be defined as celebrations of a community – to serve as a public demonstration of what the community is all about (allen et al., 2008:15). arts festivals often include various types of fine arts together with other cultural expressions to make them more broadly appealing (jackson & o’sullivan, 2002:327). according to getz (2007:403), and saayman, douglas and de klerk (2009), festivals are a category of events and they play an important role in the development of tourist attractions in terms of community-building, urban renewal and entrepreneurial growth. whitford (2004a, 2004b:81) concluded that little recognition has been given to events which include festivals in terms of the facilitation of entrepreneurial enterprises and regional development, and suggested that a proactive entrepreneurial approach to the development of government policy on events is needed. it is thus important that more research is done in order to obtain a better understanding of entrepreneurial activity at events. hence this research, which was conducted at the two largest arts festivals in south africa, namely the klein karoo national arts festival (hereafter referred to as kknk) and the grahamstown national arts festival (hereafter referred to as gnaf). the kknk was established in 1994 as a way to preserve the afrikaans language, and has since developed into the largest arts festival in south africa (kitshoff, 2004a: 238; slabbert, saayman, saayman & viviers, 2007a:41). the kknk is held annually in the town of oudtshoorn and the festival has an estimated economic impact of r71 million. the gnaf is the oldest national arts festival in south africa and was established in 1974 with the purpose of providing a cultural experience for the tourists and visitors and to grow the local economy (kitshoff, 2004b:246). the economic impact of the gnaf was estimated at r51 million in 2007 (slabbert et al., 2007b:41). the purpose of this article is to analyse the socio-demographic differences of festival entrepreneurs at these two festivals. in order to achieve the goal of the article, it is structured as a literature review that follows the introduction. thereafter the method of research will be explained, followed by the results, findings, implications and conclusions. sajesbm volume 3, (2010) www.sajesbm.com article no 101 3 literature review research indicates that entrepreneurial activity leads to economic growth (audretsch & thurik, 2001; carree & thurik, 2003; van stel, carree & thurik, 2005; ulign & brown, 2004:22). since 1994, the south african government has been committed to developing entrepreneurship through its strategies and has put a large number of resources, financial support, and policies into the development of entrepreneurial ventures (ahwireng-obeng, 2005:15). this has been done specifically to increase the number of black entrepreneurs. strategies included establishing institutions such as development corporations as well as incentive schemes to support entrepreneurs in the different provinces. according to ligthelm (2006:48), the needs in the south african economy can largely be addressed by promoting entrepreneurship and establishing education as the foundation where people are introduced to an entrepreneurial culture. entrepreneurship is a process that explores opportunities that either exist in the environment, or are produced through innovation in order to create value (ulign & brown, 2004:5-7). entrepreneurs can be defined as people who perceive opportunities and combine production factors in creative and innovative ways to develop their initial idea into profitable businesses (bolton &thompson, 2004:16; gartner, 1990:27; duening & sherrill, 2007:31; timmons & spinelli, 2004:47). however, jonker, saayman and de klerk (2009) concluded in their research that a festival entrepreneur is someone who started and manages his/her own business, and travels from festival to festival in order to promote, offer or sell his/her product or services as well as creating or adding new products. the importance of the entrepreneur within the community where she/he operates plays a big role in the factors that drive entrepreneurs (aggestam, 2007:31). hence it raises the question of to what extent opportunities are created for potential entrepreneurs? adding to the latter, co (2003:35) states that differences in entrepreneurship among societies are believed to account for their differential rates of growth and development. therefore it is not only economic growth that counts but also the level to which entrepreneurship is developed. according to amoateng and richter (2007:11), south africa is a multiracial, multilingual, multi-ethnic society and, because of the political history of apartheid (pre 1994), the population groups have had different levels of access to the resources of the country. entrepreneurship in a community depends on opportunities provided by the environment and the abilities and preferences of the population (hofstede, noorderhaven, thurik, uhlaner, wennekers & wildeman; 2004:165). added to this, differences in culture and socio-economic resources, such as education and income, sajesbm volume 3, (2010) www.sajesbm.com article no 101 4 have affected entrepreneurial ability and participation (strydom, 2003:19). according to bygrave and minniti (2000:34), many individuals make entrepreneurial choices because of the level of entrepreneurship activity within a community. in other words, how visible is entrepreneurial development, which includes accessibility of funding, information and support. south african cultures were generally distinguished in terms of language and race because of legislation. concerning the latter the population registration act no 30 of 1950 required that each inhabitant of south africa be classified and registered in accordance with their racial characteristics as part of the system of apartheid. after the 1994 democratic elections all legislation that advanced the cause of segregation has been scrapped. however, the country has many different linguistic groups, with isizulu (23.8%), isixhosa (17.6%), afrikaans (13.3%), sepedi (9.4%) and english (8.2%) being the main languages. according to hayton, george and zahra (2002:6), de haas (1990:18), and adam and moodley (1993), the different population groups and cultures that exist within a nation, influence entrepreneurship in terms of decision-making, management, finance and positioning. black south africans, according to berger (1991:8) and godsell (1991), are lacking in entrepreneurial history because of the political policy under apartheid rule, and are seen as isolated individuals, impeded by the lack of an entrepreneurial culture and a restrictive socio-political history. similar to the black south african community, the afrikaans entrepreneurs also lack entrepreneurial history and have a tendency to act alone without the mediating structure of a community (godsell, 1991). this is because the pre-1994 government lacked policy and strategies to promote and develop entrepreneurs. english-speaking south africans have a more established entrepreneurial history as traders, company owners, mine owners and industrialists. english is also the language most spoken in the business and educational environments in south africa (muller, 1980; mesthrie, 2008:333). with entrepreneurial activity stimulating economic growth, it has become important for all those who are involved in the field of entrepreneurship to obtain a greater understanding of entrepreneurs and the aspects driving them (bhola, verheul, thurik & grilo, 2006:29). the latter would therefore also apply in the case of festival entrepreneurs. the question under investigation is whether there are differences between festival entrepreneurs (for example afrikaans, english and african entrepreneurs) and if so, what are these differences? various researchers have used socio-demographic variables to differentiate between entrepreneurs (see appendix, table 1). socio-demographic variables can be defined in terms of social class and demographics. social class refers to the sajesbm volume 3, (2010) www.sajesbm.com article no 101 5 standing of an individual in the social hierarchy, while demographics is the study of the structure of the human population (pissoort & saayman, 2007:257). comparing the results of the socio-demographic studies indicated in table 1, it is apparent that language, gender, age and education are the most common variables that differentiate entrepreneurs. none of these studies were conducted at a festival. this type of research is important because entrepreneurs are seen as important roleplayers in the success and future of national arts festivals (saayman, douglas & de klerk; 2009). method exploratory research was conducted by means of two surveys. the first survey took place during the kknk held in oudtshoorn from 21 to 29 march 2008, while the second survey took place at the gnaf from 26 june to 5 july 2008. the questionnaire enquired after the entrepreneurs’ demographic background attributes as well as their role at the two festivals. the method of research will subsequently be examined under (a) questionnaire, (b) samples, and (c) statistical analysis. questionnaire the questionnaire was developed to examine the profile of the entrepreneurs as well as their attributes and role at arts festivals in south africa. the questionnaire used in this research was adapted from a study done by saayman et al. (2009). it was distributed by fieldworkers to the stall owners at the kknk and gnaf. the questionnaire had three sections, which consisted of (a) demographic information, (b) business information, and (c) festival information. a likert scale that ranged from 1 (not at all important) to 5 (extremely important) was used to determine the attributes of entrepreneurs (tustin, lighthelm, martins & van wyk, 2005:407) as well as their role at south african arts festivals. open and closed questions were included that measured the socio-demographic background of entrepreneurs. sample there were 511 stall owners (440 art stalls and 71 food stalls) at the kknk and 267 stall owners (243 art stalls and 24 food stalls) at the gnaf, which totals 778 stalls. stalls that were managed for charity purposes or where the owner was not available, sajesbm volume 3, (2010) www.sajesbm.com article no 101 6 or willing, to participate, were omitted from the survey. therefore, availability sampling was applied in this research. of the 600 questionnaires that were handed out at both festivals, 500 (249 at kknk and 251 at gnaf) were completed and used in the analyses. statistical analysis microsoft excel was used for data capturing. the data for the two festivals were combined (n=500) and the main difference between festival entrepreneurs at the kknk and the gnaf is the language spoken. the kknk is mainly an afrikaansspeaking festival, while the gnaf caters more for english and african entrepreneurs. in total, 43% of festival entrepreneurs were afrikaans-speaking, 35% english-speaking and 22% spoke african languages. the african languages consisted of isixhosa, xitsonga and isizulu. because there were fewer black festival entrepreneurs at these two national art festivals than their white counterparts, it was decided to combine all black african languages. multivariate statistics were used to examine whether there were statistically significant differences between the language groups of entrepreneurs, with language being the dependant variable. two-way frequency tables and chi-square tests were employed to profile the groups demographically, while one-way analysis-of-variance (anova), cross-tabulation analysis and tukey post-hoc tests were used to analyse differences and relationships between the language groups. the study employed the following socio-demographic variables: age, marital status, qualification, province, resourcefulness, family business, business premises, previous festivals attended and amount of shares in business, to examine whether statistically significant differences existed among different language groups. exploratory factor analyses and reliability tests were performed on the data to validate the constructs by means of the statistical package for the social sciences (spss) predictive analytics software (spss inc., 2007). the first factor analysis (pattern matrix) identified five attributes (see appendix, table 2), namely acquired skills (cronbach alpha 0.85), resourcefulness (0.83), selfedification (0.81), explorative (0.61) and self-efficacy (0.71). the kaiser-meyer-olkin measure was 0.933 and the bartlett test was found to be significant (p <.0001). sajesbm volume 3, (2010) www.sajesbm.com article no 101 7 the second factor analysis identified three primary roles (see appendix, table 3 below) of festival entrepreneurs, namely festival promotion (cronbach alpha 0.85), product promotion (0.84) and income generation (0.70). the kaiser-meyer-olkin measure was 0.844, which is acceptable, and the bartlett test was also found to be significant (p <.0001). one-way anova as well as tukey post-hoc tests were conducted to examine the different values that each language group attaches to the entrepreneurial attributes and its role at festivals. results the results will be discussed in two sections, namely the results from the crosstabulation analysis and thereafter the results from the anova and tukey’s comparison. results from the cross-tabulation analysis table 4 (see appendix) shows the comparison of language with socio-demographic variables, i.e. marital status, qualification, province, resourcefulness, family business and business premises. the association of language with socio-demographic variables was determined by means of cross-tabulation. the x²-test statistics returned significant findings at the 5% level of significance. the cross-tabulation comparison (see appendix, table 4) shows that the majority (71.5%) of afrikaans-speaking festival entrepreneurs were married, compared to only 57.5% of english-speaking and 42.6% of african entrepreneurs. afrikaansand english-speaking entrepreneurs’ level of education is considerably higher than the african-language entrepreneurs’ level of education. the african entrepreneurs have the highest proportion of businesses that are run from road stalls and festivals, while the english-speaking entrepreneurs have the highest proportion of formal premises (30.9%). the afrikaans and english groups are mainly from the western cape province, whereas the african group is mainly from the eastern cape province. results from the anova and tukey’s comparison the association of language with independent variables was examined by means of one-way anova for the three language groups (see appendix, table 5). significant differences were analysed with tukey’s post-hoc comparisons (appendix, table 5). sajesbm volume 3, (2010) www.sajesbm.com article no 101 8 the one-way anova and tukey post-hoc tests suggest that there are significant differences between the language groups (see appendix, table 5). afrikaansand english-speaking entrepreneurs at south african arts festivals are older, they attended more festivals, and they have more shares than the african entrepreneurs do. the afrikaans and english entrepreneurs started their businesses in 1997 to 1998, while the african entrepreneurs started their businesses in 2000 to 2001. the one-way anova compared the language groups across their perceived entrepreneurial attributes. the results show a significant difference between the levels of agreement between language groups about the importance of resourcefulness as an attribute of entrepreneurs as measured on a five-point likert scale. according to the tukey post-hoc test (appendix, table 5), the afrikaansand english groups agreed (including attributes such as innovation, dedication and vision, to name but a few) on the importance of resourcefulness as an entrepreneurial attribute, although the african group finds it less important. the rest of the attributes, including acquired skills, self-edification, explorative and selfefficacy, factors were considered equally important across the language groups. the second factor analysis identified the role of entrepreneurs at festivals and revealed three primary roles, namely festival promotion, product promotion and income generation, of which product promotion had the highest mean value of 4.40. no significant differences were found between language groups regarding their role at arts festivals. relationship between findings and literature the findings were: • 71.5% of afrikaans-speaking entrepreneurs were married, compared to only 57.5% english and 42.6% african entrepreneurs (see appendix, table 4). this supports research done by kalule-sabiti, palamuleni, makiwane and amoateng (2007:109), who found that the low marriage rates among the majority african population groups can be due to the increasing popularity of non-marital cohabitation and the gradual but steady increase in the divorce rate. • that the african group has a lower level of education (see appendix, table 4) supports the notion that inferior education was and most probably still is provided for the african majority in south africa due to a lack of resources, properly qualified teachers and lack of school infrastructure (fedderke, kadt and luiz; 2000). brand (2004:35) adds that the privilege of education through the medium of the mother tongue is still reserved exclusively for the afrikaans and english speakers. in summation the global entrepreneurial monitor also sajesbm volume 3, (2010) www.sajesbm.com article no 101 9 found that only 13.8% of south african entrepreneurs had any type of training before starting a business (bosma, acs, autio, coduras & levie; 2009:46). • african entrepreneurs are younger than afrikaans and english entrepreneurs – the average ages of all three groups range from 38 to 44 years (see appendix, table 5). these findings support research done by bhola et al. (2006:6), and reynolds, bygrave, autio, cox and hay (2002), who found that people between the age of 25 and 44 are most likely to be involved in entrepreneurial activity. according to bosma et al. (2009:26), the 25 to 34 years age group is the most common age for people to become economically active. aldrich (1999) found that age is strongly and positively correlated with work experience and fosters the development of entrepreneurial skills. • a higher proportion of afrikaansand english-speaking entrepreneurs had family businesses than the african category (see appendix, table 4). according to bank (1994), few african family businesses existed before 1994 and the current findings suggest that the number of african family businesses is increasing, but has not reached the number of the english and afrikaans groups. • english-speaking entrepreneurs are the group with the largest proportion of formal premises, while african entrepreneurs have the largest proportion of businesses that are run from road stalls (see appendix, table 4). these findings support research done by statistics south africa. the latter estimate that, in 2001, approximately 2.3 million people were owners of at least one small or micro-business (lehohla, 2002). the vast majority (89.4%) of these business owners were african. more than two-thirds (67.2%) were operating these businesses from a dwelling or its surrounding property, and 15% did not have a fixed site from which to operate the business. • the majority of afrikaans and english festival entrepreneurs started their businesses earlier (1997 to 1998) than their african counterparts, who started their businesses in 2000 to 2001 (see appendix, table 5). • the perceived role of entrepreneurs at arts festivals is the same across all three language groups (see appendix, table 3). the most important role is product promotion, followed by income generation and festival promotion. this supports research done by jonker et al. (2009), who indicated that the combination and importance of entrepreneurial attributes seem to be industry or sector specific. limitation of the study the greatest limitation of this study was the absence of more black festival entrepreneurs at these festivals. sajesbm volume 3, (2010) www.sajesbm.com article no 101 10 sajesbm volume 3, (2010) www.sajesbm.com article no 101 11 implications based on the results of the research, three main implications were identified: • firstly, these results shed light on the differences among festival entrepreneurs and confirm that differences do exist, as was indicated in the findings above. these findings therefore enable government agencies at all levels of government who are involved in funding and promotion of entrepreneurial development as well as festival organisers to increase the number of festival entrepreneurs. the reason is that festival entrepreneurs play a vital role in the future of arts festivals, since they attract, entertain and sell products and services to visitors as well as create job opportunities. the above could be achieved by means of creating opportunities for potential festival entrepreneurs to become part of a particular festival by giving discount to first-time entrepreneurs at a festival, and/or giving preference to festival entrepreneurs who are entering with new or more innovative products. a special prize or award with the aim of assisting newcomers could also be awarded annually to the most innovative new products/services at the festival. • secondly, festival organisers should be more actively involved in accommodating festival entrepreneurs, especially from the african language groups. this could be done by hosting workshops for potential festival entrepreneurs as well as developing a more proactive communication strategy that covers a wider range of media in order to inform potential black entrepreneurs. added to this the latter require more training and government agencies should assist in this regard. festival entrepreneurs might require training in aspects such as determining price, ensuring quality and authentic products, how to conduct business and how to market and sell products effectively. • thirdly, since most black entrepreneurs run their businesses from informal dwellings, assistance by government agencies and festival organisers is required to ensure greater sustainability. this could be achieved for example by subsidising new entrants. directions for future research based on the results of this research, it is recommended that a similar study should focus more on an analysis of african festival entrepreneurs at other festivals in order to obtain more insight into the socio-demographics of the different african language groups. it would also be useful to determine the types of training that festival sajesbm volume 3, (2010) www.sajesbm.com article no 101 12 entrepreneurs require. lastly research should also be conducted on the relationship between festival entrepreneurs and other stakeholders. conclusions the purpose of this research was to identify the socio-demographic differences of festival entrepreneurs at two national arts festivals in south africa. the literature review could not confirm that similar research has been conducted at national arts festivals, which is an indication that this is an area where more research is required. the reason is that the number of events and specifically festivals is constantly increasing in south africa. hence growth in this sector creates more opportunities for festival entrepreneurs both current and potential. results indicated significant differences between the different language groups (afrikaans, english and african languages). this implies that a different approach is required if one wants to see growth in specifically the number of black festival entrepreneurs. also, the latter require greater assistance in terms of training, being informed about festivals and a venue from where they can operate their businesses on a daily basis. these differences could also be an indication of different needs. however, an interesting finding was in terms of the role and function of festival entrepreneurs which indicated no differences. this shows that in terms of the core business the different language groups are in accord. references adam, h. & moodley, k. 1993. the negotiated revolution. johannesburg: jonathan ball. ahwireng-obeng, f. 2005. internationalising south african entrepreneurship: identifying strategy drivers for competitive superiority. africa insight, 35(3): 13-18. available: saepublications. aggestam, m. 2007. art-entrepreneurship in the scandinavian music industry. (in henry, c. entrepreneurship in the creative industries: an international perspective. cheltenham, uk: edgard elgar. pp. 30-53). aldrich, h.e. 1999. organizations evolving, london: sage. allen, j., o’toole, w., harris, r. & mcdonnell, i. 2008. festival & special event management. 4th edition. australia: wiley. 637p. sajesbm volume 3, (2010) www.sajesbm.com article no 101 13 amoateng, a.y. & richter, l.m. 2007. social and economic context of families and households in south africa. (in amoateng, a.y. & heaton, t.b. eds. families and households in post-apartheid south africa: socio-demographic perspectives. cape town: hsrc press. p. 1-25.). audretsch, d.b. & thurik, a.r. 2001. what is new about the new economy: sources of growth in the managed and entrepreneurial economies. industrial and corporate change, 10(1): 25-48. bank, l. 1994. between traders and tribalists: implosion and the politics of disjuncture in a south african homeland, african affairs, 93(370):75-99. berger, b. 1991. introduction in the culture of entrepreneurship. san francisco: institute for contemporary studies. bhola, r., verheul, i., thurik, r. & grilo, i. 2006. explaining engagement levels of opportunity and necessity entrepreneurs. eim business and policy research, 1-45. bolton, b. & thompson, j. 2004. entrepreneur: talent, temperament, technique. 2nd edition oxford: elsevier. 415p. bosma, n., acs, z.j., autio, e., coduras, a & levie, j. 2009. global entrepreneurship monitor: 2008 executive report. gem global entrepreneurship monitor. london: london business school brand, g.v.w. 2004. ‘english only’? creating linguistic space for african indigenous knowledge systems in higher education. south african journal of higher education. 18(3): 27-39. bygrave, w. & minniti, m. 2000. the social dynamics of entrepreneurship. entrepreneurship theory and practice. 24(3): 25-36. carree, m.a. & thurik, a.r. 2003. the impact of entrepreneurship on economic growth. (in audretsch, d.b. & acs, z.j., eds., handbook of entrepreneurship research, boston/dordrecht: kluwer academic publishers, 437-471.) co, m.j. 2003. a socio-cultural explanation of black entrepreneurship in south africa. south african journal of business management, 34(4):35-44. sajesbm volume 3, (2010) www.sajesbm.com article no 101 14 de haas, m. 1990. ethnicity in perspective. democracy in action, feb. duening, t.n. & sherrill, w.w. 2007. entrepreneurism: exploring entrepreneurship from a business process perspective. usa: thomson. 336p. fedderke, j.w., kadt, r.d. & luiz, j.m. 2000. uneducation south africa: the failure to address the 1910-1993 legacy. international review of education. 46(3/4): 257-281. gartner, w.b. 1990. what are we talking about when we talk about entrepreneurship? journal of business venturing, 5: 15-28. getz, d. 2007. progress in tourism management: event tourism: definition, evolution, and research. tourism management, 29(2008): 403-428. godsell, g. 1991. entrepreneurs embattled: barriers to entrepreneurship in south africa. (in b. berger the culture of entrepreneurship. california: ics press. 85-98) hayton, j.c., george, g. & zahra, s.a. 2002. national culture and entrepreneurship: a review of behavioural research. entrepreneurship theory and practice. 33-52. hofstede, g., noorderhaven, n.g., thurik, a.r., uhlaner, l.m., wennekers, a.r.m & wildeman, r.e. 2004. culture’s role in entrepreneurship: self-employment out of dissatisfaction. (in brown, t.e. & ulign, j., eds. innovation, entrepreneurship and culture: the interaction between technology, progress and economic growth. cheltenham, uk: edgard elgar. p. 162-203). jackson, m.j. & o’sullivan, d. 2002. festival tourism: a contributor to sustainable local economic development? journal of sustainable tourism, 10(4): 325-342. jonker, e., saayman, m. & de klerk, s. 2009. the role and attributes of entrepreneurs at the klein karoo national arts (kknk) festival. journal of tourism and cultural heritage, 7(3):381-392. kalule-sabiti, i., palamuleni, m., makiwane, m. & amoateng, a.y. 2007. family formation and dissolution patterns. (in amoateng, a.y. & heaton, t.b. eds. sajesbm volume 3, (2010) www.sajesbm.com article no 101 15 families and households in post-apartheid south africa: socio-demographic perspectives. cape town: hsrc press. p. 89-112.) kitshoff, h. 2004a. klein karoo nasionale kunstefees (kknk) – oudtshoorn, 311 april 2004. south african tourism journal, 18:237-241. available: saepublications. kitshoff, h. 2004b. grahamstown national arts festival – grahamstown, 1-10 july 2004. south african tourism journal, 18:246-249. lehohla, p. 2002. the contribution of small and micro enterprises to the economy of the country: a survey of non-vat-registered businesses in south africa part 2 – narrative report. pretoria: statistics south africa 56p. ligthelm, a. 2006. an evaluation of the role and potential of the informal economy for employment creation in south africa. south african journal of labour relations, 30(1): 30-50. mesthrie, r. 2008. south africa: the rocky road to nation building. (in simpson, a. language and national identity in africa. new york: oxford university press. p. 316-338). muller, c.f.j. 1980. inleiding. (in muller, c.f.j. 500 jaar suid-afrikaanse geskiedenis. 3rd edition pretoria: academica. p. ix-xi). pissoort, v. & saayman, m. 2007. market segmentation of visitors at three selected arts festivals in south africa. acta commercii. 255-268. reynolds, p.d., bygrave, w.d., autio, e., cox, l.w. & hay, m. 2002. global entrepreneurship monitor, 2002 executive report. london: london business school saayman, m., douglas, m. & de klerk, s. 2009. attributes of entrepreneurs at an arts festival. southern african journal of entrepreneurs and small business management, 2(1):17-29 saayman, m. & kruger, m. 2008. travel motives of visitors attending oppikoppi music festival. acta academica, 41(4):56-73 senik, c. & verdier, t. 2008. entrepreneurs, social networks and work values of ethnic minorities in france. international journal of manpower, 29(7): 610-629. shen, j. & saijo, t. 2007. re-examining the relations between sociodemographic characteristics and individual environmental concern: evidence from shanghai data. journal of environmental psychology, 28: 42-50. sajesbm volume 3, (2010) www.sajesbm.com article no 101 16 slabbert, e., saayman, m., saayman, a. & viviers, p. 2007a. sosioekonomiese impak van besoekers aan die absa kknk 2007. potchefstroom: institute for tourism and leisure studies. slabbert, e., saayman, m., saayman, a. & viviers, p. 2007b. socioeconomic impact of visitors to the grahamstown national arts festival 2007. potchefstroom: institute for tourism and leisure studies. spss inc. (2007) spss® 16.0 for windows, release 16.0.0, copyright© by spss inc., chicago, illinois. www.spss.com strydom, h. 2003. mapping the road to multilingualism in south africa. acta academica supplementum, (2):15-31. south africa. 1950. the population registration act , act no 30 of 1950. government printer timmons, j.a. & spinelli, s. 2004. new venture creation: entrepreneurship for the 21st century. 6th edition. new york: irwin. 700p. thrane, c. 2008. earnings differentiation in the tourism industry: gender, human capital and socio-demographic effects. tourism management, 29: 514-524. tustin, d.h., lighthelm, a.a., martins, j.h. & van wyk, h.j. 2005. marketing research in practice. pretoria: unisa press. 749p. ulign, j. & brown, t.e. 2004. innovation, entrepreneurship and culture, a matter of interaction between technology, progress and economic growth? an introduction. (in brown, t.e. & ulign, j., eds. innovation, entrepreneurship and culture: the interaction between technology, progress and economic growth. cheltenham, uk: edgard elgar. p. 1-38). van stel, a.j., carree, m.a. & thurik, a.r. 2005. the effect of entrepreneurial activity on national economic growth. small business economics, 24(3): 311-321. whitford, m. 2004a. regional development through domestic and tourist event policies: gold coast and brisbane, 1974–2003, unlv journal of hospitality, tourism and leisure science, 1: 1–24. whitford, m. 2004b. event public policy development in the northern subregional organisation of councils, queensland australia: rhetoric or realisation? journal of convention and event tourism, 6(3): 81–99. sajesbm volume 3, (2010) www.sajesbm.com article no 101 17 template 3rd draft / exam project ebw 801 88 financial management practices in successful small and medium enterprises (smes) hendrik wolmarans hendrik.wolmarans@up.ac.za quentin meintjes qmcape@gmail.com university of pretoria abstract although the success of small, medium and micro enterprises (smes) is extremely important for the south african economy, their failure rate is amongst the highest in the world; some researchers estimate as high as 90 percent. research has shown that the lack of financial management skills and application of financial management practices are some of the biggest factors contributing to sme failure. however, it is not clear from the literature which of these skills and practices are more important than others. this study aims to fill this gap by determining which financial management skills are relevant for successful smes. a survey was done on a sample of owner-managers of successful smes who had been asked, firstly, whether they performed different financial management practices and, secondly, how frequently they performed these in their companies. the study concludes that practices regarding working capital as well as profitability are much more relevant than those regarding a balance sheet or strategic finance. similarly, financial practices related to cash flow and decision making are more relevant than those related to planning or analysing. it may be true, due to the high risk and volatile environment of smes, as well as the challenges that are often underestimated, that financial practices which academics regard as important are not always implemented by these companies. this study contributes to the existing body of knowledge as it determines the relative relevance and frequency of use of financial management practices by successful smes. key words small and medium enterprises, financial management practices, successful smes, entrepreneurship education sajesbm volume 7 (2015) www.sajesbm.co.za article 149 mailto:hendrik.wolmarans@up.ac.za mailto:qmcape@gmail.com 89 introduction various studies have identified the performance of a country’s sme sector as a good indicator of its overall vitality and future prospects (xesha, iwu & slabbert, 2014:37). small businesses are globally regarded as being important for the income, growth and prosperity of individuals, the community and the economy (badenhorst-weiss & cilliers, 2014:2; nkosi, bounds & goldman, 2013:1). in the european union, smes are even seen as the engine for societal development, as apart from the obvious contributions they make toward the gross domestic product (gdp), they are, inter alia, a source of employment and training for the youth (nkosi, bounds & goldman, 2013:1). the activities of the sme sector in africa are crucial for promoting economic growth, job creation and poverty alleviation (rogerson, 2001a:267), while the small business sector is often seen as the incubator of employment, innovation and growth (carter & van auken, 2006:493). steyn and leonard (2012:24) even see smes as the driving force of any economy. however, in spite of various incentives, training programmes and research by academics, olawale and smit (2010:1790) estimate that as many as 75 percent of south african smes eventually fail. some researchers even estimate this failure rate to be as high as 90 per cent (radipere & van scheers, 2005:402, pretorius, 2009:1). this failure rate is one of the highest in the world. as a comparison the average failure rate for smes in 21 european countries in 2010 was only 35 percent (marzocchi, ramlogan & gagliardi 2013:23). there is consensus amongst experts that financial management skills are some of the key components in the skills mix for smes to be successful (bloom & boessenkool, 2002:244, roodt, 2005:18, kotze & smit, 2008:35, akande, 2011:372, bezuidenhout & nenungwe, 2012:11658). if an sme is not managed well from a financial management point of view, it cannot survive over the mediumto long–term. however, what is not yet clear from the literature is which specific financial management practices are more important in successful smes. which of the numerous financial management skills have the owner-managers of successful smes found to be most useful? which of the financial management practices do they use most frequently? sajesbm volume 7 (2015) www.sajesbm.co.za article 149 90 this study seeks to answer these questions. this knowledge could be important not only for existing and nascent (aspiring) entrepreneurs, but also for educators of future owner-managers of small firms. in enhancing the ways in which financial management knowledge can be utilised in practice by owner-managers of smes, the results of this study can also contribute to the enhancement of the success of smes in south africa. the aim of this study is to determine the relative relevance to and frequency of use of specific financial management practices as performed by the owner-managers of successful smes in the western cape. a survey was done on the owner-managers of 30 successful smes in the western cape. the results indicate that the financial management practices that sme ownermanagers regard as relevant and are performed more than once a quarter, tend to focus more on working capital and profitability than on the balance sheet or strategic finance. similarly, practices related to cash flow and decision-making are regarded as more valuable than those related to planning or analysing. the layout of this article is as follows: the literature review is followed by a discussion on what makes an sme successful. specific financial management practices are then linked to financial management skills. next, a profile of the western cape is given, followed by the hypotheses and research methodology. the results then follow, where-after conclusions and recommendations are made and possible future research areas identified. literature review in common with the experience of many countries in the developing world, postapartheid south africa has been at the forefront of the development and implementation of a set of pro-sme policies (rogerson, 2001b:271). the promotion of smes has been recognised by the south african government as one of the key pillars of economic strategies for reconstruction and development in post-apartheid south africa. the monitoring of research on the sme economy in south africa is viewed as a critical issue of high policy relevance (rogerson, 2008:35). smes are critical in the economic and social development of most countries (sanda, sackey & fältholm, 2011:7). they are especially important for their role in job creation with low investment, development of entrepreneurship, regional development, and as sajesbm volume 7 (2015) www.sajesbm.co.za article 149 91 suppliers to large companies. however, despite their important contribution to economic vitality, small firms often experience financial stress (carter & van auken, 2006:493). the definition of smes internationally an sme is defined by the annual turnover and the number of full-time employees in the firm (world bank, 2011:4). the asia-pacific economic cooperation (apec) indicates that in apec’s participating countries an sme normally will have not more than 100 employees (liang, 2003:173). to qualify as an sme in south africa, a firm should have not more than 50 employees and a turnover of less than r64 million (south africa, 1996). however, the new small business corporation tax aimed at smes, includes all firms with an annual turnover of less than r14 million (burger, 2009:4). for this study the target population is, therefore, all smes with a turnover of less than r14 million that employ fewer than 50 full-time employees. failure and sustainability of smes smes in south africa are more likely to fail than to succeed. van eeden, viviers and venter (2003:13) estimated the failure rate of south african smes to be between 70 and 80 percent. olawale and garwe (2010:730) and mutezo (2013:153) were of the opinion that 75 percent of new smes in south africa will never become established firms. radipere and van scheers (2005:402) estimated this failure rate to be as high as 90 percent. when south africa is compared internationally, the failure rate of south african smes is extremely high. in south africa, whereas as few as 19 percent of adults intend to become entrepreneurs, only 2.3 percent (of adults) eventually become the owners of established businesses (turnton & herrington, 2012:53). this rate is one of the lowest and far below the average of eight percent for similar countries. while new business owners in the uk generally open their businesses flush with optimism at their chances of success, more than 50 percent of them fail in the first twoandahalf years of trading (dennis and fernald, 2001:75; cressy, 2006:103). in south africa radipere and van scheers (2005:402) estimate that 40 percent of sajesbm volume 7 (2015) www.sajesbm.co.za article 149 92 small firms fail in their first year, 60 percent before their second year has passed and 90 percent in their first 10 years of existence. adeniran and johnson (2012:4088) estimated that south african smes fail at a rate of between 70 and 80 percent. pretorius (2009:1) estimated this rate to be between 50 and 90 percent. the sustainability of an sme is generally linked to the period that it actively trades in the market. young firms tend to be more prone to failure than older ones (cressy, 2006:103). knaup and piazza (2007:7) found that, if the age of an sme is less than one year, it has only a 31% probability of surviving for seven or more years (see figure 1). on the other hand, if an sme has already survived for four years the probability of lasting three more years (in total, then, seven years) increases significantly to 70 percent. only after seven years do these authors regard the sme to be well established. figure 1: age of the sme and probability of surviving for seven or more years (source: adapted from knaup & piazza, 2007:7) von broembsen, wood and herrington (2005:20) were of the opinion that south african and mexican start-up firms are the least likely of their international counterparts to survive for more than 42 months (three and a half years). olawale and garwe (2010:730) defined a sme that has been in existence for more than 42 months, as an established sme, as the risk of failure reduces significantly after this time period. for the purpose of this study it is assumed that a sustainable sme is one that has traded for at least 42 months. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 93 south african studies a number of south african studies similar to this one have been done on various financial aspects of smes. the titles of these studies, the research design and the sample sizes are summarised in table 1. table 1: sample size of related studies researcher year title research design sample size van eeden, viviers & venter 2003 a comparative study of selected problems encountered by small businesses in the nelson mandela, cape town and egoli metropoles survey research (non-probability sampling) 1 036 schwarze 2008 involving the accounting profession in the development of financial management skills of micro-enterprise owners in south africa survey research (non-probability sampling) 8 rajaram & o’neill 2009 profit or no profit – does the sme sector really know? survey research (non-probability sampling) 30 ligthelm 2010 entrepreneurship and small business sustainability survey research (probability sampling) 300 olawale & smit 2010 the impact of the business environment on the availability of trade credit to new smes in south africa survey research (probability sampling) 233 rootman & kruger 2010 adapting smme business functions during economic turmoil. survey research (non-probability sampling) 250 nkosi, bounds & goldman 2013 skills required for the management of black-owned small enterprises in soweto. survey research (non-probability sampling) 25 badenhorstweiss & cilliers 2014 competitive advantage of small businesses in soweto. survey research (multi stage quota sampling) 497 van eeden et al. (2003:44) endeavoured to establish to what extent small businesses in a typical south african setting experienced selected problems as negatively influencing the success of their business. the most prominent problem areas were economic and financial factors, competition, socio-economic problems sajesbm volume 7 (2015) www.sajesbm.co.za article 149 94 and change. schwarze (2008:139) found that most sme owners do not possess the critical financial management skills required to ensure survival and growth of their enterprises. rajaram and o’neill (2009:115) determined that the sme sector in kwazulu-natal did, on average, not possess the accounting and financial management skills needed to function optimally and reach their full potential with regard to profitability, growth and sustainability. ligthelm (2010:131) determined that entrepreneurial acumen, business and financial management skills can be classified as the strongest predictors of small business survival. olawale and smit (2010:1778) investigated the impact of the business environment (internal and external environment) on the availability of debt from commercial banks to new smes. internal factors were labelled as managerial competencies, collateral, networking and business information, which were important. the external factors were labelled macro-economy, legal, ethics, crime and corruption. results showed that both internal and external factors have a significant impact on the availability of debt to new smes. rootman and kruger (2010:107) investigated how smes should adapt their business function to improve business performance during times of economic turmoil. respondents regarded the financial management function as the area in smes that required the most focus and adjustment, to improve business performance during challenging economic times. nkosi, bounds & goldman (2013:1) sought to identify the most pertinent business and management skills required for the management of small enterprises in soweto. the findings indicated that most sme owners lack management and business skills and that sme owners often seem to be driven by non-monetary rewards. badenhorst-weiss and cilliers (2014:1) explored the various sources of competitive advantage, focusing specifically on differentiation (also in price) and a unique value package to ensure competitiveness and sustainability for independent small businesses in soweto. it was found that sustainable small businesses use the elements of their value packages better than stagnating or shrinking businesses. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 95 from the literature reviewed above it can be deduced that smes, although very important for the south african economy in terms of creation of both job opportunities and wealth, continue to have a high failure rate. it is also apparent that financial management practices are necessary for sme survival, growth and success. however, no research has yet investigated the relative value of different financial management practices among the owner-managers of smes, nor how frequently these practices are performed. definitions different concepts should be clearly defined and distinguished. accounting can be defined as the systematic and comprehensive recording of financial transactions pertaining to a business (brigham & houston, 2011). the primary objective of financial accounting is the preparation of financial statements including the balance sheet, income statement and cash flow statement that encapsulates the company's operating performance over a particular period, and financial position at a specific point in time. cost accounting entails the recording of all the costs incurred in a business in a way that can be used to improve its management. financial management, on the other hand, can be defined as the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. it is clear that these concepts may overlap, but for an sme owner the differences may be much less obvious. however, the skill-set required for each of the disciplines of accounting and financial management are not necessarily the same. for example, an sme owner might not know how to prepare an income statement, but might be able to interpret its results. successful smes the success of a firm is normally measured by its financial performance (profits, return on assets, and return on investment); product market performance (sales or market share) or shareholders’ returns (richard, devinney, yip & johnson, 2009:722). traditionally, smes are also typically expected to aim at growth over time (berger & udell, 1998:613). however, what an owner-manager of an sme defines as success for an sme could differ. subjective factors such as personal satisfaction, sajesbm volume 7 (2015) www.sajesbm.co.za article 149 http://www.businessdictionary.com/definition/planning.html http://www.businessdictionary.com/definition/directing.html http://www.businessdictionary.com/definition/monitoring.html http://www.businessdictionary.com/definition/organizing.html http://www.businessdictionary.com/definition/controller.html http://www.businessdictionary.com/definition/monetary.html http://www.businessdictionary.com/definition/resource.html http://www.businessdictionary.com/definition/organization.html 96 work-life balance, customer satisfaction, employee satisfaction, and usefulness are often seen as more important than financial performance (gorgievski, ascalon and stephan, 2011:222). dennis and fernald (2001:75) found that only 17 percent of the owners of new smes had as their aim to start a profitable venture which would improve the owner’s financial standing. lecornu, mcmahon, forsaith and stanger (1996:1) and walker and brown (2004:577) agreed that entrepreneurs often define success more in terms of nonfinancial factors. in spite of the above, there are strong indications in the literature that if smes are not managed well from a financial point of view, they will not continue to be successful (collis & jarvis, 2002:100; carter & van auken, 2006:493; cressy, 2006:103; rajaram & o’neill, 2009:99). external and internal factors related to the failure of smes the factors that contribute to the failure of smes can be classified into external and internal factors. external factors are those that cannot be controlled by the ownermanager, such as the macroeconomic environment, social factors such as crime, ethics and corruption, technology and the regulatory environment (olawale & garwe, 2010:732). internal factors within the sme are factors which can be controlled by the sme, such as access to finance, geographic location and the level of managerial skills in the sme. as figure 2 indicates, canadian smes that fail due to internal factors predominately fail due to the lack of general management and financial management skills (statistics canada 1997:24). figure 2: the importance of internal factors causing bankruptcy (source: adapted from statistics canada 1997:24) sajesbm volume 7 (2015) www.sajesbm.co.za article 149 97 from figure 2 it seems that a lack of financial management skills is more than twice as likely to cause financial failure than a lack of operations or human resource skills. it is evident that financial management skills are some of the cornerstone skills for successful smes. olawale and smit (2010:1790) agree that, for south african entrepreneurs, the lack of financial management skills is one of the most important inhibiting internal factors. sme success and the use of financial information how strong is the correlation between the use of financial information and success of smes? mixed results have been found by different researchers. for smes in the usa, mcmahon and davies (1994:15) did not find a significant correlation between more comprehensive historical financial reporting and the use of financial ratios on the one hand and the sme’s rate of growth and financial performance on the other. thomas and evanson (1987:570) found no relationship between the use of financial ratios and the success of small pharmaceutical firms in the uk. however, they argued that this may be due to a lack of sophistication in the use of these ratios. akande (2011:372) confirmed that accounting and financial management skills are important for entrepreneurs and advise small business owner-managers to embark on capacity building in these disciplines. roodt (2005:18) found that financial skills are some of the top skills that entrepreneurs report as necessary for success in business. financial management is one of the most important management skills for an sme because it affects every aspect of the entrepreneurial venture (watson, 2004:88). financial management entails minimising the costs, maximising the profit, and planning and controlling the financial assets of the firm (bloom & boessenkool, 2002:244). collis and jarvis (2002:100) investigated the use of financial information by small companies in the uk and found that the majority of small companies adopt practices that include formal planning and control. everett and watson (1998:372) argued that smes cannot be successful without sufficient funding and adequate management skills. however, the funding obtained can often be linked to the level of financial sajesbm volume 7 (2015) www.sajesbm.co.za article 149 98 management skills present within the sme. olawale and garwe (2010:736) proposed that new smes should be able to draw up business plans, have strategic and operational plans and forecast cash flows to secure debt, actions which are mostly the result of advanced financial management skills. without these key outputs, credit providers are hesitant to provide funding to smes. from the above it can be postulated that financial management skills are indispensable to successful smes. benzing, chu and kara (2009:86), rootman and kruger (2010:107) and ligthelm (2010:131) agree. in spite of all the reasons why financial management skills and practices are regarded as indispensable for sme success, very few researchers have investigated which specific of these practices are the most relevant for entrepreneurs. however, financial management practices could first be grouped into logical groups and linked to financial topics and financial skills. linking specific financial management practices to financial management topics and to financial management skills in order to understand the scope of financial management practices more fully, it is useful to link these practices to established financial management topics and financial management skills. chandra (2008) raises five main topics relating to smes:  cost and management accounting;  financial analysis and planning;  investment decision;  financing decision; and  working capital management. brigham and houston (2011:4) and moyer, mcguigan and kretlow (2012:23) list various financial management practices which are important for smes. in table 2 these practices are linked to the financial management topics. for instance, the sajesbm volume 7 (2015) www.sajesbm.co.za article 149 99 interpretation of an income statement is more related to the topic of financial analysis and planning than to other topics. table 2: sme financial management practices linked to financial management topics financial management topic financial management practice c o s t a n d m a n a g e m e n t a c c o u n ti n g f in a n c ia l a n a ly s is a n d p la n n in g in v e s tm e n t d e c is io n f in a n c in g d e c is io n w o rk in g c a p it a l m a n a g e m e n t profitability management interpret income statement √ prepare tax returns √ prepare forecasted income statement √ √ √ analyse forecasted variance on income statement √ √ prepare break-even analysis √ √ √ prepare segmented income statement √ √ √ working capital management prepare list of all debtors √ assess the levels of stock of the business √ prepare list of all creditors √ prepare cash flow statement √ prepare forecasted cash flow statement √ √ √ √ √ analyse cash flow statement using previous periods as a base √ √ √ √ budget/forecast variance analysis on cash flow statement √ √ √ √ analyse bank statements using previous periods as a base √ √ asset and liability management prepare balance sheet √ √ prepare forecasted balance sheet √ √ √ analyse balance sheet using previous periods as a base √ √ √ budget/forecast variance analysis on balance sheet √ √ √ analyse key financial ratios in the business √ √ √ √ strategic financial management prepare business plans √ √ √ √ √ perform scenario analysis & planning √ √ √ √ √ (source: own contribution) sajesbm volume 7 (2015) www.sajesbm.co.za article 149 100 from table 2 it can be seen that various financial management topics, from accounting to working capital management, all play an important role in the successful management of a company and have financial practices associated with them which sometimes overlap. rajaram and o’neill (2009:111) and schwarze (2008:145) identify four categories of financial management skills, namely cash flow management, decision making, planning and analysis. linking the financial management practices to specific financial management skills could be useful to determine which category of financial management skills is more important, on average, for the owner-managers of smes. in table 3, the financial management practices are linked to the financial management skills as identified by rajaram and o’neill (2009:111) and schwarze (2008:145). table 3: financial management practices linked to financial management skills financial management skills financial management practice c a s h f lo w m a n a g e m e n t d e c is io n m a k in g p la n n in g a n a ly s is profitability management interpret income statement √ interpret tax reports √ prepare forecasted income statement √ analyse forecasted variance on income statement √ prepare break-even analysis √ prepare segmented income statement √ working capital management prepare list of all debtors √ assess the levels of stock of the business √ prepare list of all creditors √ prepare cash flow statement √ prepare forecasted cash flow statement √ analyse cash flow statement using previous periods as a base √ budget/forecast variance analysis on cash flow statement √ sajesbm volume 7 (2015) www.sajesbm.co.za article 149 101 analyse bank statements using previous periods as a base √ asset and liability management prepare balance sheet √ prepare forecasted balance sheet √ analyse balance sheet using previous periods as a base √ budget/forecast variance analysis on balance sheet √ analyse key financial ratios in the business √ strategic financial management prepare business plans √ perform scenario analysis & planning √ (source: own compilation) from table 3 and the relevant literature reviewed, it can be inferred that the identified financial management skills can be related to financial management practices which are all necessary for a successful business. bruwer (2010:69) highlighted the importance of profitability management and states that retail smes experience difficulty in interpreting and analysing accounting information. perks and smith (2008:155) list debtors account management and inventory management as major potential problem areas in smes. garcía-teruel and martínez-solano (2007:175) and orobia (2013:226) regard the management of inventory and accounts receivable (working capital) as important for smes. this confirms that profitability management and working capital management skills are important to the success of an sme. asset and liability management, as well as strategic financial management are listed as areas that require development within smes (rajaram & o’neill, 2009:115; schwarze, 2008:145). profile of the western cape the target population in this study are smes in the western cape, the most south western province of south africa. although the western cape has only about 11 percent of south africa’s population, it contributes nearly 15 percent of the south african gdp (herrington & kew, 2013:56). sixty percent of western cape businesses have medium to high growth perceptions compared to 38 percent in gauteng and only 26 percent for the rest of south africa. the western cape has the sajesbm volume 7 (2015) www.sajesbm.co.za article 149 102 lowest unemployment figure at 21 percent compared with 26 percent for gauteng and 38 percent for the eastern cape and limpopo. these numbers illustrate that the western cape may be more accommodating towards entrepreneurs than some other south african provinces. different industries contribute different percentages to the western cape’s regional gdp, as illustrated in figure 3. similarly, various districts in the western cape contribute different percentages to the regional gdp, as illustrated in table 4. naturally all these industries and districts need to be represented in the sample for this study. figure 3: percentage contribution per industry to western cape gdp (source: adapted from statistics south africa, 2006:71) table 4: contribution of the western cape districts to the south african gdp and western cape gdp western cape region share of south african gdp (%) share of western cape gdpr (%) cape town 11.2% 76.6% cape winelands 1.5% 10.5% eden 0.9% 6.1% west coast 0.6% 4.0% overberg 0.3% 2.4% central karoo 0.1% 0.5% total 14.6% 100.0% (source: adapted from western cape provincial treasury, 2006:217) sajesbm volume 7 (2015) www.sajesbm.co.za article 149 103 studies of the level of use of financial management practices in various parts of the country have confirmed that smes all over south africa experience problems with the adequate application and use of these practices. these studies cover smes in kwa-zulu natal (rajaram & o’neill, 2009:99), gauteng and the eastern cape (van eeden et al., 2003:13) and the western cape (bruwer, 2010:69). however, none of these studies focused on the use of specific financial management practices by the owner-managers of smes, nor on the frequency with which these practices are used. hypotheses and research methodolgy the relevant hypotheses of this study are: hypothesis 1 states that there are differences in the use of financial management practices by the owner-managers of successful smes in the western cape. hypothesis 2 states that there are differences in the frequency with which the practices are voluntarily performed. hypothesis 3 speculates that it may be true, due to the high risk and volatile environment of smes, as well as the challenges that are often underestimated, that all the financial practices that academics regard as important are not always implemented by these companies. note that hypothesis 2 covers practices that are voluntarily performed. it could be argued that some activities may be compulsory such as submitting vat returns or other activities that might enhance financial management and control. for the purpose of this study it is assumed that the impact of such compulsory activities will not affect the results and conclusions of the study to a significant degree. the role of the regulatory environment and compliance should be acknowledged, but for the current purpose the impact of this role is assumed to be negligible. a complete list of all smes in the western cape is not available. therefore a judgemental sample of 30 of the most successful smes was taken from 150 suitable candidates from the records of an accounting firm engaged in providing financial management consultation to smes. saunders, lewis and thornhill (2009:235) contend that for non-probability sampling, a minimum sample of between 25 and 30 sajesbm volume 7 (2015) www.sajesbm.co.za article 149 104 respondents should be used. taking into account the sample sizes of between eight and 1036 respondents used by similar studies (see table 1), a sample of 30 was deemed to be sufficient for this study. the questionnaire consisted of two sections. the first section covered the demographic attributes of respondents. this information is included to ensure that the firm qualified to participate in the study. the second section of the questionnaire allowed respondents to indicate whether the financial management practices were used in the firm and the frequency thereof. ethical concerns were addressed by a letter of consent that respondents completed during personal contact with the researcher, when they agreed to participate in the survey. if a respondent agreed to participate, the electronic link of the questionnaire’s website was sent to him, with a specific username and password in order to complete the questionnaire at his own convenience. each respondent was allowed to complete the questionnaire once only. on completion, the website then sent the answers to a centralised database that the researcher could access, in order to guarantee anonymity. to ensure completeness, the website had built-in controls to ensure that all questions were answered before it was submitted. to ensure accuracy, the website displayed the answers to the respondent before submitting them. results respondent characteristics the main characteristics of respondents are shown in figures 4, 5 and 6. all respondents conformed to the requirements of the study, namely they had already traded for at least threeandahalf years, they had no more than 50 full-time employees and they had an annual turnover of no more than r14 million. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 105 figure 4: turnover per respondent figure 5: number of employees per sme figure 6: number of years the smes traded sajesbm volume 7 (2015) www.sajesbm.co.za article 149 106 from figures 4, 5 and 6 it follows that the typical respondent had a turnover of between one and five million rand per year, had less than 10 employees, and had already traded between five and ten years. representative industries and districts in figure 3 the contribution of different industries to the western cape gdp is indicated. following this, the percentage of this study’s respondents per industry is given in figure 7. the three main industries, namely wholesale and retail (50 percent), financial and business services (37 percent) and manufacturing (7 percent) were in total represented by 93 percent of the respondents. figure 7: respondents by industry figure 8: geographical location of respondents sajesbm volume 7 (2015) www.sajesbm.co.za article 149 107 in figure 8 the geographical distribution of respondents is given. the same structure of representation as the distribution of the regional gdp (see table 4) is evident here. whereas the district of the city of cape town was represented by nearly 70 percent of the respondents, the other districts had fewer respondents. the main results of the study are summarised in table 5. the different financial management practices are linked to the financial topics (see table 2), as well as to different financial management skills (see table 3). the use of the practices is indicated by the percentage of respondents that perform them at all. similarly the percentages of respondents who voluntarily perform the practice more than once per quarter, are also indicated. in the last column the weighted averages are given per financial practice, which could be used as an approximation of the relevance of the practices. in table 5 the practices are ranked in decreasing order of relevance. table 5: ranking of financial practices by average of use and voluntary performance more than once every quarter ra nki ng financial practice financial management topic financial management skill percentage of respondents who perform this practice percentage respondents who perform this practice voluntarily more than once per quarter weighted average 1 prepare list of debtors working capital cash flow 100 100 100 2 prepare list of creditors working capital cash flow 93 93 93 3 interpret income statement profitability decision making 90 67 78 4 determine stock levels working capital cash flow 78 65 72 5 prepare cash flow statement working capital cash flow 77 60 68 6 interpret tax report profitability decision making 100 27 63 7 prepare balance sheet balance sheet decision making 90 33 62 8 determine break-even point profitability decision making 76 45 60 9 prepare segmented income statement profitability decision making 64 50 57 10 prepare forecast income statement profitability planning 83 30 57 11 compare actual to forecast income statement profitability planning 77 30 53 12 prepare forecast cash flow statement strategic finance planning 70 37 53 sajesbm volume 7 (2015) www.sajesbm.co.za article 149 108 13 compare actual with past cash flow working capital analyse 60 40 50 14 analyse bank statement working capital analyse 60 33 47 15 prepare scenario analysis strategic finance planning 77 13 45 16 compare actual with forecast cash flow working capital planning 57 30 43 17 compare actual to past balance sheets balance sheet analyse 67 10 38 18 perform financial ratio analysis balance sheet analyse 53 10 32 19 calculate financial ratios balance sheet analyse 53 10 32 20 prepare forecast balance sheet strategic finance planning 43 7 25 21 prepare business plan strategic finance planning 43 3 23 (source: own compilation) from table 5 it can be concluded that there are definite differences in the percentage of respondents that use the financial management practices. this confirms hypothesis 1 concerning the differences in the use of financial management practices. if one investigates the top five financial practices on this list, those involving working capital and cash flow feature prominently. this confirms the importance of regular information regarding cash flow for the owner-manager and the important role that working capital plays in the success of the sme (garcíateruel & martínez-solano, 2007:164). if one investigates the bottom five financial management practices on this list, it can be seen that to analyse and to plan, to use the balance sheet and to engage in strategic financial activities are not used as much by the smes. it is cause for concern that some of these practices are performed by only 43 percent of the respondents. on the one hand one could say that respondents regard it as unnecessary to prepare a business plan or forecast a balance sheet on a regular basis, which are clearly much less relevant than, for instance, the management of cash flow. on the other hand one should take note of the fact that fewer than half of respondents ever perform these activities. table 5 also shows that there are differences in the percentages of respondents who voluntarily perform the practices more than once per quarter. this confirms sajesbm volume 7 (2015) www.sajesbm.co.za article 149 109 hypothesis 2 concerning the differences in the frequency with which the practices are voluntarily performed. hypothesis 3 is as yet unanswered and leaves one with the question: is it perhaps true that smes do not use all the financial practices that academics regard as important, due to the high risk and volatile environment of smes, as well as the challenges that are often underestimated? this could be true, but enough evidence does not appear in this study. from table 5 the averages of practices per financial management topic were calculated and are given in table 6. similarly the averages of practices per financial management skill are given in table 7. table 6: ranking by financial management topic ranking financial management topic average percentage respondents who perform this practice average percentage respondents who perform this practice voluntarily more than once per quarter weighted average 1 working capital 75 60 68 2 profitability 82 42 62 3 balance sheet 66 16 41 4 strategic finance 54 8 31 table 7: ranking by financial management skill ranking financial management skill average percentage respondents who perform this practice average percentage respondents who perform this practice voluntarily more than once per quarter weighted average 1 cash flow management 87 80 84 2 decision making 80 48 64 3 planning 64 21 43 sajesbm volume 7 (2015) www.sajesbm.co.za article 149 110 4 analysis 59 21 40 from table 6 it can be concluded that practices regarding working capital as well as profitability are much more relevant than those regarding a balance sheet or strategic finance. similarly, one could conclude from table 7 that practices related to cash flow and decision making are more relevant than those related to planning or analysing. limitations and areas in need of future research this study was limited to smes in the western cape. future studies may investigate whether the same relationships hold for smes in other provinces. secondly, no claim can be made that causality was proven. one cannot assume that these smes only became successful because they used these financial management practices; many other variables could also have played a role. future research could investigate whether less successful smes have a different pattern of use of these financial management practices in order to understand more fully the relationship between these practices and sme success. thirdly, future research could investigate whether smes could be even more successful if they would better understand the important role that analysing, planning, the balance sheet and strategic financial activities could play in their firms. lastly, it should also be pointed out that there could be a bias in the type of sme that participated in the survey. the fact that these smes were clients of a management consulting firm could mean that they already conformed to certain requirements, such as being registered for tax, while they certainly realised the importance of financial advice. future research might also focus on the relationships between financial practices and other variables where smes do not receive assistance from financial consultants. could it be true that the high risk and volatile environment of smes, as well as the challenges that are often underestimated, are the main reasons that most financial practices that academics regard as important are not always utilised by these companies? future research could address this issue. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 111 conclusions and recommendations the aim of this study is to identify which specific financial management practices are the most relevant to successful smes. it has now been established that financial management practices regarding working capital and profitability are more relevant to the owner-managers of established smes than those regarding balance sheets and strategic financial management. practices regarding cash flow and decision making are also much more relevant than those regarding planning and detail analysis. it seems that to focus on short-term management issues like cash flow, is much more relevant for established smes than to have a medium to long-term view of the firm. on the other hand it could be argued that these firms became successful smes because they had a stronger focus on short-term management issues than on mediumto long-term aspects. a number of recommendations can be made from this study. firstly, nascent entrepreneurs and owner-managers of young smes should take note of the financial management practices that established smes have found to be most helpful. secondly, educators of these entrepreneurs should take note of these rankings of practices by respondents. thirdly, one could speculate whether these smes would not perhaps have been even more successful if they had, in fact, placed a higher focus on analysing and planning, or given more attention to understanding balance sheet items or engaging in strategic financial activities. this study contributes to a better understanding of which specific financial management practices are the most relevant to successful smes. references adeniran, t.v. & johnston, k.a. 2012. investigating the dynamic capabilities and competitive advantage of south african smes. african journal of business management, 6(11):4088-4099. akande, o.o. 2011. accounting skill as a performance factor for small businesses in nigeria. journal of emerging trends in economics and management sciences, 2(5):372-378. badenhorst-weiss, j.a. & cilliers, j.o. 2014. competitive advantage of independent small businesses in soweto. southern african business review, 18(3):1-21. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 112 benzing, c., chu, h. m. & kara, o. 2009. entrepreneurs in turkey: a factor analysis of motivations, success factors, and problems. journal of small business management, 47(1):58-91. berger, a.n. & udell, g.f. 1998. the economics of small business finance: the roles of private equity and debt markets in the financial growth cycle. journal of banking and finance, 22(6):613-673. bezuidenhout, a. & nenungwe, a.l. 2012. a competency framework for the small business sector in johannesburg, south africa. african journal of business management, 6(47): 11658-11669. bloom, j.z. & boessenkool, a.l. 2002. financial management. in nieman, g. and bennett, a. (eds). business management: a value chain approach. pp. 205-256. pretoria: van schaik. brigham, e. f. & houston, j. f. 2011. fundamentals of financial management, 7th ed. mason, ohio: south western. bruwer, j. 2010, sustainability of south african fmcg smme retail businesses in the cape peninsula, unpublished mtech thesis, cape town: cape peninsula university of technology. burger, a. 2009. small business definition changed. tax breaks newsletter, 287:4-5. carter, r. & van auken, h. 2006. small firm bankruptcy. journal of small business management, 44(4):493-512. chandra, p. 2008. financial management. new delhi: mcgraw-hill. collis, j. & jarvis, r. 2002. financial information and the management of small private companies. journal of small business and enterprise development, 9(2):100-110. cressy, r. 2006. why do most firms die young? small business economics, 26:103116. dennis, w.j. & fernald, l.w. 2001. the chances of financial success (and loss) from small business ownership. entrepreneurship:theory & practice, 26(1):75-83. everett, j. & watson, j. 1998. small business failure and external risk factors. small business economics, 11:371-390. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 113 garcía-teruel, p.j. & martínez-solano, p. 2007. effects of working capital management on sme profitability. international journal of managerial finance, 3(2):164-177. gorgievski, m., ascalon, m.e. & stephan, u. 2011. small business owners’ success criteria, a values approach to personal differences. journal of small business management, 49(2):207-232. herrington, m. & kew, j. 2013. global entrepreneurship monitor: south african report. [online] available from http://www.gemconsortium.org/ [downloaded: 201502-17] knaup, a.e. & piazza, c.p. 2007. business employment dynamics data: survival and longevity. monthly labour review, 130(9):3-10. kotze, l. & smit, a.v.a. 2008. personal financial literacy and personal debt management: the potential relationship with new venture creation. south african journal of entrepreneurship and small business management, 1:35-50. lecornu, m.r., mcmahon, r.g.p., forsaith, d.m. & stanger, a.m.j. 1996. the small enterprise financial objective function. journal of small business management, 34(3):1-14. liang, t.w. 2003. what is an sme? sme definitions and statistical issues. journal of enterprising culture, 11(3):173-183. ligthelm, a.a. 2010. entrepreneurship and small business sustainability. southern african business review, 14(3):131-153. marzocchi, c., ramlogan, r. & gagliardi, d. 2013. a recovery on the horizon? annual report on european smes. [online] available from: http://ec.europa.eu [downloaded: 2015:02:17 ] mcmahon, r.g.p. & davies, l.g. 1994. financial reporting and analysis practices in small enterprises: their association with growth rate and financial performance. journal of small business management, 32(1):1-17. moyer, r.c., mcguigan, j.r. & kretlow, w.j. 2012. contemporary financial management. 12th ed., mason, ohio: south western. nkosi, e. bounds, m. & goldman, g. 2013. skills required for the management of black-owned small enterprises in soweto. acta commercii, 13(1), art. #186, 10 pages. http://dx.doi.org/10.4102/ac.v13i1.186. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 http://www.gemconsortium.org/ http://ec.europa.eu/ http://dx.doi.org/10.4102/ac.v13i1.186 114 olawale, f. & garwe, d. 2010. obstacles to the growth of new smmes in south africa: a principal component analysis approach. african journal of business management, 4(5):729-738. olawale, f. & smit, a.v.a. 2010. the impact of the business environment on the availability of trade credit to new smes in south africa. african journal of business management, 4(9):1790-1799. orobia, l.a. 2013. gender differences in working capital management amongst small business owners in uganda. |journal of economics and behavioural studies, 5(4):226-236. perks, s. & smith, e.e. 2008. focused training programmes for solving growth problems of very small businesses. acta commercii, 8:145-159. pretorius, m. 2009. defining business decline, failure and turnaround: a content analysis. south african journal of entrepreneurship and small business management, 2(1):1-16. radipere, s. & van scheers, l. 2005. investigating whether a lack of marketing and managerial skills is the main cause of business failure in south africa. south african journal of economic and management sciences, 8(4):402-411. rajaram, r. & o‘neill, c. 2009. profit or no profit – does the sme sector really know? alternation, 16(1):99-119. richard, p.j., devinney, t.m., yip, g.s. & johnson, g. 2009. measuring organizational performance: towards methodological best practice. journal of management, 35(3):718-804. rogerson, c.m. 2001a. growing the smme manufacturing economy in south africa: evidence from gauteng province. journal of contemporary african studies, 19(2):267-291. rogerson, c.m. 2001b. towards a framework for rural smme development in south africa. in khosa, m. (ed.). empowerment through economic transformation. durban: african millennium press, pp. 271-298. rogerson, c.m. 2008. tracking smme development in south africa: issues of finance, training and the regulatory environment. urban forum, 19:61-81. roodt, j. 2005. self-employment and the required skills. management dynamics, 14(4):18-33. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 115 rootman, c. & kruger, j. 2010. adapting smme business functions during economic turmoil. acta commercii, 10:107-119. sanda, a., sackey, j. & fältholm, y. 2011. managerial competence and nonperformance of small firms in a developing economy. international journal of contemporary business studies, 2(3):6-24. saunders, m., lewis, p. & thornhill, a. 2009. research methods for business students. 5th ed., harlow, essex: pearson. schwarze, c. l. 2008. involving the accounting profession in the development of financial management skills of micro-enterprise owners in south africa. meditari accountancy research, 16(2):139-151. south africa. 1996. national small business act no. 102. pretoria: government printer. statistics canada. 1997. failing concerns: business bankruptcy in canada. ottawa: statistics canada. statistics south africa. 2006. provincial profile 2004: western cape. pretoria: statistics south africa. steyn, a.a. & leonard, a.c. 2012. guidance for smes with the adoption of technology: a conceptual framework. south african journal of entrepreneurship and small business management, 5:24-33. thomas, j. & evanson, r.v. 1987. an empirical investigation of association between financial ratio use and small business success. journal of business finance & accounting, 14(4):555-571. turton, n. & herrington, m. 2012. global entrepreneurship monitor: south africa. [online] available from http://www.gemconsortium.org/ [downloaded: 2015-02-17]. van eeden, s., viviers, s. & venter, d. 2003. a comparative study of selected problems encountered by small business in the nelson mandela, cape town and egoli metropoles. management dynamics, 12(3):13-23. von broembsen, m., wood, e. & herrington, m. 2005, global entrepreneurship monitor south africa 2005, [online] available from: http://bbbee.typepad.com/ paul_janisch/files/gem2005.pdf [downloaded:2011-07-01]. walker, e. & brown, a. 2004. what success factors are important to small business owners? international small business journal, 22(6):577-594. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 http://www.gemconsortium.org/ http://bbbee.typepad.com/%20paul_janisch/files/gem2005.pdf http://bbbee.typepad.com/%20paul_janisch/files/gem2005.pdf 116 watson, g. e. h. 2004, a situational analysis of entrepreneurship mentors in south africa, unpublished masters of commerce thesis, university of south africa, pretoria. western cape provincial treasury. 2006. provincial economic review & outlook. pretoria: business print centre. world bank. 2011. small and medium enterprises: a cross-country analysis with a new data set. [online] available from: http://www-wds.worldbank.org/external/ default/wdscontentserver/wdsp/ib/2011/01/18/000158349_20110118141007/ren dered/pdf/wps5538.pdf [downloaded 2011-07-10]. xesha, d., iwu, c.g. & slabbert, a. 2014. business relationships as a driver of success for small, medium, and micro enterprises (smmes) in south africa. journal of economics, 5(1):37-43. sajesbm volume 7 (2015) www.sajesbm.co.za article 149 http://www-wds.worldbank.org/external/%20default/wdscontentserver/wdsp/ib/2011/01/18/000158349_20110118141007/rendered/pdf/wps5538.pdf http://www-wds.worldbank.org/external/%20default/wdscontentserver/wdsp/ib/2011/01/18/000158349_20110118141007/rendered/pdf/wps5538.pdf http://www-wds.worldbank.org/external/%20default/wdscontentserver/wdsp/ib/2011/01/18/000158349_20110118141007/rendered/pdf/wps5538.pdf microsoft word 01 pretorius fighting failure march 2009.doc sajesbm ns volume 2 (2009) issue 1 1 __________________________________________________________________________________________ defining business decline, failure and turnaround: a content analysis marius pretorius department of business management, university of pretoria, south africa marius.pretorius@up.ac.za abstract in the past, researchers have often defined failure to suit their data. this has led to a lack of comparability in research outputs. the overriding objective of this paper is to propose a universal definition for the failure phenomenon. clear definitions are a prerequisite for exploring major constructs, their relationship to failure and the context and processes involved. the study reports on the core definitions of the failure phenomenon and identifies core criteria for distinguishing between them. it places decline, failure and turnaround in perspective and highlights level of distress and turnaround as key moderating elements. it distinguishes the failure phenomenon from controversial synonyms such as closure, accidental bankruptcy and closure for alternative motives. key words and phrases: business decline, failure, turnaround, level of distress introduction understanding business failure presents an enormous theoretical challenge that still fundamentally remains to be met, probably because past efforts were more concerned with prediction than with understanding. that such a challenge has largely gone unanswered is fairly easily understood (cybinski, 2001:39; shepherd, 2005:126). the lack of understanding of the concept is partly due to the lack of an adequate definition of failure. (shepherd, 2005:124). researching the failure arena quickly shows that various authors have different interpretations of failure and that no one universal definition exists. existing writings about failure are dominated by prediction models but diverge into several fields, and the differing focuses and objectives of researchers create an ill-defined domain, made up of several overlapping fields (shepherd, 2003). existing research also appears problematic because of the current definition of failure and the ways in which failures have been measured in the past (de castro, alvares, blasick & ortiz, 1997:1). while financial prediction of failure (which uses bankruptcy as dependent variable) takes up a large portion of failure-related research, this study explores outside the limitations of prediction (balcaen & ooghe, 2005; steyn bruwer & hamman, 2006) by investigating the qualitative rather than the quantitative end of the continuum. if it is true that between 50 and 90 percent of entrepreneurial ventures fail (depending on the author and statistics quoted), failure is probably the one thing that almost all entrepreneurs will face somewhere in their endeavours. at the same time, failure is probably the last thing on the mind of an entrepreneur starting out on the entrepreneurial process. given the “survival of the fittest”, failure is a natural step in the life cycle of business ventures. organisational ecology (as a metaphor) further asserts that the environment will naturally weed out unfit organisations, and that the ability to survive over time is a function of both an organisation’s suitability to the current environment and its ability to adapt appropriately if the environment evolves. misalignment with the environment may therefore expose firms to different liabilities associated with failure (barron, west & hannon, 1994:381). sajesbm ns volume 2 (2009) issue 1 2 __________________________________________________________________________________________ there exists a limited but growing body of knowledge on the topic of failure on which researchers can base their investigations, especially in the small business domain. the research articles are, however, scattered across business, management, financial, psychology, entrepreneurial and many other journals and no proof could be found that these works have ever been comprehensively reviewed. there is no specific body of science to which failure exclusively belongs. while this study focuses on failure in business ventures, it does not ignore failure in other organisations, such as quasiand government ventures. this study prefers the term venture, but uses it interchangeably with business, firm and organisation as terms, depending on how different authors have reported their research in the literature. business ventures hover somewhere between the extremes of the success-failure continuum, which influences the decisions that ventures are faced with, and the potential consequences of failure have significant and interesting impacts on business decisions (cybinski, 2001:31). failures draw attention all the time, whether they occur during start-up or in mature ventures, and it appears that failure is inherently part and parcel of the science of business management. if failure is indeed central to the entrepreneurial thrust of ventures, better understanding of the domain will benefit both the science and the practising entrepreneur overall. recently there have been two special editions of journals (journal of business venturing and long range planning) that focused on failure, which also points to the resurgence of failure as a research domain. there also appears an outcry for better understanding of the failure domain since the onset of the world economic crisis in 2008. the importance of failure in business has been acknowledged in reports of crises in companies that have dominated the news in recent times. several icons of business such as worldcom and enron were not spared failure, leading to investors losing large portions of their assets. experts greet the news of these failures with post-mortems on what could have been done to avoid the decline. some reviewers, with the 20/20 vision of hindsight and expensive financial prediction models, express amazement that management did not foresee and respond to critical events in time to prevent termination. obviously, it is easier to make up prescriptions after events have occurred than it is to prescribe ways to avoid problems in the future (probst & raisch, 2005:90). it is also true that often one cannot really describe something without explaining what it is not. in the search for the secret of venture success (lower failure rates), it helps us to look at failure for improved understanding. the research question is therefore one of making sense of the failure phenomenon in order to improve the understanding of successful business by describing what it is not. thus, this study aims to support not only researchers but also entrepreneurs and practitioners. entrepreneurs could benefit from this improved understanding to reduce high failure rates of 80 to 90 percent, as reported by knott and posen (2005:617). distinguishing between decline and failure gives direction to entrepreneurs about strategies to pursue when attempting recovery in their ventures. aim of this study this study has one principal aim: it seeks to review the scientific literature on business failure through grounded theory methodology and to identify the universal constructs of the failure phenomenon. it therefore attempts to advance research at this promising intersection of entrepreneurship, business management and the cognition sciences by mapping the territory meaningfully in order to direct entrepreneurs and researchers through the failure domain. sajesbm ns volume 2 (2009) issue 1 3 __________________________________________________________________________________________ the overriding objective is therefore to propose a universal definition of the failure phenomenon as a first step in exploring the major constructs, their relationship to failure and the context and processes involved, thus providing a better understanding of the phenomenon that goes beyond a descriptive account. method of review the specific research need identified in this study is to better understand and make sense of failure, rather than predict failure, although the two focuses are related and a large number of recently published works have been in the field of failure prediction, as reported by sharma (2001:5). the specific methodology (emulating that of forbes, 1999) adopted in this study was selected because secondary sources of failure are limited (especially in developing countries), as failed firms disappear and entrepreneurs of failed ventures rarely like to talk about the reasons that led to failure. even when they do speak out, such explanations are likely to have self-reporting and retrospective reporting biases (shepherd, 2005:126). scientific resources from the abi-inform, ebsco-host, proquest, blackwell and other databases were searched for titles published since 1985. the date was somewhat arbitrarily determined (though not necessarily adhered to) and based on convenience, as this was the earliest date for which most databases had downloadable electronic titles, abstracts and full texts readily available. for apparently major works, the date was not a limitation, especially when an article was referenced widely. age of publication was not considered important, but relevance and contribution to the body of knowledge of failure were paramount. at first a search for failure, combined with business, venture, firm or organisation was conducted. initial searches were keyword-based and narrowed down by using the different keyword variants identified during the process. as the articles (data) were obtained, searches were extended to include terms such as crisis, decline, discontinuance, distress and more. all articles were scanned based on titles and abstracts that led to a first complete reading of each article that was deemed to cover failure-related issues, using a method similar to that described by forbes (1999:417). when prediction was used in conjunction with failure, a plethora of articles were found in a range of financial and accounting journals and it was clear at this early junction that failure prediction (from the financial perspective) made up a large part of the total research base associated with failure. balcaen and ooghe (2005:24) confirm that corporate failure prediction has become a major research domain within corporate finance. secondand third-round searches were conducted using author names in addition to keywords for cross-referencing. thereafter specific journals were searched. key journals included journal of business venturing, entrepreneurship theory and practice, academy of management review, sloan’s management review, academy of management executive, british journal of management, administrative science quarterly, long range planning, strategic management review, the british accounting review, organisational science, journal of small business management, but were not limited to these. references of important articles were then searched and accessed to build up an extensive list of articles. the definitions of failure were mapped through a snowball process where references in one article lead to the search for the next articles with definitions. articles covering all failurerelated terms were investigated to identify more references. these articles were then obtained and the process repeated to identify the key works referenced by the different authors. sajesbm ns volume 2 (2009) issue 1 4 __________________________________________________________________________________________ borrowing from corbin and strauss’s (1990) method on grounded theory research, concepts for each definition were identified and through repetitive scrutiny and comparison within the “conditions” for each definition, the concepts were categorised towards building a definition of failure. the categories were the cornerstones of the definitions eventually developed. after reading (analysing) the abstracts of the articles, papers that in fact represented failurerelated issues were selected based on personal understanding of the issues. thereafter each article was assessed for definitions and identified and key concepts reported. categorising the concepts into sub-domains (categories) of failure-related issues (pretorius, 2008b) was followed by reporting them individually with their specific contributions, based on corbin and strauss’s method (1990:7). articles without clear definitions were discarded for reporting in this study. eventually a list of key references was assembled. the process of adding articles was never officially stopped but drifted towards closure as no more “useful new information” came forth, in accordance with the principles suggested by the grounded theory research process. this meant that the real number of articles screened became less important than initially anticipated when i embarked on the study. findings the report of the findings of the research covers, firstly, the outcome of the definitional approach. secondly, it explores the criteria for constructs contained in the definitions. thirdly, it proposes definitions and finally highlights key elements. the final definition of turnaround is proposed to suggest the key difference between decline and failure. while many authors failed to propose a definition to guide their research and depended on the general understanding that readers might have about the phenomenon, many definitions with varying viewpoints were found. the variations confirm shepherd’s (2005:124) statement that the lack of a single definition of failure is partly responsible for the poor understanding of the phenomenon. failure is defined in as many ways as there are researchers. watson and everett (1999:9) report that many of the differences in reports of sectoral failure rates may be driven by choice of failure definition. balcaen and ooghe (2005:23) state that the assumption of dichotomous datasets (failure vs. success or non-failure) to enable accurate predictions neglects the multidimensional nature of failure and is in conflict with the reality of failure situations. steyn et al. (2006:11) also report a list of definitions by south african authors that underscores the lack of a definition outside those dichotomous types used for prediction purposes. as the research progressed and while probing the different databases, it was found that failure is associated with bankruptcy, liquidation, insolvency, crisis, decline in performance, decision-making, collapse, crashing, accounting practices, project failure, distress, trouble, systems failure, franchise failure, being non-successful, and more. therefore the eventual search terms focused mainly on business, organisational, corporate, venture, and enterprise decline, failure and turnaround and less on prediction. table 1 shows the variation in definitions and how they are influenced by the researchers’ focuses during investigation. sajesbm ns volume 2 (2009) issue 1 5 __________________________________________________________________________________________ table 1: synthesis of principal works based on the definitional perspective definition key definition constructs apparent researcher focus type of study reference decline focused definitions decline: degeneration of organisational performance in sales, profitability, market share and technological leadership performing worse decline signs, causes and preventative strategies theory lorange & nelson, (1987) performance decline: decrease in some measurement such as sales, workforce, profits or profit ratios (roi or roe) that has continued for some time. measurement and duration (time) of decline performance decline weitzel & jonsson, (1989) decline: refers to decreasing internal resource munificence over time with respect to two critical resources: financial and human (managerial) resources. decrease in internal ability to survive time aftermath of decline compared with non-decliners. patterns of decline. e d’aveni (1989:578) decline: organisations enter a stage of decline when they fail to anticipate, recognise, avoid, neutralise or adapt external or internal pressures that threaten the organisation’s long-term survival. management stages and signs and actions trigger point internal systems to detect conditions that may lead to decline case weitzel & jonsson, (1991) decline and crisis are the low and high extremes of the rate of performance deterioration. level and rate of performance deterioration decline and crisis impact on turnaround and debt financing chowdhury & lang (1993:8) financial distress: fall of a firm from a superior performance position to an extremely poor position on any appropriate performance criterion – specifically taffler’s z-value. decline from superior position to poor position. rule = +, +, -. two years’ good performance followed by poor. turnaround strategies sudarsanam & lai (2001:190) decline and deteriorating financial performance measured by bankruptcy and dramatic fall in market value decline deterioration of financial performance crisis, crashing and collapse probst & raisch (2005:90) failure focused definitions failure: firms that filed bankruptcy after having their shares trading publicly in the years prior to bankruptcy bankruptcy after being successful leadership change during decline schwartz & menon (1985: 681) failure: bankruptcy (excluding intentional bankruptcy that was used as a legal tactic). bankruptcy consequences of decline compared with non-decliners. e d’aveni (1989:585) failure or severe form of financial distress such as loan default or non-repayment of creditors. severity default prediction models literature review keasey & watson (1991:89) failure occurs when the level of organisation capital reaches zero. it is no longer able to meet its financial obligations to debt holders, employees, or suppliers and resorts to or is forced into bankruptcy or liquidation. organisational capital model for understanding resource buffer and mortality relationship theory levinthal (1991:401) sajesbm ns volume 2 (2009) issue 1 6 __________________________________________________________________________________________ table 1 continues failure means closure of a unit but not total closure (within a franchise organisation) closure franchise failure comparison castrogiovanni, justis & julian (1993:106) failure: a firm that has gone out of business with losses to its creditors not operating any longer losses duncan & handler (1994:7) business dissolution refers to single business corporations that shut down and multiple business corporations that shut down a single business and includes both voluntary liquidation and involuntary bankruptcy. shut down choice vs forced bankruptcy effects of business sales and age dissolution and divestiture e mitchell (1994:576) failure: business failing organisations are those that will become insolvent unless appropriate management actions are taken to effect a turnaround in financial performance pending insolvency requirement for alternative management action configurations of factors leading to failure richardson, nwankwo & richardson (1994:9). failure: firms involved in court procedures or voluntary actions which result in losses to creditors excluding discontinued ventures losses to creditors non financial failure prediction e lussier (1995:9) failure: ceased operations due to outright insolvency, and/or when a firm has ceased operations in order to stop continued losses ceased operations outright insolvency. continued losses closing vs disappearance vs failure de castro, alvarez, blasick & ortiz (1997:4) financial crisis: closure of the firm resulting in large-scale social and economic costs ceased operations crisis in banks that led to closure (failure) stead & smallman (1999:13) failure is defined as bankruptcy bankruptcy comparing failure attribution between venture capitalists and entrepreneurs 6 cases zacharakis, meyer & decastro (1999:5) failures refer to deaths of entire firms and industry exits by multiple business companies. closing or exiting the industry strategy and age dependence e henderson (1999:291) discontinuance (ceasing of operations) of business for any reason or bankruptcy or failing to “make a go of it”. end of operations failure rates and defining failure e watson & everett (1999:5) an initiative can be said to have failed when it is terminated as a consequence of actual or anticipated performance below a critical threshold (fallen short of its goals) termination performance below critical threshold real options reasoning and anti-failure bias mcgrath (1999:14) failure is “not having made profit for the previous three years” losing money non-financial prediction e lussier & pfeifer (2001:232) sajesbm ns volume 2 (2009) issue 1 7 __________________________________________________________________________________________ table 1 continues when fall in revenue and/or rise in expenses are of such magnitude that the firm becomes insolvent and is unable to attract new debt or equity funding; consequently it cannot continue to operate under the current ownership and management. insolvency and involuntary change in ownership and management. grief of owner and recovery after losing a business, failure research t shepherd (2003:318), shepherd (2005:124) bankruptcy is the ultimate reason for exiting the economy and happens when firms lack sufficient capital to cover their obligations. firms that are insolvent to the point of legal proceedings have clearly failed to meet the market’s performance threshold of fulfilling their financial obligations. exiting the economy or not meeting the “performance threshold” of the market. resource-based view of failure with age of firm as proxy for resource differences between firms. thornhill & amit (2003:497) ..success and failure were identifiable as “end states” … end state small business failure single case ritchie & richardson (2004:236) organisation failure is the end result of a decline failure follows decline turnaround case applicatio n sheppard & chowdhury (2005:241) failure, in organisations and elsewhere, is deviation from expected and desired results. deviation from goals learning theory cannon & edmondson (2005:300) at the time of failure the “legal status” of the firm was bankrupt, meaning it had suspended payments against creditors and had lost all credit legal status credit loss prediction e pompe & bilderbeek (2005:851) a major loss of value rather than bankruptcy value loss board role in renewal qualitativ e hass & pryor (2005:12) failure occurs when a firm’s value falls below the opportunity cost of staying in business performance decline measuring decline theory cressy (2006:103) … firms whose stocks are delisted as a result of either bankruptcy or liquidation elections. distress prediction joseph & lipka (2006:296) turnaround focused definitions turnaround situation is when a firm has had two successive years of roi and ros growth followed by: absolute simultaneous declines in both for a minimum of two years and a rate of decline greater than the industry average over the two year period. decline in roi and ros for two years after success for two years turnaround: retrenchment and recovery robbins & pearce (1992:295) turnaround management is a process whereby managers actively seek to save distressed firm from failure. save distressed firms from failure difference between distress and failure e fredenberger & bonnicic (1994:59) sajesbm ns volume 2 (2009) issue 1 8 __________________________________________________________________________________________ table 1 continues a successful turnaround is when a firm undergoes a survivalthreatening performance decline over a period of years but is able to reverse the performance decline, end the threat to firm survival and achieve sustained profitability. reverse performance decline turnaround process e barker & duhaime (1997:18) turnaround is a concerted and organised effort by top management to respond to the firm’s performance problems. top management induced effort turnaround e barker & moné (1998:1239) once profitable firms that have suffered firm-threatening performance declines and are attempting, either successfully or unsuccessfully, to turn around. once profitable now decline performance decline e barker & barr (2002:968) organisations that are not demonstrating performance that is acceptable to stakeholders, analysts, vendors and employees. require a turnaround intervention. unacceptable performance performance theory kow (2004:229) turnaround has occurred when the firm recovers adequately to resume normal operations, often defined as having survived a threat to survival and regained sustained profitability. survived decline normal operations profitability recovery to normal operations theory lohrke et al. (2004:65) the actions taken to bring about a recovery in performance in a failing organisation where failure is defined as “existence threatening decline” in performance. actions for recovery in performance action to recover from decline theory walshe et al. (2004:201) sajesbm ns volume 2 (2009) issue 1 9 __________________________________________________________________________________________ table 1 contains the main definitions found in the literature; due to space constraints, definitions such as those using bankruptcy as criterion were not repeated ad infinitum. three main categories were distinguishable, suggesting that researchers use definitions as required for specific problems. there were more definitions for failure than for decline and turnaround, a possible reason being the large sub-domain of prediction research reported in the literature. the table also shows the key constructs of the definitions used and the apparent focus of the specific authors. table 1 reports many different terminologies within definitions, depending on the choice of the authors reporting it. liao (2004:134) confirms that in general many different terms are related to business failure, such as closures, exit, dissolution, discontinuance, insolvency, organisational mortality, bankruptcy and organisational failure. it was therefore deemed necessary to identify and list the different criteria for the definitions, as they make up the key constructs required to propose the universal definitions. the key criteria are reported in table 2. table 2: core criteria that distinguish between the definitions for decline, failure and turnaround construct criteria supporting reference worsening performance criterion roi decline for two consecutive years. average pre-tax roi of less than 10% for the same two consecutive years. the performance decline must be independent of the performance of the industry in which they operated. chowdhury & lang (1993:11) value destruction criterion loss of company value and changing from being profitable. distress criterion accumulation of debt that seriously threatens survival. changing market leadership position towards becoming unprofitable and becoming a player only. probst & raisch (2005:91) decreasing internal resource munificence criterion – over time in both financial and human resources. d’aveni (1989:578) decline direction criterion – changing from good to bad performance. discontinuance criterion – includes exit or closure for any reason, excluding deliberate exits for alternative motives. bankruptcy criterion – occurs when the firm is deemed to be legally bankrupt or has ceased operation with resulting losses to creditors. liao (2004:134). bankruptcy, to include sudden, voluntary, strategic, accidental, and liquidity bankruptcy as types of this criterion. balcaen & ooghe (2005:11) loss-cutting criterion – where firms are disposed of with a loss to avoid further losses. liao (2004:134) loss-cutting appears similar to exiting at threshold performance. gimeno et al. (1997:750) failure earning criterion – a firm is viewed as a failure if it is not earning an adequate return on invested capital, which is significantly and continually below prevailing rates on similar investments. liao (2004:134) sajesbm ns volume 2 (2009) issue 1 10 __________________________________________________________________________________________ table 2 continues there is a shifting of resource application from the ceased operation to a more profitable opportunity. fredland & morris (1976:7) shareholder loss criterion – whether the loss applies to creditors, owners or any other relevant constituency (this appears as an extension of the loss criterion). keasy & watson (1991:89) and lussier (1995:9) recovery/reversal criterion – from decline in performance or a life-threatening situation towards acceptable performance barker & duhaime (1997:18) resumption of normal operations criterion – such as sustained profitability. lorkhe et al. (2004:65) turnaround reorientation criterion – whether it is through strategic, structure, control system or power distribution interventions as determined by the specificity of the situation. the criteria from table 2 guided the research towards constructing definitions for both decline and failure. on the basis of tables 1and 2, it is possible to propose at least two main definitions for universal use by entrepreneurs and researchers: these are: decline – a venture is in decline when its performance worsens (decreasing resource slack) over consecutive periods and it experiences distress in continuing operations. decline is a natural precursor in the process to failure. failure – a venture fails when it involuntarily becomes unable to attract new debt or equity funding to reverse decline; consequently, it cannot continue to operate under the current ownership and management. failure is the endpoint at discontinuance (bankruptcy) and when it is reached, operations cease and judicial proceedings take effect. key to the proposed definitions for decline and failure are distinctly different manifestations, namely: decline implies operating under distress which, if the causes are corrected, leads to continued operation, and if not corrected, will lead to eventual failure. associated terms include underperforming firms, “living dead” firms, lingering firms, “failure avoidance” firms and “persistent technical insolvent” firms. intervention through alternative management and financial injection could keep a declining venture operating, albeit not in its current form and depending on the suddenness and severity of the distress (crisis). decline has categories of severity that can be described as underperformance, decline, distress and crisis as a slide towards the point of failure (pretorius, 2004:90). these categories are determined by the degree of severity, which generally depends on environmental munificence (capacity to support growth) and dynamism (variability in key external factors), strategic alignment (adapting), and available resource slack (lohrke, bedeian & palmer, 2004:64). it is acknowledged that in decline, failure could result from a single shock event, such as losing a major account or environmental disaster, although this applies in a minority of cases. failure connotes finality about the inability to operate any further. this study distinguishes decline and failure from “closure”, concurring with fredland and morris (1976:7); stokes and blackburn (2002:18) and bates (2005:343), who postulate that failure and closure are not synonymous, as many ventures close while sajesbm ns volume 2 (2009) issue 1 11 __________________________________________________________________________________________ their owners report them as successful at the time of closure, or for alternative motives. similarly voluntary, strategic, and accidental bankruptcy (balcaen & ooghe, 2005:11) should be appraised differently from failure as defined in this text, where failure is associated with involuntary circumstances. the reports of d’aveni (1989), lorange and nelson (1987), weitzel and jonsson (1991), pretorius and holtzhauzen (2008) and pretorius (2008a) support the differentiation of decline and failure. synthesising the two definitions of decline and failure confirms their heterogeneity despite their interrelatedness. a third definition is proposed for turnaround (rescue) to support the definitions for decline and failure. it further serves as a measure of differentiation between them. the proposed definition is: turnaround – a venture has been turned around when it has recovered from a “decline that threatened its existence” to resume normal operations and achieve performance acceptable to its stakeholders (constituents) through reorientation of positioning, strategy, structure, control systems and power distribution. return to positive cash flow is associated with achievement of “normal operations”. the turnaround definition implies that a declining firm can be turned around, while a firm that has failed cannot. judicial actions are often associated with failed firms but less often with those in decline and very small ventures, which enter and exit informally. while it is true that decline and failure are often used interchangeably, it is valuable to distinguish between them, as this may influence the strategies that will be pursued for each. their strong interrelationship is also obvious; in the next section both terms are explored and the proposed definitions confirmed. discussions, observations and conclusions financial prediction models depend heavily on data integrity, while they mainly use bankruptcy as the criterion of failure. a lack of definitions of decline and failure is not uncommon in the research articles used as data for these studies. moss-kanter (2003) reports on turnaround and decline by describing cases and scenarios rather than stating any formal definitions, thereby suggesting that readers can form their own pictures of what the key terms entail. in the same way, raina, chanda, metha and maheshwari (2003) immediately direct attention to the causes of decline, without giving a formal definition. often failure is also the secondary focus of research papers, while the primary focus is on prediction models, causes, signs, conditions or effects of failure rather than failure itself. this approach confirms shepherd’s (2005) postulation of variation in the understanding of the failure phenomenon. consequently, this article has attempted to improve clarity and congruence of definition. a second contributing factor to variation in definition is that different researchers formulate definitions to suit their specific research problem. while it is acceptable to do so, the practice means that results are not easily and meaningfully comparable unless exactly similar methodologies are followed. examples include cases where failure has been equated with non-performance, unsuccessful closures (bates, 2005); and not demonstrating performance (kow, 2004:229). finding a definition for failure thus contributes to better comparability of various results. sajesbm ns volume 2 (2009) issue 1 12 __________________________________________________________________________________________ defining decline separately adds an additional dimension as it eliminates previous confusion to some extent. researchers who attempt to predict forthcoming failure have shown remarkable homogeneity in their definition, as they use bankruptcy and insolvency as the principal measurement criteria. prediction is usually based on financial ratios, which are measurable, which is probably the reason for the use of bankruptcy as criterion. few works on non-financial prediction were found during this research, probably because of the difficulty of measuring the relevant variables used for prediction. those who predict failure do so using data from the period of decline that precedes the failure, which is subject to decision-making and interventions of turnaround attempts that probably distort the figures used in any case. finally, searching for articles on failure-related subjects reveals an apparent lack of recent failure literature, especially from the late 1990s. since the new millennium, however, some new research findings have been reported, though they have not flooded the literature. on the basis of the definitional approach to understanding failure, one can conclude that decline precedes failure, which is the end state of deteriorating performance. turnaround focuses on signs and causes of decline, while learning from failure depends on the postmortem approach. while one can learn from both, the turning around of ventures during decline has more general value for both entrepreneurs and the economy as a whole. contribution of the research to entrepreneurship what set out as a study in the field of entrepreneurship ended in the heart of the business management domain, covering more than failure and as such including both decline and turnaround. this confirms the importance to entrepreneurship development of better knowledge of failure and shows that the origins and reach of decline and failure are extensive. as with the grounded theory research approach, this study proved a successful application of the research method of setting out on a course whose destination is not clear on departure. developed on the basis of grounded theory principles (corbin & strauss, 1990:18), two key definitions were arrived at in this study: decline and failure. they should be viewed as constructs that are differentiated by the conditions, context, actions/interactions, directional movement and consequences determined by the configuration of relevant variables at the time. limitations of this research limitations of one study serve as challenges for the next. definitions per se suggest guidelines for classification of variables. classification requires homogeneity within categories and heterogeneity between categories to allow for generalisation. the definitions show a clear distinction between decline and failure, with the turnaround definition directing the categorisation process. the literature acknowledges the complexity of the failure phenomenon. thus, the definitional approach can only be the first step – a crucial first step – in the process of mapping the territory for venture failure research. defining the phenomena does not explain the constructs that are involved when they do arise, nor do definitions identify the governing principles to be considered when decline and failure take place. sajesbm ns volume 2 (2009) issue 1 13 __________________________________________________________________________________________ a final limitation was probably the exclusion of some works by delineating the research as reviewing the scientific literature, thus excluding some sources. however, those excluded were mostly popular how-to-do-it books that are not necessarily driven by the scientific research focus required for this study, and conference proceedings, which normally end up as refereed papers in any case. future research this study identified the criteria that distinguish business decline from failure and suggested a platform for understanding a previously ill-defined phenomenon. extension of this research is required, firstly in the direction of classification of critical failure variables and secondly to ascertain the governing principles of the failure domain. it is hoped that scholars will find the proposed definitions useful to guide research, while entrepreneurs will be assisted in choosing the relevant strategies after quantifying their specific contexts. some of the findings may still appear vague and, to some, of little moment, but nevertheless the researcher found this an enriching (yet humbling) experience. it contributes to the body of knowledge by proposing a framework of thinking about failure. if it leads to discussion or disagreement it will have served its purpose well. other researchers are specifically invited to critique this review and challenged to assess the proposed definitions. references balcaen, s. & ooghe, h. 2005. thirty five years of studies on business failure: an overview of the classic statistical methodologies and their related problems. the british accounting review, 20:1-31. barker, v.l. iii, & barr, p.s. 2002. linking top management attributions to strategic reorientation in declining firms attempting turnarounds. journal of business research, 55:963-976. barker, v.l. iii & duhaime, i.m. 1997. strategic change in the turnaround process: theory and empirical evidence. strategic management journal, 18(1):13-38. barker, v.l. iii & moné, m.a. 1998. the mechanistic structure shift and strategic reorientation in declining firms attempting turnarounds. human relations, 51(10):1227-1258. barron, d.n.e., west, e. & hannan, m.t. 1994. a time to grow and a time to die: growth and mortality of credit unions in new york city. american journal of sociology, 100:381-421. bates, t. 2005. analysis of young, small firms that have closed: delineating successful from unsuccessful closures. journal of business venturing, 20:343-358. cannon, m.d. & edmondson, a.c. 2005. failing to learn and learning to fail (intelligently): how great organisations put failure to work to innovate and improve. long range planning, 38:299-319. castrogiovanni, g.j., justis, r.t. & julian, s.d. 1993. franchise failure rates: an assessment of magnitude and influencing factors. journal of small business management, 31(2):105-114. charitou, a., neophytou, e. & charalambous, c. 2004. predicting corporate failure: empirical evidence for the uk. european accounting review, 13(3):465-497. chrisman, j.j., hofer, c.w. & boulton, w.r. 1988. toward a system for classification of business strategies. academy of management review, 13(3):413-428. chowdhury, s.d. & lang, j.r. 1993. crisis, decline and turnaround: a test of competing hypotheses for shortterm performance improvement in small firms. journal of small business management, 31(4):8-17. sajesbm ns volume 2 (2009) issue 1 14 __________________________________________________________________________________________ corbin, j. & strauss, a. 1990. grounded theory research: procedures, canons and evaluative criteria. qualitative sociology, 13(1):3-21. cressy, r. 2006. why do most firms die young.? small business economics, 26:103-116. cybinski, p. 2001. description, explanation, prediction: the evaluation of bankruptcy studies? managerial finance, 27(4):29-44. d’aveni, r.a. 1989. the aftermath of organisational decline: a longitudinal study of the strategic and managerial characteristics of declining firms. academy of management journal, 32(3):577-608. de castro, j.o., alvarez, s.a., blasick, j.d. & ortiz, m. 1997. an examination of the nature of business closings: are they really failures? frontiers of entrepreneurship research. [online] available from: http://www.babson.edu/entrep/fer/papers97/decastro/ [accessed: 2005-03-10]. duncan, j.w. & handler, d.p. 1994. the misunderstood role of small business. business economics, july: 7–12. forbes, d.p. 1999. cognitive approaches to new venture creation. international journal of management reviews, 1(4):415-439. fredenberger, w.b & bonnicic, j. 1994. turnaround phases: extending the life cycle theory. american business review, january:59-65. fredland, j.e. & morris, c.e. 1976. a cross section analysis of small business failure. american journal of small business, 1(1):7-18. gimeno, j., folta, t.b. & woo, c.y. 1997. survival of the fittest? entrepreneurial human capital and the persistence of underperforming firms. administrative science quarterly, 42:750-783. hass, w.j. & pryor, s.g. 2005. the board’s role in corporate renewal. journal of private equity, special turnaround issue: 12-19. henderson, a.d., 1999. firm strategy and age dependence: a contingent view of the liabilities of newness, adolescence and obsolescence. administrative science quarterly, 44:281-314. joseph, g & lipka, r. 2006. distressed firms and the secular deterioration in usefulness of accounting information. journal of business research, 59:295-303. keasey, k. & watson, r. 1991. financial distress prediction models: a review of their usefulness. british journal of management, 2:89-102. knott, a. & posen, h.e. 2005. is failure good? strategic management journal, 26:617-641. kow, g. 2004. turning around business performance: part 1. journal of change management, 4(3):229-246. levinthal, d.a. 1991. random walks and organisation mortality. administrative science quarterly, 36:397-420. liao, j. 2004. entrepreneurial failures: key challenges and future directions. in: welsch, h.p. entrepreneurship: the way ahead. new york: routledge:133-150. lohrke, f.t., bedeian, a.g. & palmer, t.b. 2004. the role of top management teams in formulating and implementing turnaround strategies: a review and research agenda. international journal of management reviews, 5/6(2):63-90. lorange, p. & nelson, r.t. 1987. how to reorganize – and avoid – organizational decline. sloan management review, spring, 28(3):41-46. lussier, r.n. 1995. a non-financial business success versus failure prediction model for young firms. journal of small business management, 33(1):8-24. lussier, r.n. & pfeifer, s. 2001. a cross-national prediction model for business success. journal of small business management, 39(3):228-249. sajesbm ns volume 2 (2009) issue 1 15 __________________________________________________________________________________________ mcgrath, r.g., 1999. falling forward: real options reasoning and entrepreneurial failure. academy of management review, 24(1):13-30. mitchell, w., 1994. the dynamics of evolving markets: the effects of business sales and age on dissolutions and divestitures. administrative science quarterly, 39:575-602. moss-kanter, r. 2003. leadership and the psychology of turnarounds. harvard business review, june: 58-67. pompe, p.p.m. & bilderbeek, j. 2005. the prediction of bankruptcy of smalland medium-sized industrial firms. journal of business venturing, 20:847-868. pretorius, m. 2004. managing a troubled business. in: nieman, g.h. & pretorius, m. managing growth: a guide for entrepreneurs. cape town: juta: 71-104. pretorius. m. 2008a. when porter’s generic strategies are not enough: complementary strategies for turnaround situations. journal of business strategy, 29(6):19-29. pretorius. m. 2008b. critical variables of business failure: a review and classifications framework. south african journal of economic and management sciences, 11(4):408-430. pretorius, m. & holtzhauzen, g.t.d. 2008. critical variables of venture turnarounds: a liabilities approach. southern african business review, 12(2):87-107. probst, g. & raisch, s. 2005. organizational crisis: the logic of failure. academy of management executive, 19(1):90-105. raina, b., chanda, p., metha, d.p. & maheshwari, s.k. 2003. organisational decline and turnaround management. vikalpa, 28(4): 83-92. richardson, b., nwankwo, s. & richardson, s. 1994. understanding the causes of business failure crisis: generic failure types: boiled frogs, drowned frogs, bullfrogs and tadpoles. management decision, 32(4):9-22. ritchie, j. & richardson, s. 2004. disclosing smaller business success and failure. the british accounting review, 36:233-250. robbins, d.k & pearce ii, j.a. 1992. turnaround: retrenchment and recovery. strategic management journal, 13(4):287-309. schwartz, k.b & menon, k. 1985. executive succession in failing firms. academy of management journal, 28(3):680-686. sharma, d.s. 2001. the role of cash flow information in predicting corporate failure: the state of the literature. managerial finance, 27(4):3-28. shepherd, d.a. 2003. learning from business failure: propositions of grief recovery for the self-employed. academy of management review, 28(2):318-328. shepherd, d.a. 2005. the theoretical basis for my plenary speech about our successes and failures at research on business failure. conference proceedings: regional frontiers of entrepreneurial research. brisbane. february:123-134. sheppard, j.p. & chowdhury, s.d. 2005. riding the wrong wave: organisational failure as a failed turnaround. long range planning, 38:239-260. stead, e. & smallman, c. 1999. understanding business failure: learning and un-learning lessons from industrial crises. journal of contingencies and crisis management, 7(1):1-18. steyn bruwer, b.w. & hamman, w.d. 2006. company failure in south africa. classification and prediction by means of recursive partitioning. south african journal of business management, 37(4): 7-18. sajesbm ns volume 2 (2009) issue 1 16 __________________________________________________________________________________________ stokes, d & blackburn, r. 2002. learning the hard way: the lessons of owner-managers who have closed their businesses. journal of small business and enterprise development, 9(1):17-27. sudarsanam, s. & lai, j. 2001. corporate financial distress and turnaround strategies: an empirical analysis. british journal of management, 12:183-199. thornhill, s. & amit, r. 2003. learning about failure: bankruptcy, firm age, and the resource-based view. organisational science, 14(5):497-509. walshe, k., harvey, g., hyde, p. & pandit, n. 2004. organisational failure and turnaround: lessons for the public services from the for-profit sector. public money and management, august: 201-208. watson, j. & everett, j. 1999. small business failure rates: choice of definition and industry effects. international small business journal, 17(2):4-19. weitzel, w.f. & jonsson, e. 1989. decline in organisations: a literature integration and extension. administrative science quarterly, march: 91-109. weitzel, w.f. & jonsson, e. 1991. reversing the downward spiral: lessons from w.t. grant and sears roebuck. academy of management executive, 5(3):7-21. zacharakis, a.l, meyer, g.d. & decastro, j. 1999. differing perceptions of new venture failure: a matched exploratory study of venture capitalists and entrepreneurs. journal of small business management, 37(3):1-14. abstract introduction definition of informal businesses and previous research on the growth of informal businesses theoretical framework used in this study research methodology and design ethical consideration empirical results discussion conclusions and implications acknowledgements references about the author(s) fredrika w. struwig department of business management, nelson mandela university, south africa janine krüger department of business management, nelson mandela university, south africa geoffrey nuwagaba department of business management, nelson mandela university, south africa citation struwig, f.w., krüger, j. & nuwagaba, g., 2019, ‘the influence of the business environment on the growth of informal businesses in uganda’, southern african journal of entrepreneurship and small business management 11(1), a200. https://doi.org/10.4102/sajesbm.v11i1.200 original research the influence of the business environment on the growth of informal businesses in uganda fredrika w. struwig, janine krüger, geoffrey nuwagaba received: 04 july 2018; accepted: 16 oct. 2018; published: 14 feb. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: informal businesses are important drivers of economic growth, especially in developing countries. these informal businesses often do not survive their first year of existence, with anecdotal evidence citing various challenges from the business environment. aim: this study explored the influence of business environmental challenges on the growth of informal businesses in uganda. setting: there are various challenges from the internal and external environment that impede the growth and survival of informal businesses in uganda. from the internal business perspective, informal businesses have poor business processes and do not have proper business strategies on which to focus their business growth strategies. from the external environment perspective, informal businesses do not understand their suppliers adequately. in addition, there is a lack of research on the relationships between internal and external business environments and the growth of informal businesses. method: primary data were collected from 383 informal businesses using a self-administered questionnaire. the data were analysed using descriptive statistics in spss 21.0 (statistical package for the social sciences), while the relationship between the variables was determined using pearson’s product moment correlation coefficient and tested using regression analysis and analysis of variance (anova). results: the results showed that there was a significant positive directional relationship between the internal environment and the growth of informal businesses. however, there was a negative significant directional relationship between the external environment and the growth of informal businesses. conclusions: informal businesses should pay more attention to the internal environment and appropriate strategies should be developed and implemented to ensure their growth. introduction informal businesses are regarded as important drivers of economic growth, especially in developing countries. this is evident when one considers that the informal sector in uganda contributes 49% of the gross domestic product (gdp) of the country (kasemiire 2017:2). these informal businesses contribute to the production of goods and services, provide employment and are regarded as the livelihood for the poor (deen-swarray, ndiwalana & stork 2013:1). despite their importance, anecdotal evidence shows that informal businesses in uganda do not exist longer than a year citing various challenges from the internal and external environment that impede their survival and growth. from the internal business perspective, informal businesses are managed by owners who lack knowledge and skills in areas such as cash planning, cash forecasting, short-term investment of surplus cash, financial controls and reporting as well as debtor management. they also have poor business processes, poor-quality products and services as well as not having proper business strategies to keep these informal businesses focused on growth objectives. from the external environment perspective, informal businesses do not understand their suppliers adequately. they often regard their suppliers as unreliable, they cannot secure supplies on credit and because of their mobile nature, they do not have loyal customers, while their customer base often declines (uganda bureau of statistics [ubos] 2012). in addition, informal businesses face strong competition because most of the informal businesses sell similar or related products. another challenge the informal businesses face includes the payment of presumptive taxes that are normally higher than normal business tax (kasemiire 2017:2). a combination of these challenges anecdotally impedes the growth of these businesses in terms of sales growth, profitability, growth in employment and length of business existence (uganda investment authority 2012). despite the situation, there is a lack of research on the relationships between the business environments (internal and external) and growth of informal businesses, and this situation requires urgent intervention. the investigation of the relationships between these variables will assist in understanding what needs to be performed to ensure the growth of informal businesses. thus, the aim of this article is to investigate the relationships between the business environments and the growth of informal businesses in uganda. definition of informal businesses and previous research on the growth of informal businesses there is no universally accepted definition for informal businesses, but there is an agreement that informal businesses have certain characteristics that differ from those of formal businesses. informal businesses are small, unregistered businesses operating as street vendors and in-home businesses established on residential sites (ligthelm 2013:59). furthermore, informal businesses are described as businesses that correspond to sole traders (own-account workers) and those in small or micro-enterprises (henley, arabsheibani & carneiro 2006:4). van broembsen (2010:260) defines informal businesses as unregistered and having unregulated economic activities that contribute to the gdp. these businesses include casual and contract workers, domestic workers and farm workers, while barbour and llanes (2013:22) define informal businesses as businesses involved in the production and distribution of legal goods and services in which there is non-compliance with regulations in areas such as tax, conditions of employment and the claiming of benefits. for the purposes of this article, informal businesses include small, unregistered businesses whose trading location is mostly mobile, and which often evade taxes. in uganda, informal businesses seek to meet household needs by supplementing the family income by means of formal employment. in many cases, informal businesses exist as the only option to earn a livelihood for those who have little or no education to engage in gainful opportunities such as waged work (bukaliya & aleck 2012:58). this category of business is generally, but not exclusively, home-based and its business operations are limited because of the small capital base with which they start up and the resultant small profits base to re-invest in the businesses (ishengoma & kappel 2011:352). typically, these informal businesses do not have access to fixed premises, accessible roads and utilities. it is reported that the lack of management ability among the owners of the informal businesses is compounded by the lack of collateral to secure loans from financial institutions. when informal businesses attempt to access credit that would enhance their cash positions, some major factors impede their growth, which include the low level of professionalism, poor linkages with large businesses, poor records and account keeping as well as limited knowledge of business opportunities (kasemiire 2017; unctad 2007). these businesses tend to use simple technology in production, which often negatively impacts on the quality of their products. in addition, many of the informal businesses face limited access to markets and strong competition from other businesses (ishengoma & kappel 2011:352). informal businesses play various but vital roles ranging from providing employment to the family members and relatives (deen-swarray et al. 2013:1; delbiso 2013:1) to providing disposable income to the owners and the workforce (llanes & barbour 2007:12). in addition, although not registered by official tax bodies, they contribute to the gdp especially through consumption (tshuma & jari 2013:250). despite the significance of informal businesses, literature shows that the majority of informal businesses do not grow and survive for long in business (uganda national household survey 2010:143). sookram and watson (2008:1531) investigated the socio-economic, demographic and attitudinal characteristics of proprietors of informal businesses in emerging economies and their perceptions of the risk of detection by tax authorities. the results of the study suggested that informal businesses decided to participate in the informal sector when, among other factors, they believed that the risk of detection by the tax authorities was low and that government regulations were burdensome. these findings suggested that informal businesses decided to stay as small and informal businesses to avoid tax and other government regulations and therefore deliberately refused to expand and grow in order to avoid identification by the authorities. these findings are supported by a study conducted by rosemary (2016:410) among female entrepreneurs in kenya, which also found that the legal and regulating environments hindered the growth potential of informal businesses. ademola and anyankora (2012:218) examined the challenges of improving the conditions of informal businesses in lagos island, nigeria. the study’s objectives included identifying informal business activities in the study area, examining the socio-economic characteristics of people involved in the activities, examining the conditions in which they operated, identifying the involvement factors in the informal sector activities in lagos island and assessing the problems of managing the sector activities in the study area. ademola and anyankora (2012:225) established that informal businesses maintained operations on a small-scale because of a lack of skills for expansion as the majority of the businesses had no specialised education and training to grow their businesses. the results therefore suggested that the lack of specialised business skills, which was highly attributable to low education levels and training, constituted some of the factors affecting the growth of informal businesses. the western cape provincial economic review and outlook (2007:163) examined the growth of formal small, medium and micro-enterprises with a specific focus on informal businesses and growth in employment as one of the measures of growth. the findings showed that while the formal sector appeared to be growing, the informal businesses did not appear to be generating new employment. informal business employment growth appeared to be stagnant at best, preventing the sector from making a greater contribution to the provincial economy. furthermore, a study conducted in kenya supports the notion that the income derived from the informal businesses was used to supplement the family income; therefore, no or little funds were available for expansion or growth purposes (rosemary 2016:410). adhikari (2012:1) examined income generation in the informal sector with specific focus on street vending. it was established that informal businesses required less investment and the income from that investment was satisfactory to at least sustain a family in the city. the study further established that the income and profit from business activities were too low to promote business growth (adhikari 2012:13). these findings supported the findings by the western cape provincial economic review and outlook (2007:163), which established that informal businesses were driven by survival. the findings suggested that the growth of informal businesses was partly influenced by low-income levels and lack of profitability. in a study by donner (2007:19), it was established that the majority of the informal businesses did not adopt information and communication technology (ict) in growing their businesses. most of the small and informal businesses focused on the customers in the neighbourhoods and not on the new customers even when there was an opportunity using ict. these findings suggest that informal businesses may remain stagnated in their growth because of the lack of adoption of new technology such as ict. ogbokor and ngeendepi (2012:16) concurred with donner (2007:19) that informal businesses did not embrace new technological changes to boost their business growth. mwobobia (2012:114) noted that informal businesses in kenya faced a high probability of failure because of their small size. furthermore, because of their small size, a simple management mistake was likely to lead to closure of a small business; hence, there was no opportunity to learn from its past mistakes. mwobobia (2012:114) further noted that the lack of planning, improper financing and poor management had been posited as the main causes of failure of small informal businesses. ogbokor and ngeendepi (2012:16) investigated challenges facing small businesses where the majority were informal businesses. ogbokor and ngeendepi (2012:16) established that informal businesses did not have a clear marketing plan and they did not conduct market research. this often led the informal businesses to underinvest in activities and services that could potentially enhance their productivity and growth. van broembsen (2010:26) points out that one of the major factors influencing informal business growth is business strategy. in addition, it was noted by both van broembsen (2010:26) as well as the western cape provincial economic review and outlook (2007:163) that informal businesses had survivalist strategies that had no potential for growing the informal businesses into sustainable and viable businesses. the results of alemayehu and van vuuren’s (2017:262) study highlighted that resource munificence and environment munificence had an impact on business strategies available for business growth. van broembsen (2010:261) further identified that wage and working conditions in emerging informal businesses were uniformly poor both for owners and their employees. this questioned the sustainability and quality of the employment generated by informal businesses. keter (2012:873) found that owners of informal businesses did not have adequate skills to pursue business growth. rosemary (2016:410) also concurred that the lack of skills, training and education hampered informal business growth. keter (2012:873) cited that owners may, for instance, incur costs such as bribes to licensing officials, loss of goods because of confiscation and loss of valuable time because of frequent closures, all of which impacted on business growth. mbaye and gueye (2018:25–51) showed that poor business environments affect both formal and informal businesses. a study by meyer, meyer and molefe (2016:127–128) found that many external environmental factors, such as lack of service delivery, labour legislation and crime, influenced the growth of informal businesses. furthermore, the results highlighted that the lack of marketing, financial and management skills hampered business growth. de castro, khavul and bruton (2014:75–94) conducted a qualitative study that showed that when making decisions about informality, entrepreneurs in emerging economies purposefully chose to remain informal. theoretical framework used in this study in this study, the focus is on the relationships between the business environments and the growth of informal businesses. the growth of informal business is the dependent variable and the internal and external environments are the independent variables. dependent variable: growth of informal businesses one of the measures of the growth of informal businesses is their contribution to the labour market (alderslade, talmage & freeman 2006:9; henley et al. 2006:2). authors such as alderslade et al. (2006:9) and sparks and barnett (2010:1) highlighted that the number of employees engaged in informal businesses was one of the baselines used to measure the growth of informal businesses and further noted that informal businesses with a large number of employees were considered to be at a higher level of growth than businesses with fewer employees. they did not, however, specify the exact number of employees who qualify an informal business as a growing one. the 2017 international monetary fund (imf) report highlighted that the informal sector employed between 30% and 90% of labour in sub-saharan africa. with regard to the informal sector in uganda, research shows that 27% of the informal sector is in agriculture, 24% in trade and services and 1% in mining and quarrying, respectively (kasemiire 2017:3). ligthelm (2013:59) identified the role of profitability and expansion as measures of informal business growth. onwe (2013:62) asserted that the majority of informal businesses were not growing because of the lack of sales revenue and profitability. onwe (2013:62) as well as bukaliya and aleck (2012:63) highlighted that some informal businesses had prospects to pursue growth through profitability. however, proper bookkeeping of informal businesses to measure their profitability and secure more sources of capital from financial institutions was lacking. in addition, bukaliya and aleck (2012:63) attributed the low profitability of informal business to financial indiscipline and low levels of training which result in the misuse of funds that otherwise could have been invested in more profitable opportunities to realise business growth. it is thus evident that the basic indicators of informal business growth include the level of employment of the workforce, scale of operation (alderslade et al. 2006:9; henley et al. 2006:2; sparks & barnett 2010:1), sales level, profitability, expansion rate and business survival or sustainability (bukaliya & aleck 2012:63; ligthelm 2013:59; onwe 2013:62). for the purposes of this study, the basic measures of the growth of informal businesses are sales volume, growth in employment and length of business existence. independent variable: the business environment the business environment consists of an internal and an external environment (gupta, guha & krishnaswami 2013:10; kew & stredwick 2017:5). the internal environment includes resources, synergy and distinctive competences of a business. all these together determine the business capability in terms of its strengths and weaknesses existing in different functional areas such as marketing, operations, personnel, financial and technical. in addition, business managers need to monitor the business opportunities and threats that have or are likely to have an influence on their businesses as the internal environment is constantly influenced by the external environment (gupta et al. 2013:10). independent variable: the internal environment gupta et al. (2013:10) concurred with the views of vrontis and pavlou (2008:290), arguing that the internal environment is mainly controllable by the business, and therefore, businesses should avoid any problems that are presented within the internal environment that may hamper business growth. furthermore, an internal audit can examine the business’s own resources and supply suggestions as to the business’s strengths and weaknesses and affirm that the product development and strategic formation is based upon the internal business capabilities. oginni and adesanya (2013:146) highlighted that businesses existed and operated within an environment where there was a complex interplay in terms of activities and networks of relationships between human resources, material resources and other systems. these relationships will define the internal environment of a business. in a study on factors affecting business success of small and medium enterprises (smes) in thailand, chittithaworn et al. (2011:182) noted that internal environmental factors including management and know-how, products and services, the way of doing business (business processes) and cooperation between employees, resources and finance were very important in determining the growth of a business. growth was measured using the following factors: business survival, profit, return on investment, sales growth and the number of employees. in a study on factors limiting the success and growth of small businesses in tanzania, with the focus on small businesses where the majority were informal in nature, nkonoki (2010:25) identified three basic internal environmental factors influencing the growth of informal businesses: entrepreneurship, business type and the overall business strategy. these three internal environmental factors all needed to be present for the business to achieve rapid growth. it was concluded that slow growing, no-growth or failing businesses may have some characteristics in one of the three areas (entrepreneurship, business or strategy), but it was only where all three combined effectively that the fast-growth businesses were found (nkonoki 2010:25). a study on the informal sector in ghana found that the lack of skills and technology affected the level of production of informal businesses (osei-boateng & ampratwum 2011:6) as these informal businesses employed traditional and manual technologies of production which result in these informal businesses producing little products. the findings are in line with those of osamwonyi and tafamel (2010:200) who established that the majority of managers of informal businesses did not have adequate management skills, which adversely affected the survival and growth of these businesses. other internal environmental factors that limited the scale of operations and production, and thus hampered the growth of informal businesses, were a lack of job security and social protection, which included pension, maternity leave and paid sick leave (osei-boateng & ampratwum 2011:6). olawale and garwe (2010:730) asserted that the business internal environment was largely controllable by the business and included factors such as finance (especially internal finance such as owner’s equity contribution and collateral), managerial competence of the owners, location, investment in information technology, cost of production and networking. in addition, olawale and garwe (2010:730) noted that the internal business environment was important in influencing business growth. olawale and garwe (2010:730) also argued that all businesses required financial resources to start trading and to fund growth, while managerial competences, that is, the sets of knowledge, skills, behaviours and attitudes that contribute to personal effectiveness, were very important to the survival and growth of new businesses. from the literature, it can be concluded that the internal environment influences the growth of informal businesses. growth of informal businesses is dependent on managerial ability to deal with the internal environment. this environment has either a positive or negative influence on business growth. if managers, for instance, are not able to acquire suitable human resource to manage the business properly, the business may not prosper (nkonoki 2010:25; olawale & garwe 2010:730). in this study, the internal environment challenges that were examined include the staff appropriateness, business knowledge, staff competence, operational planning and strategic planning. as a result, hypothesis 1 is as follows: h1: there is a significant positive directional relationship between the internal environment and growth of informal businesses in uganda. independent variable: external environment the external environment consists of those factors uncontrollable by businesses and includes government regulation, technological changes and the market that has a great influence on the growth of informal businesses (chittithaworn et al. 2011:182). in addition, gupta et al. (2013:10) argued that the external environment provided both opportunities and threats to businesses. a major problem associated with informal activities in the external environment is the lack of regulation. komollo (2010:2) stated that the majority of informal businesses tend to use public spaces for their activities. this leads to a state of fear for these business owners as to when, rather than if, they would be evicted from their premises. this has led the informal business owners to construct make-shift structures that are poorly serviced, aesthetically unfriendly and environmentally unstable and from which they cannot reap the maximum economic benefits of their trade. in line with komollo (2010), osei-boateng and ampratwum (2011:6) highlighted that informal businesses tend to escape the regulation of government, and consequently they suffer the neglect of policy makers. young, schaffers and bruwer (2012:11 322) found that the failure rate of informal businesses was very high and specified that up to 70% of new businesses failed in their first 2 years of existence. among the numerous key reasons for the failure were external factors that included economic factors (policies, procedures, inflation rates and interest rates) as well as social factors (crime and infrastructure). a study on the business environment and growth potential of microand small-manufacturing enterprises in uganda highlighted a number of challenges within the external environment, which included limited access to productive resources and markets as well as high tax rates (ishengoma & kappel 2011:358). therefore, businesses should scan the external environment for opportunities and threats if they are to survive. these opportunities and constraints are classified into what is generally regarded as the elements of the environment. the elements of the business environment include the economic environment, the political and legal environment and the technological environment (onodugo & ewurum 2013:14). this again offers businesses a number of opportunities as well as threats. the external environment influences the growth of informal businesses through the provision of opportunities in the market where products and services are traded. however, most informal businesses find it difficult to cope with a variety of challenges that are found in the external environment such as competition from formal businesses, and eventually their growth and survival are put at risk. therefore, depending on the ability of informal businesses to take advantage of opportunities or guard against external challenges (threats), the external environment may positively or negatively influence the growth of informal businesses. specifically, external opportunities, if effectively utilised, enhance business growth and have a positive influence, while external challenges that cannot be guarded against often lead to business failure (onodugo & ewurum 2013:14; politis & gabrielsson 2006:5). in this study, the external environment challenges that were examined included supplier knowledge, supplier reliability, supplier loyalty, customer loyalty, market share, competition and the legal status. as a result, hypothesis 2 is as follows: h2: there is a significant positive directional relationship between the external environment and growth of informal businesses in uganda. figure 1 shows the theoretical framework used in this study and includes the dependent and independent variables as discussed. figure 1: theoretical framework of the relationships between the business environments and growth of informal businesses. research methodology and design this study adopted a positivistic research design following a quantitative approach. the study population included informal businesses in kampala district that hosts the majority of informal businesses in uganda. these informal businesses included those dealing in trade, agriculture and offering services. it is estimated that there is a total of 100 000 informal businesses in the kampala district (uganda investment authority 2011). business owners of the informal businesses were the target respondents, given that most of these informal businesses are individually owned. a sample of 383 respondents was drawn from the population to participate in the study. this was arrived at using the equation for known populations published by the national educational association (amin 2005:256). this sample of informal businesses was selected using probability sampling, namely cluster and systematic sampling. each of the five divisions, namely central, kawempe, nakawa, makindye and rubaga of the kampala district, formed a stratum and the total sample was evenly distributed among the five divisions (strata). at least 67 informal businesses were selected from each division (stratum) to allow an even distribution across the five divisions (strata). within each division (stratum), clusters of related businesses were identified and from each cluster, informal businesses were randomly selected for inclusion in the sample. trained fieldworkers distributed and collected the completed questionnaires. a self-administered structured questionnaire, consisting of two sections and a cover letter, was used to collect primary data. the questionnaires were delivered and collected from the sample of informal businesses. questionnaire items were constructed based on the literature. the cover letter explained the purpose of the study as well as the rights (voluntary, anonymity, opt-out option and confidentiality) of the respondents. section a of the questionnaire collected business profile data such as the respondent’s gender and age, the highest educational level, the type and geographic location of the business, the length of time the business had been in existence, the number of employees and the experience the respondent had as a business owner. section a used closedand open-ended questions. section b composed of 20 items using an ordinal scale in the form of a five-point likert-type scale to collect data pertaining to the internal (five items) and external environments (seven items) and growth of the informal businesses (eight items). the five-point scale ranged from ‘strongly disagree’ (1) to ‘strongly agree’ (5). the collected data were captured in microsoft excel and statistically analysed by using spss. content validity was attained by conducting a pilot study using convenience sampling after experts in the field of business management assessed the face validity of the questionnaire. the content validity index (cvi) was used to measure the variables of interest or test whether the degree to which the elements of measuring instrument were representative of the construct of interest (delgado-rico, carretero-dios & ruch 2012:450). the necessary changes were made to the questionnaire items after the completion of each validity test. as the cvis for internal environment (0.80), external environment (0.71) and growth of informal businesses (0.75) were above 0.70 (tavakol & dennick 2011:53; waltz, strickland & lenz 2005:155), sufficient evidence is provided for content validity. exploratory factor analysis (efa) was used to determine construct validity (zikmund, babin, carr & griffin 2013:303) and factors with at least three items having factor loadings of at least 0.4 were considered valid. cronbach’s alpha correlation coefficients were calculated to assess the reliability of the questionnaire where coefficients of 0.70 or greater were regarded as reliable (drost 2011:106; hair et al. 2014:123). the pearson product moment correlation coefficient was used to determine whether associations existed between the variables (hauke & kossowski 2011:88). regression analysis was used to test whether significance relationships existed between each of the independent variables (internal and external environments) and the dependent variable (growth of informal businesses). ethical consideration the anonymity of the respondents was ensured, and ethical clearance was obtained from the organisations involved in the research. empirical results in the next sections, the sample, measuring instrument and statistical results are discussed. sample description a total of 383 usable questionnaires were returned. the majority of respondents were women (51.17%), with 48.83% men participating in the study. the sample composed of a fairly equal distribution of respondents between the ages of 26 and 35 (29.77%), 36 and 45 (27.68%) and 46 years and older (25.84%). only 16.71% of the respondents were in the age group of 16–25 years. most of the respondents had attained secondary education (38.38%), a tertiary education (34.47%) or a primary education (26.63%), while two respondents (0.52%) had no schooling. most of the respondents had experience of between 5 and 10 years (46.74%) as an owner and less than 5 years (42.04%), while only a few respondents (11.22%) had more than 10 years’ experience as an owner. the business profile information was also obtained pertaining to the informal businesses that were owned by the respondents. most of the informal businesses provided services (37.60%) or sold finished goods (37.34%), while some of the businesses were involved in manufacturing (14.62%) and agriculture (10.44%). the informal businesses under investigation were located in five divisions in uganda, namely the kawempe division (21.93%), the nakawa division (21.67%), the makindye division (20.89%), the rubaga division (19.58%) and the central division (15.93%). the majority informal businesses included in the sample had been in existence for a period of between 1 and 5 years (43.60%). the remainder of the informal businesses had been in existence for a period of less than 1 year (26.89%), followed by those that had been in existence for the period of between 6 and 10 years (19.84%) and for more than 10 years (9.67%). the majority of informal businesses employed less than five employees (81.98%), while the remainder employed between 5 and 10 employees (18.02%). validity and reliability of the measuring instrument the measuring instrument was tested for validity and reliability. the independent variable, growth of informal businesses, was measured using eight items, while the two independent variables (internal and external environments) were measured using five and seven items, respectively. the cvi for the three variables ranged between 0.71 and 0.80, which provided sufficient evidence of content validity as all the cvis were above 0.7 (tavakol & dennick 2011:53; waltz et al. 2005:155). to ensure construct validity, an efa of a confirmatory nature was performed on each of the variables. table 1 summarises the various items and factor loadings for the two independent and one dependent variables. table 1: factor loadings and items of variables. table 1 shows that only four of the five items developed to measure the internal environment were retained to measure this independent variable, while five of the seven items developed to measure the external environment were retained. six of the eight items developed to measure growth of informal businesses were retained and used in further analyses. the six items with factor loadings of less than 0.4 were discarded from further analysis. figure 2 outlines the validated frameworks that were used for empirical testing and shows the items retained in the framework after efa. figure 2: validated framework used for empirical testing of the relationships between the business environments and growth of informal businesses. to ensure reliability, cronbach’s alphas were calculated. the cronbach’s alphas for the factors internal environment, external environment and growth of informal businesses were all above 0.7, which indicated that the factors were internally reliable. descriptive statistics of the internal environment, external environment and growth of informal businesses descriptive statistics were calculated for the internal and external environments and growth of informal businesses. regarding the internal environment variable, nearly two-thirds (62.66%) of the respondents indicated that they agreed that they employed the right people in the business, the employees understood what was expected of them, the employees performed as expected and that the business set targets for less than 1 year. for the external environment variable, most respondents (81.20%) agreed that they knew their suppliers, that these suppliers were reliable, and supplies could be purchased on credit from these suppliers, and that the informal business experienced an increase in the number of customers since inception. these results may be explained by the location of the informal businesses that were all located in the city centre and suburbs, providing easy access to various suppliers. the growth of informal business variable showed that most participating informal businesses employed less than five employees, suggesting that they were not growing. respondents were neutral regarding to the growth of their informal businesses which may indicate that the respondents were unsure about the growth of their informal businesses. results of correlation analysis pearson product moment correlation coefficient analysis was used to determine links between the independent and the dependent variables. there was a positive significant moderate correlation between the internal environment and the external environment (r = 0.311; p < 0.000) as well as a positive significant but weak correlation between the internal and growth of the informal businesses (r = 0.118; p < 0.05). however, a weak negative significant correlation existed between the external environment and growth of informal businesses (r = -0.100; p < 0.10). multiple regression analysis and hypotheses testing results the assumptions of multiple regression analysis were tested by checking for normality and determined the skewness and kurtosis values. these values were acceptable for normality. the variance inflation factors (vifs) were calculated for the three variables, which ranged from 1.04 to 1.13, indicating no multi-collinearity. no autocorrelation existed as the durbin–watson value was 3.05, while the cook’s distance of 0.088 provided support that no significant outliers existed in the data set. the multiple regression analysis was conducted to determine whether the internal and external environments had a positive directional relationship with growth of informal businesses. the results showed that the internal environment had a statistically significantly relationship with growth of informal businesses, where f(2.380) = 6.811, p < 0.01, r2 = 0.035. the internal environment had a positive directional relationship (b = 0.135, p < 0.01). the external environment, however, presented a negative directional relationship (b = -0.162, p < 0.01) with growth of informal businesses. therefore, hypothesis h1 was accepted and h2 was rejected. the r2 indicated that the internal and external environments explained 3.46% of the variation in the data. in addition, the internal environment (t = 3.11) exerted a stronger influence on growth of the informal businesses than the external environment (t = -2.85). discussion the results of this study are in concurrence with the findings of politis and gabrielsson (2006:5) and onodugo and ewurum (2013:14), who found that the external environment influenced the growth of informal businesses through the provision of opportunities in terms of the market where products and services were sold. however, politis and gabrielsson (2006:5) and onodugo and ewurum (2013:14) noted that the external environment presented a variety of challenges such as competition from superior formal businesses with which most informal businesses found difficult to compete. these challenges placed additional pressure on the survival and growth of the informal businesses. the directional relationship between the external environment and the growth of the informal businesses is thus negative as shown in this study. this means that the external environmental challenges inhibit the growth of informal businesses. olawale and garwe (2010:730) and nkonoki (2010:25) found that the internal environment has a significant positive directional relationship on the growth of businesses which is in line with the results of this study. in particular, olawale and garwe (2010:730) and nkonoki (2010:25) highlighted that factors including entrepreneur ability, business characteristics and business strategy were indispensable in shaping the growth of informal businesses. the internal environment thus positively influences the growth of informal businesses. conclusions and implications the empirical survey reported a significant positive directional relationship between the internal environment and growth of informal businesses and a significant negative directional relationship between the external environment and growth of informal businesses. the results suggest that the external environment presents challenges that impede the growth of informal businesses. however, the internal environment can lead to growth in the informal businesses as employing the right employees while ensuring that all employees understand the business processes, products and services are beneficial to the growth of the informal business. furthermore, the employees should be informed of the informal business targets. the employees should also be involved in setting the short-term targets, as they were responsible for achieving these targets. therefore, if targets were attained by informed employees, the informal business might grow in terms of number of loyal customers and profitability. the results concur with the assertion by politis and gabrielsson (2006:5) and onodugo and ewurum (2013:14) that the external environment has a significant influence on the growth of informal businesses through the provision of opportunities in terms of the market where they sell their products and services. the external environment presents a variety of challenges such as competition from formal businesses. most informal businesses find it difficult to compete and cope with the external factors, which may impede the growth of the informal businesses and eventually ruin their survival. hence, depending on the ability of informal businesses to take advantage of opportunities or guard against external challenges, the external environment has a negative directional relationship with the growth of informal businesses. it is recommended that informal businesses should strategise to take advantage of the opportunities provided by the external environment while guarding against the threats posed by the same environment. informal businesses should further maintain good relationships with their suppliers to obtain credit from suppliers and for negotiating more flexible credit terms for credit purchases. furthermore, informal businesses should take advantage of customer loyalty and ensure that they are fully stocked to maximise sales while retaining their customers. in addition, the informal businesses should focus on differentiated service provision to counteract the efforts of the competitors. this would also assist the informal businesses to increase their number of customers as well as improve sales and profitability, and hence, their business growth. to conclude, informal businesses in uganda should scrutinise the internal and external environments for variables that may influence their growth. once these variables have been identified, appropriate strategies should be developed and implemented to ensure the growth of informal businesses. this study used a validated framework for empirical testing of the relationships between the business environments and growth of informal businesses. this framework can be used in future studies to determine the variables that enhance the growth of informal businesses. acknowledgements the authors thank the reviewers of this article for their positive feedback to improve the final quality of the article. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution this article is based on information collected for a phd study. j.k. was supervisor of the thesis and assisted in the draft article and provided valuable inputs to the final article. f.w.s. was the co-supervisor of the study and she created a draft article from the phd thesis of g.n. the article was finalised by f.w.s. references ademola, f. & anyankora, m.i., 2012, ‘the challenges of improving informal sector activities conditions in lagos island, nigeria’, british journal of arts and social sciences 6(2), 218–232. adhikari, d.b., 2012, ‘income generation in informal sector: a case study of the street vendors of kathmandu metropolitan city’, economic journal of development issues 13, 1–14. https://doi.org/10.3126/ejdi.v13i0.7193 alderslade, j., talmage, j. & freeman, y., 2006, ‘measuring the informal economy – one neighborhood at a time’, a discussion paper prepared for the brookings institution metropolitan policy program usa, the brookings press, ca. alemayehu, b.z. & van vuuren, j., 2017, ‘munificence contingent small business growth model (special emphasis to african sme’s context)’, journal of small business & entrepreneurship 29(4), 251–269. https://doi.org/10.1080/08276331.2017.1327565 amin, m.e., 2005, social science research: conception, methodology and analysis, makerere university, kampala, uganda. barbour, a. & llanes, m., 2013, supporting people to legitimise their informal businesses, joseph rowntree foundation report, york, england. bukaliya, r. & aleck, h., 2012, ‘challenges affecting informal business funding in zimbabwe: implications for the zimbabwe open university’, the african symposium: an online journal of the african educational research network 12(1), 57–72. chittithaworn, c., islam, a., keawchana, t. & yusuf, d.h.m., 2011, ‘factors affecting business success of small & medium enterprises (smes) in thailand’, asian social science 7(5), 180–190. https://doi.org/10.5539/ass.v7n5p180 de castro, j.o., khavul, s. & bruton, g.d., 2014, ‘shades of grey: how do informal firms navigate between macro and meso institutional environments?’, strategic entrepreneurship journal 8, 75–94. https://doi.org/10.1002/sej.1172 deen-swarray, m., ndiwalana, a. & stork, c., 2013, ‘bridging the financial gap and unlocking the potential of informal businesses through mobile money in four east african countries’, cprsouth8/cprafrica2013 conference, mysore, india, 05–07 september, n.p. delbiso, t.d., 2013, the role of informal sector employment in poverty alleviation: the case of hawassa city, ethiopia, ethiopia economics association, addis ababa. delgado-rico, e., carretero-dios, h. & ruch, w., 2012, ‘content validity evidences in test development: an applied perspective’, international journal of clinical and health psychology 12(3), 449–459. donner, j., 2007, ‘customer acquisition among small and informal businesses in urban india: comparing face to face mediated channels’, the electronic journal of information systems in developing countries 32(3), 1–16. https://doi.org/10.1002/j.1681-4835.2007.tb00222.x drost, e.a., 2011, ‘validity and reliability in social science research’, education research and perspectives 38(1), 105–123. gupta, p.d., guha, s. & krishnaswami, s.s., 2013, ‘firm growth and its determinants’, journal of innovation and entrepreneurship 2(1), 1–14. https://doi.org/10.1186/2192-5372-2-15 hair, j.f., black, w.c., babin, j.b. & anderson, r.e., 2014, multivariate data analysis, 7th edn., pearson, essex. hauke, j. & kossowski, t., 2011, ‘comparison of values of pearson’s and spearman’s correlation coefficients on the same sets of data’, quaestiones geographicae 30(2), 87–93. https://doi.org/10.2478/v10117-011-0021-1 henley, a., arabsheibani, g.r. & carneiro, f.g., 2006, on defining and measuring the informal sector, discussion paper no. 2473, world bank publications, washington, dc. ishengoma, e.k. & kappel, r., 2011, ‘business environment and growth potential of micro and small manufacturing enterprises in uganda’, african development review 23(3), 352–365. https://doi.org/10.1111/j.1467-8268.2011.00291.x kasemiire, c., 2017, ‘why formalising informal sector is a song with no end’, daily monitor, 07 september, p. 9. keter, j., 2012, ‘business competitiveness in the informal sector in rural areas against a background of regulatory frameworks: a study of smes in kesses division, uasin gishu district, kenya’, journal of emerging trends in educational research and policy studies 3(6), 873–879. kew, j. & stredwick, j., 2017, business environment: managing in strategic context, 2nd edn., chartered institute of personnel and development, london. komollo, f.o., 2010, ‘regularization of the informal ‘jua kali’ activities in nairobi for sustainable development’, 46th isocarp congress, nairobi, kenya, 19–23 september, n.p. ligthelm, a.a., 2013, ‘confusion about entrepreneurship? formal versus informal small businesses’, southern african business review 17(3), 57–75. llanes, m. & barbour, a., 2007, self-employed and micro-entrepreneurs: informal trading and the journey towards formalization, community links, london. mbaye, a.a. & gueye, f., 2018, ‘the competitiveness challenge of the formal sector in francophone africa: understanding the role of the informal sector and the business environment’, in i. adeleye & m. esposito (eds.), africa’s competitiveness in the global economy, pp. 25–51, aib sub-saharan africa (ssa) series, palgrave macmillan, cham. meyer, n., meyer, d.f. & molefe, k.n., 2016, ‘barriers to small informal business development and entrepreneurship: the case of the emfuleni region’, polish journal of management studies 13(1), 121–133. https://doi.org/10.17512/pjms.2016.13.1.12 mwobobia, f.m., 2012, ‘the challenges facing small-scale women entrepreneurs: a case of kenya’, international journal of business administration 3(2), 112–121. https://doi.org/10.5430/ijba.v3n2p112 nkonoki, e., 2010, what are the factors limiting the success and/or growth of small businesses in tanzania? – an empirical study on small business growth, international business, arcada university of applied sciences, helsinki. ogbokor, c.a. & ngeendepi, e.j., 2012, investigating the challenges faced by smes in namibia, university of science and technology, namibia. oginni, b.o. & adesanya, a.s., 2013, ‘business environmental factors: implications on the survival and growth of business organisations in the manufacturing sector of lagos metropolis’, business and management research 2(3), 146–155. https://doi.org/10.5430/bmr.v2n3p146 olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. onodugo, v.a. & ewurum, u.j.f., 2013, ‘environmental scanning: an imperative for business survival and growth in nigeria’, journal of economics and sustainable development 4(7), 12–20. onwe, o.j., 2013, ‘role of the informal sector in development of the nigerian economy: output and employment approach’, journal of economics and development studies 1(1), 60–74. osamwonyi, i.o. & tafamel, a.e., 2010, ‘options for sustaining small and medium scale enterprises in nigeria: emphasis on edo state’, african research review journal 4(3b), 192–211. https://doi.org/10.4314/afrrev.v4i3.60249 osei-boateng, c. & ampratwum, e., 2011, the informal sector in ghana, friedrich-ebert-stiftung, ghana office. politis, d. & gabrielsson, j., 2006, informal investors and value added: what do we know and where do we go?, paper no. 13, centre for innovation, research and competence in the learning economy, lund university, sweden. rosemary, m., 2016, ‘the social factors that influence growth of women owned businesses in the informal sector in kenya: a case of women street vendors in bungoma town, bungoma district’, international journal of academic research in business and social sciences 6(5), 391–412. https://doi.org/10.6007/ijarbss/v6-i5/2156 sookram, s. & watson, p.k., 2008, ‘small-business participation in the informal sector of an emerging economy’, journal of development studies 44(10), 1531–1553. https://doi.org/10.1080/00220380802265520 sparks, d.l. & barnett, s.t., 2010, ‘the informal sector in sub-saharan africa: out of the shadows to foster sustainable employment and equity?’, international business & economics research journal 9(5), 1–12. https://doi.org/10.19030/iber.v9i5.563 tavakol, m. & dennick, r., 2011, ‘making sense of cronbach’s alpha’, international journal of medical education 2, 53–55. https://doi.org/10.5116/ijme.4dfb.8dfd tshuma, m.c. & jari, b., 2013, ‘the informal sector as a source of household income: the case of alice town in the eastern cape province of south africa’, journal of african studies and development 5(8), 250–260. uganda bureau of statistics (ubos), 2012, statistical abstract: environment, demographic, socio-economic, production and macroeconomic statistics, uganda government printers, kampala, uganda. uganda investment authority, 2011, 2010 baseline survey of small and medium enterprises in uganda, draft final report, uganda investment authority, kampala. uganda investment authority, 2012, key building blocks for sme support at uganda investment authority, sme division, online survey report 2012/13, uganda investment authority, kampala. uganda national household survey report, 2010, a bridged report, social economic module, uganda bureau of statistics, kampala. unctad, 2007, ‘report of the expert meeting on increasing the participation of developing countries’ smes in global value chains’, expert meeting on increasing the participation of developing countries’ smes, geneva, 18–19 october. van broembsen, m., 2010, ‘informal business and poverty in south africa: re-thinking the paradigm1’, law, democracy & development 14(1), 256–274. vrontis, d. & pavlou, p., 2008, ‘the external environment and its effect on strategic marketing planning: a case study for mcdonalds’, journal for international business and entrepreneurship development 3(4), 290–295. https://doi.org/10.1504/jibed.2008.019163 waltz, c.f., strickland, o.l. & lenz, e.r., 2005, measurement in nursing and health research, 3rd edn., springer, new york. western cape provincial economic review and outlook, 2007, small, medium and micro enterprises and the informal sector, western cape provincial treasury, cape town. young, l., schaffers, l. & bruwer, j.p., 2012, ‘south african informal businesses sustainability in the cape town central business district: the power of internal financial controls’, african journal of business management 6(45), 11321–11326. https://doi.org/10.5897/ajbm12.882 zikmund, w.g., babin, b.j., carr, j.c. & griffin, m., 2013, business research methods, 9th edn., south-western cengage learning, mason, oh. microsoft word 6 book review the high impact leader ns 1_1_94-101.doc sajesbm ns volume 1 (2008) issue 1 94 ___________________________________________________________________________________________ the high impact leader: moments matter in accelerating authentic leadership development bruce j. avolio and fred luthans. new york, ny: mcgraw-hill, 2006 262 pages, hard cover. reviewed by jeremias j. de klerk, university of the free state, january 2008 mias.deklerk@sasol.com why another book on leadership? this question is rightly asked by bruce avolio and fred luthans in the opening chapters of the high impact leader. implicit in this question is the sceptical challenge from the time-pressured entrepreneurial leader: “why should i dedicate my valuable time to reading another book on leadership and not spend my time on something else with perhaps a higher return on the time invested?” well, the authors justify this specific book on the premise that this is a valid question, and with the hypothesis that many leadership development programmes fall short of delivering the intended developmental results. they argue that this situation can be corrected if we as leaders learn more from our life experiences and work with our authentic selves. in other words, shifting the attention away from what typically occurs in formal leadership development programmes to lifelong learning from all moments and events that could possibly impact on one’s personal and professional growth facilitates the development of authentic leadership. this pragmatic approach followed in the high impact leader should resonate well with the entrepreneurial leader who is often less interested in formal leadership qualifications than in obtaining practical tools to use as a leader. moreover, the entrepreneurial leader has often gained much personal, life and professional experience to capitalise on in order to grow and develop further as a leader. the intention of this book is to guide leaders practically through an effective and insightful journey of accelerated development as an authentic leader. the authors answer the opening question with the positive impacts of entrepreneurs as authentic leaders on work performance, employee satisfaction, happiness and commitment (jensen & luthans, 2006b; peterson & luthans, 2003); one could rather question whether any entrepreneurial leader can afford not to read a book that addresses these issues in such a pragmatic way. sajesbm ns volume 1 (2008) issue 1 95 ___________________________________________________________________________________________ it is good to see that the well-known authors and leadership scholars, bruce avolio and fred luthans, do not preach the concept of authentic leadership in the high impact leader, but rather explain the concept and provide readers with some practical tips on how to build and develop their own skills as authentic leaders. the book will appeal to a wide audience of entrepreneurial leaders who are looking for a no-nonsense book on one of the current “hot” topics in leadership, namely “authentic leadership”, made popular by bill george (2003). the discussions in the book are based on the wide experience gained in leadership consulting work and leadership research by the two authors and their interaction with leaders, and also on the data gained from worldwide research on leadership by the gallup leadership institute. the authors have provided a practical framework to help readers to understand and develop their own authentic leadership. they provide a broad range of exercises at the end of every chapter, including tips and suggestions on how to develop one’s own authentic leadership skills. these include crucial questions for reflection on one’s own personal and leadership life journey. fortunately, the authors stop short of giving recipe-like prescriptions on what to do, and the high impact leader is not degraded to the level of another superficial self-help, how-to book like those already cluttering many bookshelves. another contribution to this practical framework is the fact the book is packed with anecdotes and real-life stories about several political and business leaders. these stories make for interesting reading and make the context of authentic leadership and how to build one’s own leadership authenticity interesting, relevant and practical. this is specifically helpful to the entrepreneurial leader, as the authors tell anecdotes and stories not only about leaders from huge corporations, but also about those from smaller organisations. though some of these leaders and their companies may not be that well known to the south african audience, this is preferable to being bombarded by more stories about jack welch or bill gates, as if they are the only leaders of note. reading about what other leaders did in certain circumstances or what approaches they took may make it easier for the reader to transpose the story to his or her own circumstances and to reflect on how to deal authentically with such situations. although the book is based on much research, this approach makes it less “academic” in its feel and accessible to leaders from virtually all business backgrounds. so what does the book offer? the discussion on authentic leadership development (ald) commences with a discussion of how significant life and leadership events or situations sajesbm ns volume 1 (2008) issue 1 96 ___________________________________________________________________________________________ (“moments that matter”) influence leaders and authentic leadership. avolio and luthans propose that by learning from our life journeys, acting authentically during moments that matter, being aware of and “building-out” our authentic selves, each of us can build our authenticity as a leader, and they claim that this should also lead to better bottom-line results in business. they argue that significant moments that come into our paths during life trigger the potential within us. as the title indicates, “moments that matter” is a theme running throughout the book. the way we act, react, respond to or deal with these moments brings the future into the present and can as such be life-changing. interesting research data by the gallup leadership institute, obtained from the gallup poll on authentic leadership, create a solid foundation for most of the discussions. it is of particular interest to the entrepreneurial leader of a smaller organisation to note that the research data from the us population indicates that employees in smaller organisations (of less than 100 employees) were more likely to rate their leaders as displaying authentic leadership. perhaps it is the personal closeness to their leader in smaller organisations that creates this experience? at any rate, this is a point in favour of leaders in smaller organisations and is an aspect that the entrepreneurial leader should not lose sight of. a helpful and nifty bonus to the practicality of the book is the supporting web site, www.eleading.com, onto which the authors provide access to the reader through a pin code. through the website the reader gains access to three relevant psychological instruments to develop authentic leadership: “the authentic leadership survey”, “your own psychological capital assessment”, and “a mapping of your social networks and relationships”. all instruments are easy to access, easy to complete, and provide practical insight into one’s own style and authenticity. the web site also compares one’s own score with an international norm (the average score from all participants that completed the questionnaires from all over the world). the authentic leadership survey and social networks analysis is to be forwarded to colleagues or subordinates to complete in order to obtain a more objective and thus accurate assessment. i found the open and honest reflection on the effectiveness of the last 100 years of leadership interventions, development and research particularly refreshing. it was encouraging to read that the authors challenge the impact and outcome of most existing leadership development programmes. many of us have the same doubts and sometimes privately question the effectiveness of such programmes, yet they are not often questioned openly; especially not by sajesbm ns volume 1 (2008) issue 1 97 ___________________________________________________________________________________________ esteemed business school professors who make their living from them. avolio and luthans conclude that although leadership development programmes are not always all they are claimed to be, and may fall short of delivering the intended developmental results, yet research still confirms that leadership interventions can work. this is especially true if such programmes can be augmented by incorporating learning from all possible moments and experiences that could possibly impact on one’s personal and professional growth. ald is then introduced as consisting of four basic core components: self-awareness, selfregulation, self-development and “a new level of ald” (although it is not clear at this point what this component means). self-awareness as a component of authenticity makes intuitive sense, but in addition the authors clearly illustrate the importance of self-awareness (past, present and future) to leadership and authenticity development. they also demonstrate the importance of self-efficacy (the confidence in one’s mind that one will be successful in taking on a particular challenge) to success – research data indicate that self-efficacy improves workrelated performance by a mind-boggling 28 percent. in the extensive discussion on the links between one’s authentic self and possible self, and how movement occurs from one to the other, the authors contend that there is no such thing as a single self. they argue that we can and should develop a vision of a future self so that we are ready to act with self-discipline to realise it when the right moment that matters arrives. the difficult question of when to change or when not to change is then addressed. the authors suggest that by crafting a new leadership and life story or narrative, and living it, as planned or unplanned moments that matter arise, our future self can become our authentic self if we consistently work on it with discipline. by having a narrative of one’s life story, self-regulation can provide the discipline and compass to tilt the delicate balance for a leader to change (when necessary for growth or development) or not to change (when the change is not congruent with one’s authenticity or life story) in the correct direction. two other valuable chapters address the construct of psychological capital (psycap), and how leaders and followers can go about developing and enhancing the value of their psycap. the main components of psycap are hope (to have a will and a way), optimism (a positive sense of what can be accomplished), and resilience (the ability to bounce back). psycap also has specific relevance for entrepreneurs as authentic leaders. relationships have been found between the psycap and self-perceptions of authentic leadership in business founders of sajesbm ns volume 1 (2008) issue 1 98 ___________________________________________________________________________________________ relatively new and small organisations (jensen & luthans, 2006b). again, self-awareness and self-efficacy are critical aspects for understanding and building-out one’s own level of psycap. the authors suggest the pygmalion effect (self-fulfilling prophecy) as specifically helpful to building psycap in others. showing confidence in others raises their hope and self-efficacy and thus leads to raised expectations and attainment of success. the next chapter covers what constitutes sustainable and veritable leadership performance in a changing world. this is a more general discussion on leadership effectiveness and developing effectiveness as a leader. the example of warren buffet as an authentic leader and ald is a useful way to conclude the “instructional” part of the book. finally, the chapter entitled “sounds like a plan for your ald” provides a more specific suggested structure for developing one’s own ald plan. stimulating questions, several guidelines and suggestions, and a checklist to check the plan makes this a practical end to a worthwhile book. of course, the high impact leader is not without faults. the first problem is encountered in the title of the book, where the authors equate high-impact leadership with authentic leadership. although the authors explain why they regard authentic leadership as having a high impact, this is confusing, as several other definitions or views exist on what high-impact leadership means (e.g. traversi, 2007:14; harkins, 2006:3). there is not a visible enough clear structure and storyline, and this detracts somewhat from the clarity of the message and its applications. interesting and important concepts and constructs are presented and discussed early in the book, but without a clear flow of the thinking or argument. it is only on page 35 that the authors define what they mean by the term “authentic leaders.” even then they only state the particular definition for authentic leadership used in a gallup poll and the reader has to infer that this is also the definition of authentic leadership that is used in the book. what, then, is the definition of an authentic leader in the book? it is only on page 64 that the authors get to discuss the basic components of authentic leadership development (ald). they posit that ald rests on the core components of 1) self-awareness, 2) self-regulation, 3) self-development, and 4) “a new level of ald.” not only is it unclear why they chose these four constructs as the core components and how they are linked to the definition of authentic leadership, but what is meant by the fourth component is confusing. these four components are not used consistently as the overarching structure for the discussions on ald, which contributes to the somewhat confusing structure of the book. sajesbm ns volume 1 (2008) issue 1 99 ___________________________________________________________________________________________ throughout the book the authors posit that “moments that matter” are crucial to authentic leadership and the development thereof, so surely this concept should be one of the core components? the lack of a clear structure, storyline and clear definitions may partly block the message to the reader who is not familiar with the concept of authentic leadership. perhaps one reason for the lack of clarity and structure is to be found in the emphasis on anecdotes and exemplary stories. as rosenzweig (2007) notes, we must be cautious of anecdotal storytelling that masquerades as science. although avolio and luthans themselves caution against relying on opinion and anecdotal evidence (page 48), they border on relying too much on stories and anecdotes themselves. although these provide interesting reading and help the non-academic reader to gain a practical understanding of the constructs being discussed, they detract from a clear storyline, what is being discussed and why. this is especially true as the context or rationale for including some of the stories in the text is not obvious, while other stories appear to be out of place. for instance, the story of the police chief (page102) is interesting and an example of some technical insight. but can it really be used as an example to demonstrate the concept of the future self? i found the distinction between authentic self and possible self somewhat problematic. to consider my “possible self” to be on a higher order of existence than my “authentic self” surely denies the notion of authenticity? authenticity includes developing my potential and thus living to my full potential, while i am true to who i am at all times. this includes growth and development and becoming a better human being through learning from my mistakes and my successes, while i live my life consistently with integrity and according to a clear set of values. this means i become a better self by not focusing on it, but by being more authentic where i am. authenticity in essence means “not counterfeit or copied” and “worthy of belief”. this means i cannot copy my leadership actions or leadership style from others, or even base it on what worked for others. my leadership style must be aligned with who i am, not who i want to be, and presented as such as worthy of belief and worthy of following in my particular context. as goffee and jones (2005: 90) note: “if a leader is playing a role that isn't a true expression of his authentic self, followers will sooner or later feel like they've been tricked”. some of the real depth of authenticity is lost in all the anecdotes of important and well-known leaders. they create the impression that i can copy from these great leaders how they dealt with difficult sajesbm ns volume 1 (2008) issue 1 100 ___________________________________________________________________________________________ situations, especially in becoming my possible self. not enough emphasis is put, or light shed, on how to fathom my own authenticity, how to be true to it, build-out this particular aspect of myself, or how to be authentic in my context. perhaps this omission is understandable; as it is difficult to go deeply into as personal a concept as authenticity, and to demonstrate to the reader how to develop it, without destroying authenticity by providing examples of what others did or a recipe on how to do it. after all, real authenticity cannot be copied; what is authentic to you might not be authentic to me! the huge amount of data provided on leadership research are very interesting, mostly useful and add to the theoretical soundness of the book. but some research data appear to be more about general leadership effectiveness than about developing one’s own level of authentic leadership. for instance the data from research provided on pages 38 and 39 have little to do with the authors’ definition of authentic leadership, and are not clearly linked to ald. these data focus on diversity and gender issues, how leaders pick new employees, and whether leaders make people to feel that they contribute to the organisation. these are very important issues to address, but how are they linked to transparency, self-awareness or self-regulation? as such, most of chapter 9 is biased towards leadership performance in just about any aspect of leadership, with too little emphasis or clarity on the role of authenticity of ald in these aspects. this is confusing and may take the reader out of the deeper reflection mode about his or her authenticity as a leader into a consideration of more general leadership actions and traits. lastly, although the importance of values is discussed briefly in chapter 9, and they are implicit in many of the discussions, for instance those on the authenticity and integrity of warren buffet, i would have expected more focus on values. values are normative standards by which we judge and choose between alternative modes of behaviour, those principles that we regard as conducive to our welfare (elizur, 1984). values lay the foundation for motivations and attitudes, influence perceptions, weigh up the degree of importance of certain behaviour in a life area. the role of values, personal and organisational, is thus fundamental to authentic leadership and authentic leadership development. nevertheless, the high impact leader by bruce avolio and fred luthans is an enjoyable read and a worthwhile source of information for enhancing one’s development journey as a leader. it is packed with enough practical examples and triggers for the entrepreneurial reader to stimulate thinking on leadership and authenticity, supported by practical ideas to build-out this sajesbm ns volume 1 (2008) issue 1 101 ___________________________________________________________________________________________ aspect of one’s leadership profile. it should find wide acceptance with business readers as well as academics. this is good news for the entrepreneurial leader who looks for an easy read, but one with enough solid meat to make a real difference. in conclusion, bruce avolio and fred luthans succeed to a large extent in their intention to effectively guide leaders through an accelerated journey towards authentic leadership development. but as with most books or sources, the real value lies not in the reading, but in its application. the leader-reader who is not interested in recreational reading only, but who works diligently through the book, answering the questions, completing the exercises (including the instruments on the web site) will gain the most from the book. such a leader should get much assistance in his or her development as a leader. references elizur, d. 1984. facets of work values: a structural analysis of work outcomes. journal of applied psychology, 35: 379–389. george, b. 2003. authentic leadership: rediscovering the secrets to creating lasting value. san francisco: josseybass. goffee, r. & jones, g. 2005. managing authenticity: the paradox of great leadership. harvard business review, 83(12):86–94. harkins, p. 2006. high-impact team leaders. leadership excellence, 23(10):3-4. jensen, s. m. & luthans, f. 2006a. relationship between entrepreneurs' psychological capital and their authentic leadership. journal of managerial issues, 18(2):254–273. jensen, s. m. & luthans, f. 2006b. entrepreneurs as authentic leaders: impact on employees’ attitudes. leadership & organization development journal, 27(8): 646–666. luthans, f. & jensen, s.m. 2002. hope: a new positive strength for human resource development. human resource development review, 1:304–322. peterson, s.j. & luthans, f. 2003. the positive impact and development of hopeful leaders. leadership and organizational development journal, 24(jan-feb): 26–31. rosenzweig, p. 2007. the halo effect. free press: new york. traversi, d. m. 2007. eight drivers of the high impact leader. supervision, 68(11):13–16. abstract introduction literature review theoretical framework and human capital theory research method and design results and discussion the nature of immigrant entrepreneurs’ contribution to entrepreneurial development in-store skills transfer discussion implications for further research recommendations conclusion acknowledgements references about the author(s) lebohang y. moloi department of business support studies, faculty of management sciences, central university of technology, bloemfontein, south africa lentswe mosweunyane department of business support studies, faculty of management sciences, central university of technology, bloemfontein, south africa crispen chipunza department of business support studies, faculty of management sciences, central university of technology, bloemfontein, south africa citation moloi, l.y., mosweunyane, l. & chipunza, c., 2022, ‘assessing immigrant entrepreneur’s contribution to entrepreneurial development: a case of small retailers in the mangaung, free state province’, southern african journal of entrepreneurship and small business management 14(1), a440. https://doi.org/10.4102/sajesbm.v14i1.440 original research assessing immigrant entrepreneur’s contribution to entrepreneurial development: a case of small retailers in the mangaung, free state province lebohang y. moloi, lentswe mosweunyane, crispen chipunza received: 21 june 2021; accepted: 02 mar. 2022; published: 28 apr. 2022 copyright: © 2022. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: despite numerous training programmes by the south african (sa) government equipping citizens with entrepreneurial skills to create businesses for economic development. the country still faces a high rate of liquidation of businesses leading to unemployment. aim: this article mainly aimed to assess immigrant entrepreneurs’ contribution to entrepreneurial development in the mangaung metropolitan municipality (mmm). setting: the study focuses on the role that skilled immigrant entrepreneurs play in entrepreneurial development in mmm through human capital theory. methods: drawing on interpretivist paradigm, the study adopted empirical stance and qualitative approach. a total of 20 participants’ immigrant entrepreneurs and employees from small retailers in mmm were interviewed. data collected were analysed using the burnard’s (1991) stage-by-stage method of the semi-structured interviews. content analysis was used to analyse data collected. whilst thematic analysis was employed to analyse the data obtained from the face-to-face interviews. results: although immigrant entrepreneurs were using their resources to share expertise and experience, most of their employees were not willing to learn. immigrant entrepreneurs considered government support as a valuable tool when seeking to understand their contribution to developing the citizens. accordingly, the results demonstrated that entrepreneurial skills transfer via in-store training influenced local citizens’ entrepreneurial mindset and decision to start businesses. the findings also revealed that immigrant businesses might play a critical role in solving entrepreneurial development of sa as government funding was considered to be a tool for skills transfer and entrepreneurial growth. conclusion: whilst most studies investigated immigrant-citizen’s entrepreneurial skills transfer process, little attention was given to possible entrepreneurial development mechanisms through business collaboration. the study concludes that human capital in the form of skilled labour has a positive effect on entrepreneurial development. this informs policymakers to prioritise the upskilling of the workforce and contributes towards value-generating economic activities. keywords: smme’s; immigrant entrepreneurship; entrepreneurial skills; entrepreneurial development; collaboration, and government support. introduction this study focuses on assessing the contribution of immigrant entrepreneurs on entrepreneurial skills development in mangaung metropolitan municipality (mmm). the study is guided by the objective to determine the nature of immigrant entrepreneurs’ contribution to entrepreneurial development amongst south african citizens in the mangaung metropolitan area. the approach assesses the contribution of immigrant entrepreneurs to skills development, its impact on employment and economic growth. a study on immigrant entrepreneurship has been growing recently (adendorff & halkias 2014). however, only few studies were conducted on it in developing countries (shinnar & nayir 2019). despite a number of studies, there are many gaps yet to be researched (akin, bostanci & akyol 2017:501; shinnar & nayir 2019:559). hence, this study assesses the contribution by immigrant entrepreneurs to entrepreneurial development, particularly small retail businesses in mangaung metropolitan municipality (mmm) of south africa. acs (2006) and naudé (2010) posit that entrepreneur can be a key contributor to the job growth, innovation and the shaping of communities. moreover, radipere and dhliwayo (2014) concur that entrepreneurship is the force that drive economic development of any country. however, south africa is rated as having the smallest percentage of entrepreneurs compared to other developing southern african development community (sadc) countries (radipere & dhliwayo 2014). therefore, immigrant entrepreneurs play a significant role in the economy through the creation of businesses despite the size of the business (ngota, raikaran & mang’unyi 2019). as fatoki (2014) concurs, most developed countries have benefit from immigrant entrepreneurs. thus, the inflow of immigrant entrepreneurs in south africa can possibly play a role in entrepreneurial development, with the anticipation of finding possible solutions to the problem of entrepreneurial development or activities leading to low rate of employment in south africa, particularly in mmm. the main aim of the study is to assess the immigrant entrepreneurs’ contribution to entrepreneurial development in mangaung. tengeh and nkem (2017) describe immigrant entrepreneurship as business activities conducted by immigrants in their host countries, either with the assistance of social networks or through individual initiative. the concept of immigrant entrepreneurship has become an important socio-economic phenomenon, as it plays a critical role in economic development (aaltonen & akola 2014). scholars (fairlie 2012; fairlie & lofstrom 2014) observed that trends in a new business formation are increasing amongst immigrants but decreasing amongst citizens. a similar trend is also seen in emerging economies such as south africa. in accord, nkealah (2011) posits that entrepreneurship seems to be thriving amongst the immigrant population in south africa, but this does not seem to be the case amongst south africans. results revealed that south african business owners (small, medium and micro enterprises [smmes]) do not view themselves as potential entrepreneurs mainly because the majority of south africans have grown up with little or without entrepreneurial background. instead, south africans are employed by immigrant entrepreneurs (kalitanyi & visser 2010) and therefore, entrepreneurial skills can be transferred from these immigrant employers to the employees who will then contribute to entrepreneurial development of the country. the research issue behind the article is that local entrepreneurs especially in small retail appear to be closing down (ligthelm 2010). the importance of scholarly research about entrepreneurial growth and improvement cannot be underestimated because of the obvious lack of concentration of prior studies on this aspect. on the other hand, nkealah (2011) asserts that there seems to be an increasing number of immigrant entrepreneurs in sa. since the 1994 democratically held elections, sa has witnessed an entry of immigrants, with a majority of them from african countries (landau & jacobsen 2004; simelane 1999). nonetheless, there is no known work that has focused on the contribution of entrepreneurial development by immigrant entrepreneurs to sa citizens through human capital theory (hct). as a result of this limit in research on the role of entrepreneurial development of south african citizens, this study addressed the research gap on how the seeming success of immigrant entrepreneurship can be transferred to local people to promote entrepreneurial development in mangaung metropolitan. the rest of this article is structured as follows: firstly, a brief review of related entrepreneurial literatures is presented; secondly, research methodology, empirical results and discussion, and, finally, the conclusions of this article are provided. literature review entrepreneurship and immigrant entrepreneurship in south africa despite the small retail sector’s hard commitment, the challenges of entrepreneurial skills growth are not entirely resolved globally. henry, hill and leitch (2003) and undiayaundeye and otu (2015) affirm that entrepreneurs are identified as the engine of economic progression and the creation of wealth, and they add to a good quality of life by providing employment opportunities for both the educated and less educated entrepreneurs (nieman & nieuwenhuizen 2009; venter, urban & rwigema 2012). glackin and mariotti (2012) define it as having to do with entrepreneurs’ innovative ability to identify societal needs and harness resources at own risk to satisfy those needs for economic gain. other researchers define entrepreneurship according to their discipline specialties. however, for the purpose of this study, entrepreneurship is a process whereby persons (entrepreneurs) recognise opportunities based on market needs or gaps and start their own businesses to satisfy societal needs through innovation, with the intention to make profit (fatoki & patswawairi 2012). immigrant entrepreneurship is, therefore, the process, whereby persons from a foreign country recognise opportunities in a host country and create business to make profit. aaltonen and akola (2014) define immigrant entrepreneur as a person who moved from a different country to create a business in a host country. the south african government has prioritised entrepreneurship and the development of small businesses as the facilitator for achieving economic growth and development (bosma, wennekers & amorós 2011). the uptake of immigrant entrepreneurs in sa is believed to have resulted in a shift in the control of small retail shops in townships from locals to immigrant entrepreneurship (charman, petersen & piper 2012). local entrepreneurs seem to be failing to compete with immigrant entrepreneurs in the retail sector, as they appear to be fading away from the sector whilst immigrant entrepreneurs are taking over. kalitanyi and visser (2014) proclaim that one of the most debatable issues in recent times in the south african literature has been the impact of african immigrant entrepreneurship on reducing unemployment. furthermore, chamunorwa and mlambo (2014); lemes, almeida and hormiga (2010) assert that the effect of immigration on unemployment has been central to the social, economic and political debate in recent years. there is a proliferation of successful immigrant-owned small retail businesses in south africa as compared to those owned by south africans. this might be influenced by the fact that oreigners are unable to find employed easily in sa, hence they usually end up creating businesses instead. furthermore, ngota et al. (2019) posit that with the increased shortage of jobs amidst increasing trends of migration into sa over the years, small businesses are becoming the only smart option. in agreement, fatoki (2010) affirms that there has been a growing development of businesses owned by immigrants in sa. furthermore, tengeh and nkem (2017) assert that businesses owned by immigrants represent a significant conduit for advancing the growth of the south african economy. therefore, the adoption of immigrants in the mainstream economy will develop the level of entrepreneurial activities in sa. moreover, the adoption of immigrants in the mainstream economy will improve the level of entrepreneurial activities in sa and minimise the level of unemployment and people’s dependence on government grants. entrepreneurial development in retail business the goal of entrepreneurship development is to broaden the base of entrepreneurs in an economy to hasten the pace at which new businesses are created. van aardt et al. (2008) argue that such high levels of entrepreneurship aid the production and exchange of goods and services, thereby stimulating economic growth and development. furthermore, entrepreneurship is said to bring about structural transformation in business, resulting in growth and increased output for the benefit of society (hisrich, peters & shepherd 2010). this will bring about an increase in the creation of business. mitchelmore and rowley (2010) further assert that entrepreneurial development activities make the field of entrepreneurship attractive to non-entrepreneurs by creating and developing an interest in entrepreneurial activities, and supporting them in mastering the required skills and competences to become involved in such enterprises. the involvement of the immigrant entrepreneurship in entrepreneurship development would reduce the current dependency on government for a livelihood. ogbo and agu (2012) postulate that this may be achieved through various means, examples of which are structured institutional development programmes. therefore, the intervention of government would play a significant role in the growth of entrepreneurs and non-entrepreneurs who lack resources by providing the necessary programmes or initiatives to assist them to stay and grow in the field of the retail industry. through the support of and collaboration with government and immigrant business owners, local entrepreneurs can develop their entrepreneurial skills particularly in the mmm area. thus, the collaboration with immigrant business owners will play a significant role in helping local citizens, who are interested in entrepreneurial activities, to become part of and participate in immigrants’ smmes. in support, stokes, wilson and mador (2010) posit that entrepreneurship knowledge and skills are necessary resources for the success of smmes and ultimately for economic development. this would further promote job creation rooted in entrepreneurship, leading to economic growth and poverty eradication. rasool and botha (2011) argue that a lack of skills limits sa’s economy from developing. additionally, inadequate entrepreneurship education is still one of the prime factors preventing the growth of the economy of south africa (fatoki & garwe 2010). however, the involvement of the private sector in the creation of entrepreneurship would reduce the current dependence of the government on livelihoods. ogbo and agu (2012) postulate that this may be achieved through various means, such as the development of entrepreneurship through collaborations with the seemingly succeeding immigrant entrepreneurs. chrysostome and lin (2010) make a point that the influence of immigrant entrepreneurship in the host country is not limited to its economic aspects, but it also plays an important role in non-economic aspect such as a developing entrepreneurial spirit and providing role models for citizens as well. entrepreneurial development would enhance entrepreneurial self-efficacy, and the level of confidence individuals have in their entrepreneurial capabilities (chen, greene & crick 1998), which will motivate and encourage them to recognise opportunities and their capabilities. this would, therefore, generate wealth and decrease people’s reliance on government for jobs (radipere & dhliwayo 2014). the seeming success of immigrant entrepreneurship and government support may play a critical part in developing entrepreneurship, especially in mmm. government support and immigrant entrepreneurs government provides a range of direct financial assistance packages to the smmes which include subsidies, grants, tax benefits such as tax rebates and deductions which play an important role in assisting the smmes in their enterprise (xiang & worthington 2013). the authors further argue that the role of the government is to ease the smme’s financial constraints by assisting smmes to obtain financing. in addition to funding, a wide range of business developments such as business advice, counselling, mentoring, finance, training, incubators and clusters can be provided by government agencies (xiang & worthington 2013). however, financing and preparation are the most critical resources for budding entrepreneurs, both locals and immigrants. the majority of smmes in south africa have been founded by owners who have little awareness of the business world and are not aware of the risks that could result in the failure of businesses (naudé 2013; vis 2012). hence, the number of smmes in sa has not only led to a decline in unemployment but a decline in local entrepreneurs. there have been interest and calls from some government quarters on foreigners to share ideas of successful entrepreneurship with south african smme owners (fatoki 2010; times live 2015:1). in addition, the government has developed an institutional model to help small immigrant businesses (tengeh 2013). this was meant to alleviate resentment and build the perception that the business spaces of sa are not being stripped away by immigrants. again, the structural models to help small immigrant enterprises have not yet achieved their goal of shifting the idea that sa’s business areas are not being taken away by immigrants who employ south africans because of high levels of unemployment and discrimination. therefore, the use of available government interventions needs to be updated to allow professional (immigrants) entrepreneurs to help south africans unlock their full potential for entrepreneurial development. theoretical framework and human capital theory the framework demonstrated the basis on which questions and objectives of research are formulated, whereas the literature review argued that smmes can have an influence on employment creation. the conceptual framework hypothesised that immigrant entrepreneurship can influence the creation of employment and entrepreneurship development which in turn would lead to survival of small retail businesses. in other words, these elements, if not well-managed or implemented effectively, can either influence the rate of employment creation and entrepreneurship development positively or negatively. based on the below-mentioned theory, the study was guided by the hct which was developed by block and sandner (2009). the theory’s concern is that opportunity entrepreneurs are likely to have higher human capital talents and a higher cognitive ability, which lead to more productive and efficient activities. thomas, smith and diez (2013:3) define human capital as ‘people, their performance and their potential in the organisation’. the inclusion of the term ‘potential’ is important as it indicates that employees can develop their skill and abilities over time (thomas et al. 2013:3). human capital is vital to discovering and creating entrepreneurial opportunity (marvel 2013). marvel (2013) further argues that human capital helps to accumulate new knowledge and the creation of advantages for new businesses. given the entrepreneurial gaps between immigrants who infiltrated the retail industry, and local citizens, grasping the fact that entrepreneurial development depends on entrepreneurs’ collaboration, the appropriateness of entrepreneurial skills (or programs) in use cannot be understated. hence, wuttaphan (2017) concurs that currently, human resource is now viewed as human capital which leads to a source of value. the theory of human capital (hc) recognises that not all labour is capital (kenton 2020). however, employers can increase the value of that capital by investing in employees (kenton 2020) by developing their knowledge and skills. nafukho, hairston and brooks (2004) agree that human capital is seen as investment in education and training is a form of capital required for the development of individuals, organisations and communities. human capital attributes, such as education and experience, may also be critical for entrepreneurial development. the theory is, therefore, relevant for the research, as it enables employees to take advantage of the opportunities available, exposes their entrepreneurial skills and enables them to learn more from all available platforms. therefore, owners of small retail business which are mostly immigrants can use this theory to assist local citizens to acquire knowledge that will stimulate entrepreneurial spirit in them. in agreement, unger et al. (2011) posit that hct is concerned with knowledge of small-scale business owners. hence, marvel, davis and sproul (2016) emphasise that human capital is vital in stimulating aspects of entrepreneurship. ngepah, saba and mabindisa (2021) affirm that human capital has a positive and a significant impact on both total output and economic growth. furthermore, the disaggregated proxy of human capital shows that a higher level of skilled employment is associated with higher total output and economic growth. therefore, with the implementation of human capital by immigrant entrepreneurs, and with the empowerment of south africans through relevant programmes, south africans would be empowered to increase the country’s human capital it would contribute positively to development of entrepreneurs, creating and building enterprises which may result in growth of the economy and emerging businesses in sa. entrepreneurs possess this human capital skill. as a result, immigrant entrepreneurs can impart this human capital skill to their employees, which they will use to create economic value that will pay off. research method and design the study adopted a qualitative approach, in accordance with the interpretivist paradigm, with the aim to assess the contribution of immigrant entrepreneurship to the entrepreneurial development in mmm. this study adopted an empirical stance. empirical research ‘is used to express the results of qualitative scientific data on real world phenomena’ (pasek 2012). the elucidation for this study is to determine the nature of the immigrant entrepreneurs’ contribution to entrepreneurial development in the mangaung metropolitan area. the scope of the empirical enquiry was limited to retail smmes, particularly immigrant entrepreneurs and their employees in the mmm area as capital city of the free state province of south africa. twenty participants were sampled out of an estimated 603 immigrant businesses in the study area using convenience sampling. in conformance with the qualitative design, the interview measurement instrument was used and controlled by the researcher. fox (2009) posits that in-depth interviews are suitable in situations where the researcher wants to use open-ended questions to acquire information in depth from few people. hence, in-depth interviews were conducted to individual immigrant business owners and their local employees. the data collection instrument was compiled from the perspective of the participants and the interview items addressed or measured exactly what they were intended to measure, thus ensuring validity of the instrument, and as the same instrument was used in all the interviews, consistency was assured, therefore the interviews were regarded as reliable. data collected were analysed using burnard’s (1991) stage-by-stage method of data analysis for the analysis of the semi-structured interviews. burnard’s method assumes that semi-structured interviews should be recorded in full and the whole recording be transcribed. content analysis was used to analyse the data collected, whilst thematic analysis was employed to analyse the data, which were obtained from the face-to-face interviews. therefore, a complete framework was used for a more detailed coding and analysis of transcripts using thematic content analysis. originally, the researcher generated 10 themes from the transcriptions during the first-level coding. the researcher transcribed the recording, diary notes and the other stage of proofreading was done by other researchers to ensure credibility. the revisiting and re-emersion of the data and the comparison with the themes by researchers led to the further modification and reduction of the 10 themes to five themes. the content analysis followed a systematic process of coding and drawing conclusions from texts. this process starts by determining which units of data will be analysed from written or verbal texts (cooper & schindler 2006). verbatim quotations were used to illustrate specific themes which emerged from the data which were obtained from the interviews. to ensure the trustworthiness and eliminate bias in the results, two rounds of content analysis were performed on the field recordings. the rounds were generated to diverse views independently and to check if researchers’ documentation of report findings was consistent with what the research participants actually said. the interviews were audio-recorded and transcribed, and the recorder was not only a data soliciting device, but also served to expand the memory of the researcher and supplement diary notes. this was done as part of corroboration of evidence and promoting trustworthiness of results. thus, consideration was given to the following issues: credibility (verifying the truthfulness of the results by means of the researcher’s reflective notes and peer inspection; transferability (relevance of the findings) was guaranteed through classifications of the data. dependability or the consistency of the findings was safeguarded by documenting the key phases of the research process, particularly the data collection and analysis procedures. ethical considerations the master’s project was approved by the faculty research and innovation committee (fric) at the central university of technology, free state, reference number: fmsec04/19. results and discussion this section presents the findings from the collected data in detail, in terms of using frequencies and themes relative to the objective of the study. it also discusses these findings in relation to the broad research objective. the first section of the results consists of the participants’ demographics followed by the qualitative results. in reporting the findings from this study, the participant’s demographic profile is reported in table 1 provided below, and closely followed by the nature of immigrant entrepreneurs’ contribution and entrepreneurial skills transfer. participants’ demographic profile was prepared. table 1: the demographic data of immigrant business owners and local citizens involved in immigrants’ small retail businesses. the table below reports the demographic data of south african citizens employed by immigrant entrepreneurs as well as data of immigrant business owners involved in small retail businesses in the mangaung metropolitan area. employee’s participants as shown in table 1, the gender of the participants shows that the majority of the participants were females at 70%, and the remaining percentage were male. one immigrant participant said that ‘i prefer to hire and share skill with women because they are hard workers’. this finding would satisfy the policymakers because of the national priority of promoting gender equality. about 80% of the participants were fairly youth, that is, between 20 and 29 years old, with the remaining (20%) falling in the age category of 20 to 39 years. based on the data provided above, most of local citizens working for immigrant entrepreneurs are young, yet uneducated and mostly females. the findings further show that females need to be given the opportunity to showcase their potential in boosting the economy closing the gap of gender equality and previously disadvantaged black women. based on the above results, young local females work the most with immigrant entrepreneurs and therefore can benefit the most from their entrepreneurial skills. immigrant participants as shown in table 1, 30% of participants had matric and below, whilst 50% studied beyond matric and only 1% had postgraduate. table 1 further reveals the dominating gender as male (80%) and remaining percentage being females. this implies that the small retail business is dominated by males. majority of immigrant business owners were between the ages of 20–39 (60%) and only 30% were over the age of 40. this is supported by a study on african immigrant entrepreneurs in sa by ngota et al. (2019) who found that there were younger male immigrant entrepreneurs who operated businesses in sa than their female counterpart. the percentages shown above show that young men with tertiary qualifications run their own business at an early age, which is something lacking for their locals’ counterparts in the mmm area. the immigrant participants were from different countries with nigeria dominating with 40%, followed by bangladesh with 30%. participants with experience counted 70%, whilst 30% were without experience. based on these findings, clearly, immigrant’s retail business owners have the entrepreneurial experience to manage their businesses. the majority of participants (50%) have been in the business for 6–10 years, whilst only 10% of them have more than 11 years in business. this finding is consistence with participants’ experience. the immigrant businesses were not doing badly as shown in table 1, 90% were having more than r10 000 in profits while having employees who are not more than five. based on the above findings, some of the immigrant entrepreneurs started their business years ago and have a lot of experience, whereas others started more recently without financial support. it is clear from the evidence above that youth entrepreneurs’ activities in south africa remain low compared to other countries in africa. the nature of immigrant entrepreneurs’ contribution to entrepreneurial development tengeh, ballard and slabbert (2012) pointed out that a number of these businesses have succeeded in employing local workers, and, as hohn (2012) asserts, they aid economic growth because the low-income population benefits directly through employment. it has been reported that sa has been dominated by foreigners especially in small businesses, which normally led to fights between south africans and foreigners, whereby south africans accuse foreigners of taking their jobs (nkealah 2011). to a lesser extent, local citizens’ background or financial state leaves them with no choice but to work in low-paying jobs. therefore, it can be concluded that immigrant entrepreneurs do contribute to creating employment in mmm. however, there is a need for proper entrepreneurial development for persons working for immigrants in order for them to start their own businesses. by being the employees of immigrant entrepreneurs, these workers can develop entrepreneurial skill while doing the job. most immigrant entrepreneurs are climbing the retail business ladder. particularly, their entrepreneurial skills allow individuals to acquire financial services through different investment or savings such as stokvels. this is supported by researchers (such as lyon, sepulveda & syrett 2007; singh 2015), who state that even though immigrant entrepreneurs are accused of maintaining their competitiveness by engaging in practices like evading tax, non-adherence to labour laws and the employment of vulnerable illegal immigrants, amongst others, they contribute to the community by making products cheaper, as they use competitive practices to outperform locals. in support of this finding, participant 09 said: ‘yes, to some degree they do contribute because fellow south africans didn’t really hire any other people in their tuck shops, whereas these immigrants hire south africans to work in their shops and you can work as cashier or cleaner, so it’s somewhat type of a job creation.’ (participant 09, female, cleaner) the responses of other two participants whom they hire indicated that they looked for an individual with capabilities, not qualifications per se. participant 6 said: ‘yes, they do, because when they hire you they don’t want any qualification, if you have passed matric, or interview, they give you the job, even if we clean they do provide some job for us.’ (participant 06, female, security) according to tharpe (2015), smmes owned by immigrant entrepreneurs help alleviate congestion in main malls or supermarkets by offering local communities’ essential food or clothing items at affordable prices. despite the assertion by peberdy (2017) who proclaimed that the migrant spaza shops are harmful to local economies and inhibit job creation, this study revealed that immigrant business owners do hire local citizens and make a difference in their lives. this is also supported by hohn (2012) who posits that a number of these migrant businesses succeed in employing local workers. the findings have also revealed that immigrant entrepreneurs have control over spaza shops in mmm and local entrepreneurs fail to compete with immigrant entrepreneurs in the retail sector. it is thus clear that the market presented itself as an opportunity to immigrants who came to sa for employment, whilst local citizens were looking for proper education and employment from large companies. it could be understood from this finding that immigrants did not only took over the market but brought some innovation in the market that is causing them to infiltrate the market. one could say that the cause was the resistance to change of a new millennium by local business owners and that left the door opened for immigrants. in support of this finding, participant 09 said: ‘the immigrants have changed the market because i feel like they have infiltrated the market industry because most of the south african are unemployed even those who used to own business back then they are out of the business now because of the immigrants who took over the market.’ (participant 09, female, cleaner) another issue that was pointed out when discussing immigrant entrepreneurs’ contribution was about the standard of economy such as low prices and tax payment. participant 03 said: ‘they help our economy to grow because if you compare locals with foreigners, foreigners have many businesses than locals.’ (participant 03, female, stock-taker & cleaner) participant 06 affirmed that: ‘they are friendly, they make sure that they don’t run out of stock, they think out of the box like they ask customers what they would like, and they always bring new ideas. their prices are very low compared to other shops; they are good in savings & investment, they buy in bulk for discount.’ (participant 06, female, security) ngota et al. (2019) corroborate this by asserting that immigrant entrepreneurs brought competitiveness and innovation. however, it could be understood from these findings that entrepreneurial development may be gained through immigrant entrepreneur’s contributions. therefore, it can be concluded that immigrant entrepreneurs who already play a crucial role in creating new ventures and employment may give an opportunity to local people who work for them to gain business experience. immigrant entrepreneurs evidently stimulate economic growth in a positive way (ngota et al. 2019). for that reason, they can be used as a stimulus for entrepreneurship development in mmm. in-store skills transfer kalitanyi and visser (2014) posit that immigrant entrepreneurial skills are an asset to the south african economy and not a liability. furthermore, knowledge and skills sharing manifest in collaboration that involves employers in assembling and generating knowledge through partnership engagements. however, studies about immigrant entrepreneurial skills transfer found that these entrepreneurs require some sort of support (kalitanyi & visser 2010; khosa & kalitanyi 2015; ngota et al. 2017) for the immigrant entrepreneurs to keep their businesses surviving, creating an opportunity for entrepreneurial skills development. there is willingness to share entrepreneurial skills between immigrants and local citizens for the benefit of south africa economy. participant 05 and participant 02 agree with other participants in uttering that: ‘yes, in the business, as i do my work, i get to learn how business operates.’ (participant 05, male, owner) ‘yes, they do, but indirectly, because they allow us to do some of the work that we have no knowledge of and we learn from that.’ (participant 02, female, cashier) in corroboration, kalitanyi and visser (2014), in their study on migration and migrants’ entrepreneurial skills in south africa established that immigrant entrepreneurs indeed transmitted their entrepreneurial skills to local citizens. asoba and tengeh (2016) further concur that immigrants who migrate to south africa are highly skilled and some of them come with artisan skills, entrepreneurial skills and managerial skills, which enable them to manage and expand business ventures in their host destinations. as evident from these results, immigrant entrepreneurs pass skills to local people to improve their entrepreneurial skills: ‘yes, i believe i am transferring the skills with the system i am using in the business, by showing them how to order and receive goods from suppliers, packaging, and dealing with customers. yes, i tell them to look at what i am doing when approaching customers and suppliers, and then leave them with the shop to run everything on their own. in that way i transfer managerial skills to them indirectly.’ (participant 07, male, owner) the transcripts above show that local citizens concur with the immigrant entrepreneurs that they learned a lot in the business. additionally, immigrant entrepreneurs transfer skills to their employees in an informal way, providing in-store training and coaching to develop local citizens’ entrepreneurial skills. it is believed by a slight majority of immigrants that south africans will find it easier to start up their own businesses, because it is easy for them to get funding from organisations such as sector education and training authority (seta) and others, as well as get support from government and loans from the bank. with such support, the study revealed that partnership is of benefit for both parties as locals will bring capital and immigrants’ entrepreneurial skills and knowledge to reduce unemployment rate, grow economy, business sustainability and alleviate poverty. immigrant entrepreneurs are increasingly becoming the leading employers in sa’s economy (kongolo 2010). however, crush, skinner and stulgaitis (2017) pointed out that government is yet to acknowledge that immigrant retail business owners make a valuable contribution to the economy of the country, through job creation for some south africans. south african participants interviewed in this study believed that retail shops owned by immigrants have not jeopardised opportunities for south africans by joining the retail market but have created jobs for some south africans who are unable to find jobs in large businesses especially those with no tertiary qualifications. it is interesting that majority of the immigrants hire people without capabilities and qualifications because they believe that an individual learns everything while doing the job. the participants mentioned that requirements for small business formation should be eased to allow potential entrepreneurs to join the industry particularly retail industry. garg and phayane (2014) posit that immigrant entrepreneurs can be used to support the entrance of young people into entrepreneurial activities by forging sustainable partnerships. with support from the government, many of these retail businesses could be increased to medium enterprises that employ more people (garg & phayane 2014). therefore, government should provide the needed passages and means to allow this sector to grow. through government programmes, immigrants with relevant skills needed by sa locals can positively help locals master these skills, but in order to benefit both parties, government support is required. based on this study, immigrant entrepreneurs have higher human capital talent and cognitive ability because of the early childhood preparation on entrepreneurship which is something that is lacking to mangaung locals to successfully manage business. the findings have revealed that the majority of locals only have little formal education compared to immigrants who additionally have experience, practical learning and entrepreneurial skills to exploit opportunities, and that hinders locals to successfully start and sustain business (jovanovic 1982; unger et al. 2011). therefore, immigrant entrepreneurs may have higher human capital talents (block & sandner 2009), which may be useful when transferring skill to local citizens and therefore, develop their entrepreneurial capabilities. with the findings, collaboration could change the low rate of young entrepreneurs in mmm. discussion the need to explore the contribution of immigrant entrepreneurs to entrepreneurial development stems from the unemployment and lack of entrepreneurial skills of most south african smmes, especially those in the retail sector. although smme owners and managers can use their resources to effectively share their expertise and experience with their employees in their stores, most of their employees are not willing to learn. apart from acute skills shortages, south african smmes have a substantial lack of the vital skills and expertise needed to run business effectively (hanclova et al. 2015). this lack of entrepreneurial skills and technological skills explains the limited activity of local enterprises, such as smme grocery stores and wholesalers in south africa. immigrant entrepreneurs contribute towards the development of the economy by creating employment for themselves and for south african citizens (kalitanyi 2007). however, immigrant entrepreneurs considered government support as a valuable tool when seeking to understand their contribution to job creation and to develop the local citizens’ entrepreneurial skills. as such, the results demonstrated that entrepreneurial skills transfer via in-store training influenced local citizens’ entrepreneurial mindset and decision to start businesses. moreover, interventions through several initiatives to promote collaborations with immigrant entrepreneurs might help to improve the growth of entrepreneurial development in order to expand the transfer of entrepreneurial skills amongst the local citizens. lastly, results demonstrated that skills can be transferred to local citizens who are willing to learn and start a business. this can be achieved through the intervention of government programmes and if strategies are developed to foster long-term bonds between immigrants and local citizens. utilising hct may assist immigrant entrepreneurs to impact entrepreneurial skills amongst locals through in-store training. in-store training emphasises the capacity to create and maintain business connections and to allow local citizens to adjust privately in the comfort of a business, as learning remains one of the potentialities of this training platform. government funding for this training is also required, to ensure that the transition of skills of high quality takes place. although rambe and mosweunyane (2017) argue that the growth of entrepreneurship is insufficient to reduce poverty; inequality amongst smmes is judged by increased entrepreneurial activity. the study acknowledged the great concern that the delay between the exponential growth of immigrant businesses (retail smmes) and the increasing levels of unemployment in south africa, amidst claims about the development of potential of smme, is the eradication of poverty in the society. the business collaboration is a more dependable way of rolling back the frontiers of poverty in this country. the findings indicate that the majority of smme owners or managers consider government funding to be a tool for skills transfer and entrepreneurial growth, and that there are strategies to be implemented amongst the government programmes initiated to assist and grow young entrepreneurs in south africa, not only for south africans, but also for immigrant entrepreneurs. hence, studies on immigrant entrepreneurial skills transfer have found that some sort of support is required (kalitanyi & visser 2010; khosa & kalitanyi 2015; ngota et al. 2017) for immigrant entrepreneurs to keep their businesses going in order to be able to create job opportunities for others, thereby creating an opportunity for skills transfer. seamless incorporation of collaboration will be a great aid in helping immigrants expand their businesses, and in this way, local entrepreneurs would also be able to gain entrepreneurial knowledge and skills. entrepreneurship policies and strategies should, therefore, not only consider the financial effects of government initiatives but also consider their contribution and how they can be used to facilitate the successful implementation of the development of entrepreneurship through cooperation. implications for further research the goal of this study was to assess the level of contribution of immigrants to develop the entrepreneurial skills of local citizens with the aid of skills, expertise and experience of immigrants. however, the research was confined to immigrant entrepreneurs and local people residing in mangaung, in particular bloemfontein, in the free state province. future research could also look at a diverse community of various employers who encourage entrepreneurship through different business environments such as social media sites, universities and colleges looking at the training programmes offered. future studies should focus more on strategies for easing regulations and policies on the creation of entrepreneurial skills and knowledge required to improve smmes, especially for young people. any study should mix traditional enterprises with virtual enterprises in order to establish and have a greater impact on the development of entrepreneurship skills amongst local people. recommendations this article seeks to contribute to entrepreneurial skills, knowledge and experience through integrated government programmes and through platforms such as in-service training. the seamless integration of collaboration would be a great help in assisting immigrants with their needs to grow their business, and in same way, local entrepreneurs will also be able to receive guaranteed training to develop their entrepreneurial skills and boost economy. the knowledge emanating from this article may assist in shaping the decision of prospective locals and immigrant entrepreneurs contemplating to collaborate with south african government. it may also assist in influencing the strategies for easing regulations and policies on the creation of entrepreneurial skills and knowledge required to improve smmes, especially young people in free state. therefore recommendations are as follows: promote collaboration policy promote a programme of cooperation that will be collected and issued to establish an environment that allows immigrant entrepreneurs to start up their enterprises. in addition, through government funding, business would register and pay tax that would lead to economic growth, poverty easing and job creation. the south african government should consider making it mandatory for immigrant entrepreneurs to partner with local smme businesses to encourage entrepreneurship amongst south africans. cooperation with immigrant entrepreneurs may also help boost the entrepreneurial activities of young people in sa. improve support structures it seems that south africans depend more on government aid than on refugees. immigrant entrepreneurs need to play their part in government policy to provide vocational training and expand entrepreneurship skills training to maintain a broad scope for entrepreneurship skills creation and implementation. ensure that a potential investment opportunity is more leveraged and that its appeal matches the needs of the public. the key is that the government must recognise that certain talents have an effect on business, whether they belong to future entrepreneurs or workers. immigrant entrepreneurs and governments also need to gain an awareness of the psychological, personal, social and cultural characteristics that can affect the decision of local people on entrepreneurship. conclusion there is no question that immigrant entrepreneurs create jobs. there are, therefore, exceptional things that locals should learn from immigrant small retail business owners. given the often undisclosed transferability of entrepreneurial skills by immigrant entrepreneurs as they have an impact on the country’s small retail sector, the study sought to assess the contribution of immigrant entrepreneurs on entrepreneurial development to determine how it affects the entrepreneurial development of south africans. it is with the dependability of the hct and the willingness of immigrant entrepreneurs, these can resolve the problem facing the nation and the value of developing entrepreneurship amongst south african people to minimise unemployment. furthermore, south african citizens with low level of human capital can gain some experience to incorporate the formal education they have to start and sustain the business through the integration of immigrant’s human capital. whilst positive feedback on the creation of entrepreneurship provides opportunities for expanded jobs, negative feedback scares locals and immigrant entrepreneurs from partnering because of the lack of trust and unfavourable policies. this can affect possibly the success of cooperation, hence government should, by all means, consider the views of immigrants as they will have a huge effect and support their economy, as entrepreneurship (smme) is evolving and improving the figures on unemployment, economy and developing entrepreneurship. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have influenced the writing of this research article. authors’ contributions l.y.m. conceptualised and wrote the literature review. l.m. helped with methodology and questionnaire construction, and c.c. helped with analysis and language issues. funding information this research received a grant from central university of technology, free state (grant number: 39362). data availability data sharing is applicable to this article as there were new data created in this study. disclaimer the expressed views and opinions in this article are those of the authors and do not necessarily reflect the official policy. references aaltonen, s. & akola, e., 2014, lack of trust: the main obstacle for immigrant entrepreneurship?, turku school of economics, university of turku, viewed 17 november 2020, from http://pyk2.aalto.fi/ncsb2012/aaltonen.pdf. adendorff, c. & halkias, d., 2014, ‘leveraging ethnic entrepreneurship, culture and family dynamics to enhance good governance and sustainability in the immigrant family business’, journal of developmental entrepreneurship 19(2), 1450008. https://doi.org/10.1142/s1084946714500083 akin, n., bostanci, b. & akyol, e.m., 2017, ‘examining of immigrant entrepreneurship studies in international literature by using social network analysis’, problems and perspectives in management 15(2), 500–508. https://doi.org/10.21511/ppm.15(si).2017.03 acs, z., 2006, ‘how is entrepreneurship good for economic growth?’, innovations, technology, governance, globalization 1(1), 97–107. https://doi.org/10.1162/itgg.2006.1.1.97 asoba, s.n. & tengeh, r.k., 2016, ‘challenges to the growth of african immigrant-owned businesses in selected craft markets in cape town, south africa’, investment management and financial innovations 13(3), 410–418. https://doi.org/10.21511/imfi.13(3-2).2016.14 block, j.h. & sandner, p., 2009, ‘necessity and opportunity entrepreneurs and their duration in self-employment: evidence from german micro data’, journal of industry, competition and trade 9(2), 117–137. https://doi.org/10.1007/s10842-007-0029-3 bosma, n., wennekers, s. & amorós, j.e., 2011, extended report: entrepreneurs and entrepreneurial employees across the globe, global entrepreneurship research association, london (gb). burnard, p., 1991, ‘a method of analysing interview transcripts in qualitative research’, nurse education today 11(6), 461–466. https://doi.org/10.1016/0260-6917(91)90009-y chamunorwa, w. & mlambo, c., 2014, ‘the unemployment impact of immigration in south africa’, mediterranean journal of social sciences 5(20), 2631. https://doi.org/10.5901/mjss.2014.v5n20p2631 charman, a., petersen, l. & piper, l., 2012, ‘from local survivalism to foreign entrepreneurship: the transformation of the spaza sector in delft, cape town’, transformation: critical perspectives on southern africa 78(1), 47–73. https://doi.org/10.1353/trn.2012.0035 chen, c.c., greene, p.g. & crick, a., 1998, ‘does entrepreneurial self-efficacy distinguish entrepreneurs from managers?’, journal of business venturing 13(4), 295–316. https://doi.org/10.1016/s0883-9026(97)00029-3 chrysostome, e. & lin, x., 2010, ‘immigrant entrepreneurship: scrutinizing a promising type of business venture’, thunderbird international business review 52(2), 77–82. https://doi.org/10.1002/tie.20315 cooper, d.r. & schindler, p.s., 2006, business research methods, 9th edn., mcgraw hill, boston, ma. crush, j., skinner, c. & stulgaitis, m., 2017, rendering south africa undesirable: a critique of refugee and informal sector policy (no. 79), southern african migration programme, waterloo, ontario, canada. fairlie, r.w., 2012, ‘immigrant entrepreneurs and small business owners, and their access to financial capital’, small business administration, 396, 1–46. fairlie, r.w. & lofstrom, m., 2014, ‘immigration and entrepreneurship’, in b. chiswick & p. miller (eds.), handbook on the economics of international immigration, elsevier, amsterdam, 877–912. fatoki, o.o., 2010, ‘graduate entrepreneurial intention in south africa: motivations and obstacles’, international journal of business and management 5(9), 87. https://doi.org/10.5539/ijbm.v5n9p87 fatoki, o., 2014, ‘immigrant entrepreneurship in south africa: current literature and research opportunities’, journal of social sciences 40(1), 1–7. https://doi.org/10.1080/09718923.2014.11893297 fatoki, o. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. https://doi.org/10.5539/ibr.v4n2p161 fatoki, o. & patswawairi, t., 2012, ‘the motivations and obstacles to immigrant entrepreneurship in south africa’, journal of social sciences 32(2), 133–142. https://doi.org/10.1080/09718923.2012.11893059 fox, n., 2009, using interviews in a research project, p. 26, the nihr rds for the east midlands/yorkshire & the humber, nottingham garg, a.j. & phayane, n., 2014, ‘impact of small businesses owned by immigrant entrepreneurs on the local community of brits’, journal of small business and entrepreneurship development 2(2), 57–85. glackin, c. & mariotti, s., 2012, entrepreneurship and small business management, prentice hall, pearson, nj. hanclova, j., doucek, p., fischer, j. & vltavska, k., 2015, ‘does ict capital affect economic growth in the eu-15 and eu-12 countries?’, journal of business economics and management 6(2), 387–406. https://doi.org/10.3846/16111699.2012.754375 henry, c., hill, f. & leitch, c., 2003, ‘developing a coherent enterprise support policy: a new challenge for governments’, environment and planning c: government and policy 21(1), 3–19. https://doi.org/10.1068/c0220 hisrich, r.d., peters, m.p. & shepherd, d.a., 2010, entrepreneurship with business plan pro cd-rom, l. custom (ed.), mcgraw-hill irwin, new york, ny. hohn, m.d., 2012, immigrant entrepreneurs creating jobs and strengthening the economy, usa immigration learning centre, washington d.c jovanovic, b., 1982, ‘selection and the evolution of industry’, econometrica: journal of the econometric society 50(3), 649–670. https://doi.org/10.2307/1912606 kalitanyi, v., 2007, evaluation of employment creation by african immigrant entrepreneurs for unemployed south africans in cape town, university of the western cape, cape town. kalitanyi, v. & visser, k., 2010, ‘african immigrants in south africa: job takers or job creators?’, south african journal of economic and management sciences 13(4), 376–390. https://doi.org/10.4102/sajems.v13i4.91 kalitanyi, v. & visser, k., 2014, ‘migration and migrants entrepreneurial skills in south africa: assets or liability?’, mediterranean journal of social sciences 5(14), 147–159. https://doi.org/10.5901/mjss.2014.v5n14p147 kenton, w., 2020, human capital, viewed 04 march 2021, from https://www.investopedia.com/terms/h/humancapital.asp. khosa, r.m. & kalitanyi, v., 2015, ‘migration reasons, traits and entrepreneurial motivation of african immigrant entrepreneurs’, journal of enterprising communities: people and places in the global economy 9(2), 132–155. https://doi.org/10.1108/jec-07-2014-0011 kongolo, m., 2010, ‘job creation versus job shedding and the roles of smes in economic development’, african journal of business management 4(11), 2288–2295, viewed 15 september 2018, from http://academicjournals.org.ajbm. landau, l.b. & jacobsen, k., 2004, ‘refugees in the new johannesburg’, forced migration review 19(1), 44–46. lemes, p.c., almeida, d.j.g. & hormiga, e., 2010, ‘the role of knowledge in the immigrant entrepreneurial process’, international journal of business administration 1(1), 68–79. https://doi.org/10.5430/ijba.v1n1p68 ligthelm, a.a., 2010, ‘entrepreneurship and small business sustainability’, southern african business review, 14(3), 131–153. lyon, f., sepulveda, l. & syrett, s., 2007, ‘enterprising refugees: contributions and challenges in deprived urban areas’, local economy 22(4), 362–375. https://doi.org/10.1080/02690940701736769 marvel, m.r., 2013, ‘human capital and search–based discovery: a study of high–tech entrepreneurship’, entrepreneurship theory and practice 37(2), 403–419. https://doi.org/10.1111/j.1540-6520.2011.00465.x marvel, m.r., davis, j.l. & sproul, c.r., 2016, ‘human capital and entrepreneurship research: a critical review and future directions’, entrepreneurship theory and practice 40(3), 599–626. https://doi.org/10.1111/etap.12136 mitchelmore, s. & rowley, j., 2010, ‘entrepreneurial competencies: a literature review and development agenda’, international journal of entrepreneurial behavior & research 16, 92–111. https://doi.org/10.1108/13552551011026995 nafukho, f.m., hairston, n. & brooks, k., 2004, ‘human capital theory: implications for human resource development’, human resource development international 7(4), 545–551. https://doi.org/10.1080/1367886042000299843 naudé, w., 2010, ‘entrepreneurship, developing countries, and development economics: new approaches and insights’, small business economics 34(1), 1–12. https://doi.org/10.1007/s11187-009-9198-2 naudé, w., 2013, promoting entrepreneurship in developing countries: policy challenges, p. 4, united nations university policy brief. 4, helsinki, finland. ngepah, n., saba, c.s. & mabindisa, n.g., 2021, ‘human capital and economic growth in south africa: a cross-municipality panel data analysis’, south african journal of economic and management sciences 24(1), a3577. https://doi.org/10.4102/sajems.v24i1.3577 ngota, b.l, rajkaran, s, balkaran, s. & mang’unyi, e.e., 2017, ‘exploring the african immigrant entrepreneurship-job creation nexus: a south african case study’, international review of management and marketing 7(3), 143–49. ngota, b.l., rajkaran, s. & mang’unyi, e.e., 2019, ‘african immigrant entrepreneurship: a catalyst for skills transfer’, academy of entrepreneurship journal 25(2), 1–20. nieman, g. & nieuwenhuizen, c., 2009, entrepreneurship: a south african perspective, van schaik, pretoria. nkealah, n., 2011, ‘commodifying the female body: xenophobic violence in south africa’, africa development 36(2), 123–136. ogbo, a. & agu, c.n., 2012, ‘the role of entrepreneurship in economic development: the nigerian perspective’, european journal of business and management 4(9), 1–12. pasek, j., 2012, writing the empirical social science research paper: a guide for the perplexed, university of michigan, viewed 04 march 2021, from https://www.apa.org/education-career/undergrad/empirical-social-science.pdf peberdy, s., 2017, competition or co-operation? south african and migrant entrepreneurs in johannesburg (no. 75), southern african migration programme, johannesburg, south africa. radipere, n.s. & dhliwayo, s., 2014, ‘an analysis of local and immigrant entrepreneurs in south africa’, international journal of advanced research in business 1(2), 34–39. rambe, p. & mosweunyane, l., 2017, ‘a poverty-reduction oriented perspective to small business development in south africa: a human capabilities approach’, african journal of science, technology, innovation and development 9(3), 289–302. https://doi.org/10.1080/20421338.2017.1322749 rasool, f. & botha, c.j., 2011, ‘the nature, extent and effect of skills shortages on skills migration in south africa’, sa journal of human resource management/sa tydskrif vir menslikehulpbronbestuur 9(1), 1–12. https://doi.org/10.4102/sajhrm.v9i1.287 shinnar, r.s. & nayır, z.d., 2019, ‘immigrant entrepreneurship in an emerging economy: the case of turkey’, journal of small business management 57(2), 559–575. https://doi.org/10.1111/jsbm.12408 simelane, s.e., 1999, trend in international migration: migration among professionals, semi-professionals and miners in south africa, 1970–1997, directorate of analysis, statistics south africa, pretoria. stokes, d., wilson, n. & mador, m., 2010, entrepreneurship (391), cengage learning emea, hampshire. tengeh, r.k., 2013, ‘advancing the case for the support and promotion of african immigrant-owned businesses in south africa’, mediterranean journal of social science 4(2), 347–359. https://doi.org/10.5901/mjss.2013.v4n2p347 tengeh, r.k., ballard, h. & slabbert, a., 2012, ‘do immigrants-owned businesses grow financially? an empirical study of african immigrant-owned businesses in the cape town metropolitan area in south africa’, african journal of business management 6(19), 6070–6081. https://doi.org/10.5897/ajbm12.010 tengeh, r.k. & nkem, l., 2017, ‘sustaining immigrant entrepreneurship in south africa: the role of informal financial associations’, sustainability 9(8), 1396. https://doi.org/10.3390/su9081396 tharpe, w., 2015, immigrants help chart georgia’s course to prosperity, viewed 09 april 2017, from https://gbpi.org/wp-content/uploads/2015/12/immigrants-help-chart-course-to-prosperity.pdf. thomas, h., smith, r.r. & diez, f., 2013, human capital and global business strategy, cambridge university press, cambridge. times live, 2015, ‘minister lindiwe zulu: small business development department budget vote 2015/2016’, times live, 20 may, viewed 23 november 2018, from http://timeslive.co.za. undiyaundeye, f. & otu, e.a., 2015, ‘entrepreneurship skills acquisition and the benefits amongst the undergraduate students in nigeria’, european journal of social science education and research 2(3), 9–14. https://doi.org/10.26417/ejser.v4i1.p9-14 unger, j.m., rauch, a., frese, m. & rosenbusch, n., 2011, ‘human capital and entrepreneurial success: a meta-analytical review’, journal of business venturing 26(3), 341–358. https://doi.org/10.1016/j.jbusvent.2009.09.004 van aardt, i., van aardt, c., bezeuidenhout, s. & mumba, m., 2008, entrepreneurship and new venture management, 3rd edn., oxford university press, south africa. venter, r., urban, b. & rwigema, h., 2012, entrepreneurship: theory and practice, 3rd edn., oxford university press, cape town. vis, c., 2012, ‘education women entrepreneurs in kigali, rwanda, expanding capabilities for enhancing entrepreneurship in a socially just context’, master’s thesis, university of amsterdam. wuttaphan, n., 2017, ‘human capital theory: the theory of human resource development, implications, and future’, rajabhat journal of sciences, humanities and social sciences 18(2), 240–253. xiang, d. & worthington, a.c., 2013, ‘the impact of government financial assistance on smes in australia during the gfc’, journal of griffith business schools 7, 2–5. abstract introduction literature review methodology findings and discussion conclusion acknowledgements references appendix 1 about the author(s) maddison-lee brinkley department of business management, university of pretoria, south africa ingrid le roux department of business management, university of pretoria, south africa citation brinkley, m-l. & le roux, i., 2018, ‘coaching as a support function for potential entrepreneurs’, the southern african journal of entrepreneurship and small business management 10(1), a99. https://doi.org/10.4102/sajesbm.v10i1.99 original research coaching as a support function for potential entrepreneurs maddison-lee brinkley, ingrid le roux received: 15 aug. 2016; accepted: 20 july 2018; published: 30 aug. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: there is a longstanding debate on whether the practice of coaching support is useful for entrepreneurs who lack the skills and assistance needed to make a success of their businesses. aim: to gain a better understanding of the benefits derived from coaching support, this study explores the debate on whether coaching is useful as a support function for entrepreneurs. setting: entrepreneurs who participated in a support intervention programme to assist them with the development or growth of their business. methods: this study employed a qualitative research design and used 12 semi-structured, face-to-face interviews that were conducted with entrepreneurs from the pretoria region, who received support intervention for business purposes between august and october 2015. results: the study found that confusion still exists around the concepts of coaching and mentoring. furthermore, it was found that both mentoring and coaching are useful as a support function for entrepreneurs, as evidenced through the benefits derived from the intervention. these benefits mainly include the development of skills, particularly of 21st-century skills, new perspectives, enhanced communication, increased self-awareness and learning, and were facilitated by learning. conclusion: both mentoring and coaching can benefit potential entrepreneurs; however, each form contributes different benefits. coaching contributes to the self-development of entrepreneurs, whilst mentoring assists in the development of managerial functions needed to successfully start and grow a business. it is clear that these different forms of support intervention aid in developing different skills, and therefore, entrepreneurs should articulate their required needs before engaging support. introduction it is well documented that entrepreneurial skills are becoming increasingly important for survival and future entrepreneurial and business success as well as job creation. this is especially true in today’s dynamic and competitive environment in which entrepreneurs are faced with greater market and competitive pressures (dobrea & maiorescu 2015:249). entrepreneurs often lack the tools and support needed to grow a successful business and turn to coaching to provide support for the future success of their business (audet & couteret 2012:516; crompton & smyrnios 2011:11). coaching is used as a support function for entrepreneurs and an important development tool for entrepreneurs (dobrea & maiorescu 2015:248; fielden & hunt 2011:354; saadaoui & affess 2015:56). however, there is little research on the perceived benefits derived from a coaching as a support intervention in the small-to-medium enterprise or emerging entrepreneurial environment (audet & couteret 2012:516; crompton & smyrnios 2011:2; saadaoui & affess 2015:55). furthermore, it is important to note that previous academic research has explored coaching on a theoretical basis more than on an empirical basis (kutzhanova, lyons & lichtenstein 2009:195), and more research is needed to investigate the effectiveness of coaching specifically in the entrepreneurship and small and medium-sized enterprises (sme) realm (kim & kuo 2015:169; mühlberger & traut-mattausch 2015:199). coaching is seen as a support function for individual support, based on an interpersonal relationship that facilitates learning (audet & couteret 2012:516; kutzhanova et al. 2009:207). literature on coaching also highlights the fact that coaching only provides a support structure and does not to do the work for the entrepreneur (audet & couteret 2012:520). furthermore, coaching is used as a means to empower the entrepreneur and encourage the entrepreneur to think more strategically and arrive at solutions on their own (audet & couteret 2012:528; wakkee, elfring & monaghan 2010:6). coaching is thus used in the skills development process and ultimately to improve organisational growth, financial performance and firm performance through derivation of the practical benefits of coaching (crompton & smyrnios 2011:18; dobrea & maiorescu 2015:258; kutzhanova et al. 2009:195–196). however, literature also outlines the roles of coaching which include coaches acting as sounding boards, listeners, advisors, counsellors, skill enhancers and facilitators of learning and development (crompton & smyrnios 2011:4; dobrea & maiorescu 2015:245). such roles aid in the processes of development and goal setting and provide focus and direction for entrepreneurial focus on processes and issues relating to their business (wakkee et al. 2010:7). previous research has focused mostly on executive coaching and mentoring rather than business coaching for entrepreneurs (dobrea & maiorescu 2015:248; koopman 2013:3; kutzhanova et al. 2009:196). therefore, it created a platform for a debate on whether coaching is useful in skills development and as a support function for the small-to-medium enterprise, as well as emerging entrepreneurs. the aim of this study was to address and develop a better understanding of the gap that exists in the literature on whether coaching is useful as a support function for entrepreneurs and to better understand the perceived benefits derived from coaching support. the study adds value by contributing to the debate on coaching as a support function and is qualitative in nature. the study aimed to answer the following two research questions, namely: what perceived coaching support was received by participants? what perceived benefits were derived from the support intervention received? the rest of the article is structured as follows: firstly, existing literature that focuses on the entrepreneur, the nature and importance of coaching and the perceived benefits of coaching as a support function is reviewed. a discussion of the methodology with particular reference to the research design, sampling, the data collection method, method of data analysis and the criteria to ensure trustworthiness follows. the findings of this study are then reported and discussed. this section of the paper reports on the participants’ reflection on their support intervention experiences. lastly, the article is concluded with a summary of the findings and theoretical implications, managerial implications, and limitations and recommendations for future research. literature review the nature and importance of entrepreneurship an entrepreneur can be defined as a person who starts a business venture through the identification and exploitation of an opportunity, by gathering resources and bearing the risk of failure (nieuwenhuizen & nieman 2009:9). similarly, entrepreneurship is a venture undertaken by an entrepreneur who assumes the risk of the discovery and exploitation of an opportunity (wolf, kaudela-baum & meissner 2011:243). entrepreneurship is important for economic development and performance as it relates to productivity, wealth and job creation, innovation and competitiveness (adekunle 2011:363; kuratko, morris & schindehutte 2015:1; spencer, kirchhoff & white 2008:9). however, despite the importance of entrepreneurship, entrepreneurial ventures are susceptible to failure. entrepreneurial ventures fail because of a lack of business knowledge or learning, poor planning, a lack of appropriate skills, poor management, poor finance management and inability to reach goals (freiling & laudien 2013:2–3; hammer 2012:3; urban 2012:17). entrepreneurs are facing rapid changes in environmental, economic, market and competitive pressures and, because of these pressures, they seek faster and better ways of keeping up with the pace of change (crompton 2012:22; international coach federation n.d.). entrepreneurs want to receive advice on matters such as planning, strategy and marketing, and learn how to engage in high-level thinking (crompton 2012:20). furthermore, it is essential for entrepreneurs to continuously develop their skill set in the face of changing environmental pressures (mazra & guy 2012:293). companies are no longer achieving results through traditional management approaches and need to develop inclusive and collaborative working environments. as a result, entrepreneurs seek support to assist them in overcoming these various challenges, improving efficiency, achieving future success and developing necessary skills (audet & couteret 2012:516; crompton & smyrnios 2011:11; international coach federation n.d.; lamine, mian & fayolle 2014:537). coaching is used by entrepreneurs as a development tool and a mechanism for support that encourages the high-level thinking necessary to be successful in their endeavours now and in the future (audet & couteret 2012:516; crompton & smyrnios 2011:11; dobrea & maiorescu 2015:248; fielden & hunt 2011:354; saadaoui & affess 2015:56). the nature and importance of coaching the notion of coaching is not a new phenomenon. previous literature highlights definitions of coaching as a means to assist people in developing the necessary knowledge, opportunities and tools needed for adequate growth (feldman & lankau 2005:830). the international coach federation (icf) (n.d.) defines coaching as ‘partnering with clients in a thought-provoking and creative process that inspires them to maximize their personal and professional potential’. similarly, vidal-salazar, ferrón-vilchez and cordón-pozo (2012:424) define coaching as a management practice that encourages personal development and fosters sustainable economic growth. audet and couteret (2012:516) offer a conceptualised definition of coaching as a support structure that facilitates learning and development of potential. other definitions of coaching include coaching as a process of facilitating growth and change (moore et al. n.d.:33) and coaching as a tool for self-development for increased effectiveness and fulfilment (centre for coaching 2015). for the purpose of this paper, coaching is defined as the support for emerging entrepreneurs in the start-up phase of their business, with the aim of development or improvement of the necessary skills required for independence and future success (audet & couteret 2012:516; saadaoui & affess 2015:55). coaching differs from other managerial tools used to aid the entrepreneur such as consultancy and mentoring. it is important that a distinction be made between these terms. consultancy does not facilitate learning, unlike coaching which creates and facilitates a learning environment. coaching does not provide ‘ready-made answers to specific problems’ (audet & couteret 2012:516) but rather allows and encourages the entrepreneur to overcome problems through their own problem-solving processes (audet & couteret 2012:516; mühlberger & traut-mattausch 2015:202; rosha 2013:124). coaching and mentoring are often used interchangeably in literature (crompton 2012:33; koopman 2013:11), owing to the fact that the two methods are almost the same. both these methods encourage an individual to solve problems themselves (audet & couteret 2012:516). however, mentoring is perceived as a voluntary relationship with a long-term focus on the overall business endeavour. the purpose of mentoring is to assist entrepreneurs in broadening their personal horizons and teaching them how to be an entrepreneur. for the purpose of this paper, mentoring is defined as a formal process of advice or support given by a person who has experience and knowledge to another person who is lacking in such experience and knowledge (arkün kocadere 2015:1). coaching, on the other hand, is perceived as a business relationship with a short-term focus on assisting entrepreneurs in improving business performance through the development of specific skills and goal achievement, for the purposes of growth and success (audet & couteret 2012:516–517; crompton 2012:33; koopman 2013:3; mckevitt & marshall 2015:264). several types of coaching exist in literature and needs mentioning. these types can be categorised as executive coaching, business coaching, personal coaching and entrepreneurial coaching. however, the focus of this study is on entrepreneurial coaching. nevertheless, the concept of coaching generally remains the same regardless of the context (wilson 2014:8). therefore, for the motivation of this paper, theory was drawn from all contexts to provide supporting arguments. the roles of the coach the roles of coaching, as well as the roles of coaches, are highlighted throughout literature. a coach can perform various roles such as improving job performance, assisting in the development of strategic plans, inspiring entrepreneurs to reach higher levels of personal and professional potential, assisting the entrepreneur in defining his or her limitations, and providing guidance, support, accountability and encouragement (crompton & smyrnios 2011:4; kutzhanova et al. 2009:207; lavryk 2013:142; lawless 2009:41; rosha 2013:124). the coach provides support that creates the opportunity for an entrepreneur to acquire or enhance skills for specific tasks (bax, negrutiu & calota 2011:5; crompton & smyrnios 2011:4; rosha 2013:124), by facilitating learning and development, and assisting an individual in the formation of new strategies for thinking (bax et al. 2011:5; crompton & smyrnios 2011:4; kutzhanova et al. 2009:207). the aim is to help the entrepreneur develop the critical ability to step back from a situation and to think about the learning process (audet & couteret 2012:518). coaches provide guidance towards a better focus on organisational issues and processes and facilitate change (botma 2012:7; wakkee et al. 2010:7) by guiding the entrepreneur into a situation where he or she becomes aware of his or her incompetencies, which becomes necessary for implementing corrective measures. entrepreneurs are taught to see themselves realistically and reflect on their behaviour and how others perceive their actions, which is achieved through inner potential exploration, learning and self-awareness (bachkirova, arthur & reading 2015:185; crompton 2012:28; lawless 2009:10; vidal-salazar et al. 2012:426). the coach provides a structure that does not allow the coach to do work for the entrepreneur, but rather a structure that will facilitate problem-solving and encourage entrepreneurs to derive their own solutions (audet & couteret 2012:516; koopman 2013:5). this solution-focused approach uses thought-provoking questioning that encourages entrepreneurs to change their thinking by challenging their underlying assumptions and allowing entrepreneurs to work through challenges that they perceive as opportunities rather than as problems (crompton 2012:50; crompton, smyrnios & bi 2014:17; nikolova et al. 2014:86). the coach may act as a sounding board for entrepreneurs with the purpose of challenging their thinking and encouraging more strategic thinking for the exploration of alternative perspectives (gray, ekinci & goregaokar 2011:864–865). in this way, coaches are expected to listen and create a safe space for sharing and discussion of problems and opportunities (crompton 2012:150; nikolova et al. 2014:86). perceived benefits of coaching coaching has an important place in the world of business as a useful tool in jobs that require learning (saadaoui & affess 2015:55; vidal-salazar et al. 2012:426). however, there is little research on the effect of or usefulness of coaching in the small-to-medium enterprise or emerging entrepreneurial environment (audet & couteret 2012:516; crompton & smyrnios 2011:2; gray et al. 2011:865; saadaoui & affess 2015:55). however, literature does acknowledge that coaching is effective, specifically because of its ability to meet the unique needs and expectations of entrepreneurs. coaching increases the effectiveness of improvement procedures, efficiency, development of entrepreneurial behaviours, self-confidence, capacities, new knowledge and skills and ultimately assists in achieving desired ends (saadaoui & affess 2015:55; vidal-salazar et al. 2012:430; wakkee et al. 2010:3). entrepreneurs are more open to innovation and change within their business, which may be essential for the growth and sustainability of the business (chaudhry 2015). other benefits include new perspectives, increased productivity and performance, goal attainment, life and work satisfaction and fulfilment, better quality of work, increased adaptability, enhanced communication, increased self-awareness and increased leadership effectiveness (centre for coaching 2015; international coach federation n.d.; london deanery 2014; mineur 2012:12). coaching works to execute planning and preparation, define expectations and responsibilities and provide support in an attempt to positively, effectively and permanently influence entrepreneurs and their businesses (centre for coaching 2015; crompton & smyrnios 2011:7). literature further shows that coaching has an important bearing on important factors such as self-efficacy, growth and performance, skills development, goal setting and planning, and personal and work life. self-efficacy entrepreneurial self-efficacy refers to the strengths of an individual’s belief that he or she has the capability of performing the roles and tasks of an entrepreneur and represents what the individual thinks he or she can realise with his or her skills (bullough & renko 2013:345; saadaoui & affess 2015:56; urban 2013:6–7). higher levels of self-efficacy result in higher levels of performance (bachkirova et al. 2015:179; wakkee et al. 2010:5). the reason for this is that individuals with higher levels of self-efficacy perceive their environment as having more opportunities and fewer risks, and are more inclined to put more effort into overcoming challenges and achieving their goals (hechavarria, renko & matthews 2012:689; urban 2013:4). self-efficacy increases the competence to identify and discover new opportunities, facilitates learning and contributes to improving the quality of planning and the development of both human and conceptual skills. the entrepreneur develops the capability of overseeing, managing and motivating employees, as well as the capacity to improve working conditions and business performance (hechavarria et al. 2012:688; saadaoui & affess 2015:59; urban 2006:3). self-efficacy can be enhanced as a result of learning facilitated through coaching and includes transferring knowledge and empowering the entrepreneur as a way of enhancing the individual’s belief in the possibility of success (audet & couteret 2012:516; urban 2006:3; wakkee et al. 2010:6). growth and performance business coaching has an impact on the growth and performance of an entrepreneur’s business (crompton et al. 2014:25). dobrea and maiorescu (2015:248) demonstrated that a company’s growth and financial performance were indeed an outcome of coaching. this is furthermore confirmed in the study conducted by crompton and smyrnios (2011:8–18). the participants revealed that between 5% and 50% of growth was attributable to coaching. the participants revealed that growth resulted because coaching provided them with the opportunity to consider other perspectives and options. coaching also contributed wisdom, experience, help and guidance. they concluded that coaching is positively related to growth and performance. further evidence is offered by the icf (n.d.), who claims that coaching maximises performance through improvement in business management and improved work performance. skills development skills can be viewed as the integration of knowledge and ability, within a perceived environmental area of application (kutzhanova et al. 2009:194). the concept of skill describes specific abilities of the entrepreneur. entrepreneurs develop different skills because of different experiences. skill development involves the transition of knowledge into behavioural processes of learning. coaching is important in the facilitation of learning to expand the knowledge of entrepreneurs. additionally, coaching is used as a development tool to teach the entrepreneur how to expand, learn and acquire skills and to develop and refine the skills and capabilities of the entrepreneur (anzengruber 2015:33; kutzhanova et al. 2009:194–205; lawton-smith 2007:2). goal setting and planning participating in coaching is associated with enhanced goal attainment (international coach federation n.d.). in the study conducted by lawless (2009:86–125), participants divulge that goal setting and planning made significant differences to their business. for these participants, planning was a means of prevention to the overreaction to daily events and assisted individuals in the control of their businesses. furthermore, the study revealed that coaching influences goal planning and achievement. coaching was used to narrow down goals to provide the entrepreneur with a more specific focus. mühlberger and traut-mattausch (2015:218) supported this notion in their study which reinforced the fact that coaching is effective for goal-related results and further revealed that coaching positively influenced goal attainment, and not only goal setting. personal and work life coaching can improve mental health, enhance the entrepreneur’s quality of life and increase job satisfaction and fulfilment (centre for coaching 2015). coaching affords entrepreneurs the opportunity to develop a broader perspective of the roles they should fulfill in their businesses and allows them to reflect on their existing knowledge. this reflection reveals limitations in the entrepreneurs’ skills and, consequently, their inability to cope with problems. coaching plays an important role in the self-learning process and includes features such as self-management (gray et al. 2011:877; kutzhanova et al. 2009:205). coaching helps participants manage change and carry out cognitive and emotional tasks, as it allows entrepreneurs to divulge confidential concerns, deficiencies and doubts (gray et al. 2011:874–877), which is found to be useful for entrepreneurs in the reduction of stress or loneliness (botma 2012:48–55). success in personal areas of an entrepreneurs’ life may provide the entrepreneur with greater organisational focus for long-term success (gray et al. 2011:874). summary of literature review it can be assumed that coaching is useful as far as it assists entrepreneurs in improving their self-efficacy; contributes to growth and performance; provides a positive learning environment that facilitates skills development; provides an effective means to planning, goal setting and goal achievement; and provides balance in the personal and work life of entrepreneurs. however, crompton (2012:169) notes that the benefits derived from coaching are difficult to express in quantifiable terms. rather than a measure of firm growth, benefits are generally determined by the satisfaction felt by the entrepreneur about the coaching experience and by his or her personal development throughout the process, and outcomes are generally difficult to quantify (bachkirova et al. 2015:178). therefore, for the purpose of the study, qualitative data are collected through semi-structured interviews to determine the benefits as perceived by the entrepreneurs. methodology as a result of the qualitative nature of this research and in order to understand how entrepreneurs interpret, construct and make meaning from their experiences, a generic qualitative research design was applied. this design was useful in developing and understanding the usefulness of coaching support and the benefits thereof. this study also sought to describe the coaching experience from an entrepreneur’s perspective and expand the current available knowledge on the usefulness of coaching as a support function (cooper & schindler 2014:15; vogt 2005:22). the questions included in the discussion guide can be found in appendix 1. the unit of analysis in this study was individuals who received support intervention for the purposes of learning and development. the sample consisted of 10 entrepreneurs (incubatees) who had received (perceived) coaching as a support intervention for business purposes from an incubator. an incubator can be defined as an environment that fosters the creation and the development of entrepreneurial businesses (anholon et al. 2016:66). two additional participants, who had received life coaching support from a professional coach, were included to form an experimental group. one was also an entrepreneur, whilst the other merely received life coaching. the reason for the inclusion of the experimental group is that the researchers noticed that there was confusion between mentoring and coaching, such that the 10 incubatees had the perception that they were receiving coaching support, but had actually received mentoring support from the incubator, as noted in the findings section of the paper. a total of 12 individuals from pretoria participated. snowball sampling and purposive criterion sampling were employed to identify and specify particular predetermined criteria to be possessed by participants (guest, bunce & johnson 2006:61; plano clark & creswell 2015:334; polit & beck 2012:519–523). participants were chosen based on prior experiences with coaching for business purposes and being an entrepreneur. twenty-one letters of introduction were sent out to potential participants. fourteen participants responded. semi-structured interviews were conducted with 12 of the 14 participants who responded to the invitation to participate. thematic analysis was used to systematically identify, organise, analyse and report patterns or themes within the data and allowed the researchers to make sense of the coaching experiences of entrepreneurs (braun & clarke 2006:79, 2012:57). the data were coded by inductively assigning codes or labels to describe text segments of the transcripts. each code identified was relevant to the research questions. each theme in this paper can be defined using the sub-themes and respective codes, which reflect any meaningful patterns evident from the data. findings and discussion the aim of this study was to address and develop a better understanding of the gap that exists in literature on whether coaching is useful as a support function for entrepreneurs and to better understand the benefits derived from the received support intervention. figure 1 shows the total number of responses that correspond with each theme, as well as the number of coded responses that were contributed by the incubatees and those that were contributed by the experimental group. figure 1: graph showing total coded responses per theme. the graph shows the main themes that emerged in this research, namely: coaching, mentoring, the confusion between coaching and mentoring, 21st-century skills and learning. furthermore, the graph also shows the contributions of the incubatees and the experimental group to each theme. the section following the graph discusses the findings of this research. coaching the finding in this section deals with the coaching support contribution that participants received. in analysing the 448 coded responses, it was found that 140 were applicable to coaching, which can be described as a self-development tool for increased effectiveness and fulfilment (self-velopment), and as a support intervention that assists in the maximisation of personal and professional development (coaching contribution) (centre for coaching 2015; international coach federation n.d.). therefore, the main theme of coaching is supported by the sub-themes of coaching contribution and self-development. the coaching intervention included participants telling their coach about what was going on in their lives, what they were struggling with and what they were trying to achieve in terms of improvement. in addition to this, and in line with literature, the data showed that coaching was an open conversation that provided participants with a person who listened to them and a safe space where participants were able to speak freely without fear of judgement (crompton 2012:15; kim & kuo 2015:154; nikolova et al. 2014:86). the coaching intervention worked to provide direction to participants and empower them through a process of self-learning that allowed them to find their own solutions. this is also in line with literature that suggests that coaching does not merely provide the answer to the problem, but rather allows the individual to derive their own solution (audet & couteret 2012:516; mühlberger & traut-mattausch 2015:201–202; o’flaherty 2003:2; rosha 2013:124). one participant reported on this process: ‘with coaching, it’s all about you … your own steps … your own outcomes… you are in control … not exactly telling you how to do it … you set your own goals and how you want to go about it, they (the coach) are just there to support.’ (p12, female, experimental coachee) furthermore, and in line with literature, the intervention revolved around building specific competencies or skills that assisted participants in the discovery of limitations that prevented improvements and developing a self-correcting ability whilst removing self-doubt (kim & kuo 2015:157; lawless 2009:10; o’flaherty 2003:2). one participant identified the use of coaching on limiting behaviour: ‘receiving coaching … is actually to get rid of those inhibitions and limitations that limit you to operate at your highest ability…. i realised there was certain ways i acted that was limiting to my business and my behaviour, and through coaching i could remove those.’ (p11, male, experimental coachee) thus, as the literature suggests, self-awareness was created by providing the participants with the opportunity for reflection about limiting behaviours and the effect of such behaviours on those around them (bachkirova et al. 2015:185; crompton 2012:28; lawless 2009:10; vidal-salazar et al. 2012:426). deriving one’s own solutions and increased self-awareness were two reported outcomes of the self-development process experienced by participants. participants also reported self-development through increased responsibility and emotional intelligence, improved communication skills and higher levels of confidence, all of which support coaching literature (bachkirova et al. 2015:185; mühlberger & traut-mattausch 2015:200; international coaching federation n.d.). participants reported improved confidence on abilities such as risk-taking, decision-making, leadership, talking to people and in one’s own capabilities. for example, one participant reported gaining confidence in various ways: ‘confidence in your capabilities…. i am very much confident in the decisions i’m making right now because … i am well informed…. before coaching, i’ll doubt myself, but now i’m more confident in my leadership skills.’ (p12, female, experimental coachee) although these findings suggest that coaching is useful as a support function and offers several benefits such as self-development and increased confidence, it should be noted that 59 out of the 138 coded responses that contributed to the theme of coaching were responses from the two experimental participants (p11 and p12) who received coaching from a qualified coach using a specific growth model to develop the person. this suggests that the group of incubatees were not the recipients of a coaching intervention. mentoring mentoring was identified as a second main theme in the study, with a total of 133 coded responses. the three sub-themes, namely: structure, mentorship contribution and generic lessons, supplement the definition of mentoring which can be defined as a formal process (structure) of advice or support given by a person who has experience and knowledge to another person who is lacking in such experience and knowledge (mentorship contribution) (arkün kocadere 2015:1). in addition, mentoring is focused around teaching entrepreneurs in general and does not address individual-specific needs that teach specific skills (generic lessons) (audet & couteret 2012:516–517). the majority of the participants of the study reported that the formal intervention was an organised and structured process that assisted them with planning and management, developing goals and visions and provided them with focus that they were able to achieve through particular steps. a formal intervention provides such structure (desimone et al. 2012:104). one participant confirmed that the formal intervention provided structure and assisted in planning: ‘… helps you to be organised, to be structured, and to optimise your resources and your talents…. it’s (intervention) helped me quantify certain processes in business…. planning, for example.’ (p4, male, incubatee) the participants also referred to the various characteristics of mentorship that they encountered during the intervention process. these characteristics are evident from literature and included receiving idea feedback and development, advice, guidance, encouragement and motivation, and a business world perspective from someone with knowledge and experience (gordon 2015:7–10; koopman 2013:3; mühlberger & traut-mattausch 2015:202; o’flaherty 2003:1–3). the following quote sums up some of these mentorship characteristics: ‘sharing with us what other successful entrepreneurs that went through this process have done and where they have been … we see that it’s possible … makes us believe more and become more motivated.’ (p6, male, incubatee) in addition, most of the incubatees reported receiving generic lessons in which they all attended the same classes, and their one-on-one sessions with their mentor followed the same general process. one participant reported that all incubatees received lectures on the following: ‘introduction into the business incubator and then the business model canvas … on financial stuff like the budget, the statement of financial position and everything, looking at the financial components of the business … on marketing skills, and then that also further in included presentation skills.’ (p3, female, incubatee) the data suggest that the intervention did not necessarily teach specific skills to address specific needs of the participants. rather, the intervention taught skills in a more general sense by teaching the participants how to be entrepreneurs and how to start up and run their businesses, unlike coaching, which according to literature, aims to teach specific skills to address specific needs of the participants (audet & couteret 2012:516–517; centre for coaching 2015; crompton & smyrnios 2011:7). almost all the coded responses for this theme were responses from the incubatees. therefore, it is evident that what the incubatees received was synonymous with mentoring in that they took part in a structured and somewhat generic process, which offered several benefits such as idea feedback and support, encouragement, motivation and advice, in addition to receiving a real business world perspective from individuals with industry experience. thus, it can be concluded that mentoring played a significant role in teaching the participants what it takes to be an entrepreneur and was therefore useful to the incubatees in this regard. although the incubatees received mentoring, they referred to the intervention support as coaching; this suggests that there is confusion between the two concepts. confusing coaching and mentoring upon analysis of the data, the researchers found that in the open question asked to define coaching and mentoring, it was evident that four of the incubatees were able to describe the terms mentorship and coaching as separate concepts that are in line with the literature. mentorship is described as a long-term voluntary relationship in which the mentor takes the mentee ‘under their wing’ to teach the mentee from the mentor’s own experience. the focus is on the overall business endeavour, in this case, the endeavour of starting up a business. on the other hand, coaching is described as an intervention with a more short-term focus with the aim of providing individual support and guiding an individual through a thought-provoking process of self-development (crompton 2012:50; kim & kuo 2015:157; mckevitt & marshall 2015:264; o’flaherty 2003:3). for example, one participant explained this difference: ‘coaching … is a sort of intimate instruction … we’re talking about a guided experience … a mentor is someone with industry experience who takes you under the wing to actually teach you the ropes … they don’t do it for a profession.’ (p4, male, incubatee) however, when the incubatees reported on their actual experience of the support intervention they had received, it was evident that some confusion exists. of the 111 coded responses regarding the support intervention contribution for incubatees, 72 described mentoring experiences whilst only 39 described coaching. these findings support the literature on the confusion between the definitions and the purposes of coaching and mentoring. generally, there is a lack of consensus about the meaning of coaching and mentorship, and the two terms are often used interchangeably throughout literature (crompton 2012:33; koopman 2013:10–11). six of the incubatees reported that they believed that there was no difference between mentorship and coaching, for example, when asked if participants had different definitions of the two terms, one incubatee said: ‘no, i don’t think so. i think a mentor and a coach for me would be quite similar.’ (p7, male, incubatee) interestingly enough, although the four other incubatees could accurately describe the difference between mentorship and coaching, the data suggest that they believe that they had received coaching, when in fact, they mostly received mentoring support. furthermore, these four incubatees also used the terms interchangeably. the following quote summarises the interchangeable use of coaching and mentoring by an incubatee who was initially able to explain the difference: ‘whether in the form of mentorship or structured coaching … you require coaching … we had private sessions with the incubator mentors or coaches.’ (p4, male, incubatee) it can be deduced that there is still some confusion around the difference in meaning of coaching and mentoring support because participants referred to mentorship as coaching and vice versa, even when they believed that they knew the difference. it is possible that confusion stems from the fact that according to participants, the two forms of intervention are almost the same, because both forms of intervention encouraged them to solve problems and do the work themselves. however, according to the literature, coaching differs in the regard that coaching is focused on finding the reason behind the problem (audet & couteret 2012:33; koopman 2013:4), whilst mentoring in this study places more of a focus on improving business activities. twenty-first-century the fourth theme and an unexpected finding that emerged from the coding was that of 21st-century skills. although participants were not specifically asked about these skills, they were a by-product of the interview conversation. the number of coded responses for this theme totalled 109 responses, making it the third most often occurring theme. as the name suggests, 21st-century skills are the specific skills needed for survival in the 21st century. these skills include creativity, collaboration, critical thinking, communication skills, social and cultural skills, problem-solving, entrepreneurial skills, and information and technological skills (allen & van der velden 2012:12–13; barell 2010:197; boyles 2012:42). participants reported on collaborations, problem-solving, critical thinking and entrepreneurship. these four skills are the sub-themes that make up the main theme of 21st-century skills. collaborations result from cooperative encounters that could potentially result in new innovations (boyles 2012:47–48). participants reported that they were given the opportunity to share their ideas with other incubatees, with other like-minded individuals at the innovation hub, and with potential investors. problem-solving requires the identification, interpretation and inquiry (barell 2010:188; boyles 2012:51). participants reported improved decision-making and applying lessons learned during the intervention in their daily lives, for example: ‘… now i take informed decisions now, very informed decisions…. so i think i will think things through before i decide, and i will be more objective when i do things.’ (p12, female, experimental coachee) participants were able to develop entrepreneurial skills and capabilities needed for the success of their business. these skills are essential to entrepreneurial ability and include the ability to better identify opportunities and increase or improve the risk-taking ability to pursue opportunity (boyles 2012:42; nieuwenhuizen & nieman 2009:9; wolf et al. 2011:243). participants reported developing risk-taking ability and the ability to see an opportunity through increased confidence. finally, critical thinking provides the opportunity to take a step back from a situation and analyse the situation to clarify the learning process (audet & couteret 2012:58; barell 2010:189). participants’ thinking was challenged in this way so that they think more critically. critical thinking was developed when participants were given the opportunity to think differently, outside of the box and more realistically. one participant reported that the intervention: ‘it helps you to just see past the problem and say: listen, what are we trying to achieve?’ (p7, male, incubatee) however, it seems that because most of the coded responses emerged from the incubatee group, mentoring contributed to the development of 21st-century skills, more than that of coaching. nevertheless, all participants benefited from the development of several skills regardless of the intervention received. literature supports the notion that the development of skills is transferred through knowledge that can be expanded by intervention support which facilitates learning (anzengruber 2015:33; kutzhanova et al. 2009:194–205; lawton-smith 2007:2). learning learning was the final theme identified by the researchers. all 12 participants reported learning as an outcome of the intervention. learning contributed 58 of the responses. learning is an important reason for seeking support intervention because it assists in decreasing gaps in knowledge and developing or acquiring new skills that will further capabilities (anzengruber 2015:33; kutzhanova et al. 2009:194–205; lawton-smith 2007:2; mühlberger & traut-mattausch 2015:200). participants reported learning from people with experience, learning by expanding their knowledge, learning in a more practical way and repetitive and continuous learning. the following quote reports one participant’s reason for seeking support intervention: ‘i wanted to learn more on how it is in the field, and not necessarily a textbook…. i can read a textbook, so i wanted to hear from someone in the business.’ (p10, female, incubatee) it is evident that the support that participants received during the intervention process was supplemented by learning, an important development tool for adult learners who were able to broaden their knowledge horizons and develop new skills. the data show that practical learning was achieved through the classroom experience and one-on-one sessions, confirming that adult learners would prefer to learn from someone who has additional insights and experience rather than learn from a textbook. based on the findings presented above, the researchers concluded that the support intervention resulted in a definite overlap between mentoring, coaching, 21st-century skills and learning. figure 2 shows the resulting overlap. figure 2: overlap framework. the overlap between coaching and mentoring provides evidence that there is a lack of consensus between the two forms of intervention which stems from the confusion in literature and possibly the lack of understanding about the different approaches of the facilitators of the intervention. furthermore, the overlap also indicates that support intervention programmes may draw from the contexts of other types of support interventions to support or strengthen the process. for example, the 10 incubatees who received mentoring also reported increased confidence and more enhanced emotional intelligence, which are characteristics synonymous with self-development and ultimately coaching. although coaching and mentoring addressed different issues, both forms of interventions contributed to learning. learning was achieved through a structured process with a set of steps (mentoring) and through a self-exploration process in which participants took their own steps through the process (coaching). what is interesting is that, all the learning that was gained from the support interventions in this study can be linked to 21st-century skills. the researchers developed the framework shown in figure 3 to show the link between coaching, mentoring and 21st-century skills, as well as the main benefits reported by the participants. figure 3: linking framework. another interesting finding in this study is the fact that mentoring, which provided structure that assisted with planning, management and organisation skills through guidance, feedback and motivation from the mentor was largely associated with 21st-century skills, more than that of coaching; this overlap is shown in figure 2. mentoring has the ability to quickly transfer and integrate 21st-century skills into an entrepreneurial business (le roux 2015:15). mentoring played a large role in the development of 21st-century skills such as critical thinking, problem-solving, collaborating and entrepreneurial skills, which have become increasingly important for survival in the rapidly changing environment that entrepreneurs are faced with today. furthermore, and although it was not an intention of the study, the two forms of support interventions contributed to the development of seven of the eight main 21st-century skills. therefore, the value of coaching and mentoring as support functions in assisting start-ups and novice entrepreneurs, linking governmental goals of creating a new business, can no longer be ignored. however, a clear distinction must be made between coaching and mentoring. furthermore, developing a business without focusing on self-development is not going to be beneficial in creating successful businesses. the role of coaching can no longer be underestimated and therefore incubatee managers should ensure both functions. conclusion this paper aimed to provide a better understanding of whether coaching is useful as a support function for entrepreneurs and to better understand the benefits derived from the received support intervention. based on the responses from 12 interviews, the researchers identified five predominant themes by exploring and understanding the support intervention experiences of the participants to determine what perceived coaching support was received. the study discovered that the participants, particularly the incubatees, perceived that they had received coaching support. however, upon comparison to the two participants from the experimental group, it is clear that the incubatees actually had received mentoring support. therefore, this research offers evidence for the notion that confusion still exists around the concepts of coaching and mentoring (koopman 2013:3). in addition, this study found that it was mostly mentoring that facilitated the development of the ever important 21st-century skills. this research illustrated that, regardless of the support intervention, learning was always an outcome, irrespective of whether it was through mentoring, coaching or the development of various skills (anzengruber 2015:33; bachkirova et al. 2015:185; kim & kuo 2015:157; kutzhanova et al. 2009:194–205; lawton-smith 2007:2; mühlberger & traut-mattausch 2015:220). this research provides valuable insight into the various benefits derived from learning that was facilitated by two separate types of support intervention. the study is one of few pieces of research that explored the effectiveness of coaching for entrepreneurs and showed that both coaching and mentoring were useful to the entrepreneurs of this study and has, therefore, contributed to the literature on both coaching and mentoring, the development of 21st-century skills, as well as the resulting overlap that suggests there might be a need for both mentoring and coaching. this study has provided positive evidence regarding the effectiveness of coaching, given the context of the study. this research shows that intervention is in fact useful as a support function and, therefore, has implications for consultants, managers and practitioners who can use the empirical evidence provided in this study to select an appropriate form of support intervention for either the development of practical skills through mentoring or self-development through coaching. furthermore, those who choose to use support intervention should be aware of the various types and different phases of intervention, as they serve different purposes and aid in the development of different skills (bachkirova et al. 2015:178; koopman 2013:2). limitations and recommendations for future research there is no study without limitations and it is the case in this study. firstly, the sample used is not representative of all entrepreneurs who have received support intervention. secondly, the results from the two participants who received coaching only support the notion that confusion exists amongst the concepts of coaching and mentoring and it cannot be used to generalise the usefulness of coaching as a support function for entrepreneurs. thirdly, the majority of the participants in this study were in the start-up phase of their businesses, had not yet completed the intervention programme or were still studying. the implication here is that participants were sometimes unsure of the potential benefits of the intervention, because they may not have yet transferred learning developments from the support intervention into their daily business lives. therefore, future research should consider expanding the selection of participants from other geographical areas and consider exploring the usefulness of the support intervention across different phases of coaching and incubation, for example, before, during and after the intervention (bachkirova et al. 2015:187; kim & kuo 2015:171; mühlberger & traut-mattausch 2015:217–221). future research should also consider using participants from different incubation programmes to determine whether the derived benefits are consistent across different programmes (bachkirova et al. 2015:178). furthermore, more comprehensive research to explore the usefulness of mentoring in the development of 21st-century skills should be considered. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions i.l.r. was the research supervisor, made conceptual contributions and contributed substantially to the research design, and m.b. made some conceptual contributions, conducted all the interviews and was largely responsible for the preparation and write up of the research. references adekunle, b., 2011, ‘determinants of microenterprise performance in nigeria’, international small business journal 29(4), 360–373. https://doi.org/10.1177/0266242610369751 allen, j. & van der velden, r.k.w., 2012, skills for the 21st century: implications for education, roa, maastricht university school of business and economics, maastricht university, netherlands. anholon, r., novaski, o., pinto, j.s. & porto, g.s., 2016, ‘knowledge management in incubated companies: proposal of a model to enhance managerial skills’, international journal of knowledge management studies 7(1–2), 63–86. https://doi.org/10.1504/ijkms.2016.080234 anzengruber, j., 2015, ‘time perspectives and perceived effectiveness of peer coaching interventions between managers in an organisational context’, international journal of evidence based coaching and mentoring 9, 30–44. arkün kocadere, s., 2015, ‘the development of a scale on assessing peer mentoring at the college level’, mentoring & tutoring: partnership in learning 23(4):1–13. https://doi.org/10.1080/13611267.2015.1090283 audet, j. & couteret, p., 2012, ‘coaching the entrepreneur: features and success factors’, journal of small business and enterprise development 19(3), 515–531. https://doi.org/10.1108/14626001211250207 bachkirova, t., arthur, l. & reading, e., 2015, ‘evaluating a coaching and mentoring programme: challenges and solutions’, international coaching psychology review 10(2), 175–189. barell, j., 2010, ‘problem-based learning: the foundation for 21st century skills’, in j. bellanca & r. brandt (eds.), 21st century skills: rethinking how students learn, solution tree press, bloomington, in. bax, j., negrutiu, m. & calota, t.o., 2011, ‘coaching: a philosophy, concept, tool and skill’, journal of knowledge management, economics and information technology 1(7), 1–9. botma, f.j., 2012, ‘development of a coaching framework for the business manager acting in an informal coaching role in the workplace’, doctoral dissertation, stellenbosch university, stellenbosch. boyles, t., 2012, ‘21st century knowledge, skills, and abilities and entrepreneurial competencies: a model for undergraduate entrepreneurship education’, journal of entrepreneurship education 15, 41–55. braun, v. & clarke, v., 2006, ‘using thematic analysis in psychology’, qualitative research in psychology 3, 77–101. https://doi.org/10.1191/1478088706qp063oa braun, v. & clarke, v., 2012, ‘thematic analysis’, in h. cooper (ed.), apa handbook of research methods in psychology: volume 2 research designs, pp. 57–71, american psychological association, washington, dc. bullough, a. & renko, m., 2013, ‘entrepreneurial resilience during challenging times’, business horizons 56(3), 343–350. https://doi.org/10.1016/j.bushor.2013.01.001 centre for coaching, 2015, faq. [online], viewed 16 april 2015, from http://centreforcoaching.co.za/faq/ chaudhry, a.m., 2015, the advantages and disadvantages of adopting a coaching and mentoring system in an organisation, viewed 16 april 2015, from https://www.academia.edu/9704658/the_advantages_and_disadvantages_of_adopting_a_coaching_and_mentoring_system_in_an_organization cooper, d.r. & schindler, p.s., 2014, business research methods, 12th international edn., mcgraw-hill, new york. crompton, b.m., 2012, ‘the effect of business coaching and mentoring on small-to-medium enterprise performance and growth’, doctoral dissertation, rmit university, melbourne, australia. crompton, b.m. & smyrnios, k.x., 2011, ‘what difference does business coaching make to entrepreneurs’ firm performance and future growth’, paper presented at the 56th annual international council of small business world conference, stockholm, sweden, 15–18th june, pp. 1–20. crompton, b.m. & smyrnios, k.x. & bi, r., 2014, ‘measuring the influence of business coaching on fast-growth firms’, small enterprise research 19(1), 16–31. https://doi.org/10.5172/ser.2012.19.1.16 desimone, l.m., hochberg, e.d., porter, a.c., polikoff, m.s., schwartz, r. & johnson, l.j., 2014, ‘formal and informal mentoring complementary, compensatory, or consistent?’, journal of teacher education 65(2), 88–110. https://doi.org/10.1177/0022487113511643 dobrea, m. & maiorescu, i., 2015, ‘entrepreneurial outcomes and organisational performance through business coaching’, amfiteatru economic 17(33), 247–260. feldman, d.c. & lankau, m.j., 2005, ‘executive coaching: a review and agenda for future research’, journal of management 31(6), 829–848. https://doi.org/10.1177/0149206305279599 fielden, s.l. & hunt, c.m., 2011, ‘online coaching: an alternative source of social support for female entrepreneurs during venture creation’, international small business journal 29(4), 345–359. https://doi.org/10.1177/0266242610369881 freiling, j. & lauden, s.m., 2013, ‘explaining new venture failure: a competence-based approach’, paper presented at the aims international conference, nice, france, 11–12th april, pp. 1–7. gordon, e.j., 2015, ‘exploring the dyad: novice physical education teachers’ and their mentor’s perspectives of the mentoring process’, doctoral dissertation, texas tech university, lubbock, tx. gray, d.e., ekinci, y. & goregaokar, h., 2011, ‘coaching sme managers: business development or personal therapy: a mixed methods study’, the international journal of human resource management 22(4), 863–882. https://doi.org/10.1080/09585192.2011.555129 guest, g., bunce, a. & johnson, l., 2006, ‘how many interviews are enough: an experiment with data saturation and variability’, field methods 18(1), 59–82. https://doi.org/10.1177/1525822x05279903 hammer, m.h., 2012, ‘why entrepreneurs fail and how to fight it?’, e-journal onderzoek voor een vitale region 1(1), 1–8. hechavarria, d.m., renko, m. & matthews, c.h., 2012, ‘the nascent entrepreneurship hub: goals, entrepreneurial self-efficacy and start-up outcomes’, small business economics 39(3), 685–701. https://doi.org/10.1007/s11187-011-9355-2 international coach federation, n.d., coaching faq’s, viewed 16 april 2015, from http://www.coachfederation.org/need/landing.cfm?itemnumber=978&navitemnumber=567 kim, s. & kuo, m.h., 2015, ‘examining the relationships among coaching, trustworthiness, and role behaviors: a social exchange perspective’, the journal of applied behavioral science 51(2), 152–176. https://doi.org/10.1177/0021886315574884 koopman, r.g., 2013, ‘coaching and mentoring entrepreneurs; more definitions won’t work’, paper presented at 27nd rent, vilnius, lithuania, 20–22 november, pp. 1–14. kuratko, d.f., morris, m.h. & schindehutte, m., 2015, ‘understanding the dynamics of entrepreneurship through framework approaches’, small business economics 45(1), 1–13. https://doi.org/10.1007/s11187-015-9627-3 kutzhanova, n., lyons, t.s. & lichtenstein, g.a., 2009, ‘skills-based development of entrepreneurs and the role of personal and peer group coaching in enterprise development’, economic development quarterly 23(3), 193–210. https://doi.org/10.1177/0891242409336547 lamine, w., mian, s. & fayolle, a., 2014, ‘how do social skills enable nascent entrepreneurs to enact perseverance strategies in the face of challenges: a comparative case study of success and failure’, international journal of entrepreneurial behavior & research 20(6), 517–541. https://doi.org/10.1108/ijebr-02-2013-0020 lavryk, a., 2013, ‘business coaching’, development management (18), 141–142. lawless, m., 2009, ‘the influence of life coaching on entrepreneurs goal planning and attainment’, doctoral dissertation, waterford institute of technology, republic of ireland. lawton-smith, c., 2007, ‘coaching: is it just a new name for training’, international journal of evidence based coaching and mentoring 1, 1–9. le roux, i., 2015, the missing link in the 21st century skills debate. london deanery, 2014, what are the benefits of coaching and mentoring?, stewart house, london, viewed 16 april 2015, from http://mentoring.londondeanery.ac.uk/our-scheme/overview/what-are-the-benefits-of-coaching-and-mentoring mazra, m. & guy, o.r., 2012, ‘empirical and explanatory approach of support effect on newly created firms’ performance’, journal of management and sustainability 2(2), 293–304. https://doi.org/10.5539/jms.v2n2p293 mckevitt, d. & marshall, d., 2015, ‘the legitimacy of entrepreneurial mentoring’, international journal of entrepreneurial behavior & research 21(2), 263–280. https://doi.org/10.1108/ijebr-05-2014-0089 mineur, m., 2012, ‘determining relevant factors of coaching: the development of a questionnaire’, doctoral dissertation, tilburg university, tilburg, netherlands. moore, m., highstein, g., tschannen-moran, b. & silverio, g., n.d., coaching behaviour change, viewed 18 april 2018, from http://downloads.lww.com/wolterskluwer_vitalstream_com/sample-content/9780781772624_moore/samples/mooresampchap3.pdf mühlberger, m.d. & traut-mattausch, e., 2015, ‘leading to effectiveness comparing dyadic coaching and group coaching’, the journal of applied behavioral science 51(2), 198–230. https://doi.org/10.1177/0021886315574331 nieuwenhuizen, c. & nieman, g., 2009, ‘the nature and development of entrepreneurship’, in g. nieman & c. nieuwenhuizen (eds.), entrepreneurship: a south african perspective, 2nd edn., pp. 1–16, van schaik, hatfield, pretoria. nikolova, n., clegg, s., fox, s., bjørkeng, k. & pitsis, t., 2013, ‘uncertainty reduction through everyday performative language work’, international studies of management & organization 43(3), 74–89. https://doi.org/10.2753/imo0020-8825430305 o’flaherty, c., 2003, coaching versus mentoring versus leading versus managing, viewed 27 october 2018, from http://www.centreforcoaching.co.za/images/stories/o_vs_vs.pdf plano clark, v.l. & creswell, j.w., 2015, understanding research: a consumer’s guide, 2nd edn., pearson, upper saddle river, nj. polit, d.f. & beck, c.t., 2012, nursing research: generating and assessing evidence for nursing practice, 9th edn., wolters kluwer health | lippincott williams & wilkins, philadelphia, pa. rosha, a., 2013, ‘the similarities and differences between coaching and other targeted interventions’, economics and business 24, 119–126. https://doi.org/10.7250/eb.2013.015 saadaoui, s. & affess, h., 2015, ‘evaluating the role of coaching on developing entrepreneurial self-efficacy’, european journal of business and social sciences 3(11), 54–61. spencer, a.s., kirchhoff, b.a. & white, c., 2008, ‘entrepreneurship, innovation, and wealth distribution: the essence of creative destruction’, international small business journal 26(1), 9–26. https://doi.org/10.1177/0266242607084657 urban, b., 2006, ‘entrepreneurial self-efficacy in a multicultural society: measures and ethnic differences’, journal of industrial psychology 32(1), 2–10. https://doi.org/10.4102/sajip.v32i1.221 urban, b., 2012, ‘a metacognitive approach to explaining entrepreneurial intentions’, management dynamics 21(2), 16–33. urban, b., 2013, ‘social entrepreneurship in an emerging economy: a focus on the institutional environment and social entrepreneurial self-efficacy’, international research journal 11(1), 3–25. vidal-salazar, m.d., ferrón-vilchez, v. & cordon-pozo, e., 2012, ‘coaching: an effective practice for business competitiveness’, competitiveness review: an international business journal 22(5), 423–433. https://doi.org/10.1108/10595421211266302 vogt, w.p., 2005, ‘basic research’, in w.p. vogt (ed.), dictionary of statistics & methodology, 3rd edn., sage, thousand oaks, ca, viewed 03 june 2015, from http://0-www.srmo.sagepub.com.innopac.up.ac.za/view/dictionary-of-statistics-methodology/n131.xml?rskey=afvm2a&row=1 wakkee, i., elfring, t. & monaghan, s., 2010, ‘creating entrepreneurial employees in traditional service sectors: the role of coaching and self-efficacy’, international entrepreneurial management journal 6, 1–21. wilson, c., 2014, performance coaching: a complete guide to best practice coaching and training, replika press, india, viewed 19 april 2015, from https://books.google.co.za/books?hl=en&lr=&id=mnvzagaaqbaj&oi=fnd&pg=pp1&dq=wilson,+c.,+2014,+performance+coaching:+a+complete+guide+to+best+practice+coaching+and+training,&ots=vb_i1aulsc&sig=w6ixcdn-hvoolvpljcpof08u9ee#v=onepage&q=wilson%2c%20c.%2c%202014%2c%20performance%20coaching%3a%20a%20complete%20guide%20to%20best%20practice%20coaching%20and%20training%2c&f=false wolf, p., kaudela-baum, s. & meissner, j.o., 2011, ‘exploring innovating cultures in small and medium-sized enterprises: findings from central switzerland’, international small business journal 30(3), 242–274. https://doi.org/10.1177/0266242610386666 appendix 1 discussion guide: coaching as a support function for entrepreneurs questions i would like to start by asking you a few background questions. what is your definition of an entrepreneur? an entrepreneur is any person who has identified and made an effort to gather resources in an attempt to exploit an opportunity, whilst bearing the risk of failure. based on this definition, are you an entrepreneur? how long have you been an entrepreneur? please tell me about your business? now i am going to ask you questions about the coaching you have received. 5. what does the term coaching mean to you? 6. is your definition of coaching different from your definition of mentorship? 6.1 if yes, please elaborate. 7. what were your reasons for attending coaching? 8. briefly explain what happened during your coaching sessions. 9. what specific support did you receive from your coach? 10. what is your opinion of the coaching you received? 10.1 why do you say that? 11. were the outcomes of coaching in line with your expectations of the process? 11.1 please elaborate. 12. tell me about what coaching has taught you. 13. do you intend to apply what you have learned during coaching in your work environment? 13.1 if yes, please tell me how you will apply what you have learned. 14. what was the most valuable aspect of coaching for you? 15. what aspect of coaching was least valuable to you? 16. has coaching assisted you with setting goals for your business? 16.1 if yes, were they short-term or long-term goals? 16.2 please give me an example or two of how coaching has helped in this regard. 17. has coaching helped you better manage your finances? 17.1 if yes, please elaborate. 18. has coaching had an effect on your personal life? 18.1 if yes, please elaborate. 19. has coaching helped you to become a better manager? 19.1 if yes, please elaborate. 20. has coaching helped you to become more confident in your abilities as an entrepreneur? 20.1 if yes, please elaborate. 21. has coaching helped you to become a better leader? 21.1 if yes, please elaborate. 22. imagine that we’re 6 months into the future. this coaching has worked very well for you. what will have changed? what will you be doing differently? 23. was there anything that you disliked about coaching? 23.1 please elaborate. 24. were there any aspects of coaching that you feel will not be beneficial to you in your future and the future of your business? 24.1 please elaborate. 25. what kind of coaching would you like to receive in future? 26. we are now at the end of the interview. is there anything else you wish to share with me? abstract introduction background research problem research objectives research questions hypotheses literature review entrepreneurial behaviour and performance key dimensions for firm performance corporate entrepreneurship entrepreneurial orientation sampling and sample size data collection research results and discussion conclusion acknowledgements references about the author(s) oliver kapepa department of entrepreneurship, university of pretoria, pretoria, south africa jurie van vuuren department of entrepreneurship, university of pretoria, pretoria, south africa citation kapepa, o., & van vuuren, j., 2019, ‘the importance of tolerance for failure and risk-taking among insurance firms in hyperinflationary zimbabwe’, southern african journal of entrepreneurship and small business management 11(1), a142. https://doi.org/10.4102/sajesbm.v11i1.142 original research the importance of tolerance for failure and risk-taking among insurance firms in hyperinflationary zimbabwe oliver kapepa, jurie van vuuren received: 14 june 2017; accepted: 23 oct. 2018; published: 16 apr. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: at the dawn of the 21st century, zimbabwe started moving towards dangerous levels of the infamous hyperinflation trajectory that made management of businesses a nightmare. many businesses failed. aim: this study seeks to explore if entrepreneurship, and in particular the aspects of risk-taking and tolerance of failure, could have saved the few companies that survived the menace that ravaged the insurance industries among many other sectors of the economy. setting: the study looks at this particular entrepreneurial behaviour of risk-taking among insurance companies in zimbabwe during the hyperinflationary environment that ravaged and defied economic logic and fundamentals. savings were being eroded at a pace faster than anywhere in the world ever before, taking a toll on businesses as they struggled to survive. methods: using a survey sample of insurance companies in zimbabwe, a quantitative approach was adopted. questionnaires were used to extract data from participants to establish the nature and extent of risk-taking, and in particular tolerance for failure during this period. therefore, tolerance of failure in corporate entities is discussed in this article as a critical aspect of risk-taking that enhances entrepreneurial innovation and ultimate prospects of corporate prosperity among insurance companies. a measure is developed to gauge the extent of tolerance of failure from the perspective of employees in the insurance industry in zimbabwe. results: the benefit of tolerance of failure or the lack thereof was measured on the dimension of profitability and growth. results revealed that tolerance of failure is a necessary entrepreneurial virtue that encourages knowledge acquisition by both experimental and experiential learning – a risk element that also spurs entrepreneurial innovation and ultimately encourages both profitability and growth of the business entity, if well managed. conclusion: the study concluded that firms that tolerate failure are more likely to be entrepreneurially innovative and perform better than those that are risk-averse and do not tolerate failure. keywords: entrepreneurship; risk taking; tolarance of failure; insurance firms; entrepreneurial performance; zimbabwe. introduction to act entrepreneurially is neither a miracle nor is it merely necessitated by circumstances of deprivation or any conditions of living. it is an inevitable challenge – and one must encounter these challenges and failures unless one looks for a salaried job. in essence, entrepreneurship is about successes and failures, bearing in mind that a small start-up will have to compete with established giants for quality products in the same marketplace. many firm managers might confess willingness to taking risks at some point, but few would consider tolerating failure as a risk worth taking. in fact, few would consider tolerance of failure as a risk rather than a potential loss of business. yet, the ability to tolerate failure would determine the extent to which a firm is prepared to take risks and enhance its entrepreneurial behaviour for better performance. even as it takes some measure of entrepreneurial endeavour for all business organisations to continue to exist (kang 2013:25; zimmerman 2010:1), the process of growing the business is always fraught with obstacles and risks as well as failures. equally, it requires the entrepreneurial prowess of some individuals in a firm, whether by themselves or collectively, to take their ventures across the famed rubicon of success and remain at the top of the marketplace, regardless of the vagaries and hostilities of the business environment. the pressures to maintain this position are made even more acute by the observation that as businesses grow, they become averse to risk and failure, and they become too bureaucratic and lose their entrepreneurial spirit and capabilities (christensen 2004; haeng-sun 2016; johnson 2001), which does not augur well for ventures operating in a competitive marketplace. they also stop taking risks for fear of failure and protecting whatever little assets they have. failure is not tolerated anymore as tolerance, it is feared, may lead to unanticipated harmful outcomes arising from taking such risks, notwithstanding the expertise, capital, assets and other available resources. guillemette et al. (2015) explore the concept of risk assessment called the expected utility theory, which advances the notion that the extent to which risk is tolerated is accompanied and influenced by future benefits or losses. failure tolerance becomes even more remote and perhaps more detrimental when hyperinflationary conditions prevail, such as existed in zimbabwe from 2003 to 2008. even as they grow, companies must continue, out of necessity, to take risks as a critical component of their entrepreneurial orientation (eo). tolerance of failure is one such critical eo attribute for success. the objective of this study was therefore to fully explore the significance of tolerance of failure to the survival of some insurance companies in the hyperinflationary environment of zimbabwe. the study sought to hypothesise, broadly, that those insurance companies that overcame the hyperinflationary situation and were revitalised did so partly on the back of the extent of their tolerance of failure, especially with regard to their employees who eventually saw a rise in the levels of corporate entrepreneurial activity through innovations that ensued. in pursuit of establishing factual solutions to these hypothetical statements, the study has depended upon both primary and secondary data. however, data were largely quantitatively analysed. the research used a relatively large sample, augmented with descriptive statistics. as the research was predominantly a survey-based investigation, stratified sampling was preferred with data collecting instruments in the form of questionnaires. analysis of variance (anova) was considered in data analysis, complemented by a few other data analysis techniques to enhance the quality of the results. background whilst zimbabwe’s economic regression that reached its peak in 2008 may be contextualised within the global economic crisis, it is important to note that zimbabwe’s economy had begun a downward spiral almost a decade earlier. zimbabwe witnessed an incomparably dire socio-economic downturn, especially between 2003 and 2008. during this time, the record hyperinflation peaked at 231 million per cent (in july 2008) (rbz monetary policy 2008), but the cato institute of calculations and forbes asia put the figure at above 500 million per cent, year on year. the variance can be explained by the fact that the reserve bank of zimbabwe may have felt duty-bound to self-censor and obliged to publish conservative figures of inflation to allay simmering public discomfort at the rate at which the economy was degenerating, whilst external institutions located far from reality could have obtained skewed data, but could also have felt the need for more objectivity. whatever the true reflection of the inflation figures, the reality was that zimbabwe had degenerated into a state of hyperinflation that virtually brought the economy to its knees, and companies were faced with the need to survive yet still realise growth within global capitalism. the financial services sector, especially the insurance industry (which consisted of 83 companies), was severely affected. these sectors, according to the then governor of the reserve bank of zimbabwe, dr gideon gono, are ‘driven by public confidence’ (november 2012). contextually, public confidence waned as the inflation set in. in the said zimbabwean scenario, the question arose of whether some insurance companies’ ability to emerge out of the hyperinflationary environment to stabilise and align with the new growth trajectory was attributable to certain aspects of eo and, in particular, the extent to which they would take risks and the risk attributed to tolerating failure. table 1 shows the distributions of the insurance companies in the insurance industry in zimbabwe by class post-hyperinflation. table 1: number of insurance players by class. whilst most of the 83 insurance companies survived the hyperinflation trauma, a few became casualties and others had to reopen post-hyperinflation period. this consequently meant that during the hyperinflation, corporate leaders were forced to intensify their entrepreneurial prowess in pursuit of economic stability within their organisations, and reinvigorate their companies’ ability to withstand the treacherous business environment through undertaking deliberate, strategic and vibrant entrepreneurial activities. it is worth noting that many companies that collapsed or lagged behind in entrepreneurship and innovation could have been so because of their failure to tolerate failure, always wanting the best from their employees everyday and leaving no room to experiment and try out new methods much needed in the unfolding socio-economic and political environment characterised by volatility, uncertainty, complexity and ambiguity. buoyed by the need to confront hyperinflationary vagaries, such as stunted growth, erosion of markets, loss of public confidence in the insurance products and international competition on the global markets, intensified entrepreneurship looked more promising as a panacea for these challenges (kreiser, patel & fiet 2013; nie, dowell & lu 2012; reynolds et al. 2000). ordinarily, such pursuit of entrepreneurial intensity, especially tolerance of failure, allows for organisations to be creative and innovatively adequate to protect their market territory, sustain profitability, enter into new markets and avoid becoming useless and defunct (smith 2010). therefore, insurance companies that needed to continue in business during and after the hyperinflationary period needed to tolerate failure and inculcate a culture of risk-taking. research problem the problem in this study is that as the hyperinflation set into the economy, many insurance companies in zimbabwe abandoned vital principles of entrepreneurship, in particular, tolerance for failure and risk-taking, which ironically could have given them the impetus to entrepreneurial intensity to survive the inflationary impairment. others, however, could have embraced entrepreneurial intensity and, in particular, the elements of tolerance for failure and, broadly, risk-taking to navigate their enterprises through the treacherous hyperinflationary environment. therefore, a management dilemma was whether to engage in entrepreneurship and, in particular, tolerance of risks such as failure in an environment (e.g. hyperinflation) in order to realise entrepreneurial performance. consequently, the failure to survive could be attributed to the lack of tolerance for failure and risk averseness. this problem is looked at from the perspective of evidence gathered in the insurance industry in zimbabwe. research objectives the study is guided by the following objectives: to explore the extent to which tolerance for failure tends to encourage entrepreneurial performance to explore the extent to which risk-taking tends to encourage entrepreneurial performance. research questions the following research questions were postulated to guide the study: do insurance firms that tolerate failure encourage entrepreneurial performance? do insurance firms that tolerate risk-taking encourage entrepreneurial performance? hypotheses hypotheses have been propounded to explain the extent to which tolerance of failure encourages entrepreneurial performance in difficult times. entrepreneurial performance is gauged by the assumed proxies of innovation, growth and profitability: h1: tolerance of failure encourages entrepreneurial performance. h2: growing companies tolerate failure among employees. h3: profitable companies tolerate failure. literature review this section explores the concepts of ‘tolerance of failure’ and ‘risk-taking’ and how these are critical behavioural constructs to the well-being of firms. the essence of entrepreneurship in hyperinflationary environments the business environment is often fraught with nuisances and economic irritations that inhibit the proper flow of the business processes and activities. inflation is one such nuisance and is most detrimental to the business environment. an economic state of hyperinflation has always brought about socio-economic quagmires and socio-political upheavals. it usually occurs when liquidity and real wages start increasing beyond their fundamental values (dreger & zhang 2011; makinen 2017). this increase in liquidity and wages, in turn, triggers price increases, which subsequently impact wages, causing a vicious cycle. thomsett (2011:73) buttressed by kararach and otieno (2016) posits that ‘the real definition of inflation is the gradual erosion of purchasing power’. in the context of zimbabwe, the local currency essentially collapsed (nhavira & ocran 2014) because of the magnitude of the hyperinflation. in situations of socio-economic unpredictability, it is difficult for businesses to function normally, unless they deliberately resort to entrepreneurial intensity to grow and realise profitability that is embedded in risk-taking proclivity, of which tolerance of failure is a critical aspect. nikolov and urban (2013) are of the opinion that corporate entrepreneurship becomes very important for firms that want to achieve sustainable competitive advantage in a highly competitive environment and to survive in finan-cially constrained environments, especially where prior entrepreneurial recognition is absent. entrepreneurial failure: predicting entrepreneurial success the term ‘failure’ always bears a negative connotation. however, failure can affect an entrepreneur either negatively or positively. negatively, failure leads to stigmatisation and low esteem of the entrepreneurs and their organisations when previous efforts have not succeeded (cardon, stevens & potter 2011; kuntze & matulich 2016). positively, failure can be a learning curve to encourage entrepreneurial performance in future efforts based on human capital theory (park, park & kim 2017). researchers and psychologists have confirmed that failure, which he (2013) calls the ‘mother of success’, precedes entrepreneurial success. some scholars have even suggested that future academic inquiry should be less preoccupied with realising entrepreneurial success and circumventing failure to a re-directed and harmonious viewpoint of how success and failure are integrated (mckenzie & sud 2008) to enhance corporate performance. roux and pretorius (2017) suggest that entrepreneurs should often heed winston churchill’s advice to learn from history when he famously said, those who fail to learn from history are doomed to repeat it. similarly, if entrepreneurs learn from their failures, they are better for not repeating the same mistakes that would lead to venture failure once more. the term ‘failure’ has different meanings for different situations, but a common meaning is the inability to get things right as previously expected. whilst the oxford english dictionary defines ‘failure’ as ‘to become deficient, to be inadequate’, zahra (2010) sees failure as an inability to do something right as expected, and in the case of the business, performing poorly. it is an acute deviation from the desired state of things. this is echoed by he (2013) who says failure is apparent when a performance is below expected levels. key to the above definitions is the presence of a strong vision vital for the entrepreneurs to determine the meaning and extent of failure (mckenzie & sud 2008). entrepreneurship is littered with many obstacles and as such incidents of failure become inevitable. it is difficult to discuss entrepreneurship without appreciating the role of failure in the success story of most entrepreneurs and entrepreneurial ventures. research suggests that entrepreneurship is not indisputably bad, but instead affords entrepreneurs and firms to learn from their failure and thus improve on their chances of ultimate success (mckenzie & sud 2008). consequently, some scholars have resorted to developing some dynamic learning viewpoints of entrepreneurship to understand how failure leads to entrepreneurial performance (he 2013; wei & hisrich 2017), even in detrimental environments such as the hyperinflation. entrepreneurial behaviour and performance it remains a puzzle as to how certain entrepreneurial behaviours spring into action in constrained environments ‘in which each piece is fitted into the place selected for it by the concatenation of pertinent circumstances’ (baumol 2010). however, what is true is that a firm’s profitability derives from certain levels of entrepreneurial behaviour, which, in turn, depends on the level of organisational creativity (bratnicka, gabrys & bratnicki 2013). risk-taking and tolerance for failure are critical elements of that behaviour which resides in human capital. it is the human capital that is often seen as guiding entrepreneurial behaviour and is critical in facilitating entrepreneurship as well as enhancing performance (farrukh, ying & mansori 2015; zarutskie 2010). the reason why some but not all people engage in entrepreneurial behaviour (shane & vankataraman 2000) is that people respond differently to entrepreneurial opportunities and subsequent entrepreneurial decisions, such as when and how to take risks and tolerate failure. according to kuratko et al. (2005) and gusman and febrian (2016), middle-level managers’ entrepreneurial behaviour is linked with successful corporate entrepreneurship, given the context that the role of top-level managers revolves around the making of effective strategic decisions such as risk-taking and inclination towards tolerating failure. consequences of entrepreneurial behaviour, such as tolerance to failure, should ultimately be rewarded if the entrepreneurial performance culture is to be upheld and sustained. such rewards are often expressed through profitability and growth (johannesson & jorgensen 2017; nieman & niewenhuizen 2009; trang 2018). thus, performance becomes critical in entrepreneurial behaviour of risk-taking and tolerance for failure. explaining entrepreneurial performance has long remained a contentious issue as efforts to arrive at an explanation and theory of what determines its threshold have not been able to produce desired and unanimously accepted results (phan 2004; shane & venkataraman 2000 in kumar 2007:55). in essence, scholars recognise that whilst entrepreneurship is a ‘must practice’ for organisations that wish to do better, determining the extent of its success may not be easy and cannot be generalised across industries. entrepreneurial performance usually occurs on both the individual and organisational levels. it is essential that through the available measuring instruments, an organisation should gauge the performance levels of its employees and, ultimately, itself. the measurement of entrepreneurial performance should be against the costs sunk into the enterprise to realise not only increased revenues but also profitability and growth, and sinking such costs can be risky. figure 1 depicts critical variables for entrepreneurial performance. figure 1: entrepreneurial performance. it is apparent from the above discussion that failure tolerance, an aspect of eo of organisational leaders, remains fundamental to catalyse intensified entrepreneurship. both internal and external variables are leveraged to realise the expected outcomes and consequences, such as improved export receipts, profitability and growth. key dimensions for firm performance relating from dimensions of eo essential to how the organisation eventually performs, morris et al. (1996:6; de jong et al. 2015; hinz 2017) buttressed by trang (2018) discuss three key dimensions underlying behaviours and attitudes of entrepreneurs: founding or managing ventures such as innovativeness, proactive behaviour and risk-taking propensity. these key dimensions are important to understand how entrepreneurial firms can perform depending on the nature of their undertakings and the extent thereof. proclivity for risk-taking one of the critical dimensions of a deliberate pursuit of entrepreneurial performance is the leadership’s readiness to take risks in pursuit of opportunities that may not have existed previously. the propensity for risk has constantly been associated with entrepreneurs. cox and jennings (1995) and ojewumi et al. (2018) consider that successful entrepreneurs usually take calculated risks. according to josien (2012:21), risk-taking as a concept is more relevant today than it was in the cantillonic era. richard cantillon (1680–1734) in brewer (2002) used the construct ‘risk-taking’ to differentiate a hired employee of a firm from the founder and owner, with the latter bearing the consequences of risks and uncertainty involved in a venture. risk-taking is defined as the willingness by the entrepreneur to deploy significant resources in a venture which has reasonable chances of failing (ali & wajid 2012:1; ferguson, dougherty & nuebert 2014; morris et al. 1996:6). dess, lumpkin and eisner (2010:456) add that risks involve certain executive decisions in favour of a specific strategic course of action, thereby steering the company in a particular direction with significant implications for executives’ careers. hence, the entrepreneur attempts to ensure that the risks are calculated and manageable. usually, risk is taken without due consideration of probable consequences. this may include deploying certain levels of resources without the applicable knowledge of, for instance, whether the results of the actions will be favourable or not. generally, it is a strategy to resort to risk-taking in chaotic situations in order to get by and mitigate the effects of such situations. mobilisation and deployment of resources into areas of uncertainty, such as exploration of new markets, launching new products or undertaking a new venture, are all endeavours strewn with risks that corporate entrepreneurs must concern themselves with, either to reduce or to eliminate them, but with potentially high rewards. only when corporate leadership is keen on entrepreneurship would their firm enter such risky business areas. in so doing, profit remains the reward for an entrepreneur taking risks and dealing with uncertainty (knight 1921). most companies that have survived similar situations might have been able to do so by deliberately taking a measured risk and balancing that with the potential benefits to be accrued in the process. figure 2 illustrates a proposed relationship between risk-taking and the performance of a firm. figure 2: a proposed risk-performance symbiosis. the diagram in figure 2 illustrates that as the corporate entrepreneurs take risks, the chances of the company with respect to mitigating the environmental challenges grow and the performance of the company correspondingly alters. however, the risks need to be prudently applied, mitigated, measured and calculated so that they are not carelessly and randomly taken without proper analysis of the possible implications. as shown in figure 2, as the risk becomes too high, the performance of the company starts deteriorating. some losses become inevitable, especially in a distressed economy. measuring entrepreneurial performance growth, profitability and innovation are contextually assumed to be proxies of entrepreneurial performance in the firm. innovativeness innovativeness refers to willingness to support creativity and experimentation in introducing new products and services, and novelty, technological leadership as well as research and development (r&d) in developing new processes (lumpkin, cogliser & schneider 2009). the degree and the numbers of innovations as well as the high rate of technological products and processes affirm the entrepreneurial performance of the firm. innovative companies by creating and introducing new products and technologies can generate extraordinary economic performance and have even been deemed the engines of economic growth (croitoru 2008; li, huang & tsai 2009). growth growth is often used as a proxy for business performance and remains an ultimate measure of entrepreneurial excellence; as a result, growth as a measure of performance may be more accurate and accessible than accounting measures of financial performance (wiklund & shepherd 2005). the growth factor is always both a motive and a consequence for any businesses whether small or large. hisrich, peters and shepherd (2008:45) consider that every entrepreneurially managed firm has the desire to rapidly grow the organisation. there can be little doubt therefore that the predominant view embodied in the entrepreneurship literature is that entrepreneurial leadership and teams exist and are disproportionately involved in the establishment of ventures that have the potential for rapid growth and expansion of the firm (carland & carland 2012). in fact, the many attempts at defining entrepreneurship would view the entrepreneur as someone who, in the process of building a vision, establishes a business aiming for profit and growth (inacio & gimenez 2012:42; nieman & niewenhuizen 2009:9). this means that the firm’s growth aspiration is at the heart of entrepreneurial activities. financial performance and profitability entrepreneurship performance can best be measured by wealth creation prowess and profitability (classen et al. 2012). turnover numbers will therefore help indicate the rate of human activity in the firm in wealth creation efforts. financial or other tangible rewards that are made possible by the firm’s financial performance are examples of extrinsic entrepreneurial outcomes (kuratko et al. 2005). demographic data often point to and determine the firm’s performance as determined by both external and internal independent variables, which is directly related to the financial performance of the firm given by the dependent variables: growth rate, profitability, per cent earnings from export and foreign direct investments (gowrishankar 2008). profitability therefore remains an objective not simply of setting up the venture, but also of acting entrepreneurially in an established corporation. nonetheless, the motivation for a profitability-embedded organisational performance is more desirable but very difficult to attain in a business environment of economic uncertainty. corporate entrepreneurship kuratko, hornsby and goldsby (2007:56) and de jong et al. (2015) opine that corporate entrepreneurship is being embraced by many organisations as not simply a component of a company’s strategy, but rather as the very framework for the company’s future critical success imperatives and activities. farrukh et al. (2015) concur that corporate entrepreneurship is the legitimate route available to realise increased levels of entrepreneurial performance. corporate entrepreneurship attempts to locate entrepreneurship in the context of a firm. as such, entrepreneurial activities and behaviours in larger, established organisations have been termed as corporate entrepreneurship (clohessy, holt & rutherford 2007). according to ireland, kuratko and morris (2006), corporate entrepreneurship allows individuals within a firm to explore and exploit opportunities and innovate notwithstanding the availability of resources. sathe (2003:2) adds that corporate entrepreneurships are efforts by corporations to generate new business and counter an array of challenges in the business environment, such as market stagnation and bureaucracy (serai, johl & marimuthu 2017; todorovic, todorovich & ma 2015). unstable business environments in recent years have witnessed corporations moving towards deliberate efforts at corporate entrepreneurship practices with those companies that fail to reinvent themselves within the context of entrepreneurship dying. broadly, corporate entrepreneurship is defined as the development of business ideas and exploration of opportunities in the context of an established firm (birkinshaw 2003; birkinshaw, hood & young 2005; kang 2014; kuratko & hodgetts 2004; russo 2010; trang 2018). some of those opportunity exploratory efforts can be futile and risky, leading to failure. corporate entrepreneurship has for a long time been recognised as a potentially viable means for promoting and sustaining organisational performance, business renewal and corporate competitiveness. the entrepreneurial activities help companies to develop new businesses that create new revenue streams. in its broader definition, corporate entrepreneurship therefore embodies risk-taking, proactiveness and radical product innovations. these corporate entrepreneurship activities can improve organisational growth and profitability and, depending on the company’s competitive environment, their impact may increase over time. the empirical evidence is compelling that corporate entrepreneurship improves company performance by increasing the firm’s proactiveness and willingness to take risks, and by pioneering the development of new products, process and services through enriching its competitiveness. it therefore becomes imperative that those people in strategic positions within an organisation are able to exhibit entrepreneurial inclination and attitudes needed to drive entrepreneurship within the company (dess et al. 2010). entrepreneurial orientation entrepreneurial orientation refers to a firm’s strategic alignment, capturing specific entrepreneurial aspects of decision-making styles, methods and practices, and as such, it reflects how a firm operates rather than what it does (ayodotun et al. 2018; wicklund & shepherd 2005:74). according to dess et al. (2010), eo refers to the entrepreneurial strategies that business organisations employ to explore and start up new ventures. entrepreneurial orientation, when measured at the individual level, is related to categorical directionality and describes the propensity for someone to lead a new venture (liao, murphy & welsch 2005). doing so would require propensity for risk and tolerance for failure. dess and lumpkin (2001:431) have advanced five critical dimensions of eo, which include autonomy, innovativeness, risk-taking, proactiveness and competitive aggressiveness (gupta, chen & gupta 2016). risk-taking would therefore mean a tendency to take bold decisions such as venturing into unknown new markets, committing a large portion of resources to ventures with uncertain outcomes and/or borrowing heavily with a chance to fail. it is therefore evident that eo–performance relationship is well established (johannesson & jorgensen 2017) in firms. it should be well established and vibrant in the insurance industry as well, even in the largely uncertain economic environment that zimbabwe has been for much of its post-independence era. seemingly, there is justification by scholars in focusing on and emphasising the individual entrepreneur orientation because it is the individual who drives the firm, hence the importance advanced by businesses in facilitating the identification of the right calibre of corporate entrepreneurs with appropriate motivation and skills set including propensity for risk-taking and tolerance to failure to assist in the running of the enterprise. tolerance of failure: an antecedent of performance regardless of how the enterprises are started, what influences their need to start up, and ultimately every decision thereafter, entrepreneurs might fail, just like donald trump who started with us$1 million from his father but still failed before rising again; they all learn from failure (liang & dunn 2014). it means that at one point or the other in the entrepreneurial journey, failure is an inevitable reality an entrepreneur must be prepared for but must choose whether to learn something from the failure and start again, be more determined or to resign altogether. tolerance of failure is therefore a critical aspect of risk proclivity and is considered a key antecedent of corporate entrepreneurship and the overall desired organisational performance. in fact, tolerating failure is a risk in itself, a luxury many managers are not willing to take as their shareholders are impatient for want of quick returns on investment. kuratko, montagno and hornsby (1990) stated that tolerance of failure is a worthy antecedent of corporate performance. this notion is echoed by jennings and lumpkin (1989) and others (havlíček, thalassinos & berezkinova 2013; wood et al. 2008). therefore, managers are encouraged to recognise and create an environment that encourages risk-taking whilst maintaining reasonable tolerance for failure (hornsby, kuratko & zahra 2002) as this guarantees sustainable organic growth of the enterprise and profitability. variously, scholars seem to confirm that for the insurance industry in zimbabwe to have survived the hyperinflation environment, there was some measure of tolerance to failure as failure was inevitable and aggravated by the fact that not many managers had prior experience of managing firms in such an environment before. equally, there could have been major risks taken in an environment of uncertainty for the firms to keep their heads above the water. risk-taking and tolerance of failure are said to often appear frequently in entrepreneurship literature as critical variables for fostering entrepreneurial activity. it suffices to conclude therefore that just like risk-taking, tolerance of failure is a critical component of entrepreneurial behaviour and an important antecedent of entrepreneurial innovation and success. when employers are willing to allow the employees to make mistakes, they are doing so as a calculated risk (kilenthong & hultman 2016), which leads to the belief that through making mistakes they are in fact learning to do things right and better. at worst, organisations realise losses, sometimes invest in products that fail to penetrate the market and face rejection, and ventures may even face extinction and collapse. organisations that tolerate failure believe that failure is an inevitable but critical aspect of success and should therefore not only be tolerated but also be encouraged and supported (urban & gaffurini 2017). chirani, farahbod and pourvahedi (2013) have gone further to remark that tolerance of failure ranks among other critical entrepreneurial characteristics of self-confidence, self-reliance, perseverance and commitment for ensuring success. cultural barrier to entrepreneurial innovations and performance culture has not made it easy to spur innovations and, ultimately, entrepreneurial performance. it is noted that cultural diversity has a tendency to suppress creativity and entrepreneurial innovations (mir-babayev et al. 2017), and ultimately firm performance. the african cultural environment, for instance, has certain barriers negating entrepreneurship, innovations and creativity, with constant reference to social hierarchy that inhibits entrepreneurial performance (conger & kanungo 1994; erickson & laing 2016; nieman & niewenhuizen 2009:12; welsch 2003:147). the belief is that certain people in society should not be let to their whims and decisions freely as they may not be expected by society to do anything right and worthwhile let alone entrepreneurial activities. such low expectations of other members of the society tend to encourage intolerance of failure and risk averseness. when such failure happens, society is ready to criminalise and punish offenders to the extent that they will not be ready to take risks in the future, thereby negating entrepreneurial intensity. the same applies to the caste system in indian society, for instance, which has created over centuries a hierarchical system that has exhibited low tolerance of failure largely because of their observation of upward hierarchical progression (bansal 2011). entrepreneurial failure: performance nexus whilst some scholars remain sceptical about the link between entrepreneurial rewards from entrepreneurial failure owing to the lack of availability of strong evidence linking entrepreneurial failure to actual benefits of the initial loss (luzzi & sasson 2016; mckenzie & sud 2008), according to mckenzie and sud (2008), other scholars have since agreed that there are benefits to be realised from learning from failure. even as tolerance of failure is seen as a risk, when it is well calculated like any risk, it tends to reward the entrepreneurs and their enterprises. however, before such benefits have been realised, entrepreneurs must have learnt to cope with failure they would have gone through. whilst failure could affect the ability to learn critical lessons from the incidents, shepherd (2003) has proposed that failure arising from entrepreneurial strategic decision-making, if well managed, can become a relevant learning curve and an important source of wisdom and entrepreneurial education for entrepreneurs (kuntze & matulich 2016; nouri et al. 2018), especially as they may want to embark on a business rescue mission (le roux & pretorius 2017), where learning from the failure would prove worthwhile. other scholars such as cannon and edmondson (2005) have noted that benefits of failure are more in providing counselling and encouragement than they are in pragmatic situations; it is therefore important to comprehend the environment and circumstances in which failure has occurred in order to make the best out of the situation. thus, it is important to understand how the entrepreneurs and their ventures would have failure in order to learn from the failure, as according to liao, kickul and ma (2009), critical stakeholders, such as entrepreneurs themselves, financiers, policy thinkers and even management and boards and shareholder proxies, need critical information about how failure would have occurred to understand and learn from it going forward. there is empirical evidence from contemporary entre-preneurship literature that suggests that failures are actually vital engines that trigger change for the better (chuang & baum 2003 cited in he 2013; kim & miner 2007) if the story of steve jobs and many other successful entrepreneurs is anything to go by. going by the initial failures that met entrepreneurs such as donald trump and steve jobs, they are lessons that failure can provide. according to hopkins, hopkins and thornton (2002:14), research has shown that companies operating in high-tech environments tend to exhibit high levels of tolerance of failure and their employees also exhibit willingness to take risks and independent action, leading to the promotion of entrepreneurial performance within the firm (tse & euchner 2017). he (2013) provides some of the critical questions on failure: [h]ow do entrepreneurs develop leadership skills in the process of making mistakes, failing, and learning from their mistakes and failure? why do some entrepreneurs learn from this experience and become better leaders, while others do not? (p. 2) entrepreneurial thinking is a critical element of creativity that allows even big firms to compete and succeed against other giants (montiel-campos 2018; prosek 2011). effective planning and problem solving in a rapidly changing global business environment call for entrepreneurial thinkers who can go beyond merely logical or linear cognitive orientation of rules, reason, rational logic and scientific cause–effect predictability to also include thought patterns of intuitive and emotional assessments, creativity and lateral thinking and total systems appraisal, integrative and synergetic thinking, perceptual flexibility, imagination and visualisation (vance et al. 2012) with much risks. therefore, tolerance for failure is a critical aspect of entrepreneurship with potential to ignite creativity and thinking in the same breath as other paradigms of the broader entrepreneurial culture, such as opportunity seeking, complexity, uncertain environments and market competition (knosková 2015). lubatkin and chatterjee (1994) say that failure is a built-in component of entrepreneurship, given the amount of uncertainties and risks involved in entrepreneurial activities. therefore, it is highly probable that failure can lead to entrepreneurial innovations if well handled, and ultimately to greater performance. challenges and failures spur those who experience them to start thinking beyond their capabilities in pursuit of solutions to such failures. they become innovative. problems such as those presented by the hyperinflation in the insurance industry would have encouraged company management and leaders to start thinking about solutions beyond what they would ordinarily have conceived. when premiums were no longer coming in, and when insurance companies could no longer pay out policyholders and meet their obligations, it became a big challenge to create new ideas to solve the prevailing problems. according to aldrich and fiol (1994) cited in (he 2013), for some time now scholars in entrepreneurship have been seized with research that is moving from success orientation and tendency to avoid failure to finding how both phenomena could be integrated for higher performance. therefore, management should show willingness to obligate significant resources to seek out opportunities that have both a chance of failure and the opportunity for success (wang et al. 2015). resourcing entrepreneurial failure as mentioned by urban and gaffurini (2017), proactive managers should not only encourage but also support their mantra for tolerance for failure by putting aside resources such as time, money and equipment. more often, it might be viewed that time and money are expended at resourcing what could be deemed as vain efforts. evidently, a budget put up for r&d is an example of resourcing tolerance for failure and risky decisions, as not all research outcomes can be useful, durable or timely and relevant to current opportunities and needs. but entrepreneurially speaking, the efforts are not in vain as failure, if strategically capitalised and managed, is often the beginning of sustainable success. this argument is buttressed by the resource-based theory. according to alverez and busenitz (2001), resource-based theory articulates that mobilisation of critical resources becomes imperative to create sustainable competitive advantage for the enterprise as resources are associated with unique capabilities that the organisation would need, especially in difficult environments (agwu 2018; sar 2017; sibanyoni & mupambwa 2017). it follows therefore that management that is able to prioritise resource mobilisation and apply such resources most effectively will also be the ones that are likely to enjoy superior entrepreneurial performance (coleman & robb 2010). such resources may be utilised in r&d and other innovative products and processes, some of which will not see the light of day. according to gillis, combs and ketchen (2014), resource-based theory describes the characteristics of strategic assets, which are resources and capabilities that spawn performance differences among firms. sirmon, hitt and ireland (2004; 2007), however, add that these resources need to be appropriately deployed to elicit the relevant competitive advantage for the enterprise. it is for this reason that this study is influenced by resource-based theory, understanding the importance of resources to influence and leverage entrepreneurial performance. more importantly, this theory becomes relevant in advancing the concept of entrepreneurial intensity driven by a sound relationship between resources and gaining a competitive advantage in the marketplace as well as making the best potential of costs opportunism and realisation of strategic business outputs. the attracting, mobilising and deployment of resources are, therefore, critical to the entrepreneurial process, and consequently the entrepreneurial intensity. an intention to embark the organisation on intensified entrepreneurship is neither an accident nor an afterthought, and although the exploitation of the opportunity is central to their thinking, entrepreneurs are still concerned with committing certain levels of resources into the enterprise (hisrich et al. 2008), albeit calculatedly for fear of failure. capelleras et al. (2010) postulate that to examine the variety of factors influencing entrepreneurial outcomes, such as venture creation speed, it is necessary to take into account not only internal resources of the firm but also individual perceptions about environmental resources. whilst failure could be inevitable in most circumstances, entrepreneurship must essentially be fully resourced to ascend into the desired plane of performance. resource-based theories of firm strategy, such as resource-based view (rbv), suggest that firms with valuable, rare and inimitable resources have the potential to achieve superior performance (raffo, clark & arik 2016; wiklund & sherphard 2003:1307). according to shokri (2012), these resources include capital (investments in businesses), participation, knowledge and skills of workers, physical equipment and buildings. attraction and use of capital is one of the key tasks of an entrepreneur to gather necessary resources and innovate competitively to become profitable. lichtenstein and brush (2001:40) observe that in the early stages of firm growth, resources are key and being able to ascertain and procure these resources becomes crucial if entrepreneurial firms are to survive and prosper (jones & jayawarna 2010:129), especially in distressed economic situations such as the decade-long hyperinflation that zimbabwe went through. however, in so doing, it must be observed that success is not imminent and might be intercepted by failure before it is achieved. research methodology and design a research design is defined as a blueprint that expresses both the structure of the research problem and the plan of investigation to obtain empirical evidence (blumberg, cooper & schindler 2008:195; collis & hussey 2013; løkke & sørensen 2014; wagner, kawulich & garner 2012). this study is largely embedded in the positivist philosophy, making predominant use of quantitative research design augmented with descriptive statistics. the enquiry focuses on determining the general trends and opinions of defined populations. the population of interest is defined as the insurance industry in zimbabwe. representation of that insurance industry population is sampled. the research then generalises the findings obtained to the larger population (the insurance industry) using statistical techniques to determine the likelihood of sample findings applying to the whole insurance industry. as a result, a cross-sectional, sequential descripto-explanatory survey research design (pickett, reilly & mcintyre 2005) was opted for in this study as the researcher was in a position to take a snapshot study of the goings-on in the insurance industry in zimbabwe during the hyperinflationary period. the survey research design assisted the researcher to engage the large insurance industry population by surveying a sample of that population in a fast and economical manner (saunders, philip & thornhill 2009; stockman 2015; wahyuni 2012). a sequential descripto-explanatory survey design with its unique elements of both descriptive and explanatory research designs applied in sequence (israel 2007; smith 2018; trujillo 2010) bolstered the study. consequently, the descriptive statistics sought to describe the ‘how’ and ‘why ‘questions (singh et al. 2012) of what happened in the insurance firms during the hyperinflationary environment with regard to tolerance for failure and risk-taking, providing near-accurate profile of events and their pragmatic contexts. this was important in providing a clear and comprehensive understanding of the context in which entrepreneurship was practised, and in particular how the principles of risk-taking and tolerance for failure were dealt with. leedy and ormrod (2005) suggest that descriptive research is more important for understanding relationships and behaviours (chong & yeo 2015; ellis & levy 2009). whatever happened would need to be explained by the explanatory design in pursuit of establishing not only what happened but also how it happened and why it happened (saunders et al. 2009). consequently, the study would assume an inductive approach as the reasoning starts with an assumption of what could have happened to the insurance firms during the hyperinflation period, which after collecting and analysing data can then be generalised to the rest of the insurance industry during the same period. therefore, the strategy was implanted for its descriptive ability to identify how insurance businesses survived the hyperinflation environment and how tolerance of failure and risk-taking was critical to the survival and possibly impacting profitability. sampling and sample size stratified sampling was used to increase statistical efficiency, to provide enough data for analysing various strata and to enable use of other research methods in other subgroups (blumberg et al. 2008; lee 2015). as the study deals with the entrepreneurial behaviours of the firm, a cross-sectional research was deemed appropriate to reach out to salaried employees, including those in management to elicit their opinions on the state of entrepreneurship in their respective organisations, especially on how the principles of tolerance for failure and risk-taking were crucial in the survival of the insurance firms during the hyperinflation period. these respondents were drawn out from a random selection of elements from various subgroups making up the insurance industry in zimbabwe, such as life assurance, short-term insurance, reinsurance, funeral assurance and broker firms. a sample of 307 respondents consisting of both employees and managers was deemed an adequate representation of the insurance industry in zimbabwe. data collection surveys sought to systematically collect a body of quantifiable data with respect to a number of variables, which were then examined to discern patterns of association. questionnaires randomly distributed via google forms were used to collect primary data from employees and managers working in various insurance firms in zimbabwe. the questionnaires schedule had sets of questions, each derived from the research questions. the questionnaires were then administered to the respondents. predominantly, the questionnaire sought to measure corporate entrepreneurial behaviour with respect to proclivity for risk-taking and innovation, both of which are proxies of tolerance for failure. the questions were therefore categorised to focus on research questions and to address the entire conceptual framework. questions were also created to stimulate responses that sought to create an association between behavioural constructs and entrepreneurial performance such as profitability and growth. data analysis was performed through various statistical techniques deemed relevant and adequate for the kind of data extracted. for comparison of dichotomous groups, independent samples t-test was used, where data were on a ratio scale; otherwise where data were collected on an ordinal scale, an independent sample’s mann–whitney u test became more useful. however, for more than two levels of independent variables, an anova sufficed, especially where the scores on the independent variable were in ratio or interval scale. research results and discussion instrument reliability and validity the question of whether the methods employed to gather data can still yield the same results at a different time and space explains reliability and validity (wagner et al. 2012). whilst reliability is concerned with the ability to measure the construct the same way over and over again in similar situations, validity presumes reliability. validity is concerned with whether the measure really measures the construct it is expected to measure. entrepreneurial performance measures were therefore advanced as growth, profitability and innovations. to ensure reliability, the consistency of measurement internally and across time becomes critical. this article used three main variables: tolerance of failure, innovation and performance. tolerance of failure score was computed from four constructs on risk orientation: bold action regardless of consequences, deliberate risk, elimination or minimisation of obstacles, and presence of risk governance framework. innovation was computed from four constructs on innovation and creativity: encouragement of ideas and solutions, recognition or appreciation of innovation activities, evidence of innovative thinking in meetings, and tolerance of failure on new things, ways and processes. scores for tolerance of failure as well as innovation were collected using a (reverse) five-point likert scale (strongly agree [1], agree [2], unsure [3], disagree [4] and strongly disagree [5]) for each of the constructs. therefore, the higher the number, the lower the level of risk orientation or tolerance of failure, as well as the level of innovation. lastly, performance was measured using two constructs, namely, growth and profitability, all collected using an ordinal scale: growth had three categories (growth into top 2, stabilisation and deterioration out of the top 2) and profitability also had three categories (profit, break-even and loss position). reliability statistics were then run for these three variables (see table 2). internal consistency for the dimensions of tolerance of failure was generally acceptable (cronbach’s alpha = 0.74), with an average of 0.57 inter-item correlation. internal consistency for the dimensions of innovation was generally weak (cronbach’s alpha = 0.63), with an average of 0.48 inter-item correlation. lastly, internal consistency for the dimensions of performance was generally poor (cronbach’s alpha = 0.51), with an inter-item correlation of 0.34. it could be fortuitous that the dimensions on performance had less consistency, given that they were measuring different dimensions of performance (growth and profitability). table 2: cronbach from spss output for measures. research hypotheses hypothesis 1: tolerance of failure encourages entrepreneurial innovations this study hypothesises that tolerance of failure ultimately results in a spike in entrepreneurial firm innovations. to test this hypothesis, entrepreneurial innovation was derived from the ability of the insurance firm to exhibit innovation and creativity, a critical dimension of entrepreneurial performance. this dimension sought to understand how various departments (financial, support services, operations, marketing and business development, and underwriting department) within the firm were entrepreneurially oriented. therefore, the innovation and creativity dimension contained five sub-items (financial department, support services departments, operations, marketing and business development, and underwriting department) measured on a three-point scale (yes = 2; unsure = 1; no = 0). a mean innovative and creativity score was computed and dichotomous mean comparison was performed to compare those who (strongly) agreed and those who (strongly) disagreed that tolerance of failure was present. the comparison was calculated using the independent samples t-test. for the purposes of this test, the response of ‘unsure’ on the dimensions of the presence of tolerance of failure was suppressed so that the comparison was carried out on two ends of the continuum. agree and strongly agree were combined; similarly, disagree and strongly disagree were combined to form the independent variable to which exhibition of innovation and creativity was a dependent variable. it is important to note that this construct was measured on a three-point scale (yes = 2; unsure = 1; no = 0); therefore, the higher the number, the higher the level of innovation and creativity. it was revealed that those who (strongly) agreed that tolerance of failure was present significantly reported exhibition of more innovation and creativity (m2 = 1.35; s2 = 0.70) than those who (strongly) disagreed (m1 = 0.92; s2 = 0.70) (t (257) = −4.540, p = 0.000). therefore, the null hypothesis is rejected and it is concluded that insurance companies that have tolerance of failure encourage entrepreneurial innovations, and entrepreneurial performance in general. hypothesis 2: growing companies tolerate failure among employees the study also hypothesised that growing companies have a tendency to tolerate failure among their employees (see table 3). to test this hypothesis, tolerance of failure score was computed from four constructs on risk orientation: bold action regardless of consequences, deliberate risk, elimination or minimisation of obstacles and presence of risk governance framework. at this juncture, it is important to comprehend that each of the four constructs for risk orientation was scored with a (reverse) five-point likert scale (strongly agree [1], agree [2], unsure [3], disagree [4] and strongly disagree [5]). therefore, the higher the number, the lower the level of risk orientation or tolerance of failure. tolerance of failure mean comparison was calculated on the dimensions of growth using a one-way anova. the results revealed that there was a statistically significant difference in mean tolerance of failure (mgrowth = 2.32, sgrowth = 0.84; mstabilise = 2.66, sstabilise = 0.77; mdeteriorate = 3.23, sdeteriorate = 1.16) among the different categories of growth. fobt = 10.49 and is associated with p = 0.000; we therefore reject h0 and conclude that at least one of the growth categories has a mean tolerance of failure significantly different from the other categories (fobt (2; 304) = 10.49, p = 0.000, α = 0.05). it can be concluded that insurance companies that took the risk of tolerating failure had much better chances of growing than those that were risk-averse because the tukey’s hsd post-hoc tests revealed that the categories of ‘growth into top 2 on the market’ and ‘stabilisation’ were a homogenous subset (p = 0.22) significantly lower than the category of ‘deterioration from outside top 2 on the market’. from the mean differences, it is apparent that the means for growth into the top 2 and stabilisation are significantly lower than that of deterioration from outside the top 2 on the market. table 3: tolerance for failure on innovations. hypothesis 3: profitable companies tolerate failure it had been propounded that those companies that make profits are likely to tolerate failure (see table 4). to test this hypothesis, tolerance of failure score was used for comparison on the categories of profitability using a one-way anova. the results revealed that there was a statistically significant difference in mean tolerance of failure (mprofit = 2.03, sprofit = 0.56; meven = 2.56, seven = 0.73; mloss = 3.12, sloss = 1.05) among the different categories of profitability. fobt = 27.156 and is associated with p = 0.000; we therefore reject h0 and conclude that at least one of the profitability categories has a mean tolerance of failure significantly different from the other categories (fobt (2; 304) = 27.16, p = 0.000, α = 0.05). it can be concluded that companies that took risks or tolerated failure had much better chances of making profit than those that were risk-averse because the tukey’s hsd post-hoc tests revealed trichotomy homogenous subsets; the ‘profit’ category was a homogenous subset significantly lower than the ‘break-even’ category which was also significantly lower than the ‘loss position’ category. from the mean tolerance of failure differences, it is apparent that the mean for those who made profit is significantly lower than those who broke even and those who broke even are also significantly lower than those who were in a loss position. table 4: summary of analysis of variance tests on the dimensions of tolerance of failure. conclusion the study results point to the fact that tolerance of failure is likely to proffer more on the aspect of entrepreneurial innovations, although in reality such efforts may not affect profitability nor encourage growth more than those who do not tolerate failure (see table 5). however, the broader and more composite aspect of risk-taking, with its numerous constructs other than tolerance for failure, tends to reflect that performance on the aspect of growth can be influenced by the extent to which an organisation embraces risk-taking. overall, the study has revealed that generally tolerance of failure is a critical aspect of risk-taking worth taking as it encourages employees to be innovative and entrepreneurial by experimenting and learning from initial instances of failure. although the results did not show any difference in terms of growth and profitability, they in fact revealed that tolerance of failure may lead to growth and profitability in the broader context of risk orientation, as shown by the insurance companies studied. companies would therefore perform better, especially in the aspect of innovations, by tolerating failure among their employees, albeit calculatedly as advocated by the findings and buttressed by various scholarly literatures, and give the employees the latitude necessary in driving the business to sustainable performance without fear of detrimental ramifications of their actions to the business and consequences to themselves. table 5: summary of analysis of variance tests on the dimensions of tolerance of failure versus profitability. acknowledgements competing interests the authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article. authors’ contribution o.k. conceptualised the study and developed the article, whilst prof. j. van vuuren edited the article. both authors read and approved the final manuscript. references agwu, e., 2018, ‘analysis of the impact of strategic management on the business performance of smes in nigeria’, academy of strategic management journal 17(1), 1–20. aldrich, h.e. & fiol, c.m., 1994, ‘fools rush in? the institutional context of industry creation’, academy of management review 19(4), 645–670. ali, j.r. & wajid, s., 2012, ‘entrepreneurial and intrapreneurial orientation in indian enterprises: an empirical study’, south asian journal of asian studies 19(3), n.p. alvarez, s.a. & busenitz, l.w., 2001, ‘the entrepreneurship of resource-based theory’, journal of management 27(6), 755–775. arasti, z., 2010, perceived causes of business failure: an empirical study of iranian entrepreneurs, academic conferences international limited, reading, vol. 9, p. 61. ayodotun, i.s., oyebisi, i.m., maxwell, o.a., oluremi, o.a., adebanji, a.w., hezekiah, f.o. et al., 2018, ‘examining the moderating effect of entrepreneurs’ demographic characteristics on strategic entrepreneurial orientations and competitiveness of smes’, journal of entrepreneurship education 21(2), 1–8. bansal, p.c., 2011, ‘from jugaad to systemic innovation: the challenge for india’, indian journal of industrial relations 6(3), 536. baumol, w.j., 2010, the microtheory of innovative entrepreneurship, princeton university press, princeton, nj. birkinshaw, j., 2003, ‘the paradox of corporate entrepreneurship’, strategy and business, 13 february, pp. 46–57. birkinshaw, j., hood, n. & young, s., 2005, ‘subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance’, international business review 14, 227–248. https://doi.org/10.1016/j.ibusrev.2004.04.010 blumberg, b., cooper, d.r. & schindler, p.s., 2008, business research methods, 2nd european edn., mcgraw-hill, new york. bratnicka, k., gabrys, b. & bratnicki, m., 2013, ‘how organizational creativity influence firm’s profitability: the moderating role of corporate entrepreneurship’, in european conference of innovation and entrepreneurship, brussels, belgium, september 19–20, 2013, pp. 116–125. brewer, t., 2002, richard cantillon: pioneer of economic theory, routledge, london. burke-le roux, a. & pretorius, m., 2017, ‘exploring entrepreneurial learning during formal business rescue processes: insights from the south african experience’, sa journal of human resource management 15(1), 1–15. https://doi.org/10.4102/sajhrm.v15i0.733 cannon, m.d. & edmondson, a.c., 2005, ‘failing to learn and learning to fail (intelligently): how great organizations put failure to work to innovate and improve’, long range planning 38(3), 299–319. capelleras, j.-l., greene, f.j., kantis, h. & rabetino, r., 2010, ‘venture creation speed and subsequent growth: evidence from south america’, journal of small business management 48(3), 302–324. cardon, m.s., stevens, c.e. & potter, d.r., 2011, ‘misfortunes or mistakes? cultural sense of making entrepreneurial failure’, journal of business venturing 26(1), 1–152. carland, j.c. & carland, j.w. (jr.), 2013, ‘a model of shared entrepreneurial leadership’, academy of entrepreneurship journal 18(2), 71–81. chirani, e., farahbod, f. & pourvahedi, f., 2013, ‘entrepreneurship and its importance in organisations’, arabian journal of business and management review (oman chapter) 3(4), 72–76. https://doi.org/10.12816/0016444 chong, c.h. & yeo, k.j., 2015, ‘an overview of grounded theory design in educational research’, asian social science 11(12), 258. https://doi.org/10.5539/ass.v11n12p258 christensen, k.s., 2004, ‘a classification of the corporate entrepreneurship umbrella: labels and perspectives’, international journal of management and enterprise development 1(4), 301–315. https://doi.org/10.1504/ijmed.2004.004635 chuang, y.t. & baum, j.a., 2003, ‘it’s all in the name: failure-induced learning by multiunit chains’, administrative science quarterly 48(1), 33–59. classen, n., van gils, a., bammens, y. & carree, m., 2012, ‘accessing resources from innovation partners: the search breadth of family smes’, journal of small business management 50(2), 191–215. https://doi.org/10.1111/j.1540-627x.2012.00350.x clohessy, g.r., holt, d.t. & rutherford, m.w., 2007, ‘corporate entrepreneurship: an empirical look at individual characteristics, context, and process’, journal of leadership and organisational studies 13(4), 40–54. https://doi.org/10.1177/10717919070130040701 coleman, s. & robb, a.m., 2010, a rising tide: financing strategies for women owned firms, stanford business books, stanford, ca. collis, j. & hussey, r., 2013, business research: a practical guide for undergraduate and postgraduate students, macmillan international higher education, new york. conger, j.a. & kanungo, r.n., 1994, ‘charismatic leadership in organizations: perceived behavioral attributes and their measurement’, journal of organizational behavior 15(5), 439–452. cox, c. & jennings, r., 1995, ‘the foundations of success: the development and characteristics of british entrepreneurs and intrapreneurs’, leadership & organization development journal 16(7), 4–9. croitoru, a., 2012, ‘schumpeter, ja, 1934 (2008), the theory of economic development: an inquiry into profits, capital, credit, interest and the business cycle, translated from the german by redvers opie, new brunswick (usa) and london (uk): transaction publishers’, journal of comparative research in anthropology and sociology 3(2), 1–13. dess, g.g. & lumpkin, g.t., 2001, ‘linking two dimensions of entrepreneurial orientation to firm performance: the moderating role of environment and industry cycle’, journal of business venturing 16, 429–451. https://doi.org/10.1016/s0883-9026(00)00048-3 dess, g.g., lumpkin, g.t. & eisner, a.b., 2010, strategic management: creating competitive advantages, 5th edn., mcgraw-hill, new york. dreger, c. & zhang, y., 2011, the chinese impact on gdp growth and inflation in the industrial countries, diw discussion papers no. 1151, deutsches institut für wirtschaftsforschung (diw), berlin. eccles, r.g. & serafeim, g., 2013, ‘the performance frontier’, harvard business review 91(5), 50–60. ellis, t.j. & levy, y., 2009, ‘towards a guide for novice researchers on research methodology: review and proposed methods’, issues in informing science & information technology 6, 323. https://doi.org/10.28945/1062 erickson, s.m. & laing, w., 2016, ‘the oxford mba: a case study in connecting academia with business’, journal of entrepreneurship education 19(1), 1. farrukh, m., ying, c.w. & mansori, s., 2016, ‘intrapreneurial behavior: an empirical investigation of personality traits’, management & marketing 11(4), 597–609. https://doi.org/10.1515/mmcks-2016-0018 ferguson, t.w., dougherty, k.d. & neubert, m.j., 2014, ‘religious orthodoxy and entrepreneurial risk-taking’, sociological focus 47(1), 32–44. https://doi.org/10.1080/00380237.2014.854136 gillis, w.e., combs, j.g. & ketchen, d.j. (jr.), 2014, ‘using resource-based theory to help explain plural form franchising’, entrepreneurship: theory and practice 38(3), 449. https://doi.org/10.1111/etap.12008 gowrishankar, k., 2008, ‘insights into entrepreneurial behaviour in indian firms’, academy of entrepreneurship journal 14(1), 95–105. guillemette, m.a., yao, r., james, i.i.i. & russell, n., 2015, ‘an analysis of risk assessment questions based on loss-averse preferences’, journal of financial counseling and planning 26(1), 17–29. https://doi.org/10.1891/1052-3073.26.1.17 gupta, a., chen, j. & gupta, v.k., 2016, ‘does management’s attention to different facets of entrepreneurial orientation create value for the firm? a longitudinal study of large retailer’, new england journal of entrepreneurship 19(2), 54–71. https://doi.org/10.1108/neje-19-02-2016-b005 gusman, y. & febrian, e., 2016, ‘the impact of managerial cognition, human capital and social capital on strategic entrepreneurship and firm performance: evidence from indonesian islamic bank industry’, academy of strategic management journal 15, 82–94. havlíček, k., thalassinos, i.e. & berezkinova, l., 2013, ‘innovation management and controlling in smes’, european research studies journal 16(4), 57–70. he, f., 2013, ‘learning from failure: the making of entrepreneurial leaders’, doctoral dissertation, the george washington university. hinz, a., 2017, ‘entrepreneurial behaviour revisited: linking self-efficacy with effectuation’, international journal of business & society 18(s2), 245. hisrich, r.d., peters, m.p. & shepherd, d.a. (eds.), 2008, entrepreneurship, 8th edn., irwin/mcgraw-hill, boston, ma. hopkins, s.a., hopkins, w.e. & thornton, b., 2002, ‘transforming low-tech environments into high-tech environments: strategies and developmental barriers’, sam advanced management journal 67(1), 14. hornsby, j.s., kuratko, d.f. & zahara, s.a., 2002, ‘middle managers’ perception of the internal environment for corporate entrepreneurship: assessing a measurement scale’, journal of business venturing 17(3), 189–290. https://doi.org/10.1016/s0883-9026(00)00059-8 inacio, jr, e. & gimenez, f.a., 2012, ‘an investigation of the reliability and validity of an entrepreneurial orientation index in brazil’, academy of entrepreneurship journal 18(2), 41. insurance and pensions commission, 2013, annual report, insurance and pensions commission, harare. ireland, r.d., kuratko, d.f. & morris, m.h., 2006, ‘a health audit for corporate entrepreneurship: innovation at all levels: part ii’, journal of business strategy 27(2), 21–30. israel, d., 2007, ‘research methods for graduate business and social science students’, south asian journal of management 14(4), 161. jennings, d.f. & lumpkin, j.r., 1989, ‘functioning modeling corporate entrepreneurship: an empirical integrative analysis’, journal of management 15(3), 485–502. johannesson, j. & jorgensen, p.j., 2017, ‘the moderating effect of employee education and professional skills on the relationship between entrepreneurial orientation and performance’, journal of entrepreneurship education 20(2), 1–18. johnson, d., 2001, ‘what is innovation and entrepreneurship? lessons for larger organisations’, industrial and commercial training 33(4), 135–140. jones, o. & jayawarna, d., 2010, ‘resourcing new businesses: social networks, bootstrapping and firm performance’, venture capital: an international journal of entrepreneurial finance 12(2), 127–152. jong, j.p.d., parker, s.k., wennekers, s. & wu, c.h., 2015, ‘entrepreneurial behavior in organizations: does job design matter?’, entrepreneurship theory and practice 39(4), 981–995. https://doi.org/10.1111/etap.12084 josien, l., 2012, ‘entrepreneurial orientation: an empirical study of the risk propensity dimension of entrepreneurs’, academy of entrepreneurship journal 18(1), 21–34. kang, w., 2013, ‘does ownership change raise hope for corporate entrepreneurship?’, academy of entrepreneurship journal 19(3), 25–41. kang, w., 2014, ‘a new form of corporate entrepreneurship: restructuring’, academy of entrepreneurship journal 20(3), 40. kararach, g. & otieno, r.o. (eds.), 2016, economic management in a hyperinflationary environment: the political economy of zimbabwe, 1980–2008, oxford university press, oxford. kilenthong, p., hultman, c.m. & hills, g.e., 2016, ‘entrepreneurial orientation as the determinant of entrepreneurial marketing behaviors’, journal of small business strategy 26(2), 1–22. kim, j.y. & miner, a.s., 2007, ‘vicarious learning from the failures and near-failures of others: evidence from the us commercial banking industry’, academy of management journal 50(3), 687–714. knight, f.h., 1921, risk, uncertainty and profit, hart, schaffner and marx, new york. knosková, l., 2015, ‘innovativeness processes and entrepreneurial culture for radical innovations’, amfiteatru economic 17(38), 342–357. kreiser, p.m., patel, p.c. & fiet, j.o., 2013, ‘the influence of changes in social capital on firm–founding activities’, entrepreneurship theory and practice 37(3), 539–567. https://doi.org/10.1111/etap.12039 kumar, m., 2007, ‘explaining entrepreneurial success: a conceptual model’, academy of entrepreneurship journal 13(1), 57–77. kuntze, r. & matulich, e., 2016, ‘exploring cognitive bias in entrepreneurial start-up failure’, academy of entrepreneurship journal 22(2), 54. kuratko, d.f., ireland, r.d., covin, j.g. & hornsby, j.s., 2005, ‘a model of middle–level managers’ entrepreneurial behavior’, entrepreneurship theory and practice 29(6), 699–716. kuratko, d.f. & hodgetts, r.m. (eds.), 2004, ‘innovation and the entrepreneur’, in entrepreneurship. theory, process, practice, 6th edn., pp. 138–150, thomson, mason, oh. kuratko, d.f., hornsby, j.s. & goldsby, m.g., 2007, ‘the relationship of stakeholder salience, organizational posture, and entrepreneurial intensity to corporate entrepreneurship’, journal of leadership & organizational studies 13(4), 56. https://doi.org/10.1177/10717919070130040801 kuratko, d.f., montagno, r.v. & hornsby, j.s., 1990, ‘developing an intrapreneurial assessment instrument for an effective corporate entrepreneurial environment’, strategic management journal 11, 49–58, viewed n.d., from, http://ssrn.com/abstract=1506387 lee, s.j., 2015, unraveling the ‘model minority’ stereotype: listening to asian american youth, teachers college press, new york. leedy, p.d. & ormrod, j.e., 2005, practical research: planning and design, 8th edn., pearson prentice hall, new jersey. li, y.h., huang, j.w. & tsai, m.t., 2009, ‘entrepreneurial orientation and firm performance: the role of knowledge creation process’, industrial marketing management 38(4), 440–449. liang, c. & dunn, p., 2014, ‘discovering heterogeneity of entrepreneurs: a comparison of food and nonfood entrepreneurs’, academy of entrepreneurship journal 20(2), 19–31. liao, j., kickul, j.r. & ma, h., 2009, ‘organizational dynamic capability and innovation: an empirical examination of internet firms’, journal of small business management 47(3), 263–286. liao, j., murphy, p. & welsch, h., 2005, ‘developing and validating a construct of entrepreneurial intensity’, new england journal of entrepreneurship 8(2), 31. https://doi.org/10.1108/neje-08-02-2005-b004 lichtenstein, b.m.b. & brush, c.g., 2001, ‘how do “resource bundles” develop and change in new ventures? a dynamic model and longitudinal exploration’, entrepreneurship theory and practice 25(3), 37–58. løkke, a.k. & sørensen, p.d., 2014, ‘theory testing using case studies’, electronic journal of business research methods 12(1), 66–74. lubatkin, m. & chatterjee, s., 1994, ‘extending modern portfolio theory into the domain of corporate diversification: does it apply?’, academy of management journal 37(1), 109–136. https://doi.org/10.5465/256772 lumpkin, g.t., cogliser, c.c. & schneider, d.r., 2009, ‘understanding and measuring autonomy: an entrepreneurial orientation perspective’, entrepreneurship: theory and practice 33(1), 47 luzzi, a. & sasson, a., 2016, ‘individual entrepreneurial exit and earnings in subsequent paid employment’, entrepreneurship theory and practice 40(2), 401–420. https://doi.org/10.1111/etap.12225 makinen, g.e., 2017, ‘monetary regimes and inflation: history, economic and political relationships’, the cato journal 37(1), 167. mckenzie, b. & sud, m., 2008, ‘a hermeneutical aprroach to understanding entrepreneurial failure’, academy of entrepreneurship journal 14(1), 123–148. mir-babayev, r., gulaliyev, m., shikhaliyeva, s., azizova, r. & ok, n., 2017, ‘the impact of cultural diversity on innovation performance: evidence from construction industry of azerbaijan’, economics & sociology 10(1), 78. https://doi.org/10.14254/2071-789x.2017/10-1/6 montiel-campos, h., 2018, ‘understanding employees’ entrepreneurial alertness: the role of creativity and support for creativity’, academy of entrepreneurship journal 24(1), 1–16. morris, m.h. & sexton, d.l., 1996, ‘the concept of entrepreneurial intensity: implications for company performance’, journal of business research 36, 5–13. https://doi.org/10.1016/0148-2963(95)00158-1 nhavira, j.d.g. & ocran, m.k., 2014, ‘measuring the statutory independence of sub-saharan africa central banks’, eastern africa social science research review 30(1), 47–72. https://doi.org/10.1353/eas.2014.0002 nie, w., dowell, w. & lui, a., 2012, in the shadow of the dragon: the global expansion of chinese companies—how it will change business forever, amacom, new york. nieman, g. & niewenhuizen, c. (eds.), 2009, entrepreneurship: a south african perspective, 2nd edn., van schaik, pretoria. nouri, p., imanipour, n., talebi, k. & zali, m., 2018, ‘exploring positive outcomes of decision making biases in the field of entrepreneurial marketing’, the qualitative report 23(6), 1364–1380. ojewumi, a.k., oyeleke, j.t., agberotimi, f. & adedayo, o., 2018, ‘obafemi awolowo university undergraduate students: the influence of gender and self-efficacy on entrepreneurial intentions’, journal of pan african studies 11(2), 168–186. park, m.s., park, j.w. & kim, j.h., 2017, ‘the effects of sme ceo’s entrepreneurial experience on corporate performance-centred on entrepreneurial failure rate’, academy of entrepreneurship journal 23(2), 11. phan, p.h., 2004, ‘entrepreneurship theory: possibilities and future directions’, journal of business venturing 19(5), 617–620. prosek, j., 2011, army of entrepreneurs: create an engaged and empowered workforce for exceptional business growth, amacom, new york. pickett, j.c., reilly, d.p. & mcintyre, r.m., 2005, ‘how to select a most efficient ols model for a time series data’, the journal of business forecasting 24(2), 28. raffo, d.m., clark, l.a. & arik, m., 2016, ‘strategic responses of non-profit organizations to the economic crisis: examining through the lenses of resource dependency and resourced-based view theories’, academy of strategic management journal 15(1), 48. reserve bank of zimbabwe, 2008, ‘monetary policy statement’ issued in terms of reserve bank of zimbabwe act, chapter 22:15, section 46, reserve bank of zimbabwe, harare. reynolds, p.d., hay, m., bygrave, w.d., camp, s.m. & autio, e., 2000, global entrepreneurship monitor: 200 executive report, kauffman centre for entrepreneurial leadership, ewing marion kauffman foundation, kansas city, mo. russo, m.v., 2010, companies on a mission: entrepreneurial strategies for growing sustainably, responsibly, and profitably, stanford business books, stanford, ca. sathe, v., 2003, corporate entrepreneurship: top managers and new business creation, cambridge university press, cambridge. sar, a.k., 2017, ‘competitive advantage and performance: an analysis of indian downstream oil and gas industry’, academy of accounting and financial studies journal 21(2), m41. saunders, m., philip, l & thornhill, a., 2009, research methods for business students, pearson education limited, london. serai, m.h., johl, s.k. & marimuthu, m., 2017, ‘an overview on relationship between corporate entrepreneurship and firm performance’, global business & management research 9, 428. shane, s. & venkataraman, s., 2000, ‘the promise of entrepreneurship as a field of research’, academy of management review 25(1), 217–226. shepherd, d.a., 2003, ‘learning from business failure: propositions of grief recovery for the self-employed’, academy of management review 28(2), 318–328. shokri, a., 2012, ‘the effects of critical success factors on iranian industries regarding some entrepreneurial competences and capabilities’, journal of business excellence 3(1), 28–32. sibanyoni, c. & mupambwa, p., 2017, ‘using resource-based theory to examine the competitiveness of an incubation plant in mining and agriculture’, international review of management and business research 6(2), 692. singh, r., squires, j., fromkin, j.b. & berger, r.p., 2012, ‘assessing the use of follow-up skeletal surveys in children with suspected physical abuse’, journal of trauma and acute care surgery 73(4), 972–976. sirmon, d.g., hitt, m.a. & ireland, r.d., 2004, the entrepreneurial mindset, harvard business press, boston, ma. sirmon, d.g., hitt, m.a. & ireland, r.d., 2007, ‘managing firm resources in dynamic environments to create value: looking inside the black box’, academy of management review 32(1), 273–292. smith, d., 2010, exploring innovation, 2nd edn., mcgraw-hill, new york. smith, p.r., 2018, ‘collecting sufficient evidence when conducting a case study’, the qualitative report 23(5), 1054–1048. smith, t.a., 2014, ‘testing theory and related factors for influencing proficiency in quantitative research’, academy of educational leadership journal 18(4), 117. stockman, c., 2015, ‘achieving a doctorate through mixed methods research’, electronic journal of business research methods 13(2), 74. sun, k.h., 2016, ‘differential impact of uncertainty on exporting decision in risk-averse and risk-taking firms’, seoul journal of economics 29, 379–409. thomsett, m.c., 2011, the manager’s pocket calculator: a quick guide to essential business formulas and ratios, american management association, new york. todorovic, z.w., todorovic, d. & ma, j., 2015, ‘corporate entrepreneurship and entrepreneurial orientation in corporate environment: a discussion’, academy of entrepreneurship journal 21(1), 82. trang, n.t.x., 2018, ‘corporate entrepreneurship and firm performance’, advances in management 11(1), 28–34. trujillo, v.j., 2010, ‘research methods in linguistics’, southwest journal of linguistics 29(2), 105. tse, e. & euchner, j., 2017, ‘innovation in china: an interview with edward tse. edward tse talks with jim euchner about china’s rising entrepreneurialism and how multinationals can succeed in china’, research-technology management 60(5), 15–21. https://doi.org/10.1080/08956308.2017.1348127 urban, b. & gaffurini, e., 2017, ‘organisational learning capabilities as determinants of social innovation: an empirical study in south africa’, sa journal of human resource management 15(1), 1–10. https://doi.org/10.4102/sajhrm.v6i1.132 vance, c.m., groves, k.s., gale, j. & hess, g.l., 2012, ‘would future entrepreneurs be better served by avoiding university business education? examining the effect of higher education on business student thinking style’, journal of entrepreneurship education 15(1), 127–141. wagner, c., kawulich, b. & garner, m. (eds.), 2012, doing social research: a global context, mcgraw-hill higher education, new york, ny. wahyuni, d., 2012, ‘the research design maze: understanding paradigms, cases, methods and methodologies’, journal of applied management accounting research 10(1), 69. wang, k.y., hermens, a., huang, k. & chelliah, j., 2015, ‘entrepreneurial orientation and organisational learning on smes’ innovations’, international journal of organizational innovation (online) 7(4), 71–81. wei, x. & hisrich, r.d., 2016, ‘error orientation and entrepreneurial decision making in chinese enterprises: opportunity identification as mediator’, social behavior and personality: an international journal 44(4), 555–568. https://doi.org/10.2224/sbp.2016.44.4.555 welsch, h.p., 2003, entrepreneurship: the way ahead, routledge, new york. wiklund, j. & shepherd, d., 2003, ‘knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses’, strategic management journal 24(13), 1307–1314. wiklund, j. & shepherd, d., 2005, ‘entrepreneurial orientation and small business performance: a configurational approach’, a journal of business venturing 20, 71–91. https://doi.org/10.1016/j.jbusvent.2004.01.001 wood, c.c., holt, d.t., reed, t.s. & hudgens, b.j., 2008, ‘perceptions of corporate entrepreneurship in air force organizations: antecedents and outcomes’, journal of small business and entrepreneurship 21(1), 117–131. https://doi.org/10.1080/08276331.2008.10593416 zahra, s.a., 2010, ‘harvesting family firms’ organizational social capital: a relational perspective’, journal of management studies 47(2), 345–366. https://doi.org/10.1111/j.1467-6486.2009.00894.x zarutskie, r., 2010, ‘the role of top management team human capital in venture capital markets: evidence from first-time funds’, journal of business venturing 25(1), 155–172. https://doi.org/10.1016/j.jbusvent.2008.05.008 zimmerman, j., 2010, ‘corporate entrepreneurship at ge and intel’, journal of business case studies 6(5), 77–81. the impact of stakeholders on family business success farrington venter and boshoff 20101102 publish sajesbm volume 3, (2010) 32 www.sajesbm.com article no 107 the influence of family and non-family stakeholders on family business success* shelley farrington** and elmarie venter department of business management, nelson mandela metropolitan university po box 77 000, nmmu south campus, port elizabeth 6031, republic of south africa tel: +27-41-5042203; fax: +27-41-5832644 shelley.farrington@nmmu.ac.za elmarie.venter@nmmu.ac.za christo boshoff department of business management, stellenbosch university private bag x1, matieland, 7602 tel: +27-21-8082735; fax: +27-41-8082226 cboshoff@sun.ac.za * this paper is based upon work financially supported by the national research foundation of south africa. ** to whom correspondence should be addressed. abstract the greatest threats to the growth, success and survival of a family business are primarily issues related to family relationships. the involvement of non-family members has also shown to present many threats as well as opportunities for the family business. because of the increasing number of sibling teams among family businesses this article focuses on the impact of family and non-family members’ involvement on the success of sibling-owned family businesses. key stakeholders identified as influencing a sibling partnership are parents, non-active sibling shareholders, spouses, and non-family members. the primary objectives of this article are thus to evaluate the impact of the stakeholders identified on the sajesbm volume 3, (2010) 33 www.sajesbm.com article no 107 success of a sibling partnership, by subjecting these relationships to empirical testing, and making recommendations to successfully manage relationships in family businesses. a structured questionnaire was made available to 1 323 sibling partner respondents. the respondents were identified by means of a convenience snowball sampling technique, and the data collected from 371 usable questionnaires was subjected to various statistical analyses. the empirical findings of this study show that both past and present parental involvement, as well as the involvement of other family members and non-family employees in the sibling-owned family businesses, significantly impact on its success. keywords and phrases: family business, sibling partnership, family team, family relationships, spouses, non-active shareholders, stakeholders. sajesbm volume 3, (2010) 34 www.sajesbm.com article no 107 introduction and problem statement most family business researchers and practitioners would probably agree that family businesses derive their special nature from the influence of family on business (hall & nordqvist, 2008). this being said, the greatest threats to the growth, success and survival of a family business are primarily issues related to family relationships (goldberg, 1996; mount, 1996; royer, simons, boyd & rafferty, 2008; ward, 1997; ward, 2004). according to molly, laveren and deloof (2010), it is from conflict laden family relationships that many family business problems originate. interpersonal dynamics among family business members have, for example, been identified as a critical factor in the low number of successful multi-generational transfers among such businesses (friedman, 1991; kepner, 1991; rodriguez, hildreth & mancuso, 1999). family members often act out their intense personal and interpersonal issues in the family’s business (rodriguez et al., 1999). this overflow of family conflicts into the business, as well as coalition politics among family members, are key problems in family businesses (kets de vries, 1993). running the family business is often more about managing family relationships than managing any other aspect of the business (mount, 1996; ward, 2004; zbar, 2004). various types of family teams are increasingly drawing the attention of researchers and authors in the field of family business, particularly copreneurships (eybers, 2010; rutherford, muse & oswald, 2006; stewart-gross & gross, 2007; venter, farrington & boshoff, 2009) and sibling partnerships (farrington, 2010; nelton, 1996; ward, 2004). according to aronoff, astrachan, mendosa and ward (1997), jimenez (2009), as well as ward (2004), an increasing number of family businesses are being passed on during the succession process to teams of siblings, or adopting sibling partnerships as an ownership structure. taking cognisance of this increase, more research attention should be directed towards these particular family business teams. by focussing on the influence of family and non-family members’ involvement on the success of sibling teams in family businesses, this article and the ensuing empirical investigation respond to this gap in current family business research. this article focuses on how family and non-family members, namely parents, spouses and non-active sibling shareholders, as well as non-family members, influence the ability of siblings in a sibling partnership to work together. as such, the purpose is to establish the impact of their involvement in the business and the relationship between the siblings, on the success of sibling-owned family businesses. the primary objectives of this article are to evaluate the impact of the involvement of these stakeholders on the success of a sibling partnership, by sajesbm volume 3, (2010) 35 www.sajesbm.com article no 107 subjecting these relationships to empirical testing and making recommendations to successfully manage relationships in family businesses. for the purpose of this article, the concepts “sibling partnership” and “sibling team” are used interchangeably and synonymously, and refer to a family business where at least two brothers and/or sisters, with a familial bond, are actively involved in the management and/or decision-making of the business, and exercise considerable influence over its strategic direction. key stakeholder relationships impacting on sibling partnerships traditional input-output models of economic activity propose that businesses convert the inputs of investors, employees, and suppliers into usable outputs, which are then sold to customers and consequently result in capital benefits for the business. according to this model, businesses only address the needs and wishes of those four key parties, namely investors, employees, suppliers, and customers. stakeholder theory, on the other hand, recognises that there are also other parties that are important to the successful functioning of a business (stakeholder theory, 2006). instrumental approaches towards stakeholder theory hold that to maximise shareholder value over an uncertain time-frame, managers ought to pay attention to key stakeholder relationships. firms have a stake in the behaviour of their stakeholders, and attention to stakeholder issues may help a firm to avoid decisions that might prompt stakeholders to undercut or thwart the firm's objectives (strategic stakeholder management, 1999). stakeholder theory clearly has important implications for family businesses. paying attention to both family and non-family stakeholder issues and relationships may help sibling partners avoid decisions that might prompt stakeholders to sabotage the partnership. in addition to having the same stakeholders as other non-family businesses, key stakeholders to sibling partnerships are: family members, those having an investment in the business, such as parents (lansberg, 1999; ward, 2004); nonactive shareholders (aronoff et al., 1997; gersick, davis, mccollom hampton & lansberg, 1997); and those that do not have an investment in the business, such as retired owners and spouses (aronoff et al., 1997; fishman, 2009; gersick et al., 1997; lansberg, 1999; schiff estess, 1999). in addition, poza, alfred and maheshwari (1997) regard both family and non-family employees as stakeholders in the family business. sundaramurthy (2008) asserts that it is vital for family and nonfamily members to work together if the family business is to succeed and grow. not only do the actions of these stakeholders influence the success of a sibling sajesbm volume 3, (2010) 36 www.sajesbm.com article no 107 partnership, but the success or failure of the sibling partnership may also have important emotional and financial ramifications for them. the family and non-family member stakeholders included in this study (see figure 1) are justified by a sufficiency of theory in the family business literature, and claims are not made that the model has an exhaustive coverage of every possible relationship influencing the effectiveness of a sibling partnership. figure 1 family and non-family members influencing the perceived success of sibling partnerships in figure 1 (the hypothesised model) the various family and non-family members identified as impacting the success of a sibling partnership are depicted, namely parental involvement, as well as the involvement of other family members and nonfamily employees. effectiveness or success in this study is measured using three variables: the dependent variable perceived success; and two intervening variables, namely financial performance and family harmony. as such, the model proposes that both the perceived financial performance of the business and the level of family harmony that exists within the family business positively influence perceived success. dependent and intervening variables as illustrated in figure 1, the dependent variable used in this study is the perceived success of a sibling partnership, which is defined as the degree to which the siblings find their ongoing involvement in the sibling partnership to be satisfying. organisational effectiveness has been described as the ability of an organisation to satisfy the expectations of its strategic constituents. given this description, it is clear that satisfying ones stakeholders plays a vital role in establishing success (zellweger financial performance perceived success family harmony parent other family members non-family members h1 h2 h3c h3b-5b h3a-5a h4c h5c financial performancefinancial performance perceived successperceived success family harmonyfamily harmony parent other family members non-family members h1 h2 h3c h3b-5b h3a-5a h4c h5c sajesbm volume 3, (2010) 37 www.sajesbm.com article no 107 & nason, 2008). the satisfaction of family members involved in a family business is commonly associated with success in family business research (distelberg & sorenson, 2009; handler, 1991; ivancevich, konopaske & matteson, 2005; sharma, 2004; venter, 200; zellweger & nason, 2008). team-member satisfaction, as a measure of team effectiveness, has also been used in a number of studies assessing team effectiveness in organisations (e.g. campion, medsker & higgs, 1993; campion, papper & medsker, 1996; doolen, hacker & van aken, 2006; howard, foster & shannon, 2005). in addition to the team members' satisfaction with the team experience, kreitner and kinicki (1995) suggest that the team members' willingness to continue contributing to the team effort is also a measure of team effectiveness. several authors have made use of business performance (financial and growth) as a measure of success to distinguish between successful and unsuccessful successions (flören, 2002; venter, 2003), successors (goldberg, 1996), family businesses (casillas, moreno, barbero, 2010; distelberg & sorenson, 2009; sharma, 2004; ward, 2004) and even teams in general (ivancevich et al., 2005; northouse, 2004). according to zellweger and nason (2008:206), growths in sales and in employees, as well as profitability are examples of performance outcomes that satisfy the demands of stakeholders. adendorff (2004) reports a positive relationship between profitability and the ability to satisfy stakeholders’ interests. similarly, venter (2003) finds a positive relationship between the financial security of the owner-manager and the business, and the satisfaction with the succession process. both anecdotal (flören, 2002; sharma, 2004; ward, 2004) and empirical evidence (santiago, 2000; venter, 2003) suggests that harmonious relationships between family members are important for successful successions and successful family businesses. zellweger and nason (2008) assert that family harmony, trustful relations, cohesion and a sense of belonging are performance outcomes that satisfy the demands of family stakeholders. in a family business characterised by disharmonious family relationships and poor financial performance, it is highly unlikely that family members involved will find their involvement to be satisfying, let alone want to continue being involved. consequently, in addition to direct effects, the hypothesised model (figure 1) implies that financial performance and family harmony act as intervening variables between the independent variables and the dependent variable perceived success. for the purpose of this study financial performance refers to positive trends of growth in number of employees and profit, as well as increasing revenue experienced by the sibling partnership. family harmony, on the other hand, is defined as mutual relationships among family members, which are characterised by closeness, caring and support, appreciation of each other, and concern for each sajesbm volume 3, (2010) 38 www.sajesbm.com article no 107 other’s welfare. against this background, the following hypotheses have been formulated: h1: there is a positive relationship between the perceived financial performance of the sibling partnership and the perceived success of the sibling partnership. h2: there is a positive relationship between the level of family harmony existing in the sibling partnership and the perceived success of the sibling partnership. independent variables numerous researchers (e.g. dyer, 1986; ward, 1987; lee, 2006; lumpkin, martin & vaughn, 2008) have focused their attention on the impact of family relationships on family businesses. three key groups of family members are identified as influencing a sibling partnership, namely the parents, the non-active sibling shareholders, and the spouses (aronoff et al., 1997; gersick et al., 1997; handler, 1991; maas, van der merwe & venter, 2005). focusing on these three key family relationships does not imply that other people or relationships with friends, children and/or colleagues, do not impact the ability of siblings to work together. for the purpose of this study, and based on the literature and anecdotal evidence, these other relationships are either not considered as family-based (for example friends and colleagues) or are not considered as key at this stage in influencing the ability of siblings to work together (for example children). in addition to family members, outsiders or non-family members are an important stakeholder group, and often make a vital contribution to the success and growth of the family business (fishmen, 2009; sharma, 2004; ward, 2004; zellweger & nason, 2008). relationships with non-family members include relationships with non-family employees, the directors of the board, and professional advisors or mentors, amongst others. the biggest challenge for sibling partners, especially successor partners, is to develop good working relationships, characterised by cooperation and trust, with key non-family employees (lansberg, 1999). the relationship between family and non-family members lends a unique dimension to a family business; poor relationships could cause conflict and spell disaster for the business (maas et al., 2005). anecdotal and empirical evidence supporting the inclusion of each of these groups of people in the hypothesised relationships will now be discussed. sajesbm volume 3, (2010) 39 www.sajesbm.com article no 107 parental involvement an overwhelming amount of anecdotal evidence exists, suggesting that parents impact the success of a sibling partnership (aronoff et al., 1997; swogger, 1991; ward, 2004). this influence of parents on the ability of siblings to work together, on their relationship, and on the success of the family business, occurs as a result of both the past (aronoff et al., 1997; cater & justis, 2009; friedman, 1991; lansberg, 1999; ward, 2004) and the present (cater & justis, 2009; de massis, chau, chrisman, 2008; friedman, 1991; harvey & evans, 1995; lansberg, 1999; sharma, 2004) behaviour of parents. according to swogger (1991), rigid emotional ties to parents can paralyse a successor generation. similarly, handler (1992) concludes that the degree of individuation or differentiation that exists in parents has important implications for the successor’s quality of experience of the succession process. if parents are alive they can continue to exercise enormous influence on the sibling team (aronoff et al., 1997). for example, the continued presence of the senior generation in the family business can act as an annoyance to other family members and employees involved in the business (aronoff et al., 1997; davis & harveston, 1999; harvey & evans, 1995). davis and harveston (1999) report that conflict is higher among second-generation family firms when the founder or spouse remains active in the family business, than when he or she is no longer active. the propensity of owner-managers to step aside is an important influencer of the successors’ satisfaction with the succession process (sharma, 1997; sharma, chua & chrisman, 2000), and the reluctance of the founder to step down is one of the dominant drivers of failed successions (ciampa & watkins, 1999; de massis et al., 2008). against this background the following hypotheses are subjected to further empirical testing: h3a : there is a positive relationship between parental involvement and the perceived financial performance of the sibling partnership. h3b : there is a positive relationship between parental involvement and the level of family harmony existing in the sibling partnership. h3c : there is a positive relationship between parental involvement and the perceived success of the sibling partnership. involvement of other family members non-active sibling shareholders are able to exercise considerable influence on the ability of the siblings to work together, and on the success of the sibling partnership (aronoff et al., 1997; brigham, 2004; gersick et al., 1997; lansberg, 1999; maas et al., 2005; van der heyden, blondel & carlock, 2005). according to lambrecht and lievens (2008:298), ownership held by numerous family shareholders can lead to increased family complexity and ultimately inhibited growth and reduced performance. furthermore, molly et al. (2010) assert that an increase in the number sajesbm volume 3, (2010) 40 www.sajesbm.com article no 107 of passive family shareholders may lead to intrafamily conflicts. the influence of dissatisfied non-active sibling shareholders manifests itself in a variety of ways, amongst others, through the sabotaging of business operations, interfering with business decisions, and stimulating conflict (underpowered sibling or cousin syndicates? 2003; maas et al., 2005). non-active sibling shareholders whose financial and participation needs are satisfied, are, however, good for both the business and the family (gersick et al., 1997; lansberg, 1999). poza (2010) asserts that successful family firms require the management of relationships with both active and non-active family members. the behaviour of spouses/in-laws is an especially important factor that influences whether the sibling team will be able to work together successfully and in a manner that is reasonably harmonious (aronoff et al., 1997; galbraith, 2003; gersick et al., 1997; lansberg, 1999; schiff estess, 1999). according to van auken and werbel (2006), a spouse’s willingness to contribute to the family business, directly or indirectly, can be seen as a core family variable, influencing financial performance. regardless of a spouse’s degree of direct participation in the business, spousal behaviour permeates family relationships and can affect business performance by influencing the entrepreneur’s attitudes, resources, and motivation toward the business (poza & messer, 2001; van auken & werbel, 2006). the joining of spouses/in-laws makes family relationships more complicated, conflict normally intensifies (fishmen, 2009; zheng, 2002) and in-laws are often seen as being responsible for this (aronoff et al., 1997; gersick et al., 1997; lansberg, 1999). davis and harveston (1999) reveal that conflict is higher among second-generation family firms when the spouse remains active in the family business and lower when the spouse is no longer active in the family business. in their study fahed-sreih and djoundourian (2006) find that non-family members in leading positions seem to be more acceptable than spouses/in-laws in these positions. the following hypotheses are subjected to further testing: h4a : there is a positive relationship between the involvement of other family members and the perceived financial performance of the sibling partnership. h4b : there is a positive relationship between the involvement of other family members and the level of family harmony existing in the sibling partnership. h4c : there is a positive relationship between the involvement of other family members and the perceived success of the sibling partnership. sajesbm volume 3, (2010) 41 www.sajesbm.com article no 107 non-family involvement outsiders or non-family members have an important impact on the success and growth of the family business (claver, rienda, quer, 2009; de massis et al., 2008; eybers, 2010; poza, 2010; sundaramurthy, 2008; sharma, 2004; ward, 2004). for example, the use of non-family or outside advisors such as jurists, fiscal experts, business economists, psychologists, and therapists has been advocated among family businesses (barach & gantisky, 1995; donckels & lambrecht, 1999; passing on the crown, 2004; ward, 2004). in his research, sorenson (2000) finds that consulting with outside professionals is highly correlated with both business (financial) and family outcomes. similarly, eybers (2010) reports significantly positive relationships between the involvement of non-family members in copreneurships and the financial and growth performance of these businesses. furthermore, in her study gladstein (1984) finds that technical consultation with others by team members is positively associated with self-reported measures of team effectiveness. outsider expertise improves the quality of discussions about strategy, improves decisionmaking, and increases the chances of business survival (mustakallio, autio & zahra, 2002). sundaramurthy (2008:89) asserts that outsiders serve as critical “trust catalysts”, building bridges between siblings and other subordinates. sufficient anecdotal and empirical evidence is presented above to hypothesise that: h5a : there is a positive relationship between the involvement of non-family employees and the perceived financial performance of the sibling partnership. h5b : there is a positive relationship between the involvement of non-family employees and the level of family harmony existing in the sibling partnership. h5c : there is a positive relationship between the involvement of non-family employees and the perceived success of the sibling partnership. methodology scale development each factor under investigation (construct) was operationalised using reliable and valid items sourced from validated measuring instruments used in previous empirical studies, as well as several self-generated items based on secondary sources. where necessary the items were rephrased to make them more suitable for the present study, and then used to empirically test the relationships hypothesised in figure 1. sajesbm volume 3, (2010) 42 www.sajesbm.com article no 107 sampling and data collection a convenience snowball sampling technique was employed for this study. two databases of family businesses were, however, identified and used to initiate the sampling process. in total 1 323 potential respondents were identified. this sampling technique and methodology are consistent with those of other family business researchers who have been constrained by the lack of a national database on family firms (sonfield & lussier, 2004; van der merwe & ellis, 2007; venter, 2003). in the present study the survey technique was employed and a self-administered structured questionnaire was distributed to potential respondents. section 1 of the questionnaire consisted of 37 statements (items) relating to the involvement of the various family and non-family members (stakeholders) in the sibling team. using a seven-point likert-type interval scale, respondents were requested to indicate their extent of agreement with regard to each statement. demographic information pertaining to both the respondent and the family business was requested in section 2. the data collected from 371 usable questionnaires was subjected to various statistical analyses. an exploratory factor analysis was undertaken and cronbachalpha coefficients calculated to assess the discriminant validity and reliability of the measuring instrument respectively. the relationships proposed in the hypothesised model (figure 1) were assessed by means structural equation modelling (sem). sample description the vast majority of respondents were male (80.6%), white (95.4%) and actively employed (93.3%) in the sibling partnership. an average age of 40 years was reported, with the majority (72.5%) being younger than 45 years. most respondents (36.7%) were an oldest child, with 33.2% being a middle child, and 30.2% a youngest child. although 29% of sibling teams consisted of both males and females, the majority (64.2%) of teams consisted of males only. the average team consisted of 2.48 siblings, with an average age difference of 5.66 years between siblings involved in the business. on average the siblings had been in business together for 11.44 years, with the majority (56.8%) having been in business together for less than 10 years. of the sibling owned/managed businesses participating in the study, 26.7% operated in the agricultural industry, 19.4% in the retail, 15.1% in the manufacturing and 11.3% in the finance/business services industries. the majority (73%) of businesses employed 50 persons or less and 24% indicated employment of fewer than 10 employees. of the participating businesses, 24% indicated having been operating for sajesbm volume 3, (2010) 43 www.sajesbm.com article no 107 10 years or less, whereas quite a large percentage (21%) had been operating for more than 50 years. the oldest business, a business that had been passed down from one family generation to another, was reported as being 265 years old. discriminant validity and reliability results before conducting a sem analysis the number of factors and the items loading onto each factor must be known (hair, black, babin, anderson & tatham, 2006). for this reason an exploratory factor analysis using spss 15 for windows was conducted to identify the unique factors present in the data prior to implementing sem. in order to conduct the exploratory factor analyses, the data were divided into two models. the first model related to the intervening and dependent variables, whereas the second to the independent variables. in identifying the factors (constructs) to extract for each model, the percentage of variance explained and the individual factor loadings were considered. because of the relational nature of the dependent and intervening variables, a principal axis factoring with an oblique (oblimin with kaiser normalisation) rotation was specified as the extraction and rotation method. bartlett’s test of sphericity reported a kmo of 0.94 (p<0.001), which confirmed that the data are factoranalysable. the exploratory factor analysis was unable to confirm all the latent variables as originally intended in the hypothesised model (figure 1). the original latent variable financial performance split into two variables, which were subsequently named financial performance and growth performance. the original dependent variable perceived success and the intervening variable family harmony combined to form a new dependent variable. this variable was renamed satisfaction with work and family relationships. these three factors explain 75.48% of the variance in the data and are regarded as the dependent variables in this study. for the independent variables it was not expected that the factors would be correlated, consequently principal component analysis with a varimax rotation was specified as the extraction and rotation method. bartlett’s test of sphericity reported a kmo of 0.793 (p<0.001), indicating that the data are factor-analysable. the original factor parental involvement split into two factors and these were renamed past parent involvement and no present parent involvement. of the original eight items expected to measure the construct parental involvement, three items loaded together onto one factor. these three items were all negatively phrased, and this factor was renamed no present parent involvement. the items intended to measure the involvement of other family members loaded onto one factor as expected. because of the negative phrasing of these items it was decided to rename this factor no other family member involvement. the factor non-family employees emerged as expected. the four factors extracted explain 60.04% of the variance in the data. sajesbm volume 3, (2010) 44 www.sajesbm.com article no 107 items that displayed no cross-loadings, that loaded to a significant extent on one factor only, and reported factor loadings of ≥ 0.4, were considered significant and retained for further analysis (hair et al., 2006). factor loadings of ≥ 0.4 were reported for all factors. consequently evidence of construct and discriminant validity for the measuring instrument is provided. cronbach-alpha coefficients of greater than 0.70 (nunnally & bernstein, 1994) were returned for all constructs. the cronbach-alpha coefficients consequently suggest that reliable measuring scales were used to measure the constructs under investigation. table 1 summarises the operational definitions of factors as well as details concerning the validity and reliability of the measuring instrument. table 1 measurement instrument analyses* operationalisation of factors item loadings cronbach alpha past parent involvement refers to the parents being involved in the lives of the siblings and in their relationship with each other, while they were growing up. 5 max: 0.878 min: 0.584 0.861 non-family involvement refers to the non-family members being involved in the family business 6 max: 0.821 min: 0.619 0.817 no other family member involvement refers to non-active sibling shareholders and spouses of sibling partners not getting involved, or else interfering in either the business or the relationship between the sibling partners. 4 max: 0.840 min: 0.785 0.864 no present parent involvement refers to parent(s) not being dependent on the business and not presently being involved or interfering in the business or in the present-day relationship between the siblings. 3 max: 0.850 min: 0.763 0.744 financial performance refers to the business being financially profitable and secure. 3 max: 0.910 min: 0.650 0.877 growth performance refers to the business showing growth in the number of employees, profits and revenues. 3 max: 0.933 min: 0.538 0.781 satisfaction with work and family relationships refers to harmonious relationships existing among family members (i.e. relationships characterised by closeness, caring and support, appreciation of each other, and concern for each other’s welfare) as well the siblings finding their working relationship in the sibling partnership as satisfying. 10 max: 0.904 min: 0.766 0.961 * see appendix a for a detailed description of multiple item scales measuring factors. sajesbm volume 3, (2010) 45 www.sajesbm.com article no 107 modified hypotheses as a result of the exploratory factor analyses, it was deemed necessary to reformulate the original hypotheses or the hypothesised model (figure 1), which are summarised below: h1: there is a positive relationship between the perceived financial performance of the sibling partnership and the satisfaction with work and family relationships. h2: there is a positive relationship between the level of growth performance of the sibling partnership and the satisfaction with work and family relationships. h3: there is a positive relationship between the level of growth performance of the sibling partnership and the perceived financial performance of the sibling partnership. h4a-4c : there is a positive relationship between past parent involvement and the perceived financial performance (h4a), the level of growth performance (h4b), and satisfaction with work and family relationships (h4c). h5a-5c : there is a positive relationship between no present parent involvement and the perceived financial performance (h5a), the level of growth performance(h5b), and the satisfaction with work and family relationships (h5c). h6a-6c : there is a positive relationship between no other family member involvement and the perceived financial performance (h6a), the level of growth performance(h6b), and the satisfaction with work and family relationships (h6c). h7a-7c : there is a positive relationship between the non-family member involvement and the perceived financial performance (h7a), the level of growth performance(h7b), and the satisfaction with work and family relationships (h7c). as mentioned above, the factor analysis resulted in the original latent variable financial performance splitting into two variables, namely financial performance and growth performance. ample empirical evidence exists to suggest that the growth performance of a business has a positive impact on its financial performance (brigham & daves, 2007; ittner & larcker, 1998). an analysis of 88 different studies has shown that growth is consistently related to higher levels of financial performance (capon, farley & hoenig, 1990). consequently an additional hypothesis was formulated (see h3 above) to test this relationship. sajesbm volume 3, (2010) 46 www.sajesbm.com article no 107 structural equation modeling results the hypothesised relationships were portrayed in path diagrams, and the structural and the measurement models were specified. a covariance matrix was used as the input matrix. as the data in the present study showed evidence of non-normality (the skewness and kurtosis of the data reported p-values of 0.000), robust maximum likelihood, which compensates for non-normality of the data, was used for obtaining estimates of the free parameters (hoogland & boomsma, 1998; satorra & bentler, 1994). indicator loadings for both the measurement and the structural models were evaluated for significance by ensuring that the p-value associated with each loading exceeded either the critical value for the 5% (critical value 1.96) significance level, the 1% (critical value 2.58) significance level (reisinger & turner, 1999) or even the 0.1% significance level (critical value of 3.30). to establish the extent to which the proposed model represents an acceptable approximation of the data, various fit indices were considered. a ratio of χ2 to degrees of freedom of 2.42 is reported, which is higher than the acceptable 2. values lower than 2 are indicators of a good fit (hair, anderson, tatham & black, 1998). the rmsea (0.0619) falls within the acceptable fit range of between 0.05 0.08 (grimm & yarnold, 2000; hair et al., 1998), while the upper limit of the 90% confidence interval for rmsea (0.0674) is less than 0.08 (boshoff, 2005; roberts, stephen & ilardi, 2003). apart from the ratio χ2 to degrees of freedom, the indices provide evidence that although the data does not fit the model perfectly, it can be described as having a reasonable fit. significant relationships identified by sem in figure 2 below, only the significant relationships identified by sem are depicted. the empirical findings show that the growth performance of the business is positively related (path coefficient = 0.23, p<0.001) to satisfaction with work and family relationships (hypothesis h2). similarly, the growth performance of the business is positively related (path coefficient = 0.71, p<0.001) to its perceived financial performance (hypothesis h3). support was thus found for hypotheses h2 and h3. no significant relationship is reported between perceived financial performance (hypothesis h1) and the satisfaction with work and family relationships. this finding suggests that the financial performance of the business has no impact on whether the siblings experience their work and family relationships as satisfying. hypothesis h1 could thus not be supported. sajesbm volume 3, (2010) 47 www.sajesbm.com article no 107 * satisfied = satisfaction with work and family relationships figure 2 model of family and non-family members influencing the level of satisfaction with work and family relationships in sibling partnerships significant positive relationships were found between past parent involvement (path coefficient = 0.24, p<0.001) and growth performance (hypothesis h4b), as well as between past parent involvement (path coefficient = 0.48, p<0.001) and satisfaction with work and family relationships (hypothesis h4c). support was thus found for hypotheses h4b and h4c. the respondents in this study are thus of the opinion that the more their parents were involved in their lives and in their relationships while they were growing up, the more likely their business is to experience growth performance, and the more likely they are to be being satisfied with their current work and family relationships. a relationship between past parent involvement and perceived financial performance (hypothesis h4a) could not be empirically confirmed. whether the parents of siblings were involved in their lives or their relationships during childhood or not, had no influence on the financial performance of the sibling partnership. hypothesis h4a could thus not be supported. the empirical findings in this study concur with a vast amount of anecdotal and empirical evidence that suggests that the behaviour of parents during the childhood years of siblings has a significant influence on the ability of those siblings to work together as adults (aronoff et al., 1997; lansberg, 1999; swogger, 1991; ward, 2004). the empirical results of this study found no significant relationship between no present parent involvement and perceived financial performance (hypothesis h5a), nor between no present parent involvement and growth performance (hypothesis no present parent past parent no other family non-family h5c satisfied growth performance h4c financial performance h4b h6b h7b h2 h3 0.20 p<0.001 0.48 p<0.001 0.24 p<0.001 0.16 p<0.001 0.27 p<0.001 0.23 p<0.001 0.71 p<0.001 no present parent past parent no other family non-family h5c satisfied growth performancegrowth performance h4c financial performancefinancial performance h4b h6b h7b h2 h3 0.20 p<0.001 0.48 p<0.001 0.24 p<0.001 0.16 p<0.001 0.27 p<0.001 0.23 p<0.001 0.71 p<0.001 sajesbm volume 3, (2010) 48 www.sajesbm.com article no 107 h5b). this result implies that whether parents are involved or get involved in the business and in the present-day relationship between the siblings or not, has no influence on the perceived financial performance or the growth performance of the business. support was thus not found for hypotheses h5a and h5b. a significant positive relationship was, however, identified between no present parent involvement (path coefficient = 0.20, p<0.001) and satisfaction with work and family relationships (hypothesis h5c). in other words, the less the parents of siblings are currently involved and/or interfere in the business and in the present-day relationship between the siblings, the more likely the siblings are to experience their work and family relationships as satisfying. support was thus found for hypothesis h5c. an overwhelming amount of anecdotal and empirical evidence suggests that the present involvement and/or interference of parents in the business and in the present-day relationship between the siblings, has an impact on the ability of siblings to work together as adults (lansberg, 1999; sharma, 2004:10; ward, 2004; davis & harveston, 1999). the empirical results of this study indicate that there is a positive relationship (path coefficient = 0.27, p<0.001) between the constructs no other family member involvement and growth performance. the respondents in this study are thus of the opinion that the less non-active sibling shareholders and spouses of sibling partners are involved and/or interfere in the business, the better the growth performance of the business will be. support is thus found for hypothesis h6b. no significant relationships were, however, found between no other family member involvement and satisfaction with work and family relationships (hypothesis h6c), or between no other family member involvement and perceived financial performance (hypothesis h6a). this finding implies that whether spouses or non-active sibling shareholders get involved and/or interfere in the business and in the relationship between the siblings or not, has no influence on the financial performance of the business, or on the siblings being satisfied with their work and family relationships. support was thus not found for hypotheses h6a and h6c. the findings of this study contradict a vast amount of anecdotal evidence supporting that both non-active sibling shareholders (brigham, 2004; lansberg, 1999; maas et al., 2005:104; van der heyden et al., 2005) and spouses (galbraith, 2003; gersick et al., 1997; lansberg, 1999; schiff estess, 1999) exercise considerable influence on the ability of the siblings to work together, and on the success of the sibling partnership. from figure 2 it can be seen that the variable non-family involvement is positively related (path coefficient = 0.16, p<0.001) to growth performance (hypothesis h7b), indicating that the participating siblings believed that the more non-family members are involved in the business, the better the growth performance of their business will sajesbm volume 3, (2010) 49 www.sajesbm.com article no 107 be. support is thus found for hypotheses h7b. the empirical results in this study are consistent with the findings of various other authors (mustakallio et al., 2002; sharma, 2004; ward, 2004), who suggest a positive relationship between the involvement of non-family members in the family business and business performance. in contrast to the aforementioned empirical and anecdotal evidence, no significant relationship was found between non-family involvement and perceived financial performance. hypothesis h7a could thus not be supported although anecdotal evidence exists suggesting that non-family members can play a key role in maintaining positive relationships (aronoff et al., 1997; lansberg, 1999; maas et al., 2005) or in creating conflicts (harvey & evans, 1995; neubauer, 2003) among family members, no significant relationship was identified between nonfamily involvement and satisfaction with work and family relationships (hypothesis h7c) in the present study. the respondents in this study were of the opinion that nonfamily members being involved in the business or not, had no influence on their being satisfied with their work and family relationships. hypothesis h7c could thus not be supported. this finding is also in contrast to the research of sorenson (2000), who reports that consulting with outside professionals is highly correlated with family outcomes. conclusions and recommendations the results of this study indicate that the growth performance of the sibling partnership exerts a significant positive influence on the financial performance of the business and on the satisfaction with work and family relationships. siblings are more likely to be satisfied with their working and family relationships, and the business is more likely to perform financially, when evidence of growth in sales, employees and profits exists. no significant relationships were identified between the other independent variables and financial performance. however, significant relationships were identified between past parent involvement, no other family member involvement and non-family involvement and growth performance, suggesting the that these factors indirectly affect perceived financial performance through their influence on growth performance. similarly, no significant relationship was identified between the independent variables no other family member involvement and non-family involvement, and the dependent variable satisfaction with work and family relationships. significant relationships were, however, found between the aforementioned independent variables and growth performance, suggesting that no other family member involvement and non-family involvement variables indirectly affect satisfaction with work and family relationships through their influence on growth performance. sajesbm volume 3, (2010) 50 www.sajesbm.com article no 107 the involvement of non-family members in a sibling partnership has a significant positive influence on the growth performance of the business. non-family members include, amongst others, non-family employees, the directors of the board, and professional advisors or mentors. non-family members make a vital contribution through expanding the knowledge base of the family business by bringing additional qualifications and skills, assisting with resolving conflict, showing objectivity, and promoting accountability and professionalism. it is also important that loyalty and respect for the family business leaders be developed among non-family employees and other outsiders. in addition, care should be taken that non-family members do not play the siblings off against each other. sibling partners should be in agreement and have a clear policy on non-family involvement. the findings of this study suggest that parents who set a good example, assist and encourage their children, and are involved in the lives of their children while they are growing up, contribute to better relationships between their children as adults. children frequently develop patterns in reaction to what they see their parents do, and several aspects relating to the behaviour of parents and their parenting style, affect the ability of the siblings to work together as adults. parents can, for example, start early in encouraging the development of skills such as sharing and collaboration, which will be necessary for a sibling relationship to survive when the children begin working together as adults. skills such as the ability to communicate, to think outside of own interests, to make decisions, to seek consensus, and the capacity to want fairness and justice for all, are the skills that are best learned while growing up in one's own family. parents can set good examples for their children by not being autocratic, manipulative or neglectful of their children. in addition, parents should treat all their children equally, and not be guilty of stereotyping or judging any one child. the results of this study highlight the important role that good parenting and a happy and stable childhood have on the future success of the family business. family business owners would do well to keep this in mind when nurturing the family business’s future leaders. in contrast to the influence of past parent involvement in the lives of siblings, the findings of this study suggest that the less that parents are involved, or get involved in the business and in the present-day relationship between the siblings, the better the present-day relationship between the siblings is likely to be. if parents are alive, whether they are involved in the family business or not, they can continue to exercise an enormous influence on the sibling team. to ensure that this influence is positive, parents should keep their involvement and interference in the family business to a minimum, and not act as arbitrator between siblings or interfere in conflict between them. parents should also display a willingness to let go, and to undertake proper exit planning (succession, estate and strategic planning). by transferring their sajesbm volume 3, (2010) 51 www.sajesbm.com article no 107 knowledge, information and networks, as well as trusting the ability of the successors, parents show support and endorse the new leaders. the less other family members (non-active siblings and spouses) are involved or get involved in the business and in the present-day relationship between the siblings, the better the growth performance of the business is likely to be. it is difficult to be an inlaw in a business-owning family, but the family business needs the spouses to be supportive of both the family and the business. an unhappy and annoyed spouse can threaten the success of a family business, whereas a happy spouse can support it and add to its strength. to successfully manage spousal relationships in a sibling partnership, consensus on spousal involvement should firstly exist. in addition, spouses should be welcomed and informed concerning business matters. spouses themselves should be objective, and as far as possible stay out of sibling and family grievances. in addition, spouses should not interfere in the day-to-day operations of the family business. as in the case of spouses, the existence of non-active siblings presents additional challenges for a sibling partnership. if possible, it is best to limit the involvement and number of non-active siblings, specifically those who are shareholders. should non-active shareholders exist, their roles and responsibilities should be clarified in a participation agreement or family constitution, and they should be informed regarding business activities. in addition, care should be taken not to allow non-active siblings to interfere in business operations or to play off those siblings working in the business against each other. implications for future research three constructs were proposed to measure success in the initial hypothesised model, namely family harmony, financial performance and perceived success. the exploratory factor analysis, however, revealed that the original six items measuring financial performance loaded onto two factors, which were renamed financial performance and growth performance. to deem growth and profitability as independent opposing measures of business performance is not unusual in the literature (cubbin & leech, 1986; geringer, frayne & olsen, 1998; small firm survey, 2007-2008). six items were originally formulated to measure family harmony and five to measure perceived success. these items unexpectedly loaded together onto one construct. as a result three new factors emerged to measure success in this study, namely financial performance, growth performance and satisfaction with work and family relationships. astrachan (2006) proposes that no single measure of performance is likely to capture the complexities of the family business; the results of this study support this proposition. the findings of this study present the family business researcher with three possible constructs for measuring different aspects of family business success. sajesbm volume 3, (2010) 52 www.sajesbm.com article no 107 in this study the factor measuring the involvement of parents in the lives of siblings, namely parental involvement, has split into two factors, each reflecting the involvement of parents in the lives of siblings at different stages in their lives. these factors relate to the involvement of parents in the lives of the siblings as children, namely past parent involvement and the present-day involvement of parents in the lives of siblings, no present parent involvement. the three items that loaded onto the aforementioned factor were all negatively phrased, hence the labelling of this factor. the results of this study show that the involvement of parents in the lives of the siblings as children versus parents’ present-day involvement in the lives of siblings have contradictory influences. the more that parents were involved in the lives of the siblings as children the better their adult relationship is likely to be, but the more the parents are involved in the present-day relationship between the siblings, the worse their adult relationships is likely to be. cleary the present and past influence of parents on the success of a family business are different constructs, and researchers should take cognisance of this when measuring or making conclusions concerning the influence of parents on family succeeding generations. limitations and future research in all empirical studies their limitations must be identified, and considered when making interpretations and conclusions. the use of non-probability snowball convenience sampling is a limitation that introduces a source of potential bias into this study. as such, the findings reported can not be generalised to the general family business population. another limitation of this study is that the proposed hypothetical model focuses exclusively on a selected number of stakeholders impacting business success. future studies could investigate various other relational and task-based factors and incorporate them into a more comprehensive model that describes the factors influencing the successful functioning of sibling partnerships. in addition, future studies could focus on other family business teams. despite the limitations identified, this study has added to the empirical body of family business research, and provides an important first step in gaining insights into important stakeholder groups influencing the effective functioning of family business teams. sajesbm volume 3, (2010) 53 www.sajesbm.com article no 107 references adendorff, c.m. 2004. the development of a cultural family business model of good governance for greek family businesses in south africa. unpublished doctoral thesis, rhodes university, grahamstown. aronoff, c.e., astrachan, j.h., mendosa, d.s. & ward, j.l. 1997. making sibling teams work: the next generation. family business leadership series. marietta, ga: family enterprise publishers. astrachan, j.h. 2006. editor’s notes. family business review, 19(1):v-vi. barach, j.a. & gantisky, j.b. 1995. successful succession in family business. family business review, 8(2):131-155. boshoff, c. 2005. a re-assessment and refinement of recovsat. managing service quality, 15(5):410-425. brigham, e.f. & daves, p.r. 2007. intermediate financial management. 9th ed. mason, oh: thomson south-western. brigham, w. 2004. siblings, don't give up the fight! the business review, march 12. [online] available from: http://www.bizjournals.com/albany/stories/2004/03/15/focus4.html [accessed: 2005-02-08]. campion, m.a., medsker, g.j. & higgs, a.c. 1993. relations between work group characteristics and effectiveness: implications for designing effective work groups. personnel psychology, 46:823-850. campion, m.a., papper, e.a. & medsker, g.j. 1996. relations between work team characteristics and effectiveness: a replication and extension. personnel psychology, 49:429-432. capon, n., farley, j.u. & hoenig, s. 1990. determinants of financial performance: a meta-analysis. management science, 36(10):1143-1159. casillas, j.c., moreno, a.m. & barbero, j.l. 2010. a configurational approach of the relationship between entrepreneurial orientation and growth of family firms. family business review, 23(1):27-44. cater iii, j.j. & justis, r.t. 2009. the development of successors from followers to leaders in small family firms. family business review, 22(2):109-124. ciampa, d. & watkins, m. 1999. the successor’s dilemma. harvard business review, 77(6):161-168. claver, e., rienda, l. & quer, d. 2009. family firms’ international commitment: the influence of family-related factors. family business review, 22(2):125-135. cubbin, j. & leech, d. 1986. growth versus profit-maximization: a simultaneousequations approach to testing the marris model. managerial and decision economics, 7:123-131. davis, p.s. & harveston, p.d. 1999. in the founder’s shadow: conflict in the family firm. family business review, 12(4):311-323. sajesbm volume 3, (2010) 54 www.sajesbm.com article no 107 de massis, a. chau, j.h. chrisman, j.j. 2008. factors preventing intra-family succession. family business review, 21(2):183-199. distelberg, b. & sorenson, r.l. 2009. updating systems concepts in family businesses: a focus on values, resource flow, and adaptability. family business review, 22(1):65-81. donckels, r. & lambrecht, j. 1999. the re-emergence of family-based enterprises in east central europe: what can be learned from family business research in the western world? family business review, 12(2):171-188. doolen, t.l., hacker, m.e. & van aken, e. 2006. managing organizational context for engineering team effectiveness. team performance management, 12(5/6):138-154. dyer, w.g. 1986. cultural change in family firms: anticipating and managing business and family transitions. in lee, j. 2006. impact of family relationships on attitudes of the second generation in family business. family business review, 19(3):175-191. eybers, c. 2010. co-preneurships in south african small and medium-sized family businesses. unpublished masters dissertation. port elizabeth: the nelson mandela metropolitan university. fahed-sreih, j. & djoundourian, s. 2006. determinants of longevity and success in lebanese family businesses: an exploratory study. family business review, 19(3):225-234. farrington 2009. sibling partnerships in south african small and medium-sized family businesses. unpublished doctoral thesis, the nelson mandela metropolitan university, port elizabeth. fishman, a.e. 2009. 9 elements of family business success. new york, ny: mcgraw-hill. flören, r.h. 2002. crown princes in the clay. assen, the netherlands: royal van gorcum. friedman, s. d. 1991. sibling relationships and intergenerational succession in family firms. family business review, 4(1):3-20. galbraith, c.s. 2003. divorce and the financial performance of small family businesses: an exploratory study. in sund, l. & smyrnios, k.x. 2005. striving for happiness and its impact on family stability: an exploration of arisotelian conception of happiness. family business review, 18(2):155-171. geringer, j.m., frayne, c.a. & olsen, d. 1998. rewarding growth or profit? top management team compensation and governance in japanese mnes. journal of international management, 4:289-309. gersick, k.e., davis, j.a., mccollom hampton, m.m. & lansberg, i. 1997. generation to generation – life cycles of the family business. boston, ma: harvard business school press. gladstein, d.l. 1984. groups in context: a model of task group effectiveness. administrative science quarterly, 29:499-517. sajesbm volume 3, (2010) 55 www.sajesbm.com article no 107 goldberg, s.d. 1996. research note: effective successors in family-owned businesses: significant elements. family business review, 9(2):185-197. grimm, l.g. & yarnold, p.r. 2000. reading and understanding more multivariate statistics. in adendorff, c.m. 2004. the development of a cultural family business model of good governance for greek family businesses in south africa. unpublished doctoral thesis, rhodes university, grahamstown. hair, j.f., anderson, r.e., tatham, r.l. & black, w.c. 1998. multivariate data analysis. 5th ed. englewood cliffs, nj: prentice hall. hair, j.f., black, w.c., babin, j.b., anderson, r.e. & tatham, r.l. 2006. multivariate data analysis. 6th ed. upper saddle river, nj: pearson/prentice hall. hall, a. & nordqvist, m. 2008. professional management in family businesses: toward an extended understanding. family business review, 21(1):51-69. handler, w.c. 1991. key interpersonal relationships of next-generation family members in family firms. journal of small business management, 29(3):21-32. handler, w.c. 1992. the succession experience of the next generation. family business review, 5(3):283-307. harvey, m. & evans, r.e. 1995. life after succession in the family business: is it really the end of problems? family business review, 8(1):3-16. hoogland, j.j. & boomsma, a. 1998. robustness studies in covariance structure modelling: an overview and a meta-analysis. sociological methods and research, 26:329-367. howard, l.w., foster, s.t. & shannon, p. 2005. leadership, perceived team climate and process improvement in municipal government. international journal of quality and reliability management, 22(8):769-795. ittner, c.d. & larcker, d.f. 1998. are nonfinancial measures leading indicators of financial performance? an analysis of customer satisfaction. journal of accounting research, 36:1-35. ivancevich, j., konopaske, i. & matteson., m. 2005. organisational behavior and management. 7th ed. new york, ny: mcgraw-hill. jimenez, r.m. 2009. research on women in family firms: current status and future directions. family business review, 22(1):53-64. kepner, e. 1991. the family and the firm: a coevolutionary perspective. family business review, 4(4):445-461. kets de vries, m.f.r. 1993. the dynamics of family controlled firms: the good news and the bad news. organisational dynamics, 21(winter):59 -71. kreitner, r. & kinicki, a. 1995. organisational behavior. 3rd ed. chicago, il: irwin. lambrecht, j. & lievens, j. 2008. pruning the family tree: an unexplored path to family business continuity and family harmony. family business review, 21(4):295-313. lansberg, i. 1999. succeeding generations: realising the dreams of families in business. boston, ma: harvard business school press. sajesbm volume 3, (2010) 56 www.sajesbm.com article no 107 lee, j. 2006. family firm performance: further evidence. family business review, 19(2):103-113. lumpkin, g.g., martin, w. & vaughn, m. 2008. family orientation: individual-level influences on family firm outcomes. family business review, 21(2):127-138. maas, g., van der merwe, s. & venter, e. 2005. family business in south africa: a practical governance guide. stellenbosch: content solutions. malone, s.c. 1989. selected correlates of business continuity planning in the family business. family business review, 2(4):341-353. molly, v., laveren, e. & deloof,m. 2010. family business succession and its impact on financial structure and performance. family business review, 23(2):131-147. mount, j. 1996. the blood knot. inc. magazine. [online] available from: http://www.inc.com/magazine/19960201/1540.html [accessed: 2006-02-21]. mustakallio, m., autio, e. & zahra, a. 2002. relational and contractual governance in family firms: effects on strategic decision-making. family business review, 15(3):205-222. nelton, s. 1996. team playing is on the rise. nation's business, 84(6). neubauer, h. 2003. the dynamics of succession in family businesses in western european countries. family business review, 16(4):269-281. northouse, p.g. 2004. leadership: theory and practice. 3rd ed. united states of america: sage. nunnally, j.c. & bernstein, i.h. 1994. psychometric theory. 3rd ed. new york, ny: mcgraw-hill. passing on the crown. 2004. the economist, november 4. [online] available from: http://www.economist.com/business/displaystory.cfm?story_id=3352686 [accessed: 2005-06-23]. poza, e.j. & messer, t. 2001. spousal leadership and continuity in the family firm. family business review, 14(1):25-36. poza, e.j. 2010. family business. 3rd ed. mason, oh: south-western cengage learning. poza, e.j., alfred, t. & maheshwari, a. 1997. stakeholder perceptions of culture and management practices in family and family firms: a preliminary report. family business review, 10(2):135-155. reisinger, y. & turner, l. 1999. structural equation modelling with lisrel: application in tourism. tourism management, 20:71-88. roberts, m.c., stephen, s. & ilardi, s.s. 2003. handbook of research methods in clinical psychology. oxford, england: blackwell publishing. rodriguez, s.n., hildreth, g.j. & mancuso, j. 1999. the dynamics of families in business: how therapists can help in ways consultants don't. contemporary family therapy, 21(4):453-468. royer, s., simons, r., boyd, b. & rafferty, a. 2008. promoting family: a contingency model of family business succession. family business review, 21(1):15-30. sajesbm volume 3, (2010) 57 www.sajesbm.com article no 107 rutherford, m.w., muse, l.a. & oswald, s.l. 2006. a new perspective on the developmental model for family business. family business review, 19(4):317333. santiago, a.l. 2000. succession experiences in philippine family businesses. family business review, 13(1):15-40. satorra, a. & bentler, p.m. 1994. corrections to test statistics and standard errors in covariance structure analysis. in von eye, a. & clogg, c.c. eds. latent variable analysis: applications to developmental research. newbury park: sage. schiff estess, p. 1999. in-laws and order. entrepreneur magazine, april. [online] available from: http://www.entrepreneur.com/article/0,4621,230146,00.html [accessed: 2007-01-25]. sharma, p. 1997. determinants of the satisfaction of the primary stakeholders with the succession process in family firms. unpublished doctoral thesis, university of calgary, calgary. sharma, p. 2004. an overview of the field of family business studies: current status and directions for the future. family business review, 17(1):1-36. sharma, p., chua, j.h. & chrisman, j.j. 2000. perceptions about the extent of succession planning in canadian family firms. canadian journal of administrative sciences, 17(3):233-244. small firm survey. 2007-2008. zweig white information services. [online] available from: http//:store.zweigwhite.com/p-408-small-firm-survey-2007-2008.aspx [accessed: 2008-05-28]. sonfield, m.c. & lussier, r.n. 2004. first-second and third-generation family firms: a comparison. family business review, 17(3):189-202. sorenson, l.r. 2000. the contribution of leadership style and practices to family and business success. family business review, 13(3):183-200. stakeholder theory. 2006. wikipedia free encyclopaedia. [online] available from: http://en.wikipedia.org/wiki/stakeholder theory [accessed: 2006-10-17]. stewart-gross, b.l. & gross, m.j. 2007. sleeping with your business partner. sterling, virginia: capital books, inc. strategic stakeholder management. 1999. academy of management journal, 42(5). [online] available from: http://www.l2manage.com/methods_strategic_stakeholder_ management.html [accessed: 2007-02-09]. sundaramurthy, c. 2008. sustaining trust within family businesses. family business review, 21(1):89-102. swogger, g. 1991. assessing the successor generation in family businesses. family business review, 4(4):397-411. underpowered sibling or cousin syndicates? 2003. centre for family business dynamics. [online] available from: http://www.fambus.com/home/sibling_syndicates2.htm [accessed: 2006-02-08]. sajesbm volume 3, (2010) 58 www.sajesbm.com article no 107 van auken, h. & werbel, j. 2006. family dynamic and family business financial performance: spousal commitment. family business review, 19(1):49-63. van der heyden, l., blondel, c. & carlock, r.s. 2005. fair process: striving for justice in family business. family business review, 18(1):1-21. van der merwe, s.p. & ellis, s. 2007. an exploratory study of some of the determinants of harmonious family relationships in small and medium-sized family businesses. management dynamics, 16(4):24-35. venter, e. 2003. the succession process in small and medium-sized family businesses in south africa. unpublished doctoral thesis, university of port elizabeth, port elizabeth. venter, e., farrington, s. m. & boshoff, h.c. 2009. selected relational-based factors that impact on the successful functioning of copreneurial businesses: a proposed conceptual model. management dynamics, 18(22):2-20. ward, j.l. 1987. keeping the family business healthy: how to plan for continuing growth, profitability and family leadership. san francisco, ca: jossey-bass. ward, j.l. 1997. growing the family business: special challenges and best practices. family business review, 10(4):323-337. ward, j.l. 2004. perpetuating the family business. 50 lessons learned from longlasting successful families in business. new york, ny: palgrave macmillan. zbar, j. 2004. chemistry and consideration: running a family business is often more about managing relationships than numbers. florida trend, 3(47):93. zellweger, m.t. & nason, r.s. 2008. a stakeholder perspective on family firm performance. family business review, 21(3):203-216. zheng, v. 2002. inheritance, chinese family business and economic development in hong kong. journal of enterprising culture, 10(4):287-312. sajesbm volume 3, (2010) 59 www.sajesbm.com article no 107 appendix a satisfaction with work and family relationships harm6 relationships among members in our family can be described as positive. psucc1 i am satisfied with the way that my sibling(s) and i work together. harm2 the members of our family are in harmony with each other. harm3 the members of our family are supportive of each other. harm4 our family members appreciate each other. psucc3 i enjoy working with my siblings in our family business. psucc5 i experience my involvement in this business together with my sibling(s) as rewarding. psucc4 i experience my involvement in this business together with my sibling(s) as fulfilling psucc2 i am satisfied with the functioning of the working arrangement between my sibling(s) and i. harm5 our family members care about each other’s welfare. financial performance fin5 i regard our family business as being financially successful. fin3 our family business is profitable. fin6 the financial well-being of our family business is secure. growth performance fin1 our family business has experienced growth in turnover over the past two years. fin4 our family business has experienced growth in profits over the past two years. fin2 our family business has experienced growth in employee numbers over the past two years. sajesbm volume 3, (2010) 60 www.sajesbm.com article no 107 appendix a – continued past parent involvement parent3 during our childhood our parents taught my sibling(s) and i how to deal with conflict. parent4 during our childhood our parents taught my sibling(s) and i how to cooperate with others. parent2 during our childhood our parents encouraged my sibling(s) and i to share our feelings. parent5 during our childhood our parents taught my sibling(s) and i to treat each other fairly. parent1 our parents support (supported if deceased) and encourage (encouraged if deceased) my siblings and i in managing our family business. non-family involvement nonf3 in our family business we involve non-family members in assisting us to effectively managing our business. nonf4 in our family business we involve non-family members when we have to make important strategic decisions about our business. nonf1 in our family business we sometimes approach non-family members to advise us on business matters. nonf6 in our family business non-family employees form part of the management team. nonf2 if necessary we draw on the expertise of non-family members to assist us with business matters. nonf5 in our family business we employ non-family members to supplement our skills. no other family member involvement ofam4 siblings not actively involved in the day-to-day operations of our family business do not interfere in business decision-making. ofam5 siblings not actively involved in the day-to-day operations of our family business do not become involved in disagreements between the siblings working in the business. ofam1 in our family business the spouses (life-partners) of sibling involved in the business do not interfere in business decision-making. ofam2 in our family business the spouses (life-partners) of siblings involved in the business do not become involved in disagreements between siblings. no present parent involvement parent8 our parents do not (or did not if deceased) interfere in business decisions made by my sibling(s) and i. parent6 our parents do not (or did not if deceased) get drawn into conflicts that arise (arose) between my sibling(s) and i. parent7 our parents are not (or were not if deceased) financially dependent on the business. 121 an exploratory study on the potential value add of social networking to the entrepeneurial process sajesbm volume 4, (2011) 1 www.sajesbm.com article no 121 an exploratory study on the potential value add of social networking to the entrepeneurial process dr. a.j. antonites* (corresponding author) senior lecturer department of business management faculty of economic and management sciences university of pretoria email: alex1@up.ac.za mr. w. kliphuis gordon institute of business sciences (gibs) university of pretoria both authors in their consecutive fields of expertise concluded the contribution of the paper. the corresponding author provided with research guidance and input with regards to the field of entrepreneurship. the other focused on the field of social media and specifically the fieldwork conducted. * to whom correspondence should be addressed. abstract it is widely established in scientific literature that entrepreneurship directly contributes to both employment generation and economic growth. entrepreneurship is said to be subject to a very specific process which includes opportunity recognition, resource allocation, innovation and networking. networking specifically, is an essential part of the entrepreneurial process as it is employed to assist entrepreneurs to capitalise on opportunities, allocate resources, find ways to innovate and contest ambiguity. with the advent of web 2.0 and online social networking platforms the way in which people exchange information and network has changed significantly and has spawned a new social culture on a global level. the purpose of this study is to examine the value that online social networking adds to the entrepreneurial process, specifically focussing on the south african landscape. sajesbm volume 4, (2011) 2 www.sajesbm.com article no 121 keywords and phrases: entrepreneurship; networking; social capital; social networking; social media. background online social networking is broadly viewed as an internet based platform where information between individuals and or groups is sourced via common interest or a need for connection. for the purpose of this study online social networking is defined as the communication between different parties where an exchange in information takes place on an electronic platform. zhang, soh and wong (2010) argue that social network ties provide a capable means to make possible the transfer of information and lessen the risk of information asymmetry between various parties. information asymmetry refers to an imbalance between parties where the one party possesses a higher level of information knowledge than the other. previous research shows the benefits of using social networks in numerous entrepreneurial scenarios such as opportunity identification (arenius & de clercq., 2005; shane & venkataraman, 2000), innovation (gloor et al. 2008; rothaermel & deeds, 2004) and resource acquisition (brush et al. 2001; zhang et al. 2010). with the advent of web 2.0 (which refers to web applications that assist interactive information sharing) and online social networking platforms, such as facebook, myspace, linkedin and twitter (and an array of others), the way in which people exchange information has changed significantly and has generated an entirely new global social networking culture. lee, kim, choi and lee (2009) found that information communication technology (ict) knowledge and electronic communication methods add value to the performance of entrepreneurs and small firms. in order for entrepreneurs in south africa to improve their social networking proficiency they would thus need to be proficient in using ict towards higher levels of entrepreneurial performance. the positive link between entrepreneurship and economic growth can be traced as far back as the works of schumpeter (1934) where it was proposed that an increase in the number of entrepreneurs in a country would lead to an increase in economic growth. herrington, kew and kew (2008:5) state “for businesses to become competitive, develop relationships with customers and suppliers and have easier access to business-related information, it is important that they have access to technology as well as have the capacity to use it efficiently”. this suggests that entrepreneurs should obtain the necessary skills, knowledge and awareness with regards to ict and its core benefits within the context of the entrepreneurial process. in the global information technology report (gitr) dutta and mia (2010) confirm that south africa is the 62nd most networked country in the world whereas sweden, singapore, denmark, switzerland and the usa are ranked in the top five. south africa is also only ranked 13th amongst upper middle-income countries (malaysia, chile and lithuania are ranked in the top three for this category). herrington, kew and kew (2008) indicate that south african ict usage is dependant on gender sajesbm volume 4, (2011) 3 www.sajesbm.com article no 121 (males have higher ict usage patterns than females), age (younger entrepreneurs are more familiar with new technology than their older counterparts), and education (the higher the level of education the more likely the entrepreneur is to embrace technology). rural entrepreneurs are less likely to make use of ict than urban entrepreneurs.the also evidence seems to indicate that ict is mostly used for sales and marketing, finance and accounting, human resources and administration, procurement and inventory management, and collaboration. the literature suggests that ict supports, with regards to the speed of processing the above-mentioned activities and with the level of innovation in the various implementations, all potentially contribute to a differentiated competitive advantage. it is against this backdrop that the main questions of this study are raised. literature review entrepreneurship the positive link between entrepreneurship and economic growth can be traced back to the works of schumpeter (1934) where the author proposed that an increase in the number of entrepreneurs in a country will lead to an increase in economic growth. nieman and nieuwenhuizen (2009) add to the body of knowledge by stating that economic development can be directly related to the level of entrepreneurial activity within a country. a possible reason for this is that entrepreneurs construct new businesses, which lead to job creation, competition intensifying and productivity increasing (acs, 2006; van stel, carree & thurik, 2005). previous studies indicate that high-growth opportunity-based entrepreneurial activity has the most direct relation to economic development (wong, ho & autio 2005; herrington, kew & kew, 2008). zimmerer and scarborough (2008:5) define an entrepreneur as “one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessary resources to capitalize on them”. the entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities and creating new businesses to pursue them (bygrave & zacharakis 2007). the key elements of the entrepreneurial process are opportunity recognition (shane & venkataraman, 2000), resource allocation (brush, greene, hart & haller, 2001) and innovation (gloor, paasivaara, schoder & willems, 2008; freeman & engel, 2007). these elements form the basis of this study and an investigation will be conducted to determine the value that social networking, especially in the online context, will add to the entrepreneurial process. social capital and networking in the past there have been studies on the topic of ‘social capital’ (batt, 2008) and still there has been no single accepted definition of the term (adler & kwon, 2002). ostrom (2000, p.176) defines social capital as “the shared knowledge, understandings, norms, rules and expectations about patterns of interactions that groups of individuals bring to a recurrent activity”. social capital can also be summarised as trust and a concern for others with the willingness to live by social norms and values (bowles & gintis, 2002). minniti (2005:5) highlights several forms that social capital may take including: (1) “the ability of information to flow through a community in order to provide a basis for action” (2) “social capital may consist of sajesbm volume 4, (2011) 4 www.sajesbm.com article no 121 obligations and expectation that depend on the trustworthiness of the environment.” perhaps the most concise definition of social capital is that it “refers to features of social organizations, such as networks, norms and trust that facilitate coordination and cooperation for mutual benefit” (chou, 2006, p.889). two of the most prominent constructs in the definitions of social capital are “trust” and”relationships”. relationships are defined as avenues through which parties gain access to an array of resources held by other parties (hoang & antoncic, 2003). relationships also give the parties credibility. from this information the deduction is made that in order for an entrepreneur to build social capital he needs to be able to foster social relationships with other parties and be able to demonstrate trust as well as gain trust from others. freeman (2004) indicates that social networks are social structures that consist of people or organisations, which are bound together by interdependent ties such as friendship, common interests, beliefs or other relationships. social networks have always been part of human interaction, but with the advent of the internet a new form of social networking has emerged. zhang, soh and wong (2010) argue that social network ties provide a capable means to make possible the transfer of information and lessen the risk of information asymmetry between various parties. previous research shows the benefits of using social networks in numerous entrepreneurial scenarios such as opportunity identification (arenius & de clercq., 2005; shane & venkataraman, 2000), innovation (gloor et al. 2008; rothaermel & deeds, 2004) and resource acquisition (brush et al. 2001; zhang et al. 2010). ulhøi (2005) presents the assumption that economic activity is entrenched in social relations and that these social relations impact the process of starting a business and the art of running the business. what this means is that entrepreneurial decisions are made in a “socio-cultural and emotional context, rather than exclusively via pure economic contracting relations” (ulhøi, 2005:941). in other words, an entrepreneur will consider the economic risks and rewards when deciding to start a business venture, will align his skills in order to exploit an opportunity, but will also look for social cues, and advice from other members within his network, when proceeding with the establishment of the business venture. minniti (2005) mentions that entrepreneurs have to deal with ambiguity and that entrepreneurs deal with this by leveraging cues and information that is guided by the actions and behaviour of other entrepreneurs. the author suggests that by observing other entrepreneurs a large amount of knowledge and skills are acquired. the argument is posed that an entrepreneur’s own social network should reduce ambiguity, help the entrepreneur to acquire resources, identify future opportunities and innovate through learning what others have done. the following section aims to give a detailed definition of online social networking and talk about the modern social networking platforms that exist. online social networks and social media in order to understand the implications of social networking for entrepreneurs it is important to make a distinction between two constructs that often get confused with one another. the constructs are (1) social networking and (2) social media. online social networking is defined as “web-based services that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a sajesbm volume 4, (2011) 5 www.sajesbm.com article no 121 list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system. the nature and nomenclature of these connections may vary from site to site” (boyd & ellison, 2007). social media refers to “online content, or methods to create, share, or build on such content through social means” (shah, 2010 p. 5). solis (2010, p.36) further defines social media as: • a platform for the socialization of media • the online tools that facilitate conversations • connections between friends, peers, and influencers • collaborations • the redistribution of influence • a call for humanizing personas and audiences, and the stories that link them together • compassionate • words, pictures, video, chatter, audio, and also experiences, observations, opinions, news, and insights • an opportunity and a privilege. in summary, social media is any tool or any service that is internet-based and aims to facilitate conversations or discussions. the difference between social networking and social media is summarised as follows: i. social networking refers to people with shared characteristics associating together, and social networks (or social networking sites) are the online platforms where all of this takes place. ii. social media can still be seen as a form of media i.e. a way for people to broadcast information. the difference is that social media offers any individual the opportunity create or distribute the information. deragon (2009) indicates that the critical reasons why entrepreneurs and organizations should make use of social media are: • to find whomever they want to do business with somewhere online • to find whatever knowledge they need about any market or any person online • to reach their targeted markets by simply engaging in the right conversations with the right people; this is regarded to be more effective than advertising • if a business can’t be found online or isn’t engaging with its target market, or worse yet, ignoring its target market, then it is not likely to be capitalising on opportunities, while its competition does • communications is a system to leverage an organisation’s ability to communicate with its target market; social media is the new communications system • social media saves time and money if it is used correctly for the right things, such as communication and information gathering • if people learn “how” to use social media correctly then they’ll understand “what” their market is looking for and “where” they are looking; in today’s competitive world a business would want them to look for you sajesbm volume 4, (2011) 6 www.sajesbm.com article no 121 • when customers and prospects are engaging about you, your industry or your products and services you need to be there listening; otherwise you will not gain the necessary market intelligence, be enabled to respond or even be aware of problems or needs; if you are not present when and where the conversations are occurring you are basically out of touch with your market • communications is about reach; communicating is about relational dynamics between people; social media provides the means to effectively communicate with your target market in human rather than institutional terms • if organisations are not communicating (listening first, initiating second) then they will struggle to create relationships with people and businesses that may want the value that is being offered. bernoff and li (2009) suggest that social technology is used for three primary reasons, namely to make connections, to establish your mark on society, or to find affinities with others. the authors also indicate that social networking and social media can be divided into six broad categories, each with its own set of capabilities that benefit the user. these six categories are: table 1: categories of social networking and media category 1 accelerating the spread of information category 2 connecting with individuals, organisations or brands category 3 organising news and information category 4 reacting to news, personal messages or information category 5 collaborating with other online users or community members category 6 creating own content, news or information source: adapted from bernoff and li (2009) from an entrepreneurial point of view it is deduced that social media and online social networks can aid participating entrepreneurs the tools to identify opportunities, allocate resources (human, physical or even financial) and innovate. in addition bernoff and li (2009) provide evidence of a number of examples of social networks and social media types that facilitate the effective use of the six activities listed above. this suggests that there is a specific social network or specific social media type that will aid the activities of an entrepreneur. table 2 highlights the various social media and social networking types. sajesbm volume 4, (2011) 7 www.sajesbm.com article no 121 objective b lo g p o d c a s t v id e o s o c ia l n e tw o rk p ri v a te c o m m u n it y r e v ie w e n g in e v ir tu a l w o rl d build customer community • • • • • • counter negative publicity • • • • • crisis management • • • • • • customer conversations • • • • • • expose employee talent • • • • • generate website traffic • • • • • • humanize the organization • • • • • • market research/focus group testing • • • • • media relations • • • • generate new product/service ideas • • • • • product/service promotion • • • • • • product support/customer service • • • • product/service feedback • • • recruit brand advocates • • • • • • generate sales leads/referrals • • • • • • solicit/gain donations and financial support • • • • • table 2: why users participate in social networking and social media category types popular examples and tools accelerating syndication and aggregation rss feeds, widgets social networking facebook, linkedin, myspace virtual worlds secondlife social news digg social bookmarking, tags del.icio.us reacting forums, ratings, reviews rotten tomatoes, buzzilions collaborating social reference, open source wikipedia, wikihow blogging blogger, wordpress, typepad micro blogging twitter podcasting itunes, podcast alley media sharing flickr, youtube connecting organizing creating source: bernoff and li (2009) gillin (2009) highlights a number of social media tools that aid the user and help him achieve an array of goals. these goals vary from building a customer community, to conducting market research, and soliciting financial support. figure 1: finding the right social media tool source: adapted from gillin (2009) sajesbm volume 4, (2011) 8 www.sajesbm.com article no 121 boyd and ellison (2007) report, that the inception of social networking sites, such as facebook, myspace and twitter, has attracted millions of users who have incorporated these sites into their daily patterns. the authors continue to define social networking sites as “web‐based services that allow individuals to (1) construct a public or semi‐public profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system”. the latest evidence indicates that the growth in social media and online social networks is quite substantial. according to qualman (2008), social media has provided the biggest shift in human behaviour since the industrial revolution. the author continues to report that more than half of the world’s population is currently under the age of 30 years. this means that over 50 per cent of the world’s population was born after 1980 and under generational theory can be classified as “millennials”. qualman (2008) further reports that 96 per cent of millennials with internet access have joined a social network. similarly, the universal mccann comparative study on social media trends (2008) indicates that: • 73% of active online worldwide users have read a blog • 45% have started their own blog • 39% subscribe to an rss feed • 57% have joined a social network • 55% have uploaded photos • 83% have watched online video clips. penetration of the internet is the highest in norway (86%), followed by finland (83%) and the netherlands (83%). the usa has an internet penetration level of 75% compared to south africa with only 9%. social media and online social networking in south africa goldstuck (2010) reports that the number of internet users in south africa has risen beyond the five million mark. the author continues to report that internet usage in south africa was stagnant between 2002 and 2007 at a penetration rate of 7%, but that this rate increased in 2008 and 2009 and reached the 10% mark in 2010. in the past access to bandwidth has been a significant barrier to the adoption of ict in south africa. the shuttleworth foundation (2010) projects, that as from 2012, bandwidth accessibility in south africa will no longer be an obstacle as several fibre optic cables will reach this country’s shores. despite the evident increase in bandwidth provision in the next two years, herrington and kew (2009) indicate that communities are still often suspicious of ict usage and that trust needs to be built between the users and the service providers of ict. the authors continue to mention that the major constraints that affect the usage of ict in south africa include: 1) a lack of ict skills and ability to use the internet effectively 2) a limited english proficiency which hampers effective usage of the internet 3) a lack of start-up capital which limits the amount of ict infrastructure that can be invested in. in contrast, herrington and kew (2009) indicate that the advantages of ict usage include 1) firms in developing countries become globally competitive 2) easier access to information 3) reducing the uncertainty of doing business. in order for south africa to improve its economic position it would need to address the issues highlighted above and provide an environment where entrepreneurial skills can be developed so that sajesbm volume 4, (2011) 9 www.sajesbm.com article no 121 entrepreneurs can progress through the entrepreneurial process with limited disruptions. research methodology research questions based on the research problem established in the background to this study, the literature that has been reviewed and the theory surrounding the entrepreneurial process, social networking, and the advent of online social media the following questions will be addressed in this study: q1: are south african entrepreneurs aware of the online social networking platforms that are available to them? q2: do south african entrepreneurs have the necessary knowledge and skills to make use of online social networking platforms? q3: do south african entrepreneurs have access to the internet in order to access the various online social networking platforms? q4: do south african entrepreneurs make use of modern online social networking platforms (in sharing information and obtaining valuable resources for their businesses)? q5: are these platforms adding value for the entrepreneur and/or his/her customers/suppliers? research design the research design is qualitative and descriptive in nature. it is descriptive in the sense that it aims to describe whether south african entrepreneurs are aware of the social networking platforms available; whether the necessary skills exist to make use of these platforms; if there is adequate access to these platforms (in the form of internet access) and if these platforms are actually being used. qualitative methods will be used as jack (2008) argues that much research has been done within the field of entrepreneurship and networks, but that many questions have remained unanswered on the relationship between entrepreneurship and networks. the author also indicates that much of the research on this field has been quantitative, which has shown to be limited. the argument is that qualitative research would allow more in-depth understandings and would encourage richer investigations. ontological beliefs the ontological position conveys the perceptual evidence and frame of reference of both the researchers within the realm of the research context. researcher a is a scientist in the field of entrepreneurship with specific reference to innovation and technology. researcher b operates in the broader media environment and both the authors believe that knowledge is derived form a factual platform. epistemological positions knowledge and its theory based in the background, experience and expertise of the researchers assisted in how core knowledge was displayed in the research process. a scientific paradigm formed the base of thinking and consequently contributed to deductive reasoning towards narrowing the core constructs investigated in the study. sajesbm volume 4, (2011) 10 www.sajesbm.com article no 121 research instrument the research was performed making use of a primary instrument, namely semistructured interviews. semi-structured interviews were conducted with a selected number of entrepreneurs. the reason for this was to get a better understanding of the issues faced by entrepreneurs (with regards to the five research questions) and to provide insights into the behaviour of entrepreneurs regarding the research problem. the interviews with the entrepreneurs were therefore kept open-ended so that a deeper and broader understanding of the problem could be acquired. unit of analysis trochim (2006) defines a unit of analysis as the main body that is being analysed in a study. in this study the unit of analysis is the south african entrepreneur. an entrepreneur is therefore defined as an individual who has started his own business, or in the past three years, has initiated the process of starting his own business in south africa. population of relevance zikmund (2003) defines a population as a total collection of entities that share a common set of characteristics. this is echoed by trochim (2006) who states that a population is the overall group that a study wishes to generalise to. in this study the population of relevance will consist of all entrepreneurs within south africa that are actively involved with their own business (i.e. they have started their own business and are still involved in its management) or who have, in the past three years, embarked in the process of establishing a business. such a population was selected, as these individuals were most probably exposed to ict in the day-to-day operations of their business. these individuals are also likely to have a solid understanding of the entrepreneurial process and would thus be most capable to comment on the factors that influence this process. sampling method the open-ended interviews with entrepreneurs were conducted using a nonprobability purposive sampling technique. non-probability sampling refers to a technique wherein units of the sample are chosen based on convenience or personal judgement. purposive sampling is a non-probability technique which is based on the judgement of an experienced individual in selecting the sample members. the sample members are therefore chosen using specific characteristics which the experienced individual deems appropriate (zikmund, 2003). the sampling frame for this study was gauteng and the western cape. sample size according to fossey, harvey, mcdermott and davidson (2002:726), “in qualitative sampling no fixed minimum number of participants is necessary to conduct sound qualitative research. however, sufficient depth of information needs to be gathered to fully describe the phenomena being studied. hence, sampling in qualitative research continues until themes emerging from the research are fully developed.” in accordance with this argument a total of twelve in-depth interviews were conducted until the researcher felt confident that a sufficient depth of data had been obtained. sajesbm volume 4, (2011) 11 www.sajesbm.com article no 121 data collection as mentioned, a pilot test was conducted on a small group to test the validity and reliability of the interview questions and to address any problems that may have arisen, before conducting the interviews with the selected entrepreneurs. direct participation by the respondents was necessary (zikmund, 2003) in the data collection process. data analysis clark (2006) indicates that there is no right way of performing analysis in a qualitative study and suggests a combination of narrative analysis, constant comparative analysis and content analysis, and that the analysis process must run alongside the data collection process. struwig and stead (2001) also indicate that data analysis in a qualitative study is less separate than in quantitative studies in the sense that data gathering and data analysis can happen concurrently. the authors continue to report that, during the analysis stage, there should be no missing data and that all the field notes, transcripts and documents are available and complete. for this study all the recordings of the interviews were transcribed and computeraided qualitative data analysis software (caqdas) system called atlas.ti was used to group the data into themes and categories. common responses were acknowledged and unusual insights were highlighted. qualitative validity credibility the results of the research is credible in the sense that the nature of the study was made credible to participant by means of a process that ensured that the interviewees understood the purpose of the interview and the nature of the research being conducted. the length of the interview was communicated as this could influence the demeanour of the interviewee. transferability the results of the study could be generalised to other contextual settings and the context of this study is well described in the background to the study. dependability there were no fundamental changes in the context, setting and research approach that could affect the results negatively. confirmability the results of this study, it is believed, would contribute to confirmability as it provides with a unique viewpoint to the broader context of entrepreneurship that could be confirmed by other researchers in the specific domain. limitations to the study as discussed previously, the inherent weakness of the method of research chosen is that it only allows for a small number of entrepreneurs to be interviewed, due to the labour intensiveness of the data collection method (ewings et al. 1996). the general lack of a research culture in south africa, in terms of willingness to participate, could affect the study negatively in terms of the expected response rate. likewise the time sajesbm volume 4, (2011) 12 www.sajesbm.com article no 121 respondent gender age home language highest education years experience relevant industry phase e1 male 40 english grade 12 12 vehicle retail sales growth e2 male 42 english grade 12 15 retail growth e3 male 30 english grade 12 8 advertising and media growth e4 male 40 english grade 12 12 business services stabilization e5 female 52 english bachelor ’s degree 10 education survival e6 male 57 english bachelor ’s degree 30 manufacturing growth e7 male 58 english grade 12 20 education maturity e8 male 61 afrikaans grade 12 8 retail growth e9 male 39 afrikaans master ’s degree 1 retail and customer services start-up e10 female 56 afrikaans diploma 14 retail stabilization e11 male 43 english diploma 22 manufacturing maturity e12 female 38 english diploma 3 marketing and advertising growth availability of entrepreneurs could also pose a threat in representative response rates. projecting data beyond the sample might be inappropriate. similarly, the entrepreneurs selected for the semi-structured interviews may have opinions that could also be non-representative of all entrepreneurs in south africa. this study will endeavour to address these issues in a positive way. research results overview of the entrepreneurs and demographics table 3 highlights the details of the twelve entrepreneurs that participated in the study. in order to preserve their anonymity the entrepreneurs have been classified from e1 to e12. each entrepreneur was selected using purposive sampling. table 3: demographics the entrepreneurs that were interviewed ranged from 30 years to 61 years of age. nine entrepreneurs were male (75%) and three were female (25%). the number of year’s entrepreneurial experience ranged from as little as one year to as much as 30 years. the number of employees per business ranged from as few as one to as many as 260. the entrepreneurs had varying levels of educational qualifications with six entrepreneurs (50%) claiming to have a grade 12 qualification, two a bachelor’s degree (17%), three a diploma or certificate (25%) and one a master’s degree (8%). sajesbm volume 4, (2011) 13 www.sajesbm.com article no 121 education 8% 17% 25% 50% masters degree bachelors degree diploma grade 12 figure 2: educational qualifications of entrepreneurs interviewed the industries represented by the entrepreneurs ranged from a high precision engineering firm, a motorcycle retailer to an educational business services consultancy. the phase in which each business found itself was also captured, but it is important to note that this was based on the opinion of the individual entrepreneurs and not based on a scientific analysis. discussion of research findings research question 1 are south african entrepreneurs aware of the online social networking platforms that are available to them? from the literature review, “awareness” refers to the ability to notice something and to gain an understanding of it. with the insights gained from the interviews it is safe to say that the entrepreneurs noticed the existence of online social networking platforms, but that their level of awareness was limiting and that they have a limited understanding of the platforms. awareness frame the interviews revealed that all of the entrepreneurs are familiar with facebook as a social network and during the interviews this platform was referred to the most. the level of awareness did vary between the entrepreneurs with some entrepreneurs actually having established fan pages on facebook and others having only heard of facebook, but never having actually engaged with the platform. twitter was the second most prominent platform with only one entrepreneur not being familiar with it. again, the level of awareness varied amongst the entrepreneurs with some expressing that they have opened twitter accounts and made tweets and others only being aware of the platform but not having ever registered an account with twitter. skype was the third most prominent platform and five of the entrepreneurs confirmed that they actively used skype as part of their daily operations. youtube was the fourth most prominent platform and, even though three entrepreneurs confirmed being familiar with the website, only one entrepreneur confirmed having actually uploaded a company related video onto the platform. sajesbm volume 4, (2011) 14 www.sajesbm.com article no 121 confimred awareness % 100% 92% 8% 8% 33% 17% 17% 25% 8% 8% 8% 8% 0% 0% 0% 17% 8% 100%100% f a ce b o o k t w itt e r m ys p a ce b lo g g e r s ky p e m xi t l in ke d in y o u t u b e p la xo w o rd p re ss f ir e st ri n g t yp e p a d f o u rs q u a re d ig g d e lic io u s r s s f e e d s it u n e s s e a rc h e n g in e s e m a il other social networking platforms that were mentioned included myspace, linkedin, wordpress, plaxo, typepad, firestring, mxit, blogger and apple’s itunes. it is interesting to note that none of the entrepreneurs mentioned prominent platforms such as digg, delicious, ning, bebo or the second life. geographically oriented platforms such as gowala or foursquare were also unfamiliar to the entrepreneurs (only one entrepreneur mentioned having heard of foursquare). the general impression from the interviews was that the vast majority of the entrepreneurs had heard of online social networking platforms in general but had certainly not done any in depth investigation into how these platforms function. only a few of the entrepreneurs had actively engaged with the online social networking platforms and, even then, the level of their engagement was limited to private social use. a small minority had said that they had used online social networks for their businesses and even these mentioned that it had been on a small scale. conclusion to the discussion of the research findings the level of awareness that each entrepreneur possesses, as in figure 3, is a reflection of the impression that the entrepreneurs created during the interview process and not a scientific analysis. it was based on how comfortably each entrepreneur spoke about social networking platforms in general. figure 3: respondents awareness % of social networking platforms research question 2 do south african entrepreneurs have the necessary knowledge and skills to make use of online social networking platforms? based on the literature and the insights gained from smith and siegel (2004) ”knowledge” is defined as the information and understanding that an entrepreneur has gained through learning or experience. ”skills” refer to the individual’s (in this case the entrepreneur’s) ability to do something well because he has learned and practised it. the feedback from the interviews suggests that entrepreneurs’ knowledge regarding online social networking platforms is limited. this is confirmed through the following statements: confirmed awareness % confirmed awareness % sajesbm volume 4, (2011) 15 www.sajesbm.com article no 121 the general derived response trend suggested that the entrepreneurs, at best, had engaged with online social networking platforms on a personal level and had only gained a very basic skill set with regards to using these platforms. when specifically asked whether entrepreneurs would be able to use these platforms for business purposes the overwhelming sentiment was, ”no”. this was surprising as each of the entrepreneurs indicated that they had a ”good” level of technological proficiency and that each would be able to access the online social networking platforms. it does however support the findings by herrington et al. (2008) who stated that entrepreneurs use their ict mostly for sales and marketing, finance and accounting, human resources and administration, procurement and inventory management, and collaboration. it would appear that the entrepreneurs in this respondent group have all embraced ict in their businesses, and have the necessary skills to leverage the technology, but are not engaging with social networking platforms on the same level as the rest of their ict activities. the themes that emerged from the interviews (with regards to why the entrepreneurs do not seem to be fully knowledgeable or proficient in using online social networking platforms) will be discussed in the following section. factors affecting entrepreneur’s knowledge and skills the interviews revealed that the level of knowledge and skills that entrepreneurs had with regards to utilising online social networking platforms in the businesses was influenced by the age of the entrepreneurs. five of the entrepreneurs (42%) indicated that they felt that social networking was something that was being adopted by a younger generation and that social networking was still a relatively new phenomenon. this is confirmed by herrington et al. (2008) who states that younger entrepreneurs are more likely to embrace ict than their older counterparts. it was noteworthy that all the entrepreneurs had embraced the internet and email (technologies that have been around for over fifteen years) as part of their business practices but that there were still hesitant about accepting social networking on a similar level. it is also worth noting that only two entrepreneurs (17%) had started their business prior to the advent of the commercial internet and email but that ten entrepreneurs (83%) had started their ventures prior to the emergence of online social networking platforms. this suggests that the entrepreneurs would accept new technologies into their businesses, but that this was something that took a bit of time (almost as if the technology needs to prove itself first). this could explain why the entrepreneurs felt they were fully proficient with using the internet and email for business purposes, but not as proficient with regards to using online social networking platforms for similar purposes. the literature suggests that 96% of millennials (those individuals born after 1980) with internet access have joined a social network (qualman, 2008). as such, it is important to note that none of the entrepreneurs interviewed were within this age group. this enforces the assumption that age is influential regarding the entrepreneurs’ willingness to use the online social networking platforms. however, qualman (2008) reports that the fastest growing segment in facebook is 55 – 65 year olds which suggests that age was not necessarily a factor when adopting social networking platforms. a possible explanation for this dichotomy is that south africans may be slightly more conservative than other parts of the world when it comes to taking on new technologies and that the ”early adopters” tend to be the younger generations. what this means is that social networking could be adopted in sajesbm volume 4, (2011) 16 www.sajesbm.com article no 121 larger volumes, but that it is going to take a bit longer, especially amongst the demographic group that the respondents represent. another factor that appeared to affect the level of skills and knowledge that entrepreneurs demonstrated was that of ”interest” in social networking. four entrepreneurs (33%) indicated that (so far) they just had not been interested in exploring what online social networking platforms could do for their businesses. the general sentiment amongst the twelve entrepreneurs was that these platforms were primarily created for personal social interaction and as a result no real effort had yet been put into using these for professional purposes. seven of the entrepreneurs (58%) indicated that they were occupied with the day to day operations of their businesses and as such did not feel motivated, or have the time, to explore online social networking as a potential business tool. this conflicts with the findings reported by deragon (2009) who stated that social networking and social media saves time and money if it is used correctly. again, it can be assumed that the low levels of knowledge about social networking caused the entrepreneurs interviewed to be unaware of these benefits, and as a result a mindset was created that social networking cannot offer anything of interest on a professional level. because these entrepreneurs did not express much interest in social networking it is safe to say that they would have not spent sufficient time practicing and learning what these platforms can do. one could assume that this has a direct impact on their existing knowledge and skills. conclusion to the discussion of the research findings in summary, the interviews highlighted that the entrepreneurs in this respondent group have the required potential to become proficient with online social networking platforms, but that very few, currently, have the knowledge or skills to be classified as fully proficient. the basic technological skills required seemed to be present with all the entrepreneurs, but factors such as interest, time, and the perception that online social networking platforms are for the younger generations, are impacting on developing the skills and knowledge to use these platforms effectively. research question 3 do south african entrepreneurs have access to the internet in order to access the various online social networking platforms? the literature suggests that south africa has very low levels of internet access with approximately only five million active users (goldstuck, 2010), which represents an approximate penetration rate of 10% of the total population. dutta and mia (2010) also indicate that south africa is the 62nd most networked country in the world. based on this information, the assumption can be made that access to the internet is a problem for the entrepreneurs. the interviews however, painted a very different picture. the twelve entrepreneurs that were interviewed all indicated that they had access to the internet with 83% indicating they had an adsl line, 50% indicating they also connected to the internet via 3g, 25% also connected via wireless. it is also worth noting that all the entrepreneurs had a mobile phone and that 50% actually used their mobile phone to connect to the internet. sajesbm volume 4, (2011) 17 www.sajesbm.com article no 121 access 83% 50% 25% 50% 0% adsl 3g wireless mobile dial up figure 4: types of internet access for the entrepreneurs that were interviewed these results may be interpreted as contradicting the findings of goldstuck (2010) and herrington and kew (2008); however the following explanation could shed more light on the topic: internet access crucial for competitiveness the response from the interviews clearly suggested that the entrepreneurs felt that internet access was a crucial part of their business operations. each of the entrepreneurs had good physical infrastructure and established client bases and were all inhighly competitive industries. all of the entrepreneurs could be classified as opportunity-based entrepreneurs and as such, had started their ventures because they saw a gap in the market (and not out of survival or necessity). the impression was created that in order for these entrepreneurs to compete effectively, that they would at least need access to the internet and be able to communicate via email. the assumption could be made that, in order for an opportunity based entrepreneur to be competitive (at industry, country and even international level), it would be crucial for him/her to have some form of access to the internet. the findings by goldstuck (2010) and herrington and kew (2008) suggest that south africans in general have limited access to the internet and are lacking the required ict or technological skills. it is therefore important to note that the entrepreneurs in this study could be more sophisticated than the norm, and may not necessarily be representative of the entire population. however, none of the entrepreneurs interviewed cited internet access as a barrier to doing business. what is important to note, though, is that many entrepreneurs cited the high cost of bandwidth as something that they were not satisfied with. conclusion to the discussion of the research findings in summary, the entrepreneurs interviewed do have access to the internet and are accessing it in many different ways (whether it is from a desktop computer, laptop or mobile device). however hese entrepreneurs are wary of the high cost of bandwidth in south africa, but are not allowing this cost to stop them from accessing the internet to a limited extent. sajesbm volume 4, (2011) 18 www.sajesbm.com article no 121 research question 4 do south african entrepreneurs make use of modern online social networking platforms (in sharing information and obtaining valuable resources for their businesses)? from the interviews it was evident that eight of the entrepreneurs (67%) had engaged with online social networking platforms to some degree. as discussed in question 1 the most widely used platforms are facebook, twitter and skype. again, all the entrepreneurs indicated that they used the internet and email as part of their business operations, but out of the 67% that had engaged with online social networking platforms, only half of them indicated that they had done so for business purposes and even then it was at a very elementary level. the 33% of entrepreneurs that did not engage with online social networking platforms at all cited reasons such as lack of interest, the availability of time and perceived skill levels as reasons for not participating. these four entrepreneurs were also all above 40 years of age which could suggest that age is influential in the speed at which social networking is being adopted by entrepreneurs within this respondent group. what are the platforms used for? the results indicated that online social networking platforms are primarily used for personal purposes. the feedback indicated that entrepreneurs mainly used the platforms to share information about them, to connect with friends, family and acquaintances and to look for information. this confirms the findings in the friendship 2.0 study (2010) which indicates that 75% of people who regularly accessed online social networks used the platforms to send messages to people and 61% used the platforms to search for people. all of this was at a personal level with very little engagement on a professional/business level. communication was the primary activity on the online social networking platforms and this varied from posting notices on people’s facebook walls to responding to tweets posted by others. the most prominent communication method amongst the respondents seemed to be through skype. skype was used for voice communication but also for instant messaging. the reason this platform seemed so popular was because of the low cost of using it and the fact that communication was instantaneous. it is important to note though that only one of the four entrepreneurs that used skype did so for business purposes, again reinforcing that these technologies are still being used for personal rather than professional reasons. because the overwhelming sentiment from the respondent group was that online social networking platforms were only being used for personal consumption the entrepreneurs were asked to think of ways these platforms could be used for opportunity recognition, resource allocation or innovation. a recurring theme from the feedback received pointed towards accessing the masses (which would be difficult through traditional means), being able to see what trends are developing locally and internationally and being able to access information in order to make informed decisions. this confirms the findings of deragon (2009) who indicated that communication is about reach and that social networking and social media provide the means to effectively communicate with your target market in human, rather than institutional terms. it also confirms the sajesbm volume 4, (2011) 19 www.sajesbm.com article no 121 statements made by bernoff and li (2009), who argue that social networking and social media benefit their user by connecting individuals, organisations and brands, accelerating the spread of information, and allowing collaboration with other online users or community members. it is notable that most of the entrepreneurs were hesitant at first to respond to this question and did not come up with these answers automatically. this could suggest that online social networking is still seen as a novelty and not the first port of call when it comes to looking for opportunities, innovating or accessing resources. it also confirms the findings of herrington and kew (2009) who report that communities are still often suspicious of ict usage and that trust needs to be built between the users and the service providers. conclusion to the discussion of the research findings to summarise, south african entrepreneurs have started to engage with online social networking platforms, but mostly for personal use and on an elementary level. these platforms are mostly used to connect with friends and family and to share information or communicate. the general trend seems to be that online social networking platforms could be used for business purposes but that entrepreneurs are not entirely sure how. the literature suggests that networking is an integral part of the entrepreneurial process, and the impression gained from the interviews affirms this theory. nevertheless it is clear that, in south africa, entrepreneurs still have a strong bias towards face-to-face networking, mainly because this is what is familiar to them and because it is what they trust. research question 5 are these online social networking platforms adding value for the entrepreneur and/or his/her customers/suppliers? from the interviews it was clear that south african entrepreneurs were still in the early stages of adopting online social networking platforms into their businesses. as discussed previously many entrepreneurs have used these platforms primarily for personal use and the few that have tried using these for business purposes have done so on an elementary level. as a result it is too early to say definitively whether entrepreneurs think that these platforms add value to their businesses. observations from the interviews, and especially the body language of entrepreneurs, suggested that there was a lot of uncertainty or even indifference when asked if these platforms were adding real value to their businesses, customers or other stakeholders. the conclusion can be made that entrepreneurs just don’t know yet. an interesting observation on the matter was as follows: “why is it so slow? i think there’s the normal bandwidth argument perhaps and i think it goes as far as the handset world. you know, the ipads and androids and the blackberries are still such a small representation of the market. i don’t think people think of social media as having anything to do with their careers whereas my us and european counterparts, people that i know through my various networks, they live on it. they work it. they use it. and that, that wave or function hasn’t got here yet” this feedback would suggest that due to the relatively poor bandwidth infrastructure and high associated cost, south african entrepreneurs have the required infrastructure to access the internet, but have been slower to adopt these platforms sajesbm volume 4, (2011) 20 www.sajesbm.com article no 121 into their businesses. as a result it is just too soon to tell what value these platforms will add to entrepreneurs. is there a future for social networking within the entrepreneurial process? every single entrepreneur responded positively when asked whether there was a future for social networking within entrepreneurship. however, most entrepreneurs did not have a clear indication as to how these platforms would add value, but were happy to acknowledge that it was a very prominent technology and that it would shape the way people communicated in future. in the literature deragon (2009) indicated that there were ten reasons why people or organisations should use social media or online social networking platforms. interestingly the entrepreneurs interviewed only echoed three of these reasons when asked whether there was a future for social networking within the entrepreneurial process. these three reasons were: 1. entrepreneurs will find whomever they want to do business with somewhere online (in a focused approach). 2. people will find whatever knowledge they need about any market or any person online. 3. people can reach their targeted markets by simply engaging in the right conversations with the right people. this is regarded to be more effective than traditional ”above the line” advertising. in summary, the entrepreneurs interviewed were all positive that online social networking could play a future within the environment of the entrepreneur.the respondents were, however, uncertain as to how exactly this would happen. acknowledgement that these platforms were still very new them and that they were still slow in adopting these into their businesses played a large part in the uncertainty. the fact that there haven’t been any real local examples of entrepreneurs that have transformed their businesses using social networking (unlike the numerous examples in the usa) could also be a reason why the adoption rate has been so slow. conclusion the findings from the research indicate that despite having physical access to the internet and the necessary basic ict or technology skills, the entrepreneurs are not fully aware of the online social networking platforms that exist, are not too knowledgeable on what these platforms can do for them as entrepreneurs, do not feel confident that they have the skills to use these platforms for business purposes and have been slow to adopt these platforms into their lives. despite the findings in the literature, which argues for the benefits of using online social networking and social media, in practice (and based on the feedback from the respondent group) it would appear that it is too soon to determine if these platforms do add value to the entrepreneurial process. sajesbm volume 4, (2011) 21 www.sajesbm.com article no 121 table 4: synthesis and conclusion entrepreneurship plays a significant role in the economic development of a country. the entrepreneurial process forms the platform from which many successful businesses can be created. a clear understanding of this process, will aid the would-be entrepreneur in developing an economically viable business. the literature shows that networking forms a large part of this process and leveraging off these networks can benefit the entrepreneur. the past five years have seen the advent of web 2.0 and the emergence of social networking and social media. in a short period hundreds of millions of consumers worldwide have started to engage in social networking and social media, which provide tremendous opportunities for entrepreneurs who are aware of these technologies and know how to leverage them. the results of this research project however, have shown that the respondents are cautious when it comes to adopting online social networking and social media into their businesses. this, together with the low levels of entrepreneurial activity in south africa, is of concern to the researcher as the expectation exists that the adoption of online social networking and social media can help entrepreneurs to seize the opportunities that exist globally, and enable them to become truly competitive. the aim of this research is to assist the various stakeholders within entrepreneurship to explore the potential benefits that online social networking and social media provide. in this way entrepreneurship within south africa can be promoted and developed. the significance of entrepreneurship, and the emergence of the social media revolution, should not be underestimated. sajesbm volume 4, (2011) 22 www.sajesbm.com article no 121 references adler, p. and kwon, s. (2002). social capital: prospects for a new concept. academy of management review, 27(1), 17−40. arenius, p. and de clercq, d. (2005) a network-based approach on opportunity recognition. small business economics, 24(3), 249 – 265. batt, p.j. (2008) building social capital in networks. industrial marketing management. 37, 487 -491. bernoff, j. and li, c. (2009) groundswell: winning in a world transformed by social technologies. boston: harvard business press. bowles, s. and gintis, h. (2002). social capital and community governance. economic journal, 112 (483), 419−436. boyd, d.m. and ellison, n.b. (2007) social networking sites: definition, history and scholarship. journal of computer mediated communication, 13 (1), 210 – 230. chou, y.k. (2006) three simple models of social capital and economic growth. the journal of socio-economics, 35, 889 – 912. clark, d. (2006) voluntary turnover of senior women in large south african organizations. masters of business administration, gibs. de clercq, d. and arenius, p. (2006) the role of knowledge in business start-up activity. international small business journal, 24(4), 339 – 358. deragon, j. (2009) why use social media? [online] available from http://www.relationship-economy.com/?p=6617 accessed 31/08/2010. dutta, s. and mia, i. global information technology report (world economic forum and insead) (2009 – 2010) ict for sustainability. geneva: gitr. ewings, p., powell, r., barton, a., and pritchard, c. (1996) qualitative research methods. peninsula research & development support unit. fossey, e., harvey, c., mcdermott, f. and davidson, l. (2002) understanding and evaluating qualitative research. australian and new zealand journal of psychiatry, 36: 717 – 732. gillham, b. (2005) research interviewing: the range of techniques. berkshire: open university press. gloor, p.a., paasivaara, m., schoder, d. and willems, p. (2008) finding collaborative innovation networks through correlating performance with social network structure. international journal of production research, 46(5), 1357 – 1371. goldstuck, a. (2010) internet access in s.a [online]. johannesburg: world wide worx. available from: http://www.worldwideworx.com/wpcontent/uploads/2010/05/www-reports-2010.pdf accessed 31/08/2010. herrington, m., kew, j. and kew, p. global entrepreneurship monitor (gem) (2008) gem south african report. cape town: gem. herrington, m. and kew, j. small business development agency (seda) (2009) ict & entrepreneurship. cape town: seda. sajesbm volume 4, (2011) 23 www.sajesbm.com article no 121 hoang, h. and antoncic, b. (2003) networked-based research in entrepreneurship: a critical view. journal of business venturing, 18, 165 – 187. jack, s.l. (2010) approaches to studying networks: implications and outcomes. journal of business venturing, 25, 120 – 137. lee, s.m., kim, j., choi, y. and lee, s. (2009) effects of it knowledge and media selection on operational performance of small firms. small business economics, 32, 241 – 257. minniti, m. (2005) entrepreneurship and network externalities. journal of economic behaviour & organization, 57, 1 – 27. ostrom, e. (2000) social capital: a fad or fundamental concept? in p. dasgupta and i. seragilden (eds.), social capital: a multifaceted perspective washington dc: world bank. qualman, e. (2008) socialnomics: how social media transforms the way we live and do business. new jersey: wiley. rothaermel, f. t. and deeds, d.l. (2004) exploration and exploitation alliances in biotechnology: a system of new product development. strategic management journal, 25, 201 – 221. shah, r. (2010) social networking for business: choosing the right tools and resources to fit your needs. new jersey: pearson education. shane, s. and venkataraman, s. (2000) the promise of entrepreneurship as a field of research. academy of management review, 25(1), 217 – 226. smith, m.u. and siegel, h. (2004) knowing, believing and understanding: what goals for science education. science & education, 13, 553 – 582. solis, b. (2010) engage! the complete guide for brands and businesses to build, cultivate and measure success in the new web. new jersey: wiley. struwig, f.w. and stead, g.b. (2001) planning, designing and reporting research. cape town: pearson education. trochim, w.m.k. (2006) research methods knowledge base. mason: cengage learning atomic dog. ulhøi, j.p. (2005) the social dimensions of entrepreneurship. technovation, 25, 939 – 946. wong, p.k., ho, y.p. and autio, e. (2005) entrepreneurship, innovation and economic growth: evidence from gem data. small business economics, 24, 335 – 350. zhang, j., soh, p. and wong, p. (2010) entrepreneurial resource acquisition through indirect ties: compensatory effects of prior knowledge. journal of management, 36(2), 511 – 536. zikmund, w.g. (2003) business research methods. ohio: south-western cengage learning. microsoft word 3 kotze smit fin lit sajesbm ns 1_1_35-50.doc sajesbm ns volume 1 (2008) issue 1 35 ________________________________________________________________________ personal financial literacy and personal debt management: the potential relationship with new venture creation *me. liezel kotzè prof. a.v.a. smit department of business management university of the free state kotzel.ekw@mail.uovs.ac.za* *to whom all correspondence should be addressed abstract prior research shows that personal savings are one of the most important financial sources for start-ups of entrepreneurial firms. the lack of personal savings and seeming shortage of financial knowledge could contribute to the low incidence of new venture creation, and the high failure rate amongst south african entrepreneurs. this paper investigates the perceptions of 286 business management students with a minimum of three years’ working and management experience, regarding both their financial literacy and their need and desire for financial education. the outcomes of the study show the necessity for financial education and financial literacy in south africa. the respondents showed a lack of confidence in their money management skills and expressed a desire for more financial knowledge. it is possible that an increased level of financial literacy could lead to more entrepreneurial activity and a decrease in new venture failures. key words and phrases: personal financial literacy, personal debt, personal savings, personal financial management, new venture creation introduction in view of the fact that personal savings represent the principal source of funding used by entrepreneurs to start and grow their entrepreneurial ventures, the extremely low level of savings, combined with the excessive debt levels of individuals in south africa, is a cause for concern. personal debt and savings are two key variables in determining effective personal financial management. healthy personal financial management will be based on good financial knowledge or literacy (timmons & spinelli, 2007:388). anthes (2004:49) concludes that financial literacy is the ability to read, analyse, manage and communicate about personal financial conditions that affect material well-being …. the ability to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and respond competently to life events that affect everyday financial decisions, including events in the general economy. according to the us financial literacy and education commission (basu, 2005:2), financial literacy is defined as sajesbm ns volume 1 (2008) issue 1 36 ________________________________________________________________________ the ability to make informed judgements and to take effective actions regarding the current and future use and management of money. financial literacy should include the ability to understand financial choices, plan for the future, spend wisely and manage and be ready for life events such as job loss or saving for retirement. the lack of knowledge of financial management contributes to the low prevalence of new venture creation, and ultimately the high failure rate of south african small and medium-sized enterprises (smes), as most entrepreneurs are intimidated by financial management (timmons & spinelli, 2007:388). the global entrepreneurship monitor (gem, 2005:7) confirms the fact that there is a very low incidence of entrepreneurial activity in south africa. limited access to finance has been cited as one of the main factors influencing the low level of entrepreneurship. one of the answers to this dilemma could be to provide financial education to empower individuals to effectively manage their personal finances (debt and savings levels) in an attempt to increase entrepreneurship and decrease new venture failures. this paper will provide background on the escalating problem of inadequate financial management practices due to insufficient financial literacy, and the importance of improving the financial literacy of individuals. identification of problem the paper will concentrate on investigating the perceptions of individuals regarding their financial literacy and their need for financial education, and the role these play in the finances of both the individual and the entrepreneur. the global entrepreneurship monitor (gem) (2003:13) reports lack of financial support as one of the main problems entrepreneurs are faced with in south africa. this, however, does not account for the low rate of entrepreneurial activity in south africa compared with that of other developing countries. entrepreneurs participating in the gem study indicated that start-up finance depended on personal savings or loans from friends or family. black-owned registered smes in the gem study indicated that access to finance was only provided if secure financial management was demonstrated. the gem survey indicated that a significant proportion of the participating firms did not implement proper management practices and that targeted skills development could be beneficial. according to timmons and spinelli (2007:387), the lack of skills in financial analysis and management could be viewed as the entrepreneurs’ achilles heel. entrepreneurs and management teams find the concept of financial management intimidating. even highly educated individuals admit to feeling uncomfortable, intimidated and even terrified because of their lack of financial management expertise. the transition from being an entrepreneur to becoming an entrepreneurial manager of a venture can be exceedingly risky if there is little or no confidence in managing finances, as financial management is listed as one of the critical managerial competencies in new venture creation and development (timmons & spinelli, 2007:269). furthermore, there is an absolute scarcity of financial administration skills amongst previously disadvantaged individuals and sajesbm ns volume 1 (2008) issue 1 37 ________________________________________________________________________ entrepreneurs in south africa (simcock, 2007:21). personal and venture financial management skills definitely influence the creation of new ventures (kim, 2001:1), and the lack of financial management knowledge may result in possible failures (simcock, 2007:21). there has been an increasing demand for information on personal finance. research (kim, 2000:1 and joo, 1998:34) has shown that many adults lack the financial knowledge to make competent and effective financial choices. the authors therefore assume that if individuals are illiterate concerning their personal finances, their financial management of new ventures will also be lacking and will lead to reduced new venture creation and possible failures of smes. excessively high debt levels, low saving rates, becoming targets of investment fraud, delinquency on credit cards and bankruptcy have all been found to be related to financial illiteracy in individuals (kim, 2000:1). even many developed countries have excessive debt levels and diminishing savings, even though they have abundant wealth and literacy at their disposal compared with developing countries (anthes, 2004:50). this trend is also evident in south africa where, after the mid-1980s’ deregulation of financial institutions, household debt amplified in excess of 30 percent (aron & muellbauer, 2000:2). according to tito mboweni, governor of the south african reserve bank (sarb), household debt as a percentage of disposable income accelerated to 77.4 percent during the third quarter of 2007, leaving only an average of 22.6 percent of the salary for living expenses and savings (sarb, 2007:1). lorgat (2003:8) argues that south africans lack a generalised savings culture, one of the causes being manifest financial illiteracy on the part of the consumer. workers are spending almost all of their income on consumption, resulting in little, if any, of their income being left for savings or investments. this is problematic in south africa, both on an individual level and in relation to the prospects of economic growth in the country via entrepreneurship. lack of savings could also impact on long-term government expenditure, as individuals make insufficient provision for old age, an additional burden that the government will have to manage (janse van rensburg, 1999:7) the ratio of household debt to disposable income in south africa has been fluctuating between 50.6 percent and 71.8 percent between 1996 and 2006. savings rates, on the other hand, have declined sharply, from as high as 8 percent in 1985 to approximately – 0.52 percent of personal disposable income in 2006 (kane-berman & tempest, 2007:87). mounting personal debt has caused south africans’ savings to become insufficient, at best. long-term savings are therefore placed in jeopardy (grawitzky, 2003:57). deregulation in south africa has led to virtually instant higher levels of debt for consumers, with the consequent decrease in savings. south african consumers’ saving figures confirm this fact, as the debt levels are higher than ever, with the ensuing low savings statistics, as can be seen in figure 1. sajesbm ns volume 1 (2008) issue 1 38 ________________________________________________________________________ figure 1: household debt and household savings as a percentage of personal disposable income (1984–2006) -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 years p er ce n ta g e household debt to disposable income household savings to disposable income (source: kane-berman & tempest, 2007:87). the very high levels of debt south african individuals accumulate invariably result in decreased savings, as these two variables have an inverse relationship. individuals make decisions with regard to their personal finances on a daily basis, and even though these decisions are necessary for day-to-day survival, it can be a daunting task (karlsson, dellgran, lingander & gärling 2004:754). kidwell and turrisi (2004:601) point out the strong link between the accumulation of personal debt and a distinct lack of skills in money management. old-fashioned values concerning financial management, such as budgeting and saving, are lost in the pursuit of instant gratification, and consumers tend to spend more than they earn. streeter (2003:4) adds that consumers tend to be confused and intimidated by the complexity of the finance industry and that they are embarrassed to admit that they struggle to understand certain terminology or practices. these individuals will not be able to select the most effective financial choices available to them, because the subject is unknown to them and therefore seems threatening. it is necessary for individuals to acquire knowledge about personal financial issues in order to be able to evaluate the financial options available to them, manage their finances effectively and gain financial security (anthes, 2004:52). chen and volpe (1998:121) found that the participants in their research study with better financial knowledge identified more efficient options, while in their decision making concerning personal financial issues they reacted more effectively. the level of an individual’s financial knowledge tends to influence attitudes that in turn affect the sajesbm ns volume 1 (2008) issue 1 39 ________________________________________________________________________ individual’s financial behaviour. inadequate personal financial management skills could be a limiting factor when the individual is creating and managing a new venture. literature review there are so many financial choices to be made, with so many variables to consider in addition to hidden biases, conflicts and subjective preferences, that consumers can become overwhelmed when it comes to making personal financial decisions (streeter, 2003:4). it is therefore necessary to examine financial literacy and all its components. a number of factors in the immediate external environment can be identified as factors that can lead to decreasing literacy in individuals. the most pertinent of these are accordingly discussed. increased complexity of the economy the finance industry tends to be confusing, intimidating and complex. individuals who are not educated or knowledgeable enough will not be able to make effective financial choices and are sometimes too proud to admit that they do not understand the economic environment. individuals are not being responsible when it comes to their personal finances, as revealed by anthes (2004:51), who reports that according to a 2004 retirement confidence survey, only 58 percent of workers are currently saving for retirement, and even these workers do not calculate how much money they have to save to live comfortably by the time they retire. a shocking finding was that half of the workers who are not saving for retirement feel confident that they will have enough retirement money by the time they need it, proving once again that there exists a great need for financial literacy training in south africa as well as worldwide (streeter, 2003:4). less time accumulating wealth and more time spending countless individuals all over the world are not saving enough money for retirement and are unprepared to deal with the complexities of managing and acquiring assets throughout their working lives (lloyd, 2005:15). citizens in south africa and western countries are experiencing major financial burdens as a result of increased life expectancy of individuals. in the year 2000, americans only started accumulating wealth after the age of 25 and stopped long before turning 65. in 1930, by contrast, individuals started accumulating wealth at the age of 20 and continued to do so until they reached their late 60s. currently individuals spend an average of 35 years in retirement, compared with 20 years of retirement in the 1930s. therefore, time in retirement has increased, but there has been a distinctive decrease in wealth accumulation (anthes, 2004:51). longer life expectancy citizens in south africa and western countries are therefore experiencing major financial burdens as a result of increased life expectancy of individuals. as indicated above, people live much longer than they did a few decades ago and consequently need significantly sajesbm ns volume 1 (2008) issue 1 40 ________________________________________________________________________ more in terms of retirement savings. in spite of this, however, a large proportion of individuals do not plan for retirement or take their life expectancy into account. the average life expectancy in the united states is expected to increase from 68 in the 1950s to 81 by 2025 (lloyd, 2005:15). anthes (2004:51) reports the following statistics concerning us life expectancy: � in 1900, 7 percent of 60-year old americans had at least one living parent. � in 2000, 44 percent of 60-year old americans had at least one living parent. absence of (or possession of limited) financial education south africans lack the necessary financial skills to plan for retirement, and education in this field would be of great benefit to society (lloyd, 2005:15). therefore little doubt exists that school syllabuses should include basic financial skills training. however, many schools in the united states do not teach financial education as a subject because the teachers themselves do not understand what they are teaching (anthes, 2004:51). effective consumer education will not occur overnight and it is a multi-generational project. it is clear that the government of south africa recognises the lack of, and need for, financial education (rsa mof, 2006:5). it is suggested that the school education system should accommodate training to stimulate entrepreneurial consciousness and educate students in necessary financial and business skills (gem, 2003:13). the educational system should also provide effective financial and administrative training to existing entrepreneurs (gem, 2003:13). lack of pension and personal savings individuals need to save for the following reasons (rsa mof, 2006:4): � to improve consumption patterns over their lifetime; � to provide for their retirement and old age; � to finance expected large expenditures, for example the purchase of a house, or their children’s education; � to finance unexpected losses of income. however, the importance of saving is frequently only realised when the need for funds arises and then it is often too late (rsa mof, 2006:4). investment and pension returns decreased since the 1980s as a result of (until recently) lower inflation and reduced interest rates. the average life expectancy at birth is 80 years and with this in mind, these investment returns become even more mediocre. the combination of lower interest and inflation rates means that an individual who is currently retired will need double the capital to buy the same standard of living as in the 1980s (needham, 2005:13). pension savings in the united states are getting more unsteady on a yearly basis, and with personal savings dangerously declining, there is a clear indication that people do not realise the implications of their actions (anthes, 2004:51). sajesbm ns volume 1 (2008) issue 1 41 ________________________________________________________________________ consequences of financial illiteracy spending more than their income atkinson and kempson (2004:2) found that young people (aged 18 to 24) in britain are increasingly over-borrowed, leading to financial difficulties because of financial illiteracy. workers find themselves in financial crises owing to the need to spend their income on costly goods, such as branded clothes and cell phones, for the purpose of fitting into a society where these goods have become a necessity, rather than a luxury (lorgat, 2003:6). anthes (2004:52) supports this viewpoint and refers to the “instant gratification mentality” that individuals possess that lures them into spending more on what they want and do not necessarily need. the lack of, or insufficient, record keeping a study done by kidwell and turrisi (2004:606) deduced that budgeting can change spending patterns of individuals through the successful regulation of finances. as a result, unnecessary spending is curbed and budget maintenance is met with a favourable attitude. it was found that 45.6 percent of students with better financial knowledge keep detailed financial records, compared with only 29 percent of the students with inferior financial knowledge. this was confirmed by research conducted by chen and volpe (1998:121), in which they suggest that groups who are more knowledgeable regulate their spending patterns and decisions by keeping detailed financial records. not planning and implementing a regular investment programme according to research done by chen and volpe (1998:122), 89.4 percent of financially knowledgeable students view the planning and implementation of a regular investment programme as important. when they were offered an investment situation, 80 percent of the knowledgeable group made the correct investment decision, whereas only 51 percent of the less knowledgeable group made the correct decision. most consumers are not educated enough to make informed investment decisions, as proved by a survey done by princeton research survey associates (1999:38) in which 45 percent of the recipients had some financial knowledge and 18 percent of the respondents did not have any knowledge concerning investment planning and implementation. making incorrect financial decisions related closely to the above is the fact that the more knowledgeable an individual is concerning personal financial issues, the less likely that individual would be to make inaccurate financial decisions that could lead to financial problems, such as taking out inadequate insurance, exceeding their income and making incorrect investment decisions (chen & volpe 1998:122). garman, leech and grable (1996:165) suggest that negative financial decisions could be rectified or avoided by providing employees with the necessary financial counselling and intelligence to manage their finances in a more effective manner. consumers who spend more than they earn, who do not keep financial sajesbm ns volume 1 (2008) issue 1 42 ________________________________________________________________________ records and do not plan and implement regular investment programmes, are individuals who make flawed financial decisions. financial literacy programmes the aim of any financial literacy programme for adults should be “to enable them, individually and collectively, to understand, and question, the way in which financial institutions, the government and personal and household decision-making connect to shape numerous aspects of their daily lives” (bond, 2000:72). consumer education seems to improve the basic financial skills required to raise awareness and understanding, which will lead to improved financial decisions (bond, 2000:72). various authors (joo, 1998:284; kidwell & turrisi, 2004:611; lorgat, 2003:8; teichman, cecconi, bernheim, novarro, monga, darosa & resnick, 2005:139) suggest that adults and children alike should be educated in financial issues, such as retirement planning, credit, savings, debt consolidation and investment, to equip them with essential financial skills to manage their personal finances effectively. streeter (2003:4) views financial education as crucial in improving both personal savings and more effective credit use. research gives the impression that financial illiteracy can only be overcome when implementing financial education programmes for all gender, age, income and educational groups. furthermore, lorgat (2003:8) suggests that south african individuals need financial education in the workplace to increase their financial well-being. joo (1998:284) supports this with his extensive research into workplace financial education combined with financial counselling sessions. he found that these improved attitudes and behaviours related to personal finances, which in turn led to positive personal financial outcomes and an improvement in overall financial well-being. research objectives and hypotheses the literature review identified and discussed the factors that perpetuate or increase financial illiteracy and the consequences of financial illiteracy. against this background, the empirical analysis focused on determining certain perceptions of individuals regarding their personal finances, with specific reference to financial knowledge, control and confidence. the following hypotheses were formulated: hypothesis 1: adequate financial knowledge is positively related to control of personal finances. hypothesis 2: adequate financial knowledge is positively associated with the management of money to achieve financial goals. hypothesis 3: adequate financial knowledge is positively associated with making independent investment decisions (i.e. without the assistance of a financial planner). the need for financial education was also investigated. sajesbm ns volume 1 (2008) issue 1 43 ________________________________________________________________________ research methodology research design the methodology used in this study consisted of primary data, which were obtained from questionnaires; and secondary data, from articles, unpublished reports, academic journals, the internet, newspapers and other local and international publications. in south africa very limited research is available in this area; therefore, much use was made of secondary data, for example newspaper articles. target population the target population comprised all 286 of the adult students enrolled at the university of the free state school of management during 2005, where individuals were registered for one of three management and business courses. in order to make provision for a nonresponse, it was decided to use the whole population, which eliminated the need to select a sample. due to the fact that all individuals in the population had a non-zero probability of selection, each member of the population had an equal opportunity of being selected. the population was selected on the basis of their business background and education, as all the respondents were employed, either in the private sector or self-employed. the population also had financial management modules included their studies and therefore it can be assumed that their financial management skills would be above average. as these individuals had higher education levels, and education impacts on the management of personal finances, it can be deduced that the results would have been more severe for less educated individuals. data collection the questionnaire employed (kim, 2000:337) was adapted for the study. the questionnaires aimed to verify and determine certain attitudes and perceptions amongst individuals regarding personal financial management. questions measured the level of satisfaction on a likert-type scale. answers varied between one and five: very satisfied (1); slightly satisfied (2); uncertain (3); slightly dissatisfied (4) and very dissatisfied (5). data analysis spss (version 15.0 for windows) was used in the statistical analysis of the data. means, standard deviation, correlation and frequency distributions were calculated to ascertain and to verify the attitudes and perceptions of the respondents. sajesbm ns volume 1 (2008) issue 1 44 ________________________________________________________________________ results sample description the gender of the 286 respondents was roughly equally matched, with males representing 52.4 percent and the female respondents representing 47.6 percent. the respondents were predominantly highly educated (65.4 percent had university or technikon degrees or diplomas). the ages of 77.3 percent of the respondents fell between 30 and 49 years. attitudes and perceptions regarding personal finances in order to determine certain perceptions and attitudes towards personal financial issues, such as adequate knowledge, control and confidence, respondents were asked to grade themselves in terms of their financial literacy on a scale from 1 to 5. from the answers it was possible to deduce a mean for each statement. the percentage of the respondents who were dissatisfied with the four elements (see table 1) regarding their personal finances was determined by calculating the overall percentage of the respondents that displayed dissatisfaction towards statements in the questionnaire, thus positioning their answers to the specific attitude as the two most negative figures. table 1: level of dissatisfaction and the percentage of respondents dissatisfied with regard to the different attitudes attitudes level of dissatisfaction dissatisfied percentage i feel i have adequate knowledge to manage my personal finances 45.0% 27.6% i feel i have control over my personal finances 47.5% 33.9% i am confident in managing money to achieve financial goals 47.5% 31.8% i feel confident in making investment decisions 50.0% 36.0% the overall level of dissatisfaction towards the various attitudes varied between 45 percent and 50 percent. however, it is interesting to note that approximately 28 percent of the respondents felt that they did not have adequate financial knowledge and 34 percent believed they did not have control over their personal finances. two-tailed pearson correlation coefficient was conducted to establish the relationship between adequate financial knowledge and personal finances, confidence in managing money to achieve financial goals, and confidence in making independent investment decisions. the results are illustrated in table 2: sajesbm ns volume 1 (2008) issue 1 45 ________________________________________________________________________ table 2: pearson correlation coefficient between adequate financial knowledge and other variables (two-tailed) (n = 286) variable adequate financial knowledge p adequate financial knowledge 1.000 control over personal finances 0.707** .000 confidence in managing money to achieve financial goals 0.706** .000 confidence in making independent investment decisions 0.266** .000 ** p < .001 table 2 shows a strong positive correlation between adequate financial knowledge and the other three variables. it can therefore be stated that individuals who perceive themselves as having adequate financial knowledge have a positive significant correlation regarding personal finances; confidence in managing money to achieve financial goals and confidence in making independent investment decisions (i.e. without the assistance of a financial planner). with n = 286, the significance has to be interpreted conservatively (hair, anderson, tatham & black, 2008). it is suggested that the common variances of the different correlations with “adequate financial knowledge” are calculated as 100r². only relationships above 25 percent common variance are regarded as conceptually significant. these calculations are presented in the following table: table 3: 100r² variable adequate financial knowledge control over personal finances 50% confidence in managing money 50% confidence in making investment decisions 7% the 7 percent common variance between adequate financial knowledge and confidence in making investment decisions should therefore be interpreted as non-significant, in order not to lend the interpretation to a type 1 error. though the common variance between adequate financial knowledge and confidence in making investment decisions is a mere 7 percent, a further t-test evaluation, as suggested by janda (2001), indicates a significant correlation at the 99 percent level of confidence. the t-test value is described in table 4. sajesbm ns volume 1 (2008) issue 1 46 ________________________________________________________________________ table 4: computation of t-value to test significance of correlation coefficient 284 284 t = .27 1-.07 = .27 0.93 = .27 305.38 = 4.72 the critical value of 4.72 for the 284 degrees of freedom two-tailed test lies above the critical t-value of 3.291, confirming a significant correlation at the 99 percent level of confidence. it is therefore apparent that hypothesis 1, hypothesis 2 and hypothesis 3 will be accepted. the respondents’ perception of their financial knowledge is connected to control over personal finances, as well as confidence in managing money and making investment decisions. financial education respondents were asked whether they thought that they needed financial education and whether they would participate in financial education if presented with the opportunity. table 5 displays the total percentage of respondents who thought that they were in need of financial education and the total percentage of all the respondents who would participate in financial education if this training were provided at their workplace. table 5: the total respondents in need of financial education and participation therein need financial education would participate in financial education total 64.9% 85.5% table 5 shows that 64.9 percent of the respondents felt that they needed financial education. of the total number of respondents, 85.5 percent would participate in financial education if it were provided to them. discussion the results of the study indicate that there is a positive correlation between adequate financial knowledge and control over personal finances, as well as confidence in managing money and making investment decisions. it can therefore be assumed that individuals who perceive that they have adequate financial knowledge feel that they have control over their personal finances; these individuals seem to be confident in managing sajesbm ns volume 1 (2008) issue 1 47 ________________________________________________________________________ their money and making investment decisions. almost a third of the respondents indicated that they did not need financial education, which could be a concern, given that there was an overall level of dissatisfaction of 45% indicated by the respondents with regard to the adequacy of their financial knowledge. personal savings seem to be the most important source of finance available to entrepreneurs in creating new ventures (gem, 2003:13). owing to the extremely high debt ratios of consumers, savings have been left behind and almost forgotten. the consequences of excessive debt and very low savings can be destructive, as these two variables play a very important role in overall personal financial health. the literature review explains the concept of financial illiteracy amongst consumers and how ignorance regarding personal finance could influence and reduce new venture creation. personal savings seem to be the main source of finance that start-up entrepreneurs make use of. because of the extremely high levels of debt, insufficient personal savings seem to be available in general (kane-berman & tempest, 2007:87). this outcome could possibly lead to fewer new ventures being created due to the lack of funds (gem, 2005:7). approximately a third of the respondents in this study showed high levels of dissatisfaction with their current level of financial knowledge, perceived control over finances, confidence in money management and making investment decisions. as personal savings is the principal source of venture capital in the case of most entrepreneurs (gem, 2003:13), we might make the deduction that the lack of savings could sizeably reduce new venture creation. the lack of confidence in money management, and the lack of control that individuals experience in managing their personal finances could also have a negative effect on financial management of smes and could possibly lead to failure of these smes, should their managers have such limited knowledge of how to manage their personal and business finances. the educational background of the respondents was higher than that of most individuals in south africa, which means that less educated individuals could have even lower levels of financial literacy and know-how. it is vital that from a young age individuals should receive financial education in personal financial management to reduce the effects and consequences of the mismanagement of personal finances and negligent handling of debt. services should be provided to individuals to assist them in consolidating loans and getting free of debt. it is also crucial that consumers be aware of the need to save for future purposes. limitations of the study there was a limitation as regards the target population, as the population was not a representative sample of the whole south african populace. the respondents who took part in this study were all the students enrolled in management programmes at the university of the free state’s school of management during 2005. these individuals could be regarded as being financially more knowledgeable than the average citizen as a result of their participation in business-related programmes. a possible deduction could therefore be that the typical white-collar worker without business-related tertiary sajesbm ns volume 1 (2008) issue 1 48 ________________________________________________________________________ qualifications could experience more problems concerning the management of personal finances. there is a definite need to initiate a similar study on a national basis. generalising from one geographical region as well as a management student sample only is a limitation. individuals in other parts of south africa could have different opinions and particulars. implications for individuals wanting to start new ventures due to the high levels of debts and subsequent low levels of personal savings, it is clear that personal financial education should be a prerequisite for healthy personal finances. entrepreneurs wanting to start new ventures need to feel confident with their personal finances, as well as the finances of the new venture. it has also become clear that individuals, as well as entrepreneurs, need to start saving more in an effort to provide for the future. directions for future research research into the personal financial management area seems to be crucial, to broaden the necessary understanding of how to aid individuals in managing their debt and personal finances effectively. the results of the study could assist individuals on a personal level, as well as helping employers to support their employees in managing their debt, while enhancing their productivity through increased employee well-being. research into this field is necessary. as there is a severe lack of information regarding south africans’ personal debt and savings, as well as personal financial information relating to age, gender, education and income. the study could also provide a basis for future research and theory development. the following are ideas on how researchers can extend this field: � further research is necessary to determine spending and saving behaviour of different groups of people, such as blue-collar workers, white-collar workers, professionals, and business owners. � in-depth research needs to be done in order to determine the consequences of inadequate financial behaviour on worker productivity and the effects thereof on the economy. � research is needed on the financial education of entrepreneurs and the outcomes resulting from this education on personal finances, debt and savings management and new venture finances. � investigations are necessary into the saving tendencies of different demographic entrepreneurial groups (classified by age, gender, qualifications and income). conclusion the extremely high levels of debt and consequently low levels of personal savings could indicate a decrease in new venture creation, as personal savings is the primary source of sajesbm ns volume 1 (2008) issue 1 49 ________________________________________________________________________ financing for entrepreneurs employed in establishing new ventures. a lack of financial literacy could lead to failure of new venture, as well as personal, financial management, thus limiting new venture success. the respondents included in the study indicated that limited financial knowledge is associated with feeling less in control of personal finances, and a decrease in confidence in managing money and making investment decisions. references anthes, w.l. 2004. financial illiteracy in america: a perfect storm, a perfect opportunity. journal of financial service professionals, 58(6):49–56. aron, j. & muellbauer, j. 2000. financial liberalization, consumption and debt in south africa. (the centre for the study of african economies working paper series). [online] available from: http://www.bepress.com/csae/paper132.pdf [downloaded: 2005-04-14]. atkinson, a. & kempson, e. 2004. young people, money management, borrowing and saving: a report to the banking code standards board. [online] available from: http://www. pfrc.bris.ac.uk/reports/bcsb_young_people.pdf [downloaded: 2005-09-24]. basu. s. 2005. white paper: financial literacy and the life cycle. white house conference on aging. [online] available from: http://216.87.66.5/ member/govt_relation/new/loader.cfm?url=/commonspot/ security/getfile.cfm&pageid=33231.pdf [downloaded: 2005-06-15]. bond, m. 2000. understanding the benefits/wages connection: financial literacy for citizenship in a risk society. studies in the education of adults, 32(1):63–77. chen, h. & volpe, r.p. 1998. an analysis of personal financial literacy among college students. financial services review, 7(2):107–128. hair, j.f., anderson, r.e., tatham, r.l. & black, w.c. 1998. multivariate data analysis. 5th ed. new york: prentice hall. janda, k. 2001. significance of the correlation coefficient: elementary statistics for political research. [online] available from:http://janda.org/c10/lectures/topic06/l24-significancer.html [accessed: 200711-14]. janse van rensburg, t. 1999. promoting personal saving in south africa. trade and industry monitor, 11:6–9. joo, s. 1998. personal financial wellness and worker job productivity. unpublished ph.d. thesis. blacksburg: virginia polytechnic and state university. garman, e.t., leech, i.e. & grable, j.e. 1996. the negative impact of employee poor personal financial behaviours on employers. financial counseling and planning, 7:157–168. gem (global entrepreneurship monitor). 2003. south african executive report: 2003 update. [online] available from http://www.gsb.uct.ac.za/gsbwebb/userfiles/gem _2003_sa.pdf [downloaded: 2007-0215]. gem (global entrepreneurship monitor). 2005. south african report 2005. [online] available from: http://www.gsb.uct.ac.za/gsbwebb/userfiles/gem2005.pdf [downloaded: 2007-12-03]. grawitzky, r. 2003. pay now, worry later. south african labour bulletin, 27(2):52. sajesbm ns volume 1 (2008) issue 1 50 ________________________________________________________________________ kane-berman, j. & tempest, j. (eds). 2007. south africa survey 2006/2007. johannesburg: south african institute of race relations. karlsson, n., dellgran, p., klingander, b. & gärling, t. 2004. household consumption: influences of aspiration level, social comparison, and money management. journal of economic psychology, 25(6):753– 769. kidwell, b. & turrisi, r. 2004. an examination of college student money management tendencies. journal of economic psychology, 25(5):601–616. kim, j. 2000. the effects of workplace financial education on personal finances and work outcomes. unpublished ph.d. thesis. blacksburg: virginia polytechnic institute and state university. lloyd, n. 2005. plan for your retirement, bank on living a lot longer. sunday times business times. 11 september:15. lorgat, m. 2003. enabling worker finances: the effects of rising costs of living and debt on worker finances. (unpublished paper.) south african sociological association. durban. needham, c. 2005. reckless spenders face a rocky retirement. sunday times business times, september 25:13. princeton survey research associates. 1999. consumer behaviour, experiences & attitudes: a comparison by age groups. [online] available from: http://www.aarp. org/research/reference/publicopinions/aresearchimport-144-d16907.html [accessed: 2005-10-21]. rsa mof (republic of south africa. ministry of finance). 2006. keynote address by the deputy minister of finance, mr. j. moleketi, mp, at the south african savings institute media launch of the “put on your savings shoes” campaign, 29 june 2006. [online] available from: http://www.treasury.gov.za/speeach/2006062901.pdf [downloaded: 2006-08-15]. sarb (south african reserve bank). 2007. statement of the monetary policy committee 2007-12-06. [online] available from: http://www.reservebank.co.za/html [accessed: 2008-01-22]. simcock, j. 2007. an analysis of financial health and the provision of financial management services in south africa’s previously disadvantaged sme community: implications for sustainability and creditworthiness. unpublished masters dissertation. cape town: university of cape town. streeter, w.w. 2003. how’s your financial literacy? aba banking journal, 95(10):4. teichman, j.m.h., cecconi, p.p., bernheim, b.d., novarro, n.k., monga, m., darosa, d. & resnick, m.i. 2005. how do residents manage personal finances? american journal of surgery, 189(2):134–139. timmons, j.a. & spinelli, s. 2007. new venture creation: entrepreneurship for the 21st century. 7th ed. new york: mcgraw-hill. abstract introduction conceptual and literature framework research methods and design data collection methods parameters for time-driven activity-based costing system calculation of resources consumed for polyvinyl chloride blinds ethical consideration results conclusion acknowledgements references appendix 1 appendix 2 appendix 3 about the author(s) arthur reynolds school of accounting, nelson mandela university, south africa houdini fourie school of accounting, nelson mandela university, south africa lourens erasmus department of financial governance, university of south africa, south africa citation reynolds, a., fourie, h. & erasmus, l., 2018, ‘a framework for time-driven activity-based costing implementation at small and medium enterprises’, southern african journal of entrepreneurship and small business management 10(1), a194. https://doi.org/10.4102/sajesbm.v10i1.194 original research a framework for time-driven activity-based costing implementation at small and medium enterprises arthur reynolds, houdini fourie, lourens erasmus received: 23 may 2018; accepted: 21 sept. 2018; published: 20 nov. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: south african small and medium enterprises (smes) are struggling to survive because of limited resources and access to low-cost funding. it may be beneficial for smes to focus on cost management within their organisation to mitigate the impact of inflationary pressure and high-cost funding. published literature provides evidence that time-driven activity-based costing (tdabc), leaning on the theory of constraints (toc), can be implemented successfully at smes within different industries. furthermore, it was demonstrated how tdabc can be effective when evaluating product cost for a wide, but fixed, product range. there is, however, no generic framework available in extant literature on how to implement tdabc effectively at smes. aim: the purpose of the study was to devise a framework for smes with resource constraints to be able to implement tdabc without exhausting limited resources. setting: a case study at a manufacturing sme specialising in custom products was employed. methods: the generic steps for tdabc as described in published literature were adapted for the manufacturing sme where the case study was conducted. results: the study found that it was practical to implement tdabc at a manufacturing sme by extrapolating the cost data from a single product which harnesses all the key activities in the factory. the tdabc costing data were sufficient for analysis of unused capacity and over-expenditure, hence providing information to consider in profitability enhancement and to support the toc. conclusion: the proposed framework for tdabc implementation at smes revises the generic framework suggested in literature by focusing on key products only and consolidating activities. introduction the prospects of survival for small and medium enterprises (smes) in south africa appear to be unfavourable. olawale and garwe (2010:729) suggest that up to 75% of smes in south africa do not survive in the long term. substandard infrastructure, high overheads and difficulty in obtaining financing are some of the factors that hamper the sustainability of smes (ingle 2014:40; national credit regulator [ncr] 2011). although there will be external factors outside the control of the typical entrepreneur, it may be beneficial for smes to focus on managing costs within their organisation, thereby mitigating the impact of high-cost funding and inflationary pressure. if there is an opportunity to highlight over-expenditure, it may be worthwhile to consider the costing systems that may assist smes in reducing costs and managing their cash flow; not only in south africa but also worldwide. drury (2015:259) has identified three types of costing systems commonly used in all industries, namely: direct costing, absorption costing and activity-based costing (abc). if effectively implemented, abc could provide more accurate product cost information than direct or absorption costing (akyol, tuncel & bayhan 2005:139). the concern with abc implementation is that intensive implementation may be counterproductive and may require too many resources (reynolds & van der poll 2015:129). in published literature, the successful implementation of abc at smes was shown to be possible, although it required modification of the general principles of the costing system (shea et al. 2018). a further costing system, not mentioned by drury (2015), is the closely related time-driven activity-based costing (tdabc) introduced by kaplan and anderson (2003). kaplan and anderson (2003:5) maintain that tdabc offers benefits over traditional abc by being less complex. the application of tdabc enables organisations to consume fewer resources, whilst also calculating unused capacity (kaplan & anderson 2003:1). kaplan and anderson (2003:15) believe that similar benefits could be accrued from the less complex tdabc, which suggests that it may be a suitable costing system for smes with resource constraints. many scholars found that organisations could benefit from tdabc if the limitations of the organisation are considered (balakrishnan, goico & arjmand 2015; fladkjaer & jensen 2011; musov 2017; stouthuysen et al. 2014). furthermore, it has been demonstrated that a lack of resources associated with smes is not a hindrance to tdabc implementation (fladkjaer & jenson 2011; ganorkar, lakhe & agrawal 2018; somapa, cools & dullaert 2012). however, the challenges that smes and organisations with limited resources face when implementing tdabc, suggest that the generic tdabc process steps (detailed later) prescribed by kaplan and anderson (2003) may be insufficient for many smes to achieve the desired benefits. the main problem identified by the current study was the unsuitability of the generic tdabc process steps for smes with limited resources. furthermore, the survival rate for smes is low and there is a need for smes to quantify the cost implications with the transparency that tdabc is supposed to offer. the primary objective of the current study was to develop a framework for the implementation of tdabc at manufacturing smes that may assist resource-constrained organisations in optimising costs. the current study specifically focused on implementing tdabc at a manufacturing sme, specialising in custom products using minimal resources. to achieve the research objective, a literature review and a tdabc implementation case study were conducted. a conceptual and literature framework for the research was formulated, which is discussed below. conceptual and literature framework many smes are facing significant challenges to manage their resources and maintain profitability. the theory of constraints (toc) dictates that resources can be managed by eliminating the weakest area within any given system (mabin 2015:131). the toc uses a five-step process to continually manage constrained resources until the constraint is resolved (goldratt 1990:6–7). the use of toc at a manufacturing organisation can improve production throughput and ensure on-time delivery (pegels & watrous 2005:302). it is plausible that a transparent costing system, such as tdabc, may be able to highlight the areas of constraint. therefore, the current study is based on the premise that tdabc could support toc. as mentioned earlier, the implementation of tdabc may require fewer resources than the closely related abc and may, therefore, be suitable for smes. there are six basic steps that could be identified in literature (figure 1). tdabcis based on two key variables, namely, unit cost of capacity supplied and unit time estimate (kaplan & anderson 2003:6). figure 1: generic steps for time-driven activity-based costing implementation. the first step to tdabc implementation is the identification of relevant activities and resource objects (kaplan & anderson 2003:6; stouthuysen et al. 2014:290). the resource groups may include items such as wages and energy costs (stouthuysen et al. 2014:293). the second step entails the calculation of total activity costs (kaplan & anderson 2003:6; stouthuysen et al. 2014:290). the calculation of total activity costs may be achieved by estimating or calculating how resources are consumed per activity (stouthuysen et al. 2014:291–292). in the study of stouthuysen et al. (2014) for tdabc implementation at a public swimming pool, the resources (totalling r906 938) were allocated on a percentage basis (table 1). table 1: allocation of resource cost to activities. from the information in table 1, it can be derived that the swimming activity consumed 75% of energy cost, as it entails using the swimming pool. conversely, the supervision of swimmers requires an employee (lifesaver), but does not consume other resources. the third step requires an estimation of the practical capacity (kaplan & anderson 2003:6; kee 2012:39; stouthuysen et al. 2014:290). practical capacity (as a percentage) can be calculated by considering lunch breaks, sick leave and public holidays (öker & adıgüzel 2010:80). in practice, a practical capacity of 80% is often assumed as a starting point with lack of sufficient data (askarany & franklin-smith 2014:67; siquenza-guzman, van den abbeele & cattrysse 2014:168). this may be appropriate for smes with resource constraints. to calculate the unit cost of capacity supplied (step 4), it is necessary to establish the total (period) cost for a specific activity and the practical capacity (in minutes) (kaplan & anderson 2003:6). the practical capacity (in minutes) is calculated based on the percentage calculated in the previous step (kaplan & anderson 2003:6). the next step in the tdabc calculation entails the calculation of activity rates for all activities, by multiplying the activity rate, calculated in the first step, with the activity time observed for the activity. to illustrate: in a customer service example from kaplan and anderson (2003), the activity credit checks take 250 min each to complete, whilst the minute rate is calculated as r0.80 per minute. therefore, each credit check is expected to cost 250 min × r0.80 = r200.00 using tdabc (kaplan & anderson 2003:8). in more complicated scenarios, it is necessary to create time equations to allow for special activities (kaplan & anderson 2003:9) constituting step five. the sixth and final step is to calculate the product (or service) cost by multiplying the activity unit time with the activity cost rates and summating all the activity costs that are relevant (kaplan & anderson 2003:8). the implementation of tdabc at smes with resource constraints in south africa, which use these generic tdabc as described in published literature with the six-step process (depicted in figure 1), may have to be critically assessed and reviewed in practice. published literature suggests that intensive implementation of tdabc at some organisations may not be practical and that compromises may likely have to be made. this may entail the measurement of only one resource group, such as employee cost in the example of tdabc implementation in an operating room (balakrishnan et al. 2015:6). in addition, it is stated that the measurement of joint support functions, such as maintenance and other fixed costs, is not compulsory and may be excluded for the tdabc calculation, although this could affect the performance of the costing system (stouthuysen et al. 2014:295). furthermore, the use of time equations across the product range because of potentially inconsistent characteristics could prove to be difficult to implement (souza et al. 2010:68). in addition, calculating practical capacity at smes may be challenging because of difficulties with availability of relevant data (fladkjaer & jenson 2011). the effectiveness of tdabc can be reduced further if a capable enterprise resource system is not present (stout & propri 2011). however, using a spreadsheet solution for tdabc analysis, as proposed by fladkjaer and jenson (2011), could potentially be effective and is likely to be the only option for many smes. research methods and design the current study was conducted using a case study approach and represents the implementation phase prior to a 3-month evaluation programme. a comprehensive literature review was conducted to obtain background to the basic tdabc implementation steps at a manufacturing sme. the manufacturing sme used for the case study was obtained by means of convenience sampling. the manufacturing sme that participated in the study specialises in polyvinyl chloride (pvc) and canvas products. the company is based in port elizabeth in the eastern cape province of south africa and mainly manufactures custom-made products for its customers. a large variety of custom-made products distinct from one another are available, namely, tarpaulins, truck curtains, canopy covers, cargo nets, boat covers, sun canopies, box covers and outdoor blinds, amongst others. the sme employs around 20 people and the factory is housed in a 1814 m² factory building on a rental agreement. the organisation requested to be anonymous and requested the researchers to refrain from divulging sensitive financial information in publications. therefore, the organisation is not named and minimum financial information is presented, except in the context of illustrative tdabc computations. data collection methods the data were collected mainly by analysis of documentary evidence, supported by direct observations, time studies and informal interviews. documentary evidence entailed the data collection of stock listings, financial statements, insurance agreements, factory layouts and invoice data from the accounting system (pastel). direct observations were used to measure floor space, review the number of employees per activity and observe the production and non-production work steps. time studies were used to determine the duration of the production work steps. informal interviews were held with the owner, as well as staff members, to establish the production workflow, basic assumptions and work step times. the results from the tdabc implementation were confirmed with the owner at a later stage by means of a semi-structured interview relating to the accuracy of headcount, floor space and time study parameters. parameters for time-driven activity-based costing system the first step was to consider the resource groups to be used for the tdabc calculation. after review of the financial statements, seven resource groups were identified, namely, salaries and wages, energy, telephone expenses, insurance, rental, vehicle expenses and other overheads. the allocation of costs for the tdabc calculation was conducted accordingly (table 2). salaries and wages, telephone expenses and vehicle expenses could initially be assigned to the actual split per activity because information was available, although not necessarily easy, to extract, because of the lack of cost centres. for further evaluations, a reasonable approximation was considered sufficient for tdabc calculations. it was deemed appropriate to use floor space for rental and insurance. the remainder of the resources was assigned depending on the number of employees (man-hours) performing each activity. table 2: resource cost allocation method. the next step was to consider the primary activities associated with the company. after consultation with the owner of the company, six primary activities were identified, namely, cutting, welding, stitching, sales, administration and fitting. the cutting activity entails cutting of material (e.g. pvc or canvas) to the correct specification and also incorporates quality inspection of products. the welding activity receives the material from the cutting department and welds additional material, such as windows and other protection, onto the received material. the stitching activity adds zips and other material by means of stitching, using sewing machines. sales entail the activities of invoicing and customer support. the administration function includes the management and bookkeeping activities of the company. the six activities incorporated numerous work steps which will be described in detail later. to calculate the floor space for each activity, it was necessary to obtain a layout of the factory (appendix 1) and calculate the floor space by physical measurement of each area. a floor space matrix was utilised to allocate activities to the different areas. the use of a matrix was required as many areas were shared amongst the various activities. the primary areas were allocated first and the remainder of the areas were then allocated, specifically or proportionally, after consultation with the sme owner (table 3). table 3: floor space allocation matrix (presented in m2). the total number of employees (n = 22) at the company were allocated to the six activities: cutting (n = 7), welding (n = 2), stitching (n = 5), sales (n = 4), administration (n = 2) and fitting (n = 2). the number of employees in the cutting department was later reduced to five people (n = 5; total headcount n = 20) because of reduced orders, which is reflected in the evaluation of the costing data. it was evident from the computation that the stitching department was housed in a disproportionately large area with 41.8% of the total area and only 25% of the work force (n = 5) utilising the area. to assign practical capacity for each activity, it was assumed that an arbitrary 80% of total capacity is available and that each employee works a total of 8 h per day. it was not considered practical to physically measure the actual capacity of each employee. therefore, each employee was assumed to be able to work productively (at 80% efficiency) for a total of 6.4 h (8 h × 80%) per day. work days were from monday to friday and overtime was not considered. the practical capacity (in minutes) was calculated by multiplying the number of available hours with the number of working days (table 4). in addition to calculating the cost rates for each activity, the cost rate per minute was calculated. it was calculated by dividing the total resource costs assigned to the activity (in rand) by the practical capacity (in minutes) to obtain a cost per minute rate. in addition, the cost per minute rate for each of the resource groups could be calculated, for example, in the sales activity: the total cost rate is r2.79 per minute constituting: salaries and wages (r1.62 per minute), energy (r0.05 per minute), telephone (r0.10 per minute), insurance (r0.05 per minute), rental (r0.21 per minute), vehicle expense (r0.23 per minute) and other overheads (r0.53 per minute). in this evaluation, it was already evident that administration carries a high labour rate, the stitching department incurs high rental costs because of large floor space allocation and the sales and administration department have vehicle expenses to consider that were not prevalent in other activities. table 4: practical capacity and cost rates for each activity. a complete implementation of tdabc, that would consider each product, was considered impractical for a company of this size and it was necessary to find an alternative solution. after consultation with the owner, it was assessed that the only custom-made product that sells on a regular basis and includes all the activities were pvc blinds. it was, therefore, decided to focus the tdabc implementation on this product only. it should be noted that the pvc blinds can differ significantly in size and specification. the next step was to evaluate the pvc blinds to establish how resources will be consumed for the tdabc system. calculation of resources consumed for polyvinyl chloride blinds the tdabc calculation used for this study was conducted in microsoft excel for mac. as explained earlier, the tdabc was applied for one product only and results were then extrapolated. the pvc blinds were selected because of their popularity and because their manufacturing encompassed all six activities. the pvc blinds represented around 5% of total sales during the evaluation phase. the first step in the evaluation of the pvc blinds manufacturing process was to establish the working steps required to produce a pvc blind across the value chain, from receipt of order to delivery to the customer. a total number of 44 work steps were identified (appendix 2). each work step was assigned to an activity, allocated a relevant cost driver and duration. the duration for each work step was assigned in two ways, namely, consultation with the relevant person and a time study for the production-related work steps. the cost drivers and time durations were confirmed with the owner as accurate after data collection. an extra column was added to each work step to further categorise each work step into one of 13 sub-activities (appendix 3). to illustrate how a sub-activity was created, the order receipt for a sales activity can be used (figure 2). there are four work steps related to this activity, namely, call from the customer (12 min), arrangements to go to customers’ place (3 min), cost estimation (15 min) and quotation presentation (15 min), which adds up to a total of 45 min per customer order. figure 2: allocation of work steps to sub-activity. with this method, it was only necessary to include the selling price, the number of sides (cutting and welding), total stitching metres, the number of blinds and number of trips for delivery on each invoice. the number of orders, job cards and invoices are always a default value of one. the number of sides affected was assumed to be two for cutting and one for welding activities per pvc blind. the tdabc product cost could then be calculated for a pvc blind invoice. to extrapolate the results, the revenue for all pvc blinds was expressed as a percentage of total revenue. if the turnover of pvc blinds in the month of evaluation was 4.81% of total turnover, resources consumed would be considered equal to 4.81% of total resources consumed, for example, the sales activity consumed r1 726.94, which is extrapolated to be r35 896.55 (r1 726.94/0.0481). a total number of six invoices relating to pvc blind constituted the tdabc input variables. the results illustrate that 29.55 h were calculated with tdabc and 42.66 h were calculated from the job cards (table 5). the hours calculated with tdabc relates only to the production activities (cutting, welding and stitching). if the job cards are accurate, based on hours recorded, the tdabc resource consumption is only around 69% for this specific month. however, it should be noted that the tdabc calculation considers the entire value chain and it is, therefore, difficult to compare directly. table 5: production hours stated on job cards compared to time-driven activity-based costing calculation. furthermore, the hours stated on the job card would likely include time for reworks and scrapping, where applicable. the accuracy could potentially be improved with reduced estimations and more time studies. however, the narrative of this research dictates that practicality is as desirable as accuracy and that a compromise is inevitable. in the month evaluated, resources of r90 135.98 were allocated to the sales activity using tdabc, with the result that 40% of resources were consumed (r35 896.55/r90 135.98). in table 6 an extract is shown from the resource utilisation. in this evaluation, it is revealed that the cutting activity only utilises 31% of its resources. in contrast, the welding department uses 54% of its resources. this may be because of higher waiting times because the productivity of the other two production activities is superior. table 6: resource utilisation for the six different activities. it is highly probable that stricter time limits for product manufacturing will improve the resource utilisation. due consideration may also be given to balancing the operations for improved productivity. in this regard, the welding activity is potentially a bottleneck activity in this organisation, especially if volumes should increase. the toc could potentially be supported with tdabc by analysing resource utilisation. furthermore, in a manufacturing sme specialising in customer products, it is plausible that flexing of production headcount in response to the order book could lower wage costs, thereby improving consumption of resources. a further revelation is that the fitting activity has consumed 104% of resources which, in theory, should be unlikely (table 6). this can probably be attributed to either an overestimation of work step times or, in fact, an above-average delivery month with shorter trips to customers. it was noted by the owner during the later evaluation phase that one person (out of two) has left the fitting department and was not replaced. one person from the cutting department was asked to assist with fitting functions on an ad hoc basis. in addition to evaluating the resources consumed for activities, it was also possible to analyse the income statement and express resources consumed as a percentage by resource group. it was calculated that only 40% of rental and insurance costs were converted into sales (table 7). the reason for the low consumption rate was the high rental costs associated with the stitching department because of unused space. the owner indicated that some of the space would be subject to subletting at a later stage to recover some of the cost. the income statement for a later month confirmed an increase in rental income that would help to negate unused capacity. an increase in total sales and/or lowering of fixed costs could allow the organisation to improve the percentage consumed for all resource categories. table 7: resource utilisation by resource group. ethical consideration the research was conducted after ethical clearance was obtained from the nelson mandela university research committee (ref: h-15-bes-acc-020). permission to conduct the research at the manufacturing sme used for the case study was granted on condition of anonymity and that no sensitive financial information is published. the manuscript was submitted for publishing only after written approval (available on request) was obtained from the sme owners to confirm their satisfaction with the content. results the primary objective of the research was to adapt the generic tdabc framework as proposed by kaplan and anderson (2003) to suit smes with resource constraints. the implementation steps for the study differ from the generic steps described by kaplan and anderson (2003) in two areas, namely, product focus and combination of work steps (or sub-activities). the generic implementation steps were found to be inappropriate, at least for an sme with multiple products and limited resources. the research confirms the findings from published literature that tdabc implementation should be adapted where constraints exists, especially for smes and other resource-constrained settings (balakrishnan et al. 2015; fladkjaer & jenson 2011; ganorkar et al. 2018; somapa et al. 2012; souza et al. 2010; stouthuysen et al. 2014). it was found that tdabc implementation for the case sme could only be achieved if the focus was on a single product that is frequently sold. although the use of a single product is very practical, it is probable that evaluating two or more products may improve accuracy. this may apply to many smes with limited resources and varied product ranges. in contrast with the view of stouthuysen et al. (2014:295), the tdabc analysis in this case considered all costs, including fixed and shared overheads. to achieve maximum accuracy, it was found to be beneficial to evaluate the entire value chain from receipt of the order to delivery and follow-up with the customer to establish all the work steps. the consumption of resources (in hours) was compared to the hours stated on the job cards (refer to appendix 3). the calculation revealed under-absorption of 13 h (or 31%) compared to the job card hours. it may be worthwhile to investigate measures to further improve accuracy. physical measurement of activities was not always possible, but in many cases an approximation was appropriate by consulting the relevant staff members or by direct observation. in the case of production activities, a time study was conducted to measure the duration of the work steps. it was not practical to include all the work steps in the tdabc equations, as this would have unnecessarily complicated the costing system. the work steps were, therefore, grouped within the activities, which resulted in simpler time equations. the use of a single product and combining work steps meant tdabc calculation for a single month could be derived from the input of six invoices only. it was suggested by souza et al. (2010:68) that made-to-order (custom) organisations cannot generalise the findings from tdabc across entire product ranges. this research suggests that although it cannot be known if tdabc results can be generalised, there is still a benefit from partially implementing tdabc. the use of microsoft excel for mac for the tdabc calculation was considered more than sufficient for the required implementation. in contrast to the view of stout and propri (2011:2), it is unlikely that investment in a dedicated enterprise resource planning (erp) system for tdabc would have derived more benefits. although it is relatively easy and quick to input into the tdabc spread sheet, there is also the risk of changes in product mix, which may result in too little, or even no, data to capture. it may, therefore, be worthwhile to consider evaluating two or more key products, rather than just a single product. it was evident from the evaluation of the tdabc data that it was possible to identify two key problems in the factory, namely, high expenditure and unused capacity. furthermore, the toc can potentially be managed with tdabc, which may improve order turnaround time. the high salary and wage costs in the admin activity and the high rental costs in the stitching activity were two examples of how the tdabc evaluation has highlighted high expenditure before resource consumption were considered. the low resource utilisation in the cutting activity has revealed a higher than optimum headcount in this area. in this regard, the findings have illustrated potential use for smes with resource constraints by adapting the generic tdabc proposed in literature to ensure implementation is practical (figure 3). figure 3: proposed modified framework for time-driven activity-based costing implementation at small and medium enterprises. conclusion although the implementation of tdabc is described in published literature with the use of the six-step process outlined by kaplan and anderson (2003), it was found that applying the tdabc implementation steps under status quo to an sme with limited resources is not practical. the current study has shown that it is possible to implement tdabc and to accrue benefits by highlighting specific areas of concern, permitting that due consideration is awarded to the limitations of the organisation. furthermore, the analysis of relevant activities may enable smes to consider the toc for more effective operations. the current study’s results contribute to existing literature by providing a revised framework for tdabc implementation in a sme with resource constraints. the strategy towards tdabc implementation at smes with resource constraints could be informed by the developed framework. it is worth noting that benefit could be derived from tdabc directly after implementation. most smes will likely not have a dedicated person to perform the cost accounting function on a continuous basis. therefore, consideration may have to be given to using tdabc only on an ad hoc basis (e.g. annually) to evaluate costs because of the quick and simple implementation time. as a result of evaluation of a small percentage of products, the system cannot claim to be 100% accurate, but may merely serve as a reasonable approximation of tdabc product cost and unused capacity. the impact that other products may have on the evaluation is unknown and this is a weakness of the current study. as such, the results of this study should not be generalised to all smes. furthermore, based on the reported resource utilisations, estimations for work step times are potentially underestimated and, therefore, resource utilisation could have been under-reported. in contrast, it is possible that the arbitrary 80% assumed for practical capacity may have been overstated, which may need to be adjusted by using appropriate measures. in addition, focusing on only select products does not allow for evaluation of product mix decision. this may be negated by performing multiple ad hoc tdabc calculations for a different product. recommendations and suggestions for future research it is recommended that owners and managers of smes adopt the framework for tdabc implementation, if limited resources are available, for a focused implementation and continuous evaluation of costing data. furthermore, it is proposed that smes with resource constraints consider tdabc analysis on an ad hoc basis only, because benefits could still be accrued in this manner. it is recommended that future research focus on the continuous evaluation of the implementation framework, described in this article, to establish its effectiveness over several months or longer. furthermore, it is prescribed that this partial product evaluation is compared with a comprehensive evaluation for the complete product range to establish to what extent tdabc accuracy is affected. in addition, it is proposed that further research establishes the suitability of ad hoc tdabc evaluations for smes. acknowledgements the authors are grateful for the input from owners of the sme for the opportunity to conduct the case study at their organisation and for the time that was set aside for this research. furthermore, the contribution of aina kapulwa, the research assistant, in collecting documentary evidence, conducting the time studies and engaging with the sme owners is acknowledged. this study was funded through a postgraduate bursary for phd studies by nelson mandela university. competing interests the views expressed in this article are our own and do not necessarily reflect the official position of the listed institutions. the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution a.r. constructed the article from the research conducted during the phd study. h.f. and l.j.e. were responsible for academic insight and review. references akyol, d.e., tuncel, g. & bayhan, g.m., 2007, ‘a comparative analysis of activity-based costing and traditional costing’, international journal of industrial and manufacturing engineering 1(3), 136–139. askarany, d. & franklin-smith, a.w., 2014, ‘cost benefit analyses of organic waste composting systems through the lens of time driven activity-based costing’, journal of applied management accounting research 12(2), 59–73. balakrishnan, k., goico, b. & arjmand, e.m., 2015, ‘applying cost accounting to operating room staffing in otolaryngology: time-driven activity-based costing and outpatient adenotonsillectomy’, otolaryngology–head and neck surgery 152(4), 684–690. https://doi.org/10.1177/0194599814568273 drury, c., 2015, management and cost accounting, 9th edn., pat bond, london. fladkjaer, h. & jensen, e., 2011, the abc-paradox: is time driven abc relevant for small and medium sized enterprises (sme)? aalborg university, department of business and management, working paper, 2, pp. 1–23. ganorkar, a.b, lakhe, r.r. & agrawal, k.n., 2018, ‘implementation of tdabc in sme: a case study’, journal of corporate accounting and finance 29(2), 87–113. https://doi.org/10.1002/jcaf.22327 goldratt, e.m., 1990, what is this thing called the theory of constraints? north river press, croton-on-hudson, ny. ingle, m., 2014, ‘an analysis of factors impeding smme performance in south africa’, africa insight 44(2), 37–50. kaplan, r.s. & anderson, s.r., 2003, time-driven activity-based costing, viewed 22 may 2018, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=485443 mabin, v., 2015, ‘goldratt’s “theory of constraints” thinking processes: a systems methodology linking soft with hard’, review of business management 15(46), 129–148. musov, m., 2017, time-driven activity-based costing: potential for application at the smes in poland and bulgaria, viewed 20 september 2018, from https://ssrn.com/abstract=2924495 national credit regulator (ncr), 2011, literature review on small and medium enterprises’ access to credit and support in south africa, viewed 22 may 2018, from http://www.ncr.org.za/pdfs/literature%20review%20on%20sme%20access%20to%20credit%20in%20south%20africa_final%20report_ncr_dec%202011.pdf öker, f. & adıgüzel, h., 2010, ‘time-driven activity-based costing: an implementation in a manufacturing company’, the journal of corporate accounting & finance 22(1), 75–92. https://doi.org/10.1002/jcaf.20646 olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new sme’s in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. pegels, c.c. & watrous, c., 2005. ‘application of the theory of constraints to a bottleneck operation in a manufacturing plant’, journal of manufacturing technology management 16(3), 302–311. https://doi.org/10.1108/17410380510583617 reynolds, a. & van der poll, h.m., 2015, ‘abc implementation in the nelson mandela bay metropole: how far should manufacturing organisations go?’, southern african business review, special edition accounting research 19(2), 118–136. shea, v.j., waldrup, b.e., xu, h. & williamson, s., 2018, ‘error rate impacts on decision efficacy’, quarterly review of business disciplines 5(1), 59–71. siquenza-guzman, l., van der abbeele, a. & cattrysse, d., 2014, ‘time-driven activity-based costing systems for cataloguing processes: a case study’, liber quarterly 23(3), 160–186. somapa, s., cools, m. & dullaert, w., 2012, ‘unlocking the potential of time-driven activity-based costing for small logistics companies’, international journal of logistics: research and applications 15(5), 303–322. https://doi.org/10.1080/13675567.2012.742043 souza, a.a.d., avelar, e.a., machado boina, t. & raimundini, s.l., 2010, ‘análise da aplicabilidade do time-driven activity-based costing em empresas de produção por encomenda [analysis of the applicability of the time driven activity-based costing in make-to-order companies]’, revista universo contábil 6(1), 67–84. stout, d.e. & propri, m.l., 2011, ‘implementing time-driven activity-based costing at a medium-sized electronics company’, management accounting quarterly 12(3), 1–11. stouthuysen, k., schierhout, k., roodhooft, f. & reusen, e., 2014, ‘time-driven activity-based costing for public services’, public money & management 34(4), 289–296. https://doi.org/10.1080/09540962.2014.920202 appendix 1 figure 1-a1: factory layout and primary activity areas. appendix 2 table 1-a2: work steps for polyvinyl chloride blinds. appendix 3 table 1-a3: calculations for resource consumption. abstract introduction informal sector activities growth constraints in informal activities formalising the informal sector objectives methodology sample particulars results: constraints to engaging in informal activities in slums willingness to move to the formal sector limitations of study and areas for further research conclusion and policy implications acknowledgements references about the author(s) darma mahadea school of economics and finance, discipline of economics, university of kwazulu-natal, south africa luther-king junior zogli school of economics and finance, discipline of economics, university of kwazulu-natal, south africa citation mahadea, d. & zogli, l-k.j. 2018, ‘constraints to growth in informal sector activities and formalisation: a case study of ghanaian slums’, southern african journal of entrepreneurship and small business management 10(1), a130. https://doi.org/10.4102/sajesbm.v10i1.130 original research constraints to growth in informal sector activities and formalisation: a case study of ghanaian slums darma mahadea, luther-king junior zogli received: 17 mar. 2017; accepted: 02 july 2018; published: 30 aug. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: globally, people often migrate from rural to urban areas in search of employment. lack of adequate employment opportunities in cities forced individuals to engage in slum informal economic activities out of necessity. aim: the informal sector presently employed about 86% of labour in ghana, contributing 42% to its gross domestic product (gdp). various constraints held back the development of slum informal activities. formalising the informal sector is advocated as a step to generate employment. this article investigated the dynamics of informal sector activities and formalisation among slum operators in ghana, based on a survey in two major cities there. setting: this article investigated the constraints that hinder the development of slum activities in accra and kumasi, two cities in ghana, and examined the informal operators’ subjective well-being and their willingness to graduate to the formal sector, should the constraints be addressed. methods: data were collected by means of a questionnaire, administered to a random sample of 342 informal slum operators. enterprise constraints are examined by using the principal component analysis (pca) method and the likelihood of the informal operators’ graduating to the formal sector by using logistic regression. results: the pca identified six clusters as limitations, explaining about 77% of the variation in constraints. these related to a lack of business knowledge, credit access, tools and materials, security and social networking. the logistic regression results reflect that, of all the constraints, it is only when access to capital is addressed, that slum operators will move into formal activities. conclusion: when people are happy in what they are doing, they are reluctant to move to the formal sector, despite incentives or interventions that address their enterprise constraints. hence, slum operators and informal activities are unlikely to disappear. nevertheless, policy-makers have to devise appropriate financing strategies for slum operators to help in their formalisation and growth pathways. introduction a slum is a group of households in an urban area lacking durable housing of a permanent nature, sufficient living space, access to safe water, adequate sanitation and security of tenure (un-habitat 2007). slums arise owing to in-migration, poverty, inadequate housing, poor infrastructure and planning for urban growth (un-habitat 2003). slums sprung up in ghana owing to the lack of adequate response mechanisms to housing, urbanisation and unemployment by the government (un-habitat 2009). the harris–todaro model suggests that people migrate from rural to urban areas because of income differentials and lack of employment opportunities (todaro & smith 2015). in ghana, high poverty levels in the north prompt one out of every five people to migrate to the southern regions (gss 2007; van der geest 2011). furthermore, owing to inadequate housing and employment opportunities in ghana, migration to the cities results in the growth of slums and informal activities as people look for a place to stay and earn a living out of desperation. slums are also a springboard for low-level entrepreneurship, associated with informal ventures. various other reasons influence people in slums to engage in informal activities. these include avoidance of and unwillingness to pay tax, remuneration from illegal activities, unwillingness to register one’s business because of intrusive regulations imposed on formal firms, avoidance of costs or bureaucratic hurdles and the benefit of working flexibly at one’s convenience and being able to balance personal and family interests (mohr 2016). an informal enterprise launched today can be an incubating base for a larger venture in the future, more so if the founder has the right entrepreneurial attributes and network support. indeed, given the heterogeneity of the informal sector firms as a group, some might cease trading soon after start-up, some are likely to survive and remain small and some enterprises might have growth potentials. if the operators of these ventures are assisted to formalise, they can graduate to higher levels of entrepreneurship, experience higher levels of happiness and generate more employment and tax revenue (urban, van vuuren & barreira 2008). indeed, bàculo’s (2006) study in italy revealed that informal operators’ material and non-material needs are to be considered when deciding on their formalisation. a study by pat horn (2014) in south africa indicated that formalisation of the informal sector is not a one-step event. formalisation is an ongoing, gradual process that partly entails strengthening the rights, security and benefits of the operators and workers, and negotiating with municipalities and other stakeholders. hence, for slum enterprises in the ghanaian context to achieve formalisation, their growth constraints and subjective well-being have to be identified and attended to, and this can help policy-makers come up with supportive intervention measures facilitating the informal slum enterprises to transition into the formal sector. this is the main aim of the article. informal sector activities although informal trading is a global phenomenon, it is most visible in africa (van rooyen & antonites 2007). the significance of the informal sector to economic development and employment generation in urban and rural areas of the developing countries is widely recognised in the literature (altman 2007; todaro & smith 2015). the international labour office (ilo) mission report in 1972 on employment in kenya portrayed a dynamic income and employment picture of the informal sector, with notable characteristics, such as ease of entry, reliance on indigenous resources, family ownership, small-scale operations, labour-intensive with adaptive technology, unregulated, competitive and with skills often acquired outside formal education. thereafter, other studies and international organisations have confirmed the vital empowerment role of the informal sector in both developed and developing countries, with linkages to the organised formal sector, and the necessity of state to support this subterranean economy (sachs 2005; van rooyen & antonites 2007). international labour office (2014) estimates that the informal sector represents 82% of total employment in south asia and mali, 75% in bolivia, 66% in sub-saharan africa, 65% in east and southeast asia, 51% in latin america and 10% in eastern europe and central asia. the ilo further ranks india as having the largest share of informal sector employment, at 83.5% of the total employment, contributing about 30% to the country’s gdp (kalyani 2016). ghana’s informal sector employs about 86% of its labour force, contributing 42% to gdp (anuwa-amarh 2015). of those in formal employment, 7% work in the public sector and another 7% in the private sector (gss 2010). informal business ventures in south africa, though largely subsistence in nature, provide a safety net for many households that would otherwise be in dire poverty situations, without employment or an alternative source of income (herrington, kew & kew 2010; lings 2014). about 70% of individuals who start an informal business do so because of unemployment. the informal sector, including the slum operations, contributes between 5% and 7% to the country’s gdp and provides between 16% and 22% of total employment. the shadow economy provides employment to over 3 million people, engaged in diverse activities, ranging from hawking, backyard mechanics and panel beating, street vending, drug peddling, hairdressing to light manufacturing (davies & thurlow 2010; mohr 2016; valodia 2007). with the recent downturn and apparent jobless economic growth in south africa, an increasing number of workers are squeezed out of the formal labour market and they seek refuge in the informal sector (horn 2016; sarb 2018). growth constraints in informal activities in accra and kumasi, a large proportion of the population, as indicated above, is engaged in informal activities, ranging from peanut manufacturing to wood processing for many years. although the operators have been trading for long, they are ‘stuck’ on the fringes of the main economy; they are not graduating to the formal level, partly because of ‘comfortableness’ and constraints they encounter in their attempts to grow. these constraints inhibit the capital accumulation, physical expansion and employment potentials of the informal enterprises and their likelihood to move to the formal sector. if the linkages between the informal enterprises and formal firms are positive and complementary, then the growth of the latter can induce growth in the informal sector (valodia 2007). some of the constraints are internal to the firm, that is, within the control of its owner-operator, and others are external, beyond the control of the owner (parsons 2013). empirical studies in various countries have identified numerous growth-limiting factors, such as infrastructure, capital, lack of relevant skills, excessive regulations and security concerns. a summary of these constraints is presented in table 1. table 1: growth constraints in the informal sector. unless appropriate interventions are made to equip the informal operators with relevant skills and resources, they are likely to continue operating on the fringes of the mainstream economy. although the activities dealt in are usually not capital-intensive, and the operating environment is not sophisticated, many operators feel satisfied with status quo operations, business as usual. research by biswas-diener & diener (2001, 2006) indicates that although operators in the informal sector may be unhappy with their physical surroundings, such as lack of adequate infrastructure and comfort in slums, they are, most often than not, satisfied with their non-material well-being (happiness). hence, this article seeks to find out if the perceived subjective well-being of the slum operators acts as a hindrance to them graduating into the formal sector. subjective well-being subjective well-being is an appraisal of one’s life satisfaction as being happy or otherwise. high subjective well-being made up of positive life experiences is an important concept of positive psychology as it makes life worth living (diener, lucas & oishi 2005). a study by biswas-diener & diener (2001) on slums of calcutta (india) discovered that, even though the slum dwellers and operators there did not have many material assets, they found satisfaction in many other areas of their lives. this means that, even though the slum dwellers were poor, and unable to satisfy all their material needs, they were very happy with their non-material aspects of well-being. biswas-diener and diener (2006) further studied subjective well-being of the homeless operators in calcutta (india), california and portland (united states of america). they found that although the homeless in these countries were dissatisfied with their material quality of life, especially their housing, income, and health, these individuals were inwardly happy. in south africa, blaauw et al.’s (2013) study of the subjective well-being of operators and labour in the informal sector found that personal income, enabling individuals in a poor community to have access to food, is an important determinant of happiness. while kingdon & knight (2007) found that relative income is a determinant of subjective well-being, mahadea (2013) found that both absolute and relative income are important for the happiness of both entrepreneurs and labour in south africa. bàculo’s (2006) study of the informal sector in italy found that if policy-makers’ aim is to assist informal operators in formalising their businesses, both material (e.g. finance) and non-material resources (e.g. operator’s culture and conduct of business) should be taken into consideration. as some limitations inhibiting the growth of informal enterprises are of a material nature and some are non-material, this article also seeks to find if subjective happiness influences informal operators to continue living and working in slums, even if they are helped to overcome their constraints. formalising the informal sector although entrepreneurship is perceived as a rewarding activity in certain regions, enabling talented individuals of a schumpeterian mould to bring about innovation, product development and new organisational structures, not many people are able to venture into the formal business and reach their aspirations (luiz & mariotti 2008; mahadea 2013; urban 2008). consequently, many end up in the informal sector owing to a combination of push and pull factors. the negative influences, as mentioned earlier, include difficulties in raising finance, insufficient skills, problems in finding formal employment and avoidance of tax and compliance with bureaucratic regulations. on the positive side, people voluntarily choose to operate in the informal sector as they prefer to be their own boss, away from the control of nagging superiors; they prefer the flexibility of working at their pace and leisure, thus balancing personal and family interests (altman 2007; naudé 2010). however, there are numerous drawbacks when one operates in slums or in the informal sector. the necessary infrastructure facilities and market expansion opportunities may be inadequate. opportunities to do business with registered firms or the government via tenders and state procurement are almost non-existent. raising funding from banks may pose a problem as the operators, especially women, may not have adequate title deeds to offer as collateral (davies & thurlow 2010; wills 2009). while the informal sector creates employment and generates revenue, operators in this sector mostly avoid paying tax, which otherwise could have played an important role in infrastructural development (ilo 1972; loayza 1997; the world bank 2013). unlike the south african case, where the informal sector is an under-utilised source of employment (van rooyen & antonites 2007), over four-fifths of the population in ghana are informally employed and avoid paying taxes; there is thus merit in formalising the informal sector there and augmenting the formal sector employment and tax revenue. de soto (1989, 2000) is of the view that, the only difference between the formal and informal sector is the legal status of the former. the informal sector lacks property rights; hence, its assets cannot be used as collateral for securing loans, and this implies that many profitable opportunities to increase investment are left untapped in the informal economy. de soto (2000) argues that there is a total of $9.3 trillion of dead capital in the informal sector and slums in the developing world. this represents capital that cannot be used as leverage for credit facilities, thus denying the informal sector of growth. further, formalisation may enable informal slum operators to have access to government support programmes and services (ilo 2009). objectives policy-makers in ghana have invested in projects to curb the growth of slums. however, their efforts have not been successful thus far. the problem being that, there has been no conclusive evidence in ghana regarding what factors hinder the growth of informal slum businesses and what will prompt them to move into the formal sector. the current study, therefore, seeks to provide answers to the growth-inhibiting factors of the informal sector in the slums of accra and kumasi, and how these operators can be assisted to enhance their development and transition into the formal sector. the study further investigates whether subjective happiness influences a slum operator’s willingness to stay informal even if the constraints are being addressed. methodology this article adopts a positivist, deductive research approach. this quantitative study gathers cross-sectional data by means of a survey. it uses a structured questionnaire administered to operators in informal activities in two urban slum regions of ghana. these are the ‘sodom and gomorrah’(s&g slum) in accra and the ‘akwatia line’ (al slum) in kumasi. principal component analysis (pca) is used to examine the constraints to growth, and logistic regression is used to examine the willingness to formalise. there is no existing data on the number of informal sector operators in urban slums of ghana, making it difficult to determine a representative sample size. accordingly, the researchers took into consideration the sample size requirements for pca. according to tabachnick and fidell (2013), a sample of above 300 is appropriate for pca. thus, the sample consisted of 344 slum operators selected by simple random sampling from the akwatia line (al slum) in kumasi (172 respondents) and the s&g slum in accra (172 respondents). the validity of the questionnaire, which shows the extent to which the measuring instrument is able to measure what it is supposed to measure, was addressed by linking the questionnaire design to literature review and previous research. to determine the constraints, operators were required to state their level of agreement or disagreement (on a 7-point likert scale) to 14 questions. subjective well-being was measured using layard’s (2011) scale, where respondents were asked to state if they are happy or not on a likert scale, from 1 to 7, where 1 stands for very unhappy and 7 for very happy. a respondent with a score below 3 may be considered unhappy and one above 3 is regarded as happy. the reliability of the questionnaire was indicated by the cronbach’s alpha. the cronbach alpha coefficient was 0.74 (> 0.7), indicating a strong internal consistency. sample particulars of the 344 respondents interviewed, 59.6% were male while 40.4% were females. in terms of marital status, 70.6% were married and 29.4% were single. almost 19% were in the 26–30 years age group, and 0.9% were in the old age group (over 60). with regard to education, over two-fifths (42.2%) did not have a formal education; about 10% had secondary education; and only 1.5% had tertiary education. males attained a higher education than females; 62% of the males had either a primary or higher education as compared to 51% of the female operators surveyed. in s&g, foodstuff sales and peanut butter manufacturing are the most represented economic activities, each with a percentage of 16. the most dominant economic activities in al are wood processing and wood sales, each accounting for 16.3% of the respondents. operators involved in livestock are the least represented economic activity in al, representing 3.5% of respondents. the majority (52%) of the respondents in both regions have been in their current slum activity for over 10 years. about a quarter (28%) have been in operation between 6 and 10 years, while only 20% were operating for less than 5 years. with regard to happiness, 87.5% of the operators scored higher than 3, indicating they are happy and only 12.5% were unhappy, with a low score. principal component analysis principal component analysis is used to determine the conditions that constrain the growth of the informal sector business in surveyed slums. literature survey identifies various constraints to informal sector development. in this study, the following constraints were examined: land tenure security, training in book-keeping and management, production inputs and production tools, access to bank loans, harassment by the municipal authority, financial management and planning skills, experience and poor communication systems, electricity supply, weak networking (social relations), state of roads, lack of collateral and access to basic infrastructure. the variables were measured on a likert scale, ranging from one (strongly disagree) to seven (strongly agree). logistic regression in determining which of the constraints, if addressed, may prompt slum operators to move out and venture into a formal sector business, logistic regression is employed. the variables (components drawn from the pca) and an operator’s happiness represent the explanatory factors, while an operator’s willingness to move or stay represents the dependent variable. a willingness to move to the formal sector is captured as 1 and 0 otherwise. in introducing the components into a regression equation, variables are generated from the extracted components. spss’s ‘compute variable function’ is used to create variables from the component results. this is done by entering the values of the component matrix multiplied by the questions they represent in the pca (spss 2009). hence, the loading of every variable in a component is multiplied by the question they stand for, generating a value (representing a component) for all 344 respondents. this procedure was also used by liu et al. (2003) in generating variables for their regression analysis. results: constraints to engaging in informal activities in slums informal activities cannot develop fast when operational constraints inhibit their growth. in this study, 14 variables were considered for the pca, ranging from lack of accounting skills to poor communication (table 4). the result (table 2) from the kaiser-meyer-olkin (kmo) measure of sampling adequacy is 0.625 – somewhat low but acceptable (hair et al. 2010). the bartlett’s test of sphericity is significant (p = 0.000), reflecting that the data set is factorable. table 2: kaiser-meyer-olkin and bartlett’s test. applying the principal component extraction method and oblimin rotation with kaiser normalisation, 6 components emerge, accounting for 77.2% of the total variation in slum operation constraints, as shown in table 3. only components with an eigen value of at least 1 were considered in the analysis. table 3: total variance explained. the first component explains about 20% of the total variation in constraints (table 3). the rotated matrix (table 4) indicates that the first component consists of three variables: lack accounting (loading, 0.896), financial management (loading, 0.857) and business management skills (loading, 0.849). this component, with a cronbach alpha of 0.841, is labelled as ‘lack of business knowledge’ (table 4). table 4: rotated matrix. the second component has a cronbach alpha of 0.801; it explains 16.4% of total variation (table 3). this set is represented by variables such as infrastructural challenges, which has a loading of 0.881, electricity problems with a loading of 0.842 and bad roads, which has a loading of 0.785. this cluster of constraints is labelled as ‘infrastructural problems’. the third component entails lack of collateral security (loading, 0.973) and difficulty in assessing bank loans (loading, 0.970). this component represents 13.66% (table 3) of total variation and is named as ‘difficulty in accessing credit’. the fourth component accounts for 10.47% of the total variation in constraints of slum activities. this cluster has a cronbach alpha of 0.743 (table 4) and is represented by lack of inputs (loading, 0.896) and lack of tools (loading, 0.874). municipal harassment (loading, 0.886) and lack of land tenure security (loading, 0.684) represent cluster five. this cluster is labelled as ‘lack of security’, explaining 8.69% of total variation in constraints. the last component, accounting for 8.13% (table 4) of the variation in constraints is labelled as ‘poor communication and social networking’ and is represented by weak networks (loading, 0.781) and poor communication (loading, 0.734). although this last component has a low cronbach’s alpha, social networks and poor communication are retained as variables in the study because they are critical constraints in ghana. a similar approach was used by shin, collier and wilson (2000). willingness to move to the formal sector formalisation of the informal sector entails cost and benefits, and poses major challenges, especially taking into consideration the high levels of slums, poverty, unemployment and low level of formal ventures in ghana (king, braimah & brown 2015). the ghanaian state may be interested in formalising the informal sector for legal and fiscal considerations, while operators are reluctant to go formal, because of tax liabilities and bureaucratic compliance hurdles they are likely to encounter. formalisation may not progress unless informal operators anticipate real net benefits from this transition. the oecd (2006) is of the view that formalising the informal sector in developing countries is a solution to eradicating poverty there in the long run. constraints faced by the operators in al and s&g slums were categorised under six clusters, in table 4. these include lack of business knowledge, infrastructural problems, difficulty in accessing credit, lack of tools and materials, security problems and poor communication and social networking. this article also sought to find out if a non-material reason (happiness) acts as a deterrent to slum operators moving into formal sector activities. happiness, as mentioned earlier, was measured on a 7-point likert scale, a higher value reflecting a higher level of happiness. hence, the above identified constraints and happiness are regressed on an operator’s willingness to move, using logistic regression. the surveyed operators were asked to answer a ‘yes’ or ‘no’, if they were willing to formalise their business, assuming they are helped and their constraints addressed. the initial logistic model is presented below: generation of variables in order to conduct the logistic regression analysis, the spss’s ‘compute variable’ function is used to generate variables from the pca results, a method suggested by liu et al. (2003). to compute a variable, the component loadings (from pca, table 4) are multiplied by the question they stand for. for each respondent, the variables from the six components are generated as follows: business knowledge = [(0.896 × lack accounting skills) + (0.857 × lack financial management skills) + (0.849 × lack business management skills)] infrastructural problems = [(0.881 × infrastructural challenges) + (0.842 × electricity problems) + (0.785 × bad roads)] capital = [(0.973 × collateral security) + (0.970 × bank loan difficulties)] lack of materials and tools = [(0.896 × lack inputs) + (0.874 × lack tools)] security = [(0.886 × municipal harassment) + 0.684 × land tenure security)] poor communication and social networking = [(0.781 × weak networks) + (0.734 × poor communication)]. logistic regression results after the computation of the needed variables, a logistic regression was run using stata, to ascertain which of the constraints, if addressed, will motivate the slum operators to move into the formal sector. the explanatory variables are lack of business knowledge, infrastructural problems, difficulty in accessing capital, lack of tools and materials, security challenges, poor communication and social networks and happiness, while the predicted variable is willingness to move to the formal sector. the results are presented in table 5. table 5: willingness to formalise. the fitted model is stated as: the hosmer–lemeshow test is used to assess the goodness of fit of the model (equation 2). a poor fit is indicated by a significance value less than 0.05 (pallant 2007). in this study, the chi-square value for the hosmer–lemeshow is 9.16, with a significance level of 0.24 (table 5). this value (0.24) is greater than the critical value of 0.05, therefore, indicating support for the fitted model, with an r2 is about 31%. the wald chi-squared (prob > chi2 = 0.000) is less than 0.05, signifying that the independent variables are not simultaneously equal to zero. only three variables are found to contribute significantly to the predictive ability of the model. this implies that infrastructural challenges, lack of capital and happiness explain 31% of variation in the outcome and are significant predictors of an operator’s willingness to move into the formal sector. the results in table 5 are in odds ratio. in interpreting the odds ratio as a percentage, the probability of an event occurring is found by subtracting the odds ratio of the event occurring from 1, and expressing the result as a percentage. this approach was also used by hailpern and visintainer (2003) in their study. from the results, an improvement in access to capital is the only constraint, which when addressed will prompt informal slum operators to move to the formal sector (odds ratio = 1.11). a unit change in greater access to capital will increase a slum operator’s willingness to formalise by 11% (1 – 1.11). similarly, blunch, canagarajah & raju (2001) concluded that financial capital investments tend to be low in the informal sector. hence, greater availability of capital to slum operators will help them grow their businesses and graduate into the formal sector. the log of odds for an operator moving to the formal sector if infrastructural challenges are met is 0.92. this implies that an unit’s increase in efforts to solving infrastructural challenges will lead to an 8% (1 – 0.92) decrease in an operator’s willingness to move. this result perhaps highlights the failure of the government of ghana to resettle s&g informal operators in 2006, as a €10.4 million project was set up to resettle them at adjin kotoku, a suburb of accra (government of ghana 2008; smith-asante 2015). the failure to relocate s&g operators to adjin kotoku can be attributed to inertia as the adjin kotoku region did not offer the same economic opportunities as s&g (mukim 2011). this result apparently runs counter to van rooyen and antonites’s (2007) findings that the improvement of infrastructure in johannesburg is likely to help informal enterprises to formalise. a happy slum operator is less likely to move into the formal sector (odds ratio = 0.38). a unit increase in slum operators’ happiness reduce their likelihood of moving to the formal sector by 62% (1 – 0.38). this implies that slum operators in ghana are perhaps happy with staying in their slum activity, a result that is similar to the findings of biswas-diener and diener (2001, 2006) regarding individuals being happy in slums in india and the usa. this result reinforces horn’s (2014) view that informal work is unlikely to ever disappear and thus many informal activities will remain informal or semi-formal in the future. improving access to tools and raw materials, security and communication, and social networks increase an operator’s probability of joining the formal sector by 5%, 1% and 7%, respectively. however, these variables were not significant in the logistic regression. limitations of study and areas for further research the study considered only two slums in kumasi and accra, owing to resource constraints. better results might have been obtained if the study included other urban slums in ghana. hence, care should be taken in generalising the results. the logistic regression result indicates that improvement to infrastructure may not necessarily prompt slum operators to move to the formal sector. many informal operators are happy to stay in the informal sector. further studies need to be conducted as to why they prefer the informal to the formal sector. conclusion and policy implications operators in slum activities in ghana are pushed into the informal sector out of necessity owing to unemployment. these operators face many growth constraints, of which lack of business knowledge and capital are most critical. about 79% of the surveyed operators have no formal education or only had primary education. hence, government policies should be geared towards creating an enabling environment for formal and informal enterprises to grow through empowering enterprisers with higher levels of education and training. not much can, however, be achieved through the provision of training alone, as this article found that infrastructural problems, difficulty in accessing credit, lack of tools and materials, security problems and poor communication and social networking are other challenges facing informal slum operators. therefore, support programmes are necessary for the provision of basic tools and machinery, credit, improved communication facilities, as well as land tenure security to slum operators in ghana. hopefully, these measures will go a long way to help forward-thinking operators to grow. in the quest to formalise, the study found that, if slum operators are helped with access to capital, they might be willing to formalise. the ilo (2014) also found that limited access to finance is a principal reason as to why the informal sector does not expand. the move to a formal economy involves challenges of tax compliance, regulations and bureaucracy. their consequences may deter informal enterprisers from moving to the formal sector. informal operators in ghana cannot access adequate finance from the commercial banks. about 70% of ghanaians remain unbanked (addae-korankye & abada 2017; boateng 2015). hence, they rely on micro-finance institutes (mfis), which are presently largely unregulated. it is recommended that the central bank of ghana (bog) designs an effective regulation policy for the micro-finance institutions to ensure that informal operators have greater access to finance, which in turn may enable them to expand their business and formalise. even though addressing infrastructure challenges will not prompt operators to formalise, it may help to modernise their operations. hence, the improvement of basic infrastructure in ghana, such as access to sanitation, good roads, an adequate supply of electricity, storage facilities and information technologies, as well as improving land tenure security and no unnecessary harassment from legislation and municipal inspectors, can help informal operators to grow. as altman (2007) puts it succinctly, policy should focus on productivity, capital, asset accumulation and skills development. however, it must be stressed that enterprise growth may be restrained by internal inertia embedded in the minds of their owners or by personal motivational factors. when people are happy in what they are doing, business as usual in the informal economy, then incentives designed to help their ventures to grow by relieving the growth constraints may have little effect. acknowledgements the authors would like to thank the reviewers for their helpful comments on this article. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors contributions both authors were responsible for the analysis and writing of the article. the fieldwork was done by l.j.z. in ghana. references addae-korankye, a. & abada, a., 2017, ‘microfinance and women empowerment in madina in accra, ghana’, asian economic and financial review 7(3), 222–231. https://doi.org/10.18488/journal.aefr/2017.7.3/102.3.222.231 altman, m., 2007, ‘what are the policy implications of the informal sector becoming the informal economy’, concept paper for iza/wb conference on employment & development, bonn, germany, pp. 8–9, june. anuwa-amarh, e.t., 2015, understanding the urban informal economy in ghana, a survey, a friedrich-ebert-stiftung report, viewed 29 january 2017, from http://www.fesghana.org/uploads/pdf/understanding%20the%20urban%20informal%20economy%20in%20ghana_a%20survey%20report.pdf aryeetey, e., 2009, the informal economy, economic growth and poverty in sub-saharan africa, framework paper, african economic research consortium, paper prepared for the aerc project workshop on ‘understanding links between growth and poverty reduction in africa’, viewed n.d., from https://www.africaportal.org/documents/6563/aryeetey_informality.pdf bàculo, l., 2006, ‘tackling informal employment: the case of southern italy’, international journal of manpower 27(6), 552–571. https://doi.org/10.1108/01437720610690482 biswas-diener, r. & diener, e., 2001, ‘making the best of a bad situation: satisfaction in the slums of calcutta’, social indicators research 55(3), 329–352. https://doi.org/10.1023/a:1010905029386 biswas-diener, r. & diener, e., 2006, ‘the subjective well-being of the homeless, and lessons for happiness’, social indicators research 76(2), 185–205. https://doi.org/10.1007/s11205-005-8671-9 blaauw, p., botha, i., schenck, r. & schoeman, c., 2013, happy in the informal economy? a case study of well-being among day labourers in south africa, economic research southern africa working paper no. 337, viewed n.d., from https://econrsa.org/system/files/publications/working_papers/working_paper_337.pdf blunch, n.h., canagarajah, s. & raju, d., 2001, ‘the informal sector revisited: a synthesis across space and time’, the world bank social protection discussion papers, no. 0119, viewed n.d., from http://documents.worldbank.org/curated/en/496711468766544695/pdf/multi0page.pdf boateng, a.a., 2015, ‘an examination of challenges and prospects of microfinance institutions in ghana’, journal of economics and sustainable development 6(4), 52–60. canagarajah, s. & sethuraman, s.v., 2001, ‘social protection and the informal sector in developing countries: challenges and opportunities’, social protection discussion paper, no 0130, viewed n.d., from http://documents.worldbank.org/curated/en/464851468739448448/pdf/multi0page.pdf davies, r. & thurlow, j., 2010, ‘formal–informal economy linkages and unemployment in south africa’, south african journal of economics 78(4), 437–459. https://doi.org/10.1111/j.1813-6982.2010.01250.x de soto, h., 1989, the other path: the informal revolution, harper & row, new york, ny. de soto, h., 2000, the mystery of capital: why capitalism triumphs in the west and fails everywhere else, basic books, new york, ny. diener, e., lucas, r.e., & oishi, s., 2005, ‘subjective well-being: the science of happiness and life satisfaction’, in c.r. snyder & s.j. lopez (eds.), handbook of positive psychology, 2nd edn., pp. 63–73, oxford university press, new york, ny. ghana statistical service, 2007, ghana living standard survey round 5 (glss5), ghana statistical service, accra. ghana statistical service, 2010, news brief; new series of the gross domestic product (gdp) estimates, highlights of the rebased series of the gdp – formal press release on november 5, 2010, ghana statistical service, accra, ghana. government of ghana, 2008, 2008 budget highlights (a brighter future)’, accra, government of ghana, viewed 12 october 2016, from https://www.mofep.gov.gh/sites/default/files/budget-statements/2008_budget_highlight.pdf hailpern, s. & visintainer, p., 2003, ‘odds ratios and logistic regression: further examples of their use and interpretation’, the stata journal 3(3), 213–225. hair, j., black, w., babin, b. & anderson, r., 2010, multivariate data analysis, 7th edn., pearson prentice hall, upper saddle river, nj. herrington, m., kew, j. & kew, p., 2010, global entrepreneurship monitor, uct centre for innovation and entrepreneurship, cape town. horn, p., 2014, collective bargaining in the informal economy street vendors, weigo research, manchester, united kingdom, viewed 12 june 2018, from http://www.wiego.org/sites/default/files/resources/files/horn-collective-bargaining-street-vendors.pdf ilo, 1972, employment, incomes and equality: a strategy for increasing productive employment in kenya, international labour office, geneva. ilo, 2009, the informal economy in africa: promoting transition to formality: challenges and strategies, international labour office, employment sector and social protection sector, ilo, geneva. ilo, 2014, ‘transitioning from the informal to the formal economy’, international labour conference, international labour office, geneva, viewed 06 august 2016, from https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_218128.pdf kalyani, m., 2016, ‘indian informal sector: an analysis’, international journal of managerial studies and research (ijmsr) 4(1), 78–85. king, r.s., braimah, i. & brown, a., 2015, ‘formalising the informal sector through association: the case of kumasi informal bakers’ association’, journal of sustainable development 8(2), 46. https://doi.org/10.5539/jsd.v8n2p46 kingdon, g.g. & knight, j., 2007, ‘community, comparisons and subjective well-being in a divided society’, journal of economic behavior & organization 64(1), 69–90. https://doi.org/10.1016/j.jebo.2007.03.004 layard, r., 2011, happiness, penguin, london. lings, k., 2014, the missing piece: solving south africa’s puzzle, macmillan, johannesburg. liu, r.x., kuang, j., gong, q. & hou, x.l., 2003, ‘principal component regression analysis with spss’, computer methods and programs in biomedicine 71(2), 141–147. https://doi.org/10.1016/s0169-2607(02)00058-5 loayza, n.v., 1997, ‘the economics of the informal sector: a simple model and some empirical evidence from latin america’, carnegie-rochester conference series on public policy, 45, 129–162. https://doi.org/10.1016/s0167-2231(96)00021-8 luiz, j. & mariotti, m., 2008, perceptions regarding entrepreneurship in an emerging and culturally diverse economy: a south african survey, working paper, no. 95, viewed n.d., from https://core.ac.uk/download/pdf/6428946.pdf mahadea, d., 2013, ‘on the economics of happiness: the influence of income and non-income factors on happiness’, south african journal of economic and management sciences 16(1), 39–51. https://doi.org/10.4102/sajems.v16i1.204 mohr, p., 2016, economic indicators, van schaik publishers, pretoria. mukim, m., 2011, ‘industry and the urge to cluster: a study of the informal sector in india’, discussion paper 0072, spatial economics research centre, london. naudé, w., 2010, ‘entrepreneurship, developing countries, and development economics: new approaches and insights’, small business economics 34(1), 1–12. https://doi.org/10.1007/s11187-009-9198-2 oecd, 2006, ‘promoting pro-poor growth: private sector development’, an extract from the publication, promoting pro-poor growth: policy guidance for donors, pp. 27–35, paris, france. okpara, j.o., 2011, ‘factors constraining the growth and survival of smes in nigeria: implications for poverty alleviation’, management research review 34(2), 156–171. https://doi.org/10.1108/01409171111102786 pallant, j., 2007, spss survival manual, 3rd edn., mcgraw-hill, london. parker, d., kirkpatrick, c. & figueira-theodorakopoulou, c., 2008, ‘infrastructure regulation and poverty reduction in developing countries: a review of the evidence and a research agenda’, the quarterly review of economics and finance 48(2), 177–188. https://doi.org/10.1016/j.qref.2006.12.005 parsons, r., 2003, zumanomics revisited, jacana, johannesburg. pisani, m.j. & patrick, j.m., 2002, ‘a conceptual model and propositions for bolstering entrepreneurship in the informal sector: the case of central america’, journal of developmental entrepreneurship 7(1), 95–111. reddy, m., naidu, v. & mohanty, m., 2003, ‘the urban informal sector in fiji results from a survey’, fijian studies: a journal of contemporary fiji 1(1), 127–154. rogerson, c.m., 2016, ‘responding to informality in urban africa: street trading in harare, zimbabwe’, urban forum 27(2), 229–251. https://doi.org/10.1007/s12132-016-9273-0 sachs, j., 2005, the end of poverty: how we can make it happen in our lifetime, penguin books, london. sarb, 2018, south african reserve bank quarterly bulletin, no. 287, march 2018, sarb, pretoria. saunders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., pearson, london. schneider, f., 2002, ‘size and measurement of the informal economy in 110 countries around the world’, paper presented at the workshop of australian national tax centre, anu, canberra australia, 17 july 2002, viewed n.d., from https://www.researchgate.net/profile/friedrich_schneider/publication/253147023_size_and_measurement_of_the_informal_economy_in_110_countries_around_the_world/links/0c96052c5462c3fff8000000/size-and-measurement-of-the-informal-economy-in-110-countries-around-the-world.pdf?origin=publication_detail shin, h., collier, d.a. & wilson, d.d., 2000, ‘supply management orientation and supplier/buyer performance’, journal of operations management 18(3), 317–333. https://doi.org/10.1016/s0272-6963(99)00031-5 skinner, c., 2005, constraints to growth and employment in durban: evidence from the informal economy, school of development studies, university of kwazulu-natal, research report no. 65. smith-asante, e., 2015, ‘adjen kotoku market: investment gone waste’, graphic online, viewed 30 october 2016, from http://www.graphic.com.gh/features/features/adjen-kotoku-market-investment-gone-waste.html spss, inc., 2009, spss statistics base 17.0 user’s guide, viewed 06 april 2016, from http://www.jou.ufl.edu/archive/researchlab/spss-statistcs-base-users-guide-17.0.pdf. tabachnick, b.g. & fidell, l.s., 2013, using multivariate statistics, 6th edn., pearson education inc, nj. the world bank, 2013, workers in the informal economy, viewed 11 december 2016, from http://web.worldbank.org/wbsite/external/topics/extsocialprotection/extlm/0,,contentmdk:20224904~menupk:584866~pagepk:148956~pipk:216618~thesitepk:390615,00.html todaro, m.p. & smith, s.c., 2015, economic development, 12th edn., pearson, upper saddle river, nj. un-habitat, 2003, the challenge of slums: global report on human settlements, un-habitat, nairobi. un-habitat, 2007, state of the world cities, un habitat, nairobi. un-habitat, 2009, ghana: accra urban profile, un habitat, nairobi. urban, b., 2008, ‘entrepreneurship orientation in a developing country context: juxtapositions with south africa’s innovation index’, journal of developmental entrepreneurship 13(4), 425–445. https://doi.org/10.1142/s108494670800106x urban, b., van vuuren, j. & barreira, j.d., 2008, ‘high-growth entrepreneurs: the relevance of business knowledge and work experience on venture success’, journal of contemporary management 5(1), 58–71. usaid, 2012, infrastructure, viewed 29 october 2016, from https://www.usaid.gov/what-we-do/economic-growth-and-trade/infrastructure. valodia, i., 2007, informal employment in south africa, hsrc, pretoria. van der geest, k., 2011, ‘north-south migration in ghana: what role for the environment?’, international migration 49(s1), e69–e94. van rooyen, e. & antonites, a.j., 2007, ‘formalising the informal sector: a case study on the city of johannesburg’, journal of public administration 42(3), 324–346. https://doi.org/10.1111/j.1468-2435.2010.00645.x wills, g., 2009, south africa’s informal economy, urban policies research no 7, wiego, durban. abstract introduction literature review research design and methodology research findings discussion conclusions and practical implications acknowledgements references about the author(s) m. anastacia mamabolo gordon institute of business science, university of pretoria, south africa myres kerrin gordon institute of business science, university of pretoria, south africa tumo kele gordon institute of business science, university of pretoria, south africa citation mamabolo, m.a., kerrin, m. & kele, t., 2017, ‘human capital investments as sources of skills: an analysis at different entrepreneurship phases’, southern african journal of entrepreneurship and small business management 9(1), a114. https://doi.org/10.4102/sajesbm.v9i1.114 original research human capital investments as sources of skills: an analysis at different entrepreneurship phases anastacia m. mamabolo, myres kerrin, tumo kele received: 24 oct. 2016; accepted: 22 feb. 2017; published: 24 may 2017 copyright: © 2017. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: entrepreneurs need entrepreneurial skills to run their businesses. skills can come from various sources, and the usage of the sources of skills can vary according to the different entrepreneurship phases. aim: adopting a human capital theory perspective, this study determined the specific human capital investments as sources of skills needed by entrepreneurs across the different entrepreneurship phases. the sources of skills included work experience, formal education, entrepreneurship education and entrepreneurship experience. setting: entrepreneurs at the different entrepreneurship phases which are nascent (entrepreneurs with ventures less than 3 months in existence), new business (entrepreneurs with ventures with more than 3 months but less than 3.5 years in existence) and established business (entrepreneurs with ventures more than 3.5 years in existence). method: the study employed a survey research design. an online questionnaire was used to collect the data. results: the results show that the sources of skills are used differently across the entrepreneurship phases. as entrepreneurs start businesses, in the nascent phase, the use of human capital investments (especially formal education) as a source of skills declines, thus creating a need to acquire more entrepreneurship-specific investments. in addition to acquiring skills from human capital investments, entrepreneurs learn skills from people in their social networks and self-taught skills which are used differently across the different entrepreneurship phases. conclusion: the findings indicate that the human capital investments are dynamic and change over time as the entrepreneurship phases unfold. because there are different sources of skills for each entrepreneurship phase, entrepreneurs need to be treated according to their phases. introduction entrepreneurship is seen as a way of promoting economic growth through innovation and job creation (dash & kaur 2012; stenholm, acs & wuebker 2013; turton & herrington 2012). the significance of entrepreneurship as an engine of economic growth has attracted the interest of many governments and non-governmental organisations (world bank 2012) and also entrepreneurship scholarship (wiklund et al. 2011). this growing academic interest in entrepreneurship has also seen the application of human capital theory from the economics literature to study the success and failure of business ventures (ucbasaran, westhead & wright 2008; unger et al. 2011). human capital theory (becker 1964) has been applied in entrepreneurship to study the relationship between human capital investments and success in the identification and exploitation of opportunities (davidsson & honig 2003; ucbasaran et al. 2008; unger et al. 2011). most of the studies that applied human capital focused on either opportunity recognition or exploitation, with confined attention to singular phases of the entrepreneurship process, namely, the nascent, new business and established phases (brixy, sternberg & stüber 2012; singer, amorós & moska 2015). it has, however, been noted that a specific kind of human capital may be important in completing activities in one phase, while the same human capital may be insignificant in the subsequent phases within the entrepreneurial process (brixy et al. 2012; marvel, davis & sproul 2014). as a result, this study argued in line with marvel et al.’s study (2014) that there is a need to fully explore the differing dimensions of human capital (investments and skills) over distinct phases within the entrepreneurial process. one of the research questions that entrepreneurship research seeks to answer is ‘where do entrepreneurial skills come from?’ (stuetzer, goethner & cantner 2012). according to the human capital theory, skills come from the investments in education, work experience and industry experience. what is not clear from the literature is the role of human capital investments as the sources of skills in the different entrepreneurship phases. as such, this study aimed at determining the differing role of human capital investments across the different entrepreneurship phases. a specific human capital investment as a source of skills will differ according to the entrepreneurship phase. some investments may provide entrepreneurs with skills to start businesses, while others may be significant to produce skills that are needed to run and sustain the businesses. for example, brixy et al. (2012) empirically discovered that formal education is more significant in identification and exploitation of opportunities than later when the business is established. because entrepreneurship activities in the entrepreneurship phases are different (amorós & bosma 2014; reynolds & curtin 2008), entrepreneurs should be treated according to the phase they are in and the activities they are performing. the findings of the study firstly showed that the use of human capital investments as sources of skills differ across the entrepreneurship phases. secondly, as entrepreneurs start businesses, in the nascent phase, the use of human capital investments (especially formal education) as a source of skills declines, thus creating a need to acquire more entrepreneurship-specific investments. in the established phase, entrepreneurs use skills learnt from entrepreneurship education, mentoring and coaching. thirdly, when the application of skills declines from the new business to the established phase, entrepreneurs seek additional sources of skills to counter the depreciating skill sets. thirdly, in addition to acquiring skills from human capital investments, entrepreneurs learn skills from people in their social networks and self-taught skills which are used differently across the different entrepreneurship phases. and finally, the findings indicate that the human capital investments are dynamic and change over time as the entrepreneurship phases unfold. because there are different sources of skills for each entrepreneurship phase, training institutions, scholars and policymakers need to treat entrepreneurs according to their phases. literature review entrepreneurship phases in a seminal paper by shane and venkataraman (2000), entrepreneurship process is defined as the identification, evaluation and exploitation of opportunities. entrepreneurship research has shown that there is no unified model of entrepreneurship process; however, a general consensus is that opportunity identification is one of the significant elements (kirzner 1973; shane & venkataraman 2000). even though there is no agreement on the entrepreneurial process, there is empirical evidence that entrepreneurs actually engage in a process which, by virtue of the activities performed and the outcomes achieved, changes over time. the panel study of entrepreneurial dynamics (psed) and the global entrepreneurship monitor (gem) provide some empirically tested entrepreneurship phases (carter, gartner & reynolds 1996; herrington & kew 2017). the entrepreneurship phase is determined by the number of years that a business venture has been in existence and has paid salary, wages and any other payment to the owners (herrington & kew 2017). this study adopted the entrepreneurship phases as being the nascent, new business and established business (herrington & kew 2017). the motivation for selecting the gem entrepreneurship phases is that they are empirically tested rather than other theoretically derived frameworks (mcmullen & dimov 2013; moroz & hindle 2012) and are currently being adopted by other scholars in the field of entrepreneurship (brixy et al. 2012; wasdani & mathew 2014). brixy et al. (2012) focused on the demographic and cognitive characteristics of entrepreneurs, while wasdani and mathew (2014) studied opportunity recognition in the different entrepreneurship phases. nascent phase entrepreneurs are individuals who take steps to create a venture, such as looking for equipment or a location, organising a start-up team, preparing a business plan or beginning to save money (bergmann & stephan 2013; carter et al. 1996). these ventures are less than 3 months old (herrington & kew 2017). new business phase entrepreneurs are those former nascent entrepreneurs who have been in business for more than 3 months, but less than 3.5 years (herrington & kew 2017; turton & herrington 2012). new business entrepreneurs are owning and managing a business, implementing the business plan, running the business on day-to-day basis, planning for growth, innovation, implementing organisational systems and hiring employees (man, lau & chan 2002; trevelyan 2011). the established phase entrepreneurs are those who have been in business for more than 3.5 years (herrington & kew 2017; kelley, singer & herrington 2012). established entrepreneurs are focused on owning and managing a business, environmental scanning for new opportunities, quality control, evaluating ideas with existing frameworks, refining existing production processes, creating organisational structures to speed up production, creating new products and provision of a more stable base of employment (man et al. 2002; herrington & kew 2017; trevelyan 2011). while nascent and new business entrepreneurs contribute to dynamism and innovation in an economy, established businesses and their owner-managers often provide stable employment and exploit the knowledge and social capital accumulated in past experiences (amorós & bosma 2014). it should be noted that the transition from the nascent to new business and thereafter the established phase is to some extent fluent and depends on the specific situations (brixy et al. 2012). for example, in some situations entrepreneurs may take longer to generate income, consequently staying longer in the nascent phase. the challenge with the entrepreneurship phases is that there is no clear evidence as to how and when entrepreneurs make a transition from one phase to the next. human capital theory according to becker’s (1964) human capital theory, human capital is the skills and knowledge manifested as ability to execute a function in order to create economic value (ucbasaran et al. 2008; unger et al. 2011). skills and knowledge can be human capital outcomes acquired through investments in formal and non-formal schooling, practical learning and work experience, which contribute to productivity and success (becker 1964; silva 2007; unger et al. 2011). the human capital investments can be generic or entrepreneurship-specific. the generic investments which are not related to any entrepreneurship activities are formal education and work experience, while entrepreneurship-specific investments related to entrepreneurship activities are start-up experience, business-ownership experience, managerial capabilities, entrepreneurial capabilities and technical capabilities (becker 1964; ucbasaran et al. 2008). general human capital investments human capital theory is based on the assumption that formal education and work experience should be considered as general human capital investments which produce knowledge and skills (becker 1964). formal education: it emerged as a significant source of knowledge and skills and, amongst others, confidence to execute entrepreneurial activities (ucbasaran et al. 2008). shane (2003) suggested that educated entrepreneurs may use the knowledge and skills acquired through the educational system for identification and pursuit of opportunities. there are contradictory observations with regard to education. one empirical view argued that the probability of educated individuals to create business ventures is high (amorós & bosma 2014), while opposing views argued that they are unlikely to start their own business ventures (van der sluis, van praag & vijverberg 2008). another empirical analysis of 380 nascent entrepreneurs showed that those with formal education are probable to discover entrepreneurial opportunities but may not be successful in exploiting process (davidsson & honig 2003). in a developing economy, studies have shown that entrepreneurs with higher levels of education are both more likely to start a business and ensure its sustainability (herrington, kew & kew 2014). these authors focused on the nascent phase, indicating that the significance of formal education in producing skills applied by entrepreneurs in the different entrepreneurship phases other than the nascent is yet to be explored (marvel et al. 2014): hypothesis 1: entrepreneurs in the nascent phase use skills acquired from formal education the most when compared to entrepreneurs in the new business and established business phases. work experience: it is represented by tacit knowledge is of paramount importance in the process of entrepreneurship (davidsson & honig 2003; gabrielsson & politis 2012; polanyi 1966) and may produce managerial skills to start new businesses (shane 2000). the indicator of work experience is the number of years of experience, number of prior full-time jobs and achievement level which can simply be regarded as position occupied (gimeno et al. 1997; unger et al. 2011). rather than having similar work experience as it is assumed in human capital theory, empirical evidence indicates that varied work experience is an added advantage for better opportunity identification, exploitation and running of a successful business venture (ganotakis 2012). this was confirmed through empirical study that founders with variety of work experiences, to be specific, managerial experience, are more likely to have developed the necessary skills to organise the business and have a greater chance of success in the start-up phase (baptista, karaöz & mendonça 2014). although there is paucity of evidence of the role of work experiences beyond start-up, this study proposes that work experience may be a source of skills needed by entrepreneurs in different entrepreneurship phases to carry out entrepreneurial activities such as organising equipment and facilities, hiring employees, seeking financial support, forming legal entity, owning and managing a business, environmental scanning, implementing organisational systems, quality control and evaluating ideas with existing frameworks (amorós & bosma 2014; man et al. 2002; reynolds & curtin 2008; trevelyan 2011): hypothesis 2: entrepreneurs in the nascent phase use skills acquired from work experience the most when compared to entrepreneurs in the new business and established phases. entrepreneurship-specific human capital investments empirical evidence indicated that entrepreneurship-specific investments, such as earlier experience in starting up a business, entrepreneurship education and the membership of an association for small business founders, generate more promising start-ups and enhance performance (baptista et al. 2014; bosma et al. 2004). prior entrepreneurship experience: the literature indicates that previous start-up experience incorporates knowledge and skills gained either in business or when creating a venture (morris et al. 2012) and also enhances both the ability to recognise viable opportunities and overcome the liability of newness challenge as a venture is created (parker 2013; politis 2008). recent empirical studies suggested that individuals who have accrued experience as business owners should possess higher accumulated levels of human capital represented by better managerial and technical skills (baptista et al. 2014; ucbasaran et al. 2008). this suggests that prior entrepreneurial experience is a source of significant skills for the successful implementation of the entrepreneur’s start-up efforts but will not necessarily ensure the entrepreneur’s persistence with these efforts to other phases (dimov 2010). entrepreneurs who are established and in the new business phase may have entrepreneurial experiences that enable them to generate knowledge from one setting and apply it effectively to a new situation (toft-kehler, wennberg & kim 2014). therefore, this study investigated how prior entrepreneurship experience is utilised as a source of skills across the different entrepreneurship phases: hypothesis 3: the entrepreneurs in the nascent phase use skills acquired from previous business experience the most when compared with entrepreneurs in the new business and established business phases. entrepreneurship education: it is human capital investment which produces explicit knowledge and skills. a recent meta-analytical study by martin, mcnally and kay (2013) showed that there is a relationship between entrepreneurship education and training, related human capital assets and entrepreneurial outcomes. the relationship is stronger for academic-focused interventions rather than training-focused interventions. chang, liu and chiang (2014) in their empirical study highlighted that well established entrepreneurship courses have a significant impact with regard to enhancing opportunity recognition. however, this relationship may be mediated by other variables like entrepreneurial alertness. the findings of data collected from 170 entrepreneurs showed that not only does entrepreneurship training provide skills but also it appears to create openness, confidence and trust amongst the participants (elmuti, khoury & omran 2012). therefore, this study investigated the use of entrepreneurship education as a source of skills for entrepreneurs in the later entrepreneurship phases: hypothesis 4: the entrepreneurs in the established phase use skills acquired from entrepreneurship education more than entrepreneurs in the nascent and new business phase. social actors in addition to acquiring skills from human capital investments, there are other sources from which entrepreneurs acquire skills. some of the entrepreneurs learn skills from their social networks such as family and friends, and those with mentors and coaches in their networks, they learn skills from them (aldrich & yang 2014; putnam 2001). family can provide resources needed to start the business (davidsson & honig 2003) and they can also influence their children’s career choice (aldrich & yang 2014). the role of mentorship increases the decision to join early-stage ventures or to start entrepreneurial careers, especially for entrepreneurs whose parents are not entrepreneurial (eesley & wang 2017). the experienced entrepreneurs can teach aspiring entrepreneurs tacit knowledge such as evaluation of business opportunities, forming teams and navigating external investments (eesley & wang 2017; st-jean et al. 2016). also, entrepreneurs who are in business, contrary to others with no entrepreneurial experience, support opportunity identification and exploitation (st-jean et al. 2016). therefore, this study suggests that: hypothesis 5a: entrepreneurs in the nascent phase use skills learnt from family and friends more than entrepreneurs in the new business and established business phases. hypothesis 5b: entrepreneurs in the nascent phase use skills acquired from coaches and mentors more than entrepreneurs in the new business and established business phases. self-taught entrepreneurs read about skills that successful entrepreneurs have and thereafter implement or imitate the same skills in their businesses (aldrich & yang 2014; baron & ensley 2006; rae 2005). unlike entrepreneurs in the established business phases who generally follow or modify the routines that they have developed, nascent entrepreneurs start mostly in a blank state (aldrich & yang 2014). the nascent entrepreneurs read about what successful entrepreneurs have done and imitate them, especially those who begin without enough knowledge and skills. finally, some of the skills are self-taught as they go through failure and experimentation in setting and running their businesses (markman & baron 2003; yusuf 2012). therefore, the study determines how self-taught skills through reading books and mistakes and failure are used in the different entrepreneurship phases: hypothesis 6a: entrepreneurs in nascent phase use the skills acquired from failure and mistakes more than entrepreneurs in the new business and established business phases. hypothesis 6b: entrepreneurs in nascent phase use the skills learnt from reading books more than entrepreneurs in the new business and established business phases. research design and methodology the research question of the study is the following: how are the sources of skills used differently across the entrepreneurship phases? the objectives of the study are: objective 1: to determine the use of formal education, work experience, entrepreneurship education and prior entrepreneurship experience as the sources of skills used in the different entrepreneurship phases. objective 2: to determine the use of social actors, that is mentors and coaches, and family and friends as sources of skills across the different entrepreneurship phases. objective 3: to investigate the use of self-taught skills from failure and mistakes and reading books across the different entrepreneurship phases. research design the quantitative research design was used in the study. the study adopted a probability sampling strategy, in which the possibility of each unit to be selected from the population is known and usually equal for all cases (teddlie & yu 2007). this strategy is implemented when selecting a relatively large number of units from a population, or from specific subgroups of a population (tashakkori & teddlie 2003; teddlie & yu 2007). a probability sampling was used to ensure that the whole population was represented. the sample consisted of the three groups of entrepreneurs who were in the nascent, new business and established business phases. using the gem sampling strategy, nascent businesses paid salaries in any kind for less than 3 months, new businesses paid salaries in any kind for more than 3 months but less than 3.5 years and established businesses paid salaries in any kind for more than 3.5 years (herrington & kew 2017; kelley et al. 2012; turton & herrington 2012). the human capital was measured by formal education, entrepreneurship education, work experience and prior entrepreneurship experience, while other sources were measured as family and friends, mentors and coaches, self-taught from failure and mistakes and reading books. research method the quantitative survey data were collected using a standardised, structured, self-administered online questionnaire which was completed by entrepreneurs owning the business ventures. experts in the field of entrepreneurship were requested to give input on the designed instrument and determine if it measured the concepts intended. the comments were made and the instrument was amended accordingly. the questionnaire had closed-ended questions with 5-point likert scales, from which respondents were required to select one of five options. the likert scale measures responses along a dimension from positive to negative, whereby the following possible answers are selected: strongly approve, approve, undecided, disapprove and strongly disapprove (likert 1932). the responses expected in this study with regard to the use of the skills acquired from human capital investments ranged from 1 = never, 2 = almost never, 3 = sometimes, 4 = almost every day to 5 = every day. in employing the ordinal scale of measurement, the researcher was able to interrogate the extent to which respondents thought they used skills that they obtained from the human capital investments, social actors and self-teaching. an invitation to participate in the study together with the survey link on surveymonkey was emailed to entrepreneurs. the list of the entrepreneurs was sourced from a private organisation that works with entrepreneurs in south africa. the list had their email addresses, telephone numbers and contact addresses. in the first week of sending out the survey email, 116 entrepreneurs responded. at the end of 1 month of data collection, there were 235 responses comprising 56 nascent, 54 new business and 125 established entrepreneurs. because the established phase had a highest number of entrepreneurs than the nascent and new business phase, a random sample of 58 entrepreneurs was selected from the 125 established entrepreneurs so as to balance the number of entrepreneurs in the phases. after balancing the phases, the final sample had 168 responses. the quantitative phase was a nationwide survey, capturing data from entrepreneurs in all south african provinces: gauteng, limpopo, mpumalanga, north-west, northern cape, western cape, kwazulu-natal, free state and eastern cape. unit of analysis the unit of analysis was the individual entrepreneur. the study focused on entrepreneurs in the three different entrepreneurship phases; therefore, the levels of analysis included the nascent, new business and established business phases. data analysis the survey responses were consolidated and then exported to ibm-spss statistical software for analysis. kruskal–wallis test was used to provide clear comparisons of the use of skills across the three phases and to test the hypotheses. the kruskal–wallis test is a non-parametric test applied to rank the data and compare the median ranks of three or more groups when the level of measurement is ordinal (cunningham & aldrich 2011). the kruskal–wallis test findings, which showed that entrepreneurship phases had unequal application of skills, were further analysed using the mann–whitney u test to detect the two-by-two group differences. mann–whitney u test is a non-parametric test utilised to provide the statistical evidence that two sampled populations are statistically different (cunningham & aldrich 2011). research findings as part of the screening process or inclusion test for the survey, respondents were asked if they had an operational business or not. respondents without an operational business at the time the survey was conducted were automatically disqualified from participating. there were 108 (64%) males and 60 (30%) females who participated in the study. this was incidentally aligned with national and global studies, showing that males are more entrepreneurial than females (herrington et al. 2014). entrepreneurs were asked to locate themselves within one of the entrepreneurship phases. the measures used to determine entrepreneurship phases were in line with the gem classification and include the period the business has existed and duration of paying salaries of any kind (herrington et al. 2014). the entrepreneurs were 56 (33%) in the nascent, 54 (32%) in the new business and 58 (35%) in the established business phases. the kolmogorov–smirnov test for normality was performed on the human capital investment variables to determine the distribution of the data. the output of the results had a p = 0.000 which indicated that the variables were not normally distributed; therefore, the analysis of the data required non-parametric tests. after the normality test, the kruskal–wallis test was performed to determine the difference in the application of skills acquired from the human capital investments across the three entrepreneurship phases. the results of the kruskal–wallis test are presented in table 1. table 1: kruskal–wallis test for human capital investments and social actors. the results of the kruskal–wallis test depicted in table 1 show that the skills learnt from work experience (p = 0.260) and formal education (p = 0.249) are applied equally across the entrepreneurship phases, whereas the rest of the skills learnt from entrepreneurship education (p = 0.000), previous entrepreneurship experience (p = 0.017), self-taught through failure (p = 0.000) and reading books (p = 0.000), family and friends (p = 0.009) and mentors and coaches (p = 0.000) are not used equally across the different entrepreneurship phases. the kruskal–wallis test findings, which showed that the sources of the skills were used differently, were further analysed using the mann–whitney u test to determine two-by-two group differences. the results of the mann–whitney u test are presented in table 2. table 2: mann–whitney u test for human capital investments and social actors. entrepreneurship education there is no difference in the application of skills learnt from entrepreneurship education across the nascent and new business phases (p = 0.246). the difference in the application is seen in the new business phase and established phase, with the established phase having a higher mean than the new business phase [p = 0.010; (established = 68.48) > (new business = 43.43)]. when the established phase was compared with the nascent phase, the results showed that the usage of skills learnt from entrepreneurship education is higher in the established phase than in the nascent phase [p = 0.000; (nascent = 66.66) > (established = 48.01)]. prior entrepreneurship experience the application of skills learnt from previous entrepreneurship experience in the nascent and new business phases is not statistically different (p = 0.483). there is a statistically significant difference in the application of skills learnt from previous entrepreneurship education between the nascent and established phases (p = 0.040). the established phase has a higher mean than the nascent phase [(nascent = 48.78) < (established = 65.92)]. the findings also showed that there is no difference between the usage of skills learnt from previous entrepreneurship experience in the new business and established phases, with the new business phase having a lower mean [p = 0.063; (new business = 50.80) < (established = 61.81)]. family and friends the comparison of the nascent and new business phases did not show any statistically significant difference (p = 0.330). the results showed a difference in the application of skills learnt from family and friends between the new business and established business phases, with the established phase having a higher mean than the new business phase [p = 0.047; (new business = 50.51) < (established = 62.09)]. further analysis showed that entrepreneurs in the established phase apply more skills acquired from family and friends than entrepreneurs in the nascent phase [p = 0.003; (nascent = 48.59) < (established = 66.10)]. mentorship and coaching table 2 showed that there is no statistically significant difference in the application of skills learnt from mentors and coaches between the nascent and new business phase (p = 0.278). entrepreneurs in the established phase apply skills acquired from mentors and coaches more than entrepreneurs in the new business phase [p = 0.000; (new business = 38.51) < (established = 73.25)]. when compared with the nascent phase, established entrepreneurs have a higher rank mean [p = 0.000; (nascent = 42.89) < (established = 71.60)], which simply means that they apply skills learnt from mentors and coaches more than entrepreneurs in the nascent phase. self-taught (failures and mistakes) entrepreneurs were asked about how they apply skills learnt from failure. the results showed that the application of the skills learnt from failure and mistakes is different across all the entrepreneurship phases (all p-values are greater than 0.005). the results showed that the new businesses have a higher rank mean than the established businesses, meaning that entrepreneurs in the new business phase use skills learnt from failure and mistakes to a greater extent [p = 0.000; (established = 37.54) < (new business = 76.86)]. the nascent phase also has a higher mean than the established phase [p = 0.00; (nascent = 71.97) > (established = 43.53)]. the comparison of the nascent phase and new business phase showed that entrepreneurs in the new business phase use more skills learnt from failure and mistakes than those in the nascent phase [p = 0.014; (new business = 62.25) > (nascent = 48.99)]. self-taught (reading books) regarding the use of skills learnt from reading books, the results showed a difference between the new business and established phases (p = 0.000). the new business phase has a higher mean than the established phase [(new business = 67.72) > (established = 46.05)]. in addition, entrepreneurs in the nascent phase apply more skills acquired from reading books than entrepreneurs in the established phase [p = 0.000; (nascent = 67.08) > (established = 48.25)]. figure 1 shows that formal education is used more as a source of skills by entrepreneurs in the nascent phase than those in the new business and established phases. the use of formal education as a source of skills declines as the entrepreneurship phases unfold. entrepreneurs in the nascent and new business phase use the skills obtained from work experience more than those in the established business phase. entrepreneurship education and prior entrepreneurship experience are a more significant source of skills for entrepreneurs in the established phase than those in the nascent and new business phase. figure 1: human capital investments utility across the entrepreneurship phases. an overall analysis of the human capital investments showed that when a nascent entrepreneur starts a business, he or she uses skills from human capital investments (especially formal education). as the entrepreneur transitions from the nascent phase to new business phase, the human capital investments which provided skills to start the business become less important, thus creating a demand to update the human capital investments for the next entrepreneurship phase. figure 2 shows how the use of human capital investments as sources of skills changes as the entrepreneurship phases unfold. figure 2: human capital investments utility across the entrepreneurship phases. a decline in the utility of human capital investments, for example, formal education as sources of skills in the new business phase, stimulates entrepreneurs to seek out entrepreneurship courses, as well as mentoring and coaching programmes. therefore, the human capital investments which were the sources of skills when the business started become obsolete as the entrepreneurship phases unfold, consequently creating a demand on entrepreneurs to look for other sources. in essence, established entrepreneurs have better access to entrepreneurship education because the enterprise development programme focuses on skills that are more relevant to established entrepreneurs rather than nascent or new business entrepreneurs. figure 3 displays the use of social actors and human capital investments as sources of skills across the entrepreneurship phases. the study suggests a u-shaped curvilinear relationship of the use of skills acquired from the human capital investments and social actors across the entrepreneurship phases. this means that human capital investments and social actors serve as sources of skills when the business starts; however, they become obsolete as the entrepreneurship phases unfold. if an entrepreneur has access to other human capital investments such as entrepreneurship education, they will increase the skills needed to run their businesses, especially in the established business phase. figure 3: sources of skills across the entrepreneurship phases. figure 3 also illustrates that the application of self-taught skills across the phases is an inverted u-shaped curvilinear relationship; thus, self-taught skills are applied the most in the nascent and new business phases than in the established phase. because of limited or lack of access to other significant sources of skills such as mentorship and entrepreneurship education, entrepreneurs starting businesses rely on their own learnings from failure, mistakes and reading entrepreneurship books. however, as the entrepreneurship phases unfold, they realise the need to get additional training and to form social networks, hence the decline in the utility of self-taught skills and corresponding increase in the utility of human capital investments and social networks in the established phase. discussion hypothesis 1: formal education the hypothesis was not supported as there was no statistically significant difference to suggest that skills acquired from formal education were used differently across the different entrepreneurship phases. although there was no statistically significant difference in application, entrepreneurs in the nascent phase applied skills learnt from formal education to a greater extent than entrepreneurs in the new business and established phases. these findings are consistent with a meta-analytical study by unger et al. (2011) which showed that outcomes of formal education in the form of skills may assist in the successful completion of the identification and exploitation phase. in the south african context, entrepreneurship education is lacking (herrington et al. 2014) and as a result, entrepreneurs appear to use skills acquired from formal education to identify and exploit entrepreneurial opportunities. hypothesis 2: work experience there was no statistically significant difference in the use of skills acquired from work experience across all the entrepreneurship phases; therefore, hypothesis 2 was not supported. entrepreneurs in all entrepreneurship phases used skills from work experience. contrary to davidsson and honig (2003) who noted that work experience is not significant for the exploitation of opportunity, the findings in this study demonstrated that work experience is significant in the nascent phase, new business phase and to some extent in the established phase. hypothesis 3: prior entrepreneurship experience although use of prior entrepreneurial experience as a source of skills across entrepreneurship phases is notably different, the hypothesis was partially supported on the notion that entrepreneurs in the established phase were more likely to apply skills learnt from previous entrepreneurship experience than entrepreneurs in the nascent and new business phases. the established entrepreneurs use skills developed during previous entrepreneurial experiences to start and run new business ventures. the results are in line with dimov’s study (2010) that established and repeat entrepreneurs use the skills acquired from prior entrepreneurship experience to start and run new business ventures. similar to this study’s findings, experienced or established entrepreneurs have developed mental frameworks which make the application of some of the skills like opportunity recognition and decision-making easier (cassar 2014; ucbasaran et al. 2008). hypothesis 4: entrepreneurship education the results showed that there was a significant difference in the application of skills acquired from entrepreneurship education across the phases. because entrepreneurs running established businesses used skills learnt from entrepreneurship education to a greater extent than those in the nascent and new business phases, the hypothesis was partially supported. as the business environment changes, established entrepreneurs periodically update their skills by attending management programmes (martin et al. 2013). considering the south african macro context in which the study was conducted, which is characterised by poor to absent entrepreneurial education at secondary and tertiary levels (turton & herrington 2012), some of the entrepreneurs in the start-up phase have not had access to any entrepreneurial education; thus, they largely use skills learnt from formal education to start and run their businesses. this makes formal education significant throughout the entrepreneurship phases. because formal education does not contribute to sustenance of a business (davidsson & honig 2003), this may contribute to the high failure rate of businesses in south africa (turton & herrington 2012). in addition, botha and bignotti (2016) highlighted that tertiary entrepreneurship education should include internship programmes. in their empirical study, they discovered that there is a positive influence of internships on entrepreneurial intent and entrepreneurial self-efficacy. therefore, south africa has a challenge of investing and introducing entrepreneurship education in schools and tertiary institutions. hypothesis 5a: family and friends the hypothesis was partially supported as the results of this study indicated that entrepreneurs in the established phase applied skills learnt from family and friends to a greater extent than entrepreneurs in the nascent and new business phases. an explanation is that in a context of low levels of entrepreneurial activity, most individuals who start businesses do not come from entrepreneurial families. although family and friends may serve as sources of funding and effective support (greve & salaff 2003; lamine et al. 2015), if they are not entrepreneurial, they are less likely to be able to offer relevant entrepreneurship skills and advice. therefore, in a context of high entrepreneurial activity, where family and friends are entrepreneurial, the nascent entrepreneur will rely on these as sources of skills needed to start a business. hypothesis 5b: mentors and coaches the hypothesis was partially supported because entrepreneurs in the established phase applied skills learnt from mentors and coaches to a greater extent than entrepreneurs in the nascent and new business phases. experienced entrepreneurs have better access to other successful entrepreneurs and consultants who may serve as coaches and mentors. because entrepreneurs in the nascent phase have poor access to mentorship and coaching, they rely on self-taught skills which are acquired from reading about other entrepreneurs. some of the nascent entrepreneurs may be overconfident and may not seek mentorship (invernizzi et al. 2016). as the businesses grow, entrepreneurs use skills obtained from mentors and coaches represented by bridging social capital (putnam 2001; stam, arzlanian & elfring 2014). the findings relating to the unequal role of social networks as sources of skills are supported by huggins et al. (2015) who demonstrated that the role of social networks in the entrepreneurship phases, that is, emergent phase, growth phase and mature phase is different. hypothesis 6a: failure and mistakes entrepreneurs in the nascent and new business phases were more likely to apply skills learnt from failures and mistakes made in the process of starting and establishing their businesses than entrepreneurs in the established phase; therefore, the hypothesis was supported. this suggests that nascent entrepreneurs learn from failure through trial and error in the process of establishing a business venture. during the process of experimentation, others discover that those initial ideas that lead to the start-up are not so great, and therefore they may decide to abandon the ideas or exit the entrepreneurship process (dimov 2010; kelley et al. 2012). therefore, the current systems of supporting and financing nascent and new business entrepreneurs need to accept failure as a necessary part of the journey to successful business venturing. hypothesis 6b: reading books the hypothesis was supported as the results showed that the usage of skills or practices acquired from reading entrepreneurial books was found to be different across the entrepreneurship phases. the study’s findings are in line with the notion that nascent and new business entrepreneurs model entrepreneurs’ stories they read in the media and apply what worked for them (aldrich & yang 2014; baron & ensley 2006; rae 2005). also, because nascent entrepreneurs have self-confidence in their own skills, they try out things by themselves and do not seek help (markman & baron 2003; robinson & marino 2015). this is why some of them read the success stories of other entrepreneurs. on the contrary, copying what other entrepreneurs in different business contexts did may lead to failure in the nascent phase. therefore, the study suggests that because of lack of resources in the nascent phase, nascent entrepreneurs adopt skills in opportunity recognition, decision-making, venture creation and growing the business by reading about what other entrepreneurs applied. conclusions and practical implications this study made a contribution by advancing on the human capital theory that human capital investments and skills outcomes change in significance in the different entrepreneurship phases. an argument raised in the literature review is that the utility of human capital investments as a source of skills is unequal across the different entrepreneurship phases. indeed, the findings of this study confirmed that the application of skills acquired from human capital investments is different in the nascent, new business and established business phases. this simply suggests that human capital is not static and linear, but it is dynamic, curvilinear and changes over the entrepreneurship phases. the results showed that entrepreneurship education is significant in the skills development of entrepreneurs, and therefore the teaching of entrepreneurship should be emphasised, especially to nascent and new business phases that do not have access. the teaching of entrepreneurship can be another way of improving the levels of formal education. because it was observed that the context of the study had a poor entrepreneurship education track record, the academic and training institutions should incorporate entrepreneurship development in the curriculum as early as primary school and maintain it throughout secondary and tertiary education. this will equip nascent entrepreneurs with the depth of skill required to start and maintain business. it was found that nascent entrepreneurs rely mostly on self-taught skills as they do not have access to coaching and mentoring so the government, private sectors and successful entrepreneurs can offer mentoring and coaching to the nascent entrepreneurs so as to minimise failure. this is because the criteria used by enterprise development institutions target established entrepreneurs than those in the nascent phases. to make it to some of the programmes, the business should be making a certain amount of profit, which at times is not attainable in the nascent phases. therefore, the enterprise development institutions such as universities, governmental and private organisations need to start focusing on nascent and new business entrepreneurs who have a higher need of skills. this shift in focus could reduce the failure rate of businesses in the early phases of the entrepreneurship process. this study was not able to determine the skills learnt from each type of human capital investment; therefore, future studies should focus on what are the types of skills learnt from these investments. obtaining the required sample sizes for nascent and new business phase entrepreneurs was a challenge because most start-up businesses are not formally registered and it is difficult to access databases from some entrepreneurial incubators; therefore, future studies should aim at obtaining larger samples of nascent entrepreneurs. the research was positioned in a context characterised by low entrepreneurial activity and low skills levels; therefore, the study may be less generalizable in contexts where entrepreneurial activity and skills are very high. acknowledgements competing interests the authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article. authors’ contributions m.a.m. conducted the research study, literature review and wrote the first draft of the article. m.k. and t.k. contributed to the conceptualisation of the theoretical framework and interpretation of the research findings. references aldrich, h.e. & yang, t., 2014, ‘how do entrepreneurs know what to do? learning and organizing in new ventures’, journal of evolutionary economics 24(1), 59–82. https://doi.org/10.1007/s00191-013-0320-x amorós, j.e. & bosma, n., 2014, global entrepreneurship monitor 2013 global report, global entrepreneurship research association, wellesley, ma. baptista, r., karaöz, m. & mendonça, j., 2013, ‘the impact of human capital on the early success of necessity versus opportunity-based entrepreneurs’, small business economics 42(4), 831–847. https://doi.org/10.1007/s11187-013-9502-z baron, r.a. & ensley, m.d., 2006, ‘opportunity recognition as the detection of meaningful patterns: evidence from comparisons of novice and experienced entrepreneurs’, management science 52(9), 1331–1344. https://doi.org/10.1287/mnsc.1060.0538 becker, g.s., 1964, human capital: a theoretical and empirical analysis, with special reference to education, national bureau of economic research, new york. bergmann, h. & stephan, u., 2013, ‘moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership’, small business economics 41(4), 945–959. bosma, n., van praag, m., thurik, r. & de wit, g., 2004, ‘the value of human and social capital investments for the business performance of startups’, small business economics 23(3), 227–236. https://doi.org/10.1023/b:sbej.0000032032.21192.72 botha, m. & bignotti, a., 2016, ‘internships enhancing entrepreneurial intent and self-efficacy: investigating tertiary-level entrepreneurship education programmes’, southern african journal of entrepreneurship and small business management 8(1), a45. https://doi.org/10.4102/sajesbm.v8i1.45 brixy, u., sternberg, r. & stüber, h., 2012, ‘the selectiveness of the entrepreneurial processes’, journal of small business management 50(1), 105–131. https://doi.org/10.1111/j.1540-627x.2011.00346.x carter, n.m., gartner, w.b. & reynolds, p.d., 1996, ‘exploring start-up event sequences’, journal of business venturing 11(3), 151–166. https://doi.org/10.1016/0883-9026(95)00129-8 cassar, g., 2014, ‘industry and startup experience on entrepreneur forecast performance in new firms’, journal of business venturing 29(1), 137–151. https://doi.org/10.1016/j.jbusvent.2012.10.002 chang, w.l., liu, j.y. & huang, w.g., 2014, ‘a study of the relationship between entrepreneurship courses and opportunity identification: an empirical survey’, asia pacific management review 19(1), 1–24. cunningham, j.b. & aldrich, j.o., 2011, using spss: an interactive hands-on approach, sage publications, london. dash, m. & kaur, k., 2012, ‘youth entrepreneurship as a way of boosting indian economic competitiveness: a study of orissa’, international review of management and marketing 2(1), 10–21. davidsson, p. & honig, b., 2003, ‘the role of social and human capital among nascent entrepreneurs’, journal of business venturing 18(3), 301–331. https://doi.org/10.1016/s0883-9026(02)00097-6 dimov, d., 2010, ‘nascent entrepreneurs and venture emergence: opportunity confidence, human capital, and early planning’, journal of management studies 47(6), 1123–1153. https://doi.org/10.1111/j.1467-6486.2009.00874.x eesley, c. & wang, y., 2017, ‘social influence in career choice: evidence from a randomized field experiment on entrepreneurial mentorship’, research policy 46(3), 636–650. https://doi.org/10.1016/j.respol.2017.01.010 elmuti, d., khoury, g. & omran, o., 2012, ‘does entrepreneurship education have a role in developing entrepreneurial skills and ventures’ effectiveness?’ journal of entrepreneurship education 15(1), 83–98. gabrielsson, j. & politis, d., 2012, ‘work experience and the generation of new business ideas among entrepreneurs: an integrated learning framework’, international journal of entrepreneurial behaviour & research 18(1), 48–74. https://doi.org/10.1108/13552551211201376 ganotakis, p., 2012, ‘founders’ human capital and the performance of uk new technology based firms’, small business economics 39(2), 495–515. https://doi.org/10.1007/s11187-010-9309-0 gimeno, j., folta, t.b., cooper, a.c. & woo, c.y., 1997, ‘survival of the fittest? entrepreneurial human capital and the persistence of underperforming firms’, administrative science quarterly 42, 750–783. https://doi.org/10.2307/2393656 greve, a. & salaff, j.w., 2003, ‘social networks and entrepreneurship’, entrepreneurship theory and practice 28(1), 1–22. https://doi.org/10.1111/1540-8520.00029 herrington, m. & kew, p., 2017, gem 2016/17 global report, global entrepreneurship research association (gera), wellesley, ma. herrington, m., kew, j. & kew, p., 2014, gem 2014 sub-saharan africa report, global entrepreneurship research association, cape town. huggins, r., izushi, h., prokop, d. & thompson, p., 2015, ‘network evolution and the spatiotemporal dynamics of knowledge sourcing’, entrepreneurship & regional development 27(7–8), 474–499. https://doi.org/10.1080/08985626.2015.1070538 invernizzi, a.c., menozzi, a., passarani, d.a., patton, d. & viglia, g., 2016, ‘entrepreneurial overconfidence and its impact upon performance’, international small business journal 1–20. https://doi.org/10.1177/0266242616678445 kelley, d., singer, s. & herrington, m., 2012, gem 2011 global report, global entrepreneurship research association (gera), wellesley, ma. kirzner, i.m., 1973, competition and entrepreneurship, university of chicago press, chicago, il. lamine, w., jack, s., fayolle, a. & chabaud, d., 2015, ‘one step beyond? towards a process view of social networks in entrepreneurship’, entrepreneurship & regional development 27(7–8), 413–429. https://doi.org/10.1080/08985626.2015.1070535 likert, r., 1932, ‘a technique for the measurement of attitudes’, archives of psychology 22, 5–55. man, t.w., lau, t. & chan, k., 2002, ‘the competitiveness of small and medium enterprises: a conceptualization with focus on entrepreneurial competencies’, journal of business venturing 17(2), 123–142. https://doi.org/10.1016/s0883-9026(00)00058-6 markman, g.d. & baron, r.a., 2003, ‘person-entrepreneurship fit: why some people are more successful as entrepreneurs than others’, human resource management review 13(2), 281–301. https://doi.org/10.1016/s1053-4822(03)00018-4 martin, b.c., mcnally, j.j. & kay, m.j., 2013, ‘examining the formation of human capital in entrepreneurship: a personal-analysis of entrepreneurship education outcomes’, journal of business venturing 28(2), 211–224. https://doi.org/10.1016/j.jbusvent.2012.03.002 marvel, m.r., davis, j.l. & sproul, c.r., 2014, ‘human capital and entrepreneurship research: a critical review and future directions’, entrepreneurship theory and practice 40(3), 599–626. https://doi.org/10.1111/etap.12136 mcmullen, j.s. & dimov, d., 2013, ‘time and the entrepreneurial journey: the problems and promise of studying entrepreneurship as a process’, journal of management studies 50(8), 1481–1512. https://doi.org/10.1111/joms.12049 moroz, p.w. & hindle, k., 2012, ‘entrepreneurship as a process: toward harmonizing multiple perspectives’, entrepreneurship theory and practice 36(4), 781–818. https://doi.org/10.1111/j.1540-6520.2011.00452.x morris, m.h., kuratko, d.f., schindehutte, m. & spivack, a.j., 2012, ‘framing the entrepreneurial experience’, entrepreneurship theory and practice 36(1), 11–40. https://doi.org/10.1111/j.1540-6520.2011.00471.x parker, s.c., 2013, ‘do serial entrepreneurs run successively better-performing businesses?’, journal of business venturing 28(5), 652–666. https://doi.org/10.1016/j.jbusvent.2012.08.001 polanyi, m., 1966, ‘the logic of tacit inference’, philosophy 41(155), 1–18. https://doi.org/10.1017/s0031819100066110 politis, d., 2008, ‘does prior start-up experience matter for entrepreneurs’ learning? a comparison between novice and habitual entrepreneurs’, journal of small business and enterprise development 15(3), 472–489. https://doi.org/10.1108/14626000810892292 putnam, r.d., 2001, bowling alone: the collapse and revival of american community, simon and schuster, new york. rae, d., 2005, ‘entrepreneurial learning: a narrative-based conceptual model’, journal of small business and enterprise development 12(3), 323–335. https://doi.org/10.1108/14626000510612259 reynolds, p.d. & curtin, r.t., 2008, ‘business creation in the states: panel study of entrepreneurial dynamics ii initial assessment’, foundations and trends in entrepreneurship 4(3), 155–307. https://doi.org/10.1561/0300000022 robinson, a.t. & marino, l.d., 2015, ‘overconfidence and risk perceptions: do they really matter for venture creation decisions?’, international entrepreneurship and management journal 11(1), 149–168. https://doi.org/10.1007/s11365-013-0277-0 shane, s., 2000, ‘prior knowledge and the discovery of entrepreneurial opportunities’, organization science 11(4), 448–469. https://doi.org/10.1287/orsc.11.4.448.14602 shane, s. & venkataraman, s., 2000, ‘the promise of entrepreneurship as a field of research’, academy of management review 25(1), 217–226. https://doi.org/10.2307/259271 shane, s.a., 2003, a general theory of entrepreneurship: the individual-opportunity nexus, edward elgar publishing, northampton, ma. silva, o., 2007, ‘the jack-of-all-trades entrepreneur: innate talent or acquired skill?’, economics letters 97(2), 118–123. https://doi.org/10.1016/j.econlet.2007.02.027 singer, s., amorós, j.e. & moska, d., 2015, gem 2014 global report, global entrepreneurship research association, wellesley, ma. stam, w., arzlanian, s. & elfring, t., 2014, ‘social capital of entrepreneurs and small firm performance: a meta-analysis of contextual and methodological moderators’, journal of business venturing 29(1), 152–173. https://doi.org/10.1016/j.jbusvent.2013.01.002 stenholm, p., acs, z.j. & wuebker, r., 2013, ‘exploring country-level institutional arrangements on the rate and type of entrepreneurial activity’, journal of business venturing 28(1), 176–193. https://doi.org/10.1016/j.jbusvent.2011.11.002 st-jean, é., tremblay, m., janssen, f., baronet, j., loué, c. & nafa, a., 2016, ‘may business mentors act as opportunity brokers and enablers among university students?’, international entrepreneurship and management journal, 13(1), 1–15. stuetzer, m., goethner, m. & cantner, u., 2012, ‘do balanced skills help nascent entrepreneurs to make progress in the venture creation process?’ economics letters 117(1), 186–188. https://doi.org/10.1016/j.econlet.2012.05.002 tashakkori, a. & teddlie, c., 2003, handbook of mixed methods in social & behavioral research, sage, london. teddlie, c. & yu, f., 2007, ‘mixed methods sampling a typology with examples’, journal of mixed methods research 1(1), 77–100. https://doi.org/10.1177/2345678906292430 toft-kehler, r., wennberg, k. & kim, p.h., 2014, ‘practice makes perfect: entrepreneurial-experience curves and venture performance’, journal of business venturing 29(4), 453–470. https://doi.org/10.1016/j.jbusvent.2013.07.001 trevelyan, r., 2011, ‘self-regulation and effort in entrepreneurial tasks’, international journal of entrepreneurial behavior & research 17(1), 39–63. https://doi.org/10.1108/13552551111107507 turton, n. & herrington, m., 2012, global entrepreneurship monitor 2012 south africa, global entrepreneurship research association, cape town. ucbasaran, d., westhead, p. & wright, m., 2008, ‘opportunity identification and pursuit: does an entrepreneur’s human capital matter?’, small business economics 30(2), 153–173. https://doi.org/10.1007/s11187-006-9020-3 unger, j.m., rauch, a., frese, m. & rosenbusch, n., 2011, ‘human capital and entrepreneurial success: a personal-analytical review’, journal of business venturing 26(3), 341–358. https://doi.org/10.1016/j.jbusvent.2009.09.004 van der sluis, j., van praag, m. & vijverberg, w., 2008, ‘education and entrepreneurship selection and performance: a review of the empirical literature’, journal of economic surveys 22(5), 795–841. https://doi.org/10.1111/j.1467-6419.2008.00550.x wasdani, k.p. & mathew, m., 2014, ‘potential for opportunity recognition along the stages of entrepreneurship’, journal of global entrepreneurship research 2(1), 7. https://doi.org/10.1186/2251-7316-2-7 wiklund, j., davidsson, p., audretsch, d.b. & karlsson, c., 2011, ‘the future of entrepreneurship research’, entrepreneurship theory and practice 35(1), 1–9. https://doi.org/10.1111/j.1540-6520.2010.00420.x world bank, 2012, world development report 2013: jobs, world bank, washington, dc. yusuf, j.e., 2012, ‘why do nascent entrepreneurs use external assistance programs?’, journal of entrepreneurship and public policy 1(2), 166–182. https://doi.org/10.1108/20452101211261444 microsoft word 03 revised going green edited 4 march 2009.doc sajesbm ns volume 2 (2009) issue 1 30 _______________________________________________________________________ going green: an smme perspective suzette viviers department of business management nelson mandela metropolitan university suzette.viviers@nmmu.ac.za abstract the purpose of this research was to investigate the level of environmental awareness and engagement among local smme owners/managers. the views of 250 smme owners/managers in the nelson mandela bay region were obtained by means of a survey questionnaire. the findings indicate that respondents are becoming more aware of the impact of their actions on the natural environment and engage in actions to reduce electricity use, recycle paper and replace hazardous materials. most respondents, however, view environmental management as costly and consider stricter environmental legislation and enforcement, as well as tax incentives, as effective measures to promote “greener” business practices among south african businesses. key words and phrases: environmental management; environmental legislation; “going green”; smmes; environmental tax incentives introduction the need to conserve our natural environment and reduce the factors causing climate change has been widely advocated in recent years (stern, 2007; mitchell & quinn, 2005:19; de villiers, 2004:21). in recognition of the financial implications of climate change, a growing number of businesses are “going green” (dahlmann, brammer & millington, 2008:264). environmental management efforts are, however, mainly limited to large businesses, as small, medium and micro enterprises (smmes) are often constrained by a lack of resources and skills (mahadea & pillay, 2008:431; maas & herrington, 2006; clover & darroch, 2005:238). problem statement given the lack of in-depth research on environmental management in the south african smme sector, the problem statement of this study was to investigate the level of environmental awareness and engagement among smme owners/managers. their views on the financial implications of “going green” and the most effective measures to promote the environmental agenda in south africa were also obtained. attention was further given to “green” actions currently undertaken by respondents. to give effect to the primary objective of this research, a number of secondary objectives were formulated, namely: to conduct a literature review on: o the definition of “going green”; o the level of environmental awareness and engagement among smme owners/managers; o the financial implications of “going green”; o “green” business practices; and 31 o measures to promote “greener” business practices in south africa. to empirically investigate the views of a sample of smme owners/managers in the nelson mandela bay region by means of a survey questionnaire. a review of the relevant literature is presented next, followed by a discussion of the research design and methodology, empirical results, pertinent conclusions and recommendations. literature review the definition of “going green” although different definitions of “going green” exist, the term generally refers to the actions of individuals, businesses and governments to protect the quality and continuity of life through the conservation of natural resources and the prevention of pollution (lesourd & schilizzi, 2001:36; newton, 2005:3). according to peattie (1995:25), a “green” business is one that deliberately chooses to incorporate environmental and sustainable development considerations into its business plan and operations. sustainable development, as defined by the world commission on environment and development (1987:1), refers to “…development that meets the needs of the present without compromising the ability of future generations to meet their own need”. the level of environmental awareness and engagement among smme owners/managers although only a few studies exist on environmental management in the smme sector, most indicate that smme owners/managers are reluctant to “go green”. horobin and long (1996:17) conducted a study among small tourism operators in the united kingdom (uk) and found that the majority of respondents were prepared to accept the link between the natural environment and their businesses, but had either not consciously made the connection before or lacked the motivation or time to act on their beliefs. many were also unaware of the different types of “green” actions they could undertake to promote sustainable development in their sector. only a small number of smme owners/managers in horobin and long’s (1996:18) study engaged in “green” actions and most followed a very ad hoc approach to doing so. few saw the need to adopt an integrated environmental policy. of those respondents who did not undertake any “greening” actions, most had not felt it necessary to act, others did not see what they personally could do and some simply did not get to do anything about it. another study in the uk also revealed that small business owners were not convinced of the need to “go green”. many respondents in this study argued that there was not enough time in their day to pursue greening measures that were not a natural by-product of their core activities (smes ‘not convinced of need to go green’, 2004:6). a more recent study in the uk, conducted by dahlmann et al. (2008:264), showed that more uk firms, including smmes, were starting to implement measures to reduce their ecological footprint. although the majority of respondents in their sample initiated steps to become “greener”, the findings reveal that they were primarily motivated by economic considerations (such as cost and risk management) and achieving compliance with environmental legislation. the researchers showed that smmes in particular rely on 32 short planning horizons, which prevent them from becoming more proactive in their environmental outlook. similar findings were observed by yu and bell (2007:19), who found that a high level of concern for the environment by chinese smme owners/managers was not mirrored by a high level of engagement. the main motivators for “going green” in this chinese sample were an improved corporate image and legislative compliance. in south africa a number of large businesses have actively embraced the notion of “going green”, woolworths being a prime example (salgado, 2008:25; mokgata, 2008). the growing level of importance attached to improved environmental management practices by large south african businesses could be attributed to developments such as: the promulgation of new environmental regulations in recent years (church, 2006:628); the stricter enforcement of green laws (ensor, 2008; benjamin, 2007); the introduction of “green” tax incentives (schubert & nel, 2008); the introduction of carbon taxes (sa considering carbon taxes, 2008); the establishment of a green building council in south africa (robertson, 2008:6); increased demand from consumers for environmentally friendly products and services. (le riche (2008:26) argues that south african consumers, like their international counterparts, are becoming increasingly responsible and informed when it comes to environmental matters. “today’s consumers want to know about where, how, when and what in even the most mundane products and are concerned about the impact their purchases will have on the environment and their health.”); more institutional investors integrating environmental considerations into their investment analyses and ownership practices (viviers, bosch, smit & buijs, 2008:15; cameron, 2006). the question remains, however, to what extent smme owners/managers in south africa are aware of these developments and how willing and able they are to adopt “greener” business practices. although no statistics are available on the effect that local smmes have on the natural environment, it is estimated to be quite significant when considering the size of the sector as a whole (kapelus, hamman, agbazue & hein, 2004:54). according to the south african business guidebook 2005/2006 (2006:26), smmes account for approximately 60 percent of employment in the formal sector and contribute almost 30 percent to the gross domestic product. in the uk it is estimated that smmes are responsible for 60 percent of the industry’s carbon dioxide emissions, 60 percent of commercial waste and eight out of ten pollution accidents (smes ‘not convinced of need to go green’, 2004:6). one of the reasons for the general absence of environmental management among smmes relates to the perception of costs being too high. financial implications of “going green” several authors point out that the initial costs associated with “going green” can be quite high, but also show that businesses can expect savings in the long run that will offset the initial costs (lesourd & schilizzi, 2001:150; newton, 2005:144). according to peattie (1995:40), the following costs are to be expected when a firm decides to “go green”: primary product costs may increase. capital expenditure, such as facility changes, may increase. 33 costs may be incurred by complying with new “green” legislation. “green” overheads may be incurred by changing the management of the firm. costs associated with carbon taxes and fines may be incurred. in addition to the costs suggested above, firms should also communicate their “green” efforts to the public to gain respect and recognition as a “green” business. it is crucial that consumers be well informed about the “green” features of new and existing products and services, as uncertainty and misleading labelling could lead to lower sales (hopfenbeck, 1992:113). smme owners/managers who decide to “go green” need to ensure that the costs incurred do not exceed the derived benefits thereof. the main benefits associated with improved environmental management include better customer relations, enhanced public and brand image and operational savings. according to peattie (1995:42) and lesourd and schilizzi (2001:38), benefits which could offset additional “greening” costs include indirect savings resulting from the reduction of raw materials, energy, water, office suppliers, heating, lighting and unnecessary packaging, and direct savings in the form of lower waste disposal costs as well as additional income from the sale of by-products. millet (2000:5) claims that “green” businesses, irrespective of size, enjoy a competitive advantage in that their customers are less likely to migrate to competing firms. moreover, environmentally conscious customers are often willing to pay premium prices for environmentally friendly goods and services (cairncross, 1995:67; grove, fisk, pickett & kangun, 1996:56). it has been estimated that small manufacturing concerns in the united states of america (usa) have benefited from mark-ups of between 20 and 30 percent on “green” products and services (do you need to be green?, 2006). in another north american study it was reported that 45 percent of smme owners/managers believed that their customers would be willing to pay more for eco-friendly products and services (go green … , 2006). “going green” can also have a positive effect on staff morale. employees are often the initiators of improved environmental practices, and firms that adhere to employees’ requests for “greener” business practices will boost staff morale and productivity. millet (2000:5) claims that “people may feel a renewed sense of meaning in their work and have the sense that they are contributing to important work if businesses take on an environmental approach”. in an extensive smme study by clemens (2006:492), a strong positive relationship was found between “green” and financial performance, which supports similar findings among larger businesses (sharma & vrendenburg, 1998:729; hills, lam & welford, 2004:223). it is however important to note that not all “green” actions increase the value of the firm. according to schaltegger and figge (1998:11), value is only created when environmental measures are: capital extensive; for instance when end-of-pipe installations (such as downstream air filters and effluent treatment plants) are “smart”, small and cheap; low material-consuming; for example when the consumption of raw materials is reduced and waste minimised; sales boosting; for instance when products with “green” benefits for consumers are designed; 34 margin widening; as when “green” products boost sales and eco-friendly production techniques reduce operating costs and carbon taxes; lowering the firm’s weighted average costs of capital (wacc); for example. when debt capital is sourced at favourable interest rates (in which case reference is made to a “green loan”); and long-term value-enhancing; for instance when premium prices charged for “green” products and services can be sustained. “green” business practices the development of a formal environmental management system will assist smme owners/managers who wish to “go green” to do so in a systematic and cost-effective manner. millet (2000:233) sets out a number of steps for the development of an environmental management system. these include the following: initial commitment: this stage comprises the realisation by top management (or the owner in the case of the smme) that there is a need for change. lesourd and schilizzi (2001:58) and clark (2007) point out that strong leadership and commitment from top management are critical for the success of any environmental management system. review: subsequently a thorough investigation needs to be undertaken of the environmental risks facing the firm, as well as the potential costs and benefits of “going green”. during this stage top management should calculate their firm’s environmental footprint and assess “green” opportunities which present themselves in local and global markets (burger, 2007). developing and publishing an environmental policy: in this step some critical “green” issues need to be identified and addressed by formulating a comprehensive environmental policy. this process may include setting targets for waste reduction and recycling, designing new “green” products, using alternative energy sources and informing consumers about the “greening” of the firm (hopfenbeck, 1992:120). these targets should be set in line with regulatory requirements. preparing and implementing action plans: management then needs to formulate and implement specific action plans to meet the stated policy goals. it is important at this stage that employees are adequately trained and that management set the example (mcdonagh & prothero, 1997:321). monitoring, auditing and reporting progress: once an appropriate environmental management system is in place, progress against the stated goals should be regularly assessed and corrective action taken where necessary (mcdonagh & prothero, 1997:321). a myriad of “greening” actions can be undertaken by smmes. these could deal with the prevention of air, water and soil pollution by reducing the use of hazardous materials and waste by replacing them with safer alternatives. examples of hazardous materials include cleaning products, disinfectants, sanitisers and pesticides, fluorescent light bulbs/tubes, batteries, oil, grease, paint and toner cartridges. other “greening” actions could focus on the reduction of solid waste, which refers to discarded materials other than fluids such as glass, paper, paperboard, food residues, textiles, plastics and sludge formed in sewage treatment systems. solid waste programmes often focus on the “triple r’s”: reducing, reusing and recycling. 35 recent studies among smmes in china and japan show that their “greening” actions centre mainly on improving energy efficiency and implementing cleaner production technologies (yu & bell, 2007:29; revell, 2002:291). given the current energy crisis in south africa, local smmes could also focus their “greening” actions on conserving electricity. lower electricity production (which is based on the burning of coal) will also improve south africa’s per capita carbon dioxide (co2) emissions ratio, which is currently equal to 7.4 metric tonnes per annum, compared with the global average of approximately 4 metric tonnes per annum (south africa. deat, 2006:223). a looming water shortage should also prompt local smme owners/managers to re-evaluate their use of this finite natural resource. measures to promote “greener” business practices shange (2008:90) investigated eight measures which could promote “greener” business practices among south african firms. these measures were: growing numbers of responsible investors internationally and in south africa; growing numbers of “green” funds; the establishment of stock market indices using ethical as well as environmental, social and corporate governance selection criteria; the development of a carbon credits market; increasing pressure from banks; increasing pressure from consumers and consumer groups; new and better enforced environmental legislation; and progressive environmental tax incentives. eighty five percent of respondents in shange’s (2008:99) study (most of whom were asset managers) stated that environmental legislation would be the most effective measure to promote “greener” business practices in south africa. the respondents were, however, of the opinion that the effectiveness of such legislation was entirely dependent on the adequate enforcement thereof. stricter environmental legislation has also been proposed by dahlmann et al. (2008:266) and yu and bell (2007:35) as an effective measure to promote “greener” business practices in the uk and china respectively. respondents in shange’s (2008:105) study were also in favour of “green” tax incentives to grow the environmental agenda in south africa. in his 2008/2009 budget speech, the south african minister of finance, trevor manuel, announced measures to this effect. he stated that the national treasury was looking at a range of environmental fiscal measures including emission charges and tradable permits as well as tax incentives for cleaner production technologies (schubert & nel, 2008). one particular incentive refers to the introduction of section 37b, a new provision of the income tax act (act 58 of 1962 as amended). this section of the act will provide tax relief for capital expenditure by local manufacturers (including smmes) on measures that will protect the environment. summary in this section it was shown that smmes are increasingly becoming concerned about the impact that their businesses are having on the natural environment, yet they do little about it. it was also shown that “going green” has definite financial benefits for smmes in terms of an improved corporate image and cost savings. it was suggested that smme 36 owners/managers should develop environmental management systems to structure their “greening” efforts. “greening” actions often centre on preventing pollution, reducing solid waste and conserving energy and water. international studies suggest that environmental legislation is the most effective measure to promote the “green” agenda in the private sector. in the next section more details are given on the research design and methodology of this study. research methodology the adoption of a positivistic research paradigm for this study called for the collection and analysis of quantitative data. a survey questionnaire was thus developed to give effect to the problem statement and research objectives of this study. open-ended and closed questions were formulated, based on the literature review. in section a, the level of environmental awareness and engagement among local smme owners/managers was evaluated, as well as smme owners’/managers’ views on the financial implications of “going green” and measures to promote “greener” business practices in the country. respondents’ perceptions were obtained using a five-point lickert scale where (1) indicated strongly disagree; (2) = disagree; (3) = neutral; (4) = agree and (5) = strongly agree. section b of the questionnaire dealt with a variety of “green” business actions which could be undertaken. respondents were asked to indicate whether they were currently undertaking a specific “green” action (yes/no). if they were not, a further question was posed to ascertain whether they would consider undertaking the action within the next 12 months. four broad categories of “green” actions were evaluated, namely pollution prevention, solid waste reduction, energy conservation and water conservation. it should be noted that the “green” actions contained in section b do not represent an exhaustive list, but rather provide examples of generic “greening” actions. finally, section c requested biographical information of the respondents (gender, level of education and total number of years of business experience) and their businesses (branch of industry and number of full-time employees). the target population of the study comprised all smmes operating in the nelson mandela bay region, irrespective of industry. although no statistics are available on the exact number of smmes operating in the nelson mandela bay region, it is estimated that there might be as many as 18 000 (mattheus, personal communication, 2007). to address the problem of low response rates associated with mail and telephonic interviews, questionnaires were personally delivered to the owners or general managers of a convenience sample of 475 smmes in the region. time and financial constraints made it impossible to select a bigger sample. of the 475 questionnaires distributed, only 250 were suitable for statistical analysis. given the nature of the data source, descriptive and inferential statistics were calculated using microsoft excel 2003 and statistica (version 8). 37 results sample description as is evident in table 1, more than two-thirds of the respondents in this sample (69.2%) were males, which is slightly higher than the overall gender distribution of entrepreneurs in south africa. most respondents in this sample (32%) held a national certificate or diploma and had more than 15 years’ experience in business (39.2%). the majority of smmes in this sample operated in the personal and business services sectors (42.8%) or the retailing/wholesaling sector (30.4%). grove et al. (1996:56) and junnila (2004:190) point out that businesses in the service sector contribute significantly to environmental ills, as they have the same energy use and global warming potential as those operating in the manufacturing sector. based on the classification of smmes according to the national small business act (no 102 of 1996), 81.6 percent of businesses in this sample were small (i.e. employing between five and fifty employees). table 1: sample description gender n % male 173 69.20 female 77 30.80 total 250 100.00 highest level of education n % grade 11 or lower 22 8.80 grade 12 or equivalent qualification 75 30.00 national certificate or diploma 80 32.00 bachelors degree 43 17.20 honours degree 15 6.00 master’s degree / mba / doctorate 15 6.00 total 250 100.00 total number of years experience n % less than or equal to 1 year 8 3.20 1 > years 5 60 24.00 5 > years 10 44 17.60 10 > years 15 40 16.00 more than 15 years 98 39.20 total 250 100.00 branch of industry n % manufacturing 25 10.00 retailing / wholesaling 76 30.40 business or personal services 107 42.80 building and construction 21 8.40 agriculture / forestry / fisheries 12 4.80 combination of retailing/wholesaling and service provision 4 1.60 combination of manufacturing and retailing/wholesaling 5 2.00 total 250 100.00 classification (based on number of full time employees) n % micro (1 – 4 full time employees) 21 8.40 small (5 – 50 full time employees) 204 81.60 medium (51 – 199 employees) 25 10.00 total 250 100.00 38 respondents’ views on “going green” table 2 indicates the frequency distributions and summary statistics of the statements contained in section a of the questionnaire. table 2: perceptions on “going green” statement frequency distribution (%) summary statistics st ro ng ly d is ag re e d is ag re e n eu tr al a gr ee st ro ng ly a gr ee m ea n st d de v s1.1 smme owners in south africa are concerned about the impact of their operations on the environment. 5.2 24.4 30.8 28.0 11.6 3.16(c) 1.08 s1.2 smme owners in south africa should become more concerned about the greening of their business operations. 0.8 0.8 5.2 50.0 43.2 4.34(a) 0.69 s1.3 i have become more aware of the impact that my business operations have on the environment within the past 12 months. 2.4 10.4 24.4 47.6 15.2 3.63(b) 0.95 the level of environmental awareness among smme owners/managers s1.4 i prefer to do business with other “green” businesses. 4.8 9.6 42.4 28.4 14.8 3.39 (c) 1.01 s1.5 i promote environmentally friendly business practices during meetings. 1.6 10.0 41.6 32.8 14.0 3.48(b) 0.91 the level of engagement among smme owners/managers s1.6 i promote green business practices among my employees by providing them with practical advice via notice boards, newsletters, the intranet etc. 4.4 16.0 40.4 30.4 8.8 3.23(c) 0.97 s1.7 it is not expensive to adopt greener business practices. 3.6 18.0 38.4 32.8 7.2 3.22 (c) 0.95 the financial implications of “going green” s1.8 i can improve my firm’s profitability by implementing greener business practices. 5.6 17.2 35.2 33.6 8.4 3.22(c) 1.01 s1.9 the government should encourage environmentally friendly business practices by means of tax incentives. 1.6 3.6 8.8 44.0 42.0 4.21(a) 0.87 s1.10 stricter government legislation on environmental issues is required in south africa. 0.8 4.8 10.8 45.2 38.4 4.16(b) 0.86 measures to promote “greener” business practices s1.11 stricter enforcement of environmental legislation is required in south africa. 0.4 2.8 14.0 42.0 40.8 4.20(a) 0.81 (a) very high level of agreement (mean scores 4.2 5) (b) high level of agreement (mean scores 3.4 – 4.2) (c) average level of agreement (mean scores 2.6 – 4.3) 39 the level of environmental awareness and engagement among smme owners/managers based on the statistics in table 2, 62.8 percent of smme owners/managers in the sample had a heightened awareness of the effect of their operations on the natural environment and the importance of reducing their ecological footprint. due to their own heightened sensitivity, 93.2 percent of respondents stated that more smme owners/managers in the country ought to become concerned about the environment. despite respondents becoming seemingly more environmentally conscious, only 46.8 percent promoted environmentally friendly business practices during meetings. fewer yet (only 39.2% of respondents) promoted “green” business practices among their employees by providing them with practical advice via notice boards, newsletters, the intranet, and so on. these finding are similar to those of horobin and long (1996:17) and yu and bell (2007:40), who found that a high level of concern for the environment does not necessarily translate into a high level of engagement by smme owners/managers. the financial implications of “going green” more than half of the respondents (56.4%) were of the opinion that it is expensive to adopt “green” business practices and only 42 percent agreed that enhanced environmental management could improve profitability. this finding supports revell’s (2002:291) argument that low levels of engagement often result from the perception that environmental and economic interests are at odds. only 21 respondents (or 8.4%) indicated that they had a budget for the implementation of “greener” business practices. of these 21 respondents, 38.1 percent had budgets of between one and five percent of annual turnover. the rest had smaller budgets. measures to promote “greener” business practices eighty six percent of respondents indicated that the south african government should encourage “greener” business practices by means of tax incentives or through stricter legislation (83.6%) and improved law enforcement (82.8%). as indicated in the literature review, both the scope and enforcement of environmental laws in south africa have improved in recent years. respondents’ calls for increased green legislation might therefore arise from a lack of knowledge about the range and nature of existing environmental laws. hillary (2000:60) found that small business managers were often unaware of the relevant laws, regulations and ordinances in their sectors. as indicated in table 3, three statements correlated significantly with statement s1.6 (“i promote ‘green’ business practices among my employees by providing them with practical advice via notice boards, newsletters, the intranet etc.”). these three statements are: s1.2 smme owners in south africa should become more concerned about the “greening” of their business operations; s1.4 i prefer to do business with other “green” businesses; and s1.8 i can improve my firm’s profitability by implementing greener business practices. 40 table 3: pearson correlations matrix s1.1 s1.2 s1.3 s1.4 s1.5 s1.6 s1.7 s1.8 s1.9 s1.10 s1.11 s1.1 1.00 0.11 -0.03 0.39 -0.16 0.32 0.32 0.40 -0.16 0.24 -0.34 s1.2 1.00 0.18 -0.12 -0.16 0.44* 0.35 0.15 0.01 0.01 0.25 s1.3 1.00 -0.12 -0.07 0.15 0.08 0.29 -0.15 0.48* 0.44* s1.4 1.00 0.18 0.62* 0.14 0.41 -0.28 0.08 -0.39 s1.5 1.00 -0.03 0.13 0.32 0.46* 0.00 0.13 s1.6 1.00 0.30 0.54* -0.18 0.17 0.02 s1.7 1.00 0.33 0.27 0.15 0.17 s1.8 1.00 0.05 0.22 0.09 s1.9 1.00 0.10 0.42 s1.10 1.00 0.26 s1.11 1.00 * significant at the 95% level s1.1: stricter enforcement of environmental legislation is required in south africa. s1.2: smme owners in south africa should become more concerned about the greening of their business operations. s1.3: i have become more aware of the impact that my business operations have on the environment within the past 12 months. s1.4: i prefer to do business with other “green” businesses. s1.5: i promote environmentally friendly business practices during meetings. s1.6: i promote green business practices among my employees by providing them with practical advice via notice boards, newsletters, the intranet etc. s1.7: it is not expensive to adopt greener business practices. s1.8: i can improve my firm’s profitability by implementing greener business practices. s1.9: the government should encourage environmentally friendly business practices by means of tax incentives. s1.10: stricter government legislation on environmental issues is required in south africa. s1.11: stricter enforcement of environmental legislation is required in south africa. the correlation of s1.6 with the first two statements seems to refer to calls by “green” smmes for a level playing field in the country. respondents appear to think that uniform environmental standards and costs can only be achieved through regulation. other studies support this argument (smes ‘not convinced of need to go green’, 2004:6). the same interpretation applies to the next set of correlations, where statement s1.3 (“i have become more aware of the impact that my business operations have on the environment within the past 12 months.”) significantly correlates with: s1.10 stricter government legislation on environmental issues is required in south africa; and s1.11 stricter enforcement of environmental legislation is required in south africa. although research by dahlmann et al. (2008:264) and yu and bell (2007:19) suggests that legislative compliance is a major motivator for smmes to engage in “greening’ actions, clemens (2006:493) warns that the burden of regulation is often greater on smmes than on larger businesses. this is because larger companies are better at challenging burdensome regulations, more insulated from bans or reductions on inputs due to green concerns, better at predicting regulatory changes (which allows them to respond more effectively to them) and more likely to adopt corporate-wide “green” improvements. 41 the desirability of more and stricter environmental laws applicable to local smmes is questionable, as the regulatory burden on smmes has already been identified as one of the main inhibitors of entrepreneurial activity in south africa (mahadea & pillay, 2008:431; maas & herrington, 2006; clover & darroch, 2005:238). this is due to the fact that increased legislation calls for more record keeping, which in turn results in higher administrative and labour costs. statement s1.9 (“the government should encourage environmentally friendly business practices by means of tax incentives.”) also significantly correlates with statement s1.5 (“i promote environmentally friendly business practices during meetings.”). this finding suggests that respondents who engage in “green” actions (which could be costly to implement in some instances) want the government to recognise and reward their efforts. no significant correlations were found between the statements in this section and the biographical details of the respondents and their businesses. “green” business practices as the data sourced in section b of the questionnaire were nominal in nature, the interpretation thereof is limited to frequency distributions. the following discussion will centre on four categories of “green” actions, namely pollution prevention, solid waste reduction, energy conservation and water conservation. pollution prevention almost half of the respondents in the sample (47.6%) identified ways in which to reduce the use of hazardous materials. a large percentage of smme owners/managers (65.5%) purchased hazardous products in small quantities and limited access thereof to trained and authorised employees only (56.8%). more than half the smme owners/managers (54%) in this sample have already reduced the use of chemical pesticides by correcting the situations that attract and harbour pests (e.g. through the proper storage and disposal of food and garbage). although less than a third of the respondents (31%) had replaced hazardous products with safer alternatives in the past year, several (19.5%) intended doing so in the next 12 months. examples of hazardous products that have been replaced with “greener” alternatives include ammonia-based cleaners and acrylic enamels. a few respondents (15%) indicated that they had changed suppliers due to the chemical contents in their suppliers’ products being “too high”. several (19%) began to purchase more biodegradable and eco-friendly products, and one respondent, the owner of a nursery, remarked that they were planting insect-repellent plants to reduce their reliance on insecticides. large numbers of respondents (46%) replaced standard fluorescent lights with nonmercury fluorescent lights, used rechargeable batteries rather than single-use batteries (48.8%) and bought paper products such as towels, napkins and unbleached copy paper (44.8%). several respondents intended doing so in the next 12 months (18.4%, 15.6% and 25.2% respectively). these statistics support the finding that more smme owners/managers are becoming aware of the effects that hazardous materials have on the natural environment. 42 an important element in pollution prevention is recycling. in businesses where grease, oil and paint were used, an almost equal split was observed between respondents who recycled these liquids and those who did not. very few respondents (7.2%) recycled spent fluorescent tubes, which is regrettable, given that these products contain small quantities of mercury, cadmium and antimony. research shows that once these toxins are released at landfills they contaminate soil and water sources for years to come (recycling fluorescent lamps, 2006). only 36.4 percent of respondents regularly informed their employees on the need to dispose of/recycle hazardous liquids and of ways of doing this. this finding corresponds with the disappointing statistics in table 2, which shows that few respondents (46.8%) promoted environmentally friendly business practices during meetings or via other communication channels (39.2%). close to a quarter of respondents (22.4%) were contemplating the use of recycling companies in the near future, and 27.6 percent were planning to step up their communication efforts in this regard in the foreseeable future. with regard to the reduction of air pollution, 51.2 percent of respondents planned business trips to accomplish all their errands in one outing and 34 percent encouraged lift clubs among employees. these findings should, however, be interpreted with caution, as smme owners/managers could have encouraged these types of activities due to high fuel prices at the time of the survey and not necessarily because they wanted to reduce their carbon emissions. solid waste reduction thirty-one percent of respondents said that solid waste assessments were not applicable to their businesses. this statistic might be indicative of the fact that smme owners/managers did not have a clear understanding of what solid waste entails. the same argument applies to the 18 percent of respondents who stated that the implementation of a solid waste recycling programme did not apply to their businesses. smme owners/managers need to realise that all businesses, irrespective of their size and operations, generate solid waste and that they have to dispose of it in a proper manner. although some smme owners/managers might not have had a clear picture of what solid waste entails, others endeavoured to reduce solid waste by buying products in returnable, re-useable or recyclable containers (52%), storing and rotating supplies to minimise losses through spoilage and damage (51.6%) and buying products that use less packaging material (37.2%). these findings confirm the growing level of environmental awareness among respondents and their desire to do business with other “green” enterprises. with regard to office paper reduction, smme owners/managers encouraged employees to keep a stack of previously used paper near printers (78%), re-use the reverse side of scrap paper and drafts of internal memos (68.4%) and use computer software programs that allow faxing directly from computers without printing (54.8%). a further 40 percent of smme owners/managers recycled toner cartridges, with a further 12.8 percent planning to do so in the next 12 months. despite the above mentioned efforts to reduce solid waste, 37.2 percent of respondents still do not set their printer and copier defaults to double sided, or use marketing 43 materials that require no envelope, such as fold-and-mail envelopes (34%). it should be noted that these seemingly small “greening” actions could lead to substantial benefits for smmes (in terms of cost savings) and the environment (in terms of preserving forests and reducing waste dumps). an unsettling finding is that a large number of respondents fail to recycle newspapers (42%) and wood/paper-based products (33.2%). few smme owners/managers (18%) buy re-used or recycled paper products such as table covers, napkins, placemats, toilet seat covers and toilet paper. this is unfortunate, as the depletion of forests is the secondlargest contributor to greenhouse gas emissions in the world (lovejoy, 2008:77). clearly, smme owners/managers need to be educated on the importance of recycling woodbased products and supporting sustainable forestry practices. thirty percent of respondents also felt that the recycling of glass, plastic or aluminium containers with a deposit value did not apply to their businesses. as stated previously, this might be due to the fact that they do not know where and how to recycle these products in their region. energy conservation due to the timing of this study (the period when eskom’s load-shedding was at its worst – april and may 2008), it comes as no surprise that most respondents were acutely aware of saving electricity. the percentages of respondents who already engaged in energy conservation measures at the time of the survey are indicated in table 4. table 4: energy conservation measures “yes, i currently do it” i know which factors have a direct impact on the electricity / energy consumption of my business. 82.0% i know how much electricity / energy is consumed in my business on a monthly basis. 80.8% i ensure that my employees are energy conscious. 70.0% i have a policy that all electronic devices and lights are switched off in non-occupied rooms. 68.8% i see energy management as an integral part of the way i do business. 65.6% i have guidelines to quantify my energy costs against my production quality. 39.2% i measure the energy usage of major equipment (e.g. motors, fan, compressors, pumps etc.) in my business. 39.2% i ensure that my employees are skilled in energy management practices. 37.2% i encourage employees to turn off lights where possible. 92.0% due to the rising costs of electricity and a looming power crisis in the country, many respondents indicated that they would consider the implementation of an energy management system and the use of ballasts in the near future (18.8% and 24.8% respectively). a ballast is an electrical component used to conduct electricity at each end of the tube. it supplies the initial electricity to the bulb that creates light and then regulates the amount of electricity flowing through the bulb so that it emits the right amount of light. according to eskom (2008), the use of ballasts can considerably reduce a firm’s electricity bill. 44 more than two-thirds of the respondents (67.2%) replaced standard light bulbs with compact fluorescent bulbs. according to eskom (2008), compact fluorescent bulbs last over ten times longer and use up to four times less energy than standard bulbs. other energy-saving measures undertaken by respondents included: regularly repairing cracks, broken windows, and other places where infiltration of unconditioned air can take place (62.8%); ensuring that the layout of their building(s) enabled adequate airflow (which reduces the energy consumption of their heating, ventilation and air conditioning system) (44.4%); and keeping doors closed between airconditioned and non-airconditioned spaces (e.g. through the use of automatic or self-closing doors) (42.4%). water conservation with regard to water conservation measures, 78.8 percent of smme owners/managers know how to read their water meter and water bill as a means of detecting leaks. a further 84.4 percent of respondents regularly checked and repaired leaks. as indicated in table 5, the majority of respondents have no measures in place to reduce their water consumption (although many of the measures are easy to install and cost effective). not many indicated that they were considering doing so in the next 12 months. this is very unfortunate as south africa is a water-scarce country. table 5: water conservation measures “not doing it currently” “not doing it currently, but considering it in the next 12 months” i have ultra low-flow toilets installed in my business. 52.8% 13.6% i have quick-closing toilet flappers in place. 42.8% 11.6% i have signs in our restrooms encouraging water conservation. 41.6% 18.8% i have low-flow aerators for sinks, faucets, lavatory sinks and kitchen sinks. 39.6% 14.8% as indicated in table 6, only some of the above-mentioned few “green” actions correlated with the biographical data of the respondents (all of them negatively). 45 table 6: correlations between “green” actions and respondents’ biographical data statements mean standard deviation total number of years business experience gender s2.20: i link business trips to accomplish all errands for my facility in one outing. 1.97 1.17 -0.194 s3.13: i keep a stack of previously used paper near printers; re-use the reverse side for scratch paper and drafts of internal memos. 1.49 0.85 -0.200 s3.22: for the shipping of non-food items i use shredded paper for my packing needs instead of purchasing styrofoam pellets, bubble wrap and other types of packaging material. 2.98 1.17 -0.177 s4.21: i regularly clean lighting fixtures and lamps so that they are lighting as effectively as possible. 1.57 0.88 -0.163 s5.3: i have low-flow aerators for sinks, faucets, lavatory sinks and kitchen sinks. 2.14 1.01 -0.172 s5.13: i wash exterior windows with a bucket and squeegee rather than with a power hose. 1.437247 0.960135 -0.195 -0.184 all correlations were statistically significant at the 95% confidence level closer investigation revealed that older respondents (those with more than 10 years’ experience) and men were less likely to engage in these “green” actions. this could be attributed to younger respondents being more conscious of environmental matters and women being more value-based in their approach to management. research in the field of responsible investing also reveals that more women and younger investors are investing in funds which explicitly consider ethical, environmental, social and corporate governance issues (mclachlan & gardner, 2004:13; schueth, 2003:195; rosen & sandler, 1999:221; hutton, d’antonio & johnsen, 1998:281). discussion the empirical findings indicate that the majority of smme owners/managers in this sample had a heightened awareness of the effect their operations are having on the natural environment. due to their own heightened sensitivity, respondents also suggested that more smme owners/managers in south africa are becoming concerned with the “greening” of their business practices. their high level of concern for the environment , however, does not translate into a high level of engagement, a finding which corresponds to research conducted by horobin and long (1996:17), as well as that of yu and bell (2007:19). smme owners/managers in this sample also view the adoption of “green” business practices as expensive and fail to recognise that environmental management could lead to improved profitability. respondents view the role of government as very important in promoting improved environmental management in the local smme sector. the respondents expressed very strong views in favour of increased environmental legislation, stricter enforcement of these laws and tax incentives. these findings correspond with those of shange (2008:99) 46 and clemens (2006:492). questions could, however, be raised about the desirability of increasing the regulatory burden on local smmes. the empirical evidence further reveals that the “green” actions of smmes in this sample mainly dealt with conserving electricity, recycling paper and replacing hazardous materials with more eco-friendly alternatives. implications and recommendations when considering the significant environmental footprint of the smme sector as a whole and the dire consequences of climate change, it is clear that smme owners/managers have an important role to play as change agents. it is thus suggested that more research be conducted on environmental management in the local smme sector and that the findings be communicated to smme owners/managers via appropriate channels (such as the general media and dedicated smme websites, newspapers and publications). it is of particular importance that smme owners/managers become better informed about existing environmental legislation and incentives, the financial benefits of “going green” and their role in terms of environmental conservation. smme owners/managers should note that small, seemingly insignificant “green” actions could have large payoffs and that the benefits of implementing an environmental management system generally outweigh the costs thereof. it is suggested that smme owners/managers build on the “green” efforts currently undertaken and that more attention be given to water conservation and recycling initiatives. finally, it is suggested that environmental education should be more strongly integrated into business and ethics curricula at tertiary education institutions. limitations of the study as this research only evaluated the “green” perceptions and actions of 250 smme owners/managers in the eastern cape, it is suggested that the study be extended to include smmes in other provinces too (especially the more affluent provinces of gauteng and the western cape). the questionnaire could also be refined to allow for a more sophisticated statistical analysis. conclusion south african smme owners/managers have an important role to play in conserving our natural environment and limiting the factors causing climate change. the growing environmental concern among smme owners/managers needs, however, to be translated into concrete “green” business practices. such actions will not only lead to improved profitability for the smmes involved, but also a sustainable future for all south africans. 47 references benjamin, c. 2007. green scorpions target gauteng polluters. business day, 10 july. (1p). [online] available from: http://www.businessday.co.za/articles/topstories.aspx?id=bd4a512546 [accessed: 200711-05]. burger, a. 2007. climate change and business: the carbon disclosure project, 27 november. (1p). [online] available from: http://www.triplepundit.com/pages/climate-change-business-the-ca-002737.php [accessed: 2008-02-14]. cairncross, f. 1995. green inc: a guide to business and the environment. london: earthscan. cameron, b. 2006. state pension fund to turn up heat on corporate sa. personal finance, 26 may. (2p). [online] available from: http://www.persfin.co.za/index.php?fsectionid=595&farticleid=3264739 [accessed: 2007-11-04]. church, j. 2006. sustainable development revisited: the protection of small business enterprises and the environment as national assets with reference to global trends and recent government policy. orbiter, 27(3):628-635. clark, a. 2007. practical advice for greening the sme: views from the states: practical advice for greening the sme. (6p). [online] available from: http://wwwblog.businessgreen.com/2007/05/ view_from_the_s.html [accessed: 2007-11-05]. clemens, b. 2006. economic incentives and small firms: does it pay to go green? journal of business research, 59:492–500. clover, t.a. & darroch, m.a.g. 2005. owners’ perceptions of factors that constrain the survival and growth of small, medium and micro agribusineses in kwazulu-natal, south africa. agrekon, 44(2):238– 263. dahlmann, f., brammer, s. & millington, a. 2008. environmental management in the united kingdom: new survey evidence. management decision, 46(2):264–283. de villiers, c.j. 2004. ethical arguments regarding corporate environmental reporting. meditary accountancy research, 12(1):21–38. do you need to be green? 2006. business week, summer. (3p). [online] available from: http://www.businessweek.com/magazine/content/06_25/b3989601.htm [accessed: 2007-11-06]. ensor, l. 2008. heavier pollution penalties on cards. business day, 29 february. (1p). [online] available from: http://www.businessday.co.za/articles/article.aspx?id=bd4a717038 [accessed: 2008-03-05]. eskom. 2008. demand size management. (3p). [online] available from: http://www.eskomdsm.co.za/ [accessed: 2008-05-17]. go green: start recycling in your small business. 2006. nfib – the voice of small business, 14 june. (5p). [online] available from: http://www.nfib.com/object/io_28768.html [accessed: 2008-02-15]. grove, s.j., fisk, r.p., pickett, g.m. & kangun, n. 1996. going green in the service sector. european journal of marketing, 30(5):56–66. hillary, r. 2000. small and medium-sized enterprises and the environment. sheffield: greenleaf. hills, p., lam, j. & welford, r. 2004. business environmental reform and technological innovation in hong kong. business strategy environment, 13:223–234. hopfenbeck, w. 1992. the management revolution: lessons in environmental excellence. london: prentice hall. 48 horobin, h. & long, j. 1996. sustainable tourism: the role of the small firm. international journal of contemporary hospitality management, 8(5):15–19. hutton, r.b., d’antonio, l. & johnsen, t. 1998. socially responsible investing. business and society magazine, 37(3):281–306. junnila, s. 2004. the environmental significance of facilities in service sector companies. facilities, 22(7/8):190–198. kapelus, p., hamman, r., agbazue, t. & hein, a. 2004. corporate social responsibility: implications for an iso standard. johannesburg: african institute of corporate citizenship. le riche, l. 2008. bring on the green. your business, 13(2):26–29. lesourd, j.b. & schilizzi, g.m. 2001. the environment in corporate management: new direction and economic insights. cheltenham: edward elgar. lovejoy, t. 2008. the threat from trees. newsweek special report: environment, clii(01/01):77. maas, g. & herrington, m. 2006. global entrepreneurship monitor: south african executive report. cape town: uct graduate school of business, university of cape town. mahadea, d. & pillay. m.k. 2008. environmental conditions for smme development in a south african province. south african journal of economics and management sciences, 11(4):431–448. mattheus, b. 2007. verbal communication (telephonic discussion) with the editor of the nelson mandela bay 2007 business guide on 1 april. port elizabeth. mclachlan, j. & gardner, j. 2004. a comparison of socially responsible and conventional investors. journal of business ethics, 52(1):11–25. mcdonagh, p. & prothero, a. (eds). 1997. green management: a reader. london: dryden. millet, l. 2000. the green office manual: a guide to responsible practice. 2nd ed. london: earthscan. mitchell, c.g. & quinn, n.w. 2005. environmental reporting disclosure in south africa: a comparative study of the expectations of selected groups of preparers and users. meditary accountancy research, 13(2):17–33. mokgata, l. 2008. going green takes on new meaning for retailers. (4p). [online] available from: http://www.bizcommunity.com/rss/196/306.html [accessed 2008-04-06]. newton, l.h. 2005. business ethics and the natural environment. cornwell: blackwell. peattie, k. 1995. environmental marketing management: meeting the green challenges. london: pitman. recycling fluorescent lamps. 2006. (2p). [online] available from: http://www.govlink.org/hazwaste/ publications/fluorescentrecycling_2006.pdf [downloaded: 2008-02-04]. revell, a. 2002. ecological modernisation of small firms in japan. environmental economics and policy studies, 5:291–317. robertson, d. 2008. green buildings are all the rage. sunday times, 2 march:6. rosen, b.n. & sandler, d.m. 1991. social issues and socially responsible investment behaviour: a preliminary investigation. journal of consumer affairs, 25(2):221–235. sa considering carbon taxes. 2008. esi-africa.com. 29 july. (3p). [online] available from: http://www.esi-africa.com/node/9505 [accessed: 2008-07-29]. 49 salgado, i. 2008. green moves by money. personal finance, 15(1st quarter):25. schaltegger, s. & figge, f. 1998. environmental shareholder value. wwz/sarasin basic report. study no 54:1-42. schubert, m. & nel, g. 2008. going green may save cash. business day, 10 march. (2p). [online] available from: http://www.businessday.co.za/articles/article.aspx?id=bd4a723103 [accessed: 2008-0311]. schueth, s. 2003. socially responsible investing in the united states. journal of business ethics, 43(3):189–194. shange, m.n. 2008. an investigation of the mechanisms which promote “greener” business practices in south africa. unpublished bcom honours thesis, nelson mandela metropolitan university: port elizabeth. sharma, s. & vrendenburg, h. 1998. proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. strategic management journal, 19:729–753. smes ‘not convinced of need to go green’. 2004. iee review, mid-july:6. (2p). [online] available from: http://www.ieereview.org [accessed: 2008-02-08]. south african business guidebook 2005/2006. 2006. 11th ed: johannesburg: writestuff publishing. south africa. 1996. national small business act, no. 102 of 1996. government gazette, 17612(1901). (14p), (27p). [online] available from: http://www.info. gov.za/ gazette/acts/1996/a102-96.pdf. [downloaded: 2006-01-07]. south africa. deat (department of environmental affairs and tourism). 2006. environment outlook 2006. (45p). [online] available from: http://www.environment.gov.za [accessed: 2007-03-11]. stern, n. 2007. the economics of climate change – the stern review. cambridge: cambridge university press. viviers, s., bosch, j.k., smit, e.vdm. & buijs, a. 2008. is responsible investing ethical? south african journal of business management, 39(1):15–25. world commission on environment and development. 1987. our common future. oxford: oxford university press. yu, j. & bell, j.n.b. 2007. building a sustainable business in china’s small and medium-sized enterprises (smes). journal of environmental assessment policy and management, 9(1):19–43. abstract introduction literature review sample and data collection measurement instrument and questionnaire design data analysis research results discussion and conclusion acknowledgements references about the author(s) jeremiah madzimure centre for academic development, vaal university of technology, vanderbijlapark, south africa citation madzimure, j., 2019, ‘the influence of strategic networks and logistics integration on firm performance among small and medium enterprises’, southern african journal of entrepreneurship and small business management 11(1), a282. https://doi.org/10.4102/sajesbm.v11i1.282 original research the influence of strategic networks and logistics integration on firm performance among small and medium enterprises jeremiah madzimure received: 14 aug. 2019; accepted: 18 nov. 2019; published: 12 dec. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: in order to stay competitive in business and improve performance, small and medium enterprises (smes) need to make use of business networking and logistics integration. strategic networking and logistics integration in business have become critical as they allow supplier partnering, exchange of vital information or access to valuable resources allowing innovation, gaining access to additional resources, sharing risks and costs, which is required for enhancing firm performance. strategic networks and logistics integration across partnering firms have therefore become paramount to supply chain management as they are critical to firm performance. most studies in this subject matter have focussed on larger firms. it became imperative for this study to focus on smes. objectives: the purpose of this study was to examine the influence of strategic networks and logistics integration on firm performance in smes in the vaal triangle. method: a quantitative research design was adopted in this study. the owners and managers of 137 smes completed the survey questionnaire. confirmatory factor analysis (cfa) was conducted to assess the psychometric properties of the measurement scales. path modelling techniques were used to test the proposed hypotheses. results: the results indicate that strategic networks had a positive and significant influence on logistics integration and firm performance. furthermore, logistics integration had a strong positive and significant influence on firm performance. conclusion: this study sheds light on the possibility of enhancing the overall performance of smes by establishing and empirically testing the relationships between logistics integration and strategic networks and firm performance. moreover, the findings of the study provide useful insights into how smes should benefit from business networking and logistics integration to improve their performance. keywords: strategic networking; logistics integration; company performance; smes; enhancing; supplier partnering; south africa. introduction the recognised relationship between firm performance and strategic relationships and logistics integration has prompted managers, researchers and practitioners alike to seek better understanding of the performance of small and medium enterprises (smes). strategic networking is one of the most important aspects of supply chain management (scm) that contribute to the growth of smes (parker 2008:627), and its different types, definitions and roles have been extensively studied (mayaka 2015; tooksoon & mudor 2012:273). furthermore, strategic networks, sometimes known as business networks, is defined as a set of two or more connected business relationships in which exchange in one relationship is contingent upon exchange (or non-exchange) in another (ricciardi 2014:151). it can be said that strategic networks are key to the success of the organisation and supply chains (jarillo 1988:31; mbanje & lunga 2015). however, despite its importance in business, there is little empirical evidence as to how both strategic networks and logistics integration influence firm performance. some studies have been conducted with only one variable – either strategic network or logistics integration’s influence on firm performance (li 2014). in addition to this, many studies have also been conducted on the impact of networking on the performance of smes (ricciardi 2014:113; tooksoon & mudor 2012:272), but little information is available on the impact of networking on the performance of smes in african countries. strategic network is regarded as a resource, which can help firms acquire additional knowledge and information regarding their business and contribute to the exchange of various resources, such as financial resources and skills, thereby facilitating the improvement of company performance. overall, strategic networking plays a vital role in improving the integration of logistics activities from supplier to the final customer and vice-versa (bowersox & daugherty 1995:71; prashantham & dhanaraj 2010:967). the aim of this study was to determine the influence of strategic networks and logistics integration on firm performance among smes. the study was conducted in the vaal triangle, southern gauteng, south africa. the next section focusses on a literature review, regarding the smes in south africa, strategic networking, logistics integration and firm performance, followed by conceptual framework and hypothesis development; thereafter, research methodology is discussed followed by the results of the study. finally, the article comes to a conclusion about the implications of the study, together with the recommendations. literature review small and medium enterprises in south africa in south africa, smes play a critical role in the country’s economy. small and medium enterprises contribute between 52% and 57% of the country’s gross domestic product (gdp) and up to 61% of the overall employment in south africa (abhor & quartey 2010:225). small and medium enterprises play a crucial role in creating employment in an economy (statistics south africa [stats sa] 2019:279). moreover, smes play a very important role in scm as they may serve as producers, distributors, retailers, as well as customers (doern 2009:276; maiga 2016:2). therefore, it is not surprising that smes are the backbone of most economies in the world, including south africa, as they are the creators of most jobs in the economy. the national small business act no. 26 of south africa 1996, as amended in 2003, defines sme as: … a separate and distinct entity including co-operative enterprises and non-governmental organisations managed by one owner or more, including its branches or subsidiaries if any is predominantly carried out in any sector or subsector of the economy mentioned in the schedule of size standards and can be classified as a sme by satisfying the criteria mentioned in the schedule of size standards. (republic of south africa 1996:1) according to the government gazette (2003:8), a small retail enterprise in south africa is one that employees 50 people or less and has a total turnover of up to r19 million, with a total asset value of r3m. a medium retail enterprise employs from 50 up to 200 people and has a total turnover of r39m, with a total asset value of r6m. hence, this study focussed on smes. strategic networks according to parker (2008:628) and nogues (2014:342), a business network is a group of entrepreneurs that voluntarily share knowledge and experiences. jarillo (1988:31) defined strategic networks as ‘long-term, purposeful arrangements among distinct but related for-profit organisations that allow firms in them to gain or sustain competitive advantage vis-à-vis their competitors outside the network’. therefore, in this study, strategic networking refers to the process through which firms leverage specialisation, effectively allocate transformational resources and optimise support through knowledge and information, thereby minimising company costs and consequently improving the performance of the firm. logistics integration logistics integration refers to collaborative working and implies joint planning, joint product development, mutual exchange of information and integrated information systems, cross-coordination on several levels in the companies on the network, long-term cooperation, fair sharing of risks and benefits (lai, wong & cheng 2010:273; taghipour et al. 2015). logistics integration does not only refer to integration and collaboration within the organisation but also includes the collaboration with the suppliers upstream and distributors, and customers downstream. thus, within organisations, logistics integration is crucial as it provides a significant competitive advantage, which leads to lower operational costs, as well improvement in value creation (eckenhofer 2011:128; lai et al. 2010:274). firm performance firm performance is defined as the performance of various processes included within the firm’s supply chain function (srinivasan, mukherjee & gaur 2011:268). one of the key aspects to successful company performance is cooperation and mutual decision-making between trading partners. companies try to improve their performance in terms of cost, delays, adaptability, variety and traceability. collaboration practices and information exchanges between partners become essential within any supply chain, as they contribute to performance (sakka & botta-genoulaz 2009:1). an effective performance measurement is essential for firm performance because it provides the basis to understand the system, as well as information about the results of system efforts to supply chain partners (anderson & reeb 2003:1301; chen, yang & li 2007:524). overall, firm performance is recognised as an important factor for improving competitive advantage (chang, tsai & hsu 2013:35). conceptual framework and hypothesis development the research model is shown in figure 1 linking the three hypotheses postulated. figure 1: conceptual framework. strategic networks and logistics integration a strategic network is regarded as a resource that can help firms acquire additional knowledge and information regarding their business and contribute to the exchange of various resources such as financial resources and skills (sandberg 2007). logistics integration in this study refers to collaboration, integration of stakeholders, as well as cooperation in the firm’s logistics activities. thus, confirming our first hypothesis: h1: strategic networks have a positive influence on logistics integration. strategic networks and firm performance vermeulen, niemann and kotzé (2016) and wheelen and hungar (2002:125) state that strategic networking is an agreement between firms to do business together in ways that go beyond normal company-to-company dealings but fall short of a merger or a full partnership. the findings of tooksoon and mudor (2012) showed that the business network was statistically significant and positively associated with performance. ge, hisrich and dong (2009:189) studied the impact of networking on the performance of smes. this study was conducted by taking a total sample of 227 firms from three cities in china and found that the outcome of the network was positively related to firm performance. in addition to this, some previous studies have shown that networks with other firms are positively associated with the performance of the firm (jack, dodd & anderson 2008:121; prashantham & dhanaraj 2010:231; watson 2007:23). it is clear from this that strategic networking not only involves social networks but also involves knowledge networks. firms that are involved in strategic networking are intended to gain knowledge and impart that knowledge to ensure the success of their business. in light of the foregoing, it is hypothesised that: h2: the strategic networks have a positive influence on firm performance. logistics integration and firm performance logistics integration is closely linked to firm performance. so it can be postulated that logistics integration can help firms improve linkage between suppliers, which ensures that goods are received on time, leading to improved company performance (kang & moon 2016:307; van der vaat & van donk 2008:121). based on the aforementioned, the following hypothesis is postulated: h3: logistics integration has a positive influence on firm performance. research method and design this study adopted a quantitative research methodology to help establish the statistical evidence on the strengths of the influence of supply strategic networks and logistics integration on firm performance. the quantitative method also helps the researcher determine causal relationships between variables (cooper & schindler 2011:217; sekaran & bougie 2009:221). in addition, the data from quantitative methodology can be interpreted using statistical analysis. sample and data collection the data for this study were collected from sme managers and owners in the vaal triangle, southern gauteng, south africa. the population for the study comprised 1543 smes owners and managers in the vaal triangle. the unit of analysis was the sme owners and managers in the vaal triangle. a convenience sampling method was used to obtain a sample of 250 smes. student tutors were trained prior to the distribution and collection of 250 questionnaires. out of the total questionnaires distributed, only 137 were fully completed and were used for final data analysis of this study. this represents a response rate of 54.8%. regarding ethical considerations, all respondents signed a formal consent form before completing the questionnaire. furthermore, information provided by participants or respondents was treated with utmost confidentiality, and anonymity was fully guaranteed. the names of respondents did not appear on the questionnaire or data, as anonymity was promised to all respondents. measurement instrument and questionnaire design ‘logistics integration’ was measured using a six-item scale adapted from chen and paulraj (2004:148), while ‘strategic networks’ used a five-item scale adapted from chinomona and pooe (2013:7). ‘firm performance’ was measured using a four-item scale, which was adopted from chinomona and pooe (2013:7). all were measured on a five-point likert-type scale that was anchored by 1 (strongly disagree) to 5 (strongly agree) to express the degree of agreement. the likert scale was used because it was easy to analyse data, draw conclusions and graphs, as the study adopted a quantitative study design. the layout of the questionnaire is provided in table 1. table 1: layout of the questionnaire. data analysis data were subjected to statistical analysis using the following techniques: descriptive statistics, confirmatory factor analysis (cfa) model fit and hypothesis testing using structural equation modelling (sem) with the analysis of moment structures (amos) programme version 24.0. the respondents’ biographic information and the composition of the sample were analysed using descriptive statistics in the form of frequencies and charts. the other constructs were analysed using the statistical package for social sciences (spss), version 24.0 for windows. the descriptive statistics, cfa, model fit and sem are discussed in the next section of research results. the sem was used in this study to analyse the relationships between the constructs. ethical considerations this article followed all ethical standards for carrying out research without direct contact with human or animal subjects. research results this section consists of three sub-sections, namely, the demographic profile of respondents, cfa and path modelling. profile of respondents table 2 presents the profile of all participants in this study. table 2: combined demographics and small and medium enterprises profile. a descriptive analysis incorporating the demographic information regarding the supply chain professionals and sme profile was conducted. a descriptive analysis of section a (demographics and sme profile) is discussed in the foregoing section, which consists of gender, experience in the industry, number of employees, type of sector and rate of turnover. it was important to first create a descriptive demographic and sme profile to enhance the researcher’s understanding of the important aspects of key personnel and the sme. a summarised frequency table of demographics and sme profile is represented in table 2. table 3 shows the demographics of the respondents. males constitute 74%, while females represent 26%. the majority of the respondents (29%) have worked in their firms between 5 and 10 years. those firms that employed between 101 and 150 employees were 41% and those that employed between 151 and 200 were 36%, meaning that the majority of the employees surveyed, work in the medium firms. though not indicated in the table, only one sme owner or manager had a phd qualification, 22 had a master’s degree, while 97 had a diploma and/or degree qualification. a total of 27 owners and/or managers had matric certificates but no further qualifications. the next section discusses the cfa. table 3: accuracy analysis statistics. confirmatory factor analysis confirmatory factor analysis is ‘a way of testing how well variables measured represents a smaller number of constructs’ (hair et al. 2014:602). confirmatory factor analysis was conducted using the amos, version 24.0, to assess psychometric properties of the measurement scales. in this study, model fit was ascertained by using the following indices: chi-square/degrees of freedom, comparative-fit-index (cfi), incremental fit index (ifi), normed fit index (nfi), tucker-lewis index (tli) and random measure of standard error approximation (rmsea). the acceptable thresholds should be equal to or higher than 0.90 for cfi, ifi and nfi (hair et al. 2016:345); for chi-square/degrees of freedom, a ratio of 3:1 or less is recommended; rmsea value should be equal to or less than 0.08 (lysons & farrington 2012:586). the results of cfa are reported in table 3. a cfa model of the three study constructs was assessed to check the model fit (hove 2015). the results are reported in table 4. table 4: confirmatory factor analysis model fit indices results. table 4 indicates that the measurement model yielded a ratio of chi-square value to degree-of-freedom of 1.49 (hove 2015). the recommended threshold range is between 1 and 3 (cooper & schindler 2011). the current study has a value far below 3. as such, the chi-square to degree-of-freedom value of 1.49 in this study is accepted and reflects a good model fit. table 5 also shows ifi, tli and cfi values (0.95, 0.97 and 0.95, respectively) that are above the recommended threshold of 0.9 or above (berndt & petzer 2011:348). this further reflects a good model fit. table 5 further reports an rmsea value of 0.02 and is less than 0.08; thus, it yields a reasonable model fit. overall, all these measures confirm a robust and acceptable model fit (schreiber et al. 2006:330). the next section discusses the path modelling results. table 5: structural equation modelling model fit indices results. path modelling results berndt and petzer (2011:348)) suggest that the goal of path analysis is ‘to provide plausible explanations of observed correlations by constructing models of cause-and-effect relations’. path analysis allows path coefficients (the relationship between variables) to be determined. in addition, path analysis requires recursivity (that the path direction is one way with no feedback loops) (cooper & schindler 2011). the advantage of path analysis is that the researcher can see which variables exert effects on others. table 5 shows the sem model fit indices results. as shown in table 5, this study reports a chi-square/df value of 1.46 as indicative of a good model fit. table 5 further shows ifi, cfi and tli values (0.93, 0.91 and 0.92, respectively) that are above the recommended threshold of 0.9 or above. these results further confirm that the estimated model fits well the sample data in this study, which provides a good model fit (hove 2015). the table also depicts an rmsea value of 0.03, which provides a very good model fit. overall, the model fit indices provide a good overall fitness of the sem model to the specified sample data. the results of hypothesis tests are reported in table 6 and show that all the three hypotheses were supported as the path coefficient were all significant. table 6: structural equation modelling results. discussion and conclusion this study shows that both strategic networks and logistics integration have positive effects on firm performance. strategic networks also show a strong positive on logistics integration. overall, the empirical results confirm the important role of strategic networking and logistics integration in increasing company performance. the results of the study support all three the hyptheses. the findings of this study are consistent with those in previous literature, thus providing additional evidence in this line of research. examples of similar findings include bonner, kim and cavusgil (2005); chinomona and pooe (2013:6); sawyerr, mcgee and peterson (2003); sukati et al. (2011), and watson (2007:870) whose studies found that logistics integration and strategic networking positively influence firm performance. the strong positive relationship on these constructs could be that the firms are sharing important business information and always integrate their logistics function. overall, the findings of this study confirm that there are close links between strategic networks, logistics integration and firm performance. thus, this study argues that a combination of strategic networks and logistics integration can have a greater positive and significant effect on firm performance. research contribution and implications of the study the findings of this study can enhance sme owners’ and managers’ understanding of how company performance can be improved through strategic networking and logistics integration. the government of south africa can plan and formulate policies to foster the growth of smes with more understanding of the linkage between strategic networking, logistics integration and firm performance. strategic networks and logistics integration are important issues that firms in developing countries such as south africa must address. the findings of this study show that forming strategic networks and promoting the integration of logistics activities are valid strategies to improve firm performance. this study, therefore, reinforces the importance of smes managers and owners to build strategic networks with their suppliers and other firms as these have proven to have positive effects on firm performance. the findings of the study have shown that strategic networking contributes significantly to the performance of the firm. therefore, smes managers and owners are encouraged to engage in active networking with other firms, especially those that are relevant to the business in which the firm operates. considering these findings, this study also reinforces the importance of smes managers and owners to build strategic relationships with business partners for effective networking as this is likely to enhance the performance of the firm. managerially, the study demonstrates the need for firms to have strong networking with supplier partners, as well the need to effectively implement a good logistics integration, as these will lead to improvement in firm performance. over and above, this study sheds light on the possibility of enhancing the overall performance of smes by establishing and empirically testing the relationships between logistics integration and strategic networks and firm performance. limitations and future research like other studies, this research has some limitations. the major limitation for this study was that the sample was drawn from one region of south africa. future research can consider other provinces of south africa, as well as incorporate larger firms for comparison purposes and for the generalisability of results. also, in this study, the perceptions of only the smes owners and managers were incorporated. these people may be biased in evaluating internal and external organisational issues. it would be beneficial to include all stakeholders, including suppliers and customers, concerning issues of strategic networks and logistics integration. another limitation of this study was the small sample size which made it difficult to generalise these results. future research with a large sample size should be conducted in order to contribute to a generalisable understanding of the research issues. this research examined the influence of strategic networks and logistics integration on firm performance observed at one point in time; future research is suggested to be conducted via longitudinal study. this could provide a clearer insight into the impact of strategic networks and logistics integration on firm performance. this study focusses on the mediating role of logistics integration in the relationship between strategic networks and firm performance; future research might examine other mediating or moderating factors that may affect this relationship such as trust, information sharing, network structure and firm size, among others. another area of research could be on the impact of business networking on organisational innovation and excellence. the other study suggested could be on the effect of the external environment on strategic networking in smes. the relationship between strategic networking antecedents/corollaries (such as commitment, trust, reputation, communication and cooperation) and firm performance could also be investigated and might reveal interesting results. finally, this study could have also used both the quantitative and qualitative methods (mixed method approach) to understand the deeper nuances. acknowledgements the author is grateful to the almighty god and his beloved family. he also thanks mothusi samosamo for drawing the diagrams. competing interests the author declares that there are no financial or personal relationships that may have inappropriately influenced him in writing this article. author’s contributions i declare that i am the sole author of this research article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are the author’s own and not an official position of the institution or the funder. references abhor, j. & quartey, p., 2010, ‘issues in sme development in ghana & south africa’, international journal of finance & economics 39, 218–228. https://doi.org/10.1111/1540-6261.00567 anderson, r.c. & reeb, d.m., 2003, ‘founding-family ownership and firm performance: evidence from s&p 500’, journal of finance 58, 1301–1328. berndt, a. & petzer, d., 2011, marketing research, pearson education, cape town. bonner, j.m., kim, d. & cavusgil, s.t., 2005, ‘self-perceived strategic network identity and its effects on market performance in alliance relationships’, journal of business research 58(10), 1371–1380. https://doi.org/10.1016/j.jbusres.2004.07.002 bowersox, d.j. & daugherty, p.j., 1995, ‘logistics paradigm: the impact of information technology’, journal of business logistics 16(1), 65–80. chang, h.h., tsai, y.c. & hsu, c.h., 2013, ‘e-procurement & supply chain performance’, international journal of management 18(1), 34–51. https://doi.org/10.1108/13598541311293168 chen, i.j. & paulraj, a., 2004, ‘towards a theory of supply chain management: the constructs and measurements’, journal of operations management 22(2), 119–150. https://doi.org/10.1016/j.jom.2003.12.007 chen, m.c., yang, t. & li, h.c., 2007, ‘evaluating the supply chain performance of it-based inter-enterprise collaboration’, information & management 44(6), 524–534. https://doi.org/10.1016/j.im.2007.02.005 chinomona, r. & pooe, r.i.d., 2013, ‘the influence of logistics integration on information sharing and business performance: the case of small and medium enterprises in south africa’, journal of transport and supply chain management 7(1), 1–9. https://doi.org/10.4102/jtscm.v7i1.92 cooper, d.r. & schindler, p., 2011, business research methods, mcgraw-hill, new york. doern, r., 2009, ‘investigating barriers to sme growth and development in transition environments: a critique and suggestions for developing the methodology’, international small business journal 27(3), 275–305. https://doi.org/10.1177/0266242609102275 eckenhofer, e.m., 2011, ‘network management as a way to manage intellectual capital’, in proceedings of the 12th european conference on knowledge management – eckm 2011, university of passau, passau, september 1–2, 2011. ge, b., hisrich, r.d. & dong, b., 2009, ‘networking, resource acquisition, and the performance of small and medium-sized enterprises: an empirical study of three major cities in china’, managing global transitions 7(3), 221–239. government gazette, 2003, no 26 national small business amendment act, vol. 461, pp. 1–10, parliament of the republic of south africa, cape town. hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2014, multivariate data analysis, 7th edn., pearson new international edition, london. hair, j.f., tomas, g., hult, m., ringle, m.c. & sarstedt, m., 2016, a primer on partial least squares structural equation modeling (pls-sem), 2nd edn., sage, thousand oaks, ca. hove, p., 2015, ‘the influence of supply chain practice on supply chain performance in south africa’, phd thesis, business, logistics, faculty of management sciences, vaal university of technology, viewed n.d., from http://hdl.handle.net/10352/320 jack, s., dodd, s.d. & anderson, a.r., 2008, ‘change and the development of entrepreneurial networks over time: a processual perspective’, entrepreneurship & regional development 20(2), 125–159. https://doi.org/10.1080/08985620701645027 jarillo, j.c., 1988, ‘on strategic networks’, strategic management journal 9(1), 31–41. https://doi.org/10.1002/smj.4250090104 kang, s. & moon, t., 2016, ‘supply chain integration and collaboration for improving supply chain performance: a dynamic capability theory perspective’, 49th hawaii international conference on system sciences, washington, dc, united states, january 05–08, 2016, pp. 307–316. lai, k.h., wong, c.w. & cheng, t.c.e., 2010, ‘bundling digitized logistics activities and its performance implications’, industrial marketing management 39(2), 273–286. https://doi.org/10.1016/j.indmarman.2008.08.002 li, x., 2014, ‘operations management of logistics and supply chain: issues and directions’, discrete dynamics in nature and society, volume 2014, article id 701938, 7 pages. https://doi.org/10.1155/2014/701938 lysons, k. & farrington, b., 2012, purchasing and supply chain management, 8th edn., prentice-hall, london. maiga, a.s., 2016, ‘assessing the impact of supply chain integration on firm competitive capability’, international journal of operations research and information systems 7(1), 1–2. https://doi.org/10.4018/ijoris.2016010101 mayaka, r.l., 2015, ‘effect of supply chain management practices on performance of barclays bank of kenya limited’, master of business administration (procurement & supply chain management) research project, university of nairobi, nairobi, kenya. mbanje, s. & lunga, j., 2015, fundamental principles of supply chain management, van schaik, pretoria. nogues, g., 2014, the supply chain of the future, illinois institute of technology special project, illinois institute of technology publishers, chicago, il. parker, s., 2008, ‘the economics of formal business network’, journal of business venturing 23(6), 627–640. https://doi.org/10.1016/j.jbusvent.2008.01.003 prashantham, s. & dhanaraj, c., 2010, ‘the dynamic influence of social capital on the international growth of new ventures’, journal of management studies 47(6), 967–994. https://doi.org/10.1111/j.1467-6486.2009.00904.x republic of south africa, 1996, the national small business act no. 26 of south africa 1996, government printing works, pretoria. ricciardi, f., 2014, innovation processes in business networks, advances in information systems and business engineering, springer fachmedien, wiesbaden. sakka, o. & botta-genoulaz, v., 2009, ‘a model of factors influencing the supply chain performance’, viewed n.d., from https://hal.archives-ouvertes.fr/hal-00389134/document sandberg, e., 2007, ‘logistics collaboration in supply chains: practice vs theory’, international journal of logistics management 18(2), 274–293. https://doi.org/10.1108/09574090710816977 sawyerr, o.o., mcgee, j. & peterson, m., 2003, ‘perceived uncertainty and firm performance in smes: the role of personal networking activities’, international small business journal 21(3), 269–278. https://doi.org/10.1177/02662426030213002 schreiber, j.b., stage, f.k., king, j., nora, a. & barlow, e.a., 2006, ‘reporting structural equation modeling and confirmatory factor analysis results: a review’, the journal of educational research 99(6), 323–338. https://doi.org/10.3200/joer.99.6.323-338 sekaran, u. & bougie, r., 2009, research methods for business: a skill-building approach, 5th edn., john wiley, new york. srinivasan, m., mukherjee, d. & gaur, a.s., 2011, ‘buyer-supplier partnership quality and supply chain performance: moderating role of risks and environmental uncertainty’, european management journal 29, 260–271. https://doi.org/10.1016/j.emj.2011.02.004 statistics south africa (stats sa), 2019, ‘monthly archives: july 2019’, viewed 10 november 2019, from http://www.statssa.gov.za/?m=201907 sukati, i., hamid, a.b.a., baharun, r., tat, h.h. & said, f., 2011, ‘an investigation of the relationship between supply chain management practices and competitive advantage of the firm’, contemporary marketing review 1(4), 1–13. taghipour, m., bagheri, m., khodarezaei, m. & farid, f., 2015, ‘supply chain performance evaluation in the it industry’, international journal of research and reviews in applied sciences 23(2), 144–156. tooksoon, p. & mudor, h., 2012, ‘commitment to networking and export performance: evidence from thai sme’s in agro-based sector’, information management and business review 4(5), 268–274. van der vaat, t. & van donk, d.p., 2008, ‘a critical review of survey-based research in supply chain integration’, international journal of production economics 111(1), 42–55. https://doi.org/10.1016/j.ijpe.2006.10.011 vermeulen, y., niemann, w. & kotzé, t., 2016, ‘supply chain integration: a qualitative exploration of perspectives from plastic manufacturers in gauteng’, journal of transport and supply chain management 10(1), 451–459. https://doi.org/10.4102/jtscm.v10i1.223 watson, j., 2007, ‘modeling the relationship between networking and firm performance’, journal of business venturing 22(6), 852–874. https://doi.org/10.1016/j.jbusvent.2006.08.001 wheelen, k.m. & hungar, g., 2002, revolutionizing product development, free press, new york, ny. abstract introduction theoretical framework used in this study research methodology and design results discussion conclusions and implications acknowledgements references about the author(s) fredrika (miemie) w. struwig department of business management, nelson mandela metropolitan university, south africa riyaadh lillah department of business management, nelson mandela metropolitan university, south africa citation struwig, f.w. & lillah, r., 2017, ‘south african small and medium-sized enterprise owners’ intention to implement an environmental management system’, southern african journal of entrepreneurship and small business management 9(1), a104. https://doi.org/10.4102/sajesbm.v9i1.104 original research south african small and medium-sized enterprise owners’ intention to implement an environmental management system fredrika (miemie) w. struwig, riyaadh lillah received: 15 sept. 2016; accepted: 03 may 2017; published: 28 june 2017 copyright: © 2017. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: environmental problems present the most complex and important managerial challenges of the 21st century. most businesses have responded to these environmental problems by adopting an environmental management system. aim: this article investigates south african small and medium-sized enterprise (sme) owners’ intentions to implement an environmental management system based on the theory of planned behaviour. setting: although large businesses are clearly of interest with respect to their environmental management, especially given their prominence in many of the most environmentally impactful sectors, the relative neglect of the environmental management of smes is disconcerting, given their overall importance in most economies. in addition, very little research used the theory of planned behaviour to empirically test sme owners’ intentions, to implement an environmental management system. method: a quantitative survey was used to collect primary data from 326 sme owners by a structured questionnaire. results: regression analysis results confirmed the influence of sme owners’ attitudes towards an environmental management system and pro-environmental norms on their intention to implement an environmental management system. perceived behavioural control, however, did not significantly influence the sme owners’ intention to implement an environmental management system. conclusion: these findings provide valuable insights into the implementation of environmental management systems among south african smes. the theory of planned behaviour also seems to be an appropriate means to investigate the intentions of smes to implement an environmental management system. introduction background given growing global concerns about the depletion of natural resources and reductions in biodiversity, understanding why and how businesses engage in environmental management is of increasing interest and importance to both academics and practitioners (dunphy, griffiths & benn 2007; holliday, schmidheiny & watts 2002; laszlo 2003). most businesses have responded to the demand to address environmental issues by implementing environmental management systems (sanchez-medina, romero-quintero & sosa-cabrera 2014). darnall, jolley and handfield (2008) define an environmental management system as a collection of internal policies, assessments, plans and implementation actions. an environmental management system affects the business as a whole and its relationships with the natural environment. the responsibility of responding to environmental issues is not limited to government and large businesses. in most economies, small and medium-sized enterprises (smes) are the largest contributors to economic activity (brammer, hoejmose & marchant 2012; klewitz & hansen 2013). smes in south africa have been identified as an important catalyst for economic growth. there are approximately 2.8 million smes in the country, contributing about 60% of the total employment. it is also estimated that no less than 90% of new jobs will be created in smes by 2030 (groepe 2015:5). although a single sme might not represent a substantial threat to the natural environment, given the prominence of these businesses in the economy, smes could have a larger collective impact on the environment than large businesses (brammer et al. 2012). it is therefore just as important for smes to address environmental concerns. compared with large businesses, smes operate differently and face disparate challenges when implementing an environmental management system (bos-brouwers 2010; brammer et al. 2012). according to boiral, baron and gunnlaugson (2014), smes lack knowledge of their environmental impacts, and their cultural disposition of resistance to self-regulation and government intervention makes them less likely to implement an environmental management system. the lack of resources in smes might also play a deciding role in their choosing whether or not to implement an environmental management system. brammer et al. (2012) further suggest that their informal structure, and the fact that smes are owner-managed, places more emphasis on personal choice and commitment in respect of environmental management. in this article, the commitment to implement an environmental management system is associated with the underlying world views, abilities and psychological predispositions (to act in a particular way) of sme owners (boiral et al. 2014). these psychological predispositions towards environmental management system implementation are captured by the sme owner’s attitude towards an environmental management system, pro-environmental norms (pn) and perceived behavioural control (pbc) and are based on ajzen’s (1991) theory of planned behaviour. thus, the aim of this study is to investigate south african sme owners’ intentions to implement an environmental management system based on the theory of planned behaviour. literature overview of the theory of planned behaviour the theory of planned behaviour is one of the most influential theories for explaining and predicting behaviour. the theory of planned behaviour (ajzen 1991) is the successor to the theory of reasoned action, also known as the fishbein behavioural intention model (fishbein & ajzen 1975). ajzen (1991) extended the theory of reasoned action to include pbc and to compensate for their model’s limitation in accounting for behaviours where individuals lack control. according to ajzen (1991:181), the fundamental aspect of the theory of planned behaviour is behavioural intent that has been proven to be a good surrogate for behaviour. steg and vlek (2009) claim that the theory of planned behaviour is better at explaining behaviours that have high behavioural costs or strong behavioural constraints. another advantage of this model is its specificity (chao 2012; monroe 2003). in other words, the theory of planned behaviour is more suited to examining specific environmental behaviours rather than a broad range of such behaviours. however, a number of studies using the theory to explain a range of environmental behaviours have emerged (chao 2012). the theory of planned behaviour was not developed specifically to assess environmental behaviour (chao 2012). nevertheless, it has been extensively applied to explain various environmental behaviours (such as recycling, water-saving, green consumer behaviour and reducing meat consumption) (chao 2012; steg & vlek 2009). in the workplace setting, greaves, zibarras and stride (2013) used the theory of planned behaviour to explore three environment-related behaviours (switching off pcs, using videoconferencing for meetings, and recycling) of workers in the united kingdom, and found support for the theory. theoretical framework used in this study in this study, the focus is on the intentions of sme owners to implement an environmental management system. four components based on the theory of planned behaviour were used in this study. component 1: intention to implement an environmental management system the intention to implement an environmental management system (intent) was defined as the degree of willingness to try, or how much of an effort an individual is planning to exert, and to implement an environmental management system (ajzen 1991). thus, this variable will deal with the extent to which sme owners agree that they intend to implement an environmental management system in the future. behavioural intent is dependent on the sme owners’ attitude towards implementing an environmental management system (att), pn and pbc. (ajzen 1991; monroe 2003). it should also be noted that it is assumed that pbc could also influence actual behaviour. in addition, ajzen (1991) asserted that attitude, social norms and pbc are correlated, and that the relative importance of these factors will differ across behaviours and situations. component 2: attitudes towards implementing an environmental management system an individual’s attitude can be defined as the degree to which a person has a favourable or unfavourable evaluation or appraisal of the target behaviour and its associated consequences (ajzen 1991; cordano et al. 2010b; martín-peña, díaz-garrido & sánchez-lópez 2010). in this article, the attitude of an sme owner towards an environmental management system is the degree to which the owner has a favourable or unfavourable evaluation or appraisal of implementing an environmental management system. in essence, this attitude will be determined by the owner-manager’s evaluation of the benefits of implementing an environmental management system. psomas, fotopoulos and kafetzopoulos (2011) identified an improved market position, relationships with stakeholders and waste management as benefits of improved environmental performance. on the contrary, worthington and patton (2005) argued that businesses expect environmental actions to yield commercial benefits. similarly, nee and wahid (2010) found that implementing the international organization for standardisation’s (iso) iso 14001 environmental management system has a significant positive influence on smes’ performance. mckeiver and gadenne (2005) reported that improved working conditions were the most important benefit in their study, and that increased sales were the least important benefit. similarly, masurel (2007) stated that improved working conditions are the most important reason that smes invest in environmental measures. dahlmann, brammer and millington (2008b) found that economic considerations such as cost reduction, risk mitigation and compliance with environmental legislation motivate business to adopt environmental management practices, especially among smes. uhlaner et al. (2012) found that perceived financial benefits predict an sme’s level of engagement in selected environmental management practices. gadenne, kennedy and mckeiver (2009) found that legislation results in general environmental awareness, which in turn increases smes’ willingness to adopt environmental management practices. however, these authors warn that sme owners do not recognise the benefits arising from cost reductions. brammer et al. (2012) found that smes perceive cost advantages and increased market share as key benefits of environmental management. in south africa, kehbila, jurgen and brent (2009) identified improved customer relations; competitiveness; relationships with authorities; and employee acceptance as key benefits of implementing an environmental management system. empirical evidence of the influence of environmental attitudes on the adoption of environmental management practices in smes is provided by cordano, marhsall and silverman (2010a) and sanchez-medina et al. (2014). these authors found that sme owners’ attitudes towards environmental management practices positively influence the likelihood that their business would adopt such practices. it is proposed that the more positive the sme owner’s attitude towards an environmental management system, the more likely he and/or she is to intend to implement one. based on the theoretical outline, the following hypothesis will be tested in this study: h1: there is a positive relationship between sme owners’ attitudes towards an environmental management system and their intention to implement such a system. component 3: pro-environmental norms schwartz (1977) proposed what has been referred to as the ‘norm-activation model of altruism’, which deals with behaviours that go beyond self-interest and focus rather on helping others. norms can be described as ‘statements about how one ought to behave’ (dietz, fitzgerald & shwom 2005:354). norms can also be understood as the perceived expectations of important referent groups to perform certain behaviours, and the motivation to comply with these expectations (ajzen 1991; fielding, mcdonald & louis 2008; martín-peña et al. 2010). in relation to the environment, norms can be understood as the beliefs of an individual about how he and/or she is supposed to act towards the environment and the perceived social pressure to act in an environmentally friendly manner. pn thus include the rules and standards that are understood by members of a group, and that guide and/or constrain social behaviour without the force of laws (fritsche et al. 2010). in this study, pn thus consist of personal norms and social norms in relation to protecting the environment. it is assumed that the stronger the personal and social norms to protect the environment, the greater the likelihood that the sme owner will intend to implement an environmental management system. very little of the research dealing with the implementation of environmental management systems in smes addresses the relationship between owners’ pn and their environmental behaviours. dief and font (2010) found that managers’ personal values predict environmental operations, but not environmental planning and organising. lopez-gamero, claver-cortes and molina-azorin (2011) found that voluntary norms, rather than environmental legislation, influence sme owners’ perception of the environment as a competitive opportunity. sanchez-medina et al. (2014) reported that perceived social norms positively influence sme owners’ pbc to undertake environmental measures. thus, the following hypothesis will be tested in this study: h2: there is a positive relationship between sme owners’ pro-environmental norms and their intention to implement such a system. component 4: perceived behavioural control perceived behavioural control (self-efficacy) refers to an individual’s perception of how easy or difficult it is to perform a certain behaviour (ajzen 1991; martín-peña et al. 2010; sanchez-medina et al. 2014). according to ajzen (1991), pbc reflects past experiences and anticipated barriers and obstacles to performing a specific behaviour. in essence, pbc is an indication of a person’s perception of his or her control over the resources needed to perform the target behaviour (fielding et al. 2008; kim & chung 2011; martín-peña et al. 2010). psomas et al. (2011) identified factors that make it difficult for business to implement the iso 14001 environmental management system standard. these included periodic audits, lack of knowledge and experience in environmental management issues, required resources for and time of implementation, keeping and checking records, employee resistance to change, corrective and preventive actions, and training in environmental management issues. worthington and patton (2005) cited time, resources, priorities, perception of costs versus benefits and short-term focus as barriers to environmental management system implementation in smes. dahlmann, brammer and millington (2008a) found that both internal and external barriers, such as a lack of skilled human resources, financial resources, information, clear regulations and technology, are critical influencers of managers’ intention and ability to implement an environmental management system. in this article, pbc will refer to an sme owner’s perceptions of the ease or difficulty of implementing an environmental management system. these perceptions will deal with the ability of the business owner to overcome the barriers to implementing an environmental management system. the greater the pbc of the sme owner, the greater the possibility that he and/or she intends to implement an environmental management system. very few studies directly investigate the relationship between sme owners’ pbc over environmental management system implementation and their intention to implement such systems. schaper (2002) found that the availability of information and time are significantly linked to the green purchase behaviour of sme owners. similarly, lopez-gamero et al. (2011) reported that the availability of complementary resources has a positive influence on managers’ perceptions of sustainability as a competitive opportunity. sanchez-medina et al. (2014) found that pbc positively influences the sme owners’ intention to undertake environmental measures. thus, the following hypothesis will be tested in this study: h3: there is a positive relationship between sme owners’ perceived behavioural control and their intention to implement such a system. figure 1 shows the theoretical framework that will be used in this study, and includes the four components discussed above, as well as the proposed hypotheses. figure 1: theoretical framework used. the framework in figure 1 showed that att, pn and perceived behaviour control have relationships with the intent. this is based on azjen’s theory of planned behaviour. this theory provides empirical evidence to support its propositions. however, the lack of research that applies to sme owners’ intent necessitates the application of the theory in this context. research methodology and design a survey was adopted with the aim of collecting data from a large sample and empirically testing the hypotheses. the empirical research was limited to smes in the eastern cape area of south africa to ensure that meaningful and accurate data were collected. a questionnaire, together with a covering letter describing the purpose of the study and a definition of an environmental management system, was distributed to sme owners who had agreed to participate in the study. the questionnaire had two sections. the first section dealt with the background information of the respondents and their businesses, whereas the second section dealt with the variables measuring the four components included in the theoretical framework (figure 1). for the purposes of this study, smes that employ no more than 200 full-time employees in the eastern cape area, were the population from which the sample was drawn. the researcher made use of criterion sampling to select respondents. in this study, the research objectives, the statistical test to be conducted, the traditions of the particular field of study and the resource constraints (cost and time) were considered when choosing a sample size (collis & hussey 2014:198; daniel 2012:237; ruben & babbie 2012:173; struwig & stead 2013:124). given these considerations, the researcher decided to target a sample of 500 smes in the eastern cape. this number takes into consideration both the non-response rate and the response rate (struwig & stead 2013:125). measuring instruments the questionnaire used to collect the primary data consisted of 28 items to measure the independent and dependent variables in this study. these items were based on an extensive literature review, and consisted of items used in previous studies as well as several self-formulated items. where necessary the items were contextualised to make them suitable for the present study. all items were anchored on a 5-point likert scale ranging from ‘strongly disagree’ to ‘strongly agree’. in the measuring instrument, eight items were used to measure intent. these items were mostly based on the entrepreneurial intention scale of gongxeka (2012) and supplemented with items found in the environmental management literature (fielding et al. 2008; greaves et al. 2013; sanchez-medina et al. 2014; venkatesh & davis 2000). five items measured pbc. these items were based on the research of hillary (2004), mckeiver and gadenne (2005), masurel (2007), kehbila et al. (2009), gadenne et al. (2009), dief and font (2010), cordano et al. (2010a), cordano et al. (2010b), psomas et al. (2011), brammer et al. (2012) and uhlaner et.al. (2012). for the pn, six items were used, based on stern et al. (1999), hunecke et al. (2001), heath and gifford (2002), steg, dreijerink and abrahamse (2005), lee (2008), lee (2009), cordano et al. (2010a) and cordano et al. (2010b). for the attitude towards environmental management system implementation scale, nine items were used. these items were based on the literature about the outcomes, drivers and benefits of environmental management system implementation (hillary 2004; hofmann, theyel & wood 2012; kehbila et al. 2009; sanchez-medina et al. 2014). table 1 summarises the content of the measuring instrument. table 1: summary of the content of the measuring instrument. to ensure content and face validity of the questionnaire, expert judgement was sought and a pilot study was used. firstly, the questionnaire was given to four academics in the department of business management at the nelson mandela metropolitan university with experience in both environmental management and the use of the theory of planned behaviour. this process resulted in minor changes being made to the wording of some items. thereafter, the questionnaire was piloted by 10 smes. the completed questionnaires were then subjected to an item analysis to check the internal consistency of the measure. this process yielded satisfactory results to confirm the reliability of the instruments. data collection the questionnaire was distributed by fieldworkers from the nelson mandela metropolitan university. they initially approached smes to ascertain whether they were interested in participating in the study. consenting sme owners were then provided with a hard copy of the questionnaire, and arrangements were made for the collection of completed questionnaires. in total, 359 questionnaires were returned. once the questionnaires had been returned, they were checked for missing data. the examination revealed that 33 questionnaires had missing information for more than three of the items measuring the hypothetical constructs in this study. these questionnaires were deemed unusable and were excluded from the study, giving a total response sample of 326 sme owners. thus, the effective response rate for this study was 65%, which conforms to babbie and mouton’s (2001:261) guideline for a good response rate. given this high response rate, non-response bias was not regarded as a problem in this study. if questionnaires had three or fewer missing values for the hypothetical constructs, and the respondents concerned could not be contacted to obtain the outstanding information, the researcher made use of the mean-substitution approach to remedy the situation. this approach is best suited to situations where the levels of missing values are relatively low, as was the case in this study (hair et al. 2014:51). results sample description the majority of the respondents (72%) were males over the age of 40 (62%). more than two-thirds (68%) of the respondents had a post-matric qualification and had been running their businesses for more than 5 years (79%). of the smes that participated in the survey, 57% were family businesses and 43% were non-family businesses. almost half (49%) of the businesses were close corporations, 22% were sole traders and 15% were private companies. in terms of the number of employees, 46% employed between 5 and 9 individuals, 28% employed between 10 and 19 individuals and 16% employed between 20 and 49 individuals. the majority of the businesses were service providers (37%) and 29% were retailers or wholesalers. results of the validity and reliability analyses of the measuring instrument to assess the validity of the measuring scales, exploratory factor analysis (efa) was performed on all of the items in the measuring instrument. principal component analysis and varimax raw were specified as the extraction and rotation methods. the explained percentage variance and the factor loadings (greater than 0.4) were considered when assessing the validity of the measuring instrument. the type of reliability estimate implemented to assess the internal consistency of the measuring instrument in this study was cronbach’s alpha coefficients. cronbach’s alpha coefficients of greater than 0.7 deemed a scale to be reliable (nunnally 1978:45). to test the influence of the sme owners’ attitude towards an environmental management system, their pn, and the pbc on their intent, multiple regression analysis was used. the results of the efa and the reliability tests performed on the items in the measuring instrument showed that four factors with eigenvalues greater than 1 were extracted from the data using principle components and varimax raw rotation. these four factors explained 57.2% of the variance in the data. the first factor extracted, intent, explained 22.9% of the variance in the data. all eight items intended to measure this factor loaded together as expected, with factor loading ranging from 0.875 to 0.686. this factor returned a cronbach’s alpha coefficient of 0.939. the second factor extracted from the data, pbc explained 10.5% of the variance in the data. all five items intended to measure pbc loaded together, and factor loadings between 0.802 and 0.528 could be observed for this factor. in addition, pbc returned a cronbach’s alpha coefficient of 0.793. the third factor extracted, pn, also explained 10.5% of the variance in the data. all six items used to measure this factor loaded as expected, and factor loadings of between 0.747 and 0.477 were returned. a cronbach’s alpha coefficient of 0.787 was calculated for pn. the last factor extracted, att, explained 13.3% of the variance in the data. all nine items intended to measure this factor loaded together. the factor loadings for att ranged between 0.704 and 0.405. this factor returned a cronbach’s alpha coefficient of 0.860. given these results, the validity and reliability of the dependent and independent variables were confirmed. in addition, as all items loaded as expected, the operational definitions of the variables remained the same. descriptive statistics and correlation analysis descriptive statistics were calculated to summarise and organise the sample data. table 2 contains the means, standard deviations and frequencies for the variables under investigation in this study. table 2: descriptive statistics of the results. as can be seen from table 2, the dependent variable, intent, returned the second highest mean score of all the variables ( = 3.66). more than half of the respondents (52.76%) agreed that they intended to implement an environmental management system, whereas only 6.13% indicated that they had no intention of implementing such a system. pn returned the highest mean score of all the variables ( = 3.89), followed by att ( = 3.31) and pbc ( = 3.20). the vast majority of the respondents agreed that they possess pn, and only 0.61% indicated that they did not. in addition, 35.28% of the respondents had a positive att, while the majority, 57.98%, were unsure when evaluating the outcomes of implementing such a system. lastly, 24.85% of the respondents agreed with the statements measuring pbc, and 62.88% were unsure whether or not their businesses were able to implement an environmental management system. table 3 contains the pearson product moment correlation coefficients calculated for the dependent and independent variables in this study. table 3: pearson product moment correlations (n = 326). as can be seen from the correlation matrix in table 3, all the variables were significantly and positively correlated with each other. the dependent variable, intent, shows significant positive relationships with the independent variables. pbc (r = 0.445) and pn (r = 0.489) had a moderate correlation with intention to implement and environmental management system. however, attitude towards an environmental management system (r = 0.634) had a strong correlation with intent. pbc had a moderate relationship with pn (r = 0.412) and a large relationship with attitude towards an environmental management system (r = 0.562). finally, pn showed a moderate relationship with attitude towards an environmental management system (r = 0.462). regression analysis to test the hypotheses to test the hypotheses in this study, regression analysis was undertaken. the results of this analysis are presented in table 4. a common problem in regression analysis is multi-collinearity. multi-collinearity exists when the independent variables in the regression analysis are correlated and could thus influence the ability of these variables to accurately explain the variance in the dependent variable (hair et al. 2014:161) thus variance inflation factors (vifs) were calculated to assess whether multi-collinearity could affect the results of the regression analysis. table 4: influence of independent variables on intention to implement an environmental management system (n = 326). table 4 shows that all the independent variables returned vifs below 4 (equivalent to a tolerance of 0.25), which mean that multi-collinearity does not pose a problem in this study (o’brien 2007:674). furthermore, the overall regression model was significant (f = 89.502; p < 0.000) and the independent variables explained 45.47% of the variance in intent (r2 = 0.4547). two of the independent variables had a significant positive influence on intent. attitude towards an environmental management system (b* = 0.481769; p = 0.000000) had the greatest influence on intent, followed by pn (b* = 0.234338; p = 0.000001). pbc did not have a significant influence on intent (b* = 0.078014; p = 0.125989). given that the p-values for the influence of the sme owners’ attitude towards an environmental management system and pn on the intent is less than 0.05 hypotheses h1 and h2 are accepted. however, because the p-value for the influence of pbc is greater than 0.05 h3 is rejected. discussion the findings of this study revealed that the majority of the respondents agreed that they intended to implement an environmental management system, and exhibited pn. however, most of the respondents returned a neutral response to the items measuring their attitude towards an environmental management system and pbc. in addition, the results of the correlation analysis revealed that all the variables under investigation were significantly and positively related to one another. this finding confirms ajzen’s (1991) assertion that all variables in the theory of planned behaviour are correlated. the results of the regression analysis showed that the sme owners’ attitude towards an environmental management system and pn have significant positive influence on their intent. in other words, the more positive the owners’ attitude towards an environmental management system, and the more pn they exhibit, the greater their intent. these findings are supported by the studies of cordano et al. (2010a) and sanchez-medina et al. (2014) who both found significant positive relationship between attitude towards environmental management and the adoption of such practices. in addition, the studies of dief and font (2010), lopez-gamero et al. (2011) and sanchez-medina et al. (2014) provide support for the significant positive influence of pn on the intent. however, the results also show that pbc does not influence sme owners’ intent. this finding is in contrast with the results of sanchez-medina et al. (2014) who found pbc to positively influence intent. thus, when using the theory of planned behaviour to understand why sme owners intend to implement environmental management systems, there are only two components that have proved useful in this study, sme owners’ attitude towards an environmental management system and pn. conclusions and implications increased concern about the natural environment has put pressure on all businesses to reduce their environmental impact. this has prompted many businesses to implement an environmental management system. given the prominence of smes in most economies, and their potential environmental impact, it is important to examine the factors that lead these businesses to implement an environmental management system. however, research focused on understanding why smes adopt such systems is lacking. an important starting point for smes to adopt an environmental management system is the psychological predispositions of their owners. thus, this study adapted the theory of planned behaviour to explain sme owners’ intent. given the fact that attitude towards an environmental management system significantly influences the intention to adopt such a system, it is recommended that individuals or organisations that advocate the use of environmental management systems highlight the positive outcomes that such systems could have on smes. in addition, the positive influence of pn should be harnessed to encourage the implementation of environmental management systems. in other words, the implementation of environmental management systems should be seen as a personal and moral obligation, and thus as vital to the legitimacy of smes. the findings of this study also show that pbc does not have a significant influence on the intent and is thus not part of the proposed framework. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions both authors contributed equally in compiling the final manuscript. references ajzen, i., 1991, ‘the theory of planned behavior’, organizational behavior and human decision process 50, 179–211. https://doi.org/10.1016/0749-5978(91)90020-t babbie, e. & mouton, j., 2001, the practice of social research, oxford university press, cape town. boiral, o., baron, c. & gunnlaugson, o., 2014, ‘environmental leadership and consciousness development: a case study among canadian smes’, journal of business ethics 123(3), 363–383. https://doi.org/10.1007/s10551-013-1845-5 bos-brouwers, h.e.j., 2010, ‘corporate sustainability and innovation in smes: evidence of themes and activities in practice’, business strategy and the environment 19, 417–435. brammer, s., hoejmose, s. & marchant, k., 2012, ‘environmental management in smes in the uk: practices, pressures and perceived benefits’, business strategy and the environment 21, 423–434. https://doi.org/10.1002/bse.717 chao, y., 2012, ‘predicting people’s environmental behaviour: theory of planned behaviour and model of responsible environmental behaviour’, environmental education research 18(4), 437–461. https://doi.org/10.1080/13504622.2011.634970 collis, j. & hussey, r., 2014, business research: a practical guide for undergraduate and postgraduate students, 4th edn., palgrave macmillan, hampshire. cordano, m., marshall, r.s. & silverman, m., 2010a, ‘how do small and medium enterprises go “green”? a study of environmental management programs in the u.s. wine industry’, journal of business ethics 92(3), 463–478. https://doi.org/10.1007/s10551-009-0168-z cordano, m., welcomer, s., scherer, r., pradenas, l. & parada, v., 2010b, ‘understanding cultural differences in the antecedents of pro-environmental behavior: a comparative analysis of business students in the united states and chile’, the journal of environmental education 41(4), 224–238. https://doi.org/10.1080/00958960903439997 dahlmann, f., brammer, s. & millington, a., 2008a, ‘barriers to proactive environmental management in the united kingdom: implications for business and public policy’, journal of general management 33(3), 1–21. https://doi.org/10.1177/030630700803300301 dahlmann, f., brammer, s. & millington, a., 2008b, ‘environmental management in the united kingdom: new survey evidence’, management decision 46(2), 264–283. https://doi.org/10.1108/00251740810854159 daniel, j., 2012, sampling essentials: practical guidelines for making sampling choices, sage, thousand oaks, ca. darnall, n., jolley, g.j. & handfield, r., 2008, ‘environmental management systems and green supply chain management: complements for sustainability?’, business strategy and the environment 18, 30–45. https://doi.org/10.1002/bse.557 dief, m.e. & font, x., 2010, ‘determinants of environmental management in the red sea hotels: personal and organizational values and contextual variables’, journal of hospitality and tourism research 36(1), 115–137. https://doi.org/10.1177/1096348010388657 dietz, t., fitzgerald, a. & shwom, r., 2005, ‘environmental values’, annual review of environment and resources 30(1), 335–372. https://doi.org/10.1146/annurev.energy.30.050504.144444 dunphy, d., griffiths, a. & benn, s., 2007, organizational change for corporate sustainability: a guide for leaders and change agents of the future, routledge, london. fielding, k.s., mcdonald, r. & louis, w.r., 2008, ‘theory of planned behaviour, identity and intentions to engage in environmental activism’, journal of environmental psychology 28(4), 318–326. https://doi.org/10.1016/j.jenvp.2008.03.003 fishbein, m., & ajzen, i., 1975, belief attitude, intention and behaviour, addison-wesley, reading, ma. fritsche, i., jonas, e., kayser, d.n. & koranyi, n., 2010, ‘existential threat and compliance with pro-environmental norms’, journal of environmental psychology 30(1), 67–79. https://doi.org/10.1016/j.jenvp.2009.08.007 gadenne, d.l., kennedy, j. & mckeiver, c., 2009, ‘an empirical study of environmental awareness and practices in smes’, journal of business ethics 84(1), 45–63. https://doi.org/10.1007/s10551-008-9672-9 gongxeka, v., 2012, ‘employee perceptions of self-employment’, unpublished masters dissertation, nelson mandela metropolitan university, port elizabeth. greaves, m., zibarras, l.d. & stride, c., 2013, ‘using the theory of planned behavior to explore environmental behavioral intentions in the workplace’, journal of environmental psychology 34, 109–120. https://doi.org/10.1016/j.jenvp.2013.02.003 groepe, f., 2015, the role of small business in the economy, viewed 29 july 2016, from https://www.resbank.co.za/lists/speeches/attachments/452/role%20of%20small%20business%202015%20.pdf hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2014, multivariate data analysis, 7th edn., pearson, harlow. heath, y. & gifford, r., 2002, ‘extending the theory of planned behavior: predicting the use of public transportation’, journal of applied social psychology 32(10), 2154–2189. https://doi.org/10.1111/j.1559-1816.2002.tb02068.x hillary, r., 2004, ‘environmental management systems and the smaller enterprise’, journal of cleaner production 12(6), 561–569. https://doi.org/10.1016/j.jclepro.2003.08.006 hofmann, k.h., theyel, g. & wood, c.h., 2012, ‘identifying firm capabilities as drivers of environmental management and sustainability practices – evidence from sme manufacturers’, business strategy and the environment 21, 530–545. https://doi.org/10.1002/bse.739 holliday, c.o., schmidheiny, s. & watts, p., 2002, walking the talk: the business case for sustainable development, greenleaf, sheffield. hunecke, m., blobaum, a., matthies, e. & hoger, r., 2001, ‘responsibility and environment: ecological norm orientation and external factors in the domain of travel mode choice behavior’, environment and behavior 33(6), 830–852. https://doi.org/10.1177/00139160121973269 kehbila, a.g., jurgen, e. & brent, a.c., 2009, ‘strategic corporate environmental management within the south african automotive industry: motivations, benefits, hurdles’, corporate social responsibility and environmental management 16, 310–323. https://doi.org/10.1002/csr.188 kim, h.y. & chung, j.e., 2011, ‘consumer purchase intention for organic personal care products’, journal of consumer marketing 28(1), 40–47. https://doi.org/10.1108/07363761111101930 klewitz, j. & hansen, e.g., 2013, ‘sustainability-oriented innovation of smes: systematic review’, journal of cleaner production 65, 57–75. https://doi.org/10.1016/j.jclepro.2013.07.017 laszlo, c., 2003, the sustainable company: how to create lasting value through social and environmental performance, island press, washington, dc. lee, k., 2008, ‘opportunities for green marketing: young consumers’, marketing intelligence & planning 26(6), 573–586. https://doi.org/10.1108/02634500810902839 lee, k., 2009, ‘gender differences in hong kong adolescent consumers’ green purchasing behavior’, journal of consumer marketing 26(2), 87–96. https://doi.org/10.1108/07363760910940456 lopez-gamero, m.d., claver-cortes, e. & molina-azorin, j.f., 2011, ‘environmental perception, management, and competitive opportunity in spanish hotels’, cornell hospitality quarterly 52(4), 480–500. https://doi.org/10.1177/1938965511420694 martín-peña, m.l., díaz-garrido, e. & sánchez-lópez, j.m., 2010, ‘relation between management’s behavioural intentions toward the environment and environmental actions’, journal of environmental planning and management 53(3), 297–315. https://doi.org/10.1080/09640561003612866 masurel, e., 2007, ‘why smes invest in environmental measures: sustainability evidence from sme printing firms’, business strategy and the environment 16(3), 190–201. https://doi.org/10.1002/bse.478 mckeiver, c. & gadenne, d., 2005, ‘environmental management systems in small and medium businesses’, international small business journal 23(5), 513–537. https://doi.org/10.1177/0266242605055910 monroe, m.c., 2003, ‘two avenues for encouraging conservation behaviors’, research in human ecology 10(2), 113–125. nee, g.y. & wahid, n.a., 2010, ‘the effect of iso 14001 environmental management system implementation on smes performance: an empirical study in malaysia’, journal of sustainable development 3(2), 215–220. nunnally, j.c., 1978, psychometric theory, 2nd edn., mcgraw-hill, new york. o’brien, r.m., 2007, ‘a caution regarding rules of thumb for variance inflation factors’, quality and quantity 41, 673–690. psomas, e.l., fotopoulos, c.v. & kafetzopoulos, d.p., 2011, ‘motives, difficulties and benefits in implementing the iso 14001 environmental management system’, management of environmental quality: an international journal 22(4), 502–521. https://doi.org/10.1108/14777831111136090 ruben, a. & babbie, e., 2012, essential research methods for social work, cengage, belmont, ca. sanchez-medina, a.j., romero-quintero, l. & sosa-cabrera, s., 2014, ‘environmental management in sme companies: an analysis from the perspective of the theory of planned behavior’, plos one 9(2), 1–12. https://doi.org/10.1371/journal.pone.0088504 schaper, m., 2002, ‘small firms and environmental management: predictors of green purchasing in western australian pharmacies’, international small business journal 20(3), 235–251. https://doi.org/10.1177/0266242602203001 schwartz, s.h., 1977, ‘normative influences on altruism’, advances in experimental social psychology 10, 221–79. https://doi.org/10.1016/s0065-2601(08)60358-5 steg, l., dreijerink, l. & abrahamse, w., 2005, ‘factors influencing the acceptability of energy policies: a test of vbn theory’, journal of environmental psychology 25(4), 415–425. https://doi.org/10.1016/j.jenvp.2005.08.003 steg, l. & vlek, c., 2009, ‘encouraging pro-environmental behaviour: an integrative review and research agenda’, journal of environmental psychology 29(3), 309–317. https://doi.org/10.1016/j.jenvp.2008.10.004 stern, p.c., dietz, t., abel, t., guagnano, g.a. & kalof, l., 1999, ‘a value-belief-norm theory of support for social movements: the case of environmentalism’, human ecology review 6(2), 81–97. struwig, f.w. & stead, g.b., 2013, research: planning, designing and reporting, pearson, cape town. uhlaner, l.m., berent-braun, m.m., jeurissen, r.j.m. & de wit, g., 2012, ‘beyond size: predicting engagement in environmental management practices of dutch smes’, journal of business ethics 109, 411–429. https://doi.org/10.1007/s10551-011-1137-x venkatesh, v. & davis, f.d., 2000, ‘a theoretical extension of the technology acceptance model: four longitudinal field studies’, management sciences 46(2), 186–204. https://doi.org/10.1287/mnsc.46.2.186.11926 worthington, i. & patton, d., 2005, ‘strategic intent in the management of the green environment within smes’, long range planning 38(2), 197–212. https://doi.org/10.1016/j.lrp.2005.01.001 microsoft word 04 strydom & adams march 2009.doc sajesbm ns volume 2 (2009) issue 1 50 _____________________________________________________________________________________________ evaluating the learning experience of undergraduate entrepreneurship students exposed to an unconventional teaching approach: a south african case study retha strydom and menisha adams department of business management, university of pretoria, south africa retha.strydom@up.ac.za abstract at the university of pretoria in south africa, the teaching personnel decided to implement, in addition to the conventional teaching approach, an unconventional approach towards teaching entrepreneurship. the approach is unconventional in the sense that it differs from the norm or standard classroom teaching. the third-year entrepreneurship course is enriched with an assignment to start and grow an actual business. the purpose of this assignment is not only the practical application of the theory taught, but also to provide an opportunity for the student to start a business in a protected environment in order to break down any psychological barriers such as fear of failure. the lecturer guides the students through the entrepreneurial process, from finding an idea to organising the business. this paper evaluates the learning experience of the students exposed to the unconventional teaching approach. preliminary observations suggest that the students acquired business skills and knowledge about the entrepreneurial process and created potentially sustainable, profitable business ventures in the class situation, despite coming from different fields of reference and different syllabi. this would seem to suggest that the practical teaching approach towards entrepreneurial learning created the conditions for these achievements. key words and phrases: entrepreneurial education, entrepreneurial learning, innovative learning methods, student business ventures, start-ups introduction as a developing country, south africa is in dire need of entrepreneurs in small, micro and medium enterprises (smmes) in order to stimulate the country’s economy, while at the same time focusing on reducing unemployment and tackling the unacceptably high crime rate. south africa’s total early-stage entrepreneurial activity (tea) rate for 2006 was 5.00%, according to the global entrepreneurship monitor (gem) report of 2007 (maas & herrington, 2007:13). the tea index measures the percentage of individuals between the ages of 18 and 64 that are involved in starting a new business. south africa should be aiming for a rate of 7.79%, which is the average tea rate for similar countries (maas & herrington, 2006:15). the tea rate for 2007 is not available because the focus of the gem south africa 2007 was to revisit data from previous years to determine different ways of promoting entrepreneurship. it also focused on the youth and their role in entrepreneurship development (maas & herrington, 2007:8). it is universally accepted that a well-functioning small business sector contributes to the economic and social growth of a country (van der merwe, 2003:28). it is up to tertiary institutions to take responsibility for promoting entrepreneurship in education and training programmes. sajesbm ns volume 2 (2009) issue 1 51 _____________________________________________________________________________________________ the chair of entrepreneurship at the university of pretoria offers three degrees (pretorius, 2008:8): 1. the b comm. in entrepreneurship – which aims to equip the learner with the skills to start and manage a business independently 2. the m phil in entrepreneurship – which aims to influence the south african enabling environment through assisting learners, mostly from the enabling environment, to understand relevant entrepreneurial issues 3. the phd in entrepreneurship – which focuses on growing the body of research in the field of entrepreneurial knowledge with special reference to south african and african contexts 4. the chair in entrepreneurship also offers the subject entrepreneurship on a third-year level as a service subject or own choice subject for other degrees. the focus of this study will be on an informal evaluation of the value of an unconventional teaching approach which was implemented six years ago on third-year level in both the b comm. degree in entrepreneurship and the own-choice subject, entrepreneurship. it has supplemented the conventional approach since that time. the third-year entrepreneurship courses have been enriched with this group assignment to start and grow an actual business since 2002. the purpose of this assignment is not only the practical application of theory, but also mainly to provide an opportunity for the student to start (often for the first time) a business in a protected environment in order to break down psychological barriers against it. the lecturer acts as a facilitator to the students through the entrepreneurial process – finding an idea, gathering resources, organising the business and growth. the focus is on innovation, entrepreneurial fit, growth and sustainability. hills (1988:1), as cited in pretorius and wlodarczyk (2007:510), establishes the fact that the most important educational objective of entrepreneurship programmes is to increase the learners’ awareness of the processes involved in initiating and managing a new business enterprise. another important objective is attention to entrepreneurship as a career option. the most important outcome of this unconventional teaching approach is that the students develop in class a business that could become an alternative to a formal job opportunity once they leave university and that they will be equipped with skills to manage and grow the business successfully. the next section explains the problem statement, followed by the research objectives of the study. this is followed by an account of the search of literature relevant to entrepreneurship education, entrepreneurial learning and the different entrepreneurship education teaching and learning approaches. the research methodology is described, followed by the findings. the study concludes with recommendations and implications for programme developments. problem statement it is both a challenge and an opportunity for entrepreneurial educators, as mcadam and leitch (2005:1) point out, to find and adopt innovative ways of encouraging student learning which teach the requirements of the enterprise culture. corman, walls and cook (2005:48) emphasise the fact that the modern technological world has conditioned today’s generation to be visually orientated and that it becomes more difficult every year to persuade students to learn by using traditional textbooks and lectures. kuratko (2004:6) argues that teaching entrepreneurship more sajesbm ns volume 2 (2009) issue 1 52 _____________________________________________________________________________________________ effectively continues to present a challenge for the educator. for entrepreneurship education to embrace the challenges and opportunities of the 21st century business environment, educators must expand their pedagogies to include new and innovative approaches to the teaching of entrepreneurship, as well as seeking to understand how entrepreneurs learn. the primary focus of this research study is to determine whether a practical teaching approach towards entrepreneurial learning will lead to the creation and growth of new business ventures. research objectives the objectives of the research study are twofold: the first is to focus on entrepreneurship education at the higher education level by examining entrepreneurial learning and the different types of teaching and learning approaches that are currently being utilised at different institutions; and the second to provide a content analysis of the unconventional teaching approach towards entrepreneurship at university level. entrepreneurial learning will be examined by highlighting the different types of learning and understanding by different researchers as well as the benefits for the potential entrepreneur (learner). the students’ feedback regarding the learning experience will be reported. literature review background to the study solomon (2007:169) notes that there is very little consensus on exactly what entrepreneurship students should be taught. yet they have to be prepared to cope with the myriad of expectations and demands they will face as they start and grow their own new ventures. for entrepreneurship educators, the challenge is to provide the subject matter, resources and experiences that will satisfy this need. co and mitchell’s study (2005:10), which assessed the state of the development of entrepreneurship education in south african higher education institutions, found that the courses offered, teaching methodologies and assessment methods still adhere to the more teacher-centred way of teaching. some institutions, however, are trying to develop new courses and use nontraditional modes of delivery that require more interaction and participation from students. this implies a shift in emphasis from the teacher to the learner. according to gillingham (2005:5), to be effective, entrepreneurship education needs to involve the individual and it must also be memorable, relevant and usable as a foundation when such an individual decides to start his or her own business in future. furthermore, the educational process needs to ensure a deep understanding of entrepreneurship, which can be accomplished if the educationalist uses a combination of techniques such as case studies, simulations and student start-ups to design a programme that enables the individual to be open to opportunities, be able to assess risks, be willing to learn from errors, and be motivated to start again. in addition to this, haym (2006:2) emphatically states that teaching should more than just about understanding the subject matter, and that students must be taught to approach learning in a manner that will make them successful when they graduate at the end of their tertiary education. this means that sajesbm ns volume 2 (2009) issue 1 53 _____________________________________________________________________________________________ students need to understand their own strengths and weaknesses and develop strategies to overcome weaknesses. their critical-thinking and problem-solving skills must also be cultivated. so, while the choice of the entrepreneurship educator’s teaching and learning approach is important, it is of equal importance to know which approach learners adopt to learning. students tend to approach learning in one of two ways, and this leads to differences in the quality of the learning outcomes. a distinction is metaphorically drawn between a deep approach and a surface approach. learners may either adopt a deep approach to learning, with the objective of understanding, or the surface approach to learning, which is more fact-bound (gravett & geyser, 2004:24). according to gibb (1992:9), there is considerable evidence that assessment systems determine the students’ orientation to learning. the learner ultimately makes the learning approach decision based on the methods of assessment used by the educator. therefore, the aim of entrepreneurship education programmes should be to stimulate a deep approach to learning, in order to contribute towards an increasing pool of potential entrepreneurs, as well as producing more competent entrepreneurs who possess, according to rasmussen and sorheim (2006:192), the ability to develop new ventures with a high growth potential. entrepreneurial learning learning can be described as an increase in knowledge, as memorising information, or as acquiring facts or procedures which can be applied in future, such as mathematics. it can also be about making sense of certain things by attempting to abstract meaning in the process of learning, or as understanding reality (gibb, 1992:5). however, effective learning is not a question of transferring information from a source to a receiver, but about individual processes involving experience, information, knowledge building and understanding. students’ learning processes can be presented as a spiral in which these four areas are in a dynamic interplay (bortne, westgaard & ofstad, 2005:6), which can be explained as follows: students experience reality by participating in different communities in practice. information is what students get access to during a course, for example other persons’ opinions, interpretations and experience. knowledge building happens when several persons together start working to expand or change their former understanding. knowledge is built through collaborative learning processes in which teachers and other persons are involved in a dialogue with each other and with the student. understanding is an integration of knowledge in each person’s repertoire that he or she can use in new situations. the aim of entrepreneurship teaching and learning approaches should be to incorporate these four areas and thus to enhance effective learning. how do entrepreneurs learn? entrepreneurial learning, as reported by man (2005:4), can be seen as a phenomenon resulting from an interaction between internal factors of the entrepreneur, the external environment, and the experience which the entrepreneur receives. firstly, the internal sajesbm ns volume 2 (2009) issue 1 54 _____________________________________________________________________________________________ factors of the entrepreneur refer to the different cognitive, attitudinal, emotional and personality factors affecting learning, such as self-efficacy, confidence, motivation to achieve and determination. secondly, the external environment refers to the appropriate external conditions which allow for valuable interactions and networking with others. lastly, experience is the major source of learning for the entrepreneur. entrepreneurial learning is depicted in figure 1. figure 1: entrepreneurial learning source: adapted from man (2005:4) man (2005:2) and sullivan (2000:160) maintain that entrepreneurial learning is important because it is closely linked to the creation, survival and growth of small to medium-sized enterprises (smes). the next section will highlight the different entrepreneurship education and teaching approaches such as the traditional approach, the active learning or active approach, the competency approach, the constructivist learning approach, the experiential learning approach, the entrepreneurialdirected approach and innovative learning methods. various entrepreneurship education teaching and learning approaches the terms “teaching approach” and “learning approach” are occasionally used interchangeably. teachers use different teaching methods, which may include group exercises, role plays and case studies and determine the type of learning that will take place, such as active learning or internal factors of the entrepreneur external environment experience of entrepreneur sajesbm ns volume 2 (2009) issue 1 55 _____________________________________________________________________________________________ experiential learning. therefore, the teaching method can also be referred to as a learning approach. the teacher may be either a lecturer who transfers knowledge or a facilitator who guides learners. on the other hand, each learner has his or her own learning style or learning approach. as previously mentioned, learners may either adopt a deep approach to learning with the objective of understanding, or the surface approach to learning, which is more fact-bound (gravett & geyser, 2004:24). the traditional approach the most popular methods of teaching entrepreneurship, as identified by petrakis and bourletidis (2005:7), are considered to be the drawing up of business plans, case studies and lectures. in traditional classes, when the element of classical teaching is predominant, the aims of the lesson are typically focused around the ability to learn by heart and not going into too much depth about entrepreneurship issues. information is mostly transferred, at the expense of knowledge building and understanding, which are essential for developing entrepreneurs. the active learning approach or the active approach mcadam and leitch (2005:10) emphasise that the active learning approach incorporates the use of case studies, role plays, group exercises and business simulations, which are deemed the most appropriate. the students are actively involved in their own learning because they are provided with opportunities to talk, listen, read, write and reflect. they are required to apply what they are learning. the competency approach by applying the competency approach to study entrepreneurial learning, man (2005:5) suggests that learning can be considered as a domain of entrepreneurial competencies leading to the acquisition of other competencies. it is a process in which an entrepreneur acts on his or her experience accumulated in previous situations and turns it into desirable outcomes. competent entrepreneurs will learn in depth about their own trade so that they can master what aspects are important and continue to improve upon them. entrepreneurial learning, according to this approach, is driven by practical requirements and the need to respond to changing demands in the external environment. the constructivist learning approach in this approach, students support real entrepreneurs in the start-up phase. the interplay between doing (gathering experiences) and reflecting/thinking assures the most effective learning process, according to constructivist pedagogy (lobler, maier & markgraf, 2005:4). students’ independent thinking and doing abilities (such as decision-making) are developed in cooperation with others, and this fosters their entrepreneurial spirit without their having to start their own business at this point. the experiential learning approach experiential learning involves immersing learners in an environment in which they actively participate in acquiring knowledge (cannon & feinstein, 2005:349). the authors anchor this sajesbm ns volume 2 (2009) issue 1 56 _____________________________________________________________________________________________ approach in the classic framework of bloom’s taxonomy of educational objectives, which arranges the cognitive objectives from the lowest to the highest level of learning. at a lower level of learning, the focus is on knowledge and students’ ability to remember ideas such as facts, concepts and theories. at a higher level of learning, students must be able to analyse and show their ability to break down ideas into parts: for example what is going on in a game or in a group exercise. they must be able to synthesise and develop new ideas from unrelated parts and, finally, have the ability to evaluate and judge the merit of ideas for given purposes. in this approach, students are learning from experience and this is more than simply repeating what has been successfully done in the past by others and avoiding what has failed. instead, an active interpretation of experience by the learner is essential (man, 2005:3). the entrepreneurial-directed approach the ideal entrepreneurial-directed approach as proposed by nieuwenhuizen & groenewald (2004:5) is one that requires the instructor to become a learning facilitator. such an approach entails an extensive use of learning exercises such as role playing, management simulations, and structured exercises of focused learning feedback situations in which the participant must take an active role. innovative learning methods gillingham (2005:4) identifies various innovations in learning methods; it is perhaps in learning methods that most innovation has taken place, such as the use of case studies, use of live case studies, simulations, venture group sessions and adventure training, as well as the extensive use of business plans and projects; use of student business start-ups and business plan competitions. other innovations include: field trips and videos; self-directed learning; action learning, computer-assisted learning; and the use of artificial intelligence. table 1 summarises the different entrepreneurship teaching and learning approaches. table 1: a brief synopsis of the different entrepreneurship teaching and learning approaches type of teaching and learning approach description of entrepreneurship teaching and learning approach traditional approach use of business plans, case studies, lectures active learning approach or the active approach use of case studies, role plays, group exercises, business simulations competency approach focus on experience/competency accumulated in previous situations constructivist learning approach interplay between doing and reflecting/thinking experiential learning active interpretation of experience by learner to acquire knowledge entrepreneurial-directed approach use of role playing, management simulations, structured exercises of focused learning feedback situations innovative learning methods use of learning methods such as case studies, live case studies, simulations, venture group sessions, student business start-ups, business plan competitions and adventure training sajesbm ns volume 2 (2009) issue 1 57 _____________________________________________________________________________________________ in summary, the above approaches repeatedly illustrate that the potential entrepreneur must be as actively involved in his or her own learning as possible. this is the common element in all the above entrepreneurship education learning approaches, with the exception of the traditional approach. there is a shift from the teacher to the learner. if one is allowed, however, to ask the question: “how many entrepreneurship educators actually do follow the learner-centred approach?” the answer can be found in co and mitchell (2005:10), who concluded in their study that the higher education institutions in south africa are still predominantly teacher centred. research methodology research design this is a formal study, in which firstly a theoretical study was undertaken with the aim of identifying and distinguishing between the different entrepreneurship education and learning approaches. secondly, a survey was done on the results of an innovative practical approach to educating in entrepreneurship at undergraduate level. reports of established student business ventures over six years (2002–2007) were analysed. teaching methodology third-year entrepreneurship students were exposed to a reality-based active learning experience in conjunction with the conventional teaching approach. the students involved in this approach were b comm. entrepreneurship students and students from other faculties who took entrepreneurship as an elective subject. the b comm. entrepreneurship students majored in the subject entrepreneurship. in the first four semesters, modules in business management, entrepreneurship, creativity and innovation and developing the business plan were completed. the focus in the third year modules of this subject is on the business functions in a small business and on the different strategies of managing and growing a business. the students from other faculties took the subject entrepreneurship as an elective in the degree that they were enrolled for, such as consumer science, education, marketing, information technology and social work. the entry requirement for entrepreneurship was the completion of a semester module in business management on first-year level. the focus in the elective entrepreneurship course is on idea generation, gathering of resources and the starting and running of a small entrepreneurial business. the students were taught in two different groups. for the purposes of this paper the b comm. entrepreneurship students will be referred to as class one, and the elective entrepreneurship students will be referred to as class two. the classes had different textbooks because of the different syllabi, but the same lecturer as facilitator and the same assignment, as specified as: form groups of five to six members and start a business, with start-up money of zar50–zar100 each. the focus must be on innovation, entrepreneurial fit, growth and sustainability. the groups must make a profit of at least zar1000 per group member in the allocated time (about 10 weeks). the outcome of this assignment is sajesbm ns volume 2 (2009) issue 1 58 _____________________________________________________________________________________________ to acquire practical knowledge and skills on starting and running a business and have a real, sustainable business at the end of the year. the same approach was followed in both classes. half of the allocated lecturing time was spent on lecturing the prescribed theory, while the other half was spent on the practical aspect of the course. theoretical lectures the aim of the theoretical lectures was to provide the students with a strong theoretical background to entrepreneurship and business functions, as prescribed in the syllabi. the lectures were primarily delivered via the use of powerpoint slides and supplemented with videos, short case-study exercises, guest speakers and field trips. the individual assignment entailed interviewing entrepreneurs who had been established in their businesses for at least three years. the students had to interview the entrepreneurs and write case studies taking the following into account: motivating factors to start an own business characteristics of the entrepreneur role models that influenced the person to start an own business establishment of the business, products or services the time it took to break even, as well as the various phases in the growth cycle the case studies were presented in class. the purpose of this specific assignment was to expose the students to the world of the entrepreneur and to the wealth of business ideas around them. they were tasked to choose entrepreneurs in a similar field as the business that they started in class, to further their future networking opportunities. practical project initially the practical project started out as an illustration and reinforcement of the theory taught in class. the students had to start any small (micro, subsistence) business and follow the processes in order to illustrate the theory presented in class. in practice this meant that as they covered the entrepreneurial process, they had to analyse themselves, find an idea, gather the resources and start the business. the focus was on business functions, so it did not matter what business they chose, as long as the business functions were addressed and they could report back on them. most of the businesses were very small and not very inspiring – like washing cars, selling eggs, and the like – but the interest and involvement of the students in the subject were remarkable and it became apparent that a more formal and extensive project could be used to assist in teaching entrepreneurship. the following year the project was structured according to wickham’s description of the entrepreneurial process in terms of opportunity, resources and organisation. wickham (2006:225) describes the entrepreneurial process as “the creation of new value through the entrepreneur identifying new opportunities, attracting the resources needed to pursue those opportunities and building an organisation to manage those resources. the process is dynamic with the entrepreneur and the entrepreneurial organisation learning through success and failure.” the sajesbm ns volume 2 (2009) issue 1 59 _____________________________________________________________________________________________ students had to start real business ventures in class as group projects, according to the guidelines set out above, and following wickham’s entrepreneurial process. the lecturer acted as facilitator/consultant, taking the groups through the process. the groups had to analyse the strengths and weaknesses in themselves, as the entrepreneur (in this case the entrepreneurial group) is central to the process. they then had to find innovative, viable and sustainable opportunities to turn into businesses and gather the necessary resources to do so. lastly, they had to organise and manage the businesses in order to ensure sustainability and growth. their goal in the short term was to make at least zar1000 profit per group member in the first ten weeks. this put the students under immense pressure. these businesses were not simulations but actual businesses that had, for example, to comply with all the legal requirements if needed, like registering patents, forming close corporations, and complying with tax laws. part of the process was to develop a logo, business cards and marketing material. one period per week was dedicated to a report back “meeting” at which the groups had to report back on the activities in the previous week. on average there were ten to fifteen groups per class, which meant that the students were exposed to that number of different businesses. the lecturer led these meetings as facilitator and consultant. the groups were encouraged to consult each other and to network during these meetings, which often resulted in their becoming suppliers for one another’s businesses or forming informal joint ventures. a further benefit for the students was that they developed the skills required for analysing and consulting. this could result in the students starting a consulting business in the future should they be interested in doing so. the long-term goal for the groups was to develop businesses that could be part of their future when they left university. the approach could also assist the students to break through the psychological barrier against starting a first business. fear of failure or the unknown are often barriers that prevent potential entrepreneurs from starting a business. the required outcomes for this method of teaching conform to the prescribed outcomes from the national council for graduate entrepreneurship (ncge, 2006) in the united kingdom in its brief to its international partners entitled good practice in entrepreneurial development within higher education. the outcomes are: 1. to develop entrepreneurial behaviours, attitudes and skills, like opportunity seeking initiative taking ownership of a development commitment to see things through personal locus of control networking capacity strategic thinking negotiation capacity achievement orientation calculated risk taking 2. to develop empathy and understanding for the life world of the entrepreneur, through living with uncertainty and complexity having to do everything under pressure sajesbm ns volume 2 (2009) issue 1 60 _____________________________________________________________________________________________ holistic management building know-who and trust relationships learning by doing, copying, making things up, problem solving working flexible and long hours 3. to inculcate key entrepreneurial values, for example a strong sense of independence distrust of bureaucracy and its values strong sense of ownership belief that rewards come with own effort belief they can make things happen belief in informal arrangements strong belief in freedom to take action belief in individual and community, not the state 4. to be motivated towards an entrepreneurial career: understand the benefits be able to compare with an employee career have some “heroes” as friends/acquaintances 5. to gain an understanding of the processes of venture creation, entry and associated tasks: be able to go through the total process and know what challenges will arise at each stage know roughly how to handle them 6. to develop generic entrepreneurship competencies, for example: how to find an idea how to appraise the idea how to see problems as opportunities how to identify key people to be influenced in any development how to learn from relationships how to assess business development needs where to look for answers emotional self awareness, ability to manage and read emotions and handle relationships ability to constantly see themselves and the business through the eyes of stakeholders 7. to acquire key business knowledge, like the following: see products and services as a combination of benefits develop a total service package appraise and learn from competition monitor the environment with limited resources set standards for operations environment and manage them finance the business appropriately from different sources develop a business plan as a relationship communication instrument acquire appropriate systems to manage cash, payments, collections, profits and costs manage statutory requirements 8. to effectively manage stakeholder relationships: understand the needs of all key stakeholders at start-up and survival stage sajesbm ns volume 2 (2009) issue 1 61 _____________________________________________________________________________________________ know how to educate stakeholders know how to learn from them know how to best build and manage the relationship data analysis the researchers analysed 165 student reports detailing business ventures formed during the period 2002–2007. the b comm. entrepreneurship students established 40 ventures, and the students who were enrolled for the elective, entrepreneurship, established 125 ventures. this ratio corresponds with the ratio of the students that were enrolled for the two courses. the researchers were interested in the following aspects as addressed by the business reports: 1. type of business 2. profit after ten weeks 3. strengths and weaknesses in themselves as entrepreneurs; opportunities and threats of the business 4. sustainability 5. what the students had learned type of business setting a target of a zar1000 profit per group member generally raised the quality of the ventures that were created in class, although some groups in both classes still reverted to conventional and very small ventures. in most cases these latter groups did not reach the set target. the ventures in class one were mostly retail businesses. they varied from selling small fleamarket type of products to friends and family, to marketing sophisticated anti-puncture devices to big transport companies. other types of ventures that featured strongly were as follows: ventures that focused on services and varied from consulting to inspecting building sites a few ventures that offered training and/or had developed programmes to supplement entrepreneurship and business education in schools a few ventures that were established because of new patents that had been developed and registered by students in the previous semester in the creativity and innovation module the ventures in class two were mostly developed around the skills of the students, who came from various other disciplines. ventures that featured strongly were: events organising, catering, developing new consumer products information technology-related services and products community development programmes, such as providing low-cost building plans to disadvantaged communities, or mobilising groups in communities to become economically active by producing arts and crafts for a foreign market export and import businesses marketing related ventures sajesbm ns volume 2 (2009) issue 1 62 _____________________________________________________________________________________________ a variety of different ventures that included washing windows of big buildings, hunting, organising adventure trips, fixing sailing boats, writing on flowers, training courses on imported motor cycles, fixing and selling houses, brokering chlorine to holiday resorts, supplying chickens to supermarket chains and manufacturing collapsible coffins. profit after ten weeks the profit ranged from a loss of zar21 000 to a profit of zar83 000. in many cases the groups could not report profit or loss after ten weeks because of the type of business, or the development needed before products were ready for the market. in these cases proof of contracts or documentation on the development processes were accepted. strengths, weaknesses, opportunities, threats the strengths, weaknesses, opportunities and threats varied widely from group to group. only the five top responses of the two classes in each category are reported in table 2, from the highest to the lowest score. table 2: strengths, weaknesses, opportunities and threats: class one and class two class one class two 1. 2. 3. 4. 5. strengths quality low prices unique product, customer service, networking knowledge of market low overheads, low start-up costs 1. 2. 3. 4. 5. strengths unique product low prices customer service teamwork low start-up costs 1. 2. 3. 4. 5. weaknesses lack of time because of being students lack of experience lack of capital being perceived as being inexperienced (because they are young and still students) lack of transport 1. 2. 3. 4. 5. weaknesses lack of time because of being students lack of experience lack of capital lack of transport being perceived as inexperienced (because they are young and still students) 1. 2. 3. 4. 5. opportunities the market is huge, there is potential to expand and grow potential to diversify many opportunities to export innovative approach the soccer world cup will be held in the republic of south africa in 2010 1. 2. 3. 4. 5. opportunities the market is huge, there is potential to expand and grow new developments and contracts many opportunities to export potential to diversify the soccer world cup will be held in the republic of south africa in 2010 1. 2. 3. 4. 5. threats competition from established companies start-up and running costs lack of capacity technological limitations safety 1. 2. 3. 4. 5. threats competition from established companies easy to copy raw materials are scarce change in trends and technology lack of black economic empowerment in ventures sajesbm ns volume 2 (2009) issue 1 63 _____________________________________________________________________________________________ sustainability most of the ventures in both groups were potentially sustainable, with a higher percentage of success stories in class two than in class one. what the students have learned the students were, without exception, positive and enthusiastic about the enormous learning experience the project imparted. the twenty most reported observations of what they had learned were as follows: be market orientated, and not product orientated. you have to visualise and plan! to start a business is hard work; it needs focus and long hours. we learned time management skills – it is of the utmost importance. commitment is important. we acquired conflict management skills. we acquired negotiation skills. we acquired networking skills. risk taking became calculated. it is extremely rewarding to have your own business. relationships in the group and with stakeholders are very important – teamwork is needed. we learned skills on how to start and manage a business. we learned that it is not so difficult to just start a business quality and price of products are important. being ethical towards each other and stakeholders is important. making mistakes is part of growing. hard work is always rewarded. we learned that we could succeed, where it had seemed impossible at first. we learned how to apply skills obtained in our field of study it was great fun! findings 1. the types of venture in class two were more innovative and varied than those in class one. this could be because class two includes students from different faculties that have entrepreneurship as an elective course in their respective fields. class two has also on average four times more students than class one every year, which results in the creation of more businesses, which means the groups are exposed to a larger variety of businesses in class (when reporting back). this encourages more innovation and variety. 2. the types of venture in class two involved more risk taking than those in class one. this could be because the students in class two did not have the same business background as the students in class one. the syllabus of class one focused on business functions in a small business, while the syllabus of class two focused on finding an idea and the creativity and innovation that is involved in the process. the business functions in the ventures in class one sajesbm ns volume 2 (2009) issue 1 64 _____________________________________________________________________________________________ were much better managed than those in class two, which could also result in a more moderate approach to risk taking. 3. there is an observable similarity between class one and class two in terms of the five strengths, weaknesses, opportunities and threats that occurred most. it could be because most of the issues that were addressed were student related, or related to them being students. all of them were young, inexperienced and had constraints in terms of time and mobility. at the same time they were knowledgeable and flexible, had a fresh view of the markets and were subject to much lower overheads than more established companies. 4. both groups reported extensive learning in terms of knowledge and skills. 5. the results reported by both groups after ten weeks varied between highly profitable, profitable, less profitable and failure. this followed the real trend in the market. it was also observed that the groups that were less profitable or failed were either not serious about the project, or did not follow the guidance offered by the other groups and facilitator during the report-back sessions. 6. most of the ventures that were established were potentially sustainable in terms of idea, need in the market and potential to grow. in reality, however, some groups had to split eventually (because of the superficial way that they had been formed) and the ventures would then have to be terminated. in some cases patents that were developed were sold to established companies because the students did not have the time, means or capacity to utilise them. a small percentage of the ventures did continue as either a part-time or a full-time business. in some cases, most of the partners were bought out and only one or two partners continued with the venture. 7. when the aspects that the students reported that they had learned are analysed, they tie in perfectly with the suggested outcomes of the good practice in entrepreneurship development, as suggested by the ncge (2006) in the uk and as listed in this paper under teaching methodology. this would seem to indicate that the teaching methodology under discussion achieves the required results. limitations of the study the following limitations of the study were identified: firstly, the methodology used by the researchers was to analyse student reports detailing business ventures formed during the period 2002–2007 in order to determine whether the teaching approach was successful. it would have been of even more value if the researchers had also interviewed the student groups. this is now not possible as these students are no longer at the university. another limitation regarding the reports is that the format of the reports was not designed, nor was the reports themselves structured, for a research study, which means that the reporting of the occurrence of the different variables was not always meaningful. to address this, it was decided to focus only on the first five variables in each case that occurred most. secondly, according to pretorius (2008:17), facilitators are ultimately the key construct that impacts on the learner’s attitude, thinking and willingness to start a new venture. facilitators plan and organise the learning and lead and control the learning process. in this study it was difficult to determine whether the outcomes were the result of the learning approach, or of the impact of the facilitator, or a combination of both of these key factors. sajesbm ns volume 2 (2009) issue 1 65 _____________________________________________________________________________________________ thirdly, there is no record of the business ventures and the student’s careers after they left university, in order to determine their medium-term to long-term success rate with regard to the growth and sustainability of the ventures and the entrepreneurial activity of the students. recommendations and implications for programme developments the research results highlight a number of pedagogic and policy implications for entrepreneurial learning. further research studies need to be undertaken into how entrepreneurs learn, and we need to gain a greater understanding of the processes if educators are to design effective programmes to accommodate the needs and expectations of learners who want to be practically involved in their own learning. therefore, the development of education and training programmes for entrepreneurs should be considered more from a learning perspective than from a teaching perspective. it is recommended that a further assessment should be conducted to confirm the preliminary findings of this study. the assessment process could be based on the entrepreneurial education assessment model as proposed by pretorius (2000:1). this model includes “approaches used to transfer knowledge and skills”, and the “facilitator” as key constructs. the first construct considers both the involvement of the learner in the learning process and the variety of learning approaches used, while an important consideration of the “facilitator” construct is multidisciplinary approach and thinking. other construct elements in this model are “motivation”, “entrepreneurial skills” and the “utilisation of the business plan” (botha, 2006:73). it is recommended that the b comm. entrepreneurship students (class one) should continue by developing a business around the product or service that they developed in their second year in the creativity and innovation module. the business plans for these products or services were written in the business plan module. this would immediately allow class one to continue a process that started one year earlier and would provide more time for the students to develop their businesses. this means that the students in class one would have individual businesses, while the students in class two would develop businesses as groups, which presents more opportunities for further research. a final recommendation is that a database of the students and their ventures should be set up and regularly updated for the purposes of ongoing (longitudinal) research. conclusion a theme of many entrepreneurial education programmes is to offer students opportunities to “experience” entrepreneurship and small business management (solomon, 2007:173). at the same time, it is also important to keep in mind that the field of entrepreneurship is complex and diverse and as such no single philosophy, conception or model of entrepreneurship education is likely to meet the broad scope of the field. aligning philosophy or purpose with learner expectations, needs, and intended outcomes is likely to enhance the learner experience and educator effectiveness (hannon, 2006:304). at the university of pretoria in south africa, preliminary observations suggest that the students in both class one and class two acquired business skills and knowledge about the entrepreneurial process and created potentially sustainable, profitable business ventures in the class situation, despite coming from different sajesbm ns volume 2 (2009) issue 1 66 _____________________________________________________________________________________________ fields of reference and different syllabi. this would seem to suggest that the practical teaching approach towards entrepreneurial learning created the conditions for these achievements. it confirms that “learning about” should be supported by “learning to be”, in this case to be an entrepreneur and to be entrepreneurial. this research would seem to show that the students in the two study groups achieved the desired outcomes in terms of being entrepreneurial, as suggested by the ncge in the uk. it would therefore appear to indicate that this programme promotes entrepreneurship, which ultimately will contribute to the economic and social growth of the country. references bortne, e.a., westgaard, s. & ofstad, d. 2005. simulating entrepreneurship through e-learning and higher education. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:1-18. botha, m. 2006. measuring the effectiveness of the women entrepreneurship programme, as a training intervention, on potential, start-up and established women entrepreneurs in south africa. unpublished dcom. thesis. pretoria: university of pretoria. cannon, h.m. & feinstein, a.h. 2005. bloom beyond bloom: using the revised taxonomy to develop experiential learning strategies. developments in business simulations and experiential learning, 32, 348–356. co, m.j. & mitchell, b. 2005. entrepreneurship education in south africa: a nationwide survey. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 1113 july:1-12. corman, l.s., walls, s.g. & cook, r.a. 2005. preparing students for entrepreneurship opportunities. proceedings of asbe, albuquerque, new mexico. gibb, g. 1992. improving the quality of student learning. bristol: technical & education services. gillingham, d.w. 2005. a framework for analysing innovations in the teaching of entrepreneurship. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:1-8. gravett, s. & geyser, h. 2004. teaching and learning in higher education. pretoria: van schaik. hannon, p. 2006. teaching pigeons to dance: sense and meaning in entrepreneurship education. education and training, 48(5):296–308. haym, g.e. 2005. an entrepreneurial approach to entrepreneurship education: active teaching. proceedings of the usasbe/sbi joint conference, tucson, arizona, 12-15 january:1-8. kuratko, d.f. 2004. entrepreneurship education in the 21st century: from legitimization to leadership. coleman white paper series, www.usasbe.org. lobler, h., maier, m. & markgraf, d. 2005. evaluating the constructivist approach in entrepreneurship education. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:1-10. maas, g. & herrington, m. 2006. global entrepreneurship monitor. south african report 2006. [online] available from: http://www.gemconsortium.org [accessed: 2007-05-31]. sajesbm ns volume 2 (2009) issue 1 67 _____________________________________________________________________________________________ maas, g. & herrington, m. 2007. global entrepreneurship monitor. south african report 2007. [online] available from: http://www.gemconsortium.org [accessed: 2009-03-17]. man, t. 2005. profiling entrepreneurial learning patterns: a competency approach. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:117. mcadam, m. & leitch, c. 2005. promoting entrepreneurial learning through innovative practices: the role of active learning in entrepreneurship education. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:1-14. ncge national council for graduate entrepreneurship. 2006. good practice in entrepreneurship development within higher education. international partners’ brief from the national council for graduate entrepreneurship, united kingdom. [online] available from: http://www.ncge.com (accessed: 2008-05-07]. nieuwenhuizen, c. & groenewald, d. 2004. entrepreneurship training and education needs as determined by the brain preference profiles of successful, established entrepreneurs. proceedings of the fourteenth internationalising entrepreneurship and training conference – intent 2004, university of napoli federico ii, italy, 5-7 july:1-18. petrakis, p.e. & bourletidis, c.a. 2005. methodological aspects of teaching entrepreneurship in tertiary education. proceedings of the fifteenth internationalising entrepreneurship education and training conference, university of surrey, surrey, 11-13 july:1-12. pretorius, m. 2000. evaluation of a proposed training methodology to enhance micro and small business start-up in south africa. proceedings of the 46th world conference of the international council for small business, brisbane, australia, 7-10 june:1-22. pretorius, m. 2008. assessment of entrepreneurship education: a pilot study. south african journal of entrepreneurship and small business management, 1(1):1–20. pretorius, m. & wlodarczyk, t. 2007. entrepreneurial training curriculum assessment: the case of new venture creation learnerships. south african journal of economics and management sciences, 10(4):504–528. rasmussen, e.a. & sorheim, r. 2006. action-based entrepreneurship education. technovation, 26:185–194. solomon, g. 2007. an examination of entrepreneurship education in the united states. journal of small business and enterprise development, 14(2):168–182. sullivan, r. 2000. entrepreneurial learning and mentoring. international journal of entrepreneurial behaviour and research, 6(3):160. van der merwe, m. 2003. “the entrepreneur.” in nieman, g., hough, j. & nieuwenhuizen, c. (eds) entrepreneurship: a south african perspective. 1st ed. pretoria: van schaik: 27-44. wickham, p. 2006. strategic entrepreneurship. great britain: pearson education. microsoft word 5 venter ubuntu sajesbm ns 1_1_66-93.doc sajesbm ns volume 1 (2008) issue 1 66 ______________________________________________________________________________________ ubuntu and social capital factors in family businesses special invited essay dr william p venter, founder and chairman of the altron group mba (wales), m phil (cum laude uj), d phil (uj) wpventer@altron.co.za abstract the current study is an investigation of social capital, and more particularly the support of the concept of ubuntu in large family businesses in south africa. insights into the social responsibility activities of some of the largest family businesses in south africa, obtained through semi-structured interviews, clearly indicate the important role which the social responsibility ubuntu activities of these businesses play in caring for the community. as south africa has a mainly “individualistic economic community”, it is interesting to observe how the collectivistic notion of ubuntu is practised in the social responsibility activities of family business groups. key words and phrases: ubuntu, social responsibility, social capital, family business, conditional matrix introduction although individualism and entrepreneurship appear to be the chief modus operandi of businesses in south africa, it is interesting to observe the collective ubuntu culture of social capital/social responsibility activities that are apparent in businesses, and family businesses in particular. jones, nyland and pollitt (2001:7–8) liken the social capital activities of businesses to ubuntu. the current article investigates the prevalence of collective ubuntu social capital activities in the mainly individualistic south african business culture. the collectivistic premise of ubuntu, of “i am because we are; i can only be a person through others”, is in direct contrast to western individualism (parr, 2006:26). it further emphasises the advantage that ubuntu brings about through collective collaboration of “caring, dignity and respect” (poovan, du toit & engelbrecht, 2006:17), enabling the weaving and re-weaving of relations to foster relationships and build human dignity (ngoenha, 2006:125,132). ubuntu is called for in social capital activities of businesses in south africa because of the high unemployment and significant percentage of orphaned hiv/aids children (maqoko & dreyer, 2007:717–718). family businesses have the unique potential to promote economic growth, create new jobs and to implicitly contribute to social stability in south africa (venter, boshoff & maas (2003:1). it is in this regard that the ubuntu concept, closely related to the social capital actions of family businesses, can play an important role in societal and economic stability. sajesbm ns volume 1 (2008) issue 1 67 ______________________________________________________________________________________ the communal social capital activities of successful family firms are far less frequently reported in business literature than are the social capital activities of non-family businesses (lester & canella, 2006:767). the current study hopefully fills this important gap in the family business literature, which is especially important when seen in the light of a recent fortune 500 companies report. this indicates that family-owned businesses have more community-friendly policies than non-family owned firms (stavrou, kassinis & filotheou, 2007:157). a study by venter (2007:378) concerning the factors that play a role in the superior performance of family businesses, as well as the successful generation succession in these businesses, indicates social capital as the second most important factor in the successful functioning of family businesses. the current study is then in some senses unique and valuable because family business owners are usually reluctant to talk about their social capital activities, as they invariably feel they do not wish to boast or seek publicity. for these reasons little is known about the true social contribution of family businesses to the social welfare of their communities. family businesses are especially difficult to investigate because of their inclination towards privacy (davis, 1983:55; poutziouris, steier & smyrnios, 2004:7). this has led to their well known privacy policies, as media exposure could disrupt their personal lives and bring unwanted attention to family members (venter, 2003:10). the investigation that follows primarily investigates the theoretical background and the prevalence of social responsibility activities in family businesses. secondly, this article discloses a number of interviews with prominent south african family-business owners concerning the importance of social responsibility activities in their businesses. literature review social capital “a business that makes nothing but money is a poor business.” henry ford a very special relationship exists, in general, between a business and its social environment. this phenomenon of the responsibility for social capital is similarly important in the performance of family businesses. the ubuntu effect of “caring, dignity and respect” (poovan et al., 2006:17) is generated in the social capital activities of family-controlled businesses by their being involved in and compassionately responding to their communities in a problem-solving role and shared identity (lester & canella, 2006:755, 758, 762). both internal (human resources management practices, change management policies and environmental impact, for example) and external social capital activities (integration of community, human rights and ecological issues) are evident in such businesses (martos & torraleja, 2007:121). social capital refers to the combined social practices, networks and partnership of businesses within the social context that such businesses operate; establishing norms and generating action towards societal needs (karakoulaki, 2002:3,5). family businesses have over generations developed the positive reputation of characteristically supporting sajesbm ns volume 1 (2008) issue 1 68 ______________________________________________________________________________________ philanthropic social welfare initiatives and projects in their communities (ward, 2003:72). the endeavour of family businesses to reinforce and support social-community concepts leads to a stronger sense of identity, which ultimately has a powerful effect on most collective business operations, thus supporting the development of a healthy society (aronoff, astrachan & ward, 1996:13; aronoff & ward, 2001:31). uhlaner, van goorbalk and masurel (2004:191) refer to this form of ubuntu activity in businesses as “social entrepreneurship”. in the south african context, there are remarkable examples of family business owners with a sense of significant social responsibility, not only towards the community at large, but also within their own businesses. for example, the philanthropic nature of sir ernest oppenheimer was described by the london times as a “deeply-developed social conscience”, leading to the establishment of the ernest oppenheimer memorial trust, which to this day still continues the altruistic activities he initiated (hocking, 1973:334). whilst still alive, the second generation chairman of toyota sa, the late bert wessels, was involved in many social responsibility activities, always based on a belief in the equality of all people, regardless of race colour or creed, even during the apartheid era (toyota chairman wessels dies, 2002:1–2). former president nelson mandela acknowledged the active social responsibility involvement of sol kerzner and his late son butch, “to give back to their country” (sol kerzner, 2004:2). dick enthoven, owner of the spier wine estate, emphasises the fact that financial performance in itself is not the only measure of business success (nevill, 2004:2). social and environmental factors must be taken into consideration. sir donald gordon, founder of the liberty group, was described as always being sensitive to the needs of those less fortunate than others, and was not afraid of redressing some of the disparities in society (romain, 1989:44). dr bill venter, founder and chairman of the altron group, refers to the company’s internal and external social responsibility activities, job-creation programmes and community projects as “having a heart” for society (koenderman, 1982:23). the trend towards emphasis of the social responsibility activities of businesses is globally evident. corporate social responsibility is regarded as advantageous to businesses economically, due to their involvement in ethical, legal and philanthropic issues (uhlaner et al., 2004:192). one of india’s largest family businesses, the tata group, regards their philanthropic involvement in their communities as more rewarding than the inspiration for making money (ellis, 2002:63). the bill gates and warren buffett families have indicated their intention of, and are already heavily involved in, donating some of their huge family wealth to selective charities (wood, 2004:19). the second-generation walton family similarly supports social upliftment, especially in advancing education of the underprivileged and the american people per se (serwer, 2004:63). there is also, on the other hand, clear evidence that non-family businesses seem to be less involved in social responsibility activities than family businesses. a study of n=42 dutch family businesses brings to light a serious lack of social entrepreneurship (uhlaner et al., 2004:191). the anglo american corporation reports its disappointment in the minimal support given to philanthropic social development in african countries outside of south africa (anglo american, 2005:16). for this reason anglo american has made a sajesbm ns volume 1 (2008) issue 1 69 ______________________________________________________________________________________ commitment to identify and develop significant african and worldwide social responsibility programmes (anglo american, 2005:16). it is clear from the above discussion that the ubuntu-like practice by large family businesses of assuming social responsibility, and becoming an entity through others by means of collective caring, leads to dignity and respect within communities (ngoenha, 2006:125, 132; parr, 2006:26; poovan et al., 2006:17). the ubuntu role family businesses play in being involved in the social responsibility activities of their communities can best be described as general philanthropy, meaningful political involvement, environmental care, and giving consideration to culture, coupled with the advancement of sports and other social upliftment projects. philanthropy successful family businesses keenly pursue philanthropic responsibilities, often in appreciation of the contribution of communities towards the success of the company (kleberg, 2001:1; ward, 2003:128). in this way, the firm acknowledges the ubuntu principle of “i am because we are” (parr, 2006:26) – in other words: this family business exists through others. the legacy of this ubuntu-like philanthropic care of the community has been preserved by the heirs of the business over decades (wood, 2004:20), thus conserving the family members’ value systems of responsible care towards the community (lovell, 2006:3; ward, 2003:129), and thereby gaining the community’s goodwill, loyalty and trust (kleberg, 2001:3, 7–8). raymond ackerman and his son, gareth, regard philanthropic community care as “the core that binds the family in cooperation with society” (salgado, 2006:14). it is not surprising that family foundations are known to bring about innovative philanthropic activities, for which many family businesses are famous (kleberg, 2001:10). this ubuntu-like philanthropic care, at all levels of society, has been practised by major south african family businesses such as altron, anglo american, de beers, rembrandt, pg glass and the toyota group (dommisse & esterhuyse, 2005:216, 218, 396; hocking, 1973:306–307, 489; lubner & lubner 1997:64; rogerson, 2003:17, 21; wessels, 1988:203). dr anton rupert, of the rembrandt group, became involved in lesotho, operating with a conviction that south africa should not be oblivious to its starving and underprivileged neighbours (anton rupert, 2006:9; coulson, 2006:42). apart from many other community projects, lubners support street-wise, a rehabilitation project of thousands of street children towards a productive life (lubner & lubner, 1997:65). christo wiese of pep stores went about creating a clothing company that made a major contribution to the south african economy in providing clothing affordable to underprivileged people, and in some measure endow these people with dignity (herd, 2006:53). the founder of macsteel, eric samson, believes that the more you serve your community, the more you receive from it (formby, 2006:27). early exposure of family members to strategic philanthropic decisions serves as a good training ground for aspiring future family business leadership (laspada, 2006:3, 5). sajesbm ns volume 1 (2008) issue 1 70 ______________________________________________________________________________________ the contribution of family business founders toward training and education is seen in the following examples: the founder of stuttafords department store and cape gates, samson stuttaford, largely established the library at the university of cape town (university of cape town, 2006:1). dr mendel kaplan, founder of sharon steel, has generously contributed to several universities in south africa and abroad (university of cape town, 2006:1). the venter family financially supported the refurbishing of the bram fischer library and the legal resources centre, elizabeth house, johannesburg (rogerson, 2003:92). the founder of the altron group, dr bill venter, personally funded eight schools as well as many computer centres for previously disadvantaged children, where some 8000 children are currently educated (altron code of conduct, 2006:2; rogerson, 2003:171). these were established in rural areas such as elliotdale, qunu and nkalane in the eastern province, and ulundi in kwazulu-natal. dr bill venter has personally funded many bursaries to universities for disadvantaged students. the walton family of wall-mart in the usa concentrate their philanthropic donations mainly on advancing a variety of educational endeavours (serwer, 2004:57–58). pick ’n pay’s dr raymond ackerman and his wife wendy’s care for education of underprivileged young people stretches far back to their involvement in night schools in cape town in their younger days, a passion that they still pursue in the well-documented support of their education and literacy programmes (prichard, 2004:47, 318; prichard, 2005:154, 168). they believe that education will secure a satisfying future for the recipients of their largesse (prichard, 2004:47, 318; prichard, 2005:154, 168). education of previously disadvantaged persons is financially supported by the dr albert wessels trust, the altron bill venter family-business trust, and various rembrandt foundations throughout south africa (altron code of conduct, 2006:1; doolan, 2005:22; rogerson, 2003:85; vision was in advance of the new sa, 2001:2). it was dr albert wessels’ personal aspiration to train unskilled, often illiterate individuals to become competent toyota factory workers (von ahlefeldt, 1983:8). the support liberty life has received from its insurance policy holders was acknowledged by its generous donation of over r30 million towards the establishment of the gordon institute of business science (gibs) (about donald gordon, 2006:1). gibs was named after sir donald gordon, founder and former chairman of liberty life, in view of his acknowledgement and support of education as a critical component of business and the development of the country. the support of family businesses towards the development of entrepreneurial programmes is also evident. anglo american empowers and supports the development of various small and medium-sized enterprises as catalysts in the creation of wealth (anglo american, 2005:14–15). during 1999 alone, the altron group financially supported more than 2000 smmes, contributing to the creation of more than 6000 jobs nationwide (rogerson, 2003:139–143). the donald gordon foundation largely funds the manufacturing plant of freeplay radio, securing jobs for 250 disabled individuals in the production of a few thousand wind-up, electricity-free radios per month (baylis, 2006:1; clockwork radios, 2002:1; dahle, 1999:170). the rupert family of the rembrandt group has instituted the small business development corporation (sbdc) and the lesotho development corporation in order to encourage and stimulate the development of sajesbm ns volume 1 (2008) issue 1 71 ______________________________________________________________________________________ entrepreneurship in south africa and lesotho, creating almost a million jobs (barron, 2006:15, dommisse & esterhuyse, 2005:241; 384–389; doolan, 2005:22). the contribution of family businesses towards health is also apparent. the chairman of de beers, nicky oppenheimer, personally plays a major role in hiv/aids management in south africa (de beers, 2005:16–25), as does the watson family (binedell, 2005:7). rembrandt’s dr anton rupert funded urgent medical care for over forty years by flying doctors to lesotho for medical emergency situations (barron, 2006:15; dommisse, 2006:17). microsoft’s bill and melinda gates are significantly involved in the treatment of measles, malaria and aids in africa – practising the motto that other individuals’ lives are just as important as their own (white, 2006:45–49). moreover, the donald gordon foundation funded the wits university donald gordon medical centre (wdgmc) in pinetown, johannesburg (wdgmc, 2008). political influence indications are that family businesses show resilience during times of political instability (aronoff & ward, 1995:122; gibson, 2002:128; heck, upton, bellet, dunn & parady, 1994:3–4). venter (2003:22) indicates that the main family-business groups in south africa have performed with dedication and distinction during turbulent and volatile times. there seems to be a special form of resilience shown by family businesses during difficult times; this could be the result of subtle political involvement of family businesses during these times which contributes to positive reform, as well as high morale in the companies they control. the delicate political involvement of family-business members is evident in south africa’s history. the founder of de beers, sir ernest oppenheimer, and his wife ina personally funded the treatment of over 200 soldiers needing plastic surgery, treated at brenthurst, which was made available as a military hospital during the second world war (hocking, 1973:193, 195). sir ernest oppenheimer actively practised the policy attributed to cecil rhodes, advocating a policy of “equal rights for all civilised men” (hocking, 1973:102, 132). sir ernest’s policy was similarly advocated by harry oppenheimer in securing the prosperity of the millions of africans in south africa, inevitably leading to frequent crossing of swords with dr hendrik verwoerd, former prime minister of south africa (hocking, 1973:306–307). toyota south africa’s dr albert wessels strove to eliminate any form of racial or language discrimination at the company (vision was in advance of the new sa, 2001:1; wessels, 1988:212). dr wessels established the albert wessels trust in 1972, encouraging black south africans to gain political, intellectual and economic equity through education (vision was in advance of the new sa, 2001:2). through the toyota sa foundation, the toyota technical education programme, and the toyota sa social development committee, those previously disadvantaged are still actively supported. dr bill venter of altron applied the principle of preserving the human dignity of all individuals working in the company, declaring that “every quarter of our multi-ethnic society will have to contribute its share of talent to the national demand if we are to cope sajesbm ns volume 1 (2008) issue 1 72 ______________________________________________________________________________________ with the socio-economic rigours of the twenty-first century”, as the south african political architecture was regarded as woefully inadequate to cater for the country’s future demands (venter, 1984:6). dr bill venter instituted a fundamental policy of nondiscrimination with regard to race and gender, and promotion on merit, as the fundamental philosophy of the altron group as far back as 1980 (rogerson, 2003:35–36, 66). dr venter pioneered racially integrated gymnasiums, canteens and comfort facilities at standard telephones and cables (stc) in boksburg in the early 1980s (rogerson, 2003:35–36). dr raymond ackerman made sterling efforts to eradicate apartheid policies by, for instance, appointing, against the government’s group areas act policy, pick ‘n pay’s first black manager in a rondebosch store (prichard, 2004:39, 90–92, 153). at the same time dr ackerman established south africa’s first multicultural golf club at clovelly, cape town (prichard, 2004:161–163). dr anton rupert constantly prophesied the co-existence and partnership of different groups in south africa (dommisse & esterhuyse, 2005:12), openly criticising the apartheid government locally and abroad, in a constructive manner, without leading to awkward confrontations (doolan, 2005:22). dr rupert showed his constant support for south africa; when it was obvious that it would be more comfortable to use geneva as his business headquarters, he took the responsibility of remaining in south africa, so that he would be able to be more involved in the reform process (dommisse & esterhuyse, 2005:214). in his commitment to reform, dr rupert initiated the establishment of the development bank for equatorial and southern africa (edesa) to provide development capital to private enterprise in southern africa (dommisse & esterhuyse, 2005:214). constructive political involvement was shown by dr rupert and harry oppenheimer after the horrendous soweto violence of 16 june, 1976, by organising a meeting with dr. nthatho motlana as chair (dommisse & esterhuyse, 2005:237–239). the meeting, held in johannesburg on 29 november, 1976, had the objective of discussing and reaching conclusions about alleviating the abject misery, poverty and non-existent political rights of black south africans (dommisse & esterhuyse, 2005:237–239). a consequence of this meeting was the establishment, in 1977, of the urban development foundation, with a mandate to improve the quality of life of black south africans, including black leaders (prichard, 2004:146; prichard, 2005:82). significantly, dr raymond ackerman was a member of the committee formed to implement the mandate (prichard, 2004:146; prichard, 2005:82). dr albert wessels simultaneously established a small-business development unit, namely the toyota urban conservancy project, to encourage black empowerment (vision was in advance of the new sa, 2001:2). the altech group, under the auspices of dr bill venter, issued a staff notice to 6000 employees on 9 april, 1979, informing personnel of the altech group’s commitment then to improve the working conditions of all their employees, irrespective of race, religion or colour (rogerson, 2003:17). this staff notice, against prevailing prohibitive legislation, terminated any segregation of eating, comfort and work facilities among employees in the altech group, as well as guaranteeing equal employment practices, sajesbm ns volume 1 (2008) issue 1 73 ______________________________________________________________________________________ leading to equal pay for all for equal work and an increase of the appointment of blacks and other non-whites in management and supervisory positions (rogerson, 2003:21). during april 1979, dr bill venter announced a training scheme for black engineers at itt factories in belgium (rogerson, 2003:17). this was the first step of its kind ever undertaken by the electronics industry in south africa. the spier vineyard trust, under the leadership of the enthoven family, has been proactive in land reform: it has provided funds for building of homes, offered employees a 25 percent share in the 60ha of vineyards, and supported the development of 12 independent organic farmers on the spier property (van wyk, 2003:4; nevill, 2004:2). aim the aim of the current study was to investigate the social capital activities of some of the most prominent family business groups in south africa. research method the current study was a qualitative, exploratory investigation to determine the frequency of different forms of social capital, inter alia ubuntu activities, in some of the most prominent family businesses in south africa by means of open-ended and closed-ended face-to-face interviews (cooper & schindler, 2006:141, 143). a quantitative, deductive approach was followed, with a detailed identification of distinct variables with standardised measurements and analyses of statistics (neuman, 2000:122–123). the data were finally quantified through statistical analysis (malhotra, 1996:164). the enquiry into the phenomenon of social capital activities in family businesses in south africa is, to the best of the researcher’s knowledge, a landmark and unique investigation. for this reason an exploratory, qualitative enquiry was proposed. different authors support the qualitative method of investigation, especially to explain an interpretive framework of the unfolding process of a social phenomenon (babbie, 2005:387; bornheim, 2000:164; van maanen, 1979:520). participants/sample due to the qualitative investigation of the current study, a non-probability or non-random sampling method was used (kerlinger & lee, 2000:179; malhotra, 1996:357–417; neuman, 2000:196). in the case of non-probability, non-random sampling, the sample size is not representative of the population, but rather representative of the social phenomenon under investigation (neuman, 2000:196). in the case of the current qualitative study, a purposive non-random sample was selected that specifically consisted of family members actively involved in family-business groups in south africa. five of the largest, most prominent family business owners in south africa, acting as ceos in their companies, participated in the survey. the participants were all male, with ages varying between 43 and 75. the participating family business members were in their secondto third-generation succession of their companies, having had ownership of the companies for between 30 and 117 years. the family businesses were involved in, inter sajesbm ns volume 1 (2008) issue 1 74 ______________________________________________________________________________________ alia, mining, retail, property, manufacturing, wholesale, banking, food processing, and wine production. measuring instruments the research was a grounded investigation, carried out by means of standardised, semistructured, one-on-one interviews, documenting perceived experiences of individuals either involved in or employed by family businesses. the personal interview is considered to be the most powerful tool and most practical method of investigation for obtaining information on the beliefs, actions and intentions of individuals (kerlinger & lee, 2000:601). the standardised interview is regarded as being based on subjective narratives representing the reality of the interviewee (henning, van rensburg & smit, 2005:55). the essence of the experiences of these individuals was formulated, discussed and interpreted by means of triangulation against the reported literature. multiple, semi-structured, individual interviews, with open-ended as well as closed-end questions, were conducted in order to investigate the functional success or failure of “familiness” in different south african family-business groups. the interview is generally regarded as a powerful method of investigation, revealing data about attitudes, intentions, feelings and behaviours which no other research tool is quite capable of accommodating (kerlinger & lee, 2000:699). the cost, time, effort and considerable skill needed for interviewing (greef, 2005:297; kerlinger & lee, 2000:699) made it both difficult and impossible to investigate a large sample size. interviews were scheduled with different family representatives in managerial positions in family-business groups in south africa. the respondents were informed about the subject under investigation. questions concerning the social capital activities in the family businesses were related to their past, present and future orientations (kerlinger & lee, 2000:602). the open-ended questions were constructed, as recommended by henning et al. (2005:158–159), with initial introductory questions, followed by intermediate and concluding questions. the interviews were evaluated, coded and categorised by means of a microsoft excel worksheet, using standard content-analysis techniques (lincoln & guba, 1985:337–338) and then loaded onto the excel word computer software. the data classification by means of computer software provides for the assignment of the themes into categories, called coding (henning et al., 2005:129) or enumeration of frequencies (lincoln & guba, 1985:338). the initial coding and enumeration were undertaken by the author and audited by two individuals with doctoral degrees. any possible discrepancies that existed were resolved by these three individuals through discussion. this process enabled the researcher to observe the different patterns within categories in terms of their similarities and variations (henning et al., 2005:129). finally, connections between the different categories were formed. data triangulation took place in the discussion of the findings, using information from the interviews, archival material and literature reviews (de vos, 2005:362). therefore, variables that emerged from the literature review were compared with the variables that emerged from the case studies through interviewing (barringer, jones, & neubaum, 2005:678). the sajesbm ns volume 1 (2008) issue 1 75 ______________________________________________________________________________________ discussion incorporated the four constant, comparative stages of evaluation according to grounded theory, as suggested by glaser and strauss (1967:105-113). problem statement and research questions the main problem investigated in the current study was to explore the existence or nonexistence of social capital in family-business groups in south africa, and the role it plays in generation-transition of family businesses. the following research questions were asked: question 1: how does the family-business performance relate to the firm’s social capital activities? question 2: would you say that social capital leads to the superior performance of family businesses when they are compared with non-family businesses? question 3: what is the role of social capital in the family business? results the results are discussed in relationship to each research question. question 1: how does the family-business performance relate to the firm’s social capital activities? the relationship between family-business performance and social capital activities of family businesses is reported in table 1 and figure 1. table 1: the relationship between family-business performance and social capital activities of family businesses code f re qu en cy p ar ti ci pa nt example 1 there are two parts to philanthropy: there is charity, which is helping those who can’t help themselves; and social investment, which is helping people who can help themselves, but who do not have the experience or the resources (financial, or otherwise) to make these happen. 2 even the grandchildren are exposed to social responsibility issues from the age of 16, when they receive their own allowances and have to report to the family business council on the monies spent. 5 3 you know, there are 270 offices, it is about close on 3000 people, and there is a strong sense of community, social involvement. so we push very hard on each of those offices around the country to be involved in philanthropy. philanthropy 4 during the days of petrol restrictions, my father took me to drive with him, taxiing people to nkandla, jacob zuma’s home town, but we could not come back, it was a long weekend, there was not petrol and i spent that entire weekend in a little village, no ablutions, there is nothing, and if you look at the food that has been cooked, and the water…. sajesbm ns volume 1 (2008) issue 1 76 ______________________________________________________________________________________ table 1 continued code f re qu en cy p ar ti ci pa nt example 5 [name of family business’s] whole existence is about philanthropy. you will know this dr venter, because you and i are from the same vintage, that when i grew up in upington, when you saw a child of colour in decent clothes, that was an exception. [family business name] made the difference. in 1966 you could dress a child in our family store from head to toe for under a rand. instilled values 3 1 my father agreed with us as a family, about what the family was going to give to philanthropy and how much we as children should give. he wanted us to feel that we would recognise these charities and that it wasn’t just his idea. so he infiltrated into us a type of, i would not call it a discipline, but a type of attitude that said there is a time to make money, there is a time to look after our own interests and there is a time to look after the interests of others. so that was the kind of culture and philosophy that he and my mother together brought into the family. 2 i was reflecting the other day, on the number of children who came to live with our family, from other families, because my father was a school principal as well as running the family business, he was trying to help out with these families, educating these children. 3 i think it was just a feeling that if you were successful, you were privileged, and then you could not just sort of, you know, i think it is an important element of the family to sort of not be like scrooge, go and count your money every evening and see how much money you have got. if you have got enough, then that is fine, then you must do other things for other people. 2 1 my father had two secretaries. the one’s job was a normal secretary’s job. the other one was a woman of character…. she had the hugest heart. her job was to do two things, one, everyone in the organisation had a responsibility to let her know if somebody was ill, or if there was a marriage, or if there was a death. my father would respond personally and people could not believe that he knew and cared for their well being. morale 2 the third leg of the table (social responsibility leg) becomes the sort of driving leg, keeping the morale or the interests in the company that you asked me about, because it involves all the staff. they all contribute to the social and environmental issues. 1 franchising has been good for us. besides the feeling of sharing, we are creating entrepreneurs. creating entrepreneurs 2 2 franchising creates opportunities for entrepreneurs. 1 i think we learned from example. my father would walk into a factory and ask: ‘how is your wife? she wasn’t well the last time i saw you?’. we saw the humanity in this. that humanity went right through the business. we could see clearly the response to my father’s caring attitude. founder sets the tone 2 2 i can think of hundreds of occasions where we’ve probably made questionable business decisions, but the right human decision. employees know that unless it is beyond our control, we would not err on the side of familiness, i.e. look after them, in whatever way we can, against running a corporation. sajesbm ns volume 1 (2008) issue 1 77 ______________________________________________________________________________________ table 1 continued 1 my mother used to spend her entire day on a number of various causes, with emphasis on three main ones. one was the development of a home for retarded people children and adults who could not find a place in society. requiring an institution, she was particularly involved in the [name of orphanage], which received many, many children from families who were destroyed by the nazis during the holocaust. she also managed the women’s benevolent society, for persons who fall on hard times, illness, were out of a job, whatever the circumstances, raising funds, and giving out food, or clothing or free medical attention. my father was supportive of all my mother’s activities. example of parents 2 2 we had a definite view about our social responsibilities. my grandfather, who was a wonderful old man, always used to say that it was easier to give than to receive and that it was a responsibility. if you did well, you should see to it that other people also did well. importance of providing jobs 1 you know, black families are upwards of 8 people. so indirectly [name of family business], with that number of employees, supports the livelihood and the fortunes of 50 000 x 8 individuals, that is 400 000. appointment of underprivileged individuals 1 we often employed people with a background from an orphanage upbringing. these people were introduced to the company and in 70% of cases turned out to be outstanding people. my father argued that when a person came from institution with no parents, then given the opportunity to develop, he would only be delighted to take it and often worked harder to achieve it. figure 1: the relationship between family-business performance and social capital activities of family businesses sajesbm ns volume 1 (2008) issue 1 78 ______________________________________________________________________________________ the family-business groups’ activities of social responsibility are an extension of their economic performance, acknowledging the communities in which they operate. for this reason they are active in philanthropic activities (n=5), instilling the values (n=3) of the family business in their stakeholders, and uplifting the morale (n=2) of the staff. family businesses play a major role in creating entrepreneurs (n=2) outside the family business through training, education and franchising. the founder often sets the tone (n=2) in a family business in respect of philanthropic participation by the company as well as the family itself. an important statement made in respect of providing jobs (n=1) indicated that, for each individual it employed, the family business indirectly provided support for seven to ten people, since that was in general the number of dependants relying on each employee for a livelihood. in addition, training and education are offered to underprivileged individuals (n=1), in the belief that they are more often than not dedicated workers. question 2: would you say that social capital leads to the superior performance of family businesses when they are compared with non-family businesses? the characteristics that play an important role in the superior performance of family businesses through social capital are represented in both table 2 and figure 2. table 2: the relationship between social capital and the superior performance of family businesses code f re qu en cy p ar ti ci pa nt example word of mouth 1 when mr mandela was released from jail, he communicated with many executives and he visited many businesses. he said to me, “you know you don’t publicise enough what you do”. i said, “you know, it is a strange thing, people get to know what i do in the community”. he said, “i didn’t know that you and your wife held bursary schemes, you should be publicising that” i said, “well we just do it our way and it seemed to have worked. you must realise that many people, especially prominent one’s, abhor publicity”. appointment of underprivileged individuals 1 we often employed people with a background from an underprivileged past and/or orphanage upbringing. these people were introduced or recruited through personal visits, and in over 70 percent of cases proved highly reliable. my father argued that when a person emerged from institution as an orphan, then given the opportunity to develop, he would not only be highly delighted but would tend to work harder and be more diligent than people who were of a privileged background. providing for the underprivileged 1 the founder applied low cost clothing to a sector of the community that really was in need. so he satisfied the need. ploughing back into society 1 i think if you are successful, you can’t take your money away with you. you have got to pay back to society the benefits society has given you. sajesbm ns volume 1 (2008) issue 1 79 ______________________________________________________________________________________ figure 2: characteristics that play a role in social capital leading to the superior performance of family businesses 0 0.2 0.4 0.6 0.8 1 1.2 word of mouth appointing underprivileged individuals providing for the underprivileged ploughing back into society the view was generally expressed that philanthropic activities undertaken by a family business did not require wide publicity, since the deeds would be communicated by word of mouth (n=1), via the employees and other stakeholders. however, a conflicting opinion existed, making the point that any major philanthropic act by a business, if reported in the correct context by the press, and given a prominent profile, could inspire others to follow suit and simultaneously could increase morale within the company. the point was raised that the appointment of underprivileged individuals (n=1) had proved to provide outstanding workers, since such individuals appreciate the opportunity to gain the necessary experience and the opportunity to climb up the corporate ladder into more responsible jobs and to achieve better living standards. without these job opportunities, such underprivileged employees would remain just “numbers” on the payroll. some family businesses have a serious commitment to providing support for the underprivileged, and through philanthropy ploughing back into society (n=1), in this way acknowledging both the support and benefits that society has made available to the family business. question 3: what is the role of social capital in the family business? the role of “familiness” in the performance of social capital is reported in table 3 and figure 3. sajesbm ns volume 1 (2008) issue 1 80 ______________________________________________________________________________________ table 3: the role of social capital in the family business code f re qu en cy p ar ti ci pa nt example priority of social values 3 1 our social priorities started with my mother. she used to spend her entire day on a number of causes, but three main ones. one was the development of a home for retarded people, not only children, but also adults, who could not find a place in society, and who needed an institution, where they could be properly cared for and treated. at the same time, exposure to others seemed to be somewhat therapeutic for them. she was particularly active, (just before and during world war 2, in an orphanage, took in many children from families who were virtually destroyed by the nazis during the holocaust. she was head of what was called the “homeless-aftercare programme”, that continued until the children left the orphanage and returned to society. if they got married, she had a whole arrange; she used to go and collect wedding dresses from all over and had a whole wardrobe, in different shapes and sizes, colours, and so on. she would build a trousseau up for the girls from the orphanage. and as we put in the book, also many of the kids who matriculated, and either went to university or did not go to university, she used to stream them into the companies, many different companies. nobody could ever refuse my mother’s request to give an orphan a job, never! she also ran the women’s benevolent society. 2 at executive meetings we always deal with the social issues the question is always asked: what are we doing on social responsibility? 3 in south africa we certainly were very aware of what we needed to do and to participate in things like the small business development corporation, to be giving funding to religious organisations, and to help educate young people who could not afford it. therefore it was unquestionably one of our responsibilities and i practised that same sort of philosophy. 1 even during the apartheid years, my father was supportive of black social development. he agreed with us as a family about what we would give to black social development and how much we as children should give. he wanted us to feel that we would also recognise these charities and that it wasn’t just his idea. 2 we are constantly looking at needs in the community that the family business can attend to. ploughing back into the community 3 3 i think there is very much a sense of contribution and wanting to give something back to society and it is something that from a corporate culture perspective we push all the time. and i think it is very part of the south african ethos these days, and it is important. sajesbm ns volume 1 (2008) issue 1 81 ______________________________________________________________________________________ table 3 continued code f re qu en cy p ar ti ci pa nt example political influence 3 1 even during the apartheid years, my father was supportive of people of colour. during the apartheid years we made contact with the banned organisation, the anc. there were two motives, one: to really find out what their ideology would be if they were really in control. we all read the freedom charter, but slogans are one thing and actions are another. we tried to make them realise that capitalism and apartheid were not one and the same thing. a third obvious element was that we would like to see apartheid dissolved, but in our time, and in our mind’s time, it was a process over time. in other words, it should fade away by introducing either limited franchise, or something like a tri-cameral parliament. we never thought it would disappear overnight. so we became more and more involved, and i started to get to know a number of individuals, some of them who were under house arrest, but i also played quite a role in bringing out a number of top americans, particularly, some europeans, some israelis, to the country incognito; some of them did not want to come under their own names. some of them would not have a stamp in their passports; it was on a piece of paper. i them to study every shade of political opinion, from the pac, anc, through to the progressives, to the nationalists, to the conservatives, to the awb, for a period of time. so they could see what we were facing. 1 i was very friendly with neil van heerden, the director general of foreign affairs. we worked very closely together, and i worked with our embassy in washington, and israel, and london, and so on. i would return from meetings with them and advise fw de klerk and pik botha what the hard facts were, so that i had a better voice. if i voiced it openly; they would not even want to see me. 2 the founder was a nap and i came from an sap family. when the family business was founded, there was an act that prescribed that you had to have different toilets for the different races. but at the family store’s head office he refused to have this and there were only separate toilets for men and for women and not for the different races. political influence 3 3 another of our mantras was our treatment of our black clientele. the growth and success of our two family businesses were predicated on the goodwill, service and relationships that we developed with our black clientele, which, together with providing them with the best quality and styles, is still the holy grail of the business today. nothing was too much trouble in order to satisfy our customers and our reputation grew as a result of this. sajesbm ns volume 1 (2008) issue 1 82 ______________________________________________________________________________________ table 3 continued code f re qu en cy p ar ti ci pa nt example bee 2 1 i have a very simple approach, you know, i think bee is a “sine qua non”. it is imperative. we have to do it and we have to do it in different ways, and i have found some quite innovative ways in structuring it and funding it. in february 1991, when we were at the world economic forum in demas, de klerk announced the release of nelson mandela, and the unbanning of the anc. we could hardly believe this. none of us expected it. nobody thought it was going to happen, just like that. i then went to the president of the world forum and i asked him if the world will drop sanctions against south africa and how would he feel about it? a friend of mine was with me, a former chief executive of premier milling. this friend was very proactive in that scene. we both asked the president, what if we could bring the past, the present and the future of south african to the world forum, de klerk, mandela and buthelezi? for the first time in history they would share the same stage and would be able to tell the world the ultimate philosophy, because we still had that interim situation, till 1994: the period of codesa. the world would begin to meet mandela, not as a prisoner and a murderer, and de klerk as a human being who had done amazing things to change, and buthelezi who represented the zulus. bee 2 1 well, he was ecstatic: “this is fantastic, because south africa is becoming more and more of a hot potato”. one would not believe the rebuffs that we as south africans used to get, particularly from the far east and some of the other african countries. we were now given prime time on cnn and other international news broadcasts, and right after our session, for the first time the nine presidents of the dismantling of the soviet union spoke together on the same platform, of their proposals for those countries. both made history at that time and the whole world became aware of it: the fall of apartheid and the fall of the communist union. afterwards mandela said to me: “you know, you must understand that i have been silenced for so many years, but here was my first opportunity to say what i wanted to say to the world”. 2 we developed a bee company: which handled all our government contracts and have a 49% interest in it. 1 we have trained 5000 kids playing in field bands in 23 different locations in the country. they are also taught about aids, and aids prevention. some of them have become spokesmen on aids prevention. we undertook a recent survey amongst about 40 odd percent of our kids, from 14 years up to 18, 19. there was less than one percent prevalence of hiv. aids prevention 2 2 as a strategic response to hiv/aids, award winning workplace programme successfully minimises the impact of the disease on the company through a range of interventions, including providing antiretroviral treatment (art) for employees and their spouse or life partner. sajesbm ns volume 1 (2008) issue 1 83 ______________________________________________________________________________________ table 3 continued code f re qu en cy p ar ti ci pa nt example helping people to help themselves 2 1 because of to aids, it is estimated that by 2010 in south africa, around two million children will be left to fend for themselves in an ominous new phenomenon called child-headed households. at best, we are working at providing sufficient care so that the children of south africa can grow up with love, morals and the promise that an education holds. 2 from a national perspective we have in the past been involved in habitat for humanity. essentially it is a fantastic programme that looks to empower people to build their own homes. creation of selfdiscipline in underprivileged children 1 1 my brother and i have been absolutely thrilled when we used to see the american marching bands, the college bands, and the football stadiums. there is nothing like that in south africa. so we gave six million to start a project. we got hold of a national director, a woman … and it started with one band, and it became two, today we have just on 5000 kids in 23 different bands in different locations in the country. little did we realise the significance that the project would have in the kid’s lives. all these initiatives have the most unbelievable spin-offs; they became part of a team, and had a sense of belonging of something worth while. there was also the discipline in a team. one cannot be a successful player if the team does not work together. if they missed three rehearsals without adequate explanations they were out, and the place taken by hundreds of kids who line up every rehearsal to see if they could get into the bands. but we had a fall out rate of only two percent. during that period, they were taught about aids, aids prevention. they became spokesmen on aids prevention. we did a recent survey amongst about 40 odd percent of our kids, they had to agree to, and it was of kids from 14 years up to 18, 19. there was under one percent prevalence of hiv to this very day. we teach them personal responsibilities, we teach them family responsibilities. we teach them community responsibilities. these kids are artists and they have to perform. performance means you cannot just rehearse all the time, you have to have an audience. we insist that they play, that there is an incentive, they play for money. whether it is football matches, or civic occasions, or whatever, they get paid a very small amount, but that is not the point. that money has to be earned to pay for their uniforms, which they wear when we have the national competitions. then comes the most unbelievable art products. we managed to persuade the norwegian government to come and have a look at our field bands. and the reason they were prepared to do it, is because in norway, music is one of the compulsory subjects that they have got to undertake in most of the public schools. they have 60 000 kids at any one time going through the norwegian music and band federation. the best kids, who show the greatest promise, a selection is made of about 30 or 40 of them, go for three months to norway, to further their education, particularly in music, reading and so on, and play with sajesbm ns volume 1 (2008) issue 1 84 ______________________________________________________________________________________ their top bands. then about eight to ten every year go for nine months to norway, to further their education. medical support 1 1 one day zelda phoned and told me that madiba wanted to speak to me. he said: ‘young man, you have got to do me a favour. on my desk i’ve got a picture of a young girl who is going to die, if she doesn’t get medical treatment. her muscle system, her nervous system around her face is collapsing, her eyes are closing, and soon she won’t be able to swallow. so she either has to be fed intravenously for the rest of her life, or receive specialised surgery. there is only one surgeon that can cure her that they know of. he is in toronto canada, and there are high costs and high risk involved. so, i said to him, to leave it to me. my son phoned the surgeon, told him that mandela wanted him to come out. would he do it free of charge? he said: ‘not only will i do it free of charge, i’ll bring a team from johns hopkins hospital, which is the biggest paediatric hospital in the world.’ he brought a team out and helped to train specialists in south africa on this and other facial problems, without any cost. the child subsequently recovered. mandela was over the moon. as a result of this, our family has set up ‘the smile foundation’, with my son as chair person. through these circumstances hundreds of kids are being operated on in this country. there is a special week, every few months, the hospital gives us beds and free accommodation treatment, and the specialists offer their services free. now, mandela’s one concern, for one child, has turned the lives of hundreds of kids …. not just the children, also the south african medical profession has got this knowledge now. figure 3: the role of “familiness” in the performance of social capital 0 0.5 1 1.5 2 2.5 3 3.5 1 priority of social responsibility ploughing back into the community political influence bee aids prevention helping people to help themselves creation of selfdiscipline in underprivileged children medical support sajesbm ns volume 1 (2008) issue 1 85 ______________________________________________________________________________________ social responsibility (n=3) seems to be a major priority in the social capital channel of family businesses, ploughing back into the community (n=3) while acknowledging the benefits and business opportunities the company receives from the community at large. some of the south african family-business groups have exercised important political influence (n=3), especially during the apartheid years, by openly opposing the government of the day. it was felt that today’s black economic empowerment (bee) (n=2) requirements stemmed from these initiatives and culminated in legislation that has moved bee a massive step forward. monetary aid is provided for hiv/aids research, as well as direct assistance for those already suffering from the condition, through the prevention of aids (n=2) programmes. in the process, training is offered to hiv/aids sufferers, which enables them to help themselves (n=2) and, as a result, plays a meaningful role in the economy. this tends to prove that family businesses have a “heart” and practise a caring influence in respect of this dreaded disease. on the other hand, the development of important upliftment projects for underprivileged children seems to play an important role in the creation of self-discipline in underprivileged children (n=1). the role that family businesses play in medical support (n=1) of the community should not be underestimated. conditional matrix a conditional matrix was formed as suggested by goulding (2002:87) andstrauss and corbin (1990:11; 1998:190), on the grounds of the following lines of reasoning: • the numbers of the codes were grouped into categories that logically belonged together. • the average of the code categories was calculated by dividing the total of the comments by the number of channels. table 4: grouping of codes into logical categories name of code category code total comments average instilling values 3 priority of social values 3 founder sets tone 2 example of parents 2 word of mouth 1 instilling social values in family and business 11 3.7 morale 2 appointment of underprivileged 1 providing for underprivileged 1 creating entrepreneurs 2 importance of providing jobs 1 creating a morale of high social responsibility 7 2.3 philanthropy 5 general philanthropy 5 1.7 positive political influence 3 bee 2 positive political influence 5 1.7 ploughing back into society 1 ploughing back into community 3 ploughing back into society 4 1.3 aids prevention 2 medical support 1 medical support 3 1 helping people to help themselves 2 creation of self-discipline in children 1 self-help/self-discipline 3 1 figure 4 is an illustration of the conditional matrix of the investigated important social responsibility categories of the investigated sample of family businesses. sajesbm ns volume 1 (2008) issue 1 86 ______________________________________________________________________________________ figure 4: conditional matrix of social responsibility activities of investigated family businesses in respect of the investigated family businesses, figure 4 indicates that instilling socialresponsibility values in the family and the business is the nucleus of social conscience in those businesses, giving the highest priority to ubuntu-driven actions. sensitising family members and employees to a business ethos of social responsibility issues in the family businesses is nurtured by sustaining a positive morale in the resolution of community issues, leading to continuous philanthropic support, even to the extent of pursuing reconciliation as mediators in political affairs. in this way, family businesses continuously plough back, into the society which they embrace, value and respect as instil social responsibility values self-help/self-discipline medical support ploughing back into society positive political influence philanthropy high morale of social responsibility sajesbm ns volume 1 (2008) issue 1 87 ______________________________________________________________________________________ intangible pillars of the family business. some of these family businesses have even been involved in medical, self-help and self-discipline programmes. discussion it is concluded that the social capital culture of family businesses seems to be closely related to the concept of ubuntu. the findings indicate the intrinsic care of these family businesses, ploughing back benefits, and uplifting and providing dignity to the communities in which they function. answers to the open-ended questions indicate that philanthropy and social responsibility issues enjoy high priority in these family businesses, which continuously plough back resources into the communities which they serve. this finding confirms the postulation that family businesses are highly orientated towards social responsibility (lester & canella, 2006:755; stavrou et al., 2007:157; ward, 2003:72) and keenly involved in philanthropic care (ward, 2003:128), fulfilling a valuable role in the values of communities (kleberg, 2001:10). social capital activities are seen as a method of instilling the values of the family business whilst uplifting the morale of the business. this emphasises the argument of aronoff et al., (1996:13) and aronoff & ward (2001:31), that a strong sense of identity and empowerment is formed through family businesses’ social responsibility activities. they create a sense of meaning in a family business (ellis, 2002:63). it seems that it is especially the founders of family businesses that set the tone in establishing social responsibility programmes. in this way, the community is served in many ways: entrepreneurial qualities are nurtured in society, underprivileged individuals are taken care of and uplifted, and bee is actively practised. in supporting underprivileged individuals the businesses also teach them to help themselves by nurturing self-discipline and encouraging them, for example, to participate in the prevention of aids through various educational programmes. the important role family businesses have played and are playing behind the scenes in the dismantling of apartheid became evident during these interviews. they played a significant role in influencing the political climate of the country as a whole, not least in bringing opposing parties together for negotiation, a process that eventually led to the transition of power and the democratic election of the first multi-racial south african government (aronoff & ward, 1995:122; dommisse & esterhuyse, 2005:93; gibson, 2002:128; heck et al., 1994:3–4; hocking, 1973:193, 197; marx, 1986:217; venter, 2003:10, 22; wessels, 1988:212). the main conclusion is that social responsibility programmes within family businesses give these businesses the opportunity to plough back into society many valuable resources in order to uplift those communities from whom the businesses receive most support. in this way, the businesses help to create a healthy society in which to operate. according to lester and canella (2006:767), the literature concerning community-level family-business social capital activities is not extensive when compared with the sajesbm ns volume 1 (2008) issue 1 88 ______________________________________________________________________________________ literature relating to non-family businesses. in this regard, the current study makes an important contribution to the body of knowledge concerning family-business social capital activities. limitations of the study only a small portion of large family businesses in south africa were investigated. it would be interesting to compare the findings of the current study with investigations of large family businesses in other countries, and with smaller family businesses in south africa and other countries. some questions were sensitive in nature. it is possible that, because of the sensitivity of the subject-matter, answers relating to this issue might have been subject to response bias. another factor is that, because the owners and founders of large family-business groups notoriously guard their privacy, there is a possibility that response bias could have affected the answers to some of the questions. the time limitation imposed by the seniority of the interviewees made it difficult to discuss each question in the detail that it deserved. it has to be emphasised that because of the time limitation of some of the individuals interviewed, and the setting of nonprobing questions, coupled with their general unwillingness to report on social responsibility issues (probably due to their reluctance to boost their own egos), these family business owners probably under-represented the true role they play in the betterment of society. directions of future research future research could draw a comparison between the social capital activities of family businesses and those of non-family businesses. future studies could also include more structured forms of investigation, for instance, more structured interviews and likert-type questionnaires that might provide a more quantitative investigation of the phenomenon of social capital activities. conclusion the social-responsibility programmes within large family businesses give these businesses the opportunity to plough back into society some valuable resources and in so doing uplift those communities from whence such businesses receive their greatest support. in this way, the businesses help to create a relatively healthy society in which to do business. sajesbm ns volume 1 (2008) issue 1 89 ______________________________________________________________________________________ the implication is that social-responsibility programmes should be carefully nurtured in family businesses because of the important role they play in creating a stable and healthy socio-economic society. the study gives evidence of social responsibility activities in family businesses in south africa that closely relate to and support the concept of ubuntu. adoption and establishment of these collectivistic ubuntu activities by the general business community in this country could contribute tremendously to the alleviation of poverty and unemployment and to the support of the ever-increasing number of aids orphans. the practising of social capital in family businesses confirms nussbaum’s (2003:7) argument that ubuntu gives an emotional soul to a business. references about donald gordon. 2006. (10p), [online] available from: www.gibs.co.za/home.asp [downloaded: 2006-05-08]. altron annual report. 2006, february 28. johannesburg: allied electronics corporation. altron code of conduct. 2006. [online] available from: http://www.altron.co.za /accountability.asp .pdf [accessed: 2006-01-04]. anglo american. 2005. report to society 2005: anglo american: a climate of change. london: anglo american. anton rupert. 2006. tukkie, 14(1):8–14. aronoff, c.e., astrachan, j.h. & ward, j.l. (eds). 1996. family business resourcebook ii: a guide for families who own businesses and the professionals who serve them. marietta, ga: business owner resources. aronoff, c.e. & ward, j.l. 1995. family-owned business: a thing of the past or a model of the future? family business review, 8(2):121–130. aronoff, c.e. & ward, j.l. 1996. chief’s toughest job: teacher. in: aronoff c.e., astrachan, j.h. & ward, j.l. (eds) family business resourcebook ii: a guide for families who own businesses and the professionals who serve them. marietta, ga: business owner resources: 59–60. aronoff, c.e. & ward, j.l. 2001. family business values: how to assure a legacy of continuity and success. (family business leadership series, number 12). marietta, ga: family enterprise publishers. babbie, e. 2005. the basics of social research. 3rd ed. london: thomson wadsworth. barringer, b.r., jones, f.f. & neubaum, d.o. 2005. a quantitative content analysis of the characteristics of rapid-growth firms and their founders. journal of business venturing, 20(5):663–687. barron, c. 2006. the benevolent tycoon. sunday times, january 22:15. baylis, t. 2006. about trevor baylis, the inventor of the wind-up technology. innovative technology. [online] available from: www.windupradio.com/trevor.html [accessed: 2006-06-16]. binedell, n. 2005. case-study: the watson group: shaking up traditions of the family business. business day management review, april:6–7. sajesbm ns volume 1 (2008) issue 1 90 ______________________________________________________________________________________ bornheim, s.p. 2000. the organisational form of family business. dordrecht: university of st. gallen. clockwork radios. 2002. september 6. [online] available from: www.bbc.co.uk/dna/h2g2/pdf [downloaded: 2006-06-16]. cooper, d.r. & schindler, p.s. 2006. business research methods, 9th ed. london: mcgraw-hill. coulson, m. 2006. the founder of a great sa business dynasty passes on, but his legacy will extend far beyond the business world. financial mail, january 27:42. dahle, c. 1999. the freeplay group, based in cape town, south africa, builds products that capture the imagination of the world – and that change the world. the agenda – social justice, april, 23:166–174. [online] available from: www.fastcompany.com/online/23/socjust.html [accessed: 2006-06-16]. davis, p. 1983. realizing the potential of the family business. organisational dynamics, 5(1):47–56. de beers. 2005. seven things you need to know about ‘living up to diamonds’. leadership in hiv aids, 7:16–25. de vos, a.s. 2005. combined quantitative and qualitative approach. in: de vos, a.s., strydom, h., fouché, c.b. & delport c.s.l. (eds) research at grass roots. 3rd ed. pretoria: van schaik: 357–366. de vos, a.s., strydom, h., fouché, c.b. & delport, c.s.l. (eds). 2005. research at grass roots . 3rd ed. pretoria: van schaik. dommisse, e. 2006. anton rupert: prins van handel. rapport, january 23:17–18. dommisse, e. & esterhuyse, w. 2005. anton rupert: a biography. cape town: tafelberg. doolan, j. 2005. anton rupert: “conservation without money is conversation”. leadership, 255:18–22. ellis, e. 2002. tata steels itself for change. fortune, april 29:61–67. formby, h. 2006. steely resolve: sa’s self-made tycoon presides over a company with a bigger sales turnover than de beers. financial mail, september 1:24–27. gibson, k. 2002. a case for the family-owned conglomerate. the mckinsey quarterly, 4:126–137. glaser, b. & strauss, a. 1976. the discovery of grounded theory: strategies for qualitative research. chicago: aldine. goulding, c. 2002. grounded theory: a practical guide for management, business and market researchers. london: sage. greef, m. 2005. information collection: interviewing. in: de vos, a.s., strydom, h., fouché, c.b. & delport, c.s.l. (eds). 2005. research at grass roots. 3rd ed. pretoria: van schaik: 286–313. heck, r., upton, n., bellet, w., dunn, b. & parady, p. 1994. family business as a field of study. working paper, international family business program association. durham: university of new hampshire. [online] available from: www.genusresources.com.pdf [downloaded: 2003-01-12]. henning, e., van rensburg, w. & smit, b. 2005 finding your way in qualitative research. 3rd ed. pretoria: van schaik. herd, d. 2006. at home with the wieses. top billing, march:50–55. sajesbm ns volume 1 (2008) issue 1 91 ______________________________________________________________________________________ hocking, a. 1973. oppenheimer and son. cape town: mcgraw-hill. jones, i.w., nyland, c.m. & pollitt, m.g. 2001. how do multinationals build social capital? evidence from south africa. (esrc centre for business research, working paper no. 220). cambridge: university of cambridge. karakoulaki, h. 2002. social capital vs family-capital: allies or opponents? economic geography research group, working paper 02-11. oxford: university of oxford. [online] available from: www.geog.ox.ac.uk/research/wpapers.pdf [downloaded: 2003-03-03]. kerlinger, f.n. & lee, h.b. 2000. foundations of behavioural research. 4th ed. london: harcourt. kleberg, s.s. 2001. destroying myths and creating value in the family business. second annual family business gathering. stetson university, deland, florida. unpublished manuscript, february 2–3:1–16. koenderman, t. 1982. altech’s bill venter: the driving force. management, august:20–29. laspada, s. 2006. the role of philanthropy. paper presented at the step’s third symposium: succession and the family enterprise, 5-6 april 2006. lester, r.h. & canella, a.a. 2006. interorganizational familiness: how family firms use interlocking directorates to build community-level social capital. entrepreneurship theory and practice, 30(6):755– 775. lincoln, y.s. & guba, e.g. 1985. naturalistic inquiry. london: sage. lovell, p. 2006. fleming family and partners. paper presented at the step’s third symposium: succession and the family enterprise, 5–6 april 2006. lubner, r. & lubner, b. 1997. plate glass and shatterprufe industries limited. johannesburg: pgsi. malhotra, n.k. 1996. marketing research: an applied orientation. 2nd ed. london: prentice-hall international. maqoko, z. & dreyer, y. 2007. child-headed households because of the trauma surrounding hiv/aids. hts, 63(2):717–731. martos, m.c.v. & torraleja, f.g. 2007. is family business more socially responsible? the case of grupo cim. business and society review, 112(1):121–136. marx, s. (ed.). 1986. dr anton rupert: pro munere grates. lesings as ere-professor in die departement bedryfsekonomie. pretoria: universiteit van pretoria. neuman, w.l. 2000. social work research methods: qualitative and quantitative approaches. boston: allyn & bacon. nevill, g. 2004, july. property of the month: july 2004 – the soul of spier. property magazine. (4p), [online] available from: www.thepropertymag.com/article.asp? contentid=7500.pdf [downloaded: 200605-04]. ngoenha, s.e. 2006. ubuntu: new model of global justice? indiglinga – african journal of indigenous knowledge systems, 5(2):125–134. nussbaum, b. 2003. ubuntu and business, reflections and questions. world business academy, 17(3):1–16. sajesbm ns volume 1 (2008) issue 1 92 ______________________________________________________________________________________ parr, m. 2006. building great african companies. succeed, november:26–27. poovan, n., du toit, m.k. & engelbrecht, a.s. 2006. the impact of the social values of ubuntu on team effectiveness. paper presented at the first international conference on value based leadership, stellenbosch, 14-16 march:1-21. poutziouris, p.z., steier, l. & smyrnios, k.x. 2004. guest editorial: a commentary on family business entrepreneurial developments. international journal of entrepreneurial behaviour & research, 10(12):7– 11. prichard, d. 2004. hearing grasshoppers jump: the story of raymond ackerman as told to denise prichard. cape town: david philip. prichard, d. 2005. the four legs of the table: raymond ackerman’s simple, straight-forward formula for success as told to denise prichard. cape town: david philip. rogerson, g. (ed.). 2003. memos from the chairman. 4th ed. johannesburg: altron. romain, k. 1989. larger than life: donald gordon and the liberty life story. johannesburg: jonathan ball. salgado, i. 2006. third generation tricky for family firms. the star business report, june 5:14. serwer, a. 2004. the waltons: inside america’s richest family. fortune, november 15:42-63. sol kerzner: back with a bang. 2004. (3p), [online] available from: http://www.safrica.info/doing_business/investment/kerzner-on&only.pdf [downloaded: 2006-06-15]. stavrou, e., kassinis, g. & filotheou, a. 2007. downsizing and stakeholder orientation among the fortune 500: does family ownership matter? journal of business ethics, 72(2):149–162. strauss, a. & corbin, j. 1990. basics of qualitative research: techniques and procedures for developing grounded theory. berlin: springer. strauss, a. & corbin, j. 1998. basics of qualitative research: techniques and procedures for developing grounded theory. thousand oaks, calif: sage. toyota chairman wessels dies. 2002. december 3. (2p), [online] available from: www.cartoday.com/content/news/singelpage.aspn?in=3691.pdf [downloaded: 2006-06-21]. uhlaner, l.m., van goor-balk, h.j.m. & masurel, e. 2004. family business and corporate social responsibility in a sample of dutch firms. journal of small business and enterprise development, 11(2):186–194. university of cape town, 2006. samson rickard stuttaford. (1p), [online] available from: www.175.uct.ac.za/creative/?f=2&s=1.pdf [downloaded: 2006-06-20]. van maanen, j. 1979. reclaiming qualitative methods for organizational research. administrative science quarterly, 24(4):520–526. van wyk, s. 2003, october 28. where hope springs eternal. mail & guardianonline. (5p), [online] available from: www.mg.co.za/articledirect.aspx?area=mg.pdf [downloaded: 2006-05-04]. sajesbm ns volume 1 (2008) issue 1 93 ______________________________________________________________________________________ venter, e., boshoff, c. & maas, g. 2003. the influence of relational factors on successful succession in family businesses: a comparative study of owner-managers and successors. south african journal of business management, 34(4):1–13. venter, w.p. 1984, march 28. address by bill venter, chairman of the panel for the in search of excellence conference. unpublished manuscript, 1-8. venter, w.p. 2003. the role of familiness in the performance of family-business groups. unpublished mphil thesis. johannesburg: rand afrikaans university. venter, w.p. 2007. the role of familiness in the success and failure of family-business groups. unpublished dphil thesis. johannesburg: university of johannesburg. vision was in advance of the new sa. 2001, july 29. (2p), [online] available from: www.suntimes.co.za/2001/07/29/business/surveys/survey17.pdf [downloaded: 2006-06-16]. von ahlefeldt, j. 1983. profile: dr albert wessels. success story in two fields. the star, june 9:8. ward, d. 2003, july 24. telephonic interview with the author. johannesburg. [interview notes in possession of the author.] wessels, a. 1988. farmboy to industrialist. johannesburg: perskor. white, l. 2006. the gates way. fair lady, april:45–49. wits university donald gordon medical centre (wdgmc). 2008. wits university donald gordon medical centre (wdgmc). [online] available from: http://www.dgmc.co.za/html [accessed: 2008-0229]. wood, s. 2004. building a family fortune. richer life, november:18–20. microsoft word 4 viviers venter fraud sajesbm ns 1_1_51-65.doc sajesbm ns volume 1 (2008) issue 1 51 fraud: an smme perspective suzette viviers* and danie venter nelson mandela metropolitan university department of business management / department of statistics nelson mandela metropolitan university suzette.viviers@nmmu.ac.za tel: 041 504 4062 fax: 041 583 2644 abstract given the important socio-economic role performed by small, medium and micro enterprises (smmes) and the negative consequences of fraud on their businesses, the objective of this study was to investigate the perceptions and management of fraud by smme owners/managers. respondents were of the opinion that fraud is a serious and increasing problem in corporate south africa and viewed ethics policy implementation and internal controls as important measures of fraud detection and prevention. only 10 per cent of respondents, however, made provision in their budgets for combating fraud. it is recommended that smme owners/managers gain more knowledge on inexpensive yet effective fraud detection and prevention measures. key words and phrases: small, medium and micro enterprises (smmes), causes of fraud, fraud detection, fraud prevention, internal controls, ethics programmes. introduction the socio-economic function performed by small, medium and micro enterprises (smmes) is widely recognised, both internationally and in south africa. a report by the department of trade and industry indicates that this sector accounts for almost 75 percent of all employment in south africa and contributes approximately 28 percent to gross domestic product (wadula, 2005:1). despite their important contribution to the socio-economic development of south africa, many smmes are exposed to the high cost of the fraud wave currently engulfing corporate south africa. it is conservatively estimated that fraud is costing south africa r80 billion a year or 6.6 percent of gdp; with an average of 6 percent of organisations’ turnover being lost due to fraud (interactive workshop on fraud, 2005:1). the true cost of fraud, however, goes beyond the financial loss and has implications for the firm’s reputation, morale and management time, as well as trust within the business (savage, 2003:6). pollick (2006) broadly defines fraud as “…deception made for personal gain; deliberate misinterpretation, which causes another person to suffer damages, usually in the form of property and/or services gained unjustly”. davies (2000:1) likewise defines fraud as “… all those activities involving dishonesty and deception that can drain value from a business, directly or indirectly, whether or not there is a personal benefit to the fraudster”. from the above definitions it is clear that fraud includes a wide range of activities, from mismanagement, theft and manipulation to white-collar crime, all of which involve some element of deception. for the purposes of this study, fraud was defined as deliberate deceit, planned and executed, with the intent to deprive another of their property or rights. sajesbm ns volume 1 (2008) issue 1 52 smmes are particularly vulnerable to fraud as they do not have adequate strategies or budgets to combat it (le roux, 2005:1; mayles, 2005:1). unfortunately, the prevention of fraud is often viewed by smme owners/managers as a costly and unnecessary exercise, which in turn leads to many smme owners/managers growing secure in the belief that their businesses are immune to fraud (morris, 2006:2). literature review in the following section a brief overview is presented of the causes of fraud, stakeholder involvement in fraudulent activities and fraud detection and prevention measures. causes of fraud according to wells (2005), the three main causes of fraud are pressure, opportunity and rationalisation. wells (2005) argues that if all three of these elements are present it is highly probable that an individual will commit fraud. examples of pressures that can lead to fraudulent activities are indicated in table 1. table 1: pressures that can lead to fraudulent activities financial pressures work-related pressures other pressures greed high levels of personal debt living beyond one’s means inadequate income bad investments the need to support addictive behaviour, e.g. drug and alcohol abuse or gambling unfair remuneration: real or perceived lack of promotion no recognition of performance unethical practices by management itself lack of job stability over-aggressive bonus plans ambition or need for power or control low self-esteem family or peer pressure emotional instability no fear of retribution or enjoying the challenge of “beating the system” disintegration of social values source: adapted from romney and steinbart (2003:280) and minnaar-van veijeren (2005:1) it can be argued that financial and work-related pressures are the most prevalent in the south african context. research by de vynck (2005:1) indicates that the typical fraudster in south africa is likely to be a male, between the ages of 31 and 45, who commits fraud due to the increasing costs of raising a family, the added financial pressure of buying a home and the escalating cost of education. according to van wyk (2005:2), financial pressure is a prominent cause of fraud in countries with a high unemployment rate, such as south africa. it has been said that “love is blind but greed is deaf…” (basson, 2000:40). kennaugh (2000:23) agrees and states that greed plays a crucial role in an individual’s motivation to commit fraud. opportunity refers to the condition or situation that allows a person to commit and conceal a fraudulent act (camerer, 2006:1). according to rossouw and van vuuren (2004:60), three actions are required to constitute an opportunity for fraud, namely: the person must be in a position of power or must have access to people in positions of trust in an organisation. sajesbm ns volume 1 (2008) issue 1 53 the person must understand the control system of the organisation as this gives him or her the ability to beat it. the person must have access to the assets of the business. opportunities often result from the lack of adequate internal controls that typifies many smmes (romney & steinbart, 2003:281). fraudsters have many excuses or rationalisations which are used to justify their behaviour. the two most common forms of rationalisation are “i am just borrowing”, or “everyone else is doing it”. other explanations given are that they are “not hurting a real person” or that they will do it “just this once” (romney & steinbart, 2003:281). le roux (2005:1) states that smmes are plagued by fraud on three fronts: misconduct, general ledger ‘mess’ and payment from debtors. in terms of misconduct, it was found that fraud is normally committed by the owner or management of the smme, as these individuals have unlimited access to company coffers. general ledger ‘mess’ refers to cases where the bookkeeper manipulates figures to reflect a skewed financial position of the smme. in most cases the perpetrator is better off financially as a result of the deed. this problem is rife in smmes, as many entrepreneurs do not have accounting expertise, which compels them to outsource this function to bookkeepers, who in turn prey on their lack of understanding of hidden fraudulent transactions. employees responsible for the payment from debtors normally carry out the third type of typical smme fraud. this form of fraud entails the creation of a shell company where fictitious debtors are created by the employee and money is siphoned off from the payment of debtors. stakeholder involvement in fraudulent activities internal stakeholders, such as employees and managers, are frequently the main culprits in fraudulent activities (kennaugh, 2000:23; motale, 2006:3; payne, 2000:5). makin and botes (2005:1), for example, state that more than 50 percent of fraudsters in south africa are in management positions. in contrast, the 2005 kpmg survey indicates that only 19 percent of uncovered fraud in large businesses involved managers. this apparent discrepancy is in line with hazelhurst’s (1999:55) comment that fraud committed by management often goes undetected, as managers frequently have the ability to override internal controls over financial and other records. smme customers are likely to commit fraud if opportunities present themselves. as most smmes accept credit cards, they become susceptible to the risk of credit card fraud. suppliers too may take advantage of smmes because of a lack of appropriate control. this may result in fewer items being delivered than stated on the delivery note or, perhaps worse, the wrong type of goods being delivered (indications of fraud, 2006:4). technological advances further present an increasing range of opportunities for external stakeholders to defraud smmes. for example, software can be downloaded from the internet which enables fraudsters to steal or copy data, alter programmes and cause systems to crash (indications of fraud, 2006:2). sajesbm ns volume 1 (2008) issue 1 54 fraud detection measures measures to detect fraudulent activities often include access controls, cctv, security equipment, internal and external audits and whistle-blowing mechanisms. unfortunately many smme owners/managers view such measures as a costly and unnecessary expenditure. as such, many do not employ any measures to detect fraud in their businesses (difficulty in quantifying, 2006:1; le roux, 2005:1). according to the ernst and young fraud and risk prevention business guide (2005:20), certain “red flags” point to fraud being perpetuated in a business. some of the most pertinent of these include: a high turnover rate of key accounting and financial personnel; low morale; an employee whose lifestyle is at variance with his or her known sources of income; changes in lifestyle or habits by key members of staff; excessive hours worked by key staff; and a lack of delegation of apparently mundane tasks by key staff. fraud prevention measures besides having fraud detection measures in place, smme owners/managers should also critically consider the ethical example which they set. according to payne (2000:5), attitudes and behaviour of employees toward economic crimes are more strongly influenced by the ethical tone and commitment at the top than by policies and procedures which are laid down to combat crime. unfortunately, top-level managers are often powered by greed and are in a position to cover up their actions (kennaugh, 2000:23). the development of a fraud policy and fraud response plan as part of a comprehensive ethics programme is also essential to effectively combat and manage the incidence of fraud in smmes (fighting fraud, 2006:7; moulton, 2005:1). problem statement and research aims given the adverse consequences fraud holds for smmes, their stakeholders and the south african economy, it is important to gain a better understanding of the causes thereof as well as preventive measures which smme owners/managers can implement to detect and manage it. the primary objective of this study was to investigate the perceptions and management of fraud by owners/managers of south african smmes. to achieve the primary research objective, the following secondary objectives were formulated: to conduct a literature review of various elements of fraud in corporate south africa; to modify and contextualise an existing kpmg fraud questionnaire to the smme sector in south africa; to conduct an empirical investigation of the perceptions and management of fraud by owners/managers of south african smmes; and sajesbm ns volume 1 (2008) issue 1 55 to provide pertinent recommendations based on the empirical results. by giving effect to these research objectives, it is hoped that a valuable contribution will be made to the body of knowledge regarding fraud in the local smme sector. in the following section, the research design and methodology of this study will be discussed. research methodology a positivistic research paradigm was adopted for this study. this approach consists of several beliefs about how a researcher can make sense to others and is based on the assumption that all researchers are fallible. as such, it is posited that human behavioural studies should be conducted in the same manner as studies in the natural sciences (blumberg, cooper & schindler, 2005:18–19). the adoption of a positivistic research paradigm called for the collection and analysis of quantitative data, which were analysed using descriptive and inferential statistics. care was taken to ensure the validity, reliability and general applicability of the findings. population and sample the target population comprised an estimated all smmes operating in the nelson mandela bay region (port elizabeth, uitenhage and despatch) irrespective of industry. although no statistics are available on the actual number of smmes operating in the nelson mandela bay region, ms mattheus, editor of the nelson mandela bay 2007 business guide, estimated on 1 april 2007 that there might be as many as 18 000 smmes operating in the area (mattheus, personal communication, 2007). to address the problem of low response rates associated with mail and telephonic interviews, it was decided to personally deliver the questionnaires to the owners or general managers of a convenience sample of 475 smmes in the region. time and financial constraints made it impossible to select a bigger sample. measuring instrument the 2005 kpmg africa fraud and misconduct survey questionnaire was modified and contextualised for application to the local smme sector. in section a of the questionnaire, the focus was on the demographic characteristics of the respondent (age, gender, number of years of business experience, function, position in the business and level of education) and his or her business (size of business in accordance with the national small business act no. 102 of 1996 and the branch of industry). section b of the questionnaire dealt with the perceptions and management of fraud by local smme owners/managers. the questionnaire consisted mainly of fixed-response questions, with provision for some open-ended responses. in contrast to the 2005 kpmg africa fraud and misconduct survey, all items were arranged on a five-point likert scale, some ranging from ‘not important at all’ to ‘very important’, whereas others gauged perceptions ranging from ‘strongly disagree’ to ‘strongly agree’. a sajesbm ns volume 1 (2008) issue 1 56 fixed response methodology was used to simplify the calculation of reliable summated scores. procedure during the months of july and august 2006 questionnaires were distributed to the sample of 475 smmes in the nelson mandela bay region. field workers provided a brief overview of the research objectives, instructed respondents regarding the completion of the questionnaire and collected the questionnaires at the respondents’ earliest convenience. of the 475 questionnaires distributed, only 300 completed questionnaires were suitable for statistical analysis. item analyses were conducted and descriptive and inferential statistics were calculated, using the microsoft excel and statistica packages. results in the following section the most pertinent empirical findings are highlighted. sample distribution the majority of respondents (72 percent) in this study were male. this finding should be viewed in the light of the fact that there are almost twice as many male entrepreneurs in south africa as female entrepreneurs (driver, wood, segal & herrington, 2001:22). more than a quarter of the respondents (27 percent) were between the ages of 30 and 49. in terms of years of experience in business, almost half of the respondents (47 percent), had over 15 years’ experience, whereas 60 percent had more than ten years’ experience. this suggests that the majority of the respondents were knowledgeable about the south african business environment. with regard to the level of education, most respondents had either a grade 12 certificate or equivalent or a national certificate or diploma (67 percent combined). of the smmes surveyed, 31 percent were considered to be micro enterprises, 58 percent small businesses and only 11 percent of the businesses met the criteria of a mediumsized business. with regard to the industry in which the respondents operated, the majority were in retailing/wholesaling (36 percent) and business or personal services sector (35 percent). perceptions of respondents regarding the prevalence of fraud in south africa compared with businesses in the 2005 kpmg survey, a larger proportion of smme owners/managers perceived fraud to be a serious problem in south africa (81 percent versus 64 percent of respondents in the kpmg survey). it should be noted that respondents in the 2005 kpmg survey were mainly employed in large businesses, i.e. businesses employing 251 or more employees. in terms of whether respondents perceived fraud as likely to increase in corporate south africa in future, similar responses were observed in the two surveys (68 percent and 67 percent of respondents respectively). sajesbm ns volume 1 (2008) issue 1 57 perceptions of respondents regarding the main causes of fraud responses of smme owners/managers and large businesses in respect of the main causes of fraud in south africa are shown in table 2. table 2: causes of fraud in south africa cause ranking by smmes in this survey ranking by large businesses in the 2005 kpmg survey the weakening of society’s values 1 (81%) 3 (58%) sophistication of criminals 2 (72%) 1 (68%) financial pressure 3 (63%) 2 (67%) it is interesting to note that 81 percent of smme owners/managers viewed the weakening of society’s values as the most important cause of fraud, whereas only 58 percent of respondents in large businesses viewed it as important. the fact that smme owners/managers ranked the weakening of society’s values as the number one cause is in sharp contrast to literature on this topic. as indicated earlier, financial pressure is generally seen as the most important cause of fraud globally and in south africa (de vynck, 2005:1; minnaar van veijeren, 2005:2; romney & steinbart, 2003:280). this finding may be attributed to the fact that smme owners/managers are in closer proximity to the general public and might therefore be more aware of unethical activities that are occurring in society. in contrast, the respondents of the 2005 kpmg survey, mainly ceos, cfos and the heads of internal auditing, are a bit further removed from the “average citizen” and hence less sensitive to changes in society’s values. greater internet usage, e-commerce and e-banking were also seen by respondents in both surveys as important contributors to fraud. perceptions of respondents regarding stakeholder involvement in fraudulent activities in line with the literature (indications of fraud, 2006:2; kennaugh, 2000:23; motale, 2006:3) and the 2005 kpmg survey, smme owners/managers in this study perceived internal stakeholders i.e. employees and managers, as more likely to engage in fraudulent activities than external stakeholders. the factors internal stakeholders and external stakeholders had mean scores of 3.55 and 3.04 respectively and standard deviations of 0.87 and 0.84 respectively. cronbach’s alpha coefficients for the two factors were equal to 0.50 and 0.62. according to nunally (1978:226), coefficients of 0.50 and better are sufficient indicators of reliability in the early stages of basic research. sajesbm ns volume 1 (2008) issue 1 58 losses suffered as a result of fraud the most prevalent losses reported by smmes in this study were: the theft of physical assets such as inventory and equipment (37 percent of respondents reporting significant losses), the theft of money (22 percent), the theft of intellectual property (18 percent), cheque fraud (15 percent) and bid rigging (10 percent). this ranking differs from that of the 2005 kpmg survey, where twice as many respondents in large businesses (48 percent) reported significant losses associated with the theft of money. although ranked second, a similar proportion of large businesses (40 percent) experienced the theft of physical assets as a significant loss. the fact that smmes suffer more losses from the theft of physical assets might be attributed to the lack of security measures, such as cctv, in these businesses compared to larger firms. smme owners/managers might also have more control over the cash of the business (signing and receiving cheques). a few smme respondents also remarked that employees’ laziness (i.e. the theft of time) is also a type of loss frequently suffered by smmes. fraud detection measures employed by smme owners/managers as shown in table 3, factor analysis of “red flags” yielded three factors that can be labelled: lifestyle changes, financial pressure and long working hours. all factor loadings were in excess of 0.59 and cronbach’s alpha coefficients in excess of 0.70, thus confirming the reliability of the derived summated scores. table 3: factors that may indicate that fraud is being perpetrated in an smme factor cronbach’s alpha coefficients “red flags” mean scores standard deviation lifestyle changes 0.71 always able and quick to supply answers ongoing transactions with related parties extravagant purchases or lifestyle vices e.g. abuse of drugs, alcohol or gambling 3.44 0.91 financial pressure 0.74 unnecessarily complicated transactions internal pressure e.g. management pressure to meet budgets increased stress real or imagined grievances against the company personal financial pressure 3.23 0.83 long working hours 0.78 refusal to delegate tasks short or no vacation unexplained or long working hours 3.10 1.04 from the mean scores shown in table 3 it is evident that lifestyle changes constitute the most prominent indicator of fraud being perpetuated, followed by financial sajesbm ns volume 1 (2008) issue 1 59 pressure and long working hours. a similar ranking of indicators was observed in the 2005 kpgm survey. these findings also correspond with the literature outlined earlier (ernst and young fraud and risk prevention business guide, 2005:20; powell, 2004:3). the factor of long working hours presents a common problem experienced by smme owners and not only creates an opportunity for them to commit fraud, but also gives them a basis upon which to rationalise their behaviour (van eeden, viviers & venter, 2003:13). although research by auriacombe (2005:88) shows that whistle-blowing encourages businesses to be more receptive to information on fraudulent activities, only 23 percent of smmes had whistle-blowing mechanisms in place for their employees, only 16 percent for their suppliers and a mere 3 percent for their customers. in contrast. 59 percent of large businesses in the 2005 kpmg survey reported having whistle-blowing hotlines available to their employees, 34 percent for suppliers and 53 percent for customers. perhaps it is easier to remain anonymous within a large business, prompting more large businesses to offer hotlines to their stakeholders, particularly employees. on the other hand, smmes are often typified by close relationships between the employer and employees, allowing for greater trust and transparency. the lack of knowledge regarding whistle-blowing hotlines among smme owners/managers might also contribute to their not utilising this fraud detection measure. actions taken upon the discovery of fraud as indicated in table 4, the most prominent actions taken by smmes upon the discovery of fraud are conducting internal investigations and disciplinary hearings. these findings are similar to those of the 2005 kpmg survey with the exception of “disciplining offenders”, which smme owners/managers are much more likely to do. in this regard thompson and strickland (2003:445) caution that the main purpose of enforcement should always be to “…encourage compliance rather than administer punishment”. table 4: actions taken upon the discovery of fraud item mean scores standard deviations smmes ‘always’ do it large businesses ‘always’ do it conduct an internal investigation 4.25 1.05 56% 53% set an example e.g. disciplining an offender and communicating it to others 4.18 1.06 52% 20% disciplinary hearing 4.12 1.18 53% 55% immediate dismissal 4.05 1.14 48% 55% report to the police 3.54 1.33 34% 43% take civil action for recovering losses 3.17 1.35 21% 21% file an insurance claim 2.88 1.39 16% 23% negotiated settlement 2.73 1.32 12% 12% keep it quiet 1.79 1.17 5% 5% sajesbm ns volume 1 (2008) issue 1 60 only 34 percent of smme owners/managers reported incidents of fraud to the police. this is lower than the percentage of large businesses in the 2005 kpmg survey (43 percent), but supports moulton’s (2005:1) argument that smmes often fail to report fraud as they fear it would tarnish their reputation. fifty-seven percent of respondents failed to report incidents of fraud to the police as they had no confidence in the justice system in south africa. fraud prevention measures implemented by smme owners/managers two factors dealing with fraud prevention measures were identified: ethics policy implementation and internal control measures. the relevant statistics pertaining to these factors are illustrated in table 5. all cronbach’s alpha coefficients were in excess of 0.6 and all factor loadings were in excess of 0.63. table 5: ethics policy implementation and internal control measures factor cronbach’s alpha coefficients items mean scores standard deviations ethics policy implementation 0.80 establishing a corporate code of conduct establishing a fraud policy implementing a comprehensive ethics programme offering training programmes on fraud detection and prevention 3.97 0.83 internal control measures 0.67 improving the screening of employees prior to hiring them reviewing and improving internal controls conducting forensic investigative reviews increasing the budget for security 3.88 0.73 the first factor essentially deals with the institutionalisation of ethics by developing and implementing a comprehensive ethics programme (rossouw & van vuuren, 2004:80). it is encouraging to note that almost half of the respondents (46 percent) have a fraud policy in place, despite the fact that only ten percent have funds available for the implementation thereof. although a similar percentage of large businesses in sajesbm ns volume 1 (2008) issue 1 61 the 2005 kpmg survey (45 percent) indicated having a fraud policy, many more (33 percent) made provision for fraud investigations in their budgets. compared with large companies in the 2005 kpmg survey, in which 42 percent of the respondents indicated that internal control measures needed to be improved within their organisations, 75 percent of smme owners/managers saw a need for improved internal control measures. these statistics show that smme owners/managers, although financially constrained, are aware of the need to improve internal controls as a measure for combating fraud. respondents’ views on the importance of managing fraud just more than half (55 percent) of smme owners/managers indicated that the management of fraud is good business practice. this is significantly lower than the 71 percent of respondents in the 2005 kpmg survey. this might be attributed to lower levels of knowledge among smme owners/managers as to what fraud exactly entails. discussion table 6 provides the main differences and similarities between the responses of smme owners/managers in this survey and those of respondents from large businesses in the 2005 kpmg survey. table 6: salient empirical findings topic comment the prevalence of fraud in south africa compared with large south african businesses, more smme owners/managers perceived fraud to be a serious problem (81 percent versus 64 percent). in both surveys more than two-thirds of respondents expected fraud to increase in future. the main causes of fraud 81 percent of smme owners/managers viewed the weakening of society’s values as the most important cause of fraud in south africa, whereas only 58 percent of respondents in larger businesses viewed it as important. similar views were expressed regarding the other causes of fraud, such as financial pressure, more sophisticated criminals and the increased use of internet based technologies. stakeholder involvement in fraudulent activities similar findings were reported in the two surveys in that internal stakeholders, i.e. employees and managers, were seen as the main perpetrators of fraud. losses suffered as a result of fraud respondents in both surveys mainly suffered losses from the theft of physical assets and money. fraud detection measures in both surveys red flags pertaining to lifestyle changes were seen as the most important indicators of fraud, followed by items relating to financial pressure and long working hours. in contrast to large businesses, very few smmes had whistle-blowing mechanisms in place. actions taken upon the discovery of fraud in both surveys, internal investigations were the primary action undertaken upon the discovery of fraud. compared with large businesses, smme owners/managers were more inclined to discipline offenders and less likely to report incidents of fraud to the police, mainly due to a lack of confidence in the judicial system and due to a fear of negative publicity. fraud prevention measures as in the case of large businesses, smme owners/managers viewed ethics policy implementation and internal control measures as important fraud prevention measures. only 10 percent, however, have budgets available in this regard. views on the importance of managing fraud only 55 percent of smme owners/managers, compared with 71 percent of large business respondents, were of the opinion that the management of fraud constitutes good business practice. sajesbm ns volume 1 (2008) issue 1 62 limitations of the study it is suggested that the relatively small sample size of 300 respondents be extended by repeating the study among smmes in other provinces in south africa. implications for management from table 6 it is clear that several similarities exist between the perceptions and management of fraud among respondents in smmes and large businesses. the most striking differences were observed in terms of fraud budgets and knowledge regarding fraud prevention and control measures (particularly whistle-blowing mechanisms). based on the empirical evidence, a number of key recommendations can be made. it is firstly suggested that smme owners/managers gain more knowledge on fraud detection and prevention measures. such measures need not be complex or expensive and could involve simple actions such as: controlling incoming mail by limiting access to it; directly collecting bank statements from the bank and reviewing the contents thereof before reconciliation, as this will allow for the detection of any unusual transactions and immediate rectification; regularly reviewing the approved list of vendors, as this will curb the creation and falsification of unknown vendors. other forms of prevention could include establishing and monitoring budgets, establishing reasonable performance targets for employees, requiring uninterrupted vacations for all employees and establishing of a rotation schedule of employees’ responsibilities. the latter provides a strong disincentive to committing fraud, although it might prove difficult in smmes as most are characterised by a strong division of labour. smme owners/managers also need to clearly communicate their fraud policy as part of a comprehensive ethics programme to all new employees. the development of a fraud policy and fraud response plan as part of a comprehensive ethics programme is also essential to effectively combat and manage the incidence of fraud. it is important that smme owners/managers set the “ethical tone and commitment at the top”, as employees’ attitudes and behaviour towards fraud are more strongly influenced by management’s actions than by the policies and procedures which they lay down to combat it (payne, 2000:5). it is further suggested that smme owners/managers educate themselves on the legal aspects of fraud detection (e.g. protection of privacy) and the disciplining of offenders (e.g. correct dismissal procedures). in this regard, sector training and education authorities (setas) and higher education institutions can play an important role. these recommendations are particularly apt in the light of the fact that smme owners/managers view fraud as becoming more prevalent in corporate south africa. unless they safeguard their businesses properly, more smmes will fall prey to unethical conduct of employees, customers and suppliers. sajesbm ns volume 1 (2008) issue 1 63 conclusion despite the negative consequences of fraud in the local smme sector, very few owners/managers have an adequate understanding of the causes or costs thereof. just more than half of the respondents were of the opinion that the management of fraud constitutes good business practice, which is in sharp contrast to 71% of respondents in large businesses. this study found that only ten percent of smme owners/managers made provision for fraud detection and prevention measures in their budgets. the empirical evidence suggests that smme owners/managers educate themselves on the topic with particular emphasis on the legal issues relating to fraud detection (e.g. protection of privacy) and the disciplining of offenders (e.g. correct dismissal procedures). unless smmes safeguard their businesses properly, more will fall prey to the rising levels of unethical conduct among employees, customers and suppliers. acknowledgements the authors wish to thank the following institutions and persons for their contributions to this study: the national research foundation and the nelson mandela metropolitan university for financial support; ms jodè may for her valuable contribution; mr thinus rheeder of kpmg for providing the 2005 africa fraud and misconduct survey questionnaire for use in this study. references auriacombe, c. j. 2005. what happens when one blows the whistle? politeia, 24(1): 88–100. basson, d. 2000. the psychology of fraud. finance week, 6:40. blumberg, b., cooper, d.r. & schindler, p.s. 2005. business research methods. london: mcgrawhill. camerer, l. 2006. corruption in south africa: results of an expert panel survey. (3p). [online] available from: http://www.iss.co.za/pubs/monographs/no65/ chap4.html [accessed: 2006-01-10]. davies, d. 2000. fraud watch. 2nd ed. johannesburg: kpmg bottom line business guides. de vynck, d. 2005. fraud is a repeated business. business report, 22 february. (1p). [online] available from: http://www.busrep.co.za/index.php? fsectionid=5618&article=241936.html [accessed: 2006-03-03]. difficulty in quantifying fraud costs doesn’t give companies a licence for complacency. 2006. (1p). [online] available from: http://www.ey.com/ global/content.nsf/south_africa/know_fraud_ quarter_one_2006_-_quantify_fraud_costs.html [accessed: 2006-01-08]. driver, a., wood, e., segal, n. & herrington, m. 2001. global entrepreneurship monitor. cape town: the graduate school of business, university of cape town. ernst & young fraud and risk prevention business guide. 2005. ernest & young: johannesburg. fighting fraud – a guide for smes. 2006. (12p). [online] available from: http://www.fraudadvisory panel.org /newsite/pdfs/advice/fighting%20fraud.pdf [downloaded: 2006-01-10]. hazelhurst, e. 1999. vigilance can weed out corruption. financial mail, 155(5):55. sajesbm ns volume 1 (2008) issue 1 64 indications of fraud in smes. 2006. (10p). [online] available from: http://www.fraudadvisorypanel. org/newsite/pdfs/advice/indication%20offraud.pdf [downloaded: 2006-09-28]. interactive workshop on fraud. 2005. (1p). [online] available from: http://www.gsb. uct.ac.za/ newsletter/newsletterarticle.asp?intarticleid=914.html [accessed: 2006-05-03]. kpmg africa fraud and misconduct survey. 2005. (113p). [online] available from: http://www. kpmg.co.za/library/detail.asp?libid=269&month=4&year=2002.html [accessed: 2006-03-03]. kennaugh, b. 2000. the state of the nation. accountancy sa, 1:21, 23. le roux, j. 2005. it is vital for smmes to quantify fraud costs accurately to avoid complacency. [online] available from: http://www.quantify_fraud_costs.index.html (1p).pdf [downloaded: 2006-0503]. makin, v. & botes, v.l. 2005. empowerment sa. (1p). [online] available from: http://www.empsa.co.za/newsletter/july-2005.html [accessed: 2006-09-28]. mattheus, b. 2007. verbal communication (telephonic discussion) with the author on 1 april. port elizabeth. mayles, t. d. 2005. a fraud prevention mini-clinic. (1p). [online] available from: http://www.barneswendling.com/pdf/mayles_fraud.pdf [downloaded: 2006-07-07]. minnaar-van veijeren, j.m. 2005. is south africa winning the fight against white-collar crime? (5p). [online] available from: http://www.i-value.co.za/article1.html [accessed: 2006-01-05]. morris, r. 2006. smes not geared up to prevent fraud. (2p). [online] available from: http://www.beelistings.co.za/news.htm?more=131.html [accessed: 2006-01-07]. motale, s. 2006. criminal misconduct cost r120 million. the citizen, 9 february: 3. moulton, g. 2005. organisational culture important in beating company fraud. (1p). [online] available from: http://www.busrep.co.za/index.php?fsecitonid=971& articleid=2419011.html [accessed: 2006-03-03]. nunally, j. 1978. psychometric theory. 2nd ed. new york: mcgraw-hill. payne, n. 2000. shepherding the shepherds. accountancy sa, january: 5. pollick, m. 2006. what is fraud? [online] available from: http://www.wisegeek. com/what-is – fraud.html [accessed: 2006-07-20]. powell, s. 2004. red flags for white-collar crime. the star, 15 november: 3. romney, m.b. & steinbart, p.j. 2003. accounting information systems. 9th ed. new jersey: prentice hall. rossouw, d. & van vuuren, l. v. 2004. business ethics. 3rd ed. cape town: oxford university press southern africa. savage, m. 2003. food for insomnia. accountancy sa, may: 6–7. south africa. 1996. national small business act, no. 102 of 1996. government gazette, 17612(1901). (14p). [online] available from: http://www.info. gov.za/ gazette/acts/1996/a102-96.pdf [downloaded: 2006-01-07]. thompson, a.a. & strickland, a.j. 2003. strategic management: concepts and cases. 13th ed. new york: mcgraw-hill. sajesbm ns volume 1 (2008) issue 1 65 van eeden, s.m., viviers, s. & venter, d.j.l. 2003. a comparative study of selected problems encountered by small businesses in the nelson mandela, cape town and egoli metropoles. management dynamics, 12(3): 13–23. van wyk, m. 2005. fraudulent financial reporting, power and financial governance: corporate governance. accounting sa, (1): 2–4. wadula, p. 2005. why sa’s small businesses stay that way. sunday times, 3 january, (1p). [online] available from: http://www.sundaytimes.co.za/zones/ sundaytimesnew/business/business1104744870. aspx.html [accessed: 2006-01-03]. wells, j.t. 2005. why employees commit fraud. [online] available from: http://www.aicpa.org/pub/jofa/feb2001/wells.html [accessed: 2006-03-03]. the influence of gender and enthnicity on the perceptions of an entrepreneurial career farrington, gray & sharp sajesbm volume 5, (2012) 1 www.sajesbm.com article no 118 the influence of gender and ethnicity on the perceptions of an entrepreneurial career in the south african context shelley farrington*, beverley gray and gary sharp department of business management, nelson mandela metropolitan university po box 77 000, nmmu south campus, port elizabeth 6031, republic of south africa tel: +27-41-5042203; fax: +27-41-5832644 shelley.farrington@nmmu.ac.za to whom correspondence should be addressed. the influence of gender and ethnicity on the perceptions of an entrepreneurial career in the south african context abstract in south africa men are more likely than women to undertake entrepreneurial activity. similarly, white south africans are more likely to start new business ventures than other ethnic groups. in order to establish why women and certain ethnic groups are less inclined to undertake entrepreneurial activities, the primary objective of this study was to establish whether the perceptions of desirability that some groups have of an entrepreneurial career differ from those of others. respondents were identified by means of convenience and judgemental sampling. in total, 739 usable questionnaires were returned. the validity and reliability of the measuring instrument was assessed by means of an exploratory factor analysis and cronbach-alpha coefficients. t-test statistics were undertaken to establish significant differences. the results show that female small business owners perceive that self-employment will allow them more flexibility and autonomy than do their male counterparts, whereas male students perceive that self-employment will allow them more time than do female students. black small business owners and black student respondents scored higher mean scores than white respondents for the majority of work values investigated in this study. this seems to suggest that black respondents perceive an entrepreneurial career more positively than white respondents do, despite white south africans being more likely to start entrepreneurial ventures than black south africans. keywords: entrepreneurial career, small business enterprises, career perceptions, work values, gender, ethnicity. sajesbm volume 5, (2012) 2 www.sajesbm.com article no 118 introduction and research objective as in all countries, venture creation in south africa plays a vital role in stimulating economic activity and reducing unemployment (malagas, 2003; nieman, 2006; timmons & spinelli, 2009; venter, urban & rwigema, 2008), and as such, is seen as a potential solution to some of south africa’s economic and social difficulties. however, it is reported that given the country’s per capita income, south africa has a lower-than-expected entrepreneurial activity rate. according to global entrepreneurship monitor (gem) survey in 2009 (herrington, kew & kew, 2010:59), the total early-stage entrepreneurial activity (tea) scored by south africa (5.9%) is considerably lower than the average for all efficiency-driven economies (11.2%), as well as the average for all middleto low-income countries (14.8%). the 2009 gem survey also reported that although 64% of south africans perceive entrepreneurship as a good career choice, this is lower than that reported (71%) in efficiency-driven economies. furthermore, in comparison to other participating countries, who reported an average of 19%, only 11% of south african respondents reported having entrepreneurial intentions (herrington et al., 2010:61). of particular concern are the low numbers of female and black south africans who are engaging in entrepreneurial activities. herrington et al. (2010:68) report that in south africa, men are 1.5 times more likely than women to be involved in early-stage entrepreneurial activity. similarly, white and indian/asian individuals are more likely to start new business ventures than are coloureds or black africans (herrington et al., 2010:71). according to urban (2010:1), both national and international studies show that the ratio of female to male participation in entrepreneurial activity varies significantly across countries. in a study spanning 17 countries, langowitz and minniti (2007:341) have found that significantly fewer women than men are involved in entrepreneurial activity. differences in starting new businesses also appear to exist among various ethnic groups. tracking a decade of entrepreneurial activity in south africa across the four main racial groups, the 2009 gem survey reported that whites are more likely to be entrepreneurs than blacks, although in more recent years this difference is becoming less marked (herrington et al., 2010:43). studies have shown that racial differences in entrepreneurial intention and starting new business ventures can be attributed not so much to a lack of entrepreneurial activity by black individuals, as to the existence of stronger barriers to entry and higher failure rates in this ethnic group (köllinger & minniti, 2006). despite several studies investigating the possible factors that contribute to the differences between gender, ethnic groups and entrepreneurial behaviour (detienne & chandler, 2007; gupta, turban, wasti & sikdar, 2009; langowitz & minniti, 2007; urban, 2010), understanding what drives entrepreneurship remains one of the most important questions being asked in management research (drost, 2010:28). given the findings by herrington et al. (2010), it appears that gender and ethnicity perspectives of entrepreneurship as a career choice continue to plague the levels of entrepreneurial activity in south africa. fostering entrepreneurship among these disadvantaged groups is thus a topic in need of increased attention among educators, researchers and public policy-makers in south africa. furthermore, an understanding of which factors play a role in driving the career decision towards entrepreneurship of these groups should top the agenda. increasingly, researchers are turning to “intentions models” as a means of explaining why some individuals embark on entrepreneurial activity and others do not (ariff, bidin, sharif & ahmad, 2010; autio, keeley, klofsten, parker & hay, 2001; degeorge & fayolle, 2008; gird and bagraim, 2008; kolvereid, 1996; krueger & carsrud, 1993). however, applying intentions models to entrepreneurial intentions is an area of research that is still in its initial stage (autio et al., 2001). ajzen’s (1991) theory of planned behaviour is one of the most commonly used intentions models to understand and predict human behaviour (gaddam, 2008; gray, farrington & sharp, 2010; haase & lautenschläger, 2011; kuehn, 2008; leffel & darling, 2009). central to this theory is an individual’s intention to perform a given sajesbm volume 5, (2012) 3 www.sajesbm.com article no 118 behaviour, such as choosing a particular career path. according to ajzen (1991:181), the general rule is that the stronger the intention to engage in a particular behaviour, the more likely will be the performance of that behaviour. the theory of planned behaviour proposes that three independent variables determine intentions, namely the attitude toward the behaviour, the social pressure to perform or not perform the behaviour (subjective norm), and the perceived behavioural control. the more favourable the attitude and subjective norm regarding a particular behaviour, and the greater the perceived behavioural control, the more likely should be an individual’s intention to perform the behaviour under consideration (ajzen, 1991:188; 2006:1). several studies (gird & bragraim, 2008; gray et al., 2010; lüthje & franke, 2003; pihie, 2009) report attitude toward the behaviour as having the strongest influence on entrepreneurial intentions. according to ajzen (1985; 1991), attitude toward the behaviour refers to the degree to which a person makes a favourable or unfavourable evaluation of the behaviour in question, and is a function of beliefs relevant to the behaviour (ajzen, 1991; 2006). the theory of planned behaviour asserts that one’s attitude towards an entrepreneurial career or self-employment determines one’s intention to embark on such a career path. one’s attitude, however, is determined by one’s beliefs or perceptions about such a career path. for example, autio, keeley, klofsten and ulfstedt (1997) report that career preferences and entrepreneurial conviction are influenced by the image of entrepreneurship as a career alternative. similarly, liñán (2008:260) argues that an individual’s decision to create a new enterprise is based on personal preference or attraction towards entrepreneurship. according to zaidatol akmaliah (2009:340), an attitude towards self-employment is an individual’s perception of working as the owner of a business, and one’s attitude towards self-employment is associated with self-employment intentions (kolvereid, 1996; kolvereid & isaksen, 2006). parr (2007) suggests that to fully benefit from the contributions that small businesses can make to the south african economy, entrepreneurship and self-employment should be positioned as highly desirable career options, and south africans from all gender and ethnic groups should be encouraged to pursue this option. however, an individual’s decision to follow a particular career path is influenced by their attitude towards that career, which in turn is influenced by their beliefs or perceptions of whether that experience would be desirable or not if they chose that particular career. according to smith-hunter, decasperis and paul (2009:26), very few researchers have attempted to examine the role of career perceptions on entrepreneurial pursuits. the failure of past entrepreneurial research to highlight the role of perceptions on entrepreneurial choices has created a void in the entrepreneurship literature waiting to be addressed (smith-hunter et al., 2009:26). an individual’s perceptions dominate both their thoughts and their behaviour as human beings, and perceptions are shown to differ across cultures, different life stages and genders (smith-hunter et al., 2009:27). according to smith-hunter et al. (2009), it is these perspectives that raise questions about the role of perceptions in influencing entrepreneurial behaviour. one such question is whether gender or ethnic grouping influences one’s perceptions or actual experience of an entrepreneurial career in south africa. another is whether the perceptions that women and black africans have of self-employment influence their decision to become self-employed. in pursuit of answers to these questions, this study aims to establish the influence of gender and ethnicity on the perceptions of several work values associated with an entrepreneurial career. if differences in perceptions of selfemployment could be identified, possible explanations could be forthcoming with regard to why certain groups are more likely to embark on entrepreneurial careers than others. this study considers several work values associated with an entrepreneurial career because values are important determinants of behaviour, particularly values that influence work attitudes (twenge, campbell, hoffman & lance, 2010:19). the primary objective of the sajesbm volume 5, (2012) 4 www.sajesbm.com article no 118 study is to establish whether the perceptions of desirability that women and black individuals have of an entrepreneurial career differ from those of white males. these differences will be established in terms of several work values. according to urban (2010), by gaining an understanding of entrepreneurial perceptions, an understanding of intended behaviour increases. the results of this study provide insights into what the different gender and ethnic groups think it would be like to follow an entrepreneurial career, and how these perceptions differ between students and individuals who currently own and run their own businesses. these insights will be useful to policy-makers, education in general, educators of entrepreneurship and career advisors in particular, who are required to provide students, particularly women and black students, with an accurate description of what owning and managing an own business entails. in addition, from these insights a more realistic perspective can be provided of what it might be like to be self-employed. gaining insights into different viewpoints adds to the knowledge of how different individuals perceive and operationalise entrepreneurship (urban, 2010). in this study an ‘entrepreneurial career’ means owning and managing one’s own small business, and a ‘small business’ is defined as a business that is independently owned and managed and employs more than 5 but fewer than 50 persons. first, a brief overview of the supporting literature is presented and relevant hypotheses are formulated. thereafter, the research methodology is described and the empirical findings presented. the findings and their implications are discussed. lastly, the limitations of the study are presented and opportunities for future research highlighted. literature overview attitudes, perceptions and work values as mentioned above, attitude toward the behaviour refers to the degree to which a person has a favourable or unfavourable evaluation of the behaviour in question (ajzen, 1985; 1991). it reflects a person’s judgement about the impact of the desired behaviour (ajzen & fishbein, 1980. attitude toward the behaviour is a function of beliefs relevant to the behaviour, beliefs about the likely outcomes of the behaviour, and evaluations of these outcomes, which are assumed to influence attitudes towards the behaviour (ajzen, 1991; 2006). it is proposed that one’s attitude towards performing the behaviour is influenced by perceptions of the personal desirability of performing the behaviour (zellweger, sieger & halter, 2010:3), and related to the desirability of becoming an entrepreneur is the image of an entrepreneur in society (veciana, aponte & urbano, 2005:174). according to douglas and shepherd (2000), when choosing a career, an individual must decide whether the desirability of a specific career option is greater than that of alternative options. ‘desirability’ is a form of value (steel & konig, 2006), and values are important determinants of behaviour, particularly values that influence work attitudes (twenge et al., 2010:19). a person’s work values are the components of a job which are important to their work satisfaction (duffy & sedlacek, 2007:359; twenge et al., 2010:5). work values shape employees’ perceptions of preference in the workplace, and as such have a direct influence on employee attitudes, behaviours, job decisions and perceptions (twenge et al., 2010:5). according to mckay (n.d.), taking one’s values into account when choosing a career, could be the most important factor that determines whether one is satisfied or not with that aspect of life. several authors have recognised that work values are variables that influence career choice (nelson, 1995; rousseau & venter, 2009; stead & watson, 1993). according to rousseau and venter (2009), work values are important career choice factors for both career choices sajesbm volume 5, (2012) 5 www.sajesbm.com article no 118 in general and for initial career choice. in addition, they maintain that understanding an individual’s work values can provide insight into career aspirations. fitzsimmons and douglas (2010:4) suggest that the attractiveness of a career alternative can be rated in terms of various work values. work values have also been shown to significantly predict career choice, and when work values are realised in the work environment, they significantly predict job satisfaction and job performance (duffy & sedlacek, 2007:359). in their article investigating differences in perceptions of self-employment between students and small business owners, farrington, gray and sharp (2011) have identified numerous aspects influencing occupational choices. they have grouped these aspects into fourteen categories or work values, which together with several descriptive statements are summarised in table 1. an elaborate theoretical discussion on the various work values identified is deemed beyond the scope of this article, and readers are referred to farrington et al. (2011) in this regard. the fourteen work values identified by farrington et al. (2011) have served in the present study as the factors to be investigated in establishing the perceptions of an entrepreneurial career among the different genders and ethnic groups. the entrepreneurial attributes possessed, as well as the entrepreneurial intentions shown, differ between individuals depending on their demographic profile. according to kristiansen and indarti (2004), several studies support the argument that demographic variables such as age, gender and individual background (education and employment experience) influence entrepreneurial intentions. similarly, kiggundu (2002) asserts that various demographic variables appear to distinguish between successful and less successful entrepreneurs. the focus of this study is on the demographic variables gender and ethnicity. table 1 work values work values statements reflecting work values time work-life balance; time to spend with friends and family; time for interests outside of work; time for a social life; working hours that allow one to have a good social life; regularity of work hours. flexibility flexible working hours; job and career flexibility; opportunity to move between workplaces. financial benefit high salary; opportunity to earn lots of money; increased personal income; initial and future earning potential; salary and benefits; financial gain; economic reward; instrumentality of wealth; acquisition of personal wealth; financial success. challenging doing challenging work/tasks; challenging career; competing demands; challenging profession. stimulating doing exciting work; doing a variety of things; change and diversity in tasks, place and people; rapidly changing; interesting and exciting; enjoyable and stimulating; fun; adventure; doing what you love; happy to go to work; not mundane and repetitive. imaginative permits creativity and originality; opportunity to be creative; build on ideas and adapt or re-invent them; develop new ideas, innovation and initiatives. sajesbm volume 5, (2012) 6 www.sajesbm.com article no 118 security being sure of a job; being certain of keeping a job; being certain a job will last; a stable future; employment security; job security; confidence in income; personal security; provide for retirement. prestige being looked up to by others; prestige; respected position in the community; gain public recognition; status in family and in society; status of profession; recognition. autonomy freedom, independence and choice; doing my work in my own way; make my own decisions; independence of actions; sense of freedom and power; maintain personal freedom. interaction getting to know fellow workers; developing close ties with coworkers; working closely with people; people-orientated; opportunity to work with people; working as part of a team; social interaction; having pleasant friendly contacts; interaction with others. serving the community being of service to society; making the world a better place; helping others; socially responsible; contribution to the community; contribution to society; helping and caring for others; opportunity to help others; worthwhile to society. stress* feeling threatened; feeling uncomfortable; gives one a sinking feeling when thinking of it; dealing with crises and conflicts; working under pressure. responsibility management responsibility; degree of responsibility expected to assume; responsibility for other people; responsibility for getting things done; responsibility for significant business activities. future prospects opportunities for promotion and advancement; future career progression; career advancement progress; promotion prospects for the future. * note: stress is not considered to be a value, but being “stress-free” is. the reverse of this factor is considered a value for the purpose of this study. (source: farrington et al., 2011). gender and entrepreneurship several studies (delmar & davidsson, 2000; matthews & moser, 1995; veciana et al., 2005) have found that males have a higher preference for entrepreneurial behaviour than females. for example, zhao, seibert and hills (2005) found that women reported significantly lower intentions to become entrepreneurs than men, while veciana et al. (2005:180) found relationships to exist between students’ gender and perceptions of new venture desirability, as well as with their intention to create new firms, with males showing higher desirability and intentions to create firms. in comparing background, culture and nationalities, studies show that there is a higher prevalence of entrepreneurship among men than women with similar backgrounds, across cultures and national boundaries (zhang, zyphur, narayanan, arvey, chaturvedi, avolio, lichtenstein & larsson, 2009). in their study across 17 countries, langowitz and minniti (2007:341) found that while entrepreneurship is a significant and growing source of employment for women, the level of female involvement in entrepreneurial activity remains sajesbm volume 5, (2012) 7 www.sajesbm.com article no 118 lower than that of men. similarly, urban (2010) contends that in comparison to men, south african women tend to have lower entrepreneurial career aspirations. drost (2010), kakkonen (2010) and ahmed, nawaz, ahmad, sajukat, usman, rehman, and ahmed (2010), as well as gupta et al. (2009), however, have reported that gender has no significant influence on intentions to start an own business. ahmed et al. (2010) have concluded that gender does not predict entrepreneurial intentions. in addition, most studies on entrepreneurs seem to suggest that few differences exist between male and female entrepreneurs (mueller, 2004). on the other hand, according to urban (2010:3), research shows that not only do the entrepreneurial intentions of women differ from those of men, but work values help to explain why gender differences lead to different self-employment choices. for example, women experience more complexity in their career choices for the work value time than men, given their need to balance their work and family roles (detienne & chandler, 2007). previous empirical studies (cliff, 1998; detienne & chandler, 2007) indicate than men tend to place a greater emphasis on economic values and on quantitative non-ambiguous measures, such as status and wealth, whereas women tend to assign more importance to social values and qualitative, ambiguous measures such as personal fulfilment and strong interpersonal relations. according to duffy and sedlacek (2007:360), men typically rate values related to prestige, responsibility, and pay as more important than do women. conversely, women are more likely to rate social values, such as helping others and working with people, higher than do men. duffy and sedlacek (2007:61) concluded that men were more likely to espouse extrinsic values, whereas women were more likely to espouse social values. in their study on gender differences concerning various work values, kakkonen (2010) reported no significant difference between the perceptions of an entrepreneurial career in terms of holding an esteemed position in society, having the chance to be independent, a job that is interesting and challenging, better income levels than in paid work, the time available for family and hobbies, responsibility, the amount of work needed to be done, independence, and earning potential. the only significant difference in perceptions between males and females in that study related to the quality of life one would have as an entrepreneur. males perceived that being an entrepreneur would afford them a better quality of life than if they were in a paid job, more so than females did (kakkonen, 2010). today, self-employment is widely recognised as an attractive and worthwhile career for women (heilman & chen, 2003) and in recent years the number of women entrepreneurs has increased dramatically (de bruin, brush & welter, 2006; kakkonen, 2010). despite this increase, the rate of entrepreneurship among women remains much lower than among men (kakkonen, 2010; reynolds, bygrave & auto, 2004). gender differences in entrepreneurial activity are well documented in the literature (reynolds et al., 2004). however, scholars have a limited understanding of the factors and decision processes that influence men and women differently to pursue entrepreneurship or not to do so (zhao et al., 2005). yet the persistent and consistent differences in male and female entrepreneurial activity across the world makes it important to understand why fewer women than men choose to become entrepreneurs (gupta et al. 2009:409). against this background, the following hypotheses are formulated: h01: gender has no influence on the perceptions of the work values associated with an entrepreneurial career. ha1: gender has an influence on the perceptions of the work values associated with an entrepreneurial career. sajesbm volume 5, (2012) 8 www.sajesbm.com article no 118 ethnicity and entrepreneurship wherever society is highly differentiated along racial or ethnic lines, race and ethnicity have been used to predict entrepreneurial activity (kiggundu, 2002:241) and several studies have examined the relationship between racial differences and self-employment (bates, 2000; fairlie, 2004), consistently reporting that black and hispanic americans exhibit lower rates of self-employment than other ethnic groups (köllinger & minniti, 2006:59). however, studies show that african americans are more likely than either hispanic americans or caucasian americans to engage in entrepreneurial activities (dyck & neubert, 2010:178). in their study measuring differences in the rates of entrepreneurial involvement between black and white americans, köllinger and minniti (2006:59, 63) found that although blacks were almost twice as likely to start a business than whites, blacks were significantly less likely than whites to own an established business that survived beyond the initial start-up. studies in africa (ramachandran & shah, 1999) have shown that while european and indian-owned firms registered positive growth, black-owned firms recorded negative growth. the study noted, however, that black entrepreneurs had significantly less formal education and business networks than their european and indian counterparts. in south africa, however, white and indian/asian individuals are more likely to start new business ventures than are coloureds or black africans (herrington et al., 2010:71). these findings are supported by fairlie and meyer (1996) who found evidence that self-employment was higher among more advantaged racial groups. giacomin, janssen, pruett, shinnar, llopis and toney (2010) found that although students were motivated by similar factors and perceived similar barriers to business creation, american, asian and european students did not share the same entrepreneurial intentions or dispositions. according to köllinger and minniti (2006:73), the gap in entrepreneurial propensity between blacks and whites can partly be explained by individual perceptions. high levels of confidence and optimistic perceptions of entrepreneurship suggest that the subjective perceptions of black americans tend to be biased towards over-optimism more than the perceptions of whites (köllinger & minniti, 2006:75). according to kazela (2009) a general perception among disadvantaged communities is that one earns an academic qualification to be more suitably qualified for the employment market rather than for self-employment. as in the case of gender, perceptions relating to work values could also influence entrepreneurial activity among ethnic groups. duffy and sedlacek (2007:361) found that african americans and asian americans were more likely to express extrinsic values, while whites were more likely to express intrinsic values. more specifically, black adolescents tended to place a greater emphasis on social values, whereas adolescent white men tended to favour work values focused on economic rewards and job security. kiggundu (2002:242) concluded that differences in race and ethnicity might be indicative of other variables more important for entrepreneurial success. in an attempt to identify these variables, the following hypotheses are formulated: h02: ethnicity has no influence on the perceptions of the work values associated with an entrepreneurial career. ha2: ethnicity has an influence on the perceptions of the work values associated with an entrepreneurial career. sajesbm volume 5, (2012) 9 www.sajesbm.com article no 118 methodology sample and sampling method a comparison of student expectations of a particular career versus actual experiences of that career has been the focus of several studies (daniel, chamberlain & gordon, 2001; ferguson & hatherly, 1991; gedye, fender & chalkley, 2004; scott & gunderson, 2003). according to rousseau and venter (2009:5), one’s expectations of a particular career and one’s experiences in reality, do not always correspond. furthermore, studies have shown that students have a more favourable attitude towards entrepreneurship than the population in general (piipponen, 2000). in order to account for these differences between expectations and reality, two samples were identified to participate in this study, namely undergraduate students of business management and existing small business owners. convenience and judgemental sampling were used to identify potential respondents, and a survey instrument was administered. the business management students were conveniently selected from undergraduate students at the nelson mandela metropolitan university, whereas specified criteria were used in judging the selection of small business owners operating in nelson mandela bay, to participate in the study. judgemental sampling was used to identify small business owner respondents because no complete lists of small businesses are available in the area, or in south africa, for that matter. the criteria by which the small business owner respondents were identified, were as follows: the small business owner respondents had to be actively involved in running (owning and managing) the business, the business had to have been in operation for at least one year, and the business had to employ fewer than 50 persons. the sample frame consisted of 803 students and 355 small business owners. in total, 739 usable questionnaires were returned, 454 from students and 285 from small business owners, yielding a response rate of 64%. data collection and statistical analysis the fourteen work values under investigation were measured using several items developed by farrington et al. (2011). by means of a structured self-administered measuring instrument, these items were then used to empirically measure the work values as applicable to an entrepreneurial career among both the student and small business owner samples. in section a, demographic information pertaining to the students and small business owner respondents, as well as the small businesses themselves, was requested. section b of the measuring instrument consisted of 69 statements (items) relating to the fourteen work values under investigation. in the case of the student questionnaire, the items measuring the constructs were phrased to measure perceptions of “what it could be like to run one’s own business”. these exact items were used in the small business owner questionnaire, but in the latter case the items were phrased to measure perceptions of “what it is like to run one’s own business”. using a 7-point likert-type interval scale, respondents were requested to indicate their extent of agreement with regard to each statement. the 7-point likert-type interval scale was interpreted as 1 = strongly disagree through to 7 = strongly agree. the data collected from 739 usable questionnaires were subjected to various statistical analyses. in order to assess the validity and reliability of the measuring instrument, an exploratory factor analysis was undertaken and cronbach-alpha coefficients were calculated. descriptive statistics relating to the work values, such as the mean and standard deviation, were calculated to summarise the sample data distribution. furthermore, t-test statistics were undertaken to establish whether differences in mean scores reported between males and females were statistically significant, as well as between the means of the various sajesbm volume 5, (2012) 10 www.sajesbm.com article no 118 ethnic groups. cohen’s d statistics were calculated to establish practical significance. differences were only considered significant if found to be both statistically and practically significant. describing the sample more than half of the student respondents were male (56%) and the large majority (99%) were under the age of 25 years. for the purpose of this study south africans of colour, namely blacks, indian/asians and coloureds are grouped together as black south africans. the reason for this is the small number of indian/asian and coloured respondents participating in the study. of the student respondents, 67% were black south africans. most respondents reported that none of their parents were self-employed (55%), but the majority (66%) indicated that they themselves undertook some form of employment (occasional, casual or full-time). the majority of respondents were completing a bcom degree. with regard to the small business owners sample group, the majority of respondents were male (72%) and less than 49 years of age (69%). an even number of white and black respondents participated in the study. most respondents (66%) indicated that they possessed a tertiary qualification. a little over half of the respondents (52%) reported that none of their parents were self-employed. on average, respondents had owned their own business for 9.72 years. small businesses participating in the study employed an average of between 9 and 10 people, and most operated in either the retail (30%) or services (36%) industries. just less than half (49%) considered their business to be a family business. validity and reliability the validity of the measuring instrument was assessed by conducting an exploratory factor analysis. the software program statistica version 8.0 was used for this purpose. principal component analysis with a varimax rotation was specified as the extraction and rotation method. in determining the factors to extract for the model, the percentage of variance explained and the individual factor loading were taken into account. the exploratory factor analysis revealed fourteen distinct factors. the items measuring the fourteen work values loaded as expected. however, only three of the five items originally intended to measure time and stimulating loaded onto these factors. similarly, only four of the five items measuring the factors flexibility, challenging and interaction loaded as expected. the fourteen work values cumulatively explained 43% of variance in the data. factor loadings of ≥ 0.6 (hair, black, babin, anderson & tatham, 2006) were reported for all factors, with the majority having loadings of ≥ 0.7. this result provides evidence of a factor structure which has been well defined. evidence of validity for the measuring scales is thus provided. despite several items not loading as expected, it was unnecessary to reformulate the operational definitions. the operationalisation of the fourteen work values identified, the minimum and maximum factor loadings, as well as the cronbach-alpha coefficients for each of these constructs, are summarised in table 2. cronbach-alpha coefficients of greater than 0.70 (nunnally & bernstein, 1994; peterson, 1994) were reported for all constructs, suggesting that reliable measuring scales were used to measure the constructs under investigation. sajesbm volume 5, (2012) 11 www.sajesbm.com article no 118 table 2 measurement instrument analysis operationalisation of work values items factor loadings cronbachalpha values time: allows for a balance between work and leisure time i.e. time for friends, family and outside interests. 3 max: 0.808 min: 0.769 0.776 flexibility: allows for freedom to vary activities and to regulate own working hours. 4 max: 0.758 min: 0.644 0.774 financial benefit: allows for a rewarding income level and increased personal wealth. 5 max: 0.767 min: 0.642 0.838 challenging: requires performing activities that are difficult and highly demanding. 4 max: 0.776 min: 0.650 0.789 stimulating: requires performing activities that are interesting, exciting and adventurous. 3 max: 0.770 min: 0.752 0.771 imaginative: requires creativity, innovation and original thinking in performing activities. 5 max: 0.750 min: 0.686 0.833 security: provides regular income and secure employment 5 max: 0.864 min: 0.778 0.905 prestige: earns respect and approval from friends, family and the community. 5 max: 0.812 min: 0.610 0.878 autonomy: allows for working independently and the making of all operational decisions 5 max: 0.833 min: 0.601 0.836 interaction: requires being people-orientated and working closely with others. 4 max: 0.768 min: 0.642 0.780 serving the community: provides opportunity to help others and be of service to the community. 4 max: 0.847 min: 0.683 0.868 stress: is a source of worry and constant pressure. 5 max:-0.890 min:-0.671 0.872 responsibility: requires taking full responsibility for activities and outcomes. 5 max: 0.810 min: 0.642 0.816 future prospects: provides one the opportunity to grow personally and professionally. 5 max: 0.784 min: 0.617 0.855 empirical results descriptive statistics were calculated to summarise the sample data distribution. the means and standard deviations of the various work values were reported for business owners and students, firstly in terms of gender (tables 3 and 4) and secondly in terms of ethnic group (tables 5 and 6). in order to establish whether gender and ethnicity have an influence on the perceptions of an entrepreneurial career, the mean scores of the fourteen work values reported by the different sample groups were investigated. statistical significance was established by means of t-tests, while cohen’s d statistics were calculated to establish practical significance. the two sample groups, namely small business owners and students, were separately analysed. with regard to the work value flexibility, significant differences (p < 0.10; cohen’s d 0.237) were found between the mean scores reported by male and female small business owners (see table 3). females (5.20) reported significantly higher mean scores than males (4.87). this finding suggests that female small business owners perceived that an own business allowed them freedom to vary activities and regulate working hours, more so than male small sajesbm volume 5, (2012) 12 www.sajesbm.com article no 118 business owners did. significant differences (p < 0.05; cohen’s d 0.283) were also reported between the mean scores of male (5.95) and female (6.22) small business owners for the work value autonomy. females perceived that an own business allowed for autonomy and independence, more so than males did. table 3 gender of small business owners and work values (male n = 206; female n = 79) mean female mean male std.dev. female std.dev. male t-value df p cohen's d time 4.650 4.382 1.45 1.53 1.34 283 0.180 0.178 flexibility 5.196 4.867 1.27 1.43 1.79 283 0.074* 0.237* financial benefit 5.192 5.209 1.09 1.26 -0.10 283 0.919 0.013 challenging 5.696 5.799 0.97 1.00 -0.78 283 0.436 0.103 stimulating 5.304 5.058 1.14 1.18 1.58 283 0.114 0.210* imaginative 6.139 6.014 0.78 0.94 1.05 283 0.293 0.139 security 5.068 5.181 1.20 1.26 -0.68 283 0.497 0.090 prestige 5.261 5.092 1.16 1.30 1.01 283 0.316 0.133 autonomy 6.218 5.948 0.58 1.06 2.14 283 0.033** 0.283* interaction 6.500 6.414 0.54 0.68 1.00 283 0.316 0.133 serving community 5.785 5.846 1.05 1.02 -0.45 283 0.655 0.059 stress 4.425 4.657 1.47 1.49 -1.18 283 0.239 0.156 responsibility 6.352 6.411 0.64 0.83 -0.57 283 0.571 0.075 future prospects 6.008 5.974 1.01 0.93 0.27 283 0.789 0.036 (*p < 0.10; **p < 0.05) (* small 0.2 < d < 0.5; ** medium 0.5 < d < 0.8; *** large d > 0.8) no other significant differences between the mean scores of male and female small business owners were reported. for the small business owner sample, the null hypothesis stating that gender has no influence on the perceptions of the work values associated with an entrepreneurial career, can thus be rejected in favour of the alternative for the work values flexibility and autonomy, but cannot be rejected for the other work values investigated in this study. for the work value time, significant differences (p < 0.05; cohen’s d 0.236) were found between the mean scores reported by male and female students (see table 4). males (4.93) reported significantly higher mean scores than females (4.66). male students perceived that owning their own business would allow them to maintain a balance between work and leisure time (time), more so than female students did. sajesbm volume 5, (2012) 13 www.sajesbm.com article no 118 table 4 gender of students and work values (male n = 254; female n = 200) mean female mean male std.dev. female std.dev. male t-value df p cohen's d time 4.655 4.929 1.25 1.09 -2.50 452 0.013* 0.236* flexibility 5.360 5.234 0.91 1.08 1.32 452 0.188 0.125 financial benefit 5.686 5.804 0.90 0.79 -1.48 452 0.139 0.140 challenging 6.034 5.974 0.80 0.78 0.80 452 0.427 0.075 stimulating 4.950 5.000 1.05 1.10 -0.49 452 0.624 0.046 imaginative 6.157 6.031 0.66 0.77 1.85 452 0.065 0.175 security 4.832 5.065 1.42 1.36 -1.78 452 0.076 0.168 prestige 5.400 5.506 0.98 0.96 -1.16 452 0.245 0.110 autonomy 5.948 5.806 0.81 0.97 1.66 452 0.098 0.157 interaction 6.348 6.268 0.61 0.72 1.26 452 0.209 0.119 serving community 5.901 5.832 0.84 0.99 0.79 452 0.427 0.075 stress 4.422 4.368 1.23 1.29 0.46 452 0.649 0.043 responsibility 6.294 6.254 0.61 0.64 0.67 452 0.504 0.063 future prospects 6.343 6.256 0.62 0.68 1.41 452 0.160 0.133 (*p < 0.05; **p < 0.01) (* small 0.2 < d < 0.5; ** medium 0.5 < d < 0.8; *** large d > 0.8) no other significant differences were reported between male and female students. for the student sample, the null hypothesis can thus be rejected in favour of the alternative for the work value time, but cannot be rejected for the other work values investigated in this study. the results of this study (see table 5) showed that black small business owners reported significantly higher mean scores than their white counterparts for five of the work values associated with an entrepreneurial career. the work values were flexibility (p < 0.05; cohen’s d 0.246), security (p < 0.05; cohen’s d 0.310), future prospects (p < 0.05; cohen’s d 0.250), prestige (p < 0.001; cohen’s d 0.557) and serving the community (p < 0.01; cohen’s d 0.302). black respondents (5.13) perceived that owning one’s own business allowed for autonomy and independence (flexibility) more so than white respondents (4.79) did. black small business owners reported mean scores of 5.35 for security and 6.10 for future prospects, whereas white respondents reported significantly lower mean scores of 4.96 and 5.87 for these work values. this finding suggests that black respondents perceived that owning their own business provided them with a regular income and secure employment (security), as well as the opportunity to grow personally and professionally (future prospects), more so than white respondents did. similarly, black small business owners reported mean scores of 5.48 for prestige and 5.99 for serving the community, whereas white respondents reported significantly lower mean scores of 4.80 and 5.68 for these work values. in other words, black respondents perceived that owning their own business earned them respect and approval (prestige) and gave them opportunities to serve the community (serving the community), more so than their white counterparts did. as with the work values discussed above, a significant difference exists between the mean scores reported by white and black small business owners for the work value stress (p < 0.001; cohen’s d 0.589). however in contrast to the above, white respondents (5.02) reported significantly higher mean scores than blacks (4.17). white small business owners perceived that their own business was a source of worry and pressure, more so than black respondents did. sajesbm volume 5, (2012) 14 www.sajesbm.com article no 118 table 5 ethnicity of small business owners and work values (white n = 142; black n = 143) mean white mean black std.dev. white std.dev. black t-value df p cohen's d time 4.383 4.529 1.54 1.48 -0.82 283 0.41 0.097 flexibility 4.787 5.128 1.50 1.27 -2.07 283 0.04* 0.246* financial benefit 5.104 5.303 1.27 1.15 -1.39 283 0.17 0.164 challenging 5.713 5.827 1.03 0.95 -0.97 283 0.33 0.115 stimulating 5.077 5.175 1.17 1.18 -0.70 283 0.49 0.083 imaginative 6.006 6.091 0.89 0.91 -0.80 283 0.43 0.095 security 4.958 5.340 1.28 1.18 -2.62 283 0.01* 0.310* prestige 4.797 5.478 1.29 1.15 -4.70 283 0.00*** 0.557** autonomy 6.128 5.917 0.96 0.95 1.86 283 0.06 0.220 interaction 6.428 6.448 0.70 0.60 -0.26 283 0.80 0.030 serving community 5.674 5.983 1.12 0.91 -2.55 283 0.01** 0.302* stress 5.015 4.173 1.31 1.54 4.97 283 0.00*** 0.589** responsibility 6.423 6.366 0.87 0.68 0.60 283 0.55 0.072 future prospects 5.865 6.101 1.03 0.85 -2.11 283 0.04* 0.250* (*p < 0.05; **p < 0.01; ***p < 0.001) (* small 0.2 < d < 0.5; ** medium 0.5 < d < 0.8; *** large d > 0.8) for the small business owner sample, the null hypothesis stating that ethnicity has no influence on the perceptions of the work place values associated with an entrepreneurial career, can thus be rejected in favour of the alternative for the work values flexibility, security, prestige, serving the community, stress and future prospects. the null hypothesis can, however, not be rejected for the other work values investigated in this study. as in the case of black small business owners, black students also reported significantly higher mean scores than their white counterparts for the factors flexibility (p < 0.001; cohen’s d 0.354), security, (p < 0.001; cohen’s d 0.510), prestige (p < 0.001; cohen’s d 0.693), serving community (p < 0.001; cohen’s d 0.593) and future prospects (p < 0.001; cohen’s d 0.390). in addition to the aforementioned factors, black students also reported significantly higher mean scores for the factors imaginative (p < 0.001; cohen’s d 0.534) and interaction (p < 0.001; cohen’s d 0.345). the results of this study (see table 6) show that black students (5.40) perceived that owning their own business would allow for autonomy and independence (flexibility) more than white students (5.05) did. black students reported mean scores of 5.18 for security and 6.37 for future prospects, whereas white respondents reported significantly lower mean scores of 4.48 and 6.12 for these work values. in other words, black students perceived that owning their own business would allow for a regular income and secure employment (security), as well as the opportunity to grow personally and professionally (future prospects), more so than white students did. black students also reported mean scores of 5.66 for prestige and 6.03 for serving the community, whereas white students reported significantly lower mean scores of 5.02 and 5.50 for these work values. this finding suggests that black respondents perceive that owning their own business would earn them respect and approval (prestige) and would provide them with an opportunity to serve the community (serving the community), more so than their white counterparts did. sajesbm volume 5, (2012) 15 www.sajesbm.com article no 118 table 6 ethnicity of students and work values (white n = 139; black n = 315) mean white mean black std.dev. white std.dev. black t-value df p cohen's d time 4.986 4.730 1.05 1.21 2.16 452 0.03* 0.220* flexibility 5.045 5.398 1.01 0.99 -3.48 452 0.00*** 0.354* financial benefit 5.718 5.767 0.80 0.86 -0.57 452 0.57 0.058 challenging 6.022 5.991 0.71 0.82 0.38 452 0.71 0.038 stimulating 4.916 5.005 0.99 1.11 -0.81 452 0.42 0.083 imaginative 5.826 6.201 0.76 0.67 -5.24 452 0.00*** 0.534** security 4.483 5.174 1.48 1.29 -5.01 452 0.00*** 0.510** prestige 5.016 5.655 0.95 0.91 -6.81 452 0.00*** 0.693** autonomy 5.869 5.869 0.78 0.96 0.01 452 1.00 0.001 interaction 6.144 6.373 0.75 0.62 -3.39 452 0.00*** 0.345** serving community 5.495 6.025 0.91 0.89 -5.82 452 0.00*** 0.593** stress 4.612 4.295 1.16 1.29 2.48 452 0.01* 0.253* responsibility 6.265 6.275 0.63 0.63 -0.16 452 0.87 0.016 future prospects 6.119 6.371 0.70 0.62 -3.83 452 0.00*** 0.390* (*p < 0.05; **p < 0.01; ***p < 0.001) (* small 0.2 < d < 0.5; ** medium 0.5 < d < 0.8; *** large d > 0.8) black students reported means of 6.20 for imaginative and 6.37 for interaction. white students on the other hand reported significantly lower means of 5.83 and 6.14 for imaginative and interaction respectively. this finding suggests that black students perceived that owning their own business would require creative thinking to perform activities (imaginative), that they worked closely with others and that they were people-orientated, more so than white students. a significant difference also existed between the mean scores reported by white and black students for the work values time (p < 0.05; cohen’s d 0.220) and stress (p < 0.05; cohen’s d 0.253). in this case, however, white students reported significantly higher mean scores for time (4.99) and stress (4.61) than black students who reported mean scores of 4.72 and 4.30 respectively for these factors. white students perceived that owning their own business would allow them to maintain a balance between work and leisure time (time), more so than black students did. white students perceived that their own business would be a source of worry and pressure, more so than black students did. for the student sample, the null hypothesis can thus be rejected in favour of the alternative for the work values time, flexibility, imaginative, security, prestige, interaction serving community, stress and future prospects, but cannot be rejected for the other work values investigated in this study. discussion the primary objective of this study was to establish whether the perceptions of desirability that women and black individuals have of an entrepreneurial career differ from those of white males. these differences were established in terms of the fourteen workplace values identified by farrington et al. (2011) among both students of business management and existing small business owners. sajesbm volume 5, (2012) 16 www.sajesbm.com article no 118 a significant relationship between the gender of the small business owner and the work values flexibility and autonomy is reported in this study. female small business owners perceived that having their own business allowed them autonomy and independence as well as freedom to vary activities and regulate working hours, more so than males did. given the household and child-rearing responsibilities which still dominate for most women, having one’s own business would allow them greater flexibility and autonomy to meet these commitments. men, on the other hand, are less likely to see themselves as being responsible for household and child-rearing duties, but are more likely to see their role as one of providing for their families – thus creating the perception that having their own business would require more work and less flexibility in order to meet these commitments. with regard to the student sample, time was the only work value that was influenced by gender. male students were under the impression that owning their own business would allow them to maintain a balance between work and leisure time, more so than female students did. this opinion changes over time, as can be seen from the business owner results. the findings of this study suggest that black respondents perceived that owning their own business provided them with a regular income and secure employment, as well as the opportunity to grow personally and professionally, more so than white respondents did. in addition, black respondents perceived that owning their own business earned them respect and approval and gave them opportunities to serve the community, more so than their white counterparts perceived. white small business owners perceived that their own business was a source of worry and pressure, more so than black respondents did. black students perceived that owning their own business would provide a regular income and secure employment, as well as the opportunity to grow personally and professionally, more so than white students did. the findings also suggests that black student perceived that owning their own business would earn them respect and approval, and would provide them with an opportunity to serve the community, more so than their white counterparts did. black students perceived that owning their own business would require creative thinking to perform activities, working closely with others, and be people-orientated, more so than white students did. white students perceived that owning their own business would allow them to maintain a balance between work and leisure time, more so than black students did. however, white students also perceived that their own business would be a source of worry and pressure, more so than black students did. implications studies report that males and particularly white males are more inclined towards entrepreneurship than females. the reasoning behind undertaking this study was that if differences in perceptions of self-employment could be identified, possible explanations could be forthcoming with regard to why certain groups are more likely to embark on entrepreneurial careers than others. the results of this study show, however, that with the exception of perceptions relating to flexibility, autonomy and maintaining a balance between work and leisure time (time), males and females do not differ in their perceptions of what an entrepreneurial career could be like (for students) or is (for small business owners). female small business owners associated higher levels of flexibility and autonomy with selfemployment than their males counterparts did. given that more men embark on entrepreneurial careers than women, but women perceived these benefits more than men did, it can be assumed that the way the different gender groups perceive self-employment is not a factor influencing their choice of pursuing an entrepreneurial career. considering the household and child-rearing responsibilities of most women, one would expect selfemployment to attract women to such a career. however, the perceptions relating to sajesbm volume 5, (2012) 17 www.sajesbm.com article no 118 flexibility and autonomy differed only between male and female small business owners, and not between male and female students. this could imply that only through the experience of self-employment would women be aware of this advantage. with an increasing number of women embarking on entrepreneurial careers (de bruin et al., 2006; kakkonen, 2010), it is assumed that as the word spreads among the female community, women will become more aware of the advantages of flexibility and autonomy experienced when self-employed. interestingly, male students perceived that self-employment would allow them time to maintain a balance between work and leisure (time), more so than female students did. a possible explanation for this finding is that male students perceive time not at work as leisure time, whereas because of anticipated household and childrearing responsibilities, female students do not necessarily regard all time not at work as leisure time. according to langowitz and minniti (2007:341, 347), men tend to perceive the entrepreneurial environment in a more positive light than do women. the results of this study, however, show that women are more positive in terms of the flexibility and autonomy of selfemployment, whereas men are more positive in terms of the leisure time that selfemployment will permit. unfortunately the findings of this study do not offer an explanation as to why more males are likely to become entrepreneurs than females, only that explanations should be sought elsewhere. the results of this study show that black small business owners and black student respondents scored higher mean scores than white respondents for the majority of work values investigated in this study. this seems to suggest that black respondents perceive an entrepreneurial career more positively than white respondents do, specifically in terms of flexibility, security, future prospects, prestige, opportunity to serve the community (serving the community) and stress levels (stress). in addition, black students believe that selfemployment will allow for greater imagination and interaction with others, than white students do. despite the more positive perception of self-employment among black repondents, the gem survey suggests that black individuals, and in particular black south africans, are less likely than white south africans to embark on an entrepreneurial career (herrington et al., 2010). this raises the question of whether the perception of, or the attitude towards, an entrepreneurial career is a factor contributing to the low levels of entrepreneurial activity among black individuals in south africa. should an explanation rather not be sought from the other determinants of intentions, as implied by the theory of planned behaviour? another possible explanation for the low levels of entrepreneurial activity among black south africans is the many opportunities now available to them in the corporate and government sector as a result of affirmative action and employment equity. future studies could shed light on this aspect. in their study, köllinger and minniti (2006:72) also reported that black individuals perceive themselves and their entrepreneurial environment in a much more optimistic light than whites do, despite black entrepreneurs being more likely to fail than whites in the early stages of the entrepreneurial process (köllinger & minniti, 2006:61). according to köllinger and minniti (2006:75), high levels of confidence and optimistic perceptions of entrepreneurship in the face of high failure rates suggest that the subjective perceptions of black americans tend to be biased towards over-optimism, more so than the perceptions of whites. given their findings, köllinger and minniti (2006:61) conclude that constraints and not preferences are behind racial differences in business ownership. black individuals embarking on entrepreneurial careers face numerous constraints, such as discrimination and lack of access to finance, as well as lack of business and managerial skills. the identification of these constraints is of utmost importance if solutions are to be found and entrepreneurial activity among black individuals in south africa is to be enhanced. furthermore, the government and policy-makers should take cognisance of the results of this study, and future efforts to encourage entrepreneurship should not only focus on sajesbm volume 5, (2012) 18 www.sajesbm.com article no 118 creating a positive perception of self-employment as a career, but also on facilitating an enabling environment for prospective women and black entrepreneurs. limitations and future research as in all studies of an empirical nature, the findings of this study should be interpreted in the light of several limitations. the use of a convenience and judgemental sampling technique is a limitation of this study. non-probability sampling introduces a source of potential bias into a study, and consequently the findings cannot be generalised to the general population. future research should strive to develop a more comprehensive database from which probability samples can be drawn. another limitation of this study is that the data collected relied on one-time individual selfreport measures to assess constructs. self-reporting potentially leads to common method bias. however, meade, watson and kroustalis (2007) are of the opinion that the use of common assessment methods does not necessarily lead to the problem of common method bias, and in many cases common method bias may be small and will not necessarily jeopardise the validity of the results. it is, however, acknowledged that common method bias could have influenced the results of this study. the results of this study show that statistically significant differences exist between males and females as well as between white and black respondents regarding how an entrepreneurial career is perceived. however, given the small to medium-size effect as determined by cohen’s d statistics, it is questionable whether these differences in perceptions are large enough to have an effect in practice (ellis & steyn, 2003:51). the findings of this study should be interpreted in light of the levels of practical significance reported. given the importance of entrepreneurship to the economies of countries, it would be useful to replicate this study throughout south africa among the general working population, in an attempt to establish the perceptions of an entrepreneurial career on a broader scale. investigating relationships between the various work values and entrepreneurial intentions could also provide some valuable insights into why more south africans are not entrepreneurial. whether other demographic factors such as socio-economic status, age and having entrepreneurial parents influence the perception of an entrepreneurial career, is also worth further investigation. furthermore, the significant differences reported in this study concerning how the different ethnic groups perceive an entrepreneurial career suggest a need for more cross-cultural research relating to entrepreneurial activity in south africa. despite the limitations identified, this study has added to the field of entrepreneurship research and has provided valuable insights into how existing and potential entrepreneurs from different gender and ethnic groups perceive an entrepreneurial career. references ahmed, i., nawaz, m.m., ahmad, z., sajukat, m.z., usman, a., rehman, w. & ahmed, n. 2010. determinants of student’s entrepreneurial career intentions: evidence from business graduates. european journal of social sciences, 15(2):14-22. ajzen, i. 1985. from intentions to actions: a theory of planned behaviour. in kuhi, j. & beckman, j. eds. 1985. action control: from cognition to behaviour. heidelberg: springer, 11-39. ajzen, i. 1991. the theory of planned behavior. organizational behavior and human sajesbm volume 5, (2012) 19 www.sajesbm.com article no 118 decision processes, 50:179-211. ajzen, i. 2006. behavioral interventions based on the theory of planned behavior. [online] available from: http://people.umass.edu/aizen/research.html. [accessed 15 july 2008]. ajzen, i. & fishbein, m. 1980. understanding attitudes and predicting social behaviour. englewood cliffs, new jersey: prentice-hall. ariff, a.h.m., bidin, z., sharif, z., & ahmad, a. 2010. predicting entrepreneurship intention among malay university accounting students in malaysia. unitar e-journal, 6(1):110. autio, e., keeley, r.h., klofsten, m. & ulfstedt, t. 1997. entrepreneurial intent among students: testing an intent model in asia, scandinavia and usa. in zaidatol akmaliah, l.p. 2009. entrepreneurship as a career choice: an analysis of entrepreneurial selfefficacy and intentions of university students. european journal of social sciences, 9(2):338-349. bates, t. 2000. financing the development of urban minority communities: lessons of history. in köllinger, p. & minniti, m. 2006. not for lack of trying: american entrepreneurship in black and white. small business economics, 27:59-79. cliff, j.e. 1998; does one size fit all? exploring the relationship between attitude towards growth, gender, and business size. journal of business venturing, 13:523-542. daniel, p., chamberlain, a. & gordon, f. 2001. expectations and experiences of newly recruited filipino nurses. br j nursing, 10(4):254-256, 258-265. de bruin, a., brush, c.g. & welter, f. 2006. introduction to the special issues: towards building cumulative knowledge on women’s entrepreneurship. entrepreneurship theory and practice, 30:585-592. degeorge, j.m. & fayolle, a. 2008. is entrepreneurial intention stable through time? first insights from a sample of french students. international journal of entrepreneurship and small business, 5(1):7-27. delmar, f. & davidsson, p. 2000. where do they come from? prevalence and characteristics of nascent entrepreneurs. entrepreneurship and regional development, 12:1–23. detienne, d.r. & chandler, g.n. 2007. the role of gender in opportunity identification, entrepreneurship theory and practice. may:365-386. douglas, e.j. & shepherd, d.a. 2000. entrepreneurship as a utility-maximimizing response. journal of business venturing, 15(3):231-251. drost, e. a. 2010. entrepreneurial intentions of business students in finland: implications for education. advances in management, 3(7):28-35. duffy, r.d. & sedlacek, w.e. 2007. the work values of first-year college students: exploring group differences. the career development quarterly, 55:359-364. dyck, b. & neubert, m. 2010. management: current practices and new directions. boston: houghton mifflin harcourt. ellis, s.m. & steyn, h.s. 2003. practical significance (effect sizes) versus or in combination with statistical significance (p-values). management dynamics, 12(4):51-53. fairlie, r. 2004. recent trends in ethnic and racial business ownership. small business economics, 23(3):203-218. sajesbm volume 5, (2012) 20 www.sajesbm.com article no 118 fairlie, r. & meyer, b. 1996. ethnic and racial self-employment differences and possible explanations. journal of human resources, 31(4):757-793. farrington, s.m., gray, b. & sharp, g. 2011. perceptions of an entrepreneurial career: do small business owners and students concur? management dynamics, 20(2):2-17. ferguson, e. & hatherly, d. 1991. the work environment in the accountancy firm: a comparison of student expectations and trainee perceptions. the british accounting review, 23(2):123-132. fitzsimmons, j.r. & douglas, e.j. 2010. interaction between feasibility and desirability in the formation of entrepreneurial intentions. journal of business venturing, doi:10.1016/j.jbusvent.2010.01.001. gaddam, s. 2008. identifying the relationship between behavioural motives and entrepreneurship intentions: an empirical study based on the perceptions of business management students. the icfaian journal of management research, vii(5):35-55. gedye, s., fender, e. & chalkley, b. 2004. students’ undergraduate expectations and postgraduate experience of the value of a degree. journal of geography in higher education, 28(3):381-396. giacomin, o., janssen, f., pruett, m., shinnar, r.s., llopis, f. & toney, b. 2010. entrepreneurial intentions, motivations and barriers: differences among american, asian and european students. international entrepreneurship and management journal, doi: 10.1007/s11365-010-0155-y. gird, a. & bagraim, j.j. 2008. the theory of planned behaviour as predictor of entrepreneurial intent amongst final-year university students. south african journal of psychology, 38(4):711-724. gray, b.a., farrington, s.m. & sharp, g.d. 2010. applying the theory of planned behaviour to entrepreneurial intention. paper presented at the 4th international business conference (ibc), vic falls, zambia, 12-14 october 2010. gupta, v.k., turban, d.b., wasti, s.a. & sikdar, a. 2009. the role of gender stereotypes in perceptions of entrepreneurs and intentions to become an entrepreneur. entrepreneurship theory and practice, march:397-417. haase, h. & lautenschläger, a. 2011. career choice motivation of university students. international journal of business administration, 2(1):2-13. hair, j.f., black, w.c., babin, j.b., anderson, r.e. & tatham, r.l. 2006. multivariate data analysis. 6th ed. upper saddle river, new jersey: pearson/prentice hall. heilman, m.e. & chen, j.j. 2003. entrepreneurship as a solution: the allure of selfemployment for women and minorities. in gupta, v.k., turban, d.b., wasti, s.a. & sikdar, a. 2009. the role of gender stereotypes in perceptions of entrepreneurs and intentions to become an entrepreneur. entrepreneurship theory and practice, march:397-417. herrington, m., kew, j. & kew, p. 2010. tracking entrepreneurship in south africa: a gem perspective. cape town: uct centre for innovation and entrepreneurship. kakkonen. m. 2010. international business student’s attitudes of entrepreneurship. advances in business-related research journal, 1(1):66-67. sajesbm volume 5, (2012) 21 www.sajesbm.com article no 118 kazela, n. 2009. the roadmap of your entrepreneurship. in fatoki, o.o. 2010. graduate entrepreneurial intention in south africa: motivations and obstacles. international journal of business and management, 5(9):87-98. kiggundu, m.n. 2002. entrepreneurs and entrepreneurship in africa: what is known and what needs to be done. journal of developmental entrepreneurship. 7(3): 239-258. köllinger, p. & minniti, m. 2006. not for lack of trying: american entrepreneurship in black and white. small business economics, 27:59-79. kolvereid, l. 1996. prediction of employment status choice intentions. entrepreneurship theory and practice, 20(3):7-57. kolvereid, l. & isaksen, e. 2006. new business start up and subsequent entry in self employment. journal of business venturing, 21:866-885. kristiansen, s. & indarti, n. 2004. entrepreneurial intention among indonesian and norwegian students. journal of enterprising culture, 12(1):55-78. krueger, n.f. & carsrud, a.l. 1993. entrepreneurial intentions: applying the theory of planned behaviour. entrepreneurship and regional development, 5:315-330. kuehn, k.w. 2008. entrepreneurial intentions research: implications for entrepreneurship education. journal of entrepreneurship education, 11:87-98. langowitz, n. & minniti, m. 2007. the entrepreneurial propensity of women. entrepreneurship theory and practice, may:341-364. leffel, a. & darling, j. 2009. entrepreneurial versus organizational employment preference: a comparative of european and american respondents. journal of entrepreneurship education, 12. liñán, f. 2008. skill and value perceptions: how do they affect entrepreneurial intentions? international entrepreneurship management journal, 4(3):257-272. lüthje, c. & franke, n. 2003. the ‘making’ of an entrepreneur: testing a model of entrepreneurial intent among engineering students at mit. r&d management, 33(2):135-147. malagas, h. ed. 2003. state of small business development in south africa, annual review 2002. pretoria: ntsika enterprise promotion agency, 33-34. matthews, c. h. & moser, s. b. 1995. family background and gender: implications for interest in small firm ownership. entrepreneurship and regional development, 7:365– 377. mckay, d.r. (n.d.). identifying your work values. [online] available from: http://careerplanning.about.com/od/selfassessment/a/work_values.htm. [accessed 30 may 2010]. meade, a. w., watson, a. m., & kroustalis, s. m. 2007. assessing common methods bias in organizational research. paper presented at the 22nd annual meeting of the society for industrial and organizational psychology, new york. mueller, s. l. 2004. gender gaps in potential for entrepreneurship across countries and cultures. journal of developmental entrepreneurship, 9(3):199-216. nelson, d. 1995. planning your future. 2nd ed. cape town: creda press. nieman, g. ed. 2006. small business management: a south african approach. pretoria: van schaik publishers. sajesbm volume 5, (2012) 22 www.sajesbm.com article no 118 nunnally, j.c. & bernstein, i.h. 1994. psychometric theory. 3rd ed. new york: mcgraw-hill. parr, m. 2007. following in branson’s footprints. succeed, september:44-45. peterson, r.a. 1994. a meta-analysis of cronbach’s co-efficient alpha. journal of consumer research, 21(2):381-391. pihie, z.a.l. 2009. entrepreneurship as a career choice: an analysis of entrepreneurial selfefficacy and intention of university students. european journal of social sciences, 9(2):338-549. piipponen, r. 2006. helsingin kauppakorkakoulum opsielijoiden ja sielta vuonna 2000 valmistuneiden mastereiden urittajyyasenteet vuonna 2004. in drost, e. a. 2010. entrepreneurial intentions of business students in finland: implications for education. advances in management, 3(7):28-35. ramachandran,v. & shah, m.j. 1999. minority entrepreneurs and private sector growth in sub-saharan africa. in kiggundu, m.n. 2002. entrepreneurs and entrepreneurship in africa: what is known and what needs to be done. journal of developmental entrepreneurship. 7(3):239-258. reynolds, p.d., bygrave, w. & autio, e. 2004. gem 2003 executive report. babson park, ma: babson college. rousseau, g.g. & venter, d.j.l. 2009. investigate the importance of factors related to career choice. management dynamics, 18(3):2-13. scott, j.r. & gunderson, c.a. 2003. a study of prospective ophthalmology residents’ career perceptions. med educ online. [online] available from: http://www.med-edonline.org/aspx?articleid=3190andtypeid=1 [accessed 31 march 2008]. smith-hunter, a., decasperis, f.j. & paul, m. 2009. the role of perception in predicting women entrepreneurial start-up behavior and success. journal of international business and economics, 9(4):26-39. stead, g.b. & watson, e.d.s. 1993. career psychology in the south african context. (2nd ed.). cape town: juta. steel, p. & konig, c.j. 2006. integrating theories of motivation. academy of management review, 31(4): 889,913. timmons, j.a. & spinelli, s. jr. 2009. new venture creation – entrepreneurship for the 21st century. (8th ed.). boston: irwin mcgraw-hill. twenge, j.m., campbell, s.m., hoffman, b.j. & lance, c.e. 2010. generational differences in work values: leisure and extrinsic values increasing, social and intrinsic values decreasing. journal of management, [online] available from: http://jom.sagepub.com/content/early/2010/03/01/0149206309352246. [accessed 30 august 2010]. urban, b. 2010. a gender perspective on career preferences and entrepreneurial selfefficacy. sa journal of human resource management, 8(1):1-8. urban, b., botha, j.b.h and urban, c.o.b. 2010. the entrepreneurial mindset. kempton park: heinemann publishers. veciana, j.m., aponte, m. & urbano, d. 2005. university students’ attitudes towards entrepreneurship: a two countries comparison. international entrepreneurship and management journal, 1(2):165-182. sajesbm volume 5, (2012) 23 www.sajesbm.com article no 118 venter, r., urban, b. & rwigema, h. 2008. entrepreneurship theory in practice. cape town: oxford university press. zaidatol akmaliah, l.p. 2009. entrepreneurship as a career choice: an analysis of entrepreneurial self-efficacy and intentions of university students. european journal of social sciences, 9(2):338-349. zellweger, t., sieger, p. & halter, f. 2010. should i stay or should i go? career choice intentions of students with family business background. journal of business venturing, doi:10.1016/jbusvent.2010.04.001. zhang, z., zyphur, m.j., narayanan, j., arvey, r.d., chaturvedi, s., avolio, b.j., lichtenstein, p. & larsson, g. 2009. the genetic basis of entrepreneurship: effects of gender and personality. organizational behavior and human decision processes, 110:93-107. zhao, h., seibert, s.e. & hills, g.e. 2005. the mediating role of self-efficacy in the development of entrepreneurial intentions. journal of applied psychology, 90(6):12651272. abstract introduction and background to the study theoretical review research methodology measures of trustworthiness ethical consideration research findings limitations and implications for future research conclusion, theoretical and managerial implications acknowledgements references about the author(s) robert h. mafundu department of logistics, vaal university of technology, vanderbijlpark, south africa chengedzai mafini department of logistics, vaal university of technology, vanderbijlpark, south africa citation mafundu, r.h. & mafini, c., 2019, ‘internal constraints to business performance in black-owned small to medium enterprises in the construction industry’, southern african journal of entrepreneurship and small business management 11(1), a165. https://doi.org/10.4102/sajesbm.v11i1.165 original research internal constraints to business performance in black-owned small to medium enterprises in the construction industry robert h. mafundu, chengedzai mafini received: 15 oct. 2017; accepted: 27 nov. 2018; published: 27 mar. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: there has been an upsurge of black-owned small to medium enterprises (smes) in the construction industry in south africa. however, many of them continue to face various challenges, which adversely affect their business performance. aim: this article investigated the internal constraints influencing business performance in black-owned smes in the south african construction industry. setting: the study was conducted using a purposive sample of 13 professionals employed by five black-owned smes operating in the construction industry in gauteng province, south africa. design, methodology and approach: a qualitative approach was followed involving semi-structured in-depth interviews with the selected participants. the collected data were analysed using content analysis. results: after the content analysis, five constraints to business performance emerged: occupational health and safety, human resources, leadership style, workplace communication and resource allocation. conclusion: the study offers insights on issues affecting the performance of black-owned smes in the construction industry in south africa. its findings facilitate the identification of the primary drivers of underperformance and are thus useful for the diagnosis of business performance challenges in smes operating in the construction industry. keywords: small to medium enterprises; business performance; occupational health and safety; human resources; workplace communication; resource allocation. introduction and background to the study after the attainment of democracy in 1994, the south african government developed black empowerment policies that were intended to address the racial and economic inequalities which dominated the apartheid era (department of trade and industry 2014). black economic empowerment (bee) and its successor known as broad-based black economic empowerment (bbbee) are some of the legislative mechanisms developed to economically empower previously marginalised groups (department of small business development 2010). also, to assist black-owned businesses in improving their competitiveness and sustainability through a cost-sharing grant for equipment, tools, machinery and business development, the black business supplier development programme (bbsdp) was launched in 2000 (kruger 2011). to this extent, many companies within the construction sector in south africa are black-owned, which denotes that they fall under the bbbee category and have benefited through the bbsdp programme. however, despite benefiting from the available government-initiated support mechanisms, most of such businesses face various constraints that limit their performance. constraints are factors that act as bottlenecks or restrictions to the attainment of specific objectives and goals (gupta, sahib & chahal 2013). some of these constraints are internal to each company, while some emanate from the external environment (choi, mogyoro & pehrsson 2011). the construction industry in south africa is composed of large companies, such as murray & roberts and group five, which are registered on the johannesburg stock exchange (jse), and smaller participants, such as small and medium black-owned enterprises. this industry is diverse and involved in projects that span from the development of civil infrastructure to the development of residential and non-residential properties (du toit 2008). however, the industry faces challenges that include project delays, corruption in tender processes, unfair tender adjudication and the shortage of qualified and skilled professionals (antony 2013). mafimidiwo and iyagba (2015) further report that the construction industry in south africa has to contend with challenges such as the effective spending of budgetary allocations, sustainability, delays in settlement by government tender committees, and unfavourable policy amendments, including the introduction of new sector codes and industrial action, all of which affect businesses operating in that industry. considering that there is stiff competition in the construction industry in south africa, it is imperative for each company to have a clear understanding of the constraints that it uniquely faces in order to maintain competitive advantages, remain profitable and survive (chadhliwa 2015). it is against the above background that this study investigated internal constraints to business performance in black-owned small to medium enterprises (smes) operating in the construction industry in south africa. the study is set against a context of unsatisfactory performance by most black-owned construction smes in south africa. the substandard business performance by most black-owned construction smes in the country is consistently manifested through their inability to complete projects on time, financial challenges, numerous complaints from clients, loss of competent project managers, shortage of skilled personnel, poor quality reputation and trouble with government regulatory authorities (andres 2011; craig, maggitti & clark 2014; ho 2016; mabindisa 2013; rudzani & manda 2016). project completions by most construction smes in south africa are ordinarily slow, and the quality of finished products is also inferior, which leave many clients dissatisfied (makhene & thwala 2009; zunguzane, smallwood & emuze 2012). olawale and garwe (2010) add that regarding their financial standing, most smes make huge annual losses and have negative balance sheets, resulting in their inability to meet financial obligations. it has been further noted by some scholars (ademeso, izunnwanne & windapo 2011; windapo 2016) that most black-owned smes in the construction industry experience skills shortages because of the continuous loss of professionals who have technical and interpersonal skills needed to manage projects. it has also been difficult for these smes to open lines of credit and secure funds from financial institutions to acquire a more recent plant and equipment (aslam & hasnu 2016; fatoki & smit 2011; heerden, mashatole & burger 2014). because of these exposures, the operations of most black-owned smes in the construction industry are under strain and face possibilities of bankruptcy and liquidation (thwala & phaladi 2009). thus, most smes in south africa have a short lifespan and fail to survive for a longer duration after the initiation of their operations (van scheers 2016). information is required to enable owners and managers of black-owned smes in the south african construction industry to turn around the operational outcomes of their businesses. this study is intended to generate such information. in addition, there is a need to expand the available research-based evidence on the underlying causes of unsatisfactory business performance, specifically among black-owned smes in the south african construction industry. previous studies focusing on the south african construction industry (ibem & laryea 2015; khumalo, mashiane & roberts 2014; mbande 2010; mosenogi 2014; pillay & mafini 2017; shakantu et al. 2007; shunmugam & rwelamila 2014; smallwood & emuze 2012; windapo & cattell 2013) were directed towards larger business enterprises. there is, however, some evidence of a few studies that focused on construction smes in south africa. for instance, motsetse (2015) investigated the role of the government in developing sustainable smes in the construction sector in the free state province. another study by abdulrauf and windapo (2016) evaluated the impact of public sector–targeted procurement strategies on the development of smes in the construction industry. still, okanga (2016) focused on a safety culture development model for the smes in the south african construction industry. despite such evidence of previous research, a notable research gap still remains regarding the internal constraints facing these businesses. this study is intended to address this research gap. the information obtained in this study can be used by black-owned smes in the construction industry in south africa to develop interventions and strategies suitable for improving their business performance. theoretical review this section briefly discusses insights from the previous literature on smes, business performance and constraints to business performance. small to medium enterprises small to medium enterprises are defined in various ways, common to either turnover thresholds and the number of employees per enterprise size category as stated in the national small business act of 1996, as amended by the national small business amendment act of 2003. the act defines an sme as: … a separate and distinct entity including co-operative enterprises and non-governmental organisations managed by one owner or more, including its branches or subsidiaries if any is predominantly carried out in any sector or subsector of the economy mentioned in the schedule of size standards and can be classified as an sme by satisfying the criteria mentioned in the schedule of size standards(national small business amendment act of 2003) the government gazette (2003) states that a small enterprise in south africa is one that employs 50 people or less and has a total turnover of up to r19 million, with a total asset value of r3m. a medium enterprise employs between 51 and 200 people and has a total turnover of r39m, with a total asset value of r6m. the bureau for economic research (2016) estimated that there were at least 2 251 821 smes operating in south africa in 2016, of which 667 433 are classified as informal businesses while 1 497 860 operate as formal businesses. according to abor and quartey (2010), it is estimated that the majority of the formal business entities are smes and contribute between 52% and 57% to the gross domestic product (gdp) and 61% to employment. this supports the view by various scholars (desiree & kengne 2016; mafini, pooe & loury-okoumba 2016; oyelana & adu 2015) that smes are key drivers of economic growth and job creation since they introduce innovations to tap new markets, boost competition, accelerate economy-wide efficiency and reduce poverty and inequality. small to medium enterprises are, therefore, essential for improving the standards of living in a society and for the stability of a country (cant, wiid & meyer 2016). business performance business performance is defined as the measurement of a firm’s ability to compete and generate profits (kuen & tong 2012). it may also be perceived as the real output or outcome of a business that is evaluated against its projected output (dragnic 2014). business performance is a multi-dimensional construct that is affected by an extensive variety of factors, which are both internal and external to the business (mafini 2015; shehadeh et al. 2016). factors contributing to business performance include operational efficiencies, mergers, acquisitions, levels of diversification, organisational structure, human capital, manipulation of the political and social influences intruding upon the market conformity, among others (laudon & laudon 2014; shehadeh et al. 2016). the influence of customer services, customer loyalty (adomako & danso 2014) and internal management or leadership practices (fok-yew & ahmad 2014) in determining business performance cannot be underestimated. in terms of its impact, business performance is linked to, among other things, the increase in profitability and customer service delivery, meeting satisfactorily or exceeding customer demand (ongori, iravo & munene 2013). according to tung, baird and schoch (2011), for businesses to survive in today’s hyper-turbulent environment, they must demonstrate meaningful performance by identifying their existing positions, clarify their goals and operate more effectively and efficiently. therefore, the determination of business performance remains an essential factor in all forms of business organisations. constraints to business performance a constraint is anything that restricts or inhibits a business in meeting its potential objective (olabisi, olagbemi & adewole 2013). there are various divergent taxonomies for classifying constraints to business performance. richman et al. (2016) classify constraints into financial, internal, external/environmental and resource-based constraints, or any other factors that inhibit the achievement of business goals and objectives. cheng and humphreys (2016) identify physical constraints (e.g. equipment, facilities, raw material and manpower) and policies (e.g. laws, regulations or the way of conducting a business) as the significant inhibitors of business performance. olabisi et al. (2013) also identify basic categories of constraints, which are market constraints, financial constraints, supplier/vendor constraints, knowledge/competence, resource constraints, material constraints and policy constraints. as suggested by hough et al. (2011), each constraint has its own inherent nature and structure. however, a common thread binding these constraints together is their adverse effect on business performance, the degree of which varies depending on the existing context (akanni, oke & akpomiemie 2015; brown 2011; scopelliti et al. 2013). hence, one of the objectives at various levels of strategy is to minimise the impact of these constraints on business performance. research methodology this section briefly discusses the research design, participants, data analysis and measures of trustworthiness. research design this study subscribes to the interpretive paradigm, which concentrates on the manner in which people think about the things that are around them (bhattacherjee 2012). a qualitative research design was adopted in the study because it enables data collection based on words from a small number of individuals so that results from the participant’s views are obtained (corbin & strauss 2015). this was preferable because the sample was based on a few individuals drawn from black-owned smes in the south african construction industry. also, qualitative research was selected because of its interpretive orientation, which ensures that findings have greater trustworthiness and less artificiality, as the process of observing phenomena in a natural, real-life setting often allows researchers to develop a more accurate understanding of those phenomena (griffin 2014). examples of qualitative research designs include exploratory, descriptive and explanatory studies (saunders, lewis & thornhill 2012). in this study, an exploratory design was followed. according to ostlund et al. (2011), the objective of an exploratory design is to investigate the contemporary status of an ascertained variable to maintaining logic about a phenomenon. an exploratory design was deemed appropriate as this study was aiming at analysing (exploring) constraints to business performance in black-owned smes in the construction industry. participants the sample comprised 13 professionals drawn from five black-owned smes in the south african construction industry based in gauteng province. the group of people who participated in the study included four engineers, three finance and accountancy professionals, two marketers and three supply management professionals. participants were selected using the non-probability purposive sampling technique. purposive sampling entails the use of population elements involved in the actual phenomenon being investigated, which enhances the transferability (generalisability) of the findings (morse 2008). participants had to match the following criteria in order to be included in the study: minimum of 2 years of employment in their respective companies and a minimum qualification of a diploma. research instrument and procedures for data collection in this study, primary data were collected using the semi-structured in-depth interview technique. these interviews are used to ensure that an open mind is maintained with regard to the objectives of the study in order to merge concepts and theories from the data (bryman 2015). an interview schedule consisting of 11 questions was constructed and used in the interviews. the interview schedule was classified into two main groups of questions: questions on business performance and questions on internal constraints to business performance. the main questions were further classified into detailed questions focusing on constraints to business performance. this study reports on the results of the questions on internal constraints to business performance only. permission to collect the data was granted by each of the five black-owned smes from which participants were drawn. after constructing an interview schedule, a total number of 13 semi-structured interviews were conducted in march and april 2016 by the principal researcher. the interviews were held until a point of saturation was reached, represented by 13 interviews, which was the point at which participants’ views began to appear repetitively, consistently, such that more data did not necessarily lead to more information (petty, thomson & stew 2012). all interviews were conducted at the head office of each company to ensure transparency of the process. each interview lasted for 15–30 min. during the interviews, an audio recorder was used to capture the proceedings of the deliberations. all participants participated voluntarily and gave consent for their voices to be recorded during the interviews. data analysis the process of qualitative content analysis was used to analyse the collected data. a professional data analyst was employed to transcribe the qualitative data, which were saved in a digital audio recorder, from voice format into text format. this resulted in 13 interview transcripts in text format. subsequently, the interview transcripts were read repeatedly to extract the crucial aspects and themes originating from the interview process (saunders, lewis & thornhill 2009). words, events or phrases that appeared similar were grouped into their identical categories (simon 2011). this procedure was repeated until a point of saturation was reached, which is the point at which the themes began to appear repeatedly (mason 2010). this facilitated the identification of common themes that were prevalent in the data. these themes were identified as the findings of the study. measures of trustworthiness trustworthiness or authenticity refers to the accuracy and credibility of findings provided by a qualitative study (creswell 2012). in this study, four measures of trustworthiness, namely, credibility, confirmability, transferability and dependability, were considered. a study is said to be credible if readers find its inferences to be believable (bhattacherjee 2012). in the current study, credibility was established by using a purposive sampling technique, which ensured that only those participants whose input served the objectives of the research were drawn to participate in the study. moreover, all participants were informed of the purpose and significance of the study before their participation, which enabled them answer the questions to the best of their abilities. confirmability refers to the degree to which the findings stated in qualitative research could be independently confirmed by others (bryman 2015). to ascertain confirmability, all 13 interview transcripts were e-mailed back to respective participants to confirm their trustworthiness and to thank them for participating in the research. the confirmation by the participants ensured that the transcripts were authentic, accurate and confirmable. transferability refers to the extent to which findings can be generalised to other circumstances (padgett 2016). in this study, transferability was ascertained through analysing the specific details of the study conditions and methods and then comparing them to similar situations that they are more familiar within the construction industries. in this case, the specifics between the construction industry in gauteng and other south african provinces were considered similar, which confirms the transferability of the findings of this study to other regions in the country. dependability refers to the extent to which data collection and data analysis procedures will yield consistent findings (saunders, lewis & thornhill 2015). in this research study, dependability was determined through triangulation, which is the collection of data from more than one source in order to achieve the complete picture of a fixed point of reference (corbin & strauss 2015). triangulation was achieved through the collection of data from five different smes, which ensured that the findings of the study are dependable. in addition, apart from the interviews, data were also collected from various secondary data sources, such as journal articles and various databases relevant to this study. ethical consideration the anonymity of participants and their smes was maintained in conducting this research. research findings this section discusses the themes that emerged from the study. themes emerging from the study the purpose of this study was to determine the internal constraints to business performance among black-owned smes in the construction industry in south africa. these constraints were determined through the content analysis of 13 interview transcripts. after analysing the data, the following five themes emerged, which consist of internal constraints to business performance: occupational health and safety human resources leadership style workplace communication resource allocation. theme 1: occupational health and safety the lack of effective occupational health and safety (ohs), which was a result of non-compliance with the client’s requirements, emerged as one of the major themes in the study. it emerged that some black-owned smes in the construction industry were not providing employees with complete safety equipment; the working environment is dangerous and exposes employees to numerous work-related hazards. the following excerpts captured from the four engineers serve as evidence of ohs irregularities: ‘employees need protective clothing, and our company is not delivering protective clothing on time. the company got section 54 (notice of suspension from the site) with regard to housekeeping; employees did not have proper protective clothing, and there was non-compliance by our company regarding customer requirements.’ (p4, female, 28 years) ‘our company had a few challenges, for example, non-compliance of our employees with the clients’ health and safety requirements, which resulted in our suspension from working on projects. this happened twice in the last two years. they were not following standard working procedures (sop) as required by the client, which has affected the business performance.’ (p1, male, 53 years) ‘the construction work environment is not safe, and nothing is being done to improve the situation. a crane can collapse over your head any minute, and an elevator can break down while you are inside it. workers are continuously under threat. an example is the tongaat mall in durban, which collapsed and killed many people. the same can happen here.’ (p3, male, 31 years) ‘the company is not providing suitable protective equipment on time. there have been two work accidents this year, and a bricklayer was killed.’ (p2, male, 44 years) generally, ohs refers to anything that supports possible harmful and hazardous effects to humans in a workplace environment and includes appropriate measures to combat these (zizek & mulej 2016). the above excerpts encapsulate the general views of employees towards ohs concerns existing in black-owned smes in the construction industry. as lamented by the participants, protective equipment is not provided to employees who continue to work in non-conducive environments. some of the smes have even lost customers because of non-compliance to ohs standards. unless addressed, these inconsistencies remain a significant constraint, which constitutes a unique threat to small businesses in the construction sector. according to some authors (beriha, patnaik & mahapatra 2012; hughes & ferrett 2009), failure to adopt ohs standards and practices may negatively impact organisational performance, resulting in inter alia the loss of revenue, failure to retain business customers, low productivity, loss of investor confidence, demotivation and lack of commitment among employees. as seen from the study, some of these after-effects of poor ohs practices are already evident in black-owned smes in the construction industry. yet, it is apparent that the implementation of ohs practices can yield numerous pertinent paybacks. for instance, the execution of successful ohs standards should result in reduced workplace illnesses and injuries and can also minimise costs associated with workplace accidents (markey & patmore 2011; smallwood, haupt & shakantu 2016). this, in turn, has a positive ripple effect on a host of other factors, such as employee motivation, customer satisfaction, productivity and organisational performance, among others (hopkins 2010; vogt et al. 2010). in view of this, companies are usually advised to adopt and implement ohs practices that include legal imperatives, ethical concerns, industrial relations and financial performance (weick 2010). thus, black-owned smes in the south african construction industry could benefit immensely by the adoption of ohs standards, programmes and practices. theme 2: human resources human resource issues were identified as one of the major themes emerging from the interviews. the lack of skilled and experienced personnel emerged as a dominating human resource challenge. the following excerpts capture this constraint accurately: ‘the company does not have adequate skilled and experienced personnel. one of our customers terminated the existing contract because we did not have suitably qualified construction engineers.’ (p11, female, 26 years) ‘qualified engineers are costly to employ because there is a shortage of engineers in south africa. as a result, we rely on whatever expertise is available, but sometimes it’s only inexperienced people who cannot achieve much for the company.’ (p8, male, 55 years) furthermore, the issue of competency was also indicated. several participants indicated that the credentials of some of the managers and staff were questionable, judging by their unsatisfactory performance in their duties. this view is captured by the following excerpts: ‘we have the skilled personnel, but it is not satisfying because they misfire when it comes to critical issues. for example, we recently suspended a site safety officer because he was failing to pick-up most safety concerns.’ (p6, male, 33 years) ‘these young engineers graduating from universities these days have a lot to learn.’ (p12, male, 33 years) ‘the company employs a marketing manager, human resource manager and a call centre, but we do not see the results.’ (p9, female, 33 years) another ensuing issue is inadequate remuneration of professional employees in black-owned smes. this is captured by the following excerpt: ‘we employ various specialists such as civil engineers, architects, construction engineers, surveyors and the like. however, on average, they only stay for less than one year because there are more paying companies in the construction industry. remember we are competing with very big companies that can pay much more than us.’ (p7, female, 40 years) ‘salary increase is supposed to be effected every year, but one has to ask when the company is going to increase the salary. it is a problem because it affects employee self-esteem and consequently affects business performance.’ (p5, male, 26 years) as mentioned above, human resource issues related to lack of skilled and experienced personnel (especially in the technical area), skilled but underperforming employees and inadequate remuneration. the shortage of skilled and experienced personnel may lead to a high degree of poor business performance, low productivity, poor product quality and impede business growth (okoye & ezejiofor 2013). underperforming employees are a classic example of human resource management inefficiencies that may lead to poor-quality products and/or services, as well as limited productivity (jawahar & raghavendra 2011; mafini & pooe 2013). inadequate remuneration may lead to uncommitted staff, high rates of intentions to quit and labour turnover (ozer 2011; tsai & wu 2010). this probably explains why, as reported by some participants, the average period of tenure for some engineers is 1 year. in addition, considering that the shortage of technical skills is a well-acknowledged national crisis in south africa (department of home affairs 2014), the non-availability of skilled employees is likely to be a perennial challenge for black-owned smes in the construction industry. coupled with this is the competition from larger companies that can pay better packages in the same industry. a more effective approach to address these human resource challenges is needed if smes in the construction industry are to be brought back to an even keel. theme 3: leadership style in the study, the lack of leadership skills, as reflected through ineffective leadership styles, emerged as one of the main constraints faced by black-owned smes in the construction industry. this is evidenced by the following excerpts: ‘in our company, the problem is that employees are not given the opportunity to suggest anything. what the manager says is final. employees have many ideas, but they are disregarded. they are tired of being bullied by their managers.’ (p10, male, 30 years) ‘our managers are appointed based on who they know. they are not even qualified for the positions they hold. there is much nepotism. no wonder why they cannot plan ahead.’ (p11, female, 26 years) ‘simple business leadership skills are lacking in this company. the leadership is not good because they do not want to employ skilled personnel. they like to do things themselves, for example, marketing and project management.’ (p3, male, 31 years) ‘qualified employees run away because they realise that our leadership is thick-headed. for example, how can you have leaders who do not know that employees must be developed? you can be in one position for donkey years without being promoted. you cannot rely on such leaders.’ (p7, female, 40 years) based on the above excerpts, the absence of leadership skills amongst black-owned smes in the construction industry is exhibited through the dominance of authoritarian leadership styles, nepotism, poor strategic planning, reluctance to employ skilled employees, non-existence of employee development programmes and the absence of promotional opportunities for employees, among others. as mentioned by opoku, ahmed and cruickshank (2015), various leadership styles can be used, depending on particular circumstances, such as attitude, values and beliefs of the people concerned. examples include transformational, distributive, charismatic, servant, participative and authoritarian leadership styles, among others (zacher & jimmieson 2013). each style is distinct from the other and has a specific impact on the performance of the organisation. despite their distinction, it is generally acknowledged in the literature (mesu, maarten & sanders 2013; salman, von friedrichs & shukur 2011; yaghoubi et al. 2014) that the application of appropriate and effective leadership is pivotal to the succes of smes. it is natural then to expect that the lack of leadership skills in black-owned smes could have damaging effects on business performance. leadership is a process which involves influence, occurs within a group setup and entails shared visions and goals (hough et al. 2011). leadership is of paramount importance for a business and a critical success factor in the drive towards sustainability is leadership that provides shared vision, strategy and direction towards a sustainable future (opoku et al. 2015). on the one hand, leadership that generates confidence and inspiration may result in leadership effectiveness, regardless of the degree of contingent-reward behaviour displayed by the leader (swid 2014). on the other hand, poor leadership skills and a poor coordination across business functions could be the significant deterrents to business success and can result in projects running the risk of failure, deterioration of employee commitment to quality, individual objectives taking precedence over business objectives and morale, and productivity diminishing over time (ropega 2011; salman et al. 2011). femi (2014) argues that poor leadership styles result in poor communication and can have a negative impact on workers’ performance and productivity. o’reilly et al. (2010) add that the lack of a clear message and consistency in leadership at different levels within the business may affect the employee’s ability to recognise and execute strategic initiatives. it is clear that the lack of practical leadership skills is a significant impediment to business performance in black-owned smes in the construction industry. accordingly, measures should be put in place to transform leadership in these businesses if performance is to be optimised. theme 4: workplace communication ineffective communication emerged as a major constraint that deters business performance. it appeared that there were no appropriate communication strategies in place in most enterprises. the following excerpts from some of the participants are shared below: ‘communication style in the company is very poor. there is no proper communication channel. we rely on the grapevine to get information on developments.’ (p2, male, 44 years) ‘within the administration office, there is a problem. you will find the manager busy with drawings, but he/she does not give feedback from the meeting. we sent someone to attend site briefings, and the gentleman did not give feedback to the office that the tender was now closing earlier than previously advised. it affects the business because we are not able to submit tender documents on time and the business loses revenue.’ (p12, male, 26 years) ‘some weaknesses need to be corrected. our communication is verbal, and we ignore some of the things. the system is not yet in place.’ (p1, male, 53 years) ‘communication does affect our business, but we have not come up with a strategy to deal with such issues. our communication style is top to bottom always.’ (p9, female, 33 years) ‘we do not have an intranet. we rely on personal emails.’ (p11, female, 26 years) the above excerpts reveal that workplace communication is a major hindrance to business performance. the absence of proper communication channels is apparent, with employees relying on the grapevine. managers also fail to give meaningful feedback to employees, and in some cases, communication is verbal only. other communication problems emerging include a unidirectional flow of information (top to bottom) and the absence of company emails in some of the business enterprises. according to pullin (2010), ineffective workplace communication generally results in massive financial losses and business failure. femi (2014) suggests that the inability of managers to coordinate a perfect and smooth flow of communication among the employees, may result in low employee commitment and reduced productivity because the majority of workers will be demotivated. additionally, top-down communication is a silent killer of business success as it inhibits ideas and inputs from employees (hough et al. 2011). mutuku and mothooko (2014) add that poor communication results in internal control breakdowns, lack of responsibility, elevated anxiety and confusion, as well as low employee motivation. as seen from the findings of this study, these effects are prevalent in black-owned smes in the construction industry. it follows then that unless measures are put in place to improve workplace communication practices, the turnaround of these business enterprises is likely to remain a pipe dream. theme 5: resource allocation poor resource allocation emerged as a critical theme in the study, particularly concerning matters such as the shortage of materials on site, lack of financial resources and the non-existence of state-of-the-art equipment/machinery. one participant raised a concern that delay in providing required equipment on site would affect project progress, as cited below: ‘in one case, there was a delay when we requested for scaffolding, and it affected the progress of the project. also, there are too many people working in offices, yet in some sites, there is a shortage of qualified personnel.’ (p8, male, 55 years) the following is an extract from another participant concerning management who are not proactive: ‘our business is affected, our managers bring tender documents to the office at the last minute and end up pricing the tender in a hurry, and this is prone to mistakes. if we need stationery, we have to wait for someone who is far away. sometimes we do not have the internet, and it affects our communication with customers.’ we do not have petty cash in the office to buy immediate office needs. we have to wait for someone to come and buy such small things and it affects our business performance.’ (p7, female, 40 years) another participant mentioned that their company depended on payment certificates to finance its operations. as a result, a delay in receiving payment from the clients would affect the project’s critical path as resources were not available. this is captured in the excerpt below: ‘yes, we experience material shortages on sites at times when the customer has not yet made payments. it affects the timely delivery of the project since we work on critical paths. for example, if bricks have run out on site, the brickwork stops, and it affects the completion of the project. yet if we cannot complete the project on time, the customer can charge us penalties of up to r10 000 a day. shortage of materials is a constraint to business performance. there is a loss of revenue and the project costs increase.’ (p6, male 33 years) another participant bemoaned the ineffective allocation of resources, as captured in the excerpt below: ‘the allocation of resources is not effective, some departments have most of the resources they need, while others are starved of resources. each manager has at least two company vehicles plus pool cars to use, yet we have to hire simple and inexpensive equipment that we use on site from other companies. this hiring of equipment causes delays on project progress because our operations are affected if the plant hire company does not deliver the equipment on time. it is better that such equipment is bought by the company.’ (p5, male, 26 years) as mentioned in the above excerpts, resource allocation issues affecting business performance include the lack of basic resources, lack of capitalisation and the lack of equipment. resource allocation is a process through which a company decides where scarce resources should be utilised in the production of goods or services (hope & moehler 2014). examples of resources include human, material and capital inputs to the business processes, which are essential assets of a business. material resources such as physical facilities and materials, plant equipment, inventories and supplies, are the main assets of a business and provide capital that is used to regulate the flow of the other resources (kumar & suresh 2009). poor allocation of resources is an indicator of the lack of strategic planning and hurts competitive advantage, employee morale, productivity and overall business performance (preuss 2009). baporikar (2015) maintains that the shortage of financial resources, administrative obstacles and scarcity of qualified workers are amongst the leading causes of business failure. given that the allocation of resources is considered a make-or-break activity in construction projects (siew 2016), it is crucial for black-owned smes in that industry to streamline the approaches by which they distribute resources across their value chains. this would be an essential step towards stimulating optimum business performance. limitations and implications for future research there are some matters that arose from the study that were beyond the control of the researchers. despite efforts to improve the transferability of the study, its findings remain limited because only those construction smes that were based in gauteng province were included in the study. in future, it would be best to increase the scope of the study by including construction smes drawn from several south african provinces. the study was qualitative in nature, which puts into spotlight several drawbacks associated with qualitative studies. these include the subjectivity of the findings, researcher bias and the view that data collection and analysis can be time-consuming and cumbersome, leading to errors (griffin 2014). in view of this, similar studies should be conducted using the mixed-method approach to ensure that the strengths of the quantitative study overcome these drawbacks. also, the study focused on internal constraints only, which spurs the opportunity to examine external constraints in the future. a further limitation is that despite their reasonably high levels of education, some participants were noticeably having challenges with expressing themselves in english. in future, there should be room for the use of vernacular dialects, with possibilities of translation so that all views can be captured accurately. as the study was restricted to black-owned smes operating in the construction industry, future studies should be extended to similar businesses operating in other sectors of the economy. further research space is available to examine the impact of each of the uncovered constraints on business performance through correlation and prediction analyses. conclusion, theoretical and managerial implications the purpose of this study is to investigate internal constraints to business performance in black-owned smes operating in the construction industry in south africa. the literature acknowledges the existence of numerous constraints that influence business performance and should be mitigated. the literature also recognises the existence of various taxonomies that classify constraints to business performance. through the qualitative analyses of primary data, five constraints to business performance, namely, ohs, human resources, leadership style, workplace communication and resource allocation, were identified. the business performance of black-owned smes in the construction industry could improve if interventions are put in place to reduce the negative impact of each of these constraints. the study has theoretical and managerial implications. on the theoretical front, it provides fresh perspectives on constraints to business performance amongst black-owned smes in the south african construction industry, which was hitherto an under-researched context. in this sense, the study occupies an important source of literature in this area, offering future researchers an empirical, rather than anecdotal, reference source. on the practical front, the study offers sme owners and managers information on factors to prioritise when investigating business performance challenges. a typical approach would be to revisit each constraint identified in this study and initiate strategies to reduce the negative impact of that constraint on business performance. specifically, this may include formulating ohs programmes and following the stipulations of the occupational health and safety act no 181 of 1993 to improve health and safety welfare amongst employees. to alleviate human resource constraints, there is a need for effective human resource planning that includes improvements in recruitment and selection, performance assessment, career planning, and training and development, as well as compensation. leadership constraints could be alleviated by the recruitment of suitably qualified and experienced managers who have the interest of their organisations at heart (brown 2011) and then empowering them continuously through training and development. workplace communication could be improved through the creation of a multi-dimensional communication culture, the use of intranets and open communication channels, standards and expectations in the workplace. unproductive resource allocation could be alleviated through implementing proper strategic planning of activities to ensure that human, material, plant and equipment and financial resources are equally allocated to various business processes to increase satisfactory performance (kumar & suresh 2009). acknowledgements the authors would like to thank the faculty of management sciences of the vaal university of technology for funding the publication fees. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions r.h.m. conducted the literature review and collected the data. c.m. conducted the data analysis and compiled the sections of the article. references abdulrauf, a. & windapo, a.o., 2016, ‘evaluating the impact of public sector targeted procurement strategies on the development of smes in the construction industry’, 9th cidb postgraduate conference, february 2–4, 2016, cape town, south africa. abor, j. & quartey, p., 2010, ‘issues in sme development in ghana and south africa’, international research journal in finance and economic 39, 218–229. ademeso, o.s., izunnwanne, o. & windapo, a.o., 2011, ‘examining factors contributing to shortage of skilled workers in the construction industry’, in nmmu construction management conference proceedings, protea marine hotel, port elizabeth, south africa: department of construction management, nmmu, november 27–29, 2011, pp. 204–213. adomako, s. & danso, a., 2014, ‘regulatory environment, environmental dynamism, political ties, and performance’, journal of small business and enterprise development 21(2), 212–230. https://doi.org/10.1108/jsbed-01-2014-0004 akanni, p.o., oke, a.e. & akpomiemie, o.a., 2015, ‘impact of environmental factors on building project performance’, journal of housing and building national research center 11(1), 91–97. andres, c., 2011, ‘family ownership, financing constraints and investment decisions’, applied financial economics 21, 1641–1659. https://doi.org/10.1080/09603107.2011.589805 antony, a.m., 2013, ‘the legal regulation of construction procurement in south africa’, unpublished masters dissertation, faculty of law, south africa, stellenbosch university. africa. aslam, s. & hasnu, s.a.f., 2016, ‘issues and constraints perceived by young entrepreneurs of pakistan’, journal of world entrepreneurship, management and sustainable development 12(1), 50–65. baporikar, n., 2015, handbook of research on entrepreneurship in the contemporary knowledge-based global economy, university of pune, pune, india. beriha, g.s., patnaik, b. & mahapatra, s.s., 2012, ‘assessment of occupational health practices in indian industries’, journal of modelling in management 7(2), 180–200. https://doi.org/10.1108/17465661211242804 bhattacherjee, a., 2012, social science research: principles, methods, and practices, university of south florida, tampa. brown, d.r., 2011, an experiential approach to organisation development, 8th edn., pearson, harlow. bryman, a., 2015, social research methods, 5th edn., oxford university press, oxford,. cant, m.c., wiid, j.a. & meyer, a., 2016, ‘smes: do they follow a shotgun or rifle approach when it comes to target marketing?’, problems and perspectives in management 14(3), 504–511. https://doi.org/10.21511/ppm.14(3-2).2016.06 chadhliwa, t.q., 2015, ‘challenges facing small and medium enterprise contractors in delivering grade r classrooms for the western cape department of transport and public works’, unpublished masters dissertation, south africa, stellenbosch university. cheng, m. & humphreys, k.a., 2016, ‘managing strategic uncertainty: the diversity and use of performance measures in the balanced scorecard’, managerial auditing journal 31, 512–534. https://doi.org/10.1108/maj-12-2015-1286 choi, j., mogyoro, m. & pehrsson, a., 2011, ‘influence of internal and external factors on expansion strategy swedish cleantech subsidiaries in the usa’, unpublished masters dissertation, school of business and economics, linnaeus university, växjö, sweden, viewed 08 september 2015, from http://docplayer.net/14797071-influence-of-internal-and-external-factors-on-expansion-strategy.html corbin, j. & strauss, a., 2015, basics of qualitative research: techniques and procedures for developing grounded theory, 4th edn., sage, thousand oaks, ca craig, t.d., maggitti, p.g. & clark, k.d., 2014, ‘knowledge flows and constraints to the entrepreneurial process in entrepreneurial resourcefulness: competing with constraints’, in a.c. corbett & a.k. jerome (eds.), entrepreneurial resourcefulness: competing with constraints, pp. 85–205, emerald group publishing limited, bingley, west yorkshire. creswell, j.w., 2012, educational research: planning, conducting and evaluating quantitative and qualitative research, 4th edn., pearson, boston, ma. department of home affairs., 2014, scarce skills and work permit quotas, viewed 08 september 2014, from http://www.home-affairs.gov.za/index.php/scarce-skillswork-quotas department of small business development, 2010, black business supplier development programme (bbsdp), viewed 02 september 2016, from http://www.dsbd.gov.za/assets/black-business-supplier-development-programme-(bbsdp)-guidelines.pdf department of trade and industry, 2014, broad-based black economic empowerment: proclamation by the president of the republic of south africa, viewed 20 september 2016, from https://www.thedti.gov.za/economic_empowerment/bee.jsp desiree, b. & kengne, s., 2016, ‘mixed-gender ownership and financial performance of smes in south africa’, international journal of gender and entrepreneurship 8(2), 117–136. https://doi.org/10.1108/ijge-10-2014-0040 dragnic, d., 2014, ‘impact of internal and external factors on the performance of fast-growing small and medium businesses’, journal of management 19(1), 119–159. du toit, c., 2008, project management and the law: practical guidelines for management of engineering and building contracts, halfway house, south african institution of civil engineering, johannesburg. fatoki, o.o. & smit, a.v., 2011, ‘constraints to credit access by new smes in south africa: supply side analysis’, african journal of business management 5(4), 1413–1425. femi, a.f., 2014, ‘the impact of communication on workers’ performance in selected organisations in lagos state’, journal of humanities and social science 19(8), 75–82. https://doi.org/10.9790/0837-19827582 fok-yew, o. & ahmad, h., 2014, ‘management of change and operational excellence in the electrical and electronics industry’, journal international review of management and business research 3(2), 223–739. government gazette, 2003, ‘no 26 national small business amendment act, cape town’, parliament of the republic of south africa 461, 1–10. griffin, c., 2014, ‘the advantages and limitations of qualitative research in psychology and education’, hellenic journal of psychology 2, 3–15. gupta, m.c., sahib, g.k. & chahal, h., 2013, ‘improving market orientation: the theory of constraints-based framework’, journal of strategic marketing 21(4), 305–322. https://doi.org/10.1080/0965254x.2013.790467 heerden, h., mashatole, s. & burger, m., 2014, constraints faced by small contractors in the gauteng province of south africa conference of informatics and management sciences, viewed january 26 2016, from https://www.google.co.za/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=utf8#q=constraints+faced+by+small+contractors+in+the+gauteng+province+of+south+africa ho, p.h.k., 2016, ‘labour and skill shortages in hong kong’s construction industry’, engineering, construction and architectural management 23(4), 533–550. https://doi.org/10.1108/ecam-12-2014-0165 hope, a.j. & moehler, r., 2014, ‘balancing projects with society and the environment: a project, programme and portfolio approach’, procedia social and behavioral sciences 119, 358–367. https://doi.org/10.1016/j.sbspro.2014.03.041 hopkins, a., 2010, failure to learn: the bp texas city refinery disaster, cch australia limited, sydney. hough, j, thomson, a.a., strickland, a.j. & gamble, j.e., 2011, crafting and executing strategy south african edition, mcgraw-hill, london. hughes, p. & ferrett, e., 2009, introduction to health and safety at work, 2nd edn., butterworth-heinemann, oxford. ibem, e.o. & laryea, s., 2015, ‘e-procurement use in the south african construction industry’, journal of information technology in construction 20, 364–384. jawahar, d.p. & raghavendra, s.n., 2011, ‘perceptual difference of role based performance – a gender study’, international journal of business, humanities and technology 1(3), 175–186. khumalo, j., mashiane, j. & roberts, s., 2014, ‘harm and overcharge in the south african precast concrete products cartel’, journal of competition law and economics 10(3), 621–646. https://doi.org/10.1093/joclec/nhu005 kuen, p.w. & tong, c., 2012, ‘major factors influencing the performance of local private third party logistics service providers in southern china’, international graduate school of business, university of south australia journal 4(1), 1–30. kumar, s.a. & suresh, n., 2009, operations management, new age international publishers, new delhi. kruger, l.p., 2011, ‘the impact of black economic empowerment (bee) on south african businesses: focusing on ten dimensions of business performance’, southern african business review 15(3), 207–233. laudon, k.c. & laudon, j.p., 2014, management information systems, 13th edn., pearson education, upper saddle river, nj. mabindisa, v., 2013, impact of staff turnover on organisational effectiveness and employee performance at the department of home affairs in the eastern cape province, durban, durban university of technology, durban. mafimidiwo, b. & iyagba, r., 2015, comparative study of problems facing small building contractors in nigeria and south africa, journal of emerging trends in economics and management sciences 6(2), 101–109. mafini, c. & pooe, d.r.i., 2013, ‘the relationship between employee satisfaction and organisational performance: evidence from a south african government department’, south african journal of industrial psychology 39(1), 1–9. https://doi.org/10.4102/sajip.v39i1.1090 mafini, c., 2015, ‘predicting organisational performance through innovation, quality and inter-organisational systems: a public sector perspective’, the journal of applied business research 31(3), 939–952. https://doi.org/10.19030/jabr.v31i3.9227 mafini, c., pooe, d.r.i. & loury-okoumba, v.w., 2016, ‘interrogating antecedents to sme supplier performance in a developing country’, southern african business review 20, 259–285. makhene, d. & thwala, w.d., 2009, ‘skilled labour shortages in construction contractors: a literature review’, in proceedings of the cidb 6th post graduate conference, johannesburg, 6–8th september, pp. 128–136. markey, r. & patmore, g., 2011, ‘employee participation in health and safety in the australian steel industry, 1935–2006’, british journal of industrial relations 49, 144–167. https://doi.org/10.1111/j.1467-8543.2009.00756.x mason, m., 2010, ‘sample size and saturation in phd studies using qualitative interviews’, qualitative social research 11(3), art. 8, viewed 29 september 2016, from http://www.qualitative-research.net/index.php/fgs/article/viewarticle/1428/3027 mbande, c., 2010, ‘overcoming construction constraints through infrastructure delivery’, in proceedings: the association of schools of construction of southern africa (asocsa), fifth built environment conference, durban, south africa, july 18–20, pp. 213–232. mesu, j., maarten, v. & sanders, k., 2013, ‘labour flexibility in smes: the impact of leadership’, employee relations 35, 120–138. morse, j.m., 2008, ‘styles of collaboration in qualitative inquiry’, qualitative health research 18(1), 3–4. mosenogi, j.m., 2014, ‘an impact analysis of construction sector on economic growth and household income in south africa’, masters dissertation, mafikeng campus, north west university, south africa, viewed 28 may 2017, from error! hyperlink reference not valid. motsetse, m.j., 2015, ‘the role of government in developing sustainable smes in the construction sector in the free state province’, masters dissertation, business school, university of the free state, bloemfontein, south africa. mutuku, c.k. & mathooko, p., 2014, ‘effects of organizational communication on employee motivation: a case study of nokia siemens networks kenya’, international journal of social sciences and project planning management 1(3), 1–12. okanga, b. 2016, ‘a safety culture development model for the smes in the building and construction industry’, journal of emerging trends in economics and management sciences (jetems) 7(3), 106–115. okoye, p.v.c. & ezejiofor, r.a., 2013, ‘the effect of human resources development on organizational productivity’, international journal of academic research in business and social sciences 3(10), 250–268. https://doi.org/10.6007/ijarbss/v3-i10/295 olabisi, y.s., olagbemi, a.a. & adewole, a.a. 2013, ‘factors affecting small-scale business performance in informal economy in lagos state-nigeria’, innovative issues and approaches in social sciences 6(2), 21–39. olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of management 4(5), 729–738. ongori, j.k., iravo, m. & munene, c.e., 2013, ‘factors affecting performance of hotels and restaurants in kenya: a case of kisii county’, interdisciplinary journal of contemporary research in business 4(12), 897–928. opoku, a., ahmed, v. & cruickshank, h., 2015, ‘leadership style of sustainability professionals in the uk construction industry’, built environment project and asset management 5(2), 184–201. https://doi.org/10.1108/bepam-12-2013-0075 o’reilly, c.a, caldwell, d.f., chatman, j.a., lapiz, m. & self, w., 2010, ‘how leadership matters: the effects of leaders’ alignment on strategy implementation’, the leadership quaterly 21, 104–113. ostlund, n., 2011, ‘combining qualitative and quantitative research within mixed method research designs: a methodological review’, international journal of nursing studies 48(3), 369–383. https://doi.org/10.1016/j.ijnurstu.2010.10.005 oyelana, a.a. & adu, e.o., 2015, ‘small and medium enterprises (smes) as a means of creating employment and poverty reduction in fort beaufort, eastern cape province of south africa’, journal of social sciences 45(1), 8–15. ozer, g. & yilmaz, e., 2011, ‘comparison of the theory of reasoned action and the theory of planned behaviour. an application on accountants’ information technology usage’, african journal of business management 5(1), 50–58. padgett, d., 2016, qualitative methods in social work research, 3rd edn., sage, los angeles, ca. petty, n.j., thomson, o.p. & stew, g., 2012, ‘ready for a paradigm shift? part 1: introducing the philosophy of qualitative research’, manual therapy 17, 267–274. https://doi.org/10.1016/j.math.2012.03.006 pillay, p. & mafini, c., 2017, ‘supply chain bottlenecks in the south african construction industry: qualitative insights’, journal of transport and supply chain management 11(0), a307. https://doi.org/10.4102/jtscm.v11i0.307 preuss, l., 2009, ‘addressing sustainable development through public procurement: the case of local government’, supply chain management 14(3), 213–219. https://doi.org/10.1108/13598540910954557 pullin, p., 2010, ‘small talk, rapport, and international communicative competence: lessons to learn from belf’, journal of business communication 47, 455–476. richman, b.m., copen, m., ohmae, k., darwin, c., henderson, b.d., garvin, c. et al., 2016, strategic management for chartered accountants, new age international, new delhi. ropega, j., 2011, ‘the reasons and symptoms of failure in sme’, international advances in economic research 17, 476–483. https://doi.org/10.1007/s11294-011-9316-1 rudzani, s. & manda, d.c., 2016, ‘an assessment of the challenges of adopting and implementing ifrs for smes in south africa’, problems and perspectives in management 14(2), 212–221. https://doi.org/10.21511/ppm.14(2-1).2016.10 salman, a., von friedrichs, y. & shukur, g., 2011, ‘the determinants of failure of small manufacturing firms: assessing the macroeconomic factors’, international business research 4(3), 22–32. https://doi.org/10.5539/ibr.v4n3p22 saunders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., prentice hall, harlow, england. saunders, m., lewis, p. & thornhill, a., 2012, research methods for business students, 6th edn., prentice hall, harlow, england. saunders, m., lewis, p. & thornhill, a., 2015, research methods for business students, 7th edn., prentice hall, harlow, england. scopelliti, i., cillo, p., busacca, p. & mazursky, d., 2013, ‘how do financial constraints affect creativity’, the journal of product innovation management 31(5), 880–893. https://doi.org/10.1111/jpim.12129 shakantu, w.m.w., tookey, j., muya, m. & bowen, p., 2007, ‘beyond egan’s supply chain management: advancing the role of logistics in the south african construction industry’, acta structilia 14(1), 93–115. shehadeh, r., al-zubi, m.f., abdallah, a.b. & maqableh, m., 2016, ‘investigating critical factors affecting the operational excellence of service firms in jordan’, journal of management research 8(1), 18–49. https://doi.org/10.5296/jmr.v8i1.8680 shunmugam, s. & rwelamila, p.d., 2014, ‘an evaluation of the status of risk management in south african construction projects’, conference paper presented at the project management south africa (pmsa) conference 2014, johannesburg, south africa, 27th september–1st october, viewed 15 october 2017, from http://c.ymcdn.com/sites/www.projectmanagement.org.za/resource/resmgr/academic_papers_2014/pmsa_national_conference_201.pdf siew, r.y.j., 2016, ‘integrating sustainability into construction project portfolio management’, ksce journal of civil engineering 20, 101–108. https://doi.org/10.1007/s12205-015-0520-z simon, m., 2011, analysis of qualitative data: dissertation and scholarly research recipes for success, viewed 05 may 2016, from http://dissertationrecipes.com/wp-content/uploads/2011/04/analysis-of-qualitative-dataxy.pdf smallwood, j.j. & emuze, f.a., 2012, ‘status of quality in south african construction: the case of a general contractor’, in proceedings of the 6th international conference and workshop on the built environment in developing countries (icbedc-2012), adelaide, australia, december 4–5, 2012, pp. 113–124. smallwood, j., haupt, t. & shakantu, w., 2016, construction health and safety in south africa: cidb development through partnership, viewed 26 may 2016, from http://cidb.org.za/publications/documents/construction%20health%20and%20safety%20in%20south%20africa.pdf swid, a., 2014, ‘police members’ perception of their leaders’ leadership style and its implications’, international journal of police strategies and management 37(3), 579–595. https://doi.org/10.1108/pijpsm-08-2013-0085 the bureau for economic research, 2016, the small medium micro enterprise sector of south africa, stellenbosch university, stellenbosch. thwala, w.d. & phaladi, m.j., 2009, ‘an exploratory study of problems facing small contractors in the north west province of south africa’, african journal of business management 3(10), 533–539. tsai, y. & wu, s, ‘the relationships between organisational citizenship behaviour, job satisfaction and turnover intention’, journal of clinical nursing 19(23–24), 3564–3574. tung, a., baird, k. & schoch, h.p., 2011, ‘factors influencing the effectiveness of performance measurement systems’, international journal of operations and production management 31(12), 1287–1310. https://doi.org/10.1108/01443571111187457 van scheers, l., 2016, ‘factors contributing to smes failure in meeting supplier performance standards’, foundations of management 8, 2080–7279. https://doi.org/10.1515/fman-2016-0004 vogt, j. leonhardt, j. köper, b. & pennig, s., 2010, ‘human factors in safety and business management’, ergonomics 53, 149–163. https://doi.org/10.1080/00140130903248801 weick, k.e., 2010, ‘reflections on enacted sense-making in the bhopal disaster’, journal of management studies 47(3), 537–550. https://doi.org/10.1111/j.1467-6486.2010.00900.x windapo, a.o., 2016, ‘skilled labour supply in the south african construction industry: the nexus between certification, quality of work output and shortages’, south african journal of human resource management 14(1), 1–13. https://doi.org/10.4102/sajhrm.v14i1.750 windapo, a.o. & cattell, k., 2013, ‘the south african construction industry: perceptions of key challenges facing its performance, development and growth’, journal of construction in developing countries 18(2), 65–79. yaghoubi, h., mahallati, t., moghadam, a. & rahimi, e., 2014, ‘transformational leadership: enabling factor of knowledge management practices’, journal of management and sustainability 4(3), 165–167. https://doi.org/10.5539/jms.v4n3p165 zacher, h. & jimmieson, n., 2013, ‘leader-follower interactions: relations with ocb and sales productivity’, journal of managerial psychology 28, 92–106. https://doi.org/10.1108/02683941311298887 zizek, s.s. & mulej, m., 2016, ‘creating a healthy company by occupational health promotion as a part of social responsibility’, kybernetes 45(2), 223–243. https://doi.org/10.1108/k-02-2015-0051 zunguzane, n., smallwood, j. & emuze, f., 2012, ‘perceptions of the quality of low-income houses in south africa: defects and their causes’, acta structilia 19(1), 19–38. abstract introduction small businesses in south africa, the tourism industry and guest houses in soweto conceptual framework aim and purpose of the study method and design relaibility and validity ethical considerations results and discussion creating a tax compliance risk profile conclusion and recommendations acknowledgements references about the author(s) marina bornman school of accounting, university of johannesburg, johannesburg, south africa pusheletso ramutumbu school of accounting, university of johannesburg, johannesburg, south africa citation bornman, m. & ramutumbu, p., 2019, ‘a tax compliance risk profile of guesthouse owners in soweto, south africa’, southern african journal of entrepreneurship and small business management 11(1), a181. https://doi.org/10.4102/sajesbm.v11i1.181 original research a tax compliance risk profile of guesthouse owners in soweto, south africa marina bornman, pusheletso ramutumbu received: 28 feb. 2018; accepted: 20 feb. 2019; published: 27 may 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: a conceptual framework to assess the particular tax situation of small business owners identifies three key aspects that distinguish small business owners’ perceptions of their tax obligation. these aspects are: they are likely to perceive more opportunities not to comply than employed taxpayers; they are likely to lack meaningful taxation knowledge and they are likely to frame the paying of taxes as a loss. aim: the aim of this article was to sketch a tax compliance risk profile of guest house owners in soweto to suggest strategies to negate those factors that may negatively influence their compliance behaviour. setting: tax compliance is a priority for tax administrations, especially in developing countries such as south africa where small businesses are a high compliance risk group. small guest houses’ income is usually variable and/or cash-based and not easily verifiable against third-party data, which creates a high risk of non-compliance. methods: a mixed methods research approach was followed. empirical evidence in the form of semi-structured questionnaires administered face-to-face with 23 guest house owners in soweto was statistically and thematically analysed to compile a profile of the tax compliance risk according to the framework for tax compliance behaviour of small business owners. results: factors such as age, gender and tax morale show favourable results for tax compliant behaviour. however, perceptions of fairness, perceived opportunity for non-compliance, knowledge deficits, decision frames, industry, business size and social norms embrace a high risk of non-compliance for this population. conclusion: information pointing out the factors that could negatively influence tax compliance behaviour in this population was obtained. strategies for empowering small business owners to comply voluntarily with their tax obligations are suggested and include, for example, taxpayer education and improved communication efforts from the revenue authority. keywords: tax compliance; guesthouse owners; tax knowledge; fairness perception; social norms; tax morale. introduction dealing with tax compliance is a priority for tax administrations, especially in developing countries armed with limited resources but faced with massive development targets (the commonwealth association of tax administrators 2006:5). to curb non-compliance, many countries’ tax administrations adopted the use of compliance models which usually ‘differentiates between the economic, psychological, and social circumstances of taxpayers’ (d’ascenzo 2015:88). d’ascenzo further points out that ‘service and enforcement’ and strategies of ‘prevention is better than cure’ are the more holistic approaches for improving levels of compliance by modern tax administrations. evans and joseph (2015:50) argue that south africa (sa) could do more to improve tax compliance and address corruption in order to safeguard its existing tax base. in this regard, tax compliance means taxpayers should calculate their tax liabilities correctly, file their returns on time, declare to south african revenue service (sars) what their income is and duly pay what is due (sars 2014:18). mckerchar and evans (2009:25) propose some appropriate and effective strategies to improve taxpayer compliance in developing economies. the strategies are grouped into four broad categories: (1) creating a more effective tax administration, (2) fostering voluntary compliance and enhancing taxpayer morale, (3) strengthening and enforcing compliance and (4) tackling the shadow economy. in 2012, the sars launched its compliance programme that points out priority areas where compliance is not at the levels that it should be (sars 2012:9). amongst other priority areas, sars identified small businesses as an area on which to focus its attention over the period of 2012/13–2016/17 (sars 2012:18). d’ascenzo (2015:96) states that small business is a key sector for many economies, and because of the risk of them operating in the cash economy and the important role they play as value-added tax (vat) collectors, many tax agencies devote a high percentage of their resources to this sector. research performed by sars indicates that in most instances, small, medium and micro-enterprises (smmes) are considered to be a high compliance risk group in most countries because of their large numbers and income which are variable and not easily verifiable against third-party data. the research findings also reflect that the commercial setups of smmes often lack well-developed structures for record keeping, independent audits of accounts and cash handling that helps to minimise the risk of under reporting (sars 2012:18). although sars has not issued a new compliance programme document in the years after the initial 2012/13 to 2016/2017 document, it can be argued that small businesses’ tax compliance is still a priority for sars. in sars’ strategic plan for 2015/16–2019/20, the small business sector is not identified as a strategic risk area facing sars; however, small businesses are still identified as a key priority area to which sars commits to making it easy for them to comply with their tax obligation (sars 2016a:42). in addition, in 2013, the davis tax committee (dtc) was mandated by the minister of finance to examine the tax system and its impact upon the promotion of smalland medium-size businesses (dtc 2013). south african revenue service declares in its strategic plan that it seeks to increase voluntary compliance across a broader taxpayer base and has indicated that it will realise these compliance objectives through better understanding of taxpayer circumstances, needs, attitudes, abilities and behaviours. south african revenue service has declared that: … we will use our understanding of the different taxpayers to inform and focus our efforts where we can have the biggest effect on compliance. this means that we will create a good balance between our education, service and enforcement interventions. (sars 2014:18) olsen (2015:31) believes that understanding taxpayer behaviour is ‘at the core of being a wise and effective administrator’ and carroll (1987:320) has also called for a better understanding of taxpayer behaviour by tax authorities. it is submitted that ‘understanding taxpayer behaviour’ is an example of a ‘prevention’ strategy which may guide a tax administration’s interventions aimed at improving tax compliance. the present article intends to contribute to an understanding of taxpayer behaviour, more specifically – that of guest house owners in the small business sector. small businesses in south africa, the tourism industry and guest houses in soweto a 2016 report on the smme sector commissioned by the small enterprise development agency (seda) reveals that there are more than 2.2 million smmes in sa of which 43% operate in the trade and accommodation sector (bureau for economic research 2016:2). however, it must be noted that smmes in sa consist of firms ranging from medium-sized enterprises, such as established traditional family businesses employing more than 100 people, to informal micro-enterprises (bureau for economic research 2016). the 2017 tax statistics indicate that 4967 small business corporations (sbcs) were registered as taxpayers in the catering and accommodation sector and only 2369 of these reported positive taxable income for the 2017 year of assessment (national treasury and south african revenue service 2017:62). not all small businesses are registered as sbcs for tax purposes, as specific criteria apply to be registered as an sbc (see section 12e(4) of the income tax act no 59 of 1962). it is therefore not possible to provide an accurate picture of the number of small businesses in the accommodation sector in sa, but indications are that they do play an important role in contributing to the fiscus and the economy. outwardly, the tourism industry and specifically guest houses appear to fit this profile of a high-compliance risk-type business because it is an industry where cash transactions may be dominant and many guest houses could, in fact, be part of the shadow economy. evans and joseph (2015:37) reason that, based on the estimates that are available (revealing that sa possibly had a shadow economy of 25.2% in 2015), the shadow economy in sa represents a real challenge for policy makers. the shadow economy (or underground economy) is typically known to ‘escape taxation’ (the commonwealth association of tax administrators 2006:14). in a guest house setup, record keeping may easily be blurred between personal and business expenditure which could lead to over-deduction of expenditure for income tax purposes and result in tax non-compliance. a study by ramutumbu (2016), surveying 23 guesthouse owners in soweto, reveals that these entrepreneurs have high levels of tax morale (or willingness to be tax compliant) but also reports that lack of knowledge is an obstacle to compliance. this article sets off by providing an overview of the supporting literature. the main focus is a discussion of the conceptual framework whereafter the aim of the study is presented. the research methodology is then described, followed by the findings of the research. lastly, a discussion follows on the practical and theoretical implications of the research. conceptual framework a guidance note on managing and improving tax compliance published by the organisation for economic co-operation and development (oecd) centre for tax policy and administration (oecd 2004:7) defines tax compliance in terms of the extent to which tax payers comply with tax obligations in the four interconnected areas of registration, filing, reporting and payment. it is not known whether the guest house industry in particular has low compliance levels. kirchler (2007:21) reports on two studies, indicating that the shadow economy (thus businesses operating outside the formal sector and probably not registered for tax) in the services and entertainment sector (including restaurants and hotels) in germany is estimated at 17% of gross national product. research by the commonwealth association of tax administrators (cata) also places the services industry in the top three industries likely to engage in tax evasion and avoidance behaviour (the commonwealth association of tax administrators 2006:24). studies on tax compliance of small business owners in south africa ramutumbu’s (2016) study attempts to understand the perceptions of smme owners in soweto towards tax compliance and was the first in sa in respect of black guest house owners. other empirical studies pertaining to tax compliance in a south african context were performed in recent years but mostly across different sectors or with individuals and not small business owners. some studies are mentioned below: smulders (2006) – on the tax compliance burden of small businesses in sa. a survey conducted with tax practitioners representing clients from various sectors. oberholzer (2007) and oberholzer and stack (2009) – a comparative study on perceptions of taxation of different population groups in sa. this study was aimed at individuals and not small business owners. coolidge and ilic (2009) – on tax compliance perceptions and formalisation of small businesses in sa. based on large-scale surveys of formal and informal small businesses from various sectors. naidoo (2012) – aimed at investigating the views of micro-business owners (as expressed by tax practitioners) on the role that tax morale plays in low compliance levels with regard to turnover tax. various business sectors were included in the sample. bornman (2014) – aimed at eliciting small business owners’ opinions on being rewarded for tax compliance. businesses surveyed were from the real estate and construction industry. junpath, kharwa and stainbank (2016) – a survey on the attitudes of taxpayers towards tax compliance and tax amnesties in sa. the population surveyed included both individual taxpayers and owners and representatives of small businesses. from the findings of the studies mentioned above, the general consensus is that the majority of taxpayers believe that it is every south african’s civil duty to pay their fair share of taxes and it appears that tax morale is generally high amongst south african taxpayers. south african revenue service’s acknowledgement that there is an ever-growing culture of tax compliance in the country (sars 2012:1) and their assertion that taxpayers’ ‘positive attitude to compliance’ is one of their strengths (sars 2016a:14) support this view. in recent years, however, sars identifies increasing non-compliance by taxpayers and traders as a risk and also reports that they will continue their efforts on increasing compliance in the cash economy through education and further support (sars 2018). in relation to small business’ tax compliance, kamleitner, korunka and kirchler et al. (2012:330) point out that most research suggests that small business owners or managers are more likely to evade paying taxes than other groups of taxpayers. likewise, coolidge and ilic’s (2009:18, 19) research reports a ‘habit’ of non-compliance by small business owners, not only with taxes but also with local fees for electricity, water and sewerage. in a report on taxation considerations for small and medium enterprises by the dtc appointed in 2013 by the ministry of finance in sa to review various tax matters, it is suggested that small firms may regard the benefits of compliance as insignificant, given the high cost of regulatory compliance (dtc 2014:10). it therefore appears that small businesses in sa, and especially small businesses that may operate in the cash economy, can be regarded as high-risk entities for being non-compliant in tax matters. kamleitner et al. (2012:331) propose that in many cases, it is impossible to prove non-compliance and cite webley’s (2004 cited in kamleitner et al. 2012) example of the us internal revenue service estimates that only half of corporate non-compliance is detected. they suggest that increasing voluntary compliance amongst business owners is a worthwhile endeavour. in order to do so, an in-depth understanding of the factors fostering non-compliance and the factors contributing to compliance is essential. although it needs to be acknowledged that the tax compliance burden (cost, time and effort) plays a major role in the tax compliance outcome of small business owners, the present article focuses only on highlighting the particular tax situation of small business owners from a psychological perspective as represented by kamleitner et al.’s (2012) framework. factors influencing tax compliance behaviour the literature on tax compliance behaviour from a behavioural or psychological viewpoint has seen major growth since the 1960s. kirchler (2007) provides a comprehensive overview of tax behaviour research and an oecd information note on understanding and influencing taxpayers’ compliance behaviour describes the findings from a survey to member countries and studies of scientific literature on taxpayer compliance behaviour (oecd 2010:4). more recently, pickhardt and prinz (2014) and hofmann et al. (2017) surveyed the main developments in this research area. alm et al. (2012:33–39) discuss the different research paradigms for the analysis of tax compliance behaviour and emphasise the importance of considering all the actors (taxpayers, tax accountants, the tax authorities and the government), their behaviours and their interactions when exploring tax compliance behaviour. the present article does not aim to describe the different approaches to tax compliance research nor to discuss the factors influencing tax compliance behaviour. rather, compliance factors for a specific population are analysed using a specific framework. it will therefore suffice with a brief annotation on the factors influencing tax compliance as identified by the south african revenue authority in their 2012 compliance programme (sars 2012:5). these factors are: a combination of individual values and norms, societal values and norms, belief in the justice and fairness of the system, the ease of compliance, the speed and accuracy of detection of non-compliance, the speed and accuracy of corrective measures and the severity or impact of the deterrent measures. taxpayers’ compliance behaviour is also influenced by attitude and willingness to pay their fair share, knowing what their obligations are, knowing how to comply, ease of compliance, legal treatment of some tax positions, an understanding of the possible consequences of non-compliance and the perception of a credible threat of detection of non-compliance. the tax compliance decision of small business owners versus individuals as a group, small business owners are much the same as other taxpayers. they have a great deal in common with individuals who earn a salary and even share views on, for example, law-abidingness and respect for authority (ahmed & braithwaite 2005:23). the major differences appear to lie in feelings of competence to deal with tax matters, tax morale and perceived opportunities not to comply. kamleitner et al. (2012:334–340) have identified the key aspects that distinguish small business owners’ perceptions of their tax obligation. this is presented in a framework (figure 1) and each factor is briefly described below. figure 1: framework of factors influencing small business owners’ tax compliance. a framework for assessing tax compliance risk figure 1 presents a framework depicting the factors influencing small business owners’ tax compliance as suggested by kamleitner et al. (2012:334). according to kamleitner et al. (2012:334), it appears that three key aspects seem to distinguish small business owners’ perceptions of their tax situation from that of employed taxpayers: they are likely to perceive more opportunities not to comply than employed taxpayers; they are more likely to lack meaningful taxation knowledge and they are more likely to frame the paying of taxes as a loss. the framework assumes that the three main factors play a universal role for small business owners, but also acknowledges that these factors are co-determined by inter-individual factors such as age, culture, gender, and so on, and furthermore by situational factors specific to the small business such as industry, size, group norms, and so on (kamleitner et al. 2012:334). a brief description of a selection of these factors (as they were used in the present study) follows. person characteristics age: kastlunger et al. (2010:543) report that empirical studies consistently found a positive relationship between age and tax compliance. older people tend to have a more positive attitude towards tax compliance (braithwaite, reinhart & smart 2010:257; kirchler 2007:157). gender: a study using decision-making experiments kastlunger et al. (2010:549) found that women and men differ regarding their taxpaying strategies and that women are more compliant than men. their review of previous studies also reveals that women are more compliant than men, but they do point out that there are inconsistencies in empirical studies in this regard. fairness perceptions: torgler (2003:22) suggests that the tax compliance literature has effectively exhibited that taxpayers’ perceptions of fairness affect their willingness to pay taxes. taxpayers’ perceptions of fairness may be discernible as three components, namely: perceptions that taxpayers have regarding the fairness of tax laws (kirchler 2007:74). bazart and bonein (2014:86) mention that perceptions of unfairness may result from ‘differences in tax rules and fiscal parameters for identical taxpayers’ perceptions on the manner in which the tax authorities use their powers to enact the laws. this corresponds with taxpayers’ perceptions on how they are treated by the tax authority (murphy 2005:566; van dijk & verboon 2010:87) perceptions on just income distribution. also named ‘distributive justice’, it refers to how a given pool of resources is distributed so that all social units receive what they are entitled to (wenzel 2002:45). on an individual level, this relates mainly to a comparison of tax burden and tax-funded benefits with that of other taxpayers (svetalekth 2016:194). tax morale: torgler (2003:81) defines tax morale as the individual’s willingness to comply, or stated differently, the intrinsic motivation to comply. cummings et al. (2008) add that this intrinsic motivation arises from the moral obligation to pay taxes or the belief in contributing to society by paying taxes. tyler (2006:313) submits that an internalised obligation is a characteristic of voluntary compliance and is derived from a person’s desire to behave according to his or her own sense of personal morality. perceived opportunity kamleitner et al. (2012:335) suggest that there are two facets of ‘perceived opportunity’. firstly, there could be specific circumstances leading to opportunities to evade. they suggest that opportunities usually come about when tax filings are not entirely automated, resulting not only in more room for errors (unintended non-compliance) but also more opportunities for intended non-compliance. secondly, people can only capitalise on opportunities if they actually recognise them. it is submitted that unless a taxpayer knows the tax legislation and procedures well, many opportunities may remain unnoticed. knowledge requirements it is proposed that small business owners’ level of tax knowledge will, in part, determine their ability to understand and cope with the administrative and legal requirements of revenue bodies. thus, higher levels of tax knowledge should make it easier to comply. kamleitner et al. (2012:336–337) provide evidence on non-compliance as a result of the complexity of reporting and returning requirements. it would also appear that the type of tax knowledge (noted as legal and procedural knowledge by kamleitner et al. 2012:337)) is an important factor in small business owners’ tax compliance, and lack of such knowledge may be an obstacle for even those willing to comply (langham, paulsen & hartel 2012:388). many small business owners deal with such tax knowledge deficiencies by employing the help of tax practitioners. decision frames small business owners pay taxes out of their own pocket, in contrast to employed taxpayers whose income tax is normally withheld at source. this represents a ‘loss frame’. kamleitner et al. (2012:338) refer to prospect theory to exhibit that ‘the perceived pain of a loss is greater than the perceived pain caused by an equally sized non-gain’. they suggest that tax non-compliance could be a consequence of this loss frame (because of the painful experience of having to pay tax). kamleitner et al. (2012:338) also refer to ‘mental accounting’ to explain why small business owners may apply the loss frame. in this context, mental accounting means to keep book of different streams of income in different mental accounts, thereby being mindful that taxes due are not part of your income. if taxes are not perceived as different from other streams of income, paying taxes is experienced as a loss. a further decision frame noted by kamleitner et al. (2012:339) is based on reactance theory and suggests that ‘paying taxes can be perceived as a reduction of one’s own financial resources and as a limitation of one’s financial freedom’. this is in accordance with the experience of tax payments as out of pocket losses. specific tax situation three factors are pointed out as considered relevant to the present study, namely industry type, business size and group norms. industry: tax authorities have singled out certain industries that pose a greater risk of being non-compliant. research performed by the cata across 17 countries indicates that firms in the building and construction industries, self-employed and contractors, taxi and transport drivers and real estate firms are most likely to engage in tax evasion and avoidance behaviours (the commonwealth association of tax administrators 2006:8). these are also industries that are more likely to operate in a cash-based environment. coolidge and ilic (2009:27) further propose that businesses belonging to industries where registration with a business association is expected are more likely to register for tax. business size: yusof, ling and wah (2014:217–220) present evidence from several studies, suggesting that larger firms are more compliant than smaller firms. their own study with 375 tax-audit cases in malaysia confirms this and they propose that better internal control, proper accounting systems and better corporate governance play a role in larger firms being more tax compliant. group norms on tax compliance (social norm): kornhauser’s (2007) literature review on normative and cognitive aspects of tax compliance confirms that social norms are a factor influencing tax compliance. social norms can be described as the shared beliefs concerning the manner in which people should behave (kornhauser 2007). this suggests that the tax compliance decision is also made with reference to the norms and observed behaviour of the general society in which taxpayers find themselves (hashimzade et al. 2014:141; wallschutzky 1985:380). strategies to improve tax compliance a report from the forum on tax administration: sme compliance sub-group emphasises the need to create an environment for small business which supports compliant behaviour and reduces opportunities for non-compliant behaviour (oecd 2012:9). the report presents a synthesis of current knowledge and experiences of compliance strategies as sourced from 12 participating oecd countries and recommends a ‘right from the start’ approach. in this approach, four dimensions are considered central to the compliance environment: (1) acting up-front, so that problems are prevented or addressed when they occur; (2) focus on the business processes dealing with the tax-related transactions; (3) making it easy to comply (and difficult not to) and (4) actively involving and engaging taxpayers, their representatives and other stakeholders, in order to achieve a better understanding of the taxpayer’s perspective and to cooperate with third parties (oecd 2012:10). from a south african perspective, sars recognises that to ensure compliance, it must ‘design, implement and manage a system that enhances perceptions of fairness, reduces administrative burden, and acts against infringements accurately and speedily’ (sars 2016a:34). south african revenue service declares that an understanding of the behaviour and reasons (root causes) that affect compliance is needed to instil a behavioural norm in which taxpayers and traders perceive compliance with legislation as a ‘positive social value’ and that interventions tailored to the needs of taxpayers are necessary (sars 2016a:34). strategies to achieve this are speedy services, quick turnaround times, quick payment of refunds, ease of trade, increased efforts to raise awareness by taxpayers of their legal obligations and making it reasonably easy to comply (sars 2016a:34). aim and purpose of the study the aim of the present article is to create a tax compliance risk profile and identify the factors that contribute the most to possible non-compliance by a population of guest house owners. by applying the available information of guest house owners in soweto to kamleitner et al.’s framework of factors influencing small business owners’ tax compliance, the risk of tax non-compliance may be identified for this population. from the results, practical and theoretical implications for policy makers and advisors may be derived and strategies for improving the tax compliance of this population may be suggested. this application of the framework will also verify the practicality of the framework as a conceptual tool for understanding and assessing the compliance risk of a population of small business owners. method and design study design the study employed a mixed methods approach in order to reach conclusions on the tax compliance risk profile of the population. a single method of data collection occurred in the form of structured questionnaires and the mixing occurred with the analysis of the data, namely descriptive statistics and a thematic analysis. saunders, lewis and thornhill (2012:166) postulate that the stage of the research process in which the mixing occurs is one way of identifying the characteristics of the mixed method research. in the present study, the mixing occurs at the analysis stage and is therefore characteristic of ‘partially integrated mixed method research’. mixed methods research is frequently associated with pragmatism as a research framework (creswell & plano clark 2011). mckerchar (2010:79) explains that pragmatists ‘freely choose the methods, techniques and procedures that best meet the needs and purpose of the research’. the authors of the present research are of the opinion that by using a mix of quantitative and qualitative analysis of the available data, the factors that influence tax compliance behaviour in small business owners can best be described for the population being explored. setting and study population the township of soweto has a long and illustrious history and heritage and is also a major south african tourist destination. according to the city of johannesburg, soweto’s tourism industry contributes more than r143m to gauteng’s gross domestic product and more than 1 million tourists visited the township in 2013 (sme south africa 2015). the estimated population statistics from the 2011 census approximate that there are 1.3 million people living in soweto (statistics south africa 2011). the township’s incredible consumer spending power cannot be ignored and recent estimates put it at about r5 billion (sme south africa 2015). the tourism industry as a whole has been targeted as one of the key sectoral drivers for economic development and transformation in sa (rogerson 2004). according to rogerson (2004), government recognises that the unequal ownership structure in tourism needs to be addressed and a programme of transformation and support for the development of especially small tourism enterprises should be implemented. additionally, the national development plan (south africa 2012) emphasises the prominence of small and expanding firms in generating the majority of new jobs and in contributing to changing apartheid legacy patterns of business ownership. given this renewed focus on smmes, it is submitted that an understanding of the tax situation of these entrepreneurs is a step towards gaining an understanding of the support they need in respect of complying with their tax obligations. ramutumbu (2016) reports that there is no existing database of small business owners of guest houses in soweto. therefore, she compiled a list of the business owners from a local telephone directory as well as using an online search for accommodation establishments in soweto. the sample frame generated 32 guest houses in soweto but the final number of completed questionnaires was 23. the fieldworkers did encounter setbacks with some of the businesses on the list. three businesses had been converted into restaurants and were no longer operating as guest houses, another three could not be located at the stated business addresses and one had closed down. these were all classified as ineligible and were thus excluded from the list. in addition, two respondents opted not to participate in the survey. data collection data were collected by means of structured questionnaires that were administered face-to-face by a fieldworker and one of the researchers of the present study. it must be noted that the data were not collected solely for the purpose of the present article; however, both the quantitative and qualitative analyses were performed first-hand on selected data from the data set compiled by ramutumbu’s (2016) study. onu (2016:15) observes that using questionnaires in tax compliance research is an acceptable data-collection tool that may provide useful indicators of the actions individuals take (such as tax compliance or non-compliance). onu provides numerous examples of studies that have made use of questionnaires to survey people’s attitudes towards the state and the fairness of the tax system to survey measures of tax morale and to survey taxpayers’ attitudes towards others who evade taxes. the data originated from ramutumbu’s (2016) survey of a sample of 23 black guest house owners or managers in the soweto township. ramutumbu gathered data on their attitude towards tax compliance and their tax morale, their perceptions towards fairness and trust in the south african tax system, their perceptions towards government and the treatment of taxpayers and their perceptions towards norms of compliance. this data were presented in the form of responses to a five-point likert scale. open-ended questions in which respondents were asked to reflect on the challenges and obstacles they experience in being tax compliant resulted in statements that could be analysed thematically. data analysis quantitative analysis: descriptive statistics were used to report on the profile of the population based on the factors age and gender. this profile serves not only to describe the population but was also interpreted to assess the tax compliance risk normally associated with age and gender as evidenced by the literature from tax compliance behaviour studies. responses to the questions on tax attitudes, perception of fairness and the social norm of tax compliance were analysed using frequency tables in order to determine the frequency in each category suggested by the likert scale. these values were then interpreted to form an opinion on the extent to which the population displays an element of risk in possibly behaving tax non-compliant. the qualitative analysis consisted of a thematic analysis of identifying and organising themes within the statements collected in response to the question ‘what are the main challenges or obstacles that you experience when trying to behave in a tax compliant manner?’ the data were coded by deductively assigning codes to statements made by the respondents as these relate to the factors ‘perceived opportunity’, ‘knowledge requirements’ and ‘decision frames’. this can be described as a process of open coding which, according to leedy and ormrod (2010:143), is the process of scrutinising the data ‘for commonalities that reflect categories or themes’. relaibility and validity de vos et al. (2011) are of the opinion that an instrument is considered valid when it actually measures the concept in question and that concept is measured accurately. according to leedy and ormrod (2015:100), validity is concerned with the soundness and effectiveness of the measuring instrument. a questionnaire was used by ramutumbu (2016) as the measuring instrument to collect data. the questionnaire was designed and constructed based on existing questionnaires found in published empirical studies on tax compliance, many of which were mentioned in the literature review of the present article (see, e.g. beers, lopresti & san juan 2012; oberholzer 2007). mouton (2013) states that using existing instruments has certain advantages such as high validity and reliability that could have been demonstrated in a particular study. the questionnaire was also pilot-tested with postgraduate and undergraduate students with an expected level of education similar to that of the respondents to ensure that the language was understandable. the thematic analysis was firstly performed separately by the researchers, whereafter a joint analysis was performed before reporting on final themes and categories. this increases the credibility of findings. in terms of transferability of the findings, it is acknowledged that the findings are not necessarily generalisable to other populations of smmes especially with regard to the findings based on person characteristics, knowledge requirements and industry specifications. however, the framework used and the process of analysis should be suitable for analysing small business tax compliance risks in any industry. ethical considerations the original research project by ramutumbu (2016) was granted ethical clearance by the research ethics committee of the faculty of economic and financial sciences at the university of johannesburg and includes the publication of further papers based on the data collected. all requirements for ethical research were met in the original study. results and discussion the tables below present the results for the sample of guest house owners in soweto for each of the factors referred to in the framework proposed by kamleitner et al. (2012). the factors under consideration are (1) person (with the dimensions: age, gender, fairness perception and tax morale); (2) perceived opportunity; (3) knowledge requirements; (4) decision frames and (5) the specific tax situation (with dimensions: industry, business size and group norms on tax compliance). the results for each factor are displayed in a new table and are numbered tables 1–5. the results presented in tables 1–5 are interpreted against existing theory and previous findings of other scholars on factors influencing tax compliance. the aim is to present an overall picture of the tax situation of this population of small business owners and to identify the areas that pose a risk to them from being compliant. interpretation and discussion of table 1 age a recent meta-analysis of survey studies on the strength of the impact on compliance of demographic factors such as age, gender, education, and income from 111 countries published between 1958 and 2012 (hofmann et al. 2017:65) serves as a credible source against which some of the findings in table 1 can be interpreted. in respect of age and gender, the meta-analysis found a rather small but significant relation between the age of taxpayers and their tax compliance as well as between gender and tax compliance. ‘the older taxpayers are, the more they tend to comply with tax law’, and ‘females tend to comply with tax law more than men’ (hofmann et al. 2017:66). in addition, kirchler (2007:157) reports that attitudes towards tax become more favourable as taxpayers age and braithwaite et al. (2010) provide further empirical evidence that younger taxpayers are, in fact, less compliant than older taxpayers. table 1: results of the analysis for the population surveyed using the factor ‘person’. with the majority of the guest house owners in the present study being over 50 years of age, it would appear that this population may have a positive attitude towards tax (which was, in fact, confirmed by the positive results on their tax morale). gender attention is drawn again to the meta-analysis referred to above which found that women tend to be more tax compliant than men. although kastlunger et al. (2010:543) point out that there are inconsistencies in empirical studies on the level of compliance by male and female taxpayers, their experimental study conducted found that women are more compliant than men. however, a south african study found significant differences between the levels of income tax compliance for male and female business owners – with male participants being more likely to be tax compliant (pretorius 2015). (it must be noted that pretorius’ study only tested for ‘registration’ compliance.) although it appears that gender does not play a major role as a factor of tax compliance and empirical studies render inconsistent results, it is noted in the present study that the majority of the guest house owners are women, which may imply a greater prospect of compliance. fairness perception: ‘a high level of fairness perception should enhance trust in authorities and it should, finally, result in a higher level of tax compliance’ (casal et al. 2016:142). murphy (2005:564) cites several empirical studies that indicate how being treated in a fair manner results in the higher trust in authorities by taxpayers, which consequently has the effect that taxpayers will be more inclined to comply with tax laws. also, see studies supporting this finding by levi, tyler and sacks (2008:24–25), beers et al. (2012:70) and hartl et al. (2015:14). furthermore, a survey conducted amongst tax avoiders (murphy 2004:206) found that taxpayers who experienced poor treatment from a tax authority as a result of their infractions (innocent or otherwise) displayed a decrease in trust in the authority which could ultimately result in resistance towards the tax authority. in the present study, responses were mostly evenly spread on the issues of fairness of tax laws; the manner in which the tax authorities use their powers to enact the laws; and perceptions on fairness of income distribution. perceptions by the respondents on fairness considerations were not overly favourable towards tax compliance. it would thus appear that fairness perception is an area of concern and may pose a risk for the tax compliance behaviour of this population of guest house owners. this may be an even bigger concern in the current political climate in sa, given the fact that the president of sa, cyril ramaphosa, suspended the sars commissioner in march 2018 as a result of a loss confidence in the commissioner’s ability to lead sars (the presidency 2018). in addition, a commission of inquiry into tax administration and governance at the sars (the nugent commission) was appointed by the president in may 2018 (the presidency 2018). the commission has, to date, heard evidence of financial misconduct at the tax service from sars employees, the office of the tax ombud and senior officials of national treasury. this inquiry may not only negatively impact taxpayers’ perception of sars officials’ ability to correctly administer tax assessment and collections, but may also raise the question if all taxes collected are correctly recorded and channelled to treasury for fair distribution. tax morale or norm of tax compliance torgler, schneider and schaltegger (2010:3) mention that many researchers have studied the effect of tax morale on tax compliance (empirically and through experiments) and further propose that policy makers are increasingly interested in understanding the driving forces of tax morale as a factor influencing tax compliance. torgler (2003:106–113) reports on empirical evidence, predicting that tax morale has a significant impact on tax compliance – higher tax morale strongly correlates with greater tax compliance. accordingly, braithwaite et al. (2010) submit in their study that the lower levels of compliance are largely because of a significantly lower tax morale. williams and horodnic’s (2015:94) empirical study further confirms that the lower the tax morale, the greater is the likelihood to participate in the shadow economy (both at the individual, population group and country level). the results in table 1 signify a high tax morale for the population under study and it is a favourable indication of tax-compliant behaviour. it means that the population has an intrinsic willingness to pay their taxes. however, it may be that the tax morale of south africans is under threat. although south africans have mostly been praised for their high tax morale in previous years (see sars annual reports), concerns about a tax slippage have been expressed recently by finance minister nhlanhla nene (national treasury 2018) as well as by sars head of revenue and research, randall carolissen, at the launch of the tax statistics 2017 publication (south african government news agency 2017). meanwhile, sars acting commissioner mark kingon said that ‘compliance is of deep concern to sars’ (business day 2018). national treasury (2018) and sars (2016b) further claim that taxpayer morality has been eroded in recent years because of corruption and wasteful expenditure in the public sector. this leads to a dent in the social contract between taxpayers and the state because of a lack of timely government response to allegations of corruption and poor governance. interpretation and discussion of table 2 perceived opportunities the cata study on tax evasion and avoidance in member countries points out that the most attractive method of non-compliance by small businesses is under reporting of income and overstatement of deductions (the commonwealth association of tax administrators 2006:8). this is achieved by accounting misdeeds and failure to keep adequate records. given the fact that the population under study expressed a lack of knowledge in understanding which expenses are deductible for tax purposes, it must be argued that this type of non-compliance may be because of error rather than intent. their lack of knowledge may, in fact, deter the recognition of opportunities to evade tax. further to this, many transactions in a guest house context may take place on a cash basis (for example, guests paying in cash for the accommodation and/or meals). this opens up the opportunity for the under reporting of income. table 2: results of the analysis for the population surveyed using the factor ‘perceived opportunity’. even though the results from the analysis did not provide conclusive evidence, it is submitted that, based on the high probability of error and prospects for cash transactions, opportunities for non-compliance (especially through accounting misdeeds) should be regarded as a high-risk factor for this population. interpretation and discussion of table 3 knowledge requirements tax knowledge is an important element of the self-assessment system of taxation and has been shown to have a positive effect on compliance behaviour (fjeldstad & heggstad 2012; hofmann, hoelzl & kirchler 2008; kamleitner et al. 2012; niemirowski, baldwin & wearing 2002; palil 2010; mansor, saad & ibrahim 2004). langham et al. (2012:364) found that when legal complexities and jargon create difficulty, ‘awareness of the rules’ is a better predictor of compliance than intention. langham et al. (2012:387) further argue that ‘complexity and obstacles to performance prevent even the most willing from complying’ and beers et al. (2012:66) opine that taxpayers ‘may use complexity as a reason to justify noncompliance’. table 3: results of the analysis for the population surveyed using the factor ‘knowledge requirements’. it is evident from the results displayed in table 3 that the respondents doubt their ability to understand and apply tax legislation correctly. it is also evident that they are more concerned with the procedural aspects (filling in the tax forms, record keeping, getting assistance from the tax office) than understanding the legislation. most of the respondents employ tax practitioners for this purpose, but they do express a need to understand the procedures themselves. this is a positive result indicating their ‘awareness of the rules’. however, it is submitted that the factor ‘tax knowledge requirements’ appears to pose a risk of non-compliance for this population because inadequate knowledge may lead to unintentional errors. interpretation and discussion of table 4 decision frames it can be presumed that this population regards paying taxes from a ‘loss frame’ because taxes are paid out of pocket. although prospect theory suggests that people are more risk seeking in the loss domain than in the gain domain (kamleitner et al. 2012:338), there is no evidence that any of the respondents actively seek (illegal) ways to reduce their tax burden. on the contrary, ramutumbu (2016) concludes in her survey of the guest house owners that this population reveals a ‘willingness to be tax compliant’. table 4: results of the analysis for the population surveyed using the factor ‘decision frames’. the results in table 4 further imply that in terms of ‘mental accounting’, it appears that the repondents are mindful of the payment of their taxes and some may keep a separate mental account. however, from further analysis of their responses, it can be concluded that a large number of them experience difficulties in keeping record of and reporting on their tax obligation. it is noted in the results displayed in table 4 that respondents perceive taxes as depriving their businesses of much needed funds. this may suggest a decision frame of ‘limitation of freedom’. kamleitner et al. (2012:339) refer to studies conducted by kirchler which perceived mixed results in the link between perceived limitation of freedom and hypothetical tax evasion. the population under study may be a high-risk group in terms of the way the tax decision is framed. yet, it is submitted that there is little evidence that the ‘loss frame’ or ‘perception of limitation of freedom’ influences these taxpayers’ compliance decision. it is suggested that future research could investigate typical decision frames of small business owners from various industries and examine the link with their tax compliance behaviour. an interesting perspective on ‘decision frame’ may be derived from the findings of coolidge and ilic’s (2009:28) analysis on perceived advantages and disadvantages of registering for tax. their results indicate that reasons of perceived advantages such as ‘better access to government services’, ‘being legal’, ‘access to and price of financing’ and ‘better opportunities for business growth’ are strongly associated with the likelihood of registering with tax. it is proposed that a decision frame of ‘perceived advantages’ may positively be associated with tax compliance, but one should also be mindful that the cost of compliance does not outweigh such benefits. discussion and interpretation of table 5 industry the oecd recognises that some industries may have norms and practices for taxpayers that favour non-compliance (oecd 2012:12). yusof et al. (2014:230) confirm that ‘types of industry’ are one of the main factors influencing compliance behaviour of smalland medium-sized corporations in malaysia. in line with an earlier statement made in the literature review section of the present study, their study found that the service and construction industries are more non-compliant as compared to other industries. they also cite an earlier study by chan and mo who found the service-oriented industry to be less compliant. if one classifies guest houses as belonging to the ‘service industry’, it would appear that this type of business falls in a high-risk category for non-compliance. moreover, guest houses could be inclined to operate on a cash basis with the possibility of limited supporting documents to be generated. table 5: results of the analysis for the population surveyed using the factor ‘specific tax situation’. on the other hand, coolidge and ilic (2009:27) suggest that registration with a business association increases the likelihood of tax registration. if these guest houses could register with the south african tourism council for the benefit of being graded and to enhance their visibility especially to foreign tourists, it may improve their prospects of being tax compliant. it can thus be concluded that although this specific population falls within the high-risk industry especially because of the strong probability of operating on a cash basis, their association with the tourism council may mitigate this risk. business size according to yusof et al. (2014:231), larger firms are more compliant than smaller firms. informal firms with more employees also appear more likely to register for tax (coolidge & ilic 2009:8). the oecd observes that the limited size of an smme may constrain administrative capacity and specialised competencies (for example, regarding tax issues) (oecd 2012:10). the majority of the businesses in the survey can be regarded as small (employing fewer than five people). this factor therefore increases the risk for non-compliance of these guest house owners. group norms on tax compliance (social norm) the shared beliefs about how members of a group should behave (social norms) may regulate the behaviour of the individual especially if the individual identifies strongly with the group (wenzel 2005:504). coolidge and ilic (2009:28) propose that businesses not likely to register (or are neutral towards tax registration) perceive that a significantly high share of businesses ‘similar to’ themselves is not paying taxes ‘at all’. fjeldstad, schulz-herzenberg and sjursen (2012) also maintain that trust in other citizens to pay their share seems to be an important factor in tax-compliant behaviour. other studies supporting a similar supposition are those of beers et al. (2012:76), cullis, jones and savoia (2012:165), bobek, roberts and sweeney (2007:61) and wenzel (2005:505). considering the results presented in table 5 where it is posited that many respondents opted for ‘no opinion’ when asked about their perception of other small businesses’ tax compliance, it can be advanced that this factor does not appear to exert a strong influence on their tax-compliant behaviour. it may be that the guest house owners do not identify strongly with other entrepreneurs in the same industry because there is no real connection between them in the form of belonging to an association or industry body. a report on entrepreneurship in sa suggests that cultural and social norms are significant factors that may impact on entrepreneurial intentions (herrington, kew & mwanga 2017), but (to the knowledge of the authors) no large-scale survey has been undertaken in sa to analyse the impact that cultural and social norms may have on tax compliance intentions. based on the literature referred to above and the inconclusive results as presented in table 5, the authors of the present article are undecided about ‘social norms’ as an indicator of risk of non-compliance in the population under study. creating a tax compliance risk profile the analysis of secondary data on a sample of guest house owners in soweto, sa, is presented in tables 1–5 and interpreted using supporting literature. the main finding in respect of each factor is presented below in order to give an overall impression of the tax compliance risk profile of this population. factor: person age, gender and tax morale display favourable results in terms of positively influencing the guest house owners’ tax compliance behaviour. however, tax morale is described as posing a big risk in the current environment in sa because of perceptions of corruption and wasteful expenditure in the public sector. ‘perceptions of fairness’ appear to pose the biggest risk for non-compliant behaviour. the population’s perceptions on the fairness of tax laws, the powers of tax authorities and the fairness of income distribution are not overly positive and may result in negatively influencing tax compliance behaviour. it is also discussed earlier how the current problems at sars may be contributing to negative perceptions of the tax authority’s competencies and fairness in dealing with taxpayers. factor: perceived opportunity it was argued that these small business owners may not actively be looking for opportunities to reduce tax payments, but opportunities do exist in the form of under reporting of income and over-deducting of expenses because of the possibility to transact with cash and the blurred lines between personal and business expenditure in a guest house context. this factor is therefore considered to contribute to the risk of non-compliance. factor: knowledge requirements although it appears that the respondents have a high awareness of their tax obligation, their lack of knowledge (particularly in terms of procedural aspects, for example, completing tax forms) poses a high risk for being non-compliant. factor: decision frames the results provided little evidence that the ‘loss frame’ or ‘perception of limitation of freedom’ is present for this population and this factor is therefore undecided. factor: specific tax situation ‘business size’ could be considered a high-risk factor because most respondents’ businesses are small and thus offer limited capacity for sufficient tax knowledge and skill. the ‘accommodation industry’ is also not regarded as favourable for tax compliance because of the prevalence of cash transactions and insufficient record keeping. by synthesising the above conclusions, a profile of the tax compliance risk for the sample is created for a visual representation as depicted in figure 2. figure 2: a profile of factors posing a risk for the compliance behaviour of guest house owners in soweto. conclusion and recommendations this study demonstrated that the framework of factors influencing the tax compliance behaviour of small business owners proposed by kamleitner et al. (2012) is a useful conceptual tool for analysing a specific population of small business owners. an interpretation of the results succeeds in highlighting the tax position of the small business owners and identifying areas of concern because of factors posing a risk for their compliant behaviour. it is suggested that similar research can be performed for other populations and industries in the small business sector. it appears that this sample may be a high-risk group for non-compliance as the results indicate this for some of the factors and are summarised in figure 2. the south african tax authority could address some of these identified risk areas with targeted strategies to encourage compliant behaviour. for example, tax authorities should take note of concerns by taxpayers on fair treatment and fair distribution of public goods and take action to ensure that it maintains legitimacy in the tax system. they should further be aware of what taxpayers perceive as obstacles to compliance, for example, knowledge deficits. south african revenue service, in keeping with its promise to ‘make it as straightforward as possible for taxpayers and traders to register, file their returns, calculate their tax liability and pay the correct taxes and duties that are due’ (sars 2014:18), could consider introducing record-keeping and expense tracking mobile apps for small businesses. online content in the form of brochures and guides and frequently asked questions to support and assist business owners with all aspects of tax are readily available on the sars website, but no interactive tools are available to help small business owners with budgeting or calculating tax liabilities nor does it have a dedicated helpline for small businesses. d’ascenzo (2015:93) describes how websites of leading tax agencies provide easy to follow step-by-step guidance for taxpayers, particularly for individuals and small businesses. tools such as ‘decision trees, calculators and self-help tools to make compliance easier’ are also common and a ‘no strings attached’ purely assistance visits to small businesses is another service offered by some tax agencies. d’ascenzo (2015:91) suggests that tax agencies should engage actively with industry associations, taxpayers and other government agencies to provide the agency with more insight into how to improve services and enhance compliance. it is, for example, possible that sars could collaborate with business associations such as the tourism council in devising industry-specific education programmes on bookkeeping and tax procedures. this, in turn, could have a positive impact on decision frames and social norms being more favourable for tax compliant behaviour. the sars acknowledges that people must be empowered to meet their tax obligations (sars 2016a:31–34). it is submitted that research on specific industries using a framework, such as proposed in the present study, could render invaluable information on risk factors, needs and frustrations of taxpayers to the revenue authority to enable this empowerment of taxpayers to comply voluntarily. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. author’s contributions m.b. was responsible for conceptualisation of the article, literature review, analysis and interpretation of results. p.r. was responsible for data gathering, literature review, analysis and interpretation of data. references ahmed, e. & braithwaite, v., 2005, ‘understanding small business taxpayers issues of deterrence, tax morale, fairness and work practice’, international small business journal 23(5), 539–568. alm, j., kirchler, e., muehlbacher, s., gangl, k., hofmann, e., kogler, c. et al., 2012, rethinking the research paradigms for analyzing tax compliance behavior, tulane economics working paper series: working paper 1210, tulane university, new orleans, la. bazart, a. & bonein, a., 2014, ‘reciprocal relationships in tax compliance decisions’, journal of economic psychology 40, 83–102. https://doi.org/10.1016/j.joep.2012.10.002 beers, t., lopresti, e. & san juan, e., 2012, ‘factors influencing voluntary compliance by sole proprietors: preliminary survey results’, taxpayer advocate service, irs, viewed 30 august 2018, from https://taxpayeradvocate.irs.gov/2012-annual-report/downloads/research-studies-factors-influencing-voluntary-compliance-by-small-businesses-preliminary-survey-results.pdf. bobek, d.d., roberts, r.w. & sweeney, j.t., 2007, ‘the social norms of tax compliance: evidence from australia, singapore, and the united states’, journal of business ethics 74, 49–64. https://doi.org/10.1007/s10551-006-9219-x bornman, m., 2014, ‘principles for understanding, encouraging and rewarding voluntary tax compliance’, phd thesis, department of accountancy, university of johannesburg. braithwaite, v., reinhart, m. & smart, m., 2010, tax non-compliance among the under-30s: knowledge, obligation or scepticism. developing alternative frameworks for explaining tax compliance, routledge, london. bureau for economic research, 2016, the small, medium and macro enterprise sector in south africa, university of stellenbosch, viewed 02 september 2018, from http://www.seda.org.za/publications/pages/research-publications.aspx. business day, 2018, april 4, low tax compliance troubles sars, viewed 12 september 2018, from https://www.businesslive.co.za/bd/national/2018-04-04-low-tax-compliance-troubles-sars/. carroll, j., 1987, ‘compliance with the law. a decision-making approach to taxpaying’, law and human behaviour 11(4), 319–335. https://doi.org/10.1007/bf01044744 casal, s., kogler, c., mittone, l. & kirchler, e., 2016, ‘tax compliance depends on voice of taxpayers’. journal of economic psychology 56, 141–150. https://doi.org/10.1016/j.joep.2016.06.005 coolidge, j. & ilic, d., 2009, tax compliance perceptions and formalization of small businesses in south africa, policy research working paper no. wps 4992, world bank, washington, dc, viewed 02 february 2018, from http://documents.worldbank.org/curated/en/419091468113058879/tax-compliance-perceptions-and-formalization-of-small-businesses-in-south-africa. creswell, j.w. & plano clark, v.l., 2011, designing and conducting mixed methods research, 2nd edn., sage publications, inc., thousand oaks, ca. cullis, j., jones, p. & savoia, a., 2012, ‘social norms and tax compliance: framing the decision to pay tax’, the journal of socio-economics 41, 159–168. https://doi.org/10.1016/j.socec.2011.12.003 cummings, r.g., martinez-vazques, j., mckee, m. & torgler, b., 2008, ‘tax morale affects tax compliance: evidence from surveys and an artefactual field experiment’, journal of economic behaviour and organisation 70(3), 447–457. https://doi.org/10.1016/j.jebo.2008.02.010 d’ascenzo., 2015, ‘global trends in tax administration’, journal of tax administration 1(1), 81–100. https://doi.org/10.2139/ssrn.3173515 de vos, a., strydom, h., fouche, c. & delport, c., 2005, research at grass roots, 3rd edn., van schaik, pretoria. dtc, 2013, the davis tax committee, viewed 05 september 2018, from http://www.taxcom.org.za/. dtc, 2014, ‘small and medium enterprises: taxation considerations interim report’, the davis tax committee, viewed 26 june 2016, from http://www.taxcom.org.za/library.html. evans, c. & joseph, s., 2015, ‘the south african tax system: fit for purpose?’, journal of tax administration 1(2), 26–56. fjeldstad, o. & heggstad, k., 2012, building taxpayer culture in mozambique, tanzania and zambia: achievements, challenges and policy recommendations, chr. michelsen institute and the international center for tax and development, bergen, viewed 06 march 2019, from https://www.cmi.no/publications/4499-building-taxpayer-culture-in-mozambique. fjeldstad, o.-h., schulz-herzenberg, c. & sjursen, i.h., 2012, ‘peoples’ view of taxation in africa: a review of research and determinants of tax compliance’, cmi working paper 2012: 7, international centre for tax and development. hartl, b., hofmann, e., gangl, k., hartner-tiefenthaler, m. & kirchler, e., 2015, ‘does the sole description of a tax authority affect tax evasion? – the impact of described coercive and legitimate power’, plos one 10(4), 1–19. https://doi.org/10.1371/journal.pone.0123355 hashimzade, n., myles, g.d., page, f. & rablen, m.d., 2014, ‘social networks and occupational choice: the endogenous formation of attitudes and beliefs about tax compliance’, journal of economic psychology 40, 134–146. https://doi.org/10.1016/j.joep.2012.09.002 herrington, m., kew, p. & mwanga, a., 2017, global entrepreneurship monitor south africa report 2016/17, global entrepreneurship monitor, viewed 12 september 2018, from https://www.gemconsortium.org/report/49833. hofmann, e., hoelzl, e. & kirchler, e., 2008, ‘preconditions of voluntary tax compliance: knowledge and evaluation of taxation, norms, fairness, and motivation to cooperate’, zeitschrift für psychologie 216(4), 209–217. https://doi.org/10.1027/0044-3409.216.4.209 hofmann, e., voracek, m., bock, c. & kirchler, e., 2017, ‘tax compliance across sociodemographic categories: meta-analyses of survey studies in 111 countries’, journal of economic psychology 62, 63–71. https://doi.org/10.1016/j.joep.2017.06.005 junpath, s.v., kharwa, s.e. & stainbank, l.j., 2016, ‘taxpayers’ attitudes towards tax amnesties and compliance in south africa: an exploratory study’, south african journal of accounting research 30(2), 97–119. https://doi.org/10.1080/10291954.2015.1070565 kamleitner, b., korunka, c. & kirchler, e., 2012, ‘tax compliance of small business owners: a review’, international journal of entrepreneurial behaviour and research 18(3), 330–351. https://doi.org/10.1108/13552551211227710 kastlunger, b., dressler, s.g., kirchler, e., mittone, l. & voracek, m., 2010, ‘sex differences in tax compliance: differentiating between demographic sex, gender-role orientation, and prenatal masculinization (2d:4d)’, journal of economic psychology 31(4), 542–552. https://doi.org/10.1016/j.joep.2010.03.015 kirchler, e., 2007, the economic psychology of tax behaviour, cambridge university press, new york. kornhauser, m., 2007, ‘normative and cognitive aspects of tax compliance: literature review and recommendations for the irs regarding individual taxpayers’, in ii national taxpayers advocate, annual report to congress, viewed 17 january 2018, from https://www.irs.gov/pub/tas/arc_2007_vol_2.pdf. langham, j., paulsen, n. & hartel, c.e., 2012, ‘improving tax compliance strategies: can the theory of planned behavior predict business compliance’, ejournal of tax research 10(2), 364–402. leedy, p.d. & ormrod, j.e., 2010, practical research: planning and design, 9th edn., pearson education, inc., boston, ma. leedy, p.d. & ormrod, j.e., 2015, practical research: planning and design, 11th edn., pearson education, inc., boston, ma. levi, m., tyler, t. & sacks, a., 2008, the reasons for compliance with law, yale university, us studies centre, sydney. mckerchar, m., 2010, design and conduct of research in tax, law and accounting, thomson reuters, sydney. mckerchar, m. & evans, c., 2009, ‘sustaining growth in developing economies through improved taxpayer compliance: challenges for policy makers and revenue authorities’, ejournal of tax research 7(2), 171–201. https://doi.org/10.2139/ssrn.1415164 mouton, j., 2013, how to succeed in your masters and doctoral studies, van schaik, pretoria. murphy, k., 2004, ‘the role of trust in nurturing compliance: a study of accused tax avoiders’, law and human behavior 28(2), 187–209. https://doi.org/10.1023/b:lahu.0000022322.94776.ca murphy, k., 2005, ‘regulating more effectively: the relationship between procedural justice, legitimacy, and tax non-compliance’, journal of law and society 32(4), 562–589. https://doi.org/10.1111/j.1467-6478.2005.00338.x naidoo, v., 2012, ‘tax morality and its effect on turnover tax’, master’s dissertation, university of johannesburg, johannesburg. national treasury, 2018, budget review 2018, viewed 10 september 2018, from www.treasury.gov.za. national treasury and south african revenue service, 2017, 2017 tax statistics, viewed 10 september 2018, from http://www.treasury.gov.za/publications/tax%20statistics/default.aspx. niemirowski, p., baldwin, s. & wearing, a., 2002, the determinants of australian taxpayers’ compliance behaviour: the influence of tax related values, beliefs, attitudes and behaviour, ato research report, commonwealth of australia, canberra. organisation for economic co-operation and development (oecd), 2004, compliance risk management: managing and improving tax complianceguidance note, forum on tax administration: compliance sub-group. centre for tax policy and administration, viewed 06 march 2019, from https://www.oecd.org/tax/administration/33818656.pdf. organisation for economic co-operation and development (oecd), 2010, understanding and influencing taxpayers’ compliance behaviour, oecd, viewed 14 september 2018, from http://www.oecd.org/tax/administration/46274793.pdf. organisation for economic co-operation and development (oecd), 2012, right from the start: influencing the compliance environment for small and medium enterprises, forum on tax administration: sme compliance sub-group, oecd, paris. olsen, n., 2015, ‘procedural justice for all: a taxpayer rights analysis of irs earned income credit compliance strategy’, advances in taxation 22, 1–35. https://doi.org/10.1108/s1058-749720150000022014 onu, d., 2016, ‘measuring tax compliance attitudes: what surveys can tell us about tax compliance behaviour’, advances in taxation 23, 179–190. https://doi.org/10.1108/s1058-749720160000023006 palil, m.r., 2010, ‘tax knowledge and tax compliance determinants in self assessment system in malaysia’, unpublished doctoral thesis, university of birmingham, birmingham. oberholzer, r., 2007, ‘perceptions of taxation: a comparative study of different population groups in south africa’, doctoral thesis, university of pretoria, pretoria. oberholzer, r. & stack, e., 2009, ‘perceptions of taxation: a comparative study of different individual taxpayers in south africa’, journal of public administration 44(3.1), 737–755. pickhardt, m. & prinz, a., 2014, ‘behavioral dynamics of tax evasion – a survey’, journal of economic psychology 40, 1–19. https://doi.org/10.1016/j.joep.2013.08.006 pretorius, m., 2015, ‘south african small business’ taxation registration compliance’, master’s dissertation, university of pretoria, pretoria. ramutumbu, p., 2016, ‘tax compliance behaviour of guest house owners’, master’s thesis, university of johannesburg, johannesburg. rogerson, c., 2004, ‘transforming the south african tourism industry: the emerging black owned bed and breakfast economy’, geojournal 60(3), 273–281. https://doi.org/10.1023/b:gejo.0000034734.81953.47 mansor, m., saad, n. & ibrahim, i., 2004, ‘the self assessment system and its compliance costs’, journal of financial reporting and accounting 2(1), 1‒15, https://doi.org/10.1108/19852510480000657 south african revenue service (sars), 2012, compliance programme (2012–2016), sars, viewed 12 march 2017, from https://www.sars.gov.za/alldocs/sarsentdoclib/ent/sars-strat-07-g02%20-%20compliance%20programme%202012%202013%20to%202016%202017%20%e2%80%93%20external%20guide.pdf. south african revenue service (sars), 2014, annual reports and strategic plans, sars, viewed 05 september 2018, from http://www.sars.gov.za/about/pages/annual-reports-and-strategic-plans.aspx. south african revenue service (sars), 2016a, strategic plan 2016/2017–2020/2021, sars annual reports and strategic plans, viewed 12 september 2018, from http://www.sars.gov.za/about/pages/annual-reports-and-strategic-plans.aspx. south african revenue service (sars), 2016b, tax season 2016, south african government, viewed 10 may 2017, from http://www.gov.za/speeches/tax-season-2016-27-jun-2016-0000. south african revenue service (sars), 2018, sars, annual performance plan 2018/19, sars annual reports and strategic plans, viewed 08 february 2019, from http://www.sars.gov.za/about/pages/annual-reports-and-strategic-plans.aspx. saunders, m., lewis, p. & thornhill, a., 2012, research methods for business students, pearson education limited, essex. sme south africa, 2015, sowetos-young-and-talented-entrepreneurs, sme south africa, viewed 27 june 2016, from http://www.smesouthafrica.co.za/15417/sowetos-young-and-talented-entrepreneurs/. smulders, s., 2006, ‘taxation compliance burden for small business in south africa’, master’s dissertation, university of pretoria, pretoria. south africa, 2012, national development plan 2030, south africa national planning commission, viewed 24 june 2016, from http://www.gov.za/sites/www.gov.za/files/executive%20summary-ndp%202030%20-%20our%20future%20-%20make%20it%20work.pdf. south african government news agency, 2017, sa increases use of tax stats to shape policies, viewed 06 march 2019, from https://www.sanews.gov.za/south-africa/sa-increases-use-tax-stats-shape-policies. statistics south africa, 2011, statistics by place, statistics south africa, viewed 04 june 2014, from http://beta2.statssa.gov.za/?page_id=1021&id=ekurhuleni-municipality. svetalekth, t., 2016, ‘the complexity of tax simplification: experiences from thailand’, in s. james, a. sawyer & t. budak (eds.), the complexity of tax simplification. experiences from around the world, pp. 187–208, palgrave macmillan, hampshire. the commonwealth association of tax administrators, 2006, tax evasion and avoidance: strategies and initiatives used by cata member countries, commonwealth secretariat, hampshire. the presidency, 2018, march 19, statement on the suspension of sars commissioner, the presidency. republic of south africa, viewed 18 september 2018, from http://www.thepresidency.gov.za/press-statements/statement-suspension-sars-commissioner. torgler, b., 2003, july, ‘tax morale: theory and empirical analysis of tax compliance’, doctoral thesis, universitat basel, basel. torgler, b., schneider, f. & schaltegger, c., 2010, ‘local autonomy, tax morale, and the shadow economy’, public choice 144, 293–321. https://doi.org/10.1007/s11127-009-9520-1 tyler, t., 2006, ‘restorative justice and procedural justice: dealing with rule breaking’, journal of social issues 62(2), 307–326. https://doi.org/10.1111/j.1540-4560.2006.00452.x van dijk, m. & verboon, p., 2010, ‘trust in authorities as a boundary condition to procedural fairness effects on tax compliance’, journal of economic psychology 31(1), 80–91. wallschutzky, i., 1985, ‘possible causes of tax evasion’, journal of economic psychology 5, 371–384. https://doi.org/10.1016/0167-4870(84)90034-5 wenzel, m., 2002, ‘tax compliance and the psychology of justice: mapping the field’, in v. braithwaite (ed.), taxing democracy, pp. 41–70, ashgate, aldershot. wenzel, m., 2005, motivation or rationalisation: causal relationships between ethics, norms and tax compliance, working paper no 63, australia national university, centre for tax system integrity, canberra, viewed 12 august 2017, from https://digitalcollections.anu.edu.au/bitstream/1885/43079/2/63.pdf. williams, c. & horodnic, i., 2015, ‘explaining and tackling the shadow economy in estonia, latvia and lithuania: a tax morale approach’, baltic journal of economics 15(2), 81–98. https://doi.org/10.1080/1406099x.2015.1114714 yusof, n.a., ling, l.m. & wah, y.b., 2014, ‘tax non-compliance among smcs in malaysia: tax audit evidence’, journal of applied accounting research 15(2), 215–234. https://doi.org/10.1108/jaar-02-2013-0016 microsoft word 02 attributes of entrepreneurs march 2009.doc sajesbm ns volume 2 (2008) issue 1 17 __________________________________________________________________________________________ attributes of entrepreneurs at an arts festival m. saayman, m. douglas and †s. de klerk institute for tourism and leisure studies and †school of business management thinkwell research unit. north-west university (potchefstroom campus) potchefstroom *melville.saayman@nwu.ac.za abstract the purpose of this article is to determine the attributes of entrepreneurs at festivals, in this case an arts festival. the reason for choosing an arts festival is that the largest festivals (judged by number of visitors and income generated) hosted in south africa annually are arts festivals. a literature review revealed that this type of study had not previously been conducted in south africa. in order to generate proper data, a survey was conducted of all small businesses that were trading at one of south africa’s largest arts festivals, namely the aardklop national arts festival, held annually in the city of potchefstroom. 222 useable questionnaires were captured and the data analysis included a factor analysis and descriptive results. the main results reveal that the most important attributes are a need for achievement, being successful, having the necessary organising skills, selfedification, being explorative, and commitment. key words: entrepreneurs, arts festivals, event tourism, south africa, attributes, aardklop national arts festival introduction the three largest arts festivals in south africa are the grahamstown festival, held in the town of grahamstown, the aardklop festival in potchefstroom and the klein karoo national arts festival in oudtshoorn (saayman & saayman, 2006:570–571). the aardklop national arts festival has been held annually since 1997 in the town of potchefstroom, in the north west province of south africa. this cultural festival incorporates theatre, dance, music, cabaret and visual arts that are held in a variety of venues in and around the town. a large craft market and open-air performances also form part of the event, drawing crowds of more than 50 000 people every year, as well as more than 200 entrepreneurs, all selling their arts, crafts and other goods and services (national arts festival, 2007). festivals and events play an important role in tourism, as indicated by mckercher, mei & tse (2006:56–57), trigg (1995:136) and anwar & sohail (2004:161–162), since they offer entertainment and serve as attractions to tourists and visitors alike. festivals and events are also used to boost tourism; tourists and visitors spend large amounts at festivals on a wide variety of products and services such as accommodation, restaurants, shows, curios and transport (van der merwe, 2008:66–67). festivals and events are also seen as a tool for addressing seasonal fluctuations. van der merwe (2008:15–16) also mentions that one of the benefits of festivals and events, and therefore tourism, is to promote entrepreneurial opportunities. aitchison and pritchard (2007:9) point out that arts festivals, as incomegenerating events, can be seen as an entrepreneurial opportunity to maximise economic sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 18 activity, attract and retain visitors and contribute to forming cultural identity at the festival. spilling (1996:92–94) and tyson, hayle, truly, jordan & thame (2005:324) concur that events, especially big events, can serve as a trigger for entrepreneurial activities. according to dahles and bras (1999:2), little attention has been given to the economic potential of tourism, which includes events and festivals, and the role of entrepreneurial activity. this is despite the fact that entrepreneurship is globally recognised to be a solution to unemployment problems, with the growth in terms of people being employed by small businesses being larger than the contribution of small businesses to the gdp of the country (elliot & boshoff, 2007:15). in general, more than 80 percent of all new job opportunities are created in new and upcoming small and medium businesses (kroon, 2002:215). the latter adds that authorities worldwide boost entrepreneurship not only because of its ability to create jobs, but also because entrepreneurship brings economic development and growth to a country and is seen as the most powerful force to establish economic and social mobility. in 2005 the then president of south africa, mr thabo mbeki, announced that all regulations applicable to small businesses in south africa should be reviewed, in order to find ways in which small, micro and medium enterprise (smme) business development could be supported and enhanced (starting your own business, 2005:3). in view of the influence of small businesses in particular on the economic growth of a country, and the significant role of the tourism sector on small business development, tourism has the potential to contribute to the development of the south african economy in a visible way (elliot & boschoff, 2007:16). longenecker, moore and petty (2003:19) state that without entrepreneurs there would be far less development and innovation. entrepreneurs serve as founders, coordinators and finishers (brush, 2008:23). a better understanding of the entrepreneurs’ contribution to arts festivals will enable festival organisers to get a better understanding of the role and function of entrepreneurs at these festivals. literature review the part played by entrepreneurship in production was first recognised in 1890, when the factors of production were stipulated as land, capital and organisation (marshall, 1920). in 1912, a more direct reference to entrepreneurship appeared in schumpeter’s work theorie der wirtschaftlichen entwicklung (schumpeter, 1912; 1942). organisation is the coordinating factor that brings the other factors together, and it is believed that entrepreneurship is the driving element behind organisation (marshall, 1920). entrepreneurs can create new commodities or improve the plan of producing an old commodity through creative organising (olivier, 2002:17). thus it is accepted that entrepreneurship is of significant importance and essential for the economic development of every country, because through entrepreneurship new ideas and inventions are developed and this enables continual improvement of societies and their organisations (kimani, 2004:10). according to timmons and spinelli (2004:3), the world’s economic and social structures have been transformed by a new generation of entrepreneurs, leading to a heritable entrepreneurial code. america has, since its founding in 1776, given a free rein to entrepreneurs, resulting in ground-breaking entrepreneurship during the past 300 years (timmons & spinelli, 2004:3). sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 19 currently there are many institutions and organisations focusing on educating people to becoming successful entrepreneurs. gordon brown, the then chancellor of nfte (network for teaching entrepreneurship), announced on november 15, 2005, that in one week alone, britain hosts approximately 2000 business events for hundreds and thousands of young people, which is proof of the importance of entrepreneurship in the uk (brown, 2005:1). people exposed to entrepreneurship frequently express more ability to exercise creative freedom, higher self-esteem, and an overall greater sense of control. a robust entrepreneurial culture will maximise individual and collective economic and social success on a local, national and global scale (start you own business, 2005:3). entrepreneurs contribute to innovation, which in turn contributes to the profitability and growth of the organisation or business, and therefore the economy (muhanna, 2006:64). determining market needs and introducing new organisations, the free-enterprise economic system of this millennium is formed by entrepreneurs as decision makers (longenecker et al., 2000:3). south africa in itself has a large number of unemployed people, especially among historically disadvantaged individuals. during 1996, the national small business act of 1996 (act 102 of 1996) as amended, was developed to attempt to address policy gaps in terms of unemployment and poverty amongst, in particular, previously disadvantaged individuals. adding to the need for such an act is the fact that south africa has shown an average 3% economic growth since the political change in the mid-1990s and the country has also experienced even higher growth rates over the past five years (africa policy information centre, 2002). this has resulted in a growing interest in entrepreneurship (haasje, 2006:43). national government policy and planning in south africa has adopted the development of small, micro and medium enterprises (smmes) as a continuous theme linked to the objectives of economic transformation. the challenge, however, lies in the fact that the country has an extremely diverse group of businesses, all of which need different kinds of support interventions (rogerson, 2005:623). in several investigations, tourism has been identified as being potentially one of the key economic drivers in south africa (rogerson, 2005:623). according to saayman and olivier (2005:134), tourism plays a vital role to the development of south africa and its people, employing an estimated 600 000 people. it is evident in the support of particular groups of tourism, including events and festivals. ndabeni and rogerson (2005:130) state that entrepreneurship in tourism has attracted limited research. furthermore, within the literature of tourism there exists a critical debate on the role of tourism in small business and its relation to rural communities’ economic development (ndabeni & rogerson, 2005:130). however, binns and nel (2002:235–237) state that in recent years, festivals and special events have become one of the fastest growing types of tourist attraction (festivals increase at a rate of about 200 annually in south africa), and the number of conceptual and empirical studies on festivals and special events has increased. one of the reasons why festivals are important from an entrepreneurial point of view is that they generate large amounts of funds: for example, the klein karoo national arts festival (kknk) generates over r60 million, and the grahamstown and aardklop national arts festivals over r50 million each (slabbert, saayman, saayman & kruger, 2008a;27; slabbert, viviers, saayman & saayman, 2008b:47; kruger, saayman & saayman, 2008:29). according to saayman & saayman, (2006:571) and spilling (1996:92–94), not enough research has been done concerning entrepreneurship at festivals or events, and the absence of international case studies supports this notion. sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 20 the following studies focus on entrepreneurship in tourism mainly by concentrating on factors such as barriers and constraints, skills development, rural tourism, opportunities, entrepreneurial culture and entry level requirements. the lack of market access is also known to be cited as a major concern for entrepreneurs, especially for smme businesses. none of these studies indicated the attributes of the entrepreneur specifically at arts festivals. the literature review did, however, reveal the following research: cleverdon (2002), van der westhuizen (2003) and olivier (2002) conducted investigations on the barriers and constraint factors that influence entrepreneurs in the tourism industry. kirsten and rogerson (2002) studied business linkages and the entrepreneur. spilling (1996) developed a framework for entrepreneurs at events and specifically the olympic games. barnard (1988) identified skills for small tourism businesses in the pretoria-witwatersrand-vereeniging area. mitton (1998) also focused on the skills that entrepreneurs require and how tertiary training can alleviate this gap. ndabeni and rogerson (2005) and austin (2003) investigated the possibilities for entrepreneurial development in rural tourism. olivier (2002) did a comprehensive analysis of opportunities for small, medium and micro-tourism businesses in south africa. the literature review did, however, reveal research concerning the profiles, characteristics and contributions of entrepreneurs in general. these studies, listed below, lead the authors to the understanding that no common description exists for the general attributes of entrepreneurs. however, the literature review did indicate some attributes from different studies. they include rotefoss and kolvereid (2005:110–112), who place an emphasis on entrepreneurs’ willingness to take calculated risks, as well as making use of market opportunities. saayman & snyman (2005:3) state that entrepreneurs are synonymous with innovation and that their actions are profit driven. these researchers add that successful entrepreneurs have strong management skills supported by the following characteristics: ambition, dedication, creativity, initiative, innovation, positive state of mind and vision (saayman & snyman, 2005:12–16). hormozi (2004:279) has found that although entrepreneurs are profit driven, their desire to achieve lies in their orientation towards excellence. hormozi (2004:279) adds that entrepreneurs are optimistic individuals who are prepared to work hard in order to be rewarded in financial and psychological ways. the evolution of entrepreneurship throughout the decades has led to entrepreneurs becoming a force to be reckoned with as members of the business community (hormozi, 2004:278). festivals can be seen as an unexplored market that extends the market reach of smme businesses in the tourism sector to a more extensive geographical reach and therefore more customers (elliot & boshoff, 2007:15). based on the above, the purpose of this research is to determine the attributes of entrepreneurs at the aardklop national arts festival. method of research data used in the analysis were gathered during the aardklop national arts festival, held on 22–29 september 2007, using an entrepreneurial-based questionnaire. the methodology used will be discussed under the following headings: the questionnaire; the samples; and the method. sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 21 the questionnaire the questionnaire used to survey entrepreneurs at the aardklop national arts festival is based on the work of barnard (1988:169), mitton (1998:113), olivier (2002:151) and van der merwe (1994:352). the questionnaire was personally distributed to local businesses and entrepreneurs during the aardklop festival. the basic layout of the questionnaire consisted of three sections. section a focused on the demographical information, while section b was concerned with information on the businesses. section c primarily focused on festival information. the questionnaire consisted of open and close ended questions as proposed by tustin, lighthelm, martins & van wyk. (2005). a psychometric response scale (likert scale 1-5) was used to specify the level of agreement to the 28 listed statements. these questions were used to generate as much information as possible regarding the entrepreneur, business background, risks involved as well as the contributions entrepreneurs make towards the aardklop national arts festival. the samples the survey took place in potchefstroom, where the aardklop national arts festival is held annually. the aardklop terrain is referred to by local residents as “die bult”. questionnaires were distributed accordingly among entrepreneurs and smme owners in this area. in total, 520 questionnaires were distributed (table 1). there are currently approximately 70 permanent small businesses in this area and 450 stands at the aardklop national arts festival. fieldworkers distributed questionnaires and collected completed questionnaires during the course of the festival. hence all businesses formed part of the survey, based on their willingness and availability to complete the questionnaire. table 1: questionnaires distributed, completed and analysed. the method microsoft excel was used for data capturing and basic data analysis. exploratory factor analysis was performed to validate the constructs by means of spss. reliability tests were also performed and descriptive data were used, especially for the profile of entrepreneurs. a total distributed b questionnaires received c questionnaires analysed amount % amount % amount % temporary stands 450 86.5% 190 37% 186 36% permanent small businesses 70 13,5% 36 6,9% 36 7% total 520 100% 226 43,5% 222 42,7% sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 22 results the results will be discussed in two sections: firstly, an overview of the profile of the entrepreneurs who attended the aardklop national arts festival and, secondly, the results of the factor analysis (entrepreneurial success factors). the results captured in table 2 concerning entrepreneurs attending the aardklop festival showed that the majority of the respondents were female and afrikaans speaking and between the ages of 35 and 49 years. most of these entrepreneurs are married and have either a degree or diploma. the average business profile of the entrepreneurs at the aardklop national arts festival shows that they have more than 50% share in their business, which they have started on their own and operate mainly from their homes, situated in the north west and gauteng provinces (see table 2). the entrepreneurs view their role at the festival as delivering unique and quality products. in order to reach this objective, they have to market their products to make festival attendees aware of their new and unique products. table 2: entrepreneurs’ profile: aardklop national arts festival 2007 variable averages gender 67% female language 72% afrikaans age 41% between 35 – 49 years marital status 72% married qualification 50% diploma/degree shares 67% have more than 50% shares how business started 87% started their business on their own operate from 60% operate their business from their home province 36% north west province 24% gauteng reasons for attending aardklop marketing business to expand business role at aardklop to deliver unique and quality products and services to do marketing for their business the next section will deal with the attributes of entrepreneurs as indicated by the factor analysis. the factor analysis identified six factors (table 3). these factors were labelled as: organisational skills, resourcefulness, achievement, self-edification, explorative tendency and commitment. sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 23 table 3: results of the factor analysis pattern matrix factors organisational skills resourcefulness achievement selfedification explorative commitment management skills .479 calculated risks .737 optimism .314 time management .622 thought-through plans .578 teamwork .757 ambition .597 creativity .737 dedication .799 initiative .786 innovation .858 vision .332 give best .858 profit driven -.530 knowledge -.381 education -.720 to always be successful -.883 to always win -.817 independence -.309 leadership -.491 optimism .311 adventurousness .497 hard work .375 communication .530 confidence .778 opportunities .565 cronbach alphas .798 .847 n/a .838 .446 .780 sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 24 table 4: correlation matrix correlation matrix factors organisational skills resourcefulness achievement selfedification explorative commitment organisational 1.000 .391 .093 -.462 .041 .339 resourcefulness .391 1.000 .172 -.417 .090 .357 achievement .093 .172 1.000 -.088 .025 -.010 self-edification -.462 -.417 -.088 1.000 -.052 -.377 explorative .041 .090 .025 -.052 1.000 .060 commitment .339 .357 -.010 -.377 .060 1.000 extraction method: principal component analysis. rotation method: oblimin with kaiser normalisation. the correlation matrix as captured in table 4 shows a low correlation between the various factors, which is an indication that the factors are well distinguished and defined. cronbach alphas were determined (table 3) to test the reliability of the identified factors, with the exception of factor 3, which consists of only one component. the cronbach alpha analyses showed very good correlations between the components within each factor. factor 4, which is that of the entrepreneur as explorer, has however a lower cronbach alpha mean, and can thus be seen as an area that requires more statements (components). factor 1: organisational skills the organisational skills included aspects such as management skills, calculated risks, time management, thought-through plans and team work. the importance of this factor is confirmed by dias and mcdermott (2006) and brush (2008), who point out that entrepreneurs create and organise new firms and industries, while managing and encouraging workers with a minimum level of human capital (dias & mcdermott, 2006:299; brush, 2008:21). this factor had a mean value of 4.20. factor 2: resourcefulness this factor had the second highest mean value (4.49) and includes aspects such as ambition, dedication, creativity, initiative, innovation, optimism and vision. according to manz and snyder (1983:68) and hart (2008:149), in order for an individual to become a resourceful entrepreneur, attributes such as innovation and vision are extremely important (manz & snyder, 1983; hart, 2008). factor 3: achievement the entrepreneurs indicated that to always give of their best is of the utmost importance to them. this factor had the highest mean value (4.58). an analysis undertaken by rauch and frese (2007) found that evidence of the entrepreneurs’ need to give of their best is portrayed in their need for achievement (rauch & frese, 2007:353). sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 25 factor 4: self-edification self-edification includes being profit driven, having knowledge, being educated, wanting to always be successful, to always win, having independence, and possessing leadership. covey states that self-edification is a frame of mind and heart that constantly seeks personal benefit in all human actions (1989:207). interesting is the fact that this factor had the lowest mean value of all six factors (3.92). factor 5: explorative tendency this factor determines to what extent optimism and adventure contribute to the entrepreneurs’ need to explore. it confirms that entrepreneurs experience a need to explore new business ventures and to introduce new products. this factor had a mean value of 4.07. factor 6: commitment this factor had the third highest mean value (4.44). hard work, communication, confidence and seeking/taking opportunities all contribute to and form part of the entrepreneurs’ vision for their businesses. according to a previous survey, kenyan and ghanaian business owners stipulated that hard work and commitment are essential for entrepreneurial success in ultimately achieving their long-term vision (hung, benzing & mcgee, 2007:298). the next section will deal with the findings and conclusions of this research. discussion relationship between findings and literature the results of the factor analysis revealed six factors (attributes) of importance to entrepreneurs’ success, namely organisational skills, resourcefulness, achievement, selfedification, explorative tendency and commitment. from the results of the literature review, it became clear that these findings support research by rotefoss and kolvereid (2005), who suggest that entrepreneurs are explorative and develop new products, methods and approaches. it also supports work by saayman and snyman (2005), who suggest that entrepreneurs require organisational skills. they are resourceful (saayman & snyman, 2005) and self-edificatory (homozi, 2004; lapini, 2007) and committed (homozi, 2004; lapini, 2007). a similar set of attributes could not be found in the literature, which confirms that there does not seem to be one set of attributes for entrepreneurs in general, but rather a variety. the results, however, show that the combination of attributes and stress laid upon certain attributes seem to differ from sector to sector or industry to industry. the fact that no similar studies done at arts festivals were found also makes it difficult to draw comparisons. another interesting finding from this research, if one looks at the mean values of the different attributes, is that the three most-important attributes, namely achievement, resourcefulness and commitment, can be categorised as personal attributes. this implies that the essence of entrepreneurs at this festival is of a personal nature and that these characteristics cannot necessarily be taught or adopted. the attribute mostly associated with entrepreneurs, namely self-edification (being profit driven, having knowledge and education, etc.) scored the lowest mean value. this might be ascribed to lower expectations by the entrepreneurs of generating a sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 26 high income at festivals. the results also support the work done by spilling (1996) and tyson et al. (2005), who indicate that a big event, in this case an arts festival, can trigger entrepreneurial activities. limitations of the study the biggest limitation is the absence of similar research done at arts festivals in order to draw lessons from. this is especially relevant to the questionnaire development and comparison of results from other arts festivals or events. implications for practitioners and policy makers the results could assist agencies concerned with assisting and expanding entrepreneurship in identifying people with these attributes. the attributes and profile could also be useful in terms of developing training programmes to teach the basic skills and to change people’s mindset in terms of entrepreneurship. even though the latter was not the purpose of this research, the research did indicate basic skills (organisational skills) that are required. the latter (see table 3) include the ability to determine risks, the ability to do proper planning and to manage time. the research could also assist festival organisers in selecting entrepreneurs for this particular arts festival, since the research provides a profile as well as key attributes. the results also show that even though training is important, personal attributes seem to be the driving force behind these entrepreneurs. therefore, the aardklop organisers and agencies concerned with entrepreneurs cannot rely on skills or qualification alone as a benchmark for entrepreneurs. directions for future research similar research at other festivals would be invaluable to confirm or reject the view portrayed above. in the case of this research, most of the entrepreneurs are from a homogeneous group, namely afrikaans-speaking, predominantly white, females, and one could probably expect a different set of attributes for other cultural groups or a different event. this should be pursued. once again the research shows that too little has been done on this topic at arts festivals. another aspect that should be refined is the questionnaire. this can be done by adding a few statements that could measure achievement more effectively. conclusions entrepreneurs and their businesses have always been a popular topic for research and enjoy attention from researchers all over the world. the aim of this article was to focus on the attributes of entrepreneurs at arts festivals, using the aardklop national arts festival as a case study. this was the first time that this type of research was conducted at an arts festival in south africa. according to the 2006 south african report from the global entrepreneurship monitor (gem), entrepreneurship on a micro-level is not showing any signs of growth, but on a macro-level, a positive entrepreneurial culture is starting to form (maas & herrington, 2006:4). the latter is very important for the management of the aardklop national arts festival, since entrepreneurial activities hold many economic benefits. festivals are accepting sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 27 their responsibility in growing entrepreneurs and this research could assist festival coordinators in developing strategies to achieve this. the contribution of this research lies in the confirmation of the six main attributes, namely organisational skills, resourcefulness, achievement, self-edification, explorative and commitment, as the most important attributes of entrepreneurs at the aardklop national arts festival, as well as the importance of these factors for entrepreneurial success. references africa policy information centre. 2002. africa: economic report on africa. [online] available from: http://www.africaaction.org/docs02/eca2002a.htm [accessed: 2008-11-10] aitchison, c. & pritchard, a. 2007. festivals and events: culture and identity in leisure, sport and tourism. eastbourne: lsa. anwar, s.a. & sohail, m. s. 2004. festival tourism in the united arab emirates: first-time versus repeat visitor perception. journal of travel research, 10(2):161–170. austin, n.k. 2003. entrepreneurship development and tourism in rural african communities. journal of african business, 4(1):87–101 barnard, a.f. 1988. omgewingsverkenning by ‘n geselekteerde groep kleinsakeondernemings in die pwvgebied. unpublished mba-thesis. potchefstroom: pu for che. binns, t. & nel, e. 2002. tourism as a local development strategy in south africa. geographical journal, 168(3):235–247. brown, g. 2005. hm treasury: chancellor announcement. november, 15. [online] available from: http://www.nfte.co.uk [accessed: 2007-03-27]. brush, c.g. 2008. pioneering strategies for entrepreneurial success. business horizons, 51(1):21–27. cleverdon, r.g. 2002. tourism development in the sadc region: the opportunities and challenges. development southern africa, 19(1):7–28. covey, s.r. 1989. the 7 habits of highly effective people. new york: free press. dahles, h. & bras, k. 1999. tourism and small entrepreneurs: development, national policy and entrepreneurial culture: indonesian cases. new york: cognizant communication corporation. dias, j. & mcdermott, j. 2006. institutions, education and development: the role of entrepreneurs. journal of development economics, 80(2):299–328. elliot, r. & boshoff, c. 2007. the influence of the owner-manager of small tourism businesses on the success of internet marketing. south african journal of business management, 38(3):15–27. haasje, k.p. 2006. south african micro entrepreneurs and resources to overcome entry barriers. journal of contemporary management, (3):43–59. hart, d.m. 2008. the politics of entrepreneurial economic development policy of states in the u.s. review of policy research, 25(2):149–168. hormozi, a.m. 2004. becoming an entrepreneur: how to start a small business. international journal of management, 21(3):278–285. sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 28 hung, m.c., benzing, c. & mcgee, c. 2007. ghanaian and kenyan entrepreneurs: a comparative analysis of their motivations, success characteristics and problems. journal of developmental enterprises, 12(3):295–322. kimani, e. 2004. mti-aiti entrepreneurship: lecture 8: entrepreneurship; summary. [online] available from: http://ocw.mit.edu/nr/rdonlyres/specialprograms/sp772spring2005/bb5f17f9-6575-4fdo-bzaf51a440d5ef84/ [accessed: 2007-03-27]. kirsten, m. & rogerson, c.m. 2002. tourism business linkages and small enterprise development in south africa. development southern africa, 19(1):29–59. kroon, j. 2002. ‘n strategie vir entrepreneurskapontwikkeling in suid-afrika. tydskrif vir geesteswetenskappe, 42(3):215–223. kruger, m., saayman, m. & saayman, a. 2008. die profiel en ekonomiese impak van aardklop nasionale kunstefees. potchefstroom: institute for tourism and leisure studies. lapini, a. 2007. 50 characteristics of successful entrepreneurs. march, 24. [online] available from: http://www.independentonline.com/?c=1908a=23354 [date of access: 4april 2007]. longenecker, j.g., moore, c.w. & petty, j.w. 2000. small business management: an entrepreneurial emphasis. 11th ed. chicago: south-western college publishing. longenecker, j.g., moore, c.w. & petty, j.w. 2003. small business management: an entrepreneurial emphasis. 12th ed. chicago: south-western college publishing. maas, g. & herrington, m. 2006. global entrepreneurship monitor: south african report. cape town: uct graduate school of business. manz, c.c. & snyder, c.a. 1983. how resourceful entrepreneurs meet business challenges…and survive. management review, 72(10):68–73. marshall, a. 1920. principles of economics. [online] available from: http://www.econlib.org/library/marshall/marp15.html#bk.iv,ch.i [accessed: 2008.11.10]. mckercher, b., mei, w.s. & tse, t.s.m. 2006. are short duration cultural festivals tourist attractions? journal of sustainable tourism, 14(1):55–66. mitton, d.m. 1998. entrepreneurskap na tersiêre opleiding. unpublished mba thesis. vanderbijlpark: pu for che. muhanna, e. 2006. the contribution of sustainable tourism development in poverty alleviation of local communities in south africa. journal of human resources in hospitality and tourism, 6(1): 7–67. national arts festival. 2007. national arts festival. [online] available from: http://en.wikipedia.org/wiki/national_arts_festival [accessed: 2007-10-05]. ndabeni, l. & rogerson, c.m. 2005. entrepreneurship in rural tourism. africa insight, 35(4):130–140. olivier, e. 2002. opportunities for small, medium and micro-tourism enterprises in south africa. unpublished m.com thesis. potchefstroom: pu for che. rauch, a. & frese, m. 2007. let’s put the person back into entrepreneurship research: a meta-analysis on the relationship between business owners’ personality traits, business creation, and success. european journal of work & organisational psychology, 16(4): 353–385. rogerson, c.m. 2005. unpacking tourism smmes in south africa: structure, support needs and policy response. development southern africa, 22(5):623–642. sajesbm ns volume 1 (2008) issue 1 __________________________________________________________________________________________ 29 rotefoss, b. & kolvereid, l. 2005. aspiring, nascent and fledgling entrepreneurs: an investigation of the business start-up process. entrepreneurship & regional development, 17(2):109–117. saayman, m. & olivier, e. 2005. an analysis of tourism smmes in south africa. south african journal of sport, physical education and recreation, 27(1):133–142. saayman, m. & saayman, a. 2006. does location of arts festivals matter? regional science, 85(4):569–584. saayman, m. & snyman, j.a. 2005. entrepreneurship: tourism style. potchefstroom: leisurec. schumpeter, j.a. 1912. theorie der wirtschaftlichen entwicklung. 1st ed in english, the theory of economic development. cambridge: harvard university press. . slabbert, e., saayman, m., saayman, a. & kruger, m. 2008(a). profile and economic impact of visitors to grahamstown national arts festival. potchefstroom: institute for tourism and leisure studies. slabbert, e., viviers, p., saayman, m., saayman, a. & dreyer, a. 2008(b). die sosio-ekonomiese impak van besoekers aan absa kknk te oudtshoorn. potchefstroom: institute for tourism and leisure studies. spilling, o.r. 1996. the entrepreneurial system: an entrepreneurship in the context of a mega-event. journal of business research, (36):91–103 starting your own business. 2005. finance week: special section, 29(june):3. timmons, j.a. & spinelli, s. 2004. new venture creation: entrepreneurship in the 21st century. new york: mcgraw-hill. trigg, p. 1995. leisure and tourism gnvq: intermediate textbook. oxford: butterworth-heinemann. tustin, d.h., lighthelm, a.a., martins, j.h. & van wyk, h.j. 2005. marketing research in practice. south africa: unisa press. tyson, b., hayle, c., truly, d., jordan, l.a. & thame, m. 2005. west indies world cup cricket: hallmark events as catalysts for community tourism development. journal of sport tourism, 10(4):323–334. van der merwe, l.h. 2008. the socio-economic impact of the kknk in oudtshoorn. unpublished master’s thesis. potchefstroom: north west university. van der merwe, m. 1994. ‘n entrepreneurskapsontwikkelingsmodel vir werkskepping as sosiale investering van ondernemings. unpublished phd thesis. potchefstroom: pu for che. van der westhuizen, t. 2003. key success factors for developing and managing a guesthouse. unpublished master’s thesis. potchefstroom: pu for che. abstract introduction literature review research methods and design ethical consideration results discussion conclusion acknowledgements references about the author(s) joash mageto department of transport and supply chain management, university of johannesburg, south africa gerrie prinsloo department of transport and supply chain management, university of johannesburg, south africa rose luke department of transport and supply chain management, university of johannesburg, south africa citation mageto, j., prinsloo, g. & luke, r., 2018, ‘logistics outsourcing and performance of manufacturing small and medium-sized enterprises in nairobi’, southern african journal of entrepreneurship and small business management 10(1), a162. https://doi.org/10.4102/sajesbm.v10i1.162 original research logistics outsourcing and performance of manufacturing small and medium-sized enterprises in nairobi joash mageto, gerrie prinsloo, rose luke received: 28 sept. 2017; accepted: 07 may 2018; published: 13 june 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: logistics outsourcing has been accepted as a strategy through which small and medium-sized enterprises (smes) can access the logistics capabilities they lack internally at a lower cost. however, the actual effect of logistics outsourcing on firm performance, especially among the smes in nairobi, remains unknown. aim: the study aimed to investigate the relationship between logistics outsourcing and firm performance of manufacturing smes in nairobi. setting: the study sampled manufacturing smes in nairobi city county. method: in this study, a convergent parallel mixed methods design was applied. survey data were collected from 163 manufacturing smes. the data were analysed using structural equation modelling to test the relationship between logistics outsourcing and firm performance. additionally, in-depth interviews were conducted in five manufacturing smes. thematic analysis was used to analyse interview data to provide more insight in the quantitative data. results: the anticipated direct link between logistics outsourcing and performance of manufacturing smes was not statistically significant. however, the study revealed a statistically significant indirect positive effect of logistics outsourcing on the performance of manufacturing smes through logistics outsourcing performance as a mediator variable. this article further highlights reasons and the process of logistics outsourcing and deduces a logistics outsourcing model for manufacturing smes to help improve their firm’s performance. conclusion: the established relationship and deduced logistics outsourcing model is likely to guide sme managers as to how to manage logistics outsourcing to improve performance. the finding that logistics outsourcing has a positive indirect effect on the performance of manufacturing smes through logistics outsourcing performance makes a significant contribution to theory. introduction manufacturing small and medium-sized enterprises (smes) in kenya have performed dismally over the years despite their significance to the economy (government of kenya 2012; papadavid 2016). this can be attributed to the high levels of uncertainty in the business environment, high costs of production, as well as inefficient transport and logistics operations, which hamper the smooth movement of raw materials to site and finished goods to the market (chege, ngui & kimuyu 2016; kimuyu 2010). in addition, smes operate in an environment characterised by rapid changes in technology, intense competition from chinese products, dynamic customer requirements and the growing need for efficiency, high-quality products and increased productivity (bowen, morara & mureithi 2009; chew & chew 2008; were 2016). the poor performance of smes in kenya has limited the benefits the sector should be providing to the government and other stakeholders, such as job creation, poverty reduction and industrialisation (buculescu 2013). were (2016) argues that the continued poor performance threatens the survival of the sme sector in kenya. thus, there is enormous pressure on the management of smes to take strategic decisions to improve performance (murphy et al. 2012). owing to limited resources in smes, they are compelled to allocate their meagre and hard-won resources to those areas of production that can generate the highest returns for shareholders (murphy et al. 2012). this means that manufacturing smes should focus their limited resources on core business areas and outsource the non-core but essential functions to reduce costs and increase customer satisfaction (solakivi et al. 2011; sople 2012). one of the essential non-core areas that present an opportunity for improved performance of manufacturing smes if outsourced is logistics (waugh & luke 2011). logistics outsourcing allows enterprises to access capabilities they lack in-house, as per the resource-based view (rbv) theory, and at a lower cost than owning, as outlined by the proponents of transaction cost economics (tce) theory (halldorsson et al. 2007). there are several studies that have investigated logistics outsourcing and firm performance (cho, ozment & sink 2008; kotabe & mol 2009; solakivi et al. 2011). however, the actual effect of logistics outsourcing on firm performance remains unknown as there is no consensus among the researchers as to whether the practice leads to improved firm performance (kotabe & mol 2009; lahiri 2015). some studies have claimed that logistics outsourcing has no effect on firm performance (hsiao et al. 2010; töyli et al. 2008). cho et al. (2008) argued that logistics outsourcing can affect firm performance negatively, whereas parashkevova (2007) claimed that it results in improved firm performance. based on the divergent views among researchers, this study highlights that little is known about the relationship between logistics outsourcing and the performance of manufacturing smes, specifically in nairobi. this study investigated the relationship using a theoretical framework that draws from the rbv and the tce theory. therefore, the study sought to answer the following research questions: why do manufacturing smes practice logistics outsourcing? how do manufacturing smes outsource logistics? what is the relationship between logistics outsourcing and performance of manufacturing smes? in this study, the relationship between logistics outsourcing and performance of smes has been established empirically. in addition, it advances logistics literature by proposing a logistics outsourcing model that smes can be applied to improve their firm’s performance. the remainder of this article addresses the importance of smes in kenya, logistics outsourcing and firm performance, methodology, findings, discussion and, finally, the conclusion. literature review in this section, literature related to the importance of smes in kenya, logistics outsourcing and firm performance is reviewed. this helped to develop a conceptual framework at the end of this section. importance of small and medium-sized enterprises in kenya the significance of smes to the economic growth and development of both developed and developing countries is recognised across the world (nasr & rostom 2013). smes require little capital to set up and have the potential to create jobs for the burgeoning number of unemployed youths in most developing countries (gill & biger 2012; sonobe, akoten & otsuka 2011). manufacturing smes boost economic activities in the areas in which they operate, because they produce goods that meet the immediate needs of locals, thus serving a market that the large enterprises have ignored (chege et al. 2016; sonobe et al. 2011). in kenya, manufacturing smes account for about 80% of the number of firms in the manufacturing sector and employ over 80% of the workforce in this sector (kenya national bureau of statistics 2016). to further emphasise the importance of smes to development, the kenyan government recognised the sector in its ‘kenya vision 2030’ strategic plan for its role in the country’s industrialisation agenda (government of kenya 2007). there are case studies of countries across the globe such as china (chen 2006), malaysia (karikomi 1998) and india (das 2008) that have industrialised by focusing on small and medium-sized manufacturers. this implies that countries in sub-saharan africa such as kenya can also facilitate industrialisation by focusing on the development of manufacturing smes. however, as highlighted earlier, smes face resource challenges, making it difficult to own capabilities that can enable efficient and effective operations (bowen et al. 2009). some of the capabilities required by smes, especially in logistics, can easily be accessed through outsourcing (murphy et al. 2012). it is expected that smes are more likely to focus on the quality of goods and distribute widely at lower costs, resulting in improved firm performance, once they contract expert logistics service providers (lsps) (soinio, tanskanen & finne 2012). logistics outsourcing and firm performance logistics outsourcing refers to the transfer of all or part of the logistics functions to be performed on behalf of the firm by third-party logistics service providers (lieb & randall 1996; könig & spinler 2016; van laarhoven, berglund & peters 2000). pratap (2014) argued that logistics outsourcing can best be explained by the rbv and tce theories. the rbv theory holds that an enterprise can acquire resources and capabilities through outsourcing to meet its customers’ needs (wong & karia 2010). similarly, the tce theory highlights that logistics outsourcing provides an avenue for conducting business at lower transaction costs when compared to in-house operations, thus improving firm performance (bolumole, frankel & naslund 2007; pratap 2014). the rbv and tce theories have been applied extensively in logistics outsourcing research (liu et al. 2015; pratap 2014), depicting their relevance to guiding development of predictive models in logistics management. past research has identified the increased importance of logistics across the globe in determining overall firm performance, as supply chains become complex (könig & spinler 2016), thus reinforcing the importance of this study. the growing significance of logistics among firms can further be revealed by the increased spending and its central role in improving customer service (langley & capgemini 2016). as logistics performance becomes more significant, firms are expected to focus on their core business areas, leaving logistics to be outsourced to expert lsps (könig & spinler 2016; rahman & wu 2011). using lsps implies that the firms (in this case manufacturing smes) would access the logistics capabilities they lack in-house, as they focus on their core manufacturing activities to improve performance (könig & spinler 2016; langley & capgemini 2016; murphy et al. 2012). thus, it is hypothesised that: logistics outsourcing has a positive effect on firm performance logistics outsourcing is also adopted to reduce logistics costs and as a long-term strategy to increase customer satisfaction and improve overall enterprise performance (fawcett, magnan & mccarter 2008; lee, lin & cheng 2013). logistics activities that are commonly outsourced can be classified into operational (transportation, fleet management, clearing and forwarding), information processing (logistics information system, procurement and order management, product track and trace), and strategic and value-adding services (inventory, warehousing and packaging management) (langley & capgemini 2016; liu et al. 2015; solakivi et al. 2011). firm performance refers to how well a firm achieves its overall goals, both financial and non-financial (kasie & belay 2013; quang et al. 2016). financial measures such as return on assets (roa) and profitability are objective as they make use of actual figures, whereas the non-financial measures, such as customer satisfaction, use perception and are generally subjective (tseng & liao 2015; yang, marlow & lu 2009). measuring firm performance is not an easy task as one should select the most appropriate measures for the industry, period (long-term and short-term) and firm size to achieve the desired results (kasie & belay 2013; quang et al. 2016). as such, because smes lack clear management structures, the specific performance metrics selected, should be growth based and should focus on financial liquidity and customer satisfaction (marchand & raymond 2008; raymond et al. 2013). therefore, this study measured performance of manufacturing smes through growth in sales, profits, roa, return on capital employed (roce), earnings before interest and tax (ebit), number of employees and customer satisfaction (solakivi et al. 2011; tseng & liao 2015). high-performing smes are likely to deliver goods to meet local demand, create employment and improve living standards of communities where they operate (chege et al. 2016; nasr & rostom 2013). thus, improving the performance of manufacturing smes will go a long way to improving not only livelihoods but also economic growth. this study highlights that logistics presents the potential to improve the performance of smes if managed diligently (waugh & luke 2011). logistics outsourcing has emerged as one such strategy that can be used to realise efficient and effective logistics operations, as the expertise of third-party logistics (3pls) can be utilised (waugh & luke 2011). although the common view is that logistics outsourcing leads to improved enterprise performance (fawcett et al. 2008; langley & capgemini 2017), the actual relationship between logistics outsourcing and firm performance has not been established precisely in past research. some past research has observed that logistics outsourcing improved firm performance (lee et al. 2013; parashkevova 2007), whereas cho et al.’s (2008) study reported a negative relationship between logistics outsourcing and firm performance and solakivi et al.’s (2011) study found no relationship with firm performance among finnish smes. therefore, this study sought to empirically investigate the relationship between logistics outsourcing and performance of small and medium-sized manufacturing enterprises in nairobi. logistics outsourcing allows the smes to access capabilities of expert lsps to achieve high logistics performance in terms of reduced cycle times, reduction of wasteful operations, increased flexibility, delivery timeliness and smooth operations in upstream and downstream activities (green, whitten & inman 2008; zailani et al. 2017). green et al. (2008) argued that increased logistics performance positively influences firm performance. as such, it is hypothesised as follows: logistics outsourcing has a positive effect on logistics performance. logistics performance has a positive effect on firm performance. logistics outsourcing performance refers to the extent to which lsps meet a firm’s expectations (wagner & franklin 2008). logistics outsourcing processes that take into consideration communication, trust levels, cooperation and innovation are likely to result in high logistics outsourcing performance (deepen et al. 2008; križman & ogorelc 2010; oshri, kotlersky & gerbasi 2015). in addition, leuschner et al. (2014) highlight that logistics outsourcing performance positively affects logistics performance and consequently firm performance. therefore, it is hypothesised as follows: logistics outsourcing has a positive effect on logistics outsourcing performance. logistics outsourcing performance has a positive effect on logistics performance. logistics outsourcing performance has a positive effect on firm performance. the relationship is investigated directly and indirectly through logistics outsourcing performance and logistics performance as mediating variables. the measures of logistics outsourcing performance in this study focus on the quality of communication and cooperation between smes and 3pls (deepen et al. 2008), trust levels (huo, ye & zhao 2015) and innovative capabilities of the 3pls (oshri et al. 2015). logistics performance is measured by operational efficiency and customer service indicators (zailani et al. 2017). finally, it is hypothesised as follows: logistics outsourcing performance mediates the relationship between logistics outsourcing and firm performance. logistics performance mediates the relationship between logistics outsourcing and firm performance. these relationships are conceptualised, as illustrated in figure 1. figure 1: conceptual framework for logistics outsourcing. the model (figure 1) was used to test six hypotheses using structural equation modelling. additionally, mediation hypotheses were tested to measure the indirect effect of logistics outsourcing (lo) on firm performance (fp) through logistics outsourcing performance (lop) and logistics performance (lp). thus, the study tested the following hypotheses: h1: logistics outsourcing has a positive effect on firm performance. h2: logistics outsourcing has a positive effect on logistics performance. h3: logistics outsourcing has a positive effect on logistics outsourcing performance. h4: logistics outsourcing performance has a positive effect on logistics performance. h5: logistics outsourcing performance has a positive effect on firm performance. h6: logistics performance has a positive effect on firm performance. h7: logistics outsourcing performance mediates the relationship between logistics outsourcing and firm performance. h8: logistics performance mediates the relationship between logistics outsourcing and firm performance. research methods and design this section presents first the research design followed in this study. thereafter, the qualitative and quantitative approaches are described as used in this study. research design the uniqueness of the sme context from industry to industry and even country to country calls for combined methods to better address the research questions, as claimed by saunders, lewis and thornhill (2016). this study therefore adopted a pragmatist’s philosophical orientation, which allows for a mixture of qualitative and quantitative research approaches in a single study (takkashori & teddlie 2010), that is, a mixed methods research design (mmd). mmd refers to the use of both qualitative and quantitative approaches to address a research problem (creswell & clark 2007; jogulu & pansiri 2011). the use of this design helped to answer the ‘why’ and ‘how’ research questions that required qualitative data and the ‘what’ question which required quantitative data. the quantitative approach helped to test the application of rbv theory to logistics outsourcing. the results from the qualitative approach enriched the quantitative findings and helped advance logistics management literature regarding performance of smes. the results from the two approaches were interpreted together to provide a comprehensive response to the research questions as opposed to using either of the approaches (saunders et al. 2016). convergent parallel design variant of mmd was used in this study, whereby quantitative and qualitative data were collected and analysed concurrently (jogulu & pansiri 2011). the qualitative approach was used to collect data that helped interpret the relationships tested between logistics outsourcing and firm performance. these two approaches were thus able to complement each other. upon analysis of the data, the findings were interpreted together, whereby results from the qualitative approach helped explain the relationship with logistics outsourcing, hence addressing the research problem adequately (creswell & clark 2011). specifically, qualitative data helped explain why smes outsource logistics services as well as the process they follow to outsource. this provided insights of the kind of statistical relationships that could be expected between logistics outsourcing and performance of the smes. the combination of qualitative and quantitative approaches overcame the shortcomings such as the bias of relying on a single approach, by providing triangulated data to study the research problem (creswell & clark 2011). the sampling techniques, instrument development and data collection are discussed in the following sections starting with the qualitative approach. qualitative approach purposive sampling was used to select five manufacturing smes, which participated in the interviews. it was used to select the manufacturing smes to provide rich data (creswell 2014) regarding logistics outsourcing and firm performance. the enterprises selected represented the five main manufacturing categories in kenya, as identified by chege et al. (2016). collecting data from multiple smes helped cross-checking to ensure that credible data were obtained. qualitative data were collected through face-to-face interviews using a semi-structured interview guide at the manufacturing smes’ site. conducting the interviews on site helped observe that actual manufacturing was taking place. the interview guide was piloted with two logistics managers. the piloting helped to adjust some questions which were not clear and drop others that were repetitive. in-depth interviews were conducted with directors or owners or managers in charge of logistics in their respective manufacturing smes. one interview was conducted in each of the smes. the selected respondents were those with all the relevant information regarding the enterprises’ logistics management practices. the five interviews were sufficient as there was no additional information obtained after the fifth interview. the five interviews were sufficient, considering the claim by creswell and clark (2007) and jogulu and pansiri (2011) that four to five case studies are appropriate to meet the requirements of a mixed methods design. three interviews were recorded using an audio recorder, whereas two were captured in interview notes. the qualitative data were analysed through thematic analysis to answer the why and how research questions (1 and 2, respectively). thematic analysis involved searching for themes across the interview data, as described by saunders et al. (2016). the qualitative data collected through in-depth interviews were transcribed and coded. themes related to the research questions 1 and 2 were identified. the research process followed in the qualitative approach is outlined in figure 2. figure 2: qualitative research approach process. quantitative approach the units of analysis comprised manufacturing smes in nairobi. the study population encompassed 406 manufacturing smes in nairobi as of 01 march 2015 as per the nairobi city county (ncc) licensing department. only smes engaged in manufacturing within ncc were counted as units of analysis. smes within the manufacturing sector that were engaged in trading or were service orientated were excluded. as such, actual manufacturing was observed during data collection, otherwise the enterprise was excluded. all other manufacturing firms were included in the study, regardless of the use of 3pl services. this inclusivity allowed for the determination of the extent of logistics outsourcing within the smes. quantitative data were collected using a seven-point likert-type survey questionnaire with end-points defined to help respondents understand the scale. although there is no preferred number of points that specific rating scales should have, krosnick and presser (2010) argue that a lengthy scale (e.g. 7-point scale) may increase data validity compared to a 5-point scale. in addition to this, the 7-point scale was considered appropriate for this study because of the successful application of the same scale length in past studies (cho et al. 2008; liu et al. 2015). the questionnaire collected data on enterprise demographics, logistics outsourcing, logistics outsourcing performance, logistics performance and firm performance. logistics outsourcing was measured by six items, which were self-developed in line with langley and capgemini (2016) and solakivi et al. (2011). logistics outsourcing performance was measured by 15 items comprising communication, trust, cooperation and innovation indicators (deepen et al. 2008; križman & ogorelc 2010). logistics performance was measured using five items adapted from green et al. (2008). similarly, firm performance was also measured by five items (solakivi et al. 2011; yang et al. 2009). the questionnaire was piloted among ten manufacturing sme managers involved in the day-to-day management of logistics in their enterprises. the piloting exercise led to rewording of some items to make them clear before the data collection. the drop and pick later method was used to collect quantitative data from sme managers in charge of logistics operations. in some cases, the questionnaires were filled on the spot. in instances of collect later, three attempts (spaced one week apart) were made to collect the filled questionnaire. any questionnaires that were not collected within the three attempts were counted as not returned. the method was appropriate as only the physical and postal addresses of the manufacturing smes were available at the ncc licensing department. although some respondents promised to email or send the filled questionnaires through postal services, none of these were received through post or email. the quantitative data were analysed using partial least squares structural equation modelling (pls-sem) to investigate the relationship between logistics outsourcing and performance of manufacturing smes. the study selected the pls-sem technique because of its predictive performance (davcik 2014; richter et al. 2016). prior to sem, the data were tested on suitability for exploratory factor analysis (efa) using the kaiser–meyer–olkin and bartlett tests (pallant 2010). efa was performed, and it identified the latent constructs scales. the scales’ reliability was tested and found satisfactory in preparation for confirmatory factor analysis using smartpls 3 (ringle, wende & becker 2015). ethical consideration ethical clearance was obtained from the relevant authorities within the university as an assurance that carrying out the study did not endanger any person or community. acceptable research ethics were observed during planning, fieldwork, data analysis and reporting. for instance, participation in the study was voluntary and respondents could withdraw at any stage. respondents were assured of anonymity of their responses. participants were also informed that the study was only for academic purposes. this means that the participants did not suffer any loss during or after the study. those who wanted to have access to the final report were given contacts through which they could make their requests. results the enterprises that participated in the qualitative approach included the following: (1) a metal fabricator that manufactures meter boxes and cable trucking accessories, with 25 employees; (2) an industrial chemical manufacturer with 93 employees; (3) a paper products manufacturer, employing 15 people; (4) a food (spices and snacks) manufacturer with 90 employees and (5) a clothes manufacturer with 17 full-time employees. the enterprises outsourced logistics services to reduce costs associated with investing in logistics fixed assets, inventory and operations. the industrial chemical manufacturer highlighted that in addition to cost reduction, the enterprise wanted to minimise the risks associated with managing logistics in-house. the respondent from the enterprise observed that: ‘… in terms of transportation cost we were okay with our in-house team, but the invisible costs of transportation were very high. for instance, we could load a full truck and it is hijacked on the way. we lose the truck and all the goods. with outsourcing security of our goods in transit is not our concern as our lsps take care of that … we outsource to reduce transport risk.’ (participant from enterprise 2, male, head of production and dispatch) logistics outsourcing helped the enterprises to focus on manufacturing. running logistics in-house means more employees and management time. the respondent from the metal fabricator noted: ‘… imagine what will happen when a vehicle in transit breaks down at night. the stress we will undergo is a lot. our transport service providers are helping us a lot.’ (participant from enterprise 1, male, supervisor) some of the enterprises, for example, the clothes manufacturer, highlighted that they lacked resources to invest in in-house logistics, and hence, they relied on outsourcing. in addition to the reasons offered above, the enterprises also observed that they adopted the use of 3pls so as to achieve flexibility, timely deliveries, eliminate idle capacity of fixed assets, achieve high customer satisfaction and increased profits. based on the interview data, the enterprises highlighted that logistics outsourcing process must be managed diligently to accrue the expected benefits especially in the improvement of enterprise performance as also argued in the waugh and luke (2011) study. three out of five of the manufacturing smes highlighted that they used ad hoc models to outsource logistics, whereas the other two had procurement guidelines that directed the outsourcing process. the ad hoc logistics outsourcing process was used to select the activities to be outsourced and the lsp. that is, they did not have a clear procedure to identify which logistics activity should be outsourced and to what degree, how to select a 3pl service provider and a contract outlining performance expectations from the prospective lsp. the enterprises that had guidelines, namely the metal fabricator, noted that ‘… our firm follows the procurement process as documented in our standard operating procedures and it helps us choose the right lsp’ (participant from enterprise 1, male, supervisor). this could imply that price (lowest bidder) was the key determinant in selecting a 3pl. although some manufacturing smes had clear guidelines of managing the purchase process, they lacked a specific process for logistics outsourcing that will lead to improved firm performance. for instance, once a decision was made on which logistics activity to outsource, the smes selected the 3pl service provider on the basis of price only. however, it may be difficult to achieve timely deliveries and high customer satisfaction through such a process. hence, the need to develop a model that will help smes select the right lsp to improve performance. analysis of data related to the survey is reported in the following paragraphs. a total of 163 complete questionnaires were returned resulting in a 40.2% response rate. non-response bias was ruled out based on the armstrong and overton (1977) study guidelines, entailing categorising the questionnaires into early responses and late responses. the late responses included questionnaires received after second and third collection attempts. this resulted in 141 and 21 questionnaires in the early and late responses categories. non-response bias was tested by comparing mean for early and late responders, using logistics outsourcing and firm performance as the ‘test variables’ (table 1). for both test variables, non-response bias was ruled out as there was no statistically significant (p > 0.05) difference between the responses of early and late responders (table 1). the enterprises that participated in the survey were grouped into various manufacturing categories with 39.3% being from chemical and plastics category, metal processors accounted for 25.2%, wood and paper accounted for 16.6%, 12.3% represented food and animal feeds category, while clothing and textiles accounted for only 6.7%. about 80% of the enterprises had between 11 and 50 employees, whereas the rest had 51 to 100 employees. the demographics also revealed that the majority (52.1%) of the enterprises had <5 years’ experience with logistics outsourcing, 24.5% had 6–10 years’ experience and the rest had over 10 years’ experience. table 1: independent samples test for early and late respondents. the quantitative data were certified suitable for efa after revealing a kaiser–meyer–olkin value of 0.894 and a statistically significant (p < 0.05) bartlett’s test (pallant 2010). all the manifest indicators were modelled as reflective in this study. the indicators were subjected to a first round of efa using the principal component analysis method and varimax rotation, but resulted in a suboptimal solution as some factors had low loadings. the factors with low loading were eliminated, and a second round of efa was performed, resulting to four components accounting for 61.2% of the total variance explained. each of the components had more than three indicators loading on it, revealing an optimal solution (pallant 2010). the structure of the components revealed that the latent constructs were lop, lp, lo and fp, as outlined in table 2. confirmatory factor analysis was conducted using smartpls 3.0 (ringle et al. 2015) for the sem technique, in order to investigate the relationship between lo and fp directly and indirectly through lop and lp as mediator constructs. the final model indicator loading after confirmatory factor analysis is illustrated in table 2. all the indicators’ loading ranged from 0.653 to 0.876 revealing substantial loading to the respective constructs. table 2: indicator outer loadings extracted from final structural equation modelling model. the sem technique requires that the final model’s goodness of fit should be assessed. according to hair et al. (2014), the final sem model should be evaluated for goodness of fit by examining the outer and inner models. the outer model reveals how the manifest variables relate to the latent variables (hair et al. 2014). the outer model is evaluated by checking internal consistency, convergent and discriminant validity (davcik 2014; hair et al. 2014). cronbach’s alpha values for each of the scales were 0.81, 0.95, 0.88 and 0.87 for all the lo, lop, lp and fp scales, respectively, revealing high internal consistency (hair et al. 2014; pallant 2010). the composite reliability values (fp: 0.90, lo: 0.81, lop: 0.95 and lp: 0.91) also revealed high internal consistency for the model. the average variance extracted (ave) values (lo: 0.56, fp: 0.65, lop: 0.61 and lp: 0.67) were all above 0.5 revealing that the model explained over 50% of the variance (davcik 2014; hair et al. 2014). discriminant validity problems were ruled out from the model as per fornell–larcker criterion and absence of the cross-loading problem among the manifest variables (hair et al. 2014). table 3 illustrates a summary of the outer model’s goodness of fit evaluation. table 3: measurement model evaluation. the inner model’s goodness of fit was evaluated by examining collinearity, coefficient of determination (r2), predictive relevance (q2), effect size (f2) and significance of the path coefficients (hair et al. 2014). the variance inflation factor (vif) values for the model were between 1.0 and 4.78, which was below the critical value of 5.0 revealing no collinearity problem (hair et al. 2014). the r2 values for the study model revealed moderate predictive accuracy for fp (0.285) and lp (0.207), while it was weak for lop (0.144) (chin 1998). the f2 values for the model’s r2 were interpreted based on cohen’s (1988) critical values and revealed that lo had a small effect on fp (0.002) and lp (0.013). similarly, lop had a small effect on fp (0.047), but a medium effect on lp (0.176). finally, lp had a medium effect on fp (0.166). the model revealed that q2 >0 (i.e. fp = 0.174; lop = 0.081; lp = 0.132), thus indicating the model had predictive relevance, as per chin (1998). statistical significance of the path coefficients was also examined to identify statistically significant relationships and to test the research hypotheses. the results revealed that the direct effect of lo on fp was not statistically significant (t-statistics <1.96) at a 95% confidence interval. however, path coefficients representing hypotheses h3, h4, h5 and h6 were statistically significant (t-statistics >1.96). the mediating effect of lop on the effect of lo on fp was statistically significant. however, the mediating effect of lp on the effect of lo on fp was not statistically significant. the hypothesis testing result is illustrated in table 4, revealing that hypotheses h1 and h2 were rejected, while h3, h4, h5 and h6 were accepted. table 4: significance of path coefficients. discussion the motivation for logistics outsourcing among manufacturing smes included cost reduction, risk sharing, access to expert lsps’ capabilities that lack in-house as well as focus on the core business of manufacturing. these reasons have been echoed across the globe, as highlighted in the studies by langley and capgemin (2016), solakivi et al. (2011) and waugh and luke (2011). the process followed in logistics outsourcing is critical in selecting the right lsp that can help the smes achieve the objectives of outsourcing. as highlighted in the previous section, smes could be using ad hoc methods when implementing logistics outsourcing strategy. to achieve improved sme performance through logistics outsourcing, a logistics outsourcing model is proposed at the end of this section. effect of logistics outsourcing on firm performance the direct relationship between logistics outsourcing and firm performance was positive, as predicted, but not statistically significant. this finding provided an empirical validation of the results reported in the studies by chatzoglou and sarigiannidis (2009) and hsiao et al. (2011) studies, which found no statistically significant relationship between logistics outsourcing and performance. similarly, it partly supported the cho et al.’s (2008) study, which found no statistically significant effect of logistics outsourcing on firm performance. this result suggests that logistics outsourcing benefits relating to performance of manufacturing smes are not straightforward as earlier expected, but might be dependent on factors other than just outsourcing, as also argued by solakivi et al. (2011). the finding might also imply that the manufacturing smes in nairobi outsourced their logistics for reasons other than just to improve their performance. some of the reasons were identified as a lack of in-house capabilities, to reduce logistics costs, an aversion to risk and a desire to free management time to focus on core activities. finally, logistics outsourcing could be used as a long-term restructuring strategy by the smes and not just to achieve financial and customer satisfaction goals, because the majority of the smes had <5 years’ experience with logistics outsourcing. thus, it is likely that this strategy would yield performance-related benefits into the future (zailani et al. 2017). mediating effect of logistics outsourcing performance logistics outsourcing performance as a mediating variable provides a deep understanding and a clear explanation of how logistics outsourcing influences firm performance (baron & kenny 1986; mackinnon & fairchild 2009). this study revealed that lo has a statistically significant positive indirect effect on fp through lop as a mediating variable. as highlighted earlier, communication, trust, cooperation and innovation were identified as measures of logistics outsourcing performance. thus, manufacturing smes practicing logistics outsourcing should focus on the quality of communication, building high trust levels, nurturing close cooperation with 3pls and aiding 3pls to enhance their innovative capabilities to improve performance. the positive indirect effect of logistics outsourcing on firm performance validates the results in the hsiao et al.’s (2011) study. the indirect effect also validates partly the finding in the solakivi, töyli and ojala (2013) study, which argued that upon logistics outsourcing, cooperation between smes and 3pls results in customer satisfaction. similarly, the result also supported the findings of the lin, pekkarinen and ma (2015) study which highlighted close cooperation between manufacturer and 3pl as an important factor through which logistics outsourcing can positively influence enterprise performance. this is because cooperation promotes good communication, the building of trust and innovation, thus making it easier for the enterprise to understand how the services offered by a 3pl can influence its performance and make suggestions on any modifications required to achieve the expected results (lin et al. 2015). this finding could imply further that the maintenance of good communication, high trust levels, close cooperation and 3pl innovation reduce contract management costs and other relationship costs, making it possible for the smes to reap the benefits of logistics outsourcing, such as reduced logistics operations and fixed costs. proposed logistics outsourcing model some of the manufacturing smes in this study had a formalised process of logistics outsourcing, although not designed to result in improved performance. in addition, it is established in this study that lo has an indirect influence on fp via lop. to achieve tangible benefits to smes based on these findings, there is need to develop a logistics outsourcing model to guide the lo process among smes to achieve improved performance. hitherto, smes do acquire expert lsps’ capabilities to reduce costs and risks and to focus on core business in line with the rbv and tce theories. therefore, applying the findings of this study, a logistics outsourcing model is deduced along the critical path lo–lop–lp–fp (figure 3). the selected path has the highest statistically significant path coefficients, depicting a strong relationship (see figure 3). figure 3: logistics outsourcing critical path model for small and medium-sized enterprises. smes expecting to apply the proposed logistics outsourcing model are expected to do it through a rigorous process. steps antecedent to the application of the proposed logistics model include the following: (1) a thorough information search to identify the reasons for outsourcing; (2) select the right activity to outsource to achieve objective in (1); (3) the right lsp that will better perform the activity selected in (2). upon selecting an lsp, the proposed model is applied by (4), negotiating a favourable contract with the selected lsp. the contract should promote lop attributes (i.e. quality communication, building high trust levels, nurturing a close cooperative relationship with the lsps and enhancing innovative capabilities of the selected lsps). high lop would ensure that (5) lp goals such as cost reduction, risk reduction, meeting of delivery times, the provision of quality goods and the seamless flow of goods are achieved. the achievement of lp goals could lead to better (6) fp in terms of improved profitability, customer satisfaction, return on capital employed, roa, and increased sales and market share. thus, manufacturing smes could focus on the path lo–lop–lp–fp when practicing lo to improve performance, as illustrated in figure 2. this path was selected because it had the highest path coefficients, signifying the strongest significant relationship paths in the model. it requires that upon logistics outsourcing, smes should focus on logistics outsourcing performance to improve logistics performance. improved logistics performance might result in improved firm performance (zailani et al. 2017). the deduced process upon applying the logistics outsourcing model is summarised, as illustrated in table 5. table 5: deduced process of logistics outsourcing. conclusion manufacturing smes in nairobi might be practising logistics outsourcing to achieve benefits beyond firm performance, for instance, to acquire logistics capabilities that they lack in-house, to share logistics-related risk and a desire to free management time to focus on core activities. however, manufacturing smes that endeavour to practise logistics outsourcing to improve their performance should promote high logistics outsourcing performance by fostering quality communication with the selected 3pl, build high trust levels, maintain a close cooperative relationship with selected 3pl and enhance the innovative capabilities of the selected 3pl. thus, logistics outsourcing has an indirect positive effect on the performance of manufacturing smes through logistics outsourcing performance. these findings make important theoretical implications by applying the rbv and tce theories in studying the relationship between logistics outsourcing and firm performance among smes. the findings also extend sme literature by providing a logistics outsourcing model to guide smes’ outsourcing to improve performance. the study recommends that sme managers follow the one-path model deduced to achieve improved performance. this can be achieved by conducting a thorough information search to identify the need and then select the right activity and the right 3pl service provider. once a 3pl is selected, a contract should be entered that promotes logistics outsourcing performance attributes. high logistics outsourcing performance ensures high logistics performance goals are achieved. the achievement of logistics performance goals will lead to better firm performance. the findings presented in this research are limited to manufacturing smes in nairobi. future research should expand the study to other contexts, such as the whole country or region, and test the model. this study tested the relationship between logistics outsourcing and firm performance through logistics outsourcing performance and logistics performance as mediating variables. future studies can test this relationship via different mediator or moderator variables. the findings presented relied on cross-sectional data. longitudinal studies in future will provide better understanding of the tested model. acknowledgements competing interests the authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article. authors’ contributions g.p., r.l. and j.m. collaborated in the conception and design of the research. j.m. collected, analysed and interpreted the data and drafted the manuscript. r.l. and g.p. critically revised the manuscript and approved the final version to be published. references armstrong, s.j. & overton, s.t., 1977, ‘estimating nonresponse bias in mail surveys’, journal of marketing research 14, 396–402. https://doi.org/10.2307/3150783 baron, r.m. & kenny, d.a., 1986, ‘the moderator-mediator variable distinction in social psychological research’, journal of personality and social psychology 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173 bolumole, y.a., frankel, r. & naslund, d., 2007, ‘developing a theoretical framework for logistics outsourcing’, transportation journal 46(2), 35–54. bowen, m., morara, m. & mureithi, s., 2009, ‘management of business challenges among small and micro enterprises in nairobi-kenya’, kca journal of business management 2(1), 16–23. https://doi.org/10.4314/kjbm.v2i1.44408 buculescu, m.m., 2013, ‘harmonization process in defining small and medium-sized enterprises. arguments for a quantitative definition versus a qualitative one’, theoretical and applied economics 20(9), 103–114. chatzoglou, p.d. & sarigiannidis, l., 2009, ‘business outsourcing and organisational performance: the case of the greek hotel industry’, international journal of services technology and management 11(2), 105–127. https://doi.org/10.1504/ijstm.2009.022520 chege, j., ngui, d. & kimuyu, p., 2016, scoping paper on kenyan manufacturing. learning to compete, working paper no.25. brookings institution, viewed 19 september 2016, from https://www.brookings.edu/wp-content/uploads/2016/07/l2c_wp25-1.pdf chen, j., 2006, ‘development of chinese small and medium-sized enterprises’, journal of small business and enterprise development 13(2), 140–147. https://doi.org/10.1108/14626000610665854 chew, r. & chew, s.b., 2008, ‘a study of smes in singapore’, journal of enterprising communities: people and places in the global economy 2(4), 332–347. https://doi.org/10.1108/17506200810913908 chin, w., 1998, ‘the partial least squares approach to structural equation modelling’, in g.a. marcoulides (ed.), modern methods for business research, pp. 295–358, lawrence erlbaum associates, mahwah nj. cho joong-kun, j., ozment, j. & sink, h., 2008, ‘logistics capability, logistics outsourcing and firm performance of small electronic appliances manufacturers’, computers and industrial engineering 38(5), 336–359. cohen, j., 1988, statistical power analysis for the behavioral sciences, 2nd edn., lawrence erlbaum ass., hillsdale, nj. creswell, j.w., 2014, research design: qualitative, quantitative and mixed methods approaches, 4th edn., sage, thousand oaks, ca. creswell, j.w. & clark, v.l.p., 2007, designing and conducting mixed methods research, sage, thousand oaks, ca. creswell, j. & clark, v.l.p., 2011, designing and conducting mixed methods research, sage, thousand oaks, ca. das, k., 2008, ‘smes in india: issues and possibilities in times of globalisation’, in h. lim (ed.), sme in asia and globalization, eria research project report 2007–5, pp. 69–97, viewed 27 april 2018, from http://www.eria.org/smes%20in%20india_issues%20and%20possibilities%20in%20times%20of%20globalisation.pdf davcik, s.n., 2014, ‘the use and misuse of structural equation modeling in management research: a review and critique’, journal of advances in management research 11(1), 47–81. https://doi.org/10.1108/jamr-07-2013-0043 deepen, j.m., goldsby, t.j., knemeyer, a.m. & wallenburg, c.m., 2008, ‘beyond expectations: an examination of logistics outsourcing goal achievement and goal exceedance’, journal of business logistics 29(2), 75–105. https://doi.org/10.1002/j.2158-1592.2008.tb00088.x fawcett, s.e., magnan, g.m. & mccarter, m.w., 2008, ‘benefits, barriers, and bridges to effective supply chain management’, supply chain management: an international journal 13(1), 35–48. https://doi.org/10.1108/13598540810850300 gill, a. & biger, n., 2012, ‘barriers to small business growth in canada’, journal of small business and enterprise development 19(4), 656–668. https://doi.org/10.1108/14626001211277451 government of kenya, 2007, kenya vision 2030, government printer, nairobi. government of kenya, 2012, small and micro-enterprises act, government printer, nairobi. green, k.w., whitten, d. & inman, r.a., 2008, ‘the impact of logistics performance on organizational performance in a supply chain context’, supply chain management: an international journal 13(4), 317–327. https://doi.org/10.1108/13598540810882206 hair, j.f., hult, g.t.m., ringle, c. & sarstedt, m., 2014, a primer on partial least squares structural equation modeling (pls-sem), sage, thousand oaks, ca. halldorsson, a., kotzab, h., mikkola, j. & skjøtt-larsen, t., 2007, ‘complementary theories to supply chain management’, supply chain management: an international journal 12(4), 284–296. https://doi.org/10.1108/13598540710759808 hsiao, h.i., kemp, r.g., van der vorst, j.g. & omta, s.w.f., 2011, ‘logistics outsourcing by taiwanese and dutch food processing industries’, british food journal 113(4), 550–576. https://doi.org/10.1108/00070701111124014 hsiao, h.i., van der vorst, j.g.a.j., kemp, r.g.m. & omta, s.w.f., 2010, ‘developing a decision-making framework for levels of logistics outsourcing in food supply chain networks’, international journal of physical distribution & logistics management 40(5), 395–414. https://doi.org/10.1108/09600031011052840 huo, b., ye, y. & zhao, x., 2015, ‘the impacts of trust and contracts on opportunism in the 3pl industry: the moderating role of demand uncertainty’, international journal of production economics 170, 160–170. https://doi.org/10.1016/j.ijpe.2015.09.018 jogulu, u.d. & pansiri, j., 2011, ‘mixed methods. a research design for management doctoral dissertations’, management research review 34(6), 687–701. https://doi.org/10.1108/01409171111136211 karikomi, s., 1998, the development strategy for smes in malaysia, viewed 27 april 2018, from http://www.ide.go.jp/library/english/publish/download/apec/pdf/1997_11.pdf kasie, f.m. & belay, a.m., 2013, ‘the impact of multi-criteria performance measurement on business performance improvement’, journal of industrial engineering and management 6(2), 595. https://doi.org/10.3926/jiem.489 kenya national bureau of statistics, 2016, micro, small and medium establishment (msme) survey, viewed 27 april 2018, from https://www.knbs.or.ke/download/2016-msme-basic-report/ kimuyu, p., 2010, ‘do small firms in developing countries ever transform?’, regional development studies 14, 11–28. könig, a. & spinler, s., 2016, ‘the effect of logistics outsourcing on the supply chain vulnerability of shippers: development of a conceptual risk management framework’, the international journal of logistics management 27(1), 122–141. https://doi.org/10.1108/ijlm-03-2014-0043 kotabe, m. & mol, m.j., 2009, ‘outsourcing and financial performance: a negative curvilinear effect’, journal of purchasing and supply management 15(4), 205–213. https://doi.org/10.1016/j.pursup.2009.04.001 križman, a. & ogorelc, a., 2010, ‘impact of disturbing factors on cooperation in logistics outsourcing performance: the empirical model’, promet-traffic &transportation 22(3), 209–218. https://doi.org/10.7307/ptt.v22i3.277 krosnick, j.a. & presser, s., 2010, ‘question and questionnaire design’, in handbook of survey research, pp. 263–313, 2nd edn., emerald, viewed 27 april 2018, from https://studysites.sagepub.com/kumar4e/study/chapter%209/questionnaires.pdf lahiri, s., 2015, ‘does outsourcing really improve firm performance? empirical evidence and research agenda’, international journal of management reviews 00, 1–35. langley, j. & capgemini, 2016, 2017 third-party logistics study – the state of logistics outsourcing results and findings of the 21st annual study, viewed 05 october 2016, from http://www.3plstudy.com/media/downloads/2016/09/2017-report.pdf langley, j. & capgemini, 2017, 2018 third-party logistics study the state of logistics outsourcing, results and findings of the 22nd annual study, viewed 27 april 2018, from http://www.3plstudy.com/3pl2018download.php lee, c.c., lin, t.t. & cheng, p.c., 2013, ‘the determinants of the transportation outsourcing strategy for the express delivery company’, service business 7(2), 207–225. https://doi.org/10.1007/s11628-012-0151-0 leuschner, r., carter, r.c., goldsby, j.t. & rogers, s.z., 2014, ‘third-party logistics: a meta-analytic review and investigation of its impact on performance’, journal of supply chain management 50(1), 21–43. https://doi.org/10.1111/jscm.12046 lieb, r.c. & randall, h.l., 1996, ‘a comparison of the use of third-party logistics services by large american manufacturers 1991, 1994 and 1995’, journal of business logistics 17(1), 305–320. lin, y., pekkarinen, s. & ma, s., 2015, ‘service-dominant logic for managing the logistics-manufacturing interface: a case study’, the international journal of logistics management 26(1), 195–214. https://doi.org/10.1108/ijlm-08-2013-0095 liu, c., huo, b., liu, s. & zhao, x., 2015, ‘effect of information sharing and process coordination on logistics outsourcing’, industrial management & data systems 115(1), 41–63. https://doi.org/10.1108/imds-08-2014-0233 mackinnon, d.p. & fairchild, a.j., 2009, ‘current directions in mediation analysis’, current directions in psychological science 18(1), 16–20. https://doi.org/10.1111/j.1467-8721.2009.01598.x marchand, m. & raymond, l., 2008, ‘researching performance measurement systems: an information systems perspective’, international journal of operations & production management 28(7), 663–686. https://doi.org/10.1108/01443570810881802 murphy, p.j., wu, z., welsch, h., heiser, d.r., young, s.t. & jiang, b., 2012, ‘small firm entrepreneurial outsourcing: traditional problems, nontraditional solutions’, strategic outsourcing: an international journal 5(3), 248–275. https://doi.org/10.1108/17538291211291774 nasr, s. & rostom, a., 2013, sme contributions to employment, job creation, and growth in the arab world, policy research working paper; no. wps 6682, viewed 25 september 2016, from http://documents.worldbank.org/curated/en/301631468278944687/sme-contributions-to-employment-job-creation-and-growth-in-the-arab-world oshri, i., kotlarsky, j. & gerbasi, a., 2015, ‘strategic innovation through outsourcing: the role of relational and contractual governance’, the journal of strategic information systems 24(3), 203–216. https://doi.org/10.1016/j.jsis.2015.08.001 pallant, j., 2010, spss survival manual: a step by step guide to data analysis using spss, 4th edn., mcgraw-hill education, new york. papadavid, p., 2016, the role of finance in kenyan manufacturing. a scoping paper, viewed 25 april 2018, from https://set.odi.org/wp-content/uploads/2016/09/the-role-of-finance-in-kenyan-manufacturing-phyllis-papadavid.pdf parashkevova, l., 2007, ‘logistics outsourcing – a means of assuring the competitive advantage for an organization’, vadyba/management 2(15), 29–38. pratap, s., 2014, ‘towards a framework for performing outsourcing capability’, strategic outsourcing: an international journal 7(3), 226–252. https://doi.org/10.1108/so-04-2014-0004 quang, h.t., sampaio, p., carvalho, m.s., fernandes, a.c., binh an, d.t. & vilhenac, e., 2016, ‘an extensive structural model of supply chain quality management and firm performance’, international journal of quality & reliability management 33(4), 444–464. https://doi.org/10.1108/ijqrm-11-2014-0188 rahman, s. & wu, j., 2011, ‘logistics outsourcing in china: the manufacturer-cum-supplier perspective’, supply chain management: an international journal 16(6), 462–473. https://doi.org/10.1108/13598541111171156 raymond, l., marchand, m., st-pierre, j., cadieux, l. & labelle, f., 2013, ‘dimensions of small business performance from the owner-manager’s perspective: a re-conceptualization and empirical validation’, entrepreneurship & regional development 25(5–6), 468–499. https://doi.org/10.1080/08985626.2013.782344 richter, n.f., sinkovics, r.r., ringle, c.m. & schlägel, c., 2016, ‘a critical look at the use of sem in international business research’, international marketing review 33(3), 376–404. https://doi.org/10.1108/imr-04-2014-0148 ringle, c.m., wende, s. & becker, j.-m., 2015, smartpls 3, smartpls gmbh, bönningstedt. saunders, n.k.m., lewis, p. & thornhill, a., 2016, research methods for business students, 7th edn., pearson educational publishers, harlow, england. soinio, j., tanskanen, k. & finne, m., 2012, ‘how logistics-service providers can develop value-added services for smes: a dyadic perspective’, international journal of logistics management 23(1), 31–49. https://doi.org/10.1108/09574091211226911 solakivi, t., töyli, j., engblom, j. & ojala, l., 2011, ‘logistics outsourcing and company performance of smes: evidence from 223 firms operating in finland’, strategic outsourcing: an international journal 4(2), 131–151. https://doi.org/10.1108/17538291111147982 solakivi, t., töyli, j. & ojala, l., 2013, ‘logistics outsourcing, its motives and the level of logistics costs in manufacturing and trading companies operating in finland’, production planning & control 24(4–5), 388–398. https://doi.org/10.1080/09537287.2011.648490 sonobe, t., akoten, j.e. & otsuka, k., 2011, ‘the growth process of informal enterprises in sub-saharan africa: a case study of a metalworking cluster in nairobi’, small business economics 36(3), 323–335. https://doi.org/10.1007/s11187-009-9222-6 sople, v.v., 2012, logistics management: the supply chain imperative, 3rd edn., dorling kindersley, pearson, india. takkashori, a. & teddlie, c. (eds.), 2010, mixed methods in social & behavioral research, sage, thousand oaks, ca. töyli, j., häkkinen, l., ojala, l. & naula, t., 2008, ‘logistics and financial performance: an analysis of 424 finnish small and medium-sized enterprises’, international journal of physical distribution & logistics management 38(1), 57–80. https://doi.org/10.1108/09600030810857210 tseng, p. & liao, c., 2015, ‘supply chain integration, information technology, market orientation and firm performance in container shipping firms’, the international journal of logistics management 26(1), 82–106. https://doi.org/10.1108/ijlm-09-2012-0088 van laarhoven, p., berglund, m. & peters, m., 2000, ‘third-party logistics in europe – five years later’, international journal of physical distribution & logistics management 30(5), 425–442. https://doi.org/10.1108/09600030010336216 wagner, s. & franklin, j., 2008, ‘why lsps don’t leverage innovations’, supply chain quarterly 2(4), 66–71. waugh, b. & luke r., 2011, ‘logistics outsourcing by manufacturers in south africa’, journal of transport and supply chain management 5(1), 337–360. https://doi.org/10.4102/jtscm.v5i1.81 were, a., 2016, manufacturing in kenya: features, challenges and opportunities. a scoping exercise, viewed 25 april 2018, from https://set.odi.org/wp-content/uploads/2016/09/manufacturing-in-kenya-anzetse-were.pdf wong, c.y. & karia, n., 2010, ‘explaining the competitive advantage of logistics service providers: a resource-based view approach’, international journal of production economics 128(1), 51–67. https://doi.org/10.1016/j.ijpe.2009.08.026 yang, c.c., marlow, p.b. & lu, c.s., 2009, ‘assessing resource, logistics service capabilities, innovation capabilities and the performance of container shipping services in taiwan’, international journal of production economics 122(1), 4–20. https://doi.org/10.1016/j.ijpe.2009.03.016 zailani, s., shaharudin, m.r., razmi, k. & iranmanesh, m., 2017, ‘influential factors and performance of logistics outsourcing practices: an evidence of malaysian companies’, review of managerial science 11(1), 53–93. https://doi.org/10.1007/s11846-015-0180-x abstract introduction literature review methodology findings discussion acknowledgements references appendix 1 about the author(s) andré g. van der walt research and development, gordon institute of business science, johannesburg, south africa louise whittaker research and development, gordon institute of business science, johannesburg, south africa citation van der walt, a.g. & whittaker, l., 2020, ‘exploring migrant micro-entrepreneurs’ use of social capital to create opportunity in south africa’s informal market: a qualitative approach’, south african journal of economic and management sciences 12(1), a261. https://doi.org/10.4102/sajesbm.v12i1.261 original research exploring migrant micro-entrepreneurs’ use of social capital to create opportunity in south africa’s informal market: a qualitative approach andré g. van der walt, louise whittaker received: 25 mar. 2019; accepted: 06 oct. 2019; published: 20 jan. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: migrants operating micro-enterprises in rural communities of south africa is a common phenomenon. these entrepreneurs live in communities they serve, and their enterprises are embedded in the ‘social fabric’ of these communities. because economic and social value is entrenched in these symbiotic relationships, it fosters the belief that these micro-enterprises hold significant job creation potential. social capital provides an excellent base to explore this topic in more detail. aim: the aim of this study was to explore why migrant micro-entrepreneurs operate enterprises in uncertain environments and how social capital contributes to migrant micro-entrepreneurial opportunity creation when contextualised in poverty. setting: the investigation focused on rural communities in two large regions of south africa, mahikeng and qwaqwa. both regions are characterised by a large central hub with several rural villages scattered around it. methods: a qualitative research design helped to understand the process of opportunity creation. entrepreneurs were selected through purposeful sampling to generate the data. trustworthiness in the data was established by heightening transparency in the research process. results: four themes emerged: life experience, social connections, opportunities and business engagement. life experience provided insights into why these entrepreneurs operated enterprises in uncertain environments, and the themes collectively showed how these entrepreneurs use social relationships to access resources to create opportunity. conclusion: a visual framework and key contributions about how migrant micro-entrepreneurs gain access to resources, how opportunity contextualised in poverty was socially determined and the importance of entrepreneurial engagement provided academic and practical relevance in the field of entrepreneurship. keywords: emerging markets; community; micro-entrepreneur; migrant; opportunity creation; social capital. introduction it is common to find numerous migrant micro-entrepreneurs in rural poor emerging markets, where the disenfranchised end user is the customer (george, mcgahan & prabhu 2012:667). these enterprises are more often than not operated by an individual as a subsistence entrepreneur (venugopal, viswanathan & jung 2015; viswanathan et al. 2014; webb, morris & pillay 2013). however, events or situations can motivate these entrepreneurs to move beyond the survival cycle to grow their business and thrive, which is termed ‘transformative subsistence’ entrepreneurship by sridharan et al. (2014:488). according to them, transformative subsistence entrepreneurs pursue value-creating activities to self-enhance the growth of their businesses and improve the economic capacity of the community in which they operate. as migrant micro-entrepreneurs very often live within the communities in which they operate their businesses, their micro-enterprises become embedded into the ‘social fabric’ of these communities (viswanathan et al. 2012:161). it led webb et al. (2013:2) to believe that it could also ‘hold significant job creation potential’. viswanathan et al. (2012), and later viswanathan et al. (2014), suggested that this is because of the intense personal relationships that develop because of the multiple and continuous interactions, which create the need to commit socially to the community in order to sustain and stabilise the business. the economic and social values thus become entrenched in a symbiotic relationship between the disenfranchised end user and the micro-entrepreneur in a community setting. as most of these entrepreneurs are asylum seekers (unhcr 2015), governmental institutions should take note of and recognise the potential locked in the relationships these entrepreneurs have with disenfranchised end users. micro-entrepreneurial contributions and the new stakeholder, the migrant micro-entrepreneur, have the potential to add value to socio-economic conditions in communities subjected to limited resources (mckinsey & company 2016). on the contrary, a significant portion of micro-enterprises in deprived rural emerging markets is controlled by foreign national asylum seekers, which raises concerns about who controls end-user product flow to disenfranchised users. as opportunity in emerging markets weakens with slumping exchange rates and political uncertainty (mckinsey & company 2016), asylum seekers might choose to return to their home countries, and a collapse of the micro-entrepreneurial framework in rural deprived emerging markets might be inevitable. understanding the strategies applied by these migrant micro-entrepreneurs and leveraging the insights that we can gain concerning their successes can benefit future endeavours by the government with policy drafting, and also micro-entrepreneurial programme development. moreover, because george et al. (2012) have shown that these micro-entrepreneurs are essential stakeholders, it is important to understand the critical link that bridges the external world (outsiders external to the community) with the internal world (embedded within the community). it becomes essential to understand why these micro-entrepreneurs operate businesses in these uncertain environments and also how they create opportunities when it is contextualised in poverty. answers to these questions might lie within social capital. however, does social capital in rural poor emerging markets inform and support entrepreneurial opportunity, or does social capital create boundary conditions that make it difficult for migrant micro-entrepreneurs to create feasible opportunities? looking at the literature, hall et al. (2012) agreed with authors such as karnani (2007) who persistently argued for the poor to be producers and entrepreneurs rather than merely the customers in inclusive growth initiatives. prahalad (2012:6) viewed the bottom of the pyramid as a ‘new source of radical innovation’. while hall et al. (2012) supported this view, they went on to suggest that local innovation should be driven by the poor as entrepreneurs. ansari, munir and gregg (2012), however, shifted the discussion towards capability transfer, proposing that it can help individuals to make more informed judgements. calton et al. (2013) then stated: [a]ttention must shift away from identifying which market niches to exploit and toward nurturing the capability of a community in poverty (via economic, cultural and infrastructure development) for a mutually advantageous advantage. (p. 722) still, it was stuetzer et al. (2014:242) in particular who called ‘for a deeper investigation of how (and the conditions under which) the region affects individual intentions and engagement’. storti (2014) pointed out expressly the research need about immigrant entrepreneurial pathways that take shape through actors and personal resources, and the characteristics of the networks to which they belong. also, rooks, klyver and sserwanga (2016) proposed a qualitative design for future research to study the dynamics of the interplay between contextual culture, entrepreneurship and social capital, which this study adopted. literature review contextual conditions the poor and poverty have no clear definition and are viewed differently by different authors. bradley et al.’s (2012:688) version of grouped views were used, namely, ‘individual deficiency’, ‘structural failing’, ‘cultural deficiency’ and poverty as a ‘capacity or opportunity deficiency’. as this study is concerned with opportunity creation, poverty from a ‘capacity or opportunity deficiency’ view seemed more appropriate, which is viewed as a consequence of a lack of economic and social capital that limits possibilities. focusing specifically on rural communities, rivera-santos and rufín (2010), and later rooks et al. (2016), have shown that rural and urban communities reflect differences in attributes, and according to stuetzer et al. (2014) these regional characteristics can exert influence on entrepreneurial behaviour. their study has shown that because regional characteristics are objective and operate as distil factors, they do not directly drive entrepreneurial behaviour. however, if the entrepreneur perceives it to be of value, it can influence behaviour. metzger and king (2015) agreed, and further have shown, that these perceptions even play a determining role in how the opportunity is constructed. in line with this argument, sruwig, krüger and nuwagaba (2019:8) more recently also highlighted environmental influences that affect informal businesses growth. the term ‘community’ as used in this study was defined by marti, courpasson and barbosa (2013) as a collective identity within the context of rural poor emerging markets. they held the view that ‘a community becomes a working space allowing members to discover their capacities to act and to defend their rights’ (marti et al. 2013:10). they postulated that community members and external actor relationships could harvest social benefits towards specific actions and entrepreneurial creations, as well as challenge the community’s world views. social relations and social structures within such community entities, according to ozdemir et al. (2016:49), could help entrepreneurs to ‘enhance their reach to or facilitate the acquisition of valuable resources’. according to them, social relationships are embedded in social capital through either relational or structural embeddedness which provides different kinds of access to resources. social capital, therefore, provides a gateway for migrant micro-entrepreneurs to accumulate resources in order to pursue or create opportunity (daspit & long 2014). opportunity creation and the entrepreneur according to wood and mckinley (2010:66), an opportunity relies not only on the environment but also on the individual in that environment. they followed a constructivist perspective which argues that ‘opportunities are produced through a process of social construction and cannot exist apart from the entrepreneur’ (wood & mckinley 2010:66). in support, metzger and king (2015:324) added that ‘opportunities are enacted, dependant on the entrepreneurs’ perceptions, interpretation, and understanding of environmental forces’, and ramoglou and tsang (2016) suggested that entrepreneurial opportunity is actively created through subjective processes and social construction. it points to opportunity creation which states that opportunities cannot exist apart from the actions of the entrepreneur, opposed to opportunity discovery which views an opportunity as out there waiting to be discovered (alvarez & barney 2007, 2014). an entrepreneur in this sense is someone who tolerates uncertainty and believes that the environment presents an opportunity that could be feasible and fulfil a personal desire (davidsson 2015; mcmullen & shepherd 2006). entrepreneurs who operate small firms that often consist of a single, self-employed individual who commonly operates out of a local inhabitant’s property are called micro-entrepreneurs (webb et al. 2013). migrant micro-entrepreneurs, foreign national individuals who manage a micro-enterprise or enterprises in a country they are not citizens of (kloosterman 2010), rely heavily on social relationships to access resources, especially in emerging markets (webb et al. 2013). in line with this argument, leitch, mcmullan and harrison (2013:351) proposed a mindset of ‘mutuality’ when doing business in emerging markets. mutuality indicates collaboration between interdependent entities, which implies trust, respect and collaborative working (leitch et al. 2013; marti et al. 2013; mckeever, anderson & jack 2014). since social capital has the means to provide access to resources (mckeever et al. 2014; nahapiet & ghoshal 1998), which according to gedajlovic et al. (2013:458) are ‘knowledge, information, goodwill and trust’, they also suggest that access is determined by the number and frequency of these interactions. the strength of these links is, therefore, regulated by bonding and bridging social capital. this study argues that it happens through the concept of ‘mutuality’, which emphasises social exchange and reciprocity (leitch et al. 2013:351; lioukas & reuer 2015), and also the concept ‘habitus’ which focuses more on an appreciation of the cultural context (mckeever et al. 2014:454). therefore, taking a subjective approach as suggested in the literature, and considering the environment and how the entrepreneur constructs opportunity within it, the model of nahapiet and ghoshal (1998) was used to ground this study. although social capital is an old concept, its modern development centres on how the concept functions in different environments (lee et al. 2019; theodoraki, messeghem & rice 2018). other models, such as the schematic model of social capital and entrepreneurship, also advocate a multidimensional view. however, it views the structural dimension as an antecedent to the cognitive and relational dimensions, which excludes the structural dimension as a gateway to resources (gedajlovic et al. 2013). and because the environment influences the way social capital dimensions function, two types of social capital dominates (gedajlovic et al. 2013). nahapiet and ghoshal’s (1998) model, however, is unique in that it applies all three dimensions of social capital to produce intellectual capital through combination and exchange. combination and exchange are influenced by the type of social capital that dominates, depending on contextual conditions. two decades later, their framework still provides an excellent base to advance our understanding of social capital and its function in different settings (daspit & long 2014; lee et al. 2019; theodoraki et al. 2018). social capital according to nahapiet and ghoshal (1998:243), social capital is defined as the ‘sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit’. they proposed in their model that social capital has three dimensions and that each dimension underlies a series of themes (see figure 1). figure 1: model of social capital in the creation of intellectual capital. according to nahapiet and ghoshal (1998:252), the structural dimension was characterised by: (1) network ties, valuable sources of information which allowed benefits through access, timing and referrals – ‘whom you know affects what you know’, (2) network configurations, which provide the channels for information transmission recognised through properties such as density, connectivity and hierarchy associated with flexibility and ease of information exchange, and (3) appropriable organisation, which explains the context in which social capital is developed such as ties, norms and trust which can often be transferred to other contexts, although it would influence the patterns of social exchange. the cognitive dimension was recognised through meaningful communication and shared stories. nahapiet and ghoshal (1998:254) recognised shared language as the means to communicate knowledge and postulated that language influences perceptions. they further suggested that language enhances combination capabilities through some overlap of knowledge between parties to the exchange. they also recognised that shared narratives involving the stories, myths and metaphors ‘provide powerful means in communities for creating, exchanging and preserving rich sets of meaning’. as the primary impact of the structural dimension is on the conditions of accessibility, the cognitive dimension focused on its influence on accessibility and combination capabilities. daspit and long (2014), however, made it clear later that the sources of social capital are embedded in the structural dimension and the resources in the cognitive and relational dimensions. they thus supported the claims by gedajlovic et al. (2013) that the relational dimension develops out of the cognitive dimension through mutuality. still, as nahapiet and ghoshal (1998) have shown, it cannot be ignored that the relational dimension is influenced by three conditions for the exchange of information. this is ‘access to parties for exchange, the anticipation of value through exchange, and the motive of parties to engage in exchange’ (gedajlovic et al. 2013:254). accordingly, these conditions for exchange were grounded in: (1) trust, which is multidimensional and indicates the ‘willingness to be vulnerable to another party’ and the belief that an intended action of another was appropriate. they suggested that there exists a two-way interaction between trust and cooperation in that ‘trust lubricates cooperation, and cooperation itself breeds trust’ (nahapiet & ghoshal 1998:255). (2) norms, which represented ‘a degree of consensus in a social system’, exert influence on the exchange process through opening access, or create rigid boundaries for parties to exchange knowledge. (3) obligations and expectations, which represented commitments to some activity in the future because of expectations developed through relationships. obligations and expectations were likely to influence access and the motivation to combine and exchange knowledge. (4) identification was introduced to present the belonging aspect of an individual within a group and thus it ‘acts as a resource influencing both the anticipation of value to be achieved and the motivation to combine and exchange knowledge’ (gedajlovic et al. 2013:254–256). as gedajlovic et al. (2013:456) suggested mutuality to highlight the trust, respect and collaborative working elements of the relational dimension, they also claimed that the ‘acquisition and management of social capital plays an essential role in the entrepreneurial success of both individuals and collectives’. furthermore, they have shown that resources such as knowledge, information, goodwill and trust stem from relationships between individuals or collectives, and suggested that the ‘frequency of these interactions; kinships; or the number/strength of ties lead to those resources’ (gedajlovic et al. 2013:458). with this in mind, both the bonding and bridging perspectives of social capital have to be considered as it has been shown that each perspective can produce different outcomes (gedajlovic et al. 2013; mckeever et al. 2014; rooks et al. 2016). the bonding perspective of social capital firstly, the bonding perspective reflects value in social capital through strong, repeated social connections that focus on reciprocity, generating norms and increased trust (gedajlovic et al. 2013). according to mckeever et al. (2014), social capital is strongly influenced by the context and the community in which it is embedded, and social capital thus influences how entrepreneurs in a community setting perceive opportunity. they suggest bourdieu’s (1990) notion of ‘habitus’ which claimed that the socio-economic context provides circumstances that increase repetitive behaviours and fosters a shared understanding of these behaviours. as ‘habitus’ is closely linked to the cultural capital of a community (mckeever et al. 2014), the norms, rituals and stories associated with this cultural context become essential. relating the bonding perspective with nahapiet and ghoshal’s (1998) model of social capital, the structural and cognitive dimensions are activated. close and robust bonding ties provide access to information with the anticipation of value, which means it is limited to individuals or collectives that share in these cultural norms, rituals and stories (mckeever et al. 2014). therefore, when a bonding perspective is followed, entrepreneurial opportunities can be suppressed when dominant groups exclude subordinates from information sharing (khayesi, george & antonakis 2014; light & dana 2013). light and dana (2013) identified such boundary conditions in their study which have shown that if the cultural capital of a community was positive towards entrepreneurship, substantial bonding social capital could be highly supportive of entrepreneurial opportunities. however, if the cultural capital did not support the notion of entrepreneurship, any entrepreneurial opportunity would be negatively affected. khayesi et al. (2014:1323–1324) identified similar conditions when they highlighted ‘kinship ties’, which emphasise ‘relationships by blood and marriage’. it demonstrates how strong ties could ‘benefit or detract an entrepreneur’s efforts to assemble resources and build a viable enterprise in a community setting’ (khayesi et al. 2014:1338). accordingly, light and dana (2013) and khayesi et al. (2014) have shown that these relationships reflect rigid and strong tendencies to resist change. therefore, because of the nature of ‘habitus’ and the broader cultural capital, extending relationships within this context was a slow process (mckeever et al. 2014). the bridging perspective of social capital secondly, the bridging perspective, according to gedajlovic et al. (2013:458), refers to actors who bridged structural holes to ‘facilitate the diffusion of asymmetrical information’. ozdemir et al. (2016:50) referred to structural holes as ‘brokerage ego-networks in extending the entrepreneurs’ reach to valuable resources’ through actors not directly connected to and often unaware of one another. they claimed that resources derived from social capital were not always easily acquirable, or very often the resources available were not always valued. mckeever et al. (2014) pointed out that the context very often determines the value that social capital holds and emphasised the critical role of the community in the entrepreneurial process. marti et al. (2013) earlier proposed that external actors who work and interact with the community should maintain a sense of detachment, although they should physically be there. this notion emphasised ‘working spaces’ (marti et al. 2013:27) which they maintained could create new resources and enhance information sharing when bridging the external world with the inner world of the community. it means that the bridging perspective focused on external ties (loose ties) and was grounded in the relational dimension of nahapiet and ghoshal’s (1998) model. according to the relational dimension, trust, norms, obligations and identification are central concepts in relationships, which motivate actors to cooperate in order to gain access to mutual benefits from these relationships. leitch et al. (2013) and mckeever et al. (2014) have shown that this happens through ‘mutuality’. they explicitly stated that when mutuality is absent, the entrepreneurial process is contractual and explicit, detracting from the benefits of information exchange. and because mutuality emphasises social exchange and reciprocity, it reflects the notion that each party to the exchange is required to repay the benefits they receive (lioukas & reuer 2015). these two perspectives of social capital, therefore, provide the means for access to resources. however, if the social structure of a community is dominated by habitus, extending relationships within such context will be much slower than when it is dominated by mutuality (mckeever et al. 2014). aims and objective the aim of this research was, firstly, to understand why migrant micro-entrepreneurs operate micro-enterprises in uncertain environments and, secondly, how past and current social capital contribute to migrant micro-entrepreneurial opportunity creation when contextualised in poverty. the overall objective of the study was to understand migrant micro-entrepreneurs in their natural environment – to extract valuable insights by exploring why and how these entrepreneurs do what they do. methodology the researcher followed a qualitative exploratory research design that motivated the exploration and discovery of new insights. the emphasis of the study was on social capital and its effects on the micro-entrepreneurial opportunity, which is, as payne et al. (2011:492) put it, ‘the goodwill available to individuals or groups that are derived from the structure and content of an actor’s social relationships’. payne et al. (2011) explained that social capital research focuses on internal and external ties from an individual or collective perspective. this study followed an individual perspective that is grounded in the philosophy of interpretivism. it implies that the researcher attempted to understand each participant in his or her natural environment. this study focused on south africa’s poor rural communities, which, according to london and hart (2004, 2011), were characterised by typical earning per capita income equivalent to $3000 per annum, or less. they also found that local enterprises operate primarily in the informal economy. these market characteristics presented challenges for the sustainability of life (calton et al. 2013), for grasping opportunities to alleviate poverty and for developing the community economically through entrepreneurship (alvarez & barney 2014). according to calton et al. (2013), challenges to entrepreneurial actions included: limited education and work or entrepreneurial opportunities; dependence on cash or informal sources of credit; poor infrastructure and a lack of a market ecology to nurture entrepreneurial innovations; lack of patient capital to support the longer gestation period of innovative base of the pyramid business ventures; and rampant public and private corruption. (pp. 723–724) furthermore, the unit of analysis was focused on the individual’s perceptions. migrant micro-entrepreneurs live in the communities in which their micro-enterprises are located, and they therefore share commonalities with the poor. the researcher employed a non-probability purposeful sampling strategy and created diversity in the sample in two ways (creswell & poth 2018). firstly, different geographic locations in south africa characterised by several rural villages around a central urban hub were used: mahikeng in the north-west province because of several villages around the greater mahikeng central hub and qwaqwa in the free state with villages scattered around phuthaditjhaba. as marti et al. (2013) and rooks et al. (2016) posited that a more collectivistic outlook in deprived rural environments can be expected when compared to an individualistic outlook in urban environments, the study concentrated on the communities in the surrounding villages. secondly, two immigrant groups, bangladeshi and ethiopian nationals, were looked at because they dominated the micro-enterprises in these villages at the time. according to creswell and poth (2018), the size of the sample in qualitative studies is dependent on data saturation. sim et al. (2018) agreed and added that it could be problematic to determine a sample size a priori for qualitative studies. they have indicated, however, that earlier studies can provide an excellent baseline to determine an initial sample number. this study, therefore, initially selected 10 migrant micro-entrepreneurs for interviews who matched the selection criteria and understood and spoke english, which, according to sim et al. (2018), was an adequate number for a qualitative study doing interviews. data collection followed a narrative style (see appendix 1) by listening to stories of the participants, who were given fictitious names (mccormick 2004). atlas.ti, a computer-aided qualitative data analysis software program, was used for data analysis. all interviews were audio-recorded, transcribed and then imported into atlas.ti with memos and observation notes (friese 2016). an iterative process was applied, collecting and analysing the data concurrently, which enabled the researcher to derive themes from the data collected. after going back and forth, listening to the audio recordings and reading the transcripts and memos, codes were developed, and data saturation occurred at interview number 9. axial coding, also known as code categories (elo & kyngäs 2007), was used to group codes that belong together and link quotations to them to establish the meaning for each code group. in this way, each code group could be linked to a research question (bloomberg & volpe 2012). code clouds and code frequency tables in atlas.ti were then used to rank the codes according to how many times they appeared in the data (friese 2016). in other words, it highlighted the data points that carried more weight in the data. lastly, the networking tool in atlas.ti was applied to construct a global perspective of the data. it enabled the researcher to look at many possible relationships between the code groups and to go back and forth in the data to secure the themes (friese 2016). four major themes emerged, which were either associated with or affected by other sub-themes and code categories. to validate the research process, firstly, ethical clearance was obtained from the gordon institute of business science to generate data. secondly, a framework matrix was used, which was developed by leitch, hill and harrison (2010:74) to allow transparency in all three domains of the research process: research design and data collection, data analysis and data interpretation. the framework was adopted for this study in an attempt to strengthen the trustworthiness of the data. it focusses on ethical justification, substantive justification and researcher quality. these three elements of justification had implications in all three domains of the research process. as qualitative studies involve interpretation, which is subject to the researcher’s frame of mind and can be influenced by world view, educational level, background and cultural value system (shepherd & sutcliffe 2011), such studies need to be justified. firstly, the ethical justification was ensured by staying within the ethical framework specified by the gordon institute of business science at all times. also, care was taken to facilitate the data collection process. pilot interviews helped to identify and rectify any leading questions and questions that had the potential to cause harm. during analyses, transcriptions were shared with participants to ensure that the data were captured correctly. finally, during interpretations, the researcher continuously asked the question ‘so what does this mean in the context of the study?’ to search for deeper insights and retain thinking within the framework of the study. secondly, to ensure substantive justification, the researcher attempted to control subjective interferences. the researcher triangulated observations, which were documented in memos, with each interview, to support and strengthen the researcher’s understanding of the actual meanings attached to phrases used by respondents (creswell & poth 2018). also, throughout the interpretation phase, the researcher applied an iterative process in order to confirm that the appropriate meanings were attached to each code, category and theme during the analysis phase. thirdly, the researcher’s background in psychology and sociology influenced the research design positively, which provided a foundation to support the quality of the research, together with continual openness in the entire research process. ethical consideration gordon institute of business science ethical committee approved ethical clearance (protocol number: temp2016-01944) to conduct this study. findings from the data, four major themes emerged: life experience, social connections, opportunities, and business engagement. initially, during analysis, codes and code categories were developed, and data points were ranked according to code clouds and code frequency tables. considering how the code categories relate to different research questions, a network view was constructed, which showed all codes and code categories in relation to one another. patterns started to develop that first pointed to life events, a critical determinant in our understanding of research question 1. this theme was termed ‘life experience’. in light of research question 2, further analysis continuously pointed to patterns that related to social relationships, which led to the theme of social connections. to make sense of this overpowering theme, why and how questions were asked, which allowed two other patterns to emerge: for the opportunity and through business actions. these themes were then termed ‘opportunity’ and ‘business engagement’. life experience firstly was related to social relationships, which included exposure by the family who owned businesses or respondents who worked in stores. it was also strongly affected by social judgement, manipulation and frustrations, as rasta from qwaqwa showed: ‘i am a christian and i respect the people and i believe in god … but south african people sunday they are going to church and maybe monday they have a strike and they will take your stuff, your property is damaged. i don’t know which kind of church is that.’ (rasta, a male shop owner from qwaqwa, 20 september 2016 at 12:20) it showed a reluctance to bond more deeply with the community. still, why do these entrepreneurs operate micro-enterprises in highly uncertain environments? james from qwaqwa explained: ‘[o]ur economy was down, and my father was a soldier and he only gets his pension and it’s too little, it’s r300 and something. i was not getting good money and my life was in trouble, so i decided to come to south africa.’ (james, a male shop owner from qwaqwa,12 september 2016 at 07:15) james, therefore, highlighted his country’s weak economy as one reason to seek opportunity elsewhere, while others also highlighted political conflict and violence as reasons to seek opportunity elsewhere. the data, therefore, have shown that the theme ‘life experience’ reflects past and current relationships, together with social issues, that can exert influence on their choices to connect socially in future. secondly, social connections were associated with the opportunities that were constructed through these connections. the data revealed business and community connections, which provided evidence to support how social capital contributes to opportunity creation. business connections originated mostly from other same nationality micro-entrepreneurs, partnerships with others of the same nationality, and family and close relatives. when referring to his people, michael from mahikeng asserted: ‘[w]hen we are working together we teach each other and learn from each other’ (michael, a male shop owner from mahikeng, 13 september 2016 at 14:34). differences, however, existed between the ethiopian and bangladeshi nationals when looking at support and business activities. as less support offers fewer opportunities to extend their social connections, a higher emphasis is placed on community connections. polash, a bangladeshi national from mahikeng, responded adamantly: ‘in business if you treat people good then you will have a good relationship and they will come to the shop, the customer is always right … i am living with these people, i don’t want someone to hate me.’ (polash, a male shop owner from mahikeng, 13 september 2016 at 11:23) on the other hand, ethiopian nationals were more focused on assisting and supporting one another personally, growing their respective businesses together. the data also revealed that value was distributed from both ends. solomon from qwaqwa admitted: ‘[t]here is a lot of support, we help each other. like my shop got burnt in 2011 and the women and the boys … they came and said we want to donate for you solomon, everyone likes to help me.’ (solomon, a male shop owner from qwaqwa, 12 september 2016 at 10:42) the community shows a willingness to assist, whereas the respondents provide value to the community by allowing them to buy products on credit. unfortunately, crime and corruption formed barriers for businesses, which inadvertently affect the social relationships in the community negatively, as shakil from mahikeng shared his experience with corrupt police officials. he claimed that officials demanded free merchandise on a regular basis in turn for services that should be free of charge: ‘i asked them where is the money and they said they are police so they don’t have to pay. then they said to me where is your asylum … and the only people that are supposed to ask us are the people at the home affairs, so they were only asking because i asked them to pay for the things that they took.’ (shakil, a male shop owner from mahikeng, 13 september 2016 at 12:58) social connections, as shown by the data, are therefore shaped by business and community connections which are very often degraded by crime and corruption. the third major theme, opportunity, was shown to be socially determined in a poor rural context, by way of social connections. as respondents’ intentions were to search for an opportunity for a better life and not to start a business, their social connections steered them towards entrepreneurial opportunities. solomon from qwaqwa explained that a friend initially provided him with the opportunity to sell bed sheets, clothes and household items; however, he never received his full commission on goods sold: ‘[e]very month i collect he would give me money for food and rent only’ (solomon, a male shop owner from qwaqwa, 12 september 2016 at 10:13). still, newly formed social connections allowed him to start his micro-enterprise. it was the case with two other respondents, although in these two cases, past connections came into play during opportunity creation. one respondent had access to a small number of funds and borrowed the remainder from his brother to start a small trading store. shakil, a male shop owner from mahikeng, had a similar situation: ‘i asked my father and he gave me some money, and i asked my other friend and another “homie” … then i opened my own shop.’ (shakil, a male shop owner from mahikeng, 13 september 2016 at 12:46) both respondents used their newly acquired community connections to position their stores strategically. it can therefore be argued that opportunity was determined by respondents’ social connections fuelled by personal aspirations in an uncertain environment. james from qwaqwa showed, exposing the need to excel in business: ‘back in ethiopia my friends have made progress, those i used to work with have progressed, now holding bigger positions, they have houses, so if i go back there i need to have something tangible to show that i have worked as well.’ (james, a male shop owner from qwaqwa, 12 september 2016 at 07:38) business engagement, therefore, emerged as the fourth and last theme. one respondent declared that he regularly deposited money into his father’s account in his home country, for his father to save the money on his behalf. he claimed to have enough saved to return to his home country and purchase a property. yet, another respondent, james from qwaqwa, admitted the difficulties that he experienced: ‘when i came here to south africa, i told myself that i want to make money and then go back to ethiopia and buy things i need and settle down … but then things didn’t go the way i thought. conditions change every day … every time i tell myself that i am doing this and that but when the day arrives something else happens … i think next year i am going to grow by god’s grace … this place is not doing great so hopefully i can move.’ (james, a male shop owner from qwaqwa, 12 september 2016 at 07:37) therefore, it exposes aspirations and the uncertainty of the environment. it also indicates that the respondents perceive their situation as temporary. interestingly, the evidence also showed that while some micro-entrepreneurs associated their situation with subsistence entrepreneurship, the majority opened second and third enterprises to grow beyond subsistence. discussion key findings as the data agreed with entrepreneurship literature that social capital affects opportunity creation, the data also added to literature in three ways. firstly, migrant micro-entrepreneurs did not embed themselves into the community to extract benefits as the bonding perspective suggested; instead, they used a bonding perspective to draw resources from their own formed community like friends, direct family and relatives. secondly, the data showed that opportunity, contextualised in poverty, was socially determined. it indicates that the social structure of the migrant micro-entrepreneur is crucial for opportunity creation and that mutuality and habitus unlock different kinds of resources that become available through these social connections. thirdly, active engagement by the entrepreneur is needed. however, the data showed that aspirations are equally crucial to subsistence entrepreneurs as it is for ‘transformative subsistence entrepreneurship’ (sridharan et al. 2014:488). in light of the key findings, a framework (figure 2) was developed to show visually how migrant micro-entrepreneurs use past and present social connections to gain access to resources embedded in social capital. figure 2: a visual representation of how opportunity, contextualised in poverty, was socially determined. these entrepreneurs, therefore, leverage their social connections to establish some control over their environment, which is uncertain, to create opportunity. the theme of life experience is elemental in the development of the personal and social makeup of the micro-entrepreneur. life experience affects a micro-entrepreneur’s past and current social relationships (viswanathan et al. 2012, 2014), and, as marti et al. (2013) have shown, determines the social connections the migrant micro-entrepreneur will pursue in a community setting. life experience also produced insights into why migrant micro-entrepreneurs operate micro-enterprises in uncertain environments. the data revealed push and pull factors, political unrest and economic distress in respondents’ home countries, and the perception of more favourable conditions to create opportunity elsewhere (metzger & king 2015; wood & mckinley 2010). it was also clear that such uncertain environments mirrored the environments that these entrepreneurs were accustomed to (marti et al. 2013). this, therefore, shows that social structures and connections within community entities can help entrepreneurs ‘enhance their reach’ (ozdemir et al. 2016:49), to acquire valuable resources (gedajlovic et al. 2013). these social connections are made up of business and community connections, which present a reciprocal dualistic connection that entails receiving resources through social capital, but also providing resources (daspit & long 2014; gedajlovic et al. 2013; nahapiet & ghoshal 1998). the value of the resources is determined by the intensity and frequency of these interactions that are either mutually beneficial through loose connections, as leitch et al. (2013) have shown, or habitual, in tighter connections according to mckeever et al. (2014). as these social connections determine what opportunities can be created in an impoverished context, it also delivered insights on how social capital contributes to opportunity creation in these rural deprived emerging markets (nahapiet & ghoshal 1998). it was clear from the data that these micro-entrepreneurs did not embed themselves into the community to contribute and extract benefits from the structural and cognitive dimension of social capital but instead used mutuality through the relational dimension to gain access in the community (leitch et al. 2013; marti et al. 2013). opportunity, therefore, originates directly from the actions of the micro-entrepreneurs which are informed by their social structures when contextualised in poverty, which also mediates the opportunity potential (metzger & king 2015; wood & mckinley 2010). it can then be argued that opportunities that are contextualised in poverty are socially determined. however, as the data have shown, the entrepreneurs should be actively engaged to benefit from any form of social capital (botha, carruthers & venter 2019). for these reasons, business engagement emerged, which is recognised as actions of the entrepreneurs in the pursuit of a business opportunity (gielnik et al. 2014). engagements, however, are fuelled by aspirations, which prompted more opportunity when more social connections were formed (gedajlovic et al. 2013). the data have shown that several micro-entrepreneurs shifted from subsistence to ‘transformative subsistence entrepreneurship’ (sridharan et al. 2014:488), supporting webb et al.’s (2013:2) argument that micro-enterprise capabilities have ‘significant job creation potential’. still, a broader social structure allows the migrant micro-entrepreneurs access to other opportunities, which, according to wood and mckinley (2010), are continuously shaped by the context. it can then be argued that social capital helps migrant micro-entrepreneurs extend their life experiences in a continuous cycle, which in essence allows these entrepreneurs more control over their environment. strengths and limitations this study approached poverty from a ‘capacity or opportunity deficiency’ point of view to show how social capital plays a critical role in opportunity creation when contextualised in poverty (bradley et al. 2012; george et al. 2012). as these micro-enterprises show ‘significant job creation potential’, as webb et al. (2013:2) have suggested, government institutions can now recognise the value created in informal markets and develop programmes to support micro-enterprises so that they can slowly be integrated into the formal economy to contribute to the gross domestic product and retain value within borders (mahadea & zogli 2018:7). mckeever et al. (2014:454) stated that ‘communities are the building blocks of society’, which illuminates the potential that is hidden within these markets that are taken for granted. either way, huge potential is stored in an informal market, and in this case, it was shown that economic value was diverted away from where it was originated. if these levers can be managed on a local level, the informal market can be utilised more effectively. the study, therefore, has shown these levers to include collaborative relationships and partnerships that are grounded in mutual trust and respect (gedajlovic et al. 2013), elements associated with the relational dimension of social capital (calton et al. 2013; nahapiet & ghoshal 1998). government institutions and policy development bodies concerned with local micro-entrepreneurial development should take cognisance of these levers and leverage these types of mindsets to support and enable local micro-entrepreneurial growth to boost job creation and uplift poor communities (alvarez & barney 2014; london & hart 2011; prahalad 2012). in light of the limitations of this study, the analysis process was prone to errors as interpretation was made by the researcher who by default used frameworks that were shaped by life experience (shepherd & sutcliffe 2011). the frameworks used placed a significant emphasis on what made sense to the researcher from the perspective of the researcher’s frame of mind. it could, therefore, be argued that the results, discussion and conclusion of the study were a combination of the respondents’ version of what was (the raw data) and the researcher’s subjective interpretation of how this was understood. another limitation was the small sample size; however, since the study was interested in gaining insights rather than making statistical generalisations, the size of the sample is adequate (yin 2018). recommendations and suggestions for future research although micro-enterprises are small and probably insignificant on their own, with little impact on the economy, or so it seems, it should be noted that these micro-enterprises when combined could exert substantial influence on any economy. if these micro-enterprises can be incorporated into the formal economy, driven by either local community-owned micro-enterprises or migrant micro-entrepreneurs employing local citizens, they could stimulate economic growth and add to the gross domestic product of a country (mckinsey & company 2016). it is therefore recommended that governing bodies and regulating institutions leverage micro-entrepreneurship as a vehicle for community empowerment and capability transfer to increase economic prosperity and offer a dignified existence to all that bear the brunt of poverty and poor living conditions (ansari et al. 2012). for future research, it would be interesting to compare local micro-entrepreneurs and their opportunities, embedded within the community, with those of migrant micro-entrepreneurs in the same context. in this way, comparisons can be drawn on how each group uses social capital to gain access to resources, and also to identify the conditions that favour one group over the other. acknowledgements some of the work in this article stems from andre g. van der walt’s thesis, entitled ‘social capital effects on migrant micro-entrepreneurial opportunity creation in rural poor emerging markets: a constructivist approach’, presented in partial fulfilment for the degree of master of business administration in 2017. competing interests the authors have declared that no competing interests exist. authors’ contributions a.g.v.d.w. planned and conducted the research. he reviewed the literature, formulated the research design, collected and analysed the data, made interpretations and finalised the research report. l.w. supervised the research project and reviewed sectional reports continuously to encourage a final article that has academic rigour. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data are stored securely and can be made available upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references alvarez, s.a. & barney, j.b., 2007, ‘discovery and creation: alternative theories of entrepreneurial action’, strategic entrepreneurship journal 1(1–2), 11–26. https://doi.org/10.1002/sej.4 alvarez, s.a. & barney, j.b., 2014, ‘entrepreneurial opportunities and poverty alleviation’, entrepreneurship: theory & practice 38(1), 159–184. https://doi.org/10.1111/etap.12078 ansari, s., munir, k. & gregg, t., 2012, ‘impact at the ‘bottom of the pyramid: the role of social capital in capability development and community empowerment’, journal of management studies 49(4), 813–842. https://doi.org/10.1111/j.1467-6486.2012.01042.x botha, m., carruthers, t.j. & venter, m.w., 2019, ‘the relationship between entrepreneurial competencies and the recurring entrepreneurial intention and action of existing entrepreneurs’, southern african journal of entrepreneurship and small business management 11(1), a214. https://doi.org/10.4102/sajesbm.v11i1.191 bourdieu, p., 1990, the logic of practice, polity press, cambridge. bloomberg, l.d. & volpe, m., 2012, completing your qualitative dissertation: a road map from beginning to end, sage publications, london. bradley, s.w., mcmullen, j.s., artz, k. & simiyu, e.m., 2012, ‘capital is not enough: innovation in developing economies’, journal of management studies 49(4), 684–717. https://doi.org/10.1111/j.1467-6486.2012.01043.x calton, j.m., werhane, p.h., hartman, l.p. & bevan, d., 2013, ‘building partnerships to create social and economic value at the base of the global development pyramid’, journal of business ethics 117(4), 721–733. https://doi.org/10.1007/s10551-013-1716-0 creswell, j.w. & poth, c.n., 2018, qualitative inquiry and research design: choosing among five approaches, 4th edn., sage, thousand oaks, ca. daspit, j.j. & long, r.g., 2014, ‘mitigating moral hazard in entrepreneurial networks: examining structural and relational social capital in east africa’, entrepreneurship: theory & practice 38(6), 1343–1350. https://doi.org/10.1111/etap.12128 davidsson, p., 2015, ‘entrepreneurial opportunities and the entrepreneurship nexus: a re-conceptualization’, journal of business venturing 30(5), 674–695. https://doi.org/10.1016/j.jbusvent.2015.01.002 elo, s. & kyngäs, h., 2007, ‘the qualitative content analysis process’, journal of advanced nursing 62(1), 107–115. https://doi.org/10.1111/j.1365-2648.2007.04569.x friese, s., 2016, atlas.ti mac – getting started guide, manual version: 283:2016060, atlas.ti scientific software development gmbh, berlin, viewed 14 november 2016, from https://downloads.atlasti.com/docs/mac/atlas.ti_for_mac-getting_started_en.pdf?_ga=1.184353126.1744971863.1471349768 gedajlovic, e., honig, b., moore, c.b., payne, g.t. & wright, m., 2013, ‘social capital and entrepreneurship: a schema and research agenda’, entrepreneurship: theory & practice 37(3), 455–478. https://doi.org/10.1111/etap.12042 george, g., mcgahan, a.m. & prabhu, j., 2012, ‘innovation for inclusive growth: towards a theoretical framework and a research agenda’, journal of management studies 49(4), 661–683. https://doi.org/10.1111/j.1467-6486.2012.01048.x gielnik, m.m., krämer, a., kappel, b. & frese, m., 2014, ‘antecedents of business opportunity identification and innovation: investigating the interplay of information processing and information acquisition’, applied psychology: an international review 63(2), 344–381. https://doi.org/10.1111/j.1464-0597.2012.00528.x hall, j., matos, s., sheehan, l. & silvestre, b., 2012, ‘entrepreneurship and innovation at the base of the pyramid: a recipe for inclusive growth or social exclusion?’, journal of management studies 49(4), 785–812. https://doi.org/10.1111/j.1467-6486.2012.01044.x karnani, a., 2007, ‘the mirage of marketing to the bottom of the pyramid: how the private sector can help alleviate poverty’, california management review 49(4), 90–111. khayesi, j.n.o., george, g. & antonakis, j., 2014, ‘kinship in entrepreneur networks: performance effects of resource assembly in africa’, entrepreneurship: theory & practice 38(6), 1323–1342. https://doi.org/10.1111/etap.12127 kloosterman, r.c., 2010, ‘matching opportunities with resources: a framework for analysing (migrant) entrepreneurship from a mixed embeddedness perspective’, entrepreneurship & regional development 22(1), 25–45. https://doi.org/10.1080/08985620903220488 lee, r., tuselmann, h., jayawarna, d. & rouse, j., 2019, ‘effects of structural, relational and cognitive social capital on resource acquisition: a study of entrepreneurs residing in multiply deprived areas’, entrepreneurship & regional development 31(5–6), 534–554. https://doi.org/10.1080/08985626.2018.1545873 leitch, c.m., hill, f.m. & harrison r.t., 2010, ‘the philosophy and practice of interpretivist research in entrepreneurship’, organizational research methods 13(1), 67–84. https://doi.org/10.1177/1094428109339839 leitch, c.m., mcmullan, c. & harrison, r.t., 2013, ‘the development of entrepreneurial leadership: the role of human, social and institutional capital’, british journal of management 24(3), 347–366. https://doi.org/10.1111/j.1467-8551.2011.00808.x light, i. & dana, l., 2013, ‘boundaries of social capital in entrepreneurship’, entrepreneurship: theory & practice 37(3), 603–624. https://doi.org/10.1111/etap.12016 lioukas, c.s. & reuer, j.j., 2015, ‘isolating trust outcomes from exchange relationships: social exchange and learning benefits of prior ties in alliances’, academy of management journal 58(6), 1826–1847. https://doi.org/10.5465/amj.2011.0934 london, t. & hart, s.l., 2004, ‘reinventing strategies for emerging markets: beyond the transnational model’, journal of international business studies 35(5), 350–370. https://doi.org/10.1057/palgrave.jibs.8400099 london, t. & hart, s.l. (eds.), 2011, next generation business strategies for the base of the pyramid: new approaches for building mutual value, ft press, upper saddle river, nj. mahadea, d. & zogli, l.k.l., 2018, ‘constraints to growth in informal sector activities and formalisation: a case study of ghanaian slums’, southern african journal of entrepreneurship and small business management 10(1), a130. https://doi.org/10.4102/sajesbm.v10i1.130 marti, i., courpasson, d. & barbosa, d.s., 2013, ‘living in the fishbowl: generating an entrepreneurial culture in a local community in argentina’, journal of business venturing 28(1), 10–29. https://doi.org/10.1016/j.jbusvent.2011.09.001 mccormick, c., 2004, ‘storying stories: a narrative approach to in-depth interview conversations’, international journal of social research methodology 7(3), 219–236. https://doi.org/10.1080/13645570210166382 mckeever, e., anderson, a. & jack, s., 2014, ‘entrepreneurship and mutuality: social capital in processes and practices’, entrepreneurship & regional development 26(5), 453–477. https://doi.org/10.1080/08985626.2014.939536 mckinsey & company, 2016, lions on the move ii: realizing the potential of africa’s economies, mckinsey global institution, viewed 21 january 2019, from www.mckinsey.com/mgi mcmullen, j.s. & shepherd, d.a., 2006, ‘entrepreneurial action and the role of uncertainty in the theory of the entrepreneur’, academy of management review 31(1), 132–152. https://doi.org/10.5465/amr.2006.19379628 metzger, m.l. & king, j.s., 2015, ‘extending constructivist perspectives on opportunity production through an incorporation of effectual logics’, entrepreneurship research journal 5(4), 323–345. https://doi.org/10.1515/erj-2014-0025 nahapiet, j. & ghoshal, s., 1998, ‘social capital, intellectual capital, and the organizational advantage’, academy of management review 23(2), 242–266. https://doi.org/10.5465/amr.1998.533225 ozdemir, s.z., moran, p., zhong, x. & bliemel, m.j., 2016, ‘reaching and acquiring valuable resources: the entrepreneur’s use of brokerage, cohesion, and embeddedness’, entrepreneurship: theory & practice 40(1), 49–79. https://doi.org/10.1111/etap.12103 payne, g.t., moore, c.b., griffis, s.e. & autry, c.w., 2011, ‘multilevel challenges and opportunities in social capital research’, journal of management 37(2), 491–520. https://doi.org/10.1177/0149206310372413 prahalad, c.k., 2012, ‘bottom of the pyramid as a source of breakthrough innovations’, journal of product innovation management 29(1), 6–12. https://doi.org/10.1111/j.1540-5885.2011.00874.x ramoglou, s. & tsang, e.w.k., 2016, ‘a realist perspective of entrepreneurship: opportunities as propensities’, academy of management review 41(3), 410–434. https://doi.org/10.5465/amr.2014.0281 rivera-santos, m. & rufín, c., 2010, ‘global village vs. small town: understanding networks at the base of the pyramid’, international business review 19(2), 126–139. https://doi.org/10.1016/j.ibusrev.2009.07.001 rooks, g., klyver, k. & sserwanga, a., 2016, ‘the context of social capital: a comparison of rural and urban entrepreneurs in uganda’, entrepreneurship: theory & practice 40(1), 111–130. https://doi.org/10.1111/etap.12107 shepherd, d.a. & sutcliffe, k.m., 2011, ‘inductive top-down theorizing: a source of new theories of organization’, academy of management review 36(2), 361–380. https://doi.org/10.5465/amr.2011.59330952 sim, j., saunders, b., waterfield, j. & kingstone, t., 2018, ‘can sample size in qualitative research be determined a priori?’, international journal of social research methodology 21(5), 619–634. https://doi.org/10.1080/13645579.2018.1454643 sridharan, s., maltz, e., viswanathan, m. & gupta, s., 2014, ‘transformative subsistence entrepreneurship: a study in india’, journal of macromarketing 34(4), 486–504. https://doi.org/10.1177/0276146714529659 storti, l., 2014, ‘being an entrepreneur: emergence and structuring of two immigrant entrepreneur groups’, entrepreneurship & regional development 26(7), 521–545. https://doi.org/10.1080/08985626.2014.959067 stuetzer, m., obschonka, m., brixy, u., sternberg, r. & cantner, u., 2014, ‘regional characteristics, opportunity perception and entrepreneurial activities’, small business economics 42(2), 221–244. https://doi.org/10.1007/s11187-013-9488-6 sruwig, f.w., krüger, j. & nuwagaba, g., 2019, ‘the influence of the business environment on the growth of informal businesses in uganda’, southern african journal of entrepreneurship and small business management 11(1), a200. https://doi.org/10.4102/sajesbm.v11i1.200 theodoraki, c., messeghem, k. & rice, m.p., 2018, ‘a social capital approach to the development of sustainable entrepreneurial ecosystems: an explorative study’, small business economics 51(1), 153–170. https://doi-org.uplib.idm.oclc.org/10.1007/s11187-017-9924-0 unhcr, 2015, the united nations refugee agency, viewed 19 january 2019, from https://popstats.unhcr.org/en/overview#_ga=1.36458536.947921381.1473837512 venugopal, s., viswanathan, m. & jung, k., 2015, ‘consumption constraints and entrepreneurial intentions in subsistence marketplaces’, journal of public policy & marketing 34(2), 235–251. https://doi.org/10.1509/jppm.14.181 viswanathan, m., echambadi, r., venugopal, s. & sridharan, s., 2014, ‘subsistence entrepreneurship, value creation, and community exchange systems: a social capital explanation’, journal of macro marketing 34(2), 213–226. https://doi.org/10.1177/0276146714521635 viswanathan, m., sridharan, s., ritchie, r., venugopal, s. & jung, k., 2012, ‘marketing interactions in subsistence marketplaces: a bottom-up approach to designing public policy’, journal of public policy & marketing 31(2), 159–177. https://doi.org/10.1509/jppm.11.049 webb, j.w., morris, m.h. & pillay, r., 2013, ‘microenterprise growth at the base of the pyramid: a resource-based perspective’, journal of developmental entrepreneurship 18(4), 1350026. https://doi.org/10.1142/s108494671350026x wood, m. & mckinley, w., 2010, ‘the production of entrepreneurial opportunity: a constructivist perspective’, strategic entrepreneurship journal 4(1), 66–84. https://doi.org/10.1002/sej.83 yin, r.k., 2018, case study research and applications: design and methods, 6th edn., sage, thousand oaks, ca. appendix 1 interview guide: i am here to listen to your story. tell me more about the time that led up to you opening your first store in this community. please share with me how this business opportunity came about. i am also interested in your relationship with this community. tell me more about the community leaders, your customers, friends and family members. did you know anyone within this community before you opened your first store? please share with me some of your relationships within this community after you opened your first store. please tell me more about your ups and downs in your business while staying in this community. share some of the best moments you experienced in the community while managing your business. also, share some of the more negative moments (not so great moments) you encountered while managing your business in this community. currently, do you have any relationships with people from other communities that are helpful (offer more opportunities) to your business? please tell me more about these connections. can you describe to me how a typical day in your store starts? can you tell me more about your daily activities and how the day ends when you close your store? where do you want to see yourself and your business after 1 year from today? abstract introduction research problem and question research philosophy and design discussions conclusion acknowledgements references about the author(s) lia m.m. hewitt department of industrial psychology and people management, colleage of business and economics, university of johannesburg, johannesburg, south africa lodewikus j. janse van rensburg department of business management, college of business and economics, university of johannesburg, johannesburg, south africa citation hewitt, l.m.m. & janse van rensburg, l.j., 2020, ‘the role of business incubators in creating sustainable small and medium enterprises’, southern african journal of entrepreneurship and small business management 12(1), a295. https://doi.org/10.4102/sajesbm.v12i1.295 original research the role of business incubators in creating sustainable small and medium enterprises lia m.m. hewitt, lodewikus j. janse van rensburg received: 01 nov. 2019; accepted: 03 june 2020; published: 25 aug. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: despite the prevalence of business incubators as platforms through which new ventures can be technically and financially supported, there is controversy on the extent to which a one-size-fits-all approach to business incubator support can be applied to all emerging or existing small and medium enterprises (smes). aim: to explore the value addition and role of business incubators to assist entrepreneurs to grow their businesses to enable them to become entrepreneurial leaders. setting: state of smes; business incubators; the development of entrepreneurs in south africa. method: a literature survey regarding the nature of business incubators was conducted, making use of a convenience sample comprising a pre-published list of 58 business incubators. results: business incubators see themselves in a position of strength and are not in a true partnership with the incubatee. most business incubators only support broad based black economic empowerment candidates, ignoring the needs and value-add of a diverse sme population. findings highlighted the conflicting information about the state of smes in south africa, thereby calling for policies to clearly and uniformly report reliable statistics on the status of smes to enable more focussed support for smes. conclusions: business incubators must clearly conceptualise their own business operating model and articulate their value-add to prospective emerging entrepreneurs. post covid-19 it is essential to fast tract the sustainability of smes and role clarification and differentiating are two important factors that need to be taken into consideration by both business incubators and entrepreneurs to ensure focussed support and allocation of public and private funding. keywords: business incubators; emerging ventures; business incubator criteria; resources; small and medium enterprises. introduction business incubators is a concept that gained its origin in the city of batavia, usa, in 1959, when joseph l. mancuso launched the batavia industrial center (lewis 2001). the focus, primarily, of business incubators should be on providing support services to start-ups, to overcome typical business challenges such as financial knowledge, rental space, human resources, access to markets and skills development. they should not be confused with large industrial parks. it might be that some large industrial parks house business incubators. the use of business incubators has since spread all over the world and is used extensively in emerging economies to support emerging and upscale survivalist small businesses (rathore & agrawal 2020). south africa (sa) is the second largest economy, after nigeria, in africa. however, its gross domestic product (gdp) per capita will be less than the rest of the world’s emerging markets within 3 years. the difference between rich and poor in sa is the biggest in the world and in fact has increased since 1994, after the takeover of the democratic african national congress (anc) (world bank report 2018). post-apartheid, broad based black economic empowerment (bbb-ee) was one strategic policy initiative implemented to redress the inequality between rich and poor. however, saba (2018) reports that the bbb-ee commission indicates that between 2015 and 2017 the number of black business owners has declined from 33.5% to 27.8%. the apparent failure of bbb-ee can be ascribed to corruption, lack of investment opportunities, policy uncertainty (property rights for example), ineffective policies and the implementation thereof (south african market insights [mi] 2019). if sa fails to get the economy going, poverty, overall wealth, education, growth and development for all the people of sa are at risk. ramaphosa, the current south african president, re-emphasised that small and medium enterprises (smes) must sustain the south african economy as is the case in other countries. strategies must be aligned to meet the target set in the national development plan (2030), which envisaged that 90% of all jobs in sa must come from the sme sector. one of the strategic instruments to assist and nurture smes is business incubators. the purpose of a business incubator is to reduce the chances of failure of start-ups and to provide them with support as well as to nurture them up to a stage where they can become independent businesses. recently, a list of 58 south african business incubators was published (crampton 2019). this calls for a critical review of what an evidence-based business incubator consists of, their role and what type of services they offer to smes. research problem and question hausberg and korreck (2018) conducted a detailed and systematic review on business incubator literature. they observed that some papers started to summarise the field, but that there are still questions that remain unanswered. the authors noticed that different types of business incubators – (1) corporate and (2) public – and different names for business incubators started to emerge. various descriptive definitions evolved, from broad to very specialised, and that these definitions do not distinguish between corporate and public-funded business incubators. in line with international trends, sa also adopted the concept of business incubators to counteract the mortality rate of start-ups (masutha & rogerson 2014). the incubator landscape in sa is characterised by public and corporate funding, but this raises issues regarding their relationship with their incubatees and their sponsors, which has different interest. based on the above, the following research question is formulated. to what extent do business incubators (public and private) in sa meet the needs of their incubatees and do they fulfil their intended role? research philosophy and design the researchers hold an epistemological constructivism stance, supported by an interpretivism theoretical perspective (gray 2014). as the focus of this article is on the role of business incubators and to what extent they serve the needs of prospective incubatees, the researchers approached these from three areas: (1) the state of smes in sa, as the state of smes would support the demand and/or need of business incubators and justify the investment required by public and private sectors; (2) recent literature on business incubators; and (3) a practical analysis of the services offered by 58 business incubators to smes in sa and site visits to three prominent business incubators to infer to what extent the needs and services coincide. an inductive approach was followed to construct meaning and to draw inferences. a convenience sampling approach was followed as crampton (2019) published a list of 58 business incubators offering their services to potential incubatees in sa. the researchers conducted an extensive analysis of their websites of all 58 business incubators, following up on the services they offer and whom their services were offered to. the researchers further conducted site visits to three well-known business incubators in the gauteng province to observe and to understand the social reality of business incubators and incubatees that will allow them to gain new insights on the role that the (public or private) business incubators play in sa and to draw conclusions on the extent to which these business incubators fulfil their role to serve the needs of incubatees. discussions one of the allotting factors is that when a researcher attempts to build a picture of the current state of smes in sa, many conflicting and contradicting statements and reports are found. the state and failures of small and medium enterprises in south africa ravi govender, head of small enterprises at standard bank (2018), stated that the alarming rate at which smes either seized to exist or fail (50% within the first year) is a matter of grave concern and can be attributed to various factors such as (1) skills, lack of experience and resources because the sme was in the first place started out of necessity; (2) failure to distinguish between own and business accounts; (3) poor cash flow; and (4) access to finance. a different sme failure statistic is provided by the ceo eustace mashimbye (cited in crampton 2019), who claims that 70% – 80% of smes do not survive their first year. the department of trade and industry (dti 2014) puts this figure at 80% – smes failed within their first 5 years. the department of small business 2018/2019 annual performance plan revealed that 2015 figures from statistics sa show a decline in sme employment. monitoring government spending on smes (with a failure rate of 70%), the impact made could not be seen. the small enterprise development agency (seda) in sa reported that there were 2.25 m smes in sa (seda 2017) and 2.56 m in 2018 (seda 2018). an increase thus was 13.6%. small enterprise development agency gauteng provincial manager colin leshou (2018) reported that, in sa, smes increased from 1.6 m in 2000 to 5.6 m in 2010. of these smes, 3.3 m were classified as survivalist, 1.7 m as micro-enterprises and 554 000 as small enterprises. what is concerning is that leshou shared 2010 statistics with no indication of what the current state is of smes in sa. analysing and comparing two key fact sheets from 2017 and 2019 by fotoyi and levin (2019), makgetla, philip and fotoyi (2019) of the trade & industrial policy strategies, an independent non-profit economic research institution on ‘the state of small business in sa’, reveal further confusing trends. it is reported by fotoyi and levin’s (2019) key fact sheet on the ‘state of small businesses in sa’ that there were 1.5 m informal businesses in sa, unchanged from 2008, and 670 000 formal business, down from 707 000 in 2008. employment in the formal sme sector was reported at 5.8 m against 3.6 m in large formal businesses. thus, smes were the major employers at the time. of the small and micro-enterprises, 51% were owned by white people, down from 62% in 2002. makgetla et al.’s (2019) key fact sheet on the ‘state of small business in sa’ during the period, 2017, indicates that the number of informal small businesses was 1.5 m and increased from 1.3 m since 2010. the number of formal small businesses in 2017 was 640 000, an increase of 50 000 from 2010. yet, in 2015 it was reported that there were 707 000 smes in 2008, and this declined to 670 000 in 2015. the claim in 2019 was made that the total number of smes grew by 50 000 from 2010 (590 000 smes), which is less than what is reported to be the total. how do the authors explain the ‘missing’ numbers of smes? they further indicate that 50% of formal jobs is located within the small business environment and that the estimated share of sa gdp is around 25%. white ownership has showed a continuous decline in sme participation to 45%. recent research conducted by the small business institute (sbi) (sbi 2018/2020) claims that the ‘alarming truth’ is in fact that there is only approximately a quarter of a million (250 000) formal smes in sa. this is clearly very different from various other reports. small business institute research (2018/9) further claims that 98.5% of the sa economy is made up of smes, but that they only provide 28% of the jobs. more than 56% of jobs are created by the 1000 largest firms in sa, including the government. the dti (2014:15) claims that smes account for 70% of national employment. this shows a sharp decline in sme employment since 2014. the impact of covid-19 on the sustainability of smes is devastating, a desktop search quickly showed that all is in agreement to this affect, however hesitant to make an estimation of the number of smes that have already or will shortly close their doors. one of the more recent quarterly financial statistics (march 2019) reports that the updates on formal business sector turnover indicated that of the r2.39 trillion in turnover, small businesses contributed 29%, and medium-size businesses contributed 10%. a notable decline is reflected in various sectors such as community, social and business services with construction showing the most notable decline of 40% (q1:2015) to 26% (q1:2019) (quarterly financial statistics [march 2019]). however, three industries –business services, trade and community, and social and personal services – are still dominated by sme presence (contributes a quarter of the overall turnover) and include enterprises such as hairdressers, dry-cleaning services and veterinary clinics (community, social and personal services); lawyers and estate agents (business services); and corner cafés (trade) (quarterly financial statistics, march 2019). the organisation for economic co-operation and development (oecd) has 34 member countries and it reports that in these countries smes represent 95% of enterprises and employ 60% – 70% of their respective populations. furthermore, these smes contribute about 60% to their countries’ gdp. according to the research published by sbi, this makes sa an international outlier. hewitt and janse van rensburg (2018) postulate that smes fail because of the inability of the entrepreneur to deal with associated contextual business complexity requirements at various stages of the business. they have developed a model (based on research evidence, practical experience and years of entrepreneurship training) – an entrepreneurial leadership levels and its associated complexities (ellac) model – demonstrating what entrepreneurs should have in place at each level before progressing to the next level. levels are clearly defined and form a solid foundation to ensure business sustainability. it is argued that the current covid-19 pandemic will have a deteriorating effect on many smes in sa. this is ascribed to the weaknesses that existed in the sme before the pandemic. the business eventually dies, terminates or the ‘entrepreneur’ deviates to a new product or service, a ‘try again’ approach. definition of small and medium enterprises the sbi (2018) reviewed more than 70 laws, regulations and strategic policy documents relating to smes, realising that there is no standard definition of what is considered as a small, medium and micro-enterprise across sa’s local government documents. institutions’ failure to clearly define what is meant by a small and medium enterprise contributes to the failure to implement good policies. as recent as 15 march 2019, the then minister of small business development approved the amendment of the national definition of small enterprises in sa (government gazette, march 2019:110:42304). the amendment further abolishes the term ‘very small enterprises’, as it is not used in international practices and will be absorbed by the term small enterprise. scanning through other policies and acts that must be read in conjunction with the act, it supports the research conducted by sbi that none of the definitions speaks to each other as they differ across policies and government documents. the research conducted by sbi clearly states that without reliable data on what constitutes smes, how many are there and what their real contribution is with respect to the gdp, sa will not be able to achieve its strategic objectives despite good intentions and policies. removing ‘micro’ might also be capitalised on by government institutions and other stakeholders who can pitch sme numbers now at 1.5 m and higher. this figure will obscure the real negative growth or state of smes in sa. business incubator models the most recent comprehensive literature review by means of a bibliometric and co-citation analysis was conducted by hausberg and korrect (2018), stretching back to more than a decade. although their work focussed on corporate business incubators and their performance, it showed that business incubators have evolved into complex business-development organisations with a range of business models and that the rise of private business incubators is significant in large corporations. their study builds on the work done by hackett and dills (2004), who conducted a comprehensive systematic literature review on business incubators. hackett and dills (2004) included 38 studies in their review and concluded that incubators serve as a mechanism for new venture creations, provide legitimacy and networks, and increase community support. furthermore, it provides a platform for building a client base and serves as a sociopolitical game of creating an environment and perception of reduced risk and an increase in security within a given physical space. incubatee selection is a predictable and a controllable process of ‘weak-but promising’ firms. exploring the characteristic of business incubators, it became evident that we were still required to visit earlier publications such as campell, kendrick and samuelson (1985), who emphasised four value-adds that a business incubator must possess: (1) an incubator must be able to diagnose business needs; (2) there must be a selection and monitoring of the services provided to these firms; (3) investment of capital and the access to the working; and (4) network of the incubator. the overall focus here is on the incubator process. ryzhonkov (2013) criticises this model and points out that the following shortcomings are evident in this model such as a clear explanation of the incubation process; the viability of the entrepreneurs and their competencies; a failure to link the external environment to the entrepreneur; and no clear selection process for the incubatees or the potential business they intent to support. in his conclusion he recognises the value-adds that incubators must provide to their incubatees. merrifield (1987) studied the model as proposed by campell et al. (1985) and added proposed selection criteria to select a prospective incubatee by means of three questions: is this a good business? does the incubator have the resources and knowledge to support the new business and what is the best marketing penetration approach for this firm to enter the market? what is defined as a ‘good business’ is unclear? smilor’s model (1987) used campell et al.’s (1985) model to build on. he moved to a more structured approach, opposed to an incubator system, but highlighted the value-add that business incubators can provide to entrepreneurs, in the form of credibility development, shortening of the learning curve, faster trouble shooting and access to networks. ryzhonkov (2013) conducted an extensive and very comprehensive analysis of 20 business incubation models developed by researchers, consultants and practitioners. he assessed their applicability, performance and efficiency for business innovation. he defines a business incubator as a system that is made up of tools, practices and elements, which increases the chance of entrepreneurs to grow their businesses to mature businesses. what ‘elements’ constitute of and what is meant by a ‘mature business’ are also unclear. the aim of his study was to develop a ‘virtual incubation’ taking into consideration the existing physical business incubators’ foundations. key outcomes listed by him were (1) that business incubators are a support and enabling system for the entrepreneur; and (2) they have main stakeholders and sponsors, who shape their future. the value-add of ryzhonkov’s (2013) study is five key value-adding activities for the entrepreneur that have been identified to: (1) increase the success rate of the new venture; (2) provide an opportunity for the new venture to build trust and credibility in the market; (3) shorten the learning curve; (4) increase the troubleshooting response rate; and (5) access to business networks and strategic alliances. it was also highlighted that business incubation success was positively related to selection performance, frequent monitoring of business assistance efforts, resources and the management and leadership capacity of the business incubator head. ryzhonkov (2013) also laid responsibility on business incubators by clearly stating that they should be profit-driven, be a learning organisation, measuring itself in terms of the impact they make on communities and on their stakeholders. business incubators must act as mediators between government, industry and universities to align strategic projects that would benefit the industry, society and the needs of the country. his analysis and critique of the 20 models concluded that most models emphasise the importance of the selection of the incubatees; however, none provide guidelines as to how to select; no performance measures for the incubator itself are set or elaborated on; and few, if any, of the incubation models describe process in detail. in other words, most models are of high level pitched with a clear lack of clarity on the ‘how’. charry, perez and barahona (2014) analysed 50 business incubation articles published between 1985 and 2012 in the field of entrepreneurship. they concluded that various terms are used for business incubators such as business accelerators (barrow 2001), innovation centres (campell 1989) and knowledge parks (bugliarello 1998), and that the nature of incubators has changed: firstly, it was an organisational environment, but after the 2000s it became an instrument of national economic importance. scillitoe and chakrabarti (2010) concluded that there is no common notion that exists, and that business incubation studies are less sophisticated in sampling frames, hypothesis development and dynamic longitudinal analysis. they argued that it is possible to recognise: (1) the development of business incubators, (2) configuration and the (3) impact business incubators make on the four levels of analysis (individual, organisation, network and the community). it can be argued here, from the above literature, that the impact business incubators make on economics country level is important. thus, adding a fifth level of analysis. the authors of this article argue that complementary models of business incubators can be designed, portraying them as competitors who are attempting to attract tenant firms to co-locate in them. it is also argued that there are business incubators in the same regions and areas who do have similarities and differences. thus, business incubators can be analysed from different perspectives and at different levels, based on the services they provide to prospective businesses. allahar and brathwalte’s (2016) study confirmed the findings of the world bank report (2013) that developing countries lack affordable infrastructure, mentors and business coaches, training opportunities, finance, business angles, seed capital, a good policy and regulatory system and connections with marketing channels. they identified the key aspects of a good business incubator as entrepreneurs and enterprises at the centre of the incubator; investing in research and development; stimulating entrepreneurship, innovationand creativity at tertiary level; methods to make finance and risk capital more accessible; and simplify tax and regulatory environment. up to recently, the types of incubators were more physical incubators. physical incubators provide facilities and face-to-face support at no cost or they are subsidised by government or major corporations. more and more authors refer to virtual incubators (allahar & brathwalte 2016; ryzhonkov 2013) or mixed business incubators. nowak and grantham (2000:131) conducted a study in the software industry in california, usa. they argued for a virtual incubator, based on the fact that it has no physical presence, but a connection to a virtual world made of information (best practices; industry and management experience; resources to market their products globally, increase sales and distribution channels) that will assist the entrepreneur. janse van rensburg, hewitt and bussin (2018) reported a longitudinal study they conducted to extract engagement factors of 37 entrepreneurs in a 13-week entrepreneurial virtual business coaching programme. an important outcome of this study indicated that it is important to monitor engagement or disengagement within the entrepreneurial virtual business coaching online learning environment. controllable intrinsic engagement factors that impacted on the entrepreneur’s engagement included: fear of selling; mindset of the entrepreneur; language used by the virtual coach; assumptions made by the coach; and the nature of tasks given by the coach to the entrepreneur. it is argued here by the authors that it supports hewitt and janse van rensburg’s (2018) rensburg view that the ability of the entrepreneur to deal with complexity will impact business growth. the european business and innovation centre network (ebn) is a network of 150 business and innovation centres and 70 other organisations that actively support the development and growth of start-ups and smes in an effective and efficient way. european business and innovation centre network released their 2019 impact report, stating the number of entrepreneurs (23 400) they have assisted as well as the number of employment (22 600) they have created. specific successes as seen by ebn are funding that has been raised and the respective spending on start-ups (45%), smes and large companies (23%) and scale-up companies (16%). key services that enabled the enterprises were access to markets (84%), finance (83%), marketing (73%), innovation programmes (68%) and team development (65%). the survival rate of enterprises three years after they have exited the incubator is 89%. the european business and innovation centre network attribute the survival rate success to the personal commitment and know-how of their professional staff and experts. evolution of south africa’s business incubator industry masutha and rodgerson (2014) provide a very comprehensive, detailed overview of the origin and history of the development and evolution of the business incubator industry in sa. it is not the focus of this article; however, a brief summary will be provided on how events unfolded in sa. the authors observed significant differences between the state-supported incubators versus the private sector-operated incubators. their study explored more than 10 years of annual reports on sa business incubators. they also conducted interviews with key stakeholders and policy-makers within the business incubation environment as well as with entrepreneurs operating within business incubators. the evolution of business incubators in sa is presented by the authors in four stages. first stage started in 1988 when business hives on the outskirts of townships (soweto) were established specifically for black entrepreneurs. business space and collective services in terms of bookkeeping, telecommunications and storage facilities were provided. the hives also served as linkage to larger enterprises. what lacked was the incubation rule period (minimum of a year) as smes were not forced out. the second stage in the evolution came about in 2000 with the establishment of the godisa programme (dti, department of science and technology [dst] and the european union [ue]). objectives were set to target the rise in sa’s challenge of unemployment, inequality and poverty. the aim was to provide services such as training, consulting, business advice and other services for efficient and effective functioning of the incubators housed in them. technology-focussed smes were targeted with economic transformation and to force black economic empowerment (bee). a national business incubation framework was to be developed. third stage of evolution came in 2006 when the godisa programme was merged to form the seda technology programme (stp). the aim here was to put in place strategic government support, reduce poverty and increase employment. the fourth stage of the incubation industry is marked by the incubation support programme (isp) 2012, initiated by the dti, a plan to be rolled out till 2022. the dti announced plans (2012) to establish 250 business incubators in sa by 2015. the above authors’ studies further revealed that incubatees they interview had an established business before joining the business incubator. the access to infrastructure, the advisory services and access to markets were benefits listed and reasons why they joined the business incubators. however, some frustration was expressed with business advisors (or the lack thereof) and the lack of sharing, transferring good basic business principles, as well as access to finance to expand their businesses. no networking or networking skills between incubatees took place or were provided to incubatees. some might have employed one additional person. thus, no or limited growth was experienced. because of the efforts of the sa government to force bee-ee, incubatees are mainly black and mostly men, with limited number of females. a study conducted by hewitt (2009) amongst entrepreneurs mainly in the gauteng province in sa discussed the impact of trust and trust agents on smes’ ability to derive benefits from networks as networks are associated positively with business survival and growth. business trust levels must be built up over time, and it was noted that trust levels amongst black african male and females as well as white females were low compared with trust levels between white males and asian males. it can be postulated here that little or no networking, lack of trust and the value of partnerships might impair black sme growth. what is the current state of business incubators in south africa? van der spuy (2019) used a qualitative research approached to report on the state of business incubators in the northern cape, sa. he argues that the purpose of business incubators is to assist emerging, promising or struggling smes to become viable and sustainable businesses after they exist in an incubator. he argues that business incubators must deliver ‘full services’ and list five categories: (1) physical workspace, (2) administrative support, (3) training and skills development, (4) access to professional skills and finance and (5) access to networks. masutha and rogerson (2014) reported on the evolvement and policy development of business incubators in sa. in sa, the dti (2014:5) affirms the need for business incubators as a ‘cornerstone of industrial development and inclusion in the economy’. the dti defines a business incubator as a physical or virtual facility that supports the development of early stage smes by providing them with business development service, funding and access to physical space to conduct their business in and a focus on development so that they can grow their own capacity as incubation is temporary. the failure rate is attributed to failure of business strategy and access to funds (sa incubator handbook 2015). the lack of funding is one of the most consistent reasons provided by government agencies and start-up entrepreneurs to defend their failure rate or the lack of business growth. the sa incubator handbook (2015: 17) reports that sa’s business incubators are spread over the nine provinces: gauteng accounts for 35; kwazulu-natal for 16; western cape for 15; eastern cape 12; mpumalanga 10; limpopo 5; northern cape 5; free state 4; and north-west 3. the small enterprise development agency is an agency of the department of small business development that accounts for 42, business incubators in partnership with the dti and private sector account for 38 and private incubators without state funding account for 25. this amounts to 105 business incubators, which is less than the anticipated 250 incubators for 2015. however, the latest seda available annual report (2017/2018:15) states that their (seda) number has increased to 64 incubators. bayen (2018) puts the number of business incubators in africa at 442 and in sa at 59. it seems that one institution quotes another without trying to determine what the actual state is. a further desktop study could not verify or confirm any numbers of any of the institutions with each other. the dti’s isp wants to attract role players to the incubator industry by offering lucrative and attractive incentives to them. they provide an annual funding of r 10 m for 3 years for incubators in partnership with the private sector or the expansion of existing incubators; seda technology programme receives funding and provides training to assist smes. the small enterprise finance agency (sefa) provides direct loans as well as facilities to smes. other funds are listed such as the national empowerment fund (focus on black-owned smes) and black business supplier programme (51% black ownership). key performance indicators for business incubators are suggested by the dti when monitoring and evaluating business incubator performance such as the number of applicants to incubator (target market is aware of incubator); the number of entrepreneurs supported by the incubator (indicates impact of support in terms of scale and if incubator is operating below or above capacity); sme survival rate during incubation (effectiveness of incubator compared with those who have not received incubation); client satisfaction (sme client feedback); sme satisfaction (indicates if incubator serves the needs of sme); and incubators’ profitability (sustainability of the incubator) (sa incubator handbook 2015). the sme south africa forum (2019) conducted interviews with andrew simelani, entrepreneur and managing director of black nation video network; a venture capitalist, abu bakr cassim, who is the founder of ground flr and jozi angels; and a representative from an incubator, kendal makgamathe, who is head of marketing at tshimologong digital innovation precinct. simelani is quoted saying that incubators are heading in the right direction, but that sa is not there yet; he strongly supports the notion that business incubators must be run by experienced entrepreneurs, even those who failed, rather than be driven by inexperienced business academics. he sadly commented on business incubators shutting down as they were fully dependent on donor funding. this is evident that the leaders of business incubators do not know how to create and grow a sustainable business for themselves, a matter of the ‘blind leading the blind’. he further noticed that some entrepreneurs expect business incubators to run their businesses for them and fail to take up responsibility for the running of their businesses. cassim acknowledged that the quality of start-ups is improving and wants to encourage investors; he warns, however, that some business incubators are becoming glorified internet cafes and create a harbour for smes who want to stay dependent and who refuse to grow. makgamathe criticised some local business incubators, who are in it for obtaining skills funding and, as they do not have the bigger picture in mind, the quality of smes they produce is poor. in the end they marginalise themselves. his advice to upcoming entrepreneurs is to view their customers as their main funders. analysis of list of 58 business incubators a definite list of sa business incubators has been released (crampton 2019), with a total of 58 incubators. the list provides the focus of each incubator and the expected selected criteria incubatees must adhere to. some of the incubators allowed direct access to their websites for further information, and some did not. this complicated the analysis, comparisons and review of the business incubators. most business incubators list their services in bullet format, thus assuming prospective entrepreneurs will know what they offer and what is expected of them. the business incubators focus on bbb-ee and most are clear that they only accept black africans, thus excluding other races from participating. business incubators’ target markets ranged from a focus on start-ups, assisting businesses, to grow to the next level, or just any business that wants to apply. services ranged from renting out their facilities; access to networks at a subsidised cost; training programmes at a cost to smes; and business advisor and coaching opportunities. incubatees’ selection criteria are clearly specified. in some cases, the business incubators were clear about the maximum time period of assistance that would be provided to the incubatees. business incubators were also clear on their area of specialisation. however, business incubators focussing on training were not specific with their selection criteria. some business incubators were clear that their focus was on start-ups and taking businesses to the next level. what is meant by next level is ‘unclear’. visiting the business incubators’ websites reveals services they will provide and to whom. however, what lacks is clear guidelines of what their responsibility and undertaking is and what the role and responsibility must be of the incubatee. this lack of upfront information might lead to difficulty, when the incubatee needs to decide to apply or not. physical visits are also not extended to prospective incubatees to help them to decide if this is the business incubator for them or not. no past successes are claimed. the impression is created that the business incubators view themselves in a position of strength and therefore do not engage in a true partnership with the incubatee. analysis of physical visit to three business incubators the authors of this article conducted a physical visit to three well-known incubators in gauteng. it was found that incubator one (private or government and various donors) housed many smallto mid-scale entrepreneurs and could provide a record and history of existing incubatees who expressed their satisfaction with the support they receive; however, some had been there for an extended period with no indication that they want to leave. the business incubator also made it very clear that, although not explicitly mentioned, they only support black entrepreneurs and do not provide opportunities for white entrepreneurs. incubator two (corporate funding) was what venture capitalist abu bakr cassim (founder of ground flr and jozi angels) would refer to as a glorified internet café. the authors consider it as a non-value-add to upskill start-up entrepreneurs or existing entrepreneurs, other than a window-dressing opportunity for the corporate funder. incubator three was funded internationally and aimed to make a difference on a community level with community goods or goods from the african continent exported to various countries. a state-of-the-art appearance was maintained, and it was headed by an experienced businessperson. apart from providing physical space, the incubator assisted with branding, marketing and access to markets. they provided a vibrant and attractive atmosphere to showcase their incubatees’ businesses. active business advice as well as infrastructure support was provided. the focus here was only on bbb-ee candidates. conclusion entrepreneurial leaders are considered as entrepreneurs who can contextualise their environment, recognise business opportunities and who are able to attract resources and skills in an innovative manner to take their business to the highest (global) level. hewitt and janse van rensburg (2017) presented their ellac model, clearly dividing the growth of a start-up entrepreneur into seven levels and three business phases: level 1 being the start-up and level 7 the ultimate entrepreneurial leader who operates on a global level. most businesses do not pass past level 3 because of their inability to deal with associated business complexities. it is in phase 1, level 1, 2 or 3, where experienced business coaches, mentors and resources such as facilities, networks, access to markets and business education (that incubators can provide), can make a difference, if they know how. the conflicting statements on the state of smes in sa are a matter of concern and if national strategic resources are used to drive and uplift smes as a catalyst to fight unemployment and poverty, then accurate and reliable data on the state of smes need to be gathered and presented. reading through annual government reports and press releases, the role and benefits of business incubators seem to be presented as positive by the drivers of business incubators. however, bearing in mind the funding, effort and good intentions that went into business incubators, it is clear from sme statistics and unemployment figures that the value-add and role of business incubators can play and should play in sa are not reaching its intended potential as planned. longitudinal studies are not available to really determine the success of incubated smes after they leave the business incubator. business incubator success can be placed at their ability to offer value-add, networking opportunities, access to markets and financial risk management. incubatees want incubators to develop their business know-how, by providing experienced, knowledgeable business coaches and mentors, to act as true business partners. a study by zhao, hills and seibert (2005) found that entrepreneurs who develop their entrepreneurial education, after they started a business, resulted in higher levels of entrepreneur self-efficacy, thus stressing again the value-add and the role that the business incubators can play in uplifting and stimulating the growth of smes. the forced drive to implement bbb-ee and to exclude other races from (especially government-funded) incubators might not be beneficial to immediate communities, the economy and the promotion of building trust, exchanging and learning from each other to build a better sa. business incubators need to be able to conceptualise and present their own business model to ensure their own sustainability and also need to be held accountable if they have received state-funding, but they have nothing to show after a few years in operations. more focus should be placed on stimulating sme growth beyond the employee of one additional employee. the role and place of virtual business incubators should be strengthened as sa needs to reach more smes across sa. thus, the role of virtual business coaches and mentors becomes more important. the one-size-fits-all approach of some business incubators must be avoided. prospective incubatees must educate themselves to choose a business incubator that can best serve their needs, such as asking the vital questions as proposed by campell et al. (1985): is this a good business? does the incubator have the resources and knowledge to support my business and do they know what is the best marketing penetration approach for my business to enter the market? what are the business incubator’s success stories? future research future research can focus on the perceived relationship of business incubators and business incubatees and the moderating effect of the psychological contract. the question is: who is doing whom a favour here? the role of virtual business incubators, coaches and mentors, considering developments and opportunities the fourth industrial revolution are offering to entrepreneurs (new and existing), should be explored. limitations of the research the research does not come without its limitations; however, the researchers attempted to apply a non-biased judgement when searching through the vast amount of literature available on the topic at hand. the aim was to report on the important role of business incubators given the unique business context in sa. acknowledgements competing interests the authors have declared that no competing interest exists. authors’ contributions all authors contributed equally to this work. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. ethical consideration this article followed all ethical standards for a research without direct contact with human or animal subjects. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references allahar, h. & brathwalte, c., 2016, ‘business incubation as an instrument of innovation: the experience of south america and the carribean’, international journal of innovation 4(2), 71–85. https://doi.org/10.5585/iji.v4i2.107 barrow, c., 2001, in incubators: a realist’s guide to the world’s new business accelerators, pp. 13–36, john wiley, chichester. bayen, m., 2018, africa: a look at the 442 active tech hubs of the continent, viewed 02 july 2020, from https://www.gsma.com/mobilefordevelopment/blog-2/africa-a-look-at-the-442-active-tech-hubs-of-the-continent/. bugliarello, g., 1998, ‘knowledge parks and incubators’, the handbook of technology management 1, 41–49. charry, g.p., perez, j.e.a. & barahona, n.e.l., 2014, business incubation research: a review and future research, pp. 41–65, pensamiento & gestion, 3, universidad del norte, barranquilla-colombia. campbell, c., 1984, hatching small businesses: planning, national business incubation association, chicago, il. campell, c., kendrick, r.c. & samuelson, d.s., 1985, ‘stalking the latent entrepreneur: business incubators and economic development’, economic development review 2(2), 43–49. crampton, n., 2019, the definite list of south african incubators for start-ups, viewed 01 july 2019, from https://www.entrepreneur.com/article/327566. department of trade and industry (dti), 2014, south africa business incubator establishment handbook: a guide to establishing business incubators in south africa, viewed 01 july 2019, from http://www.innovationeasterncape.co.za/wp-content/uploads/2016/05/sa_incubator_handbook.pdf. fotoyi, a. & levin, s., 2019, ‘special edition: the state of small business in south africa’, in n. ndlovu & m. makgetla (eds.), the real economy bulletin: trends, developments and data, viewed 30 june 2020, from https://www.tips.org.za/images/real_economy_bulletin_small_business_edition_january_2019.pdf. fotoyi, a. & levin, s., 2019, the state of small business in south africa, n. ndlovu & m. makgetla (eds.), the real economy bulletin, special edition, viewed 02 july 2020, from https://www.tips.org.za/manufacturing-data/the-real-economy-bulletin/the-state-of-small-business-in-south-africa/item/3557-reb-special-edition-the-state-of-small-business-in-south-africa%20_edition_january_2017%20(1).pdf. gray, d.e., 2014, doing research in the real world, 3rd edn., sage, washington, dc. hackett, s.m. & dilts, d., 2004, ‘a systematic review of business incubation research’, the journal of technology transfer 29, 55–82. https://doi.org/10.1023/b:jott.0000011181.11952 hausberg, p.j. & korreck, s., 2018, ‘business incubators and accelerators: a co-citation analysis-based, systematic literature review’, journal of technology transfer 45, 151–176. https://doi.org/10.1007/s10961-018-9651 hewitt, m. & janse van rensburg, l., 2017, ‘from start-up entrepreneur to entrepreneurial leader – a conceptual model’, viewed n.d., from https://ujcontent.uj.ac.za/vital/access/manager/repository/uj:25279?site_name=globalview hewitt, l.m.m., 2009, confirming influencing factors on small medium enterprise (smes) activity, pp. 80–104, the research and knowledge management division seda, pretoria. janse van rensburg, l.j., hewitt, l.m.m. & bussin, m., 2018, ‘engagement factors that contribute to entrepreneurial virtual coaching success’, in published in the proceeding of the 2nd business & entrepreneurial economics conference, brijuni, croatia, may 24–26. leshou, c., 2019, we aim to improve smme sector, viewed 02 july 2020, from https://www.engineeringnews.co.za/article/number-of-south-african-smmes-growing-2017-06-26/ lewis, d.a., 2001, does technology incubation work: a critical review of the evidence, us department of commerce economic development administration, washington, dc. makgetla, n., philip, k. & fotoyi, a., 2019, ‘the state of small business in south africa’, the real economy bulletin, special edn., viewed 02 july 2020, from https://www.tips.org.za/images/real_economy_bulletin_small_business_edition_january_2019.pdf. makgetla, n., philip, k. & fotoyi, a., 2019, the state of small business in south africa, s. levin (ed.), the real economy bulletin, special edition, viewed 30 june 2020, from https://www.tips.org.za/manufacturing-data/the-real-economy-bulletin/the-state-of-small-business-in-south-africa/item/3557-reb-special-edition-the-state-of-small-business-in-south-africa%20_edition_january_2019%20(1).pdf. masutha, m. & rogerson, c.m., 2014, ‘small enterprise development in south africa: the role of business incubators’, in c.m. rogerson & d. szymańska (eds.), bulletin of geography, socio-economic series, no. 26, pp. 141–155, nicolaus copernicus university, toruń. https://doi.org/10.2478/bog-2014-0050 merrifield, b.d., 1987, ‘new business incubators’, journal of business venturing 2(4), 277–284. https://doi.org/10.1016/0883-9026(87)90021-8 nowak, j.m. & grantham, c.e., 2000, ‘the virtual incubator: managing human capital in the software industry’, research policy 29, 129–134. https://doi.org/10.1016/s0048-7333(99)00054-2 rathore, r.s. & agrawal, r., 2020, measuring performance of business incubators: a literature review and theoretical framework development, viewed n.d., from https://ssrn.com/abstract=3573354. ryzhonkov, a., 2013, ‘analysis of 20 incubation models’, viewed 01 july, from https://worldbusinessincubation.wordpress.com/2013/11/28/907/. saba, a., 2018, has bee been a dismal failure?, viewed 30 june 2019, from https://mg.co.za/article/2018-08-31-00-has-bee-been-a-dismal-failure. scillitoe, l.l. & chakrabarti, a.k., 2010, ‘the role of incubator interaction in assisting new ventures’, technovation 30(3), 155–167. https://doi.org/10.1016/j.technovation.2009.12.002 small business institute, 2018, the number of formal micro, small & medium businesses in south africa, viewed 28 june 2019, from https://www.smallbusinessinstitute.co.za/wp-content/uploads/2019/01/sbibaselinestudyalertfinal.pdf. small enterprise development agency (seda), 2017, smme quarterly update: 3rd quarter 2017, viewed 02 july 2020, from http://www.seda.org.za/publications/publications/smme%20quarterly%202017-q3.pdf. small enterprise development agency (seda), 2018, smme quarterly update: 3rd quarter, viewed 02 july 2020, from http://www.seda.org.za/publications/publications/smme%20quarterly,%202018-q3.pdf. smilor, r.w., 1987, ‘managing the incubator system: critical success factors to accelerate new company development’, ieee transactions on engineering management 34(3), 146–155. https://doi.org/10.1109/tem.1987.6498875 south africa business incubator establishment handbook, 2014, a guide to establishing business incubators in south africa, viewed 01 july 2019, from http://www.innovationeasterncape.co.za/wp-content/uploads/2016/05/sa_incubator_handbook.pdf. south african market insights, 2019, ‘south africa’s gdp per capita will be less than emerging markets soon’, viewed 30 june 2019, from https://www.southafricanmi.com/sa-vs-the-world.html. statistics south africa, 2019, quarterly financial statistics, viewed 16 april 2020, from http://www.statssa.gov.za/publications/p0044/p0044march2019.pdf. van der spuy, j.h., 2019, ‘the state of business incubation in the northern cape: a service spectrum perspective’, the southern african journal of entrepreneurship and small business management 11(1), a271. https://doi.org/10.4102/sajesbm.v11i1.271 the department of small business, 2018/2019, annual performance plan, viewed 02 july 2019, from https://pmg.org.za/committee-meeting/26261/. world bank, 2013, the world bank annual report 2013, viewed n.d., from https://openknowledge.worldbank.org/handle/10986/16091. world bank report, 2018, republic of south africa systematic country diagnostic: an incomplete transition: overcoming the legacy of exclusion in south africa, viewed 02 july 2020, from http://documents1.worldbank.org/curated/en/815401525706928690/pdf/wbg-south-africa-systematic-country-diagnostic-final-for-board-secpo-edit-05032018.pdf. zhao, h., hills, g.e. & seibert, s.e., 2005, ‘the mediating role of self-efficacy in the development of entrepreneurial intentions’, journal of applied psychology 90(6), 1265–1272. https://doi.org/10.1037/0021-9010.90.6.1265 abstract introduction literature review method results discussion conclusion acknowledgements references footnote about the author(s) renier steyn department of industrial psychology and people management, university of johannesburg, johannesburg, south africa graduate school of business leadership, university of south africa, midrand, south africa gideon de bruin department of industrial psychology and people management, university of johannesburg, johannesburg, south africa citation steyn, r. & de bruin, g., 2019, ‘the structural validity of the innovative work behaviour questionnaire: comparing competing factorial models’, southern african journal of entrepreneurship and small business management 11(1), a291. https://doi.org/10.4102/sajesbm.v11i1.291 original research the structural validity of the innovative work behaviour questionnaire: comparing competing factorial models renier steyn, gideon de bruin received: 24 oct. 2019; accepted: 14 nov. 2019; published: 11 dec. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: innovation is about central organisational sustainability and is fundamentally centred in individuals. objectives: understanding and building theory on innovative work behaviour (iwb), as well as the parallel measurement thereof, is a prerequisite to the development of models for enhancing iwb. most theorists propose iwb as a sequential process involving steps such as exploration, generativity, investigation, championing and application. these steps are also reflected in the design of iwb measurements. in this study, the theorised step-structure of iwb, as proposed by kleysen and street in 2001, is tested – relying on general descriptive statistics and applying exploratory and confirmatory factor analyses, with five different factorial structures tested. methods: complete records for more than 3000 respondents on the iwb measure were available. the results revealed that exploration and generativity occur more often than investigation, championing and application, alerting theorists to the dwindling effect of creative ideas and also to the hierarchical nature of the steps embedded in iwb. with regard to structure, the results revealed that the iwb steps were correlated, not orthogonal, and unlikely to be sequential as theorised. the initial steps of iwb (exploration and generativity) are therefore linked to the latter steps (investigation, championing and application), implying that employees are cognisant of the latter steps when engaging in the former. results: the results of this study suggest reconsidering the segmented stepwise thinking regarding iwb. it also has important practical implications for stimulating iwb: enabling individuals to manage the latter ‘steps’ of the iwb may well encourage the creativity and curiosity associated with the former ‘steps’. conclusion: the research provides important insights into the nature of iwb, informing theoretical models using data-driven information. keywords: innovative work behaviour; south africa; factorial validity; factor analyses; structural equation modelling. introduction according to literature, there is consensus on the fact that innovation constitutes a key source of competitiveness, and that it forms an essential element of organisational success (bos-nehles, renkema & janssen 2017; sanz-valle & jiménez-jiménez 2018; veenendaal 2015). the task of effecting innovation is often left to the research and development departments (scott & bruce 1994). unlike the case of those who work in research and development teams, innovative behaviour by general employees is often perceived as an extra role or as a discretionary action, and is often not formally, directly or even indirectly recognised in organisations (janssen 2000). however, motivating general employees to implement innovative work behaviour (iwb) should be an important task of managers, as previous research has identified the management practices that inspire such employee behaviours (bos-nehles et al. 2017; sanz-valle & jiménez-jiménez 2018; veenendaal 2015). this may be essential to an organisation’s sustainability. the conceptualisation, as well as valid measurement of iwb, is disparate. without the exact conceptualisation and accurate measurement of iwb, models and theories on precursors to iwb, as well as the benefits of iwb, cannot be tested empirically. although most prominent theorists on iwb (de jong & den hartog 2010; janssen 2000; kleysen & street 2001; scott & bruce 1994) perceive iwb as a sequence of activities (stages), they differ on how they define the broad construct, and subsequently also the number of stages it comprises. perhaps, most alarming is the fact that the theorised concepts do not materialise as discrete stages when tested empirically (de jong & den hartog 2010; janssen 2000; kleysen & street 2001; scott & bruce 1994), with researchers identifying less complexity than theoretically proposed, often reporting a single construct to be representative of iwb.1 scott and bruce (1994) explain the measurement of iwb as only a single construct because of the fact that innovation is characterised by discontinued activities, where employees may be involved in several of these activities simultaneously. de jong and den hartog (2010), as well as janssen (2000), reference scott and bruce’s (1994) explanation, when they account for finding less complex models. in this article, the evolution of the iwb concept will be discussed with reference to the way the concept is defined, conceptualised (as a multi-stage process) and measured. the model of iwb, as proposed by kleysen and street (2001), will be tested, based on a sample size much larger than the one used in the original study, and using five competing fit models, compared to the single model used in the original study. kleysen and street (2001) only tested for a five-factor model, while in this study additional tests were run for a higher second-order model, an orthogonal five-factor model, a bi-factor model, as well as a single factor model. this article contributes to the iwb literature in two ways. firstly, it presents a detailed conceptualisation of the complex concept of iwb and portrays how it is presented and measured by some of the most prominent researchers in this field. secondly, it exposes the structure of iwb, incorporating the theorised structure proposed by kleysen and street (2001) using five different modelling techniques. this article provides a deeper insight into the factors that make up iwb, and could be considered as relevant, as it provides a more coherent picture of iwb and how it is measured. the article consists of five parts. firstly, existing literature relevant to iwb is reviewed, specifying how iwb is defined, conceptualised and measured. next, the research method is offered and the data analysis techniques are explained. then the results are presented and summarised. this is followed by a discussion of the results, linking the results to the literature. the article concludes with a discussion of the theoretical and managerial implications, as well as by providing directions for future research. literature review the literature review focusses on the seminal iwb work by de jong and den hartog (2010), janssen (2000), kleysen and street (2001), as well as scott and bruce (1994). while focussing on these authors, the valuable work of farr and ford (1990), kanter (1988), as well as west and farr (1989) is acknowledged. in the first part of this literature review, definitions of the iwb concept will be presented and analysed. next, the proposed structure of iwb will be presented. the measurement of iwb will then be discussed, together with some psychometric properties of the different proposed instruments. definitions of innovative work behaviour the definitions of iwb provided below build on each other and are in many ways related, with the later researchers often referring to earlier attempts to define iwb. scott and bruce (1994) do not define innovation explicitly in their article, but rather conceptualise it as something more than creativity, where the distinction is substance. they state that creativity relates to the production of novel and useful ideas, whereas innovation has to do with the production or adoption of beneficial ideas and idea implementation. it is therefore not only novelty and new knowledge but also incorporates the reworking of products or processes, and bringing the idea into effect. janssen (2000:288) defines iwb as ‘the intentional creation, introduction and application of new ideas within a work role, group or organization, in order to benefit role performance, the group, or the organization’. later, janssen (2000:288) states that ‘these extrarole [sic] behaviours refer to discretionary employee actions which go beyond prescribed role expectations, and are not directly or explicitly recognized by the formal reward system’. many follow janssen’s (2000) definition of iwb, including bos-nehles et al. (2017), sanz-valle and jiménez-jiménez (2018), as well as veenendaal (2015). when defining iwb, kleysen and street (2001) borrow from west and farr (1989) and explain iwb as ‘all individual actions directed at the generation, introduction and or application of beneficial novelty at any organisational level’ (p. 285). they state that this novelty relates to new products, technologies and processes, aimed at significantly enhancing organisational efficiency and effectiveness. lastly, when defining iwb, de jong and den hartog (2010) reference the work of janssen (2000), as well as scott and bruce (1994), and claim that iwb ‘encompass(es) a broad set of behaviours related to the generation of ideas, creating support for them, and helping their implementation’ (p. 23). they then present the definition of farr and ford (1990) to describe iwb as ‘an individual’s behaviour that aims to achieve the initiation and intentional introduction (within a work role, group or organization) of new and useful ideas, processes, products or procedures’ (p. 24). the structure of innovative work behaviour the aforementioned definitions describe iwb in terms of an input–throughput–output model (kast & rosenzweig 1972), being deterministic (teece 2018), directed to specific outcomes or even being path-dependant (levy 1994). the specific outcomes are presented as positive and being beneficial to the organisation’s success. although all the authors share a multi-dimensional and multi-stage perspective of iwb, it will become clear from what follows that the authors differ in their understanding of the nature and number of dimensions that iwb comprises. scott and bruce (1994) propose iwb as a multi-stage process, consisting of distinct activities associated with each stage. the first stage involves creativity, where ideas or solutions, which may be novel or adopted, are generated. following generation, sponsorship for the idea is necessary, and individuals try to build coalitions in order to further the idea. in the last stage, the innovative individual completes the process by operationalising the idea. this process seems to follow from the work of kanter (1988). kanter proposes a four-stage process, involving idea generation, coalition building, idea realisation and transfer or diffusion. the last stage of ‘spreading the model – the commercialisation of the product, the adoption of the idea’ (kanter 1988:512) seems to be incorporated in idea realisation, as proposed by scott and bruce (1994). scott and bruce (1994), however, state – in contradiction to their presentation of a sequential list of activities – that innovation should for all intents and purposes be regarded as a set of discontinuous activities rather than discrete and sequential stages and that individuals may at any time be involved in any of these activities. janssen (2000) follows scott and bruce‘s (1994) conceptualisation of iwb and also explains it as a multifaceted behaviour consisting of three behavioural tasks, namely, idea generation, idea promotion and idea realisation. janssen (2000) explains that innovation begins with idea generation, which is often instigated by perceived work-related problems, incongruities, discontinuities and emerging trends. next, the idea needs to be endorsed by capable sponsors, so as to provide the necessary assistance for implementation. the last element involves realisation, which includes experimentation, and ultimately the application of the idea. janssen (2000) states that in the case of small innovations, one individual may be involved in all of these activities, while more complex innovations usually require area-specific expertise. janssen (2000) supports the notion that the innovation processes are often characterised by discontinuous activities and that ‘individuals can be expected to be involved in any combination of these behaviors at any time’, as proposed by scott and bruce (1994:582). the development work conducted by janssen (2000) is widely acknowledged, including by lukes and stephan (2017). kleysen and street (2001) confirm the idea that iwb is a multi-dimensional construct and, following an extensive literature, review five elements as essential in individual innovation, namely, opportunity exploration, generativity, information investigation, championing and application. opportunity exploration involves the act of discovering or learning more about innovation opportunities. this involves paying attention to the environment and gathering information about possible opportunities, and therefore looking for possibilities, and recognising innovation opportunities as such. generativity relates to the formulation of creative ideas that refer to beneficial changes and solutions to problems. however, it goes beyond pure creativity and also involves ideas being categorised, associations being drawn between ideas and ideas being combined in new ways. information investigation is concerned with experimentation, thus giving form to specific innovation and trying out new ideas. this requires the accurate formulation of the concept, piloting it and also evaluating the outcome thereof. championing involves the sociopolitical element of innovation. to mobilise the necessary resources and to implement the idea or solution, influencing and persuading are necessary, as change normally involves the challenging of old ways, as well as risk-taking. application forms the final and apex element of innovation behaviour and signifies the adoption of the innovation. this involves the implementation of the solution, reorganising or modifying present systems and ultimately a broad-based acceptance of the new direction. kleysen and street (2001) proposed a model in which each of the factors is related to each other – which is fundamentally based on their confidence in their literature review. de jong and den hartog (2010) stated that theoretically much work has been conducted to distinguish between various dimensions and different stages of the innovation process. they then presented a four-stage scheme of iwb, focussing on idea exploration, generation, championing and implementation. idea exploration could be seen as the first step in the innovative process, where an individual identifies a problem or opportunity, with the urge to overcome the problem or make use of the opportunity. this step identifies problems or opportunities often related to the constant change in the environment, and may include issues related to current products, services or processes. idea generation is the next proposed element of iwb. it relates to the idea of solving the identified problems or making use of the opportunities. it often involves the combination and reorganisation of information and concepts in different ways, therefore ‘rearranging already existing pieces into a new whole’ (de jong & den hartog 2010:24). idea championing is an essential element of innovation as most ideas need to be promoted because of resistance caused by the requirement to change existing ways of doing things, and by the unknown effect of the envisaged benefits of its implementation. often it involves individuals finding support for creative ideas through their informal roles and building coalitions within the organisation. idea implementation follows only after enough support and enthusiasm for the idea have been obtained. this implies operationalising the idea, which requires putting sufficient effort into rolling out the idea and being results-oriented. it could include creating a culture of innovation and organisational learning. de jong and den hartog (2010), however, are aware of the modelling of iwb as a multi-dimensional construct, and therefore tested two hypotheses in presenting their measure of iwb. they claimed that: (1) the four elements contribute to an overall construct (iwb) and (2) the four elements are distinct dimensions of iwb. in this article, similar hypotheses will be tested. the various aforementioned authors are in agreement as to the basic structure of iwb, although they differ on the exact number of stages through which iwb evolves. in many respects, this may be a matter of semantics, or at best a more refined look at the phenomena. in the discussion which follows, more details on the way the authors conceptualise the stage will become clear, as the items they include in their questionnaires reveal a significant part of their thinking. measuring innovative work behaviour the way iwb is measured reflects the conceptualisation of the concept. given below are four measures of iwb, stating the number of items included, the response format used, the items themselves, as well as some information on the reliability and validity of the instruments. scott and bruce (1994) presented a six-item questionnaire, in which supervisors rated employees on a five-point likert-type scale, ranging from ‘not at all’ to ‘an exceptional degree’. the first item read as follows (scott & bruce 1994:606–607): ‘[s]earches out new technologies, processes, techniques and/or product ideas’ [sic]. although references to scott and bruce (1994) are very common, their scale of iwb is not often used. lukes and stephan (2017) used some of the items in developing their own questionnaire, while lin and lee (2017) used the questionnaire in an adapted form. a cronbach’s alpha on this original scale was 0.89 (scott & bruce 1994). lin and lee (2017) reported an α-value of 0.86 on their adapted scale. with respect to validity, scott and bruce (1994) found a correlation of 0.33 (p < 0.001) between an objective measure of innovation, based on each respondent’s innovative history, and the supervisors’ ratings of iwb. they suggest that this provides some assurances as to the validity scale. furthermore, lin and lee (2017) reported, using confirmatory factor analysis (cfa), that employees’ innovative behaviour, organisational learning and work engagement scales each had standardised factor loading larger than 0.7, which they considered as evidence of good convergent validity of each scale. janssen (2000) proposed nine items with which to measure iwb, which can be self-reports or ratings of employees by direct supervisors. respondents were asked to indicate how often they (or in the case of supervisors, employees) could be associated with particular behaviours in the workplace. the response format was a seven-point scale ranging from ‘never’ (1) to ‘always’ (7). the item and the aspects they assess are presented by janssen (2000). the first item read as follows: ‘creating new ideas for difficult issues (idea generation)’ (p. 292). the first three items assessed idea generation, the next three assessed idea promotion, whereas the last three focussed on idea realisation. janssen’s measure was recently used by amir (2015), as well as by javed et al. (2017). janssen (2000) reported cronbach’s alphas of 0.95 for the self-rated and 0.96 for the leader-rated scores of iwb. amir (2015) does not provide any reliability data, but javed et al. (2017) reported an alpha of 0.70. regarding validity, janssen (2000) reported that the intercorrelations between the three aspects of iwb ranged from 0.84 (between idea generation and idea realisation) to 0.87 (between idea generation and idea promotion) for the leader-reports, and from 0.76 (between idea generation and idea realisation) to 0.85 (between idea promotion and idea realisation) for the self-reports. given these high intercorrelations, and following scott and bruce (1994), idea generation, idea promotion and idea realisation were perceived to combine additively to create an overall scale of iwb. amir (2015) replicated the proposed structure of janssen (2000), reporting that a three-dimensional model showed a better fit than two-dimensional and single models. kleysen and street’s (2001) questionnaire comprises 14 items. respondents were asked to rate themselves with regard to each statement on a six-point scale, varying from ‘never’ (1) to ‘always’ (6). all the questions had the same prefix, namely, ‘in your current job, how often do you’. the first item’s individual questions read as follows (kleysen & street 2001:293): ‘ … look for opportunities to improve an existing process, technology, product, service or work relationship?’ the first three items were related to exploration. items 4 and 5 referred to generativity, with the consecutive items, in groups of three, relating to information investigation, championing and application. kleysen and street (2001) reported a reliability coefficient higher than 0.70 for all the sub-scales, which is acceptable (hair et al. 2010). the alpha for opportunity exploration was 0.719. for generativity, it was the same (0.719) and for information investigation it was 0.802. in the case of championing, the alpha was 0.893, and for application it was 0.796. hebenstreit (2003) reported an alpha of 0.948, when using all the items. lu and li (2010) found a two-factor solution, and reported the cronbach’s alpha values as 0.860 for each of these factors. wojtczuk-turek and turek (2013) also reported on a two-factor solution, with values of 0.880 and 0.890 respectively. the results of the cfa performed by kleysen and street (2001) did not lend empirical support to the theorised structure. however, these authors argued that as the items were developed to represent a well-defined domain, this provided construct validity to the measure. although kleysen and street (2001) suggested the use of the items as a single measure of innovation behaviour, they also stated that their research demonstrates the multi-dimensionality of the construct. hebenstreit (2003), following this stance, reported on a single factor. lu and li (2010), on the other hand, reported two factors (innovative idea generation and innovative idea implementation), as do wojtczuk-turek and turek (2013), who refer to these factors as: (1) recognising problems and initiating activities, as well as (2) generating ideas and implementing them. de jong and den hartog (2010) stated that the aim of their questionnaire was to capture the multi-dimensional measures of individual innovative behaviour, as such an instrument was not available at the time, and owing to the fact that the construct is theoretically treated as multi-dimensional. the questionnaire contained 10 items, to be completed by supervisors. the responses ranged from ‘never’ (0) to ‘always’ (6). all the items have the same prefix, namely, ‘how often does this employee …’. the first question reads as follows (de jong & den hartog 2010:29): ‘… pay attention to issues that are not part of your daily work?’ idea exploration (items 1 and 2), generation (items 3, 4 and 5), championing (items 6 and 7) and implementation (items 8, 9 and 10) were the dimensions assessed by the questionnaire. the de jong and den hartog (2010) instrument is used by de spiegelaere et al. (2014), niesen et al. (2018), as well as by polston-murdoch (2015). veenendaal (2015) adopted items from de jong and den hartog (2010) and kleysen and street (2001) when they developed their own measure. de jong and den hartog (2010) reported a cronbach’s alpha coefficient of 0.90 for idea exploration, 0.88 for idea generation, 0.95 for idea championing and 0.93 for idea implementation. these coefficients are consistently high and acceptable (hair et al. 2010). atitumpong and badir (2017) reported an alpha of 0.880, when using all the items. reporting on two dimensions, de spiegelaere et al. (2014) reported alphas of 0.910 and 0.930, respectively. similarly, niesen et al. (2018) reported on two factors, with values of 0.870 and 0.900, respectively, with 0.870 when using all the items. applying cfa as well as simple correlation analysis, de jong and den hartog (2010) concluded that the four elements contributed to an overall construct of iwb, rather than being four distinct dimensions of iwb. atitumpong and badir (2017) reported on a single factor, while de spiegelaere et al. (2014) identified two factors, which they named idea generation and idea implementation. niesen et al. (2018) also reported on two factors, which they call idea generation and idea implementation. furthermore, de jong and den hartog (2010) tested three hypotheses relating to the criterion validity of the instrument, all of which were supported. most importantly, scores on the iwb scale correlated positively with innovative outcomes. from the aforementioned, some differences among the authors regarding the stage-type conceptualisation of iwb is visible. although scott and bruce (1994) presented their measure as a single scale (six items), the items seem sequential. the others present items linked to dimensions, which also appear sequential. the authors agree on the perceived multi-dimensional nature of iwb but disagree on the number of these dimensions. also, researchers attempt to replicate these theorisations empirically applying factor analyses, often resulting in them resurging back to simpler or single models, based on their empirical findings. there seems to be a dissonance between the theory and the empirical evidence, which is (inadequately) ascribed to iwb comprising discontinued activities and individuals being involved in several of these activities simultaneously – as originally suggested by scott and bruce (1994). these inadequate explanations suggest a theoretical flaw in the understanding of the structure of iwb. bos-nehles et al. (2017:1229) echoed this and stated that ‘ … knowledge about iwb … is fragmented and inconsistent’ and ‘as such, organisations may be restricted in their ability to innovate … because they do not know how to trigger employees in a way that will encourage them to engage in iwb’. the aim of the study was to achieve more clarity on the conceptualisation of iwb through testing different measurement models to reveal which data-driven model best explains the phenomena. using increasingly advanced modelling techniques may reveal the precise structure of iwb. method population and sampling the target population consisted of all employees and all organisations. however, availability, accessibility, proximity and cost necessitated a focus on south african organisations. only medium to large organisations were targeted. to gain access to these organisations, master of business leadership students were recruited to gain permission to conduct research in these medium to large organisations. in most cases, access to organisations was granted to the students based on their relationships with specific organisations. in most cases, they were employed by these companies. the sampling of corporate entities was therefore based on convenience. the students were required to draw a random sample of employee lists in the organisations to which they received access. each student was requested to deliver 60 completed questionnaires. to achieve this, they started off by drawing a sample of 60 and then, depending on the response rate, drew fresh samples from the original list until they reached the target of 60. although the sampling process was not perfect, it inclined towards a random sample. measurement instrument kleysen and street’s (2001) 14 item iwb questionnaire, discussed above, was used. as stated above, respondents were asked to rate themselves with regard to the 14 statements on a six-point scale, ranging from ‘never’ (1) to ‘always’ (6). the first three items measured exploration, with items 4 and 5 measuring generativity. the information investigation, championing and application were each measured with three items. historic reliability and validity information, as provided above, were at an acceptable level. participants in total, data were collected from 3180 respondents. after removing cases with missing data, as well as data sets with out-of-range data, 3 096 cases remained. participants represented the following race groups: asian 8.4%, black people 58.1%, mixed ethnicity 8.4% and white people 25.1%. the mean age for the group was 37.81 years, with a standard deviation of 9.10. in terms of schooling, 4.5% reported ‘less than 12 years schooling’, 25.1% reported ‘12 years of schooling’, 40.5% reported ‘1st degree/diploma’ and 29.7% reported ‘higher degree/higher diploma’. with regard to tenure, the mean tenure was 8.46 years, with a standard deviation of 7.45 years. in total, 36.3% of respondents reported that they held a managerial position. when reporting on being involved in the core business of the organisation, versus support services, 45.2% of respondents reported that they were involved in the core business of their companies. analysis the analyses were performed with ibm spss statistics (ibm spss statistics 2017) and with the lavaan package (rosseel 2012) in r (r core team 2013). demographic data were generated first to define the sample. this was followed by descriptive data on the 14 items, including skewness and kurtosis. this was done to assess if the data did not diverge significantly from normality. the data did not diverge significantly. cronbach’s alpha coefficients for the iwb were then calculated. this value, reported later, was deemed acceptable (>0.90), which allowed for the analysis of the suitability of the data for factor analyses. kaiser–meyer–olkin’s measure of sampling adequacy (kmo) and bartlett’s test of sphericity were performed and the results were acceptable, with kmo being excellent (>0.90 – [field 2009]) and the bartlett’s test value being significant, and therefore acceptable (pallant 2013). this allowed for the performance of exploratory factor analyses (efa). given outputs of the efa, and particularly the strong one-factor solution suggested by the difference between the first and the second eigenvalue, the correlation between the factors of the efa was calculated, as well as the schmid–leiman transformed solution, which reflects the direct relationships between the items with the general factor and the residualised group factors (schmid & leiman 1957). the aforementioned did not provide comprehensive or conclusive results pertaining to the factorial structure of the iwb questionnaire; therefore, confirmatory factor analyses (cfi) were performed wherein five different fit models were tested. figure 1 graphically presents the different models tested. figure 1: measurement models for the innovative work behaviour. in figure 1, combining (d) and (c) denotes a five-factor orthogonal model. linking (d), (c) and (b) represents a correlated five-factor model. joining (d), (c) and (a) represents a higher-order five-factor model. when adding (d) and (e), a single-factor model is presented and with (d), (c) and (e) a combined bi-factor model is attained. as the χ² statistic is no longer relied upon as a basis for the acceptance or rejection of model fit (schermelleh-engel, moosbrugger & müller 2003; vandenberg 2006), it was not reported. six measures of fit were reported on, namely, comparative fit index (cfi), tucker-lewis index (tli), akaike information criterion (aic), bayesian information criterion (bic), root mean square error of approximation (rmsea) and standardised root mean square residual (srmr). comparative fit index and tli values greater than 0.95 were used as being indicative of a good model fit (vandenberg & lance 2000). no specific cut-off values for aic or bic were specified and the rule of thumb was rather used, which states that the model with the lowest aic or bic value is the better fitting model (schreiber et al. 2006; van de schoot, lugtig & hox 2012). some suggest a cut-off value for rmsea < 0.08 (van de schoot et al. 2012), others rmsea < 0.06 (schreiber et al. 2006) while awang (2012) and hair et al. (2010) suggest that the model fit is acceptable when rmsea < 0.05. in this research, the more generous cut-off value for rmsea < 0.08 (van de schoot et al. 2012) was used. this fits in well with srmr < 0.08 seen as indicative of acceptable model fit, as suggested by browne and cudeck (1993). ethical consideration ethical clearance to conduct this research was obtained from the graduate school of business leadership at the university of south africa, with ethical clearance number: 2014_sbl_018_ca. results descriptive statistics the following are descriptive statistics of the scores on the individual iwb items, as well as the total scores. from table 1, it can be observed that the mean scores for exploration (items 1, 2, and 3) and generativity (items 4 and 5) were visibly higher than in the case of the other constructs. this may be interpreted as some ideas just remaining as ideas and not resulting in innovation. this aspect will be addressed in more detail in the discussion section. the skewness and kurtosis data indicate that the distribution of the data does not diverge from normality. table 1: descriptive statistics. exploratory factor analysis the kaiser–meyer–olkin measure of sampling adequacy was acceptable at 0.961 and bartlett’s test of sphericity yielded significant results (p < 0.001), which suggested that the data were factorable. exploratory factor analysis was performed to test for the presence of a five-factor solution, as proposed by some literature. the results of the pattern matrix are presented below, where all items with a loading higher than 0.30 are bolded. five factors accounted for 80.04% of the variance in the data. from table 2, it is evident that the structure created through efa resembles the theorised structure well. apart from item 12, all the items loaded on separate factors, clustering with the items that measure the same sub-construct. for the five-factor solution rmsr = 0.01, tli = 0.98 and rmsea = 0.048 (90% ci: 0.042 – 0.053) indicated a good fit of a five-factor model. the bic = -0.86. table 2: exploratory factor analysis. however, the eigenvalues of the factors (8.59, 0.90, 0.64, 0.57 and 0.56) suggested a very strong general factor. to explore this possibility, the correlations between the factor loadings were calculated. the range of the correlations was between 0.62 and 0.82, which is relatively high (see hair et al. 2010). this prompted testing for the extent to which a higher factor may explain the variance in the data. a schmid–leiman transformed solution (schmid & leiman 1957), which transforms a higher-order factor solution into an orthogonal hierarchical solution with a general factor and residualised group factors was obtained. this solution reflects the direct relationships of the items with the general factor and the residualised group factors. the general factor accounted for 80% of the common variance among the 14 items (explained common variance = 0.80). this may be indicative that the general factor saturated the total score significantly. against this background, a general factor model was tested, to assess the adequacy of just a general factor and no group factors. this yielded the following fit statistics: rmsr = 0.06, bic = 2 354.59 and rmsea index = 0.11 (90% ci 0.107–0.114). as a whole, these results indicate that a general factor model does not adequately account for the covariances of the 14 items. confirmatory factor analysis confirmatory factor analyses were performed, focussing on variations of the five-factor solution. five models were tested to assess which theoretical structure fitted the data best. firstly, a five-factor model with correlated factors was tested (see figure 1; d + c + b). next, a higher-order model was tested, specifying that the five factors load on a single higher-order factor (see figure 1; d + c + a). an orthogonal five-factor model was then tested (see figure 1; d + c). after that, a bi-factor model was tested – implying that the data could be explained by a single general factor and five residualised group factors (see figure 1; d + c + e). lastly, a single factor solution was tested (see figure 1; d + e). in table 5, the item loadings related to the different models are presented. the factor loadings for each of the models are presented in table 5. table 6 complements figure 1 in explaining the different fit models as well as the items and residualised group factors included in the analyses. from table 6, it can be observed that loadings were consistently high in all models, except for the bi-factor model, where the loadings on the general factor were high, but the loadings on the five group factors were consistently less salient. to test which of the theoretical structures fitted the data best, several fit statistics were calculated. these are presented below. in table 6, it can be observed that the orthogonal model, given cfi, tli, rmsea and srmr, did not meet the requirement for acceptable fit. all the other models met the basic requirements of satisfactory fit. from the results in table 6, it can be seen that the correlated five-factor model and the bi-factor model competed well for the best fit, outperforming the higher-order and the single-factor models substantively. for the five-factor model and the bi-factor model, most of the statistics are identical, with aic being lower (better) in the bi-factor model and bic being lower (better) in the five-factor model. the standardised root mean square residual was also lower for the five-factor model, which suggests better fit. the five-factor model was adopted as the best representation of the present data, as more parameters indicated that the fit is best, but also as it represents a simpler model, which is mostly desirable. figure 2: correlated five-factor model for the innovative work behaviour. discussion having a clear understanding of what iwb entails is important as it relates to important organisational outcomes (bos-nehles et al. 2017; sanz-valle & jiménez-jiménez 2018; veenendaal 2015). although most researchers interested in iwb conceptualise and measure iwb as a multi-stage process (de jong & den hartog 2010; farr & ford 1990; janssen 2000; kanter 1988; kleysen & street 2001; scott & bruce 1994; west & farr 1989), they experience difficulty in trying to emulate these stages when applying factor analyses. referring to kleysen and street’s (2001) measure of iwb, neither these authors nor hebenstreit (2003), lu and li (2010) or wojtczuk-turek and turek (2013) could replicate the structure, reporting simpler models with factors. with regard to the de jong and den hartog (2010) instrument, the same problems were experienced (see atitumpong and badir [2017], de spiegelaere et al. [2014] and niesen et al. [2018]). scott and bruce’s (1994) explanation for realising less factors when testing measurement models of iwb, supported by de jong and den hartog (2010), janssen (2000), and scott and bruce (1994), is still unsubstantiated. the present study was therefore necessary, in order to shine some light on the matter, using more complex models to unravel relationships between the different elements of iwb. in the present study, a large group of respondents (3096 employees), comprising both men and women, representative of the ethnic diversity of the south african workforce when considering statistics south africa requirements, completed the questionnaire. the collected data on the iwb questionnaire (kleysen & street 2001) did not deviate meaningfully from the normal distribution and the cronbach’s alpha of 0.950 indicates high reliability. an interesting fact emerges from the descriptive statistics, namely, that the scores for the first two constructs (exploration and generativity) are considerably higher than the scores for the following constructs (information investigation, championing and application). this may suggest that more employees explore and generate ideas than those who make an effort to implement them. this intuitively makes sense, as it takes much more effort to implement an idea rather than coming up with one. this could also be a managerial concern, where management does not enable employees to voice or implement their ideas. the efa revealed a factorial structure in line with the structure suggested by kleysen and street (2001), with the exception of item 12, which loaded on both championing and application (see table 2). item 12 refers to ‘… implement(ing) changes that seem to be beneficial?’ (kleysen & street 2001:293). it could be that respondents interpreted this statement from a managerial perspective as championing, rather than from an operational perspective, as application, particularly as 36.3% of respondents reported that they held some managerial position. despite the double loading of item 12, all the other items loaded in accordance with their theorised function. the strong correlation between the factors extracted through efa (see table 3), the eigenvalues pointing to a single general construct and the reporting of a single construct by hebenstreit (2003) necessitated testing for a general construct model. the schmid–leiman transformation was performed (see table 4), with the general factor accounting for 80% of the common variance among the 14 items. the fit statistics revealed that the general factor model does not adequately account for the covariances among the items. using the lavaan package (rosseel 2012) in r (r core team 2013), five competing factorial models were tested (see table 5). the fit of the orthogonal model, suggesting that the factors are independent and unrelated, was very poor, which supports the theory that the elements of iwb are indeed related, given argumentum ad ignorantiam. however, four subsequent models in which the items and/or factors are related were tested. the weakest of these, by far, was the single factor solution, which was therefore excluded as a candidate for ideal fit. this finding is contrary to the findings of kleysen and street (2001) and hebenstreit (2003), who theorised about the existence of separate factors, but who could statistically find only a single factor. table 3: correlation among extracted factors. after considering the remaining models (the higher-order five-factor, the bi-factor models and the correlated five-factor model), the bi-factor models and the correlated five-factor model yielded almost equal results. the correlated five-factor model was accepted as the best fitting model, given the fit statistics being the best for most parameters. also, in the competing bi-factor model, many items did not have significant loadings (see table 6), while consistent high loadings were reported in the same table for the correlated five-factor model. furthermore, simpler models are desirable, particularly where application is concerned (aguilar-savén 2004). the best fitting factorial structure for the iwb is presented below. conclusion a correlated five-factor model explains the measurement fit of iwb as proposed by kleysen and street (2001) and appears to be superior to all other factorial models. this suggests that iwb indeed comprises separate but dependent sub-constructs. it has implications for those interested in enhancing iwb, as it could be possible to focus on specific aspects of the phenomena so as to foster its development as a whole. it also shows the relatedness of the different sub-constructs, echoing scott and bruce’s (1994) notion that individuals performing iwb are involved in several of these activities simultaneously. this also has interventional implications, as fostering iwb should then not involve interventions at any specific part or at the start of the process (e.g. exploration and generativity), but also intervention at later stages of the process (e.g. information investigation, championing, and application), as they are all related. this makes sense if it is argued that an employee who has knowledge regarding how to implement ideas would also be more keen to generate them. interventions at both these levels should thus be considered. future researchers are encouraged to use iwb, as proposed by kleysen and street (2001), in their research as a five-factor correlated construct, as originally proposed by these authors. table 4: schmid–leiman solution. table 5: loading of the different items per model. table 6: fit statistics. acknowledgements the authors are grateful for the assistance of the master of business leadership class of 2014 for collecting the data and the graduate school of business leadership research ethics review committee for allowing access to the data used in this study. authors’ contributions r.s. constructed the research as part of his doctoral degree and therefore wrote the concept paper. g.d.b. was the supervisor of the study and assisted in the statistical analysis and writing of the final article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data can be obtained from the authors upon reasonable request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references aguilar-savén, r.s., 2004, ‘business process modelling: review and framework’, international journal of production economics 90(2), 129–149. https://doi.org/10.1016/s0925-5273(03)00102-6 amir, m.t., 2015, ‘innovative behavior as a multidimensional construct’, jurnal manajemen teknologi 14(1), 66–80. https://doi.org/10.12695/jmt.2015.14.1.5 atitumpong, a. & badir, y.f., 2017, ‘leader-member exchange, learning orientation, and innovative work behavior’, journal of workplace learning 30(1), 32–47. https://doi.org/10.1108/jwl-01-2017-0005 awang, z., 2012, structural equation modelling using amos graphic, 1st edn., universiti teknologi mara press, shah alam. bos-nehles, a., renkema, m. & janssen, m., 2017, ‘hrm and innovative work behaviour: a systematic literature review’, personnel review 46(7), 1228–1253. https://doi.org/10.1108/pr-09-2016-0257 browne, m.w. & cudeck, r., 1993, ‘alternative ways of assessing model fit’, in k.a. bollen & j. scott long (eds.), testing structural equation models, pp. 1–9, sage, newbury park, ca. de jong, j. & den hartog, d., 2010, ‘measuring innovative work behaviour’, creativity and innovation management 19(1), 23–36. https://doi.org/10.1111/j.1467-8691.2010.00547.x de spiegelaere, s., van gyes, g., de witte, h., niesen, w. & van hootegem, g., 2014, ‘on the relation of job insecurity, job autonomy, innovative work behaviour and the mediating effect of work engagement’, creativity and innovation management 23(3), 318–330. https://doi.org/10.1111/caim.12079 farr, j. & ford, c., 1990, ‘individual innovation’, in m. west & j. farr (eds.), innovation and creativity at work: psychological and organizational strategies, pp. 63–80, wiley, chichester. field, a., 2009, discovering statistics using spss, 3rd edn., sage, london. hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2010, multivariate data analysis, prentice hall, upper saddle river, nj. hebenstreit, j.j., 2003, ‘nurse educator perceptions of structural empowerment and innovative behaviour’, structural empowerment/nursing education research 33(3), 297–301. https://doi.org/10.5480/1536-5026-33.5.297 ibm spss statistics, 2017, ibm spss statistics for windows, version 25.0, ibm corp, armonk, ny. janssen, o., 2000, ‘job demands, perceptions of effort–reward fairness and innovative work behaviour’, journal of occupational and organizational psychology 73(3), 287–302. https://doi.org/10.1348/096317900167038 javed, b., bashir, s., rawwas, m.y.a. & arjoon, s., 2017, ‘islamic work ethic, innovative work behaviour, and adaptive performance: the mediating mechanism and an interacting effect’, current issues in tourism 20(6), 647–663. https://doi.org/10.1080/13683500.2016.1171830 kanter, r.m., 1988, ‘three tiers for innovation research’, communication research 15(5), 509–523. https://doi.org/10.1177/009365088015005001 kast, f.e. & rosenzweig, j.e., 1972, ‘general systems theory: applications for organization and management’, academy of management journal 15(4), 447–465. kleysen, r.f. & street, c.t., 2001, ‘toward a multi-dimensional measure of individual innovative behavior’, journal of intellectual capital 2(3), 284–296. https://doi.org/10.1108/eum0000000005660 levy, d., 1994, ‘chaos theory and strategy: theory, application, and managerial implications’, strategic management journal 15(s2), 167–178. lin, h.-c. & lee, y.-d., 2017, ‘a study of the influence of organizational learning on employees’ innovative behavior and work engagement by a cross-level examination’, eurasia journal of mathematics, science and technology education 13(1), 3463–3478. https://doi.org/10.12973/eurasia.2017.00738a lu, x. & li, p., 2010, ‘the impact of learning culture on individual innovative behavior’, in 2010 international conference on management and service science, wuhan, china, august 24–26, 2010, pp. 1–4. https://doi.org/10.1109/icmss.2010.5577177 lukes, m. & stephan, u., 2017, ‘measuring employee innovation’, international journal of entrepreneurial behavior & research 23(1), 136–158. https://doi.org/10.1108/ijebr-11-2015-0262 niesen, w., van hootegem, a., vander elst, t., battistelli, a. & de witte, h., 2018, ‘job insecurity and innovative work behaviour: a psychological contract perspective’, psychologica belgica 57(4), 174–189. https://doi.org/10.5334/pb.381 pallant, j., 2013, spss survival manual, 5th edn., mcgraw-hill, berkshire. polston-murdoch, l., 2015, innovative behavior in local government: exploring the impact of organizational learning capacity, authentic leadership, psychological empowerment, and the moderating role of intrinsic motivation, regent university school of business & leadership, regent university, virginia beach, va. r core team, 2013, r: a language and environment for statistical computing, r foundation for statistical computing, vienna, viewed 19 november 2018, from https://www.r-project.org/ rosseel, y., 2012, ‘lavaan: an r package for structural equation modeling’, journal of statistical software 48(2), 1–36, viewed 19 november 2018, from https://www.jstatsoft.org/article/view/v048i02 sanz-valle, r. & jiménez-jiménez, d., 2018, ‘hrm and product innovation: does innovative work behaviour mediate that relationship?’, management decision 56(6), 1417–1429. https://doi.org/10.1108/md-04-2017-0404 schermelleh-engel, k., moosbrugger, h. & müller, h., 2003, ‘evaluating the fit of structural equation models: tests of significance and descriptive goodness-of-fit measures’, methods of psychological research online 8(2), 23–74. schmid, j. & leiman, j.m., 1957, ‘the development of hierarchical factor solutions’, psychometrika 22(1), 53–61. schreiber, j.b., stage, f.k., king, j., nora, a. & barlow, e.a., 2006, ‘modeling and confirmatory factor analysis results: a review’, journal of educational research 99(6), 323–337. https://doi.org/10.3200/joer.99.6.323-338 scott, s.g. & bruce, r.a., 1994, ‘determinants of innovative behavior: a path model of individual innovation in the workplace’, the academy of management journal 37(3), 580–607. https://doi.org/10.2307/256701 statistics south africa, 2018, quarterly labour force survey, viewed 02 october 2018, from www.statssa.gov.za/publications/p0211/p02112ndquarter2018.pdf teece, d.j., 2018. ‘dynamic capabilities as (workable) management systems theory’, journal of management & organization 24(3), 359–368. https://doi.org/10.1017/jmo.2017.75 van de schoot, r., lugtig, p. & hox, j., 2012, ‘a checklist for testing measurement invariance’, european journal of developmental psychology 9(4), 486–492. https://doi.org/10.1080/17405629.2012.686740 vandenberg, r.j. & lance, c.e., 2000, ‘a review and synthesis of the measurement invariance literature: suggestions, practices, and recommendations for organizational research’, organizational research methods 3(1), 4–70. vandenberg, r.j., 2006, ‘statistical and methodological myths and urban legends’, organizational research methods 9(2), 94–201. veenendaal, a.a.r., 2015, ‘enhancing innovation at work through human resource management’, university of twente. von bertalanffy, l., 1968, general system theory: foundations, development, applications, george braziller, new york. west, m.a. & farr, j.l., 1989, ‘innovation at work: psychological perspectives’, social behaviour 4(1), 15–30. wojtczuk-turek, a. & turek, d., 2013, ‘innovativeness in organizations: the role of lmx and organizational justice: the case of poland’, synergia international journal of synergy and research 2(1), 41–55. footnote 1. scott and bruce (1994), and later janssen (2000), collapsed the three stages of iwb that they theoretically proposed into a single construct when measuring it. kleysen and street (2001) were also unable to substantiate the five stages of iwb that they proposed, and just like de jong and den hartog (2010), who proposed four stages, eventually reported on less complex measurement models. abstract introduction literature review research design findings and discussion practical implications limitations and recommendations for future research conclusion acknowledgements references about the author(s) nicky h.d. terblanche university of stellenbosch business school, university of stellenbosch, cape town, south africa rajesh j. jock university of stellenbosch business school, university of stellenbosch, cape town, south africa marius ungerer university of stellenbosch business school, university of stellenbosch, cape town, south africa citation terblanche, n.h.d., jock, r.j. & ungerer, m., 2019, ‘creating and maintaining a commercially viable executive coaching practice in south africa’, southern african journal of entrepreneurship and small business management 11(1), a192. https://doi.org/10.4102/sajesbm.v11i1.192 original research creating and maintaining a commercially viable executive coaching practice in south africa nicky h.d. terblanche, rajesh j. jock, marius ungerer received: 10 may 2018; accepted: 04 dec. 2018; published: 17 apr. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: the executive coaching industry is growing internationally and in south africa. as is typical of small businesses, many struggle to survive. factors contributing to small business success have been researched, but research in the context of the executive coaching industry in south africa is sparse. aim: the aim of this study was to investigate the factors that contribute to creating and maintaining a commercially viable executive coaching practice by examining executive coaching businesses through the lens of a standard business model template consisting of value network, value architecture, value proposition and value finance dimensions. method: a qualitative methodology was followed to gather data from executive coaches in south africa. data from two focus groups (eight participants) and four semi-structured interviews were analysed using deductive content analysis to ascertain the nature of executive coaching practices in terms of a standard business model template. results: the most significant factors contributing to a successful executive coaching business include forming alliances, leveraging previous experience, employing multiple income streams and evolving as business owner. significant factors that present challenges include the lack of a business strategy, finding clients and underestimating earnings potential. these findings could assist aspiring and established executive coaches to plan and structure their coaching business. executive coach training providers could incorporate these findings into their curricula to prepare new coaches for the realities of running a coaching business. conclusion: empirical evidence of factors that contribute to successful executive coaching businesses may help guide coaches to a more realistic view of the profession, in the process contributing to the maturing of the growing executive coaching industry in south africa. keywords: executive coaching; business models; small business management; commercial viability; coaching practice. introduction executive coaching is a fast-growing industry, yet many executive coaching businesses struggle to survive (cavett 2015). coaching in the business context, referred to as executive coaching (and used interchangeably with the term ‘coaching’ in this article), can be defined as a confidential, individually tailored engagement designed to meet the needs of both the executive being coached and the organisation paying for the service (coutu & kauffman 2009). the executive coaching industry has witnessed rapid growth internationally and in south africa. it is estimated that in 2016 there were 53 000 coaches worldwide, with a growth of 1500 coaches per year for the last 4 years (forbes.com 2017). in south africa, the two main governing bodies for coaching, coaches and mentors of south africa (comensa) and the international coach federation (icf), claim to have approximately 1200 (j. myburg [comensa] pers. comm., 10 april 2018) and 389 (icf 2018) members, respectively. executive coaching is popular because it has been shown to deliver improved management performance, help executives manage business complexity, accelerate leadership development, improve team performance and encourage self-reflective awareness through challenge existing mental models (coutu & kauffman 2009; freedman 2011; kombarakaran et al. 2008). many people are drawn to the executive coaching profession by the promise of increased freedom, balanced lifestyle, self-control and a reprieve from corporate politics, bureaucracy and pressure (fairley & stout 2004; passmore 2015). setting up a coaching practice typically requires training as a coach, which can be expensive (sparrow 2009), but many aspiring coaching business owners are ambitious and optimistic that the return on investment will be worth their investment. the reality is somewhat different. cavett (2015) cites a study conducted by newton (2013) in the uk in which they claim that of 400 business coaches surveyed, 25% have earned less than £5000 from coaching per year since 2009. the icf found that 70% of coaches earn less than $50 000 per year (grodzki & allen 2005). statistics for south africa are difficult to find, but anecdotal evidence suggests that the picture is similar and that earning a living from the business of coaching is not easy. the problem seems to be that coaches often embark on small business initiatives without adequate preparation or information. similar to other small business owners, some coaches lack the skills, knowledge and strategies to succeed in business (van eeden, viviers & venter 2003). whilst many regard small businesses as the backbone of the south african economy, there has been recognition of the high failure rate among these small businesses (nieuwenhuizen & kroon 2002; pretorius & le roux 2011; van eeden et al. 2003). business failure occurs when a business owner files for bankruptcy, ceases operations or is breaking even with neither a liveable income nor a fair return to the investors from the business (ropega 2011). according to forbes, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months (forbes.com 2015), whilst pretorius (2009) states that between 50% and 90% of entrepreneurial ventures fail. circumstantial evidence suggests that coaching businesses in south africa appear not to be exempt from the spectre of start-up failures. the reasons are unclear, but could be related to the fact that coaching businesses face similar challenges to typical start-ups (cavett 2015). given the growing trend of the coaching industry in south africa, this gap in knowledge creates an opportunity to conduct empirical research into the dynamics of coaching businesses to identify the factors that contribute to create and maintain a successful coaching practice. one approach to understand the dynamics of a business is to study its functioning in terms of a business model (bm) template (zott & amit 2013). a firm’s bm is the layer between a business strategy and business processes that implement the strategy (casadesus-masanell & ricart 2010; teece 2010). osterwalder et al. (2010:14) describe a bm as being the ‘rationale of how an organisation creates, delivers, and captures value’. a bm template seems to hold promise for understanding the aspects that contribute to an organisation’s short-term profitability and long-term sustainability. it appears therefore that insight may be gained into the factors that contribute to the success of coaching businesses in south africa, if the manner in which these businesses create, deliver and capture value, can be understood in terms of a bm template. thus, the research question that guided this study was the following: what are the factors that contribute to creating and maintaining a commercially viable executive coaching practice in south africa as seen through the lens of a standard business model template? the aim of this research was to explore the factors that promote and inhibit successful executive coaching businesses using a bm template as a classification framework. this article first sets the context for the research by reviewing the literature relating to the challenges facing coaching as an instance of a small to medium enterprise, as well as the theory of bms. next, the research design is explained, followed by the presentation and discussion of the findings. the article concludes by highlighting the practical implications and limitations of this research and suggestions for further research. literature review smalland medium-sized enterprises in south africa in south africa, smalland medium-sized enterprises (smes) make up an estimated 91% of formalised businesses and provide employment to about 60% of the labour force and total economic output accounts for roughly 34% of gross domestic product (gdp) (banking association south africa 2016). in terms of doing business in south africa, the national small business amendment act 26 of 2003 (rsa 2003) would classify a coaching practice under one of two categories: (1) finance and business services or (2) community, social and personal services. a coaching practice would be characterised as either a medium, small, very small or micro enterprise, depending on (1) the total full-time equivalent of paid employees and (2) the total annual turnover. smith and watkins (2012) describe the south african entrepreneurial landscape as a milieu in which smes operate in the same environment without adequate resources. these enterprises encounter increasing competitive pressure fuelled by globalisation, legislation, relaxing trade barriers and an increase in market expansion because of emerging technologies and innovation. regardless of the support provided by government, small businesses operate under the strain of fluctuating exchange rates, high interest rates and inflation (african development bank group 2014), which could affect the potential effectiveness of various business strategies they employ. coaching businesses are no exception and share certain challenges with other small enterprises including a lack of management skills and inadequate skilled labour, finance and obtaining credit, access to markets, developing relationships with customers, recognition by large companies and government bureaucracy (banking association south africa 2016). because of these and other challenges, small businesses often fail owing to financial disaster, strategic inability to compete and the loss of key customers (cortez 2010). these types of failures can be linked to inability to anticipate obstacles (timmons & spinelli 2007). from this perspective, the failure of a business can rarely be attributed to forces not under the control of management, such as recession, interest rate changes, government policy changes or new competition. timmons and spinelli (2007) conclude that most causes of failure are found within the company’s management, which they classify into three broad areas: (1) inattention to strategic issues, (2) general management problems and (3) poor financial or accounting practices. adding to this, naqvi (2011) points out that one should not dismiss the individual characteristics of owners as they play a significant role in the success of the business as they benefit from the owner’s previous experience. to survive these challenges, smes are advised to develop sound business strategies, which could mean the difference between failure and success (thompson, bounds & goldman 2012). however, thompson et al. (2012) suggest that smes are not well versed in strategic planning. typical sme strategic planning seems to ignore non-financial aspects and focus mostly on budgets, financial forecasts and cash flow. furthermore, the planning time frames do not exceed 1 year, perhaps because of the dynamic nature of sme businesses. smalland medium-sized enterprises also do not make sufficient use of technology innovation, and research has shown that they do not possess adequate information and communication technology (ict) skills to leverage free social media platforms that could increase their market exposure (antonites & kliphuis 2011). coaching business as an instance of a smalland medium-sized enterprises starting a coaching business presents additional challenges to the ones mentioned above. coaching is a non-regulated industry, which means that anyone can call himself or herself a coach. this presents a challenge to trained coaches as reflected in an icf survey, where 43% of coaches rated ‘untrained people who call themselves coaches’ as the biggest threat to the coaching industry (icf 2012). fairley and stout (2004) elaborate on challenges that coaching businesses face: coaches often compete with more sophisticated players such as consultants and companies with large marketing budgets. furthermore, the slow corporate decision-making process implies long sales cycles, which, in turn, leads to time spent without compensation, given that executive coaches are typically paid per hour. corporate expenditures on coaching services are dependent on company performance and a drop in profit typically means a cut in spending on perceived non-essential services such as coaching (fairley & stout 2004). the conclusion drawn from this review is that in addition to typical challenges faced by smes, coaching businesses face a number of unique challenges, which add up to a demanding environment in which to achieve business success. business model templates osterwalder et al. (2010:14) define a bm as being the ‘rationale of how an organization creates, delivers, and captures value’. to explain the function of organisations as dynamic and interactive processes, zott, amit and massa (2011) contend that the bm is a new unit of analysis. this unit of analysis is in addition to the product, firm, industry or network levels. a bm offers a systematic perspective on how to do business, encompassing organisational activities and provides a view on the process of value creation and value capture. zott and amit (2010:1) thus define a bm as: ‘a system of interdependent activities that are performed by the firm and by its partners and the mechanisms that link these activities to each other’ and ‘a template that depicts the way the firm conducts its business’ (zott & amit 2013:404). the bm is a broadly discussed concept in academia and practice. the term ‘business model’ has become prominent and has been widely used since the boom of the internet in the late 1990s, originating in internet entrepreneurship and e-commerce and then evolving into business and strategy research. in their seminal book business model generation, osterwalder et al. (2010) conclude that it represents the firm’s money-earning logic. within the architecture of the firm, a bm is located between the strategic and operational layers (osterwalder 2004). in their review, zott et al. (2011) reveal a strong consensus that the bm revolves around customer-focused value creation. during the last decade and a half, the bm as a construct has become useful to researchers and practitioners alike for coming to grips with the new realities of doing business in a highly interconnected world. a bm is pertinent to new ventures or innovation-driven industries. most research on bms lies in the literature on strategy and competitive advantage and focuses on its role as descriptors of actual phenomena that characterise different categories of a business (baden-fuller & mangematin 2013). there is transformed behaviour in start-ups that utilises a bm approach. ries (2011) states that a bm seems a priori for a young business that needs sustainability designed at its core. what the bm methodology delivers is repeatable, actionable processes for building products whilst minimising on waste. this allows for making start-up decision-makers more perceptive to further related opportunities or places them in a better position to cope with delays from the environment (maurya 2012). using a business model template to understand smalland medium-sized enterprises given the pertinent insight that bms provide on the success factors of a business, it would appear that the use of a bm template could provide useful insight into coaching businesses. for the purpose of this study, the four generic bm components (ranerup, zinner henriksen & hedman 2016) as originally proposed by al-debei and avison (2010) from their unified framework of the bm concept were used as a lens to examine the experiences of running a coaching business from the perspective of owner-coaches. the core value chain components of the bm (al-debei & avison 2010:362) are the following: value proposition (vp): factors related to the offer of services, products and activities that create value for users value architecture (va): factors related to how resources (tangible or intangible) are constructed to create value for users (e.g. technological configurations and organisational structure) value network (vn): factors related to decision-makers (internal and external) and their roles in transactions and collaboration value finance (vf): factors related to finance, ownership and costs. value network the vn building block outlines the links between the firm and the customer interface. it portrays the necessary networks of agreements with partners (or stakeholders) to facilitate the transfer of value to the client (zott & amit 2013). for any small to medium business, the multitude of stakeholders and the resulting complexity can detract from a focus on key feedback loops between the firm and its clients. therefore, this model includes only key stakeholders such as suppliers, employees and partners. the vn component includes structure, which refers to the party or parties that participate in coaching, their links and the way they choose to operate. ideally, the more value the firm can create for its clients and key stakeholders, the higher the value it captures for itself (zott & amit 2013). value architecture in contrast to other service enterprises, the business of coaching involves principally two types of individuals: those whose behaviour affects the bm (the coach) and those who are affected by the bm (the client). the va describes elements of this relationship – the underlying logic and strategic choices that the firm makes in creating and delivering value to this relationship. value architecture comprises ‘the mechanisms the firm uses to deliver its product or service to the customer or each of the customer groups’ (baden-fuller & mangematin 2013:421), including flows of information and governance of linkages (amit & zott 2001). it explains the inherent environment, with an emphasis on resources, focused on value creation. value proposition the vp denotes the value offered by a firm to its clients. it refers to the firm’s offering over time (abdelkafi & täuscher 2015). the vp component includes the content of transactions, which comprises the coaching service and the resources and capabilities required. for a coaching firm, the vp is interacting with clients to solve specific problems, as with consulting firms (davies & brady 2000), so that the project (solving specific problems utilising creativity and sensing) is the primary unit of delivery. value creation develops from the knowledge, capabilities and resources of the firm, which are built up through the execution of such projects. accordingly, such value creation derives from a firm’s capacity to operationalise its key resources and processes (abdelkafi & täuscher 2015). value finance the vf component answers the following question: what is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost (zott & amit 2013)? by detailing the various costs of the coaching offering, as well as costs associated with running the business, the vf building block gives the revenue flows for profit making. monetisation is a key part of value capture and baden-fuller and mangematin (2013) state that it involves more than just pricing, but includes systems determining timings of payments and methods of collecting revenues. it also distinguishes between charging all users the same price (as in grocery supermarkets) and negotiated prices (baden-fuller & mangematin 2013). in summary, from the preceding review of literature, it seems that the bm value chain of al-debei and avison (2010), when applied as an analysis template, may provide insights into the dynamics of an executive coaching practice. these insights may contribute to the understanding of the factors that play a role in starting and maintaining a successful coaching business in south africa. it was this approach that was used in this research. research design research approach the research followed a qualitative research methodology of an explanatory and descriptive nature. this approach endeavours to make sense of the world through the view of the participants (babbie & mouton 2014). the aim was to collect data that were rich in description with the purpose of understanding the practices involved in creating commercially viable coaching businesses in south africa (fossey et al. 2002). sampling data were gathered from two focus groups and one set of interview participants. the one focus group represented currently practising executive coaches (five participants, referred to as ‘fg1’), whilst the second focus group represented former executive coaches who were not practising anymore (three participants, referred to as ‘fg2’). four participants from the focus groups were selected for interviews (referred to as ‘i’). by separating the two focus groups, the researcher was able to acquire a wider range of perspectives. purposeful, non-probability convenience sampling was used to recruit the focus group participants. inclusion criteria required participants to have been schooled as an executive coach at some stage, must have operated a coaching business for a minimum of 18 months and have experienced the phenomenon under investigation. the researcher approached participants individually, using the social platform on facebook messenger, whatsapp and through e-mail. for the interviews, the researcher asked for volunteers from the focus groups who were willing to share more detailed, personal insights of the aspects that were uncovered during the focus group discussions. data collection data were obtained from the participants during the focus-group discussions using an unstructured interview guide. the questions centred on the participants’ motivation for starting a coaching business, challenges faced and strategies employed to overcome these challenges. the questions where used to facilitate a group discussion (simon 2010). the duration of the focus groups was approximately 2 h each. semi-structured interviews, with the use of open-ended questions, were conducted with focus group participants to obtain detailed information. the interviews served to probe for a more revealing understanding of issues, specific factors and influential opinions that surfaced during the focus-group discussions. the interviews lasted between 1 and 2 h each. data for the focus-group discussions, as well as the interviews included audio recordings, field notes and photographed sticky notes. data analysis the five-step qualitative analysis process of taylor-powell and renner (2003) was used to analyse the data collected from the focus and interview groups. these steps are (1) knowing the data, (2) focusing the analysis, (3) categorising information, (4) identifying patterns and connections and finally (5) interpreting the results. in focusing the analysis and categorising the information, the researcher applied the approach of directed content analysis to group the themes that emerged from the focus group discussion and in-depth interviews in terms of the four bm template dimensions (hsieh & shannon 2005). the atlas.ti computer software programme was used to assist with data analysis. research quality assurance a multi-method approach, using focus groups and in-depth interviews, was undertaken to control bias and provide corroboration and supportive evidence. this elevated the degree of confirmability for the study (lofgren 2014). as a technique of establishing dependability, the researcher reviewed the transcript after having the recorded interviews transcribed into text documents (lincoln & guba 1985). findings and discussion the findings presented and discussed here are the results of the deductive content analysis performed on the focus groups and interview data. the aim was to understand the challenges and success strategies of coaching businesses at the hand of the four dimensions of the chosen bm template: vn, va, vp and vf. the results are summarised in figure 1. each bm dimension yielded a number of themes that are discussed in more detail. based on the sentiment of the theme as judged by the researcher, the themes are classified as being a significant positive factor (indicated by a ‘+’), significant negative factor (‘-’) or providing valuable information (‘i’). figure 1: themes relating to the four business model dimensions. value network this aspect of the bm template deals with decision-making, the positioning of the organisation in the value chain, relationships with stakeholders, roles and actors (zott & amit 2013). theme 1 – initiating a coaching business the analysis revealed that family and close friends are often crucial in the early stage of participants’ new coaching business launch. coaches’ motivation for setting up a coaching business was accounted for by both ‘push’ (moving away from unpleasant situations) and ‘pull’ (being drawn towards enticing situations) factors (ram & jones 2008). factors that pushed individuals into setting up their own coaching businesses include redundancy, burnout and frustration at being overlooked for promotion: ‘time spent at work has a detrimental effect on my social and family life and working in a corporate business consumed my whole life.’ (fg2-2, female, previous owner-coach) some coaches, especially women and previously disadvantaged individuals, launched a coaching business initiative because of perceived barriers in the traditional work environment. pull factors shared by the participants included seeking a greater degree of independence, keeping the rewards of one’s own efforts and perceived greater earning potential. this aligns with fairley and stout (2004) who emphasise autonomy as a key consideration for coaches to start their own practices. the reasons for starting a business played a critical role in the continued sustainability in the business of certain participants. participants relied on their past experience and connections to exploit opportunities: ‘we have positioned ourselves to work primarily in the public management space and in the development sectors. we have a background there, we have been there, we have the experience there, we understand those sectors, we are passionate about it, and we want to make change in those sectors.’ (i-2, female, owner-coach) theme 2 – owner-coach role evolution some coaches claimed to be able to evolve as their business evolved, that is, their role in the coaching from the inception phase of the business to the growth phases changed, particularly because of the involvement of more role players. a consistent role between these phases was activities such as continuously seeking and exploiting opportunities. what was clear is that owners in the mature stage of their firms were more focused on managing and communicating, as opposed to start-up owners who were more focused on actual coaching and doing day-to-day operations, which accords with the findings of gibb and scott (1985). an important phenomenon was that coaches who were themselves in ‘a circle of other experienced coaches’ found that it had a positive influence on their productivity and ability to sustain their business; for example, the experienced coach would highlight the pitfalls to avoid in a business proposition or the detriments of certain approaches to doing things. martinez and aldrich (2011) concluded that strong, diverse ties, associated with networking, reduced uncertainty, contributed to the knowledge of small business owners, increased information on other markets, reducing uncertainty and enhanced knowledge of business owners on sources of available capital. inevitably, the role of the owner-coach in more mature coaching businesses centred around building these alliances. theme 3 – forming alliances linked to the previous theme, participants emphasised the importance of alliance formation and saw it as a consequence of their networking efforts. alliance formation involved creating strong relationships with various stakeholders, such as other coaches, consultants, non-government or not-for profit organisations, suppliers, retailers and civil servants. these alliances, formed nationally, were used to collaborate on certain objectives or to form partnerships to achieve certain outcomes. this finding is in line with other research, suggesting that businesses do not function in isolation, but form part of the larger universe, and in order to survive, a firm must interact with its environments (van eeden et al. 2003). some participants stated that they were sceptical and resisted networking as it consumed too much time and did not automatically lead to new business opportunities. participants cited that marketing was both a financial and a time challenge. interestingly, one participant approached the marketing from a coaching perspective: ‘when we meet a client for the first time, we apply all the skills: rapport, non-judgement, listening, collecting information. we let them have a coaching experience. that for me is vital. whenever anybody meets us, they have a coaching experience. so we never have to sell coaching.’ (i-4, female, owner-coach) certain risk-taking behaviours were attributed to the fact that strong alliances were built, for example, one participant advanced a sizeable capital investment into a multi-party project. this is in line with kumar, scheer and kotler (2000) who argue that risk-taking is part of an entrepreneurial mindset. value architecture this aspect of the bm template relates to the application of resources for the purpose of creating value (zott & amit 2013). theme 1 – lack of business strategy almost all participants reported having a vision for their business, but only a limited number had concretely expressed this in a bm, business strategy or business plan. the majority had a vision statement, mission statement and values statement purely for credibility; for example, it was a proposition on their websites or facebook sites or in marketing material. there was evidence that participants’ personal values focused and guided the visions for their business to the extent that these statements were not only opportunity-based explanations of why they were in business but also what value they had to offer. this is in line with keeney’s (1992) proactive approach to value-focused thinking that captures the essence of how vision statements involve beginning with where you want to end up. all participants valued the notion of a business strategy, but for various reasons, such as a lack of time, participants did not devote as much effort as they would like towards formalising their strategic plans. they regarded the process of management itself as being strategic, which was more important than the actual formal plans and written documentation: ‘what gets me fired up is the art and craft of coaching. the act of designing transformational learning experiences. the business part is so far outside my area of knowing. it is so far outside my comfort zone that it takes work and discipline to stay in that part of it. it doesn’t come naturally to me.’ (fg1-2, female, owner-coach) owners expressed that they used intuitive thinking for strategising on their coaching business. most owners stated that they do take into consideration the external environment in the way they formulate and structure the business. this is concerning given that a sound business strategy is an important contributor to business success (thompson et al. 2012). theme 2 – using mentors in terms of external resources, participants valued working with a mentor after graduating from their coaching training. one interviewee argued that mentorship sometimes borders on consultancy, which seeks to provide protégés with readymade answers to specific problems; for example, in technical fields such as marketing and sales. even so, a combination of mentoring and consultancy may not provide novice business owners with specific skills to address specific needs, for example, accounting skills and business writing skills. in describing the ideal mentor or advisor, participants stated that they preferred someone who would be familiar with the world of small business, be able to think and behave like an entrepreneur and have the qualities of a coach; for example, being empathic and having the ability to listen. this finding is in line with the notion that the selection of the appointed advisor must be based on the new business owner’s real needs, and this requires a good preliminary diagnosis of his or her problems (matabooe, venter & rootman 2016). value proposition this aspect of the bm template relates to the offering of services, products and activities that create value for users (zott & amit 2013). theme 1 – difficulty finding clients most participants concurred that finding clients was a daunting prospect. evidence suggests that acquiring clients in the beginning was a basic reality check for many: ‘in the beginning i really struggled to get clients, which was surprising because my background was sales and marketing. i thought i used to sell a multimillion-rand software system so i figured that selling coaching for a few thousand rands would be a piece of cake. i was wrong. i really struggled to sign up coaching clients.’ (fg2-3, female, previous owner-coach) to overcome this challenge, participants noted the importance of defining their market clearly and paying attention to the details of client needs. fairley and stout (2004) highlight the importance of finding your coaching niche. participants operating successful firms aimed for a modest market share within a well-defined niche. firms had two ways to discover their niche. during the inception stage of the business, the firm targeted as many markets as possible; coaching and providing its value offering as broadly as possible, with the aim of refining its strengths and identifying weaknesses in the different market segments. being in several markets gave the owner some intelligence to understand what the different markets required and whether or not the firm had the resources and capabilities to sustain itself in those areas. by gradually unbundling their broad approach, the participants stated that they used the intelligence they had acquired to settle into a niche they believed the firm could be competitive in. the other strategy was to start with a niche and gradually find complementary clients: ‘the main journey i’ve been on to get this to be a successful practice is really defining my niche. i’ve known from the beginning that i’ve wanted to work with women, but that is not a niche, that’s still 50% of the population. i had to narrow it down.’ (fg1-4, male, owner-coach) after having defined their market, the vast majority of owners acquired business through their networks instead of marketing their business. participants repeatedly emphasised the importance of network, relationships and associations. benzing, chu and kara (2009:85) concluded that membership of associations is key to business success, as ‘business associations provide the structure and support for successful lobbying activities’ and training. this sentiment was echoed by one of the participants: ‘to be quite honest, it has been word of mouth and relationships that has helped us continuously along the way.’ (fg1-1, female, owner-coach) finding clients emerged as one of the most challenging factors in building a coaching business. theme 2 – application of previous experience participants noted that general business education and knowledge acquired through previous experience had a positive impact on their performance as owner-coaches. skills obtained in the areas of finance, strategic planning, marketing (particularly sales) and operations management helped owners to cope with problems and correcting deficiencies in the business. one participant stated that owners need training in these essential business skills: ‘i’m very under-skilled at things like selling, marketing and negotiations. i realise i have to get much more skilful at them.’ (fg1-2, female, owner-coach) owner-coaches reported that further education had no impact on them acquiring business. participants indicated that different knowledge serves different purposes. participants emphasised that prior industry knowledge gets you going, whilst business knowledge makes a person agile and cognisant of what needs to change: ‘what i didn’t really realise, which is based on 20–20 hindsight, was that the people that run successful coaching practices are coming out of the corporate world. they are able to slot back into the corporate world because they have the credibility, experience and language that corporates operate in.’ (fg2-3, female, previous owner-coach) the participants took information and knowledge from industry to their new trade as coaches and used those competencies together with their coaching talent and knowledge to create new services and opportunities. this finding is in line with that of naqvi (2011) who emphasised the role of the owner’s previous experience in business success. however, there was no relationship between having previously worked in the same industry and profitability or sustainability. there was, however, consensus that there is a relationship between people factors, such as skill and personality, and firm performance. value finance this aspect of the bm template relates to underlying economic logic of the enterprise (zott & amit 2013). theme 1: costing topologies in explaining how their businesses made money, owner-coaches offered several business-pricing typologies to clients. the first typology exchanged the coaches’ time for a set fee. the second involved package-based dynamics with total revenue exchanged for the value offerings in the package. the third typology was to work within the prescribed consultancy rates of the hiring company; for example, those owner-coaches doing business with the state had to use the published scales for professional and specialised services. the final typology was to offer free and low-cost coaching. the first typology offered very little in terms of value capture, as participants indicated that there were too few clients in a day and too few hours available in a day to maximise on the earning potential of such an arrangement. seeing a single client for 2 h a day, twice a month was described as not being sustainable in the long term. even with a best-case scenario where a coach had four clients in a day, participants indicated that this would be extremely tiring and psychologically taxing to sustain day after day. according to hall and duval (2004), coaches need to have good levels of awareness, concentration, being present to the client and matching and pacing the client. in addition, for every coaching session, there has to be preparation time and debriefing time. participants explained that this typology was advantageous only when a coach retained a few very high paying clients at any one point. the second typology has more of a multiplier notion in that there are tiers in the service offering for which the coach charges the client a single package price. packages change depending on the client segment. tiers can be added or removed, contingent on the needs of the client and paying capacity. generally, the tiers comprise some combination of diagnostic analysis, training, workshops, coaching and consultancy. whilst packages are mainly applicable to corporate clients, owner-coaches have found innovate ways of offering a combination of coaching, wellness camps and workshops to individuals. other options have a spirituality component instead of wellness. to satisfy the procurement systems of government or the public sector, coaches were required to structure their offerings within the prescribed fee thresholds for professionalised and specialised services. this third typology requires the coach to establish the target price first and then work backward to bundle a value offering within the prescribed price ceiling of the client. usually, government paid only on receipt of the outcomes or final deliverables from the service offering, that is, payment would only be received as per periodic agreed milestones or at the conclusion of the contract. this contrasts with the private sector, where payments can be structured weekly and monthly, including pre-payments or advance payments and retainer fees. finally, free and low-cost coaching was done either as part of a firm’s corporate social responsibility drive or as a teaser to attract new clients. new coaches who were still striving to achieve their benchmarks undertook a great deal of free and low-cost coaching in order to increase their skill levels. participants clearly agreed that discounts could be offered on packages, but were critical of providing only low-cost coaching, as it required the same level of energy and commitment from the coach. participants described this typology as devaluing the intensity of the value offering and that it amounted to some form of exploitation of the coaching firm, even under conditions of severe price competition. because of it being unsustainable, the participants classified it as a disabler, citing this as one of the reasons why so many coaches have exited the profession. theme 2: underestimating earnings participants stated that their goal was to bring in sufficient income to cover basic living expenses and the costs of running the business. most owners with non-economic personal agendas did not want to grow the business and were happy with staying small, as long as they could remain gainfully employed. whilst this requirement seemed reasonable and relatively straightforward, they had overestimated the literal time spent on coaching: ‘i entered the coaching profession thinking that my success would be directly proportional to how good a coach i was. but it didn’t work that way. very few people hired me. i was getting exhausted and overwhelmed.’ (fg2-1, female, previous owner-coach) those coaches who had exited the profession provided emotional testimonies of financial hardship in trying to succeed alone. this hardship took many forms such as the excessive withdrawal of funds from the business that profit could not offset, rising level of business debt and reduced cash flow. participants who had exited the coaching business reported unrealistic expectations about sustainability after start-up, for example, overestimating the rate of growth and the profit margins. theme 3: multiple income streams many participants explained that coaching services formed part of a portfolio of services, characterised by a high degree of interaction between the coach and client(s). participants explained that it is essential to adapt coaching service offerings to specific client needs, and the outcome of the full service provision may sometimes only be apparent a whilst after the assignment has been completed. owner-coaches experimented and ultimately expanded their portfolios as per these examples: ‘okay, executive coaching is definitely the area that is my money generator. in addition to that, i do a lot of coaching with educators. i’ve launched some programs for parents. also linking with my daughter who’s now also come through coaching, we’ve launched some programs for teens. together with another coach, we also launched a mother-daughter retreat.’ (fg1-1, female, owner-coach) ‘first it started off with the coaching, then the coaching led me into the health and wellness business. trying to get more clients into coaching, i had to have something more. i’ve added massage, yoga, good eating, there’s walks on the beach and then there’s coaching. so we have actually brought the two together.’ (fg1-4, male, owner-coach) practical implications this research identified a number of factors that assist and hinder coaching business success as illustrated in figure 1. aspiring coaches should take heed of these findings to help them create a realistic view of their prospective coaching businesses and to help them plan the inception of their coaching business. established coaches could adapt their approach to their coaching businesses by incorporating the findings from this research to their strategy and operations. coaching training providers are encouraged to expose coaching students to the findings of this research as part of preparing them not only as coaches but also as sme business owners. limitations and recommendations for future research the sample size used in this research was limited and could have been increased to include more perspectives including the clients of coaching businesses. the bm template that was used presents one view of a business and using other bm templates may have yielded different insights. future research could make more explicit use of a bm template in the data gathering stage to enquire directly about the level of adherence to the template. a quantitative study using a survey created from the findings of this research may also assist in obtaining a more general view of the nature of coaching business practices. conclusion this research set out to identify factors that contribute to creating and maintaining commercially viable executive coaching practices in south africa. by using a standard bm template, a number of factors that play a role in running a successful coaching business were identified. positive factors that contribute to success are forming alliances, leveraging previous business experience, employing multiple income streams and evolving as a business owner together with the business. significant factors that prevented coaching business success include the lack of a clear business strategy, the difficulty of findings coaching clients and underestimating the earnings potential of a coaching business. to the knowledge of the authors of this article, this is the first empirical research that aims to understand the factors that contribute to a successful coaching practice in south africa. it is hoped that the findings presented here will be of practical value to the coaching industry, as well as to lay the foundation for future research. acknowledgements all participants signed an informed consent form prior to participating in the study. the participants also received verbal explanations regarding the research purpose, process, their rights and their expected involvement. data were treated as anonymous and confidential. the researcher kept all interview transcripts in a locked and safe place. the ethical review committee of the researcher’s institution also provided approval for this research projects. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contribution n.h.d.t. authored the article, r.j.j. conducted the research and m.u. supervised the research. references abdelkafi, n. & täuscher, k., 2015, ‘business models for sustainability from a system dynamics perspective’, organization environment 29(1), 74–96. https://doi.org/10.1177/1086026615592930 african development bank group, 2014, south africa economic outlook, viewed 16 february 2018, from http://www.afdb.org/en/countries/southern-africa/south-africa/south-africa-economic-outlook/ al-debei, m.m. & avison, d., 2010, ‘developing a unified framework of the business model concept’, european journal of information systems 19, 359–376. https://doi.org/10.1057/ejis.2010.21 amit, r. & zott, c., 2001, ‘value creation in e-business’, strategic management journal 22, 493–520. https://doi.org/10.1002/smj.187 antonites, a. & kliphuis, w., 2011, ‘an exploratory study on the potential value add of social networking to the entrepreneurial process’, the southern african journal of entrepreneurship and small business management 4, 1–23. babbie, e. & mouton, j., 2014, the practice of social research, 15th edn., oxford university press, cape town. baden-fuller, c. & mangematin, v., 2013, ‘business models: a challenging agenda’, strategic organization 11, 418–427. https://doi.org/10.1177/1476127013510112 banking association south africa, 2016, sme enterprise, viewed 08 march 2018, from http://www.banking.org.za/ benzing, c., chu, h.m. & kara, o., 2009, ‘entrepreneurs in turkey: a factor analysis of motivations, success factors and problems’, journal of small business management 47(1), 58–91. https://doi.org/10.1111/j.1540-627x.2008.00262.x casadesus-masanell, r. & ricart, j.e., 2010, ‘from strategy to business models and onto tactics’, long range planning 43, 195–215. https://doi.org/10.1016/j.lrp.2010.01.004 cavett, b.e., 2015, ‘book review’, international journal of evidence based coaching and mentoring 13(1), 2013–2015. cortez, a., 2010, risk management: the complete idiot’s guide, penguin group (usa) inc., alpha. coutu, d. & kauffman, c., 2009, ‘what can coaches do for you?’, harvard business review 87(1), 91–97. davies, a. & brady, t., 2000, ‘organisational capabilities and learning in complex product systems: towards repeatable solutions’, research policy 29, 931–953. https://doi.org/10.1016/s0048-7333(00)00113-x fairley, s.g. & stout, c.e., 2004, getting started in personal and executive coaching: how to create a thriving coaching practice, john wiley & sons, hoboken, new jersey. forbes.com., 2015, five reasons 8 out of 10 businesses fail, viewed 18 april 2018, from http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/ forbes.com., 2017, the success and failure of the coaching industry, viewed 09 may 2018, from https://www.forbes.com/sites/forbescoachescouncil/2017/10/05/the-success-and-failure-of-the-coaching-industry/#3239dbdb6765 fossey, e., harvey, c., mcdermott, f. & davidson, l., 2002, ‘understanding and evaluating qualitative research’, australian and new zealand journal of psychiatry 36, 717–732. https://doi.org/10.1046/j.1440-1614.2002.01100.x freedman, a., 2011, ‘some implications of validation of the leadership pipeline concept: guidelines for assisting managers-in-transition’, the psychologist-manager journal 14, 140–159. https://doi.org/10.1080/10887156.2011.570146 gibb, a.a. & scott, m., 1985, ‘strategic awareness, personal commitment and the process of planning in the small business’, journal of management studies 22(6), 597–631. https://doi.org/10.1111/j.1467-6486.1985.tb00014.x grodzki, l. & allen, w., 2005, the business and practice of coaching, w.w. norton, new york. hall, l.m. & duval, m., 2004, meta-coaching volume 1: coaching change, neuro-semantics publications, clifton, co. hsieh, h.-f. & shannon, s., 2005, ‘three approaches to qualitative content analysis’, qualitative health research 15, 1277–1288. https://doi.org/10.1177/1049732305276687 icf, 2012, global coaching study, viewed 04 may 2018, from http://icf.files.cms-plus.com/includes/media/docs/2012icfglobalcoachingstudy-executivesummary.pdf icf, 2018, member fact sheet, viewed 05 may 2018, from https://coachfederation.org/app/uploads/2018/03/march2018_factsheet.pdf keeney, r.l., 1992, value-focused thinking. a path to creative decision making, harvard university press, cambridge, ma. kombarakaran, f., yang, j., baker, m. & fernandes, p., 2008, ‘executive coaching: it works!’, consulting psychology journal: practice and research 60(1), 78–90. https://doi.org/10.1037/1065-9293.60.1.78 kumar, n., scheer, l. & kotler, p., 2000, ‘from market driven to market driving’, european management journal 18(2), 129–142. https://doi.org/10.1016/s0263-2373(99)00084-5 lincoln, y.s. & guba, e.g., 1985, naturalistic inquiry, vol. 75, sage publications, new york. lofgren, o., 2014, ‘routinising research: academic skills in analogue and digital worlds’, international journal of social research methodology 17(1), 73–86. https://doi.org/10.1080/13645579.2014.854022 martinez, m.a. & aldrich, h.e., 2011, ‘networking strategies for entrepreneurs: balancing cohesion and diversity’, international journal of entrepreneurial behaviour & research 17, 7–38. https://doi.org/10.1108/13552551111107499 matabooe, m.j., venter, e. & rootman, c., 2016, ‘understanding relational conditions necessary for effective mentoring of black-owned small businesses: a south african perspective’, acta commercii 16, 1–11. https://doi.org/10.4102/ac.v16i1.327 maurya, a., 2012, running lean: iterate from plan a to a plan that works, o’reilly, sebastopol, ca. naqvi, s.w.f., 2011, ‘critical success and failure factors of entrepreneurial organizations: study of smes in bahawalpur’, journal of public administration and governance 1(4), 96–100. nieuwenhuizen, c. & kroon, j., 2002, ‘creating wealth by financing small and medium enterprises of owners who possess entrepreneurial skills’, management dynamics: contemporary research 11(1), 21–28. osterwalder, a., 2004, the business model ontology: a proposition in a design science approach, university of lausanne, lausanne, switzerland. osterwalder, a., pigneur, y., clark, t. & smith, a., 2010, business model generation: a handbook for visionaries, game changers, and challengers, self-published. passmore, j. (ed.), 2015, excellence in coaching: the industry guide, kogan page publishers, london. pretorius, m., 2009, ‘defining business decline, failure and turnaround: a content analysis’, the southern african journal of entrepreneurship and small business management 2, 1–16. pretorius, m. & le roux, i., 2011, ‘successive failure, repeat entrepreneurship and no learning: a case study’, sa journal of human resource management 9(1), 1–33. https://doi.org/10.4102/sajhrm.v9i1.236 ram, m. & jones, t., 2008, ‘ethnic-minority businesses in the uk: a review of research and policy developments’, environment and planning c: government and policy 26, 352–374. https://doi.org/10.1068/c0722 ranerup, a., zinner henriksen, h. & hedman, j., 2016, ‘an analysis of business models in public service platforms’, government information quarterly 33, 6–14. https://doi.org/10.1016/j.giq.2016.01.010 republic of south africa (rsa), 2003, national small business amendment act (26 of 2003), viewed 20 march 2018, from http://www.thedti.gov.za/business_regulation/legislation.jsp ries, e., 2011, the lean startup: how today’s entrepreneurs use continuous innovation to create radically successful businesses, crown publishing, new york. ropega, j., 2011, ‘the reasons and symptoms of failure in sme’, international advances in economic research 17, 476–483. https://doi.org/10.1007/s11294-011-9316-1 simon, m.k., 2010, ‘dissertation & scholarly research: a practical guide to start & complete your dissertation, thesis, or formal research project: recipes for success, createspace, n.p. smith, y. & watkins, j.a., 2012, ‘a literature review of small and medium enterprises (sme) risk management practices in south africa’, african journal of business management 6(21), 6324–6330. sparrow, s., 2009, ‘becoming a coach’, training & coaching today, january, 2009, p. 20. taylor-powell, e. & renner, m., 2003, analyzing qualitative data, 20 april 2018, from http://learningstore.uwex.edu/assets/pdfs/g3658-12.pdf teece, d.j., 2010, ‘business models, business strategy and innovation’, long range planning 43, 172–194. https://doi.org/10.1016/j.lrp.2009.07.003 timmons, j.a. & spinelli, s., 2007, new venture creation: entrepreneurship for the 21st century, 7th edn., mcgraw hill, new york. thompson, c., bounds, m. & goldman, g., 2012, ‘the status of strategic planning in small and medium enterprises: priority of afterthought?’, the southern african journal of entrepreneurship and small business management 5(1), 34–53. van eeden, s., viviers, s. & venter, d., 2003, ‘a comparative study of selected problems encountered by small businesses in the nelson mandela, cape town and egoli metropoles’, management dynamics: journal of the southern african institute for management scientists 12, 13–23. zott, c. & amit, r., 2010, ‘business model design: an activity system perspective’, long range planning 43, 216–226. https://doi.org/10.1016/j.lrp.2009.07.004 zott, c. & amit, r., 2013, ‘the business model: a theoretically anchored robust construct for strategic analysis’, strategic organization 11, 403–411. https://doi.org/10.1177/1476127013510466 zott, c., amit, r. & massa, l., 2011, ‘the business model: recent developments and future research’, journal of management 37(4), 1019–1042. https://doi.org/10.1177/0149206311406265 abstract introduction research methodology results and discussion conclusion acknowledgements references about the author(s) sanchen henning school for business leadership, university of south africa, south africa kabira akoob ppc cement, pretoria portland cement company, south africa citation henning, s. & akoob, k., 2017, ‘motivational factors affecting informal women entrepreneurs in north-west province’, southern african journal of entrepreneurship and small business management 9(1), a91. https://doi.org/10.4102/sajesbm.v9i1.91 original research motivational factors affecting informal women entrepreneurs in north-west province sanchen henning, kabira akoob received: 15 june 2016; accepted: 19 june 2017; published: 30 aug. 2017 copyright: © 2017. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: informal women entrepreneurs in the rural villages of north-west strive to progress from poverty to prosperity. there is a growing appreciation that the conditions that support women’s ability to start and grow ventures may be different from those that help men and therefore there is a need to examine the motivational factors affecting women’s enterprise development. aim: the study aimed to identify the motivational factors of women in the mahikeng area to start informal enterprises, the barriers they experience and their developmental business needs. setting: the study focussed on informal women entrepreneurs in the rural villages of mahikeng in the north-west province. methods: in total, 80 face-to-face questionnaires were completed with women entrepreneurs. a principal component analysis of 15 items of the total questionnaire was performed on the data to determine which items could be reduced and transformed into new components. results: ‘destitute conditions’, ‘entrepreneurial spirit’ and ‘passion for product’ emerged as the three underlying motivational factors. the component ‘destitute conditions’ was ranked as the most important reason for starting an informal business. the need to transcend impoverished conditions (a push factor) and the need for self-determination (a pull factor) were almost equally strong amongst the 80 participants. ‘lack of financial and business skills’ was ranked as the biggest obstacle to keeping the business running. ninety-one per cent of the women entrepreneurs reported that they had never received any training from the government or the private sector. conclusions: access to basic infrastructure, training, funding and business networks will enable self-efficacy behaviour of women entrepreneurs in the mahikeng district to move beyond poverty. recommendations included the establishment of a regional database of informal women entrepreneurs, the improvement of basic facilities and infrastructure and access to microloans as well as training by the formal sector. our deepest fear is not that we are inadequate our deepest fear is that we are powerful beyond measure it is our light, not our darkness that most frightens us. marianne williamson (1993:57) introduction and the little engine thought of the good little boys and girls on the other side of the mountain who would not have any toys or good food unless she helped. then she said, ‘i think i can. i think i can. i think i can.’ in the children’s book the little engine that could (piper 1978), the tiny (female) engine thought about how the little boys and girls on the other side of the mountain would not have their toys and food unless she helped. the story describes a simple but powerful concept characteristic of informal women entrepreneurs in rural settlements in north-west province. self-efficacy is a learned human pattern of thinking rather than a genetically endowed personality trait (snyder & lopez 2007). the behaviourist bandura (1982:122) defined self-efficacy as people’s beliefs in their capabilities to produce desired effects by their own actions. the research revealed that the informal women entrepreneurs in the mahikeng rural district intend to move the food and toys to the other side of the mountain through self-determination but need business education and financial support to grow their businesses out of survival mode into profit maximisation. there is a growing appreciation that the conditions that support women’s ability to start and grow ventures may be different from those that help men and therefore there is a need to examine the motivational factors affecting women’s enterprise development (bosma 2014). entrepreneurial self-efficacy refers to the strengths of an individual’s belief that he or she has the capability of performing the roles and tasks of an entrepreneur and represents what the individual thinks he or she can realise with his or her skills (saadaoui & affess 2015). the achievement, motivation and self-assurance of female entrepreneurs in a patriarchal african society are negatively affected by the social structures that oppress them (hechavarria & ingram 2016). in this context, a woman is not expected to make economic decisions such as starting a business and requesting resources and goods to make it work but rather tend to home responsibilities. the north-west province where mahikeng is situated recorded the largest annual decrease in the official unemployment rate amongst the nine provinces in south africa (stats sa 2014), from 26.8% to 25.2%. despite this fact, the province has a labour force participation rate of 2.3% (stats sa 2014). the majority of households are headed by women as men are mostly migrant labourers on mines. they live with fewer resources, fewer rights and fewer opportunities because of factors such as domestic violence, the lack of education and gender discrimination. there is a significant intersection between being a woman, working in the informal sector and being poor (sethuraman & chames 1998). a higher percentage of people in the informal sector relative to the formal sector are poor. informal economic activities are unrecorded but are estimated at a value of 28% of south africa’s total gross domestic product (gdp). that is r160 billion, which makes its value 2.5 times as large as the contribution of the entire agricultural sector, or 70% of the contribution of the mining sector to gdp (stats sa 2014). despite robust growth in the african economies during the last decade (ayub 2013) many africans continue to live in poverty. as long as african economies fail to provide employment for all their citizens, informal businesses will remain an alternative means of survival in africa (siqwana-ndulo 2013a). prahalad (2005) states that the poor market or bottom of the pyramid should not merely be seen as producers but also as consumers, implying that there is potentially a large market as well as many opportunities available in the informal business sector. while a few studies on motivational factors of female entrepreneurs in formal businesses exist, there is limited literature on female entrepreneurs in the informal sector in south africa. motivation concerns what moves people to act, think and develop. self-motivation involves behaviour that could be both intrinsically and extrinsically motivated. intrinsic motivation refers to engagement in activities because a person wants to. there are no external rewards or punishment involved and it is associated with feeling good and functioning well. also referred to as a ‘pull factor’, intrinsic motivation prompts a person to perform an activity because of the positive feelings resulting from it (wissing et al. 2015). intrinsic motivation enhances independent and responsible behaviour as the more fully an individual is apprised of what is occurring internally, the healthier, adaptive and value-consistent his or her behaviour is likely to be (brown & ryan 2004). in short, an individual decides through internal motivation how to act, think and develop. in contrast, extrinsic motivation involves a tangible reward or the avoidance of pain or suffering and can be described as ‘push factors’ in life. brown and ryan (2004) explain that from early childhood, there is a dramatic shift in the ratio of intrinsic to extrinsic motivation in the direction of extrinsic activities. external regulation needs to be internalised to mature into self-responsibility in a person. in south africa, social grants to the poor as an external motivator could foster dependency and undermine responsible, self-regulated behaviour. having more children may be interpreted as having more money without having to put in any effort. motivational orientations (push or pull factors) are described as constructs in self-determination theory (brown & ryan 2004). the authors argued that motivational orientations guide behaviour and have important consequences for psychological well-being. the necessityand opportunity drivers of entrepreneurial behaviour emerged as an analytical framework against which developing countries started to gauge how the activities that entrepreneurs engage in differ (williams & gurtoo 2012). this binary analytical framework may over-simplify the complex rationales of entrepreneurs and this view was put under the spotlight to give recognition to those entrepreneurs in developing countries who voluntarily engage in entrepreneurial endeavours out of choice and not as a survival strategy. this article aims to identify the motivational factors that affect women in the mahikeng district to start informal enterprises. the informal economy has particular relevance for the creation of employment opportunities and alleviating poverty as part of individual survival strategies of the poor (south african led network 2010). the importance of informal entrepreneurship the informal economy forms a key component of strategies to alleviate poverty and to support the creation of sustainable livelihoods. by its very nature, informal economic activity goes unrecorded and is therefore difficult to measure, but some estimates value the informal economy at around 28% of south africa’s gdp. the majority of municipalities fail in providing local economic development (led)–friendly and inclusive informal economy policies and by-laws (siqwana-ndulo 2013b) to stimulate the development of informal entrepreneurship. entrepreneurship is the pursuit of an opportunity irrespective of the resources (amine & staub 2009:183). an entrepreneur is defined as somebody who is actively involved in starting a business or is the owner of a business (harding et al. 2005). the informal sector was historically defined as being in opposition to the formal sector, and chen (2012) stated that it would disappear once developing countries achieved sufficient economic growth. there is a wide range of entrepreneurial activities included in the informal economy, such as street vendors, taxi drivers, rubbish collectors, food markets and home-based care workers, making it almost as diverse as the formal economy. informal businesses are unregistered, unregulated and untaxed businesses that are often run from street pavements or homes or according to other informal arrangements (horn 2011). wilkinson (2013) notes that: these units typically operate at a low level of organisation with little or no division between labour and capital factors or production and on a small scale. they have low bargaining power and fierce cost cutting competition render them unable to operate like formal sector entities. (p. 14) the relative share of the informal economy by province indicates a correlation with the overall unemployment rate, supporting the idea that for many people the informal economy is the alternative to unemployment. it is argued that without the informal economy, the unemployment rate would rise from the current 25% to 47.5% (stats sa 2014). women-owned informal businesses the emergence of a growing community of women entrepreneurs has been described as the most significant economic and social development in the world. a key phenomenon in most rural villages in developing economies is the emergence of female heads of households. the economic landscape of south african rural villages displays similarities such as that the men migrate to urban areas to earn a living while the women stay behind to raise their children. in parts of kenya and tanzania, over 50% of households are headed by women because of the migration of men to urban industrial sectors. in most parts of the world, including developing nations, women are a powerful force in their communities. when women earn an income and control what they do with the money, their children are more likely to finish school, their families eat better and stay healthy, their communities thrive and entire nations are in a better economic position. literature from india and sri lanka (de mel, mckenzie & woodruff 2013), somalia (ali & ali 2013), ghana (akpalu, alnaa & aglobitse 2012), nigeria (otoo et al. 2012) and south africa (siqwana-ndulo 2013) point to the fact that during the last two decades women are increasingly becoming the primary economic providers of their families going out to markets to do business. there is a significant body of literature in social work on the importance of helping women to increase their influence over their lives and their environments. however, central to poor women exercising control over their lives should be the improvement of their economic condition (raheim & bolden 1995). women business owners cite a number of reasons for becoming entrepreneurs. an analysis of the main reasons includes an increase in income, attractions of entrepreneurship, self-determination and autonomy, family concerns such as balancing career and family and the lack of career advancement. it was found that semi-literate women in developing countries start more businesses than men because of social inequalities they face and their access to other job opportunities (williams & gurtoo 2012). the desire to make a social contribution seems to be a strong motivating factor for women entrepreneurs. research suggests that this caring attitude manifests in women’s leadership style and that goals other than economic growth guide women’s businesses. there is a strong belief amongst women that a successful business should give back to the community, thus enforcing the social contribution factor (williams & gurtoo 2012). barriers women face to entering the informal business world starting a business is difficult under the best circumstances and is made even more difficult in sub-saharan africa by complex environmental factors (amine & staub 2009). factors that have been identified by various researchers as barriers to women-owned informal enterprises are discussed below. access to finance inadequate access to credit by the poor has been identified as one of the factors that contribute to poverty (hobson 2011). women informal entrepreneurs find it extremely difficult and often impossible to access credit through the formal credit system (otoo et al. 2012). formal lending institutions are averse to financing smaller loans because of the high administration and information costs and high risk with little collateral (otoo et al. 2012). women in rural communities are especially vulnerable to the regulatory discrimination of financial institutions (amine & staub 2009). o’neill and viljoen (2001) described the following specific problems faced by women entrepreneurs who tried to obtain finance: no credit record, most assets registered in husband’s name, inability to qualify for loans because of stringent criteria applied by banks and a lack of business and management skills. an increase in women’s access to microfinance could potentially contribute to increasing efficiency in output and consequently reduce poverty and empower women (akpalu et al. 2012). informal women entrepreneurs do not need large amounts of money to get started. amine and staub (2009) found that microloans to women of less than $100 have brought about profound growth in their enterprises. support systems one of the crucial barriers to women succeeding in business is the lack of support systems around them. women are socially defined as the caretakers of the family: they look after their children, care for their husbands and family units and are more likely to be socially punished for not fulfilling this role (dti 2005). women suffer from a lack of support from families. the community finds it difficult to accept the female entrepreneur and men are prejudiced towards the woman entrepreneur (o’neill & viljoen 2001). social support from family and friends who provide positive role models as well as from parents who promote entrepreneurial aspirations during childhood contributes to create positive environmental conditions favouring women’s entrepreneurship (amine & staub 2009). poor access to information and advice chiloane and mayhew (2010) and stander (2011) found that in south africa there was a need to restructure local business service centres in the local communities in such a way that information could be more widely disseminated and accessed. information on business networks should have been distributed in the same way as information about social services. hobson (2011) highlighted a lack of entrepreneurial spirit and knowledge in the field of business, a lack of acceptance in the community and male prejudices as well as a lack of management skills as barriers to entering informal business enterprises. limited access to basic infrastructure and services women’s roles and responsibilities in sub-saharan africa are made more difficult and time-consuming because of problems caused by a lack of basic infrastructure and services at the local level, such as clean water, electricity, reliable transportation and modern communication (amine & staub 2009). a lack of transport, inadequate access to market stalls and toilet facilities and the high incidence of hivand/or aids-related illnesses further complicate their situation (hobson 2011). motivational orientations to enter entrepreneurship women’s entrepreneurial activities are increasingly promoted as a means of creating growth and development. they are not a homogenous group, and their motivations for entry as well as performance of their business vary significantly (franck 2012). most rural women in the informal sector in south africa had been raised in strict traditional homes, had little education, married relatively young and had little or no urban experience (mitchell 2004). while generation of income, whether for profit or sustaining family livelihood, is a driving force behind women’s informal entrepreneurship, there is also growing recognition that it is not only motivated by poverty. informal enterprises may be motivated by a variety of ‘voluntary’ and ‘opportunity’-driven factors (franck 2012). the factors that motivate women to become entrepreneurs can also be described as ‘necessity’ or push factors or ‘opportunity’ or pull factors, or a combination of both (ali & ali 2013). push factors are factors that encourage women to start business enterprises driven by financial need because of the family situation (ali & ali 2013). push factors are a product of desperate conditions; entrepreneurship is the only option available to earning a living, rather than a positive choice. according to ali and ali (2013) push factors are factors such as insufficient family income, dissatisfaction with a salaried job, difficulty in finding work and a need for flexible work schedules because of family conditions. opportunity or pull factors are the factors associated with perceptions of entrepreneurship as an enticing avenue for a better, more fulfilling life and are associated with independence, fulfilment, entrepreneurial drive and desire for wealth, social status and power (ali & ali 2013). women entrepreneurs tend to be motivated by the need to provide security for their families and their family circumstances and not profit maximisation (mitchell 2004). women are motivated by their need for independence, economically and otherwise. furthermore, entrepreneurship allows women to combine caring for their family with bringing in the money needed for day-to-day survival. development of women entrepreneurs constraints common to all informal enterprises tend to be particularly severe for female informal enterprises. there are many factors that affect the development of women entrepreneurship in sub-saharan africa (de vita, mari & poggesi 2014). the first problem identified by de vita et al. (2014) is closely related to family responsibilities: high fertility rates of five to six births per woman. this has a considerable effect on personal consequences for women who try to start their own enterprises (amine & staub 2009; de vita et al. 2014). the second problem, which is related to the first, is the low social recognition accorded to women entrepreneurs. sub-saharan africa men believe that independent and successful women do not deserve to be considered chaste and worthy of respect (de vita et al. 2014). customary patriarchal norms and rules are still in place. sub-saharan women seem to be struggling to find acceptance in the market and respect from their customers (de vita et al. 2014). this finding contradicts the results of o’neill and viljoen (2001) that south african women are now more accepted as equals, that government policies in south africa favour women and that women are entering the market at a faster rate than before. mazonde and carmichael (2016) interviewed 43 female entrepreneurs in zimbabwe and the majority of the participants reported that their husbands looked down on their entrepreneurial activities. in an effort to keep their family intact, these women were willing to bow to patriarchy. the third problem identified by de vita et al. (2014) is related to inadequate education and training of business women. the impact of education on performance is more pronounced in women-owned businesses. a lack of market information, managerial skills and technical competence limits the participation of women in value-adding business and the size of the enterprises that are often small and where most employees are unskilled (de vita et al. 2014). education and training are key elements in successful enterprise creation (omwenga, mukulu & kanali 2013). the authors, in their study of women entrepreneurs in nairobi, kenya, found that many more women than men lack the requisite level of education and training, including business and technical skills and entrepreneurship training. they also found that women were often disadvantaged in terms of access to training. women were often unaware of training opportunities and less likely to be able to afford the cost of training (omwenga et al. 2013). many of the opportunity or pull factors resonate with concepts from the field of positive psychology (wissing et al. 2015). a focus on ‘what went right’ as opposed to ‘what went wrong’ could provide a more optimistic description regarding the status of informal women entrepreneurship in the north-west province in south africa. the 2015 female entrepreneurship index (terjesen & loyd 2015) analyses 77 countries, which is an increase from 30 in 2014. the index utilises an established theoretical framework to measure entrepreneurial environment ecosystems and individual aspirations and score nations from 0 to 100. the 2015 index revealed that despite global progress, 61% of the nations (47 of 77) scored below 50 points – an indication that these countries must pursue significant changes in order to reduce barriers for female entrepreneurs. according to the study, south africa ranked in the 36th place with a score of 44.5 of the 77 countries. from a sub-saharan perspective, south africa ranked the highest and malawi the lowest, where globally, malawi scored second lowest overall in the 76th place with an index of 15.5., almost equal to pakistan (77th place) in the last position with a score of 15.2. table 1 presents the sub-saharan female entrepreneurship index scores for african countries. table 1: sub-saharan africa score. scholars in the developing world have begun to acknowledge the significant role of the informal economy in employment provision and its function as a buffer between employment and unemployment. south africa exhibits a broad range of maturity of led activity. it seems that despite the growth in policy significance of led, there is still a need to study and capture data on led experiences in south africa. research methodology a quantitative research methodology was adopted to determine the motivational factors affecting the women entrepreneurs in the mahikeng district. the population was described as all the informal women entrepreneurs in the mahikeng district in north-west province. these businesses are unrecorded and the exact population size could not be determined. non-probability sampling was used in the absence of a formal list of informal women-owned businesses in the area. a snowball sampling technique had to be applied as the first woman entrepreneur referred the researcher to the next participant. the benefit of this technique includes the ability to obtain a large number of participants quickly and at a low cost (leedy & ormrod 2015). in total, 80 respondents completed the survey through face-to-face interviews during a period of 2 weeks. a pilot study preceded a structured questionnaire that was personally administered face-to-face with the assistance of an interpreter. during the pilot phase, the researcher conducted five interviews with informal women entrepreneurs in the area to refine the questionnaire and identify any other relevant concepts that needed to be addressed in the survey. following the pilot interviews, the questionnaire was finalised with five sections, namely a demographic section, a section to measure the characteristics of the businesses, a section to measure the perceived motivational factors to start a business, a section to measure the perceived inhibiting factors that prevent women entrepreneurship and a section to determine the development needs of the women entrepreneurs who participated in the study. this article will only report on the motivational factors of women to start an informal business, that is, the 15 questions contained in section c of the questionnaire. the results of this study are not generalisable to the greater population of south africa because of the sample size and are relevant for the mahikeng region only. ethical consideration ethics approval was obtained from the school of business leadership, unisa ethics committee and the participants’ right to privacy and anonymity was respected. participants were also informed that they could withdraw at any stage should they want to terminate the interviews. demographic information the demographic information of the respondents is summarised in table 2. in terms of age, the majority of the respondents (65%) were older than 40 years. it is clear that the younger generation is not attracted to the informal sector because only 7.5% were younger than 29 years. almost half of the respondents (45%) were single and only 21% had completed matric. less than 2% of the respondents had a post-matric qualification or a degree. table 2: demographics of the sample (n = 80). this affirmed that the majority of informal woman entrepreneurs are not well educated and therefore not marketable to the formal sector. they have basic literacy and numeracy skills and need to enhance them to manage a profitable business. the majority of respondents (81%) used personal savings to start their business. none of the respondents had access to any microloans or finance from banks. the majority of the respondents (60%) had been in the informal business for more than 6 years. only 8% of respondents had been in business for less than a year and 16% of the women reported a period of 1–3 years. statistical analysis the data were captured manually during the face-to-face interviews, coded into ms excel for data cleaning and editing and imported into spss version 22 for analysis. according to pallant (2011), principal component analysis (pca) is the most common method of exploratory analysis. the aim of a pca is to arrive at a relatively small number of factors and transform the original variables into smaller sets of linear combinations, with all of the variance in the variables being used (pallant 2011). the research aimed to identify relevant underlying hypothetical constructs emerging from the data that could add to the interpretation of the data, describe the relationships between possible constructs and present motivational factors that affect women entrepreneurs to start their own informal businesses. the first step in pca is to assess the suitability of the data for a factor analysis, followed by a factor extraction and finally a factor rotation and interpretation (pallant 2011). an exploratory analysis of the 15 items was performed on the data to determine which items could be reduced to underlying dimensions. pca was concerned only with establishing which linear components existed within the data and how a particular variable might contribute to that component (field 2009). the authors inspected the correlation matrix for evidence of coefficients greater 0.3, indicating sufficient strength of intercorrelations amongst the items to continue with the analysis (tabachnick & fidell 2013), which was indeed the case. consequently, a factor extraction was performed to determine the smallest number of factors or components that can be used to best represent the interrelationships amongst the components. although the intercorrelations amongst the items indicated sufficient strength, they were not particularly high and the authors decided on an orthogonal rotation, and specifically a varimax rotation. this rotation attempts to maximise the dispersion of loadings within factors (in this case motivational factors of women to start informal businesses). furthermore, varimax intends to load a smaller number of variables highly onto each factor resulting in more interpretable clusters of factors (tabachnick & fidell 2013). two additional measures to help assess the factorability of the data were calculated. the kaiser–meyer–olkin measure of sampling adequacy was calculated, and according to pallant (2011) a value of 0.6 is adequate for a good factor analysis. a value of 0.58 was calculated, which the authors accepted as an adequate value to proceed with the analysis. the bartlett’s test of sphericity should be significant (p < 0.05) as tabachnick and fidell (2013) stated and was calculated at a significant measure of p < 0.001. table 3 illustrates the validity and reliability of the constructs measured. cronbach’s alpha coefficients were calculated to determine the validity and reliability of the constructs measured in the questionnaire. tabachnick and fidell (2013) stated that a cronbach’s alpha score determines the internal consistency of a scale and is expressed as a value between 0 and 1. adequate measuring values of cronbach’s alpha range from 0.70 to 0.95 (tabachnick & fidell 2013). in agreement, pallant (2011) noted that alpha values of 0.70 and higher are considered suitable. however, in exploratory research within social sciences, a cut-off point may be reduced (pallant 2011) and accordingly, the authors accepted 0.5 to describe the motivational factors for women entrepreneurs in mahikeng to start their own businesses. table 3: kaiser–meyer–olkin measure of sampling adequacy and bartlett’s test of sphericity. ethical consideration ethical clearance was granted by unisa sbl before the research commenced. results and discussion the process of the identification of the underlying motivational factors is presented in this section. the descriptive statistics in table 4 presents three components of which the outstanding component is c2. this deduction is made from the high weighted mean score (4.61) with the lowest being that of ‘passion for product’ (3.14). the cronbach’s alpha coefficients of the three components are acceptable if pallant’s guideline of a cut-off point of > 0.50 for exploratory social research is applied. table 4: descriptive statistics and cronbach’s alpha coefficient. the factor matrix and its loadings account for the common factor variance but did not provide a scientific meaningful structure for easy interpretation as described. the varimax-rotated matrix in table 5 presents a simpler structure (in bold) that is easier to interpret. table 5: varimax-rotated component matrix: motivation to start a business. the cronbach’s alpha values for these configurations were established and the items were re-grouped and re-defined as component 1: ‘entrepreneurial spirit’, component 2: ‘destitute conditions’, and component 4: ‘passion for product’. table 6 explains the items, the cronbach’s alpha values and the new component descriptions. table 6: transformed components: motivation to start a business. entrepreneurial spirit (cronbach’s alpha score = 0.81) is described by the items self-fulfilment; need for independence and need for a challenge. these items can be defined as pull factors as women aspire towards certain ambitions, which are intrinsically motivated. destitute conditions (cronbach’s alpha score = 0.69) are associated with the items ‘insufficient family income’ and ‘difficulty finding a job’. these items can be defined as push factors and extrinsically motivated as women aspire to escape and move away from their unfortunate circumstances such as poverty and dependence on their male partners. passion for product (cronbach’s alpha score = 0.50) is associated with the items ‘confidence in the product’ and ‘develop my hobby’ and is also perceived as a pull factor, that is behaviour that is intrinsically motivated. component 3: ambition; component 5: traditional role and component 6: family history all had cronbach’s alpha scores below 0.50 and were therefore not included as motivational factors in the conclusions. following the identification of the underlying factors and confirmations of internal consistency reliability, the summated ratings of these factors were calculated with the aim of establishing the ranking of the three most prevalent motivational factors as well as information regarding training interventions and obstacles women entrepreneurs in informal businesses experience. a 5-point likert scale was designed to measure the extent to which the respondents agreed or disagreed with the statement where 1 = ‘agree to a very great extent’, 2 = ‘agree to a great extent’, 3 = ‘agree to some extent’, 4 = ‘agree to a limited extent’ and 5 = ‘agree to no extent’ at all. the responses are reported as top2box scores (the sum of agree to a very great extent and agree to a great extent). regarding the three key motivational factors as indicated by pca, 83% of the respondents indicated ‘destitute conditions’ as the key driver for starting an informal business, followed by 78% of women who indicated ‘entrepreneurial spirit’ as the second most important motivational factor. ‘passion for product’ was rated the third most important reason for starting a business by 43% of the respondents. although the south african government established many pro-women support structures over the last two decades to provide a variety of support to emerging entrepreneurs, the need for gender-specific and informal sector–specific training and development still exists. in terms of their training and development needs, 91% of the women interviewed indicated that they had never been exposed to any training programmes by government or a private organisation. figure 1 depicts the fact that only 9% of the respondents agreed that they have been exposed to training. figure 1: have you ever been trained by government or private sector? regarding the obstacles that the women experience, it was the lack of business and financial skills that was ranked as the biggest obstacle to a successful business with a score of 43.4%. the second biggest obstacle is the lack of a business network (38.5%), which is necessary in maintaining and expanding an informal enterprise, as is clear in figure 2. figure 2: what are the main obstacles for running your business? the results of this study indicate that women in the informal sector are less educated and have fewer marketable skills with most of the respondents not having a secondary qualification. one way to address this challenge is through skills training; however, access to training has also been identified as a barrier and must be addressed. the skills required are varying business skills, life skills and even literacy, numeracy and communication skills. informal women entrepreneurs are firstly driven by the need to survive as was shown by 83% of the respondents who agreed to a great extent and a very great extent that they do business to escape poverty. as an extrinsic motivation, it pushes them towards creating security for their family and not towards profit maximisation. they are driven to entrepreneurship out of necessity or destitution. their entrepreneurial activities are viewed as a safety net that provides employment and income-earning opportunities for those excluded from formal sector employment. many women engaged in the informal sector would in its absence be unemployed and unable to access alternate forms of income. there was only a 5% difference between the ranking score of ‘destitute conditions’ (a push factor scored at 83%) and ‘entrepreneurial spirit’ (a pull factor scored at 78%), the two key motivational factors that were identified in pca. the role of the woman in the home as the primary caregiver and often the breadwinner was ranked in the third position (50%) as a motivating factor for women to enter informal business entrepreneurship. the responsibility of parenting resides with women. many respondents were single mothers, receiving little or no support from their partners. entering business because of a family history was the weakest driver and scored 30%. conclusion the public and the private sector need to recognise the importance of the informal business sector in south africa. with a labour force participation rate of 2.3% (stats sa 2014) the rural villages in the mahikeng district in north-west do not paint a picture of growth and prosperity. a key insight was gained as a result of the almost equal ratio of intrinsic to extrinsic motivation. the need to transcend impoverished conditions and the need for self-determination were almost equally strong amongst the 80 participants. in contrast to hobson (2011) who identified a lack of entrepreneurial spirit as a barrier to growth, this is not the case amongst the women from the north-west. although the primary motivating factor to start an informal business was ‘destitute conditions’ (83%), many respondents shared a passion for business and a high entrepreneurial flair (78%). access to training may lead to business growth and stimulate the economic growth of the province. initiatives could include the facilitation of microloans, managing and coaching of business skills as well as sponsorships for sustainable growth. the improvement of basic facilities and infrastructure such as water sanitation, transport, refuse removal and power and lighting through solar systems will support informal businesses. the establishment of a national database would assist the government in fully understanding the impact of this sector on gdp, unemployment and poverty alleviation. the database could be used by large organisations to collaborate with this sector to gain a competitive advantage. an entrepreneurial spirit mixed with the right amount of skills training could enhance the performance of informal female entrepreneurs. if fully developed, it could lead these women entrepreneurs to move out of survival mode into profit maximisation. while the most important obstacle to running a business was reported as the lack of financial and business skills, 91% of the participants reported that they had never received any training from government or the private sector. competence is a necessary skill and an enabler of a self-efficacy, that is, the belief that you are the master of your own destiny. building on strengths is more effective than trying to improve weaknesses (biswas-diener & dean 2007). self-efficacy behaviour without the necessary support will take informal women entrepreneurs only so far. the little train in the little engine that could (piper 1978) is motivated and believes in her ability to move up a steep hill to deliver the goods because she has enough wagons with strong wheels and sufficient coals to keep her moving forward on a well-built railway track. access to basic infrastructure, training, funding and business networks will enable self-efficacy behaviour of women entrepreneurs in the mahikeng district to move themselves and their communities around the mountains of poverty to prosperity, from i think i can to i did it. acknowledgements competing interests the authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article. authors’ contributions s.h. wrote the complete article, included additional literature and did extra data analysis on the initial data. k.a. did the initial data collection and analysis as a mbl student references akpalu, w., alnaa, s.e. & aglobitse, p.b., 2012, ‘access to microfinance and intra household business decision making: implication for efficiency of female owned enterprises in ghana’, the journal of socio-economics 41(5), 513–518. https://doi.org/10.1016/j.socec.2012.04.020 ali, a.h. & ali, a.y.s., 2013, ‘motivational factors of somali women entrepreneurs in the benadir region’, academic research international 4(1), 59. amine, l.s. & staub, k.m., 2009, ‘women entrepreneurs in sub-saharan africa: an institutional theory analysis from a social marketing point of view’, entrepreneurship and regional development 21(2), 183–211. https://doi.org/10.1080/08985620802182144 ayub, m., 2013, ‘poverty and inequality’, global journal of emerging market economies 5(3), 329–346. https://doi.org/10.1177/0974910113505796 bandura, a., 1982, ‘self-efficacy mechanism in human agency’, american psychologist 37(2), 122. https://doi.org/10.1037/0003-066x.37.2.122 biswas-dienr, r. & dean, b., 2007, positive psychology coaching: putting the science of happiness to work for your clients, wiley, new york. bosma, n.s., 2014, ‘the global entrepreneurship monitor (gem) and its impact on entrepreneurship research’, foundations and trends in entrepreneurship 9(2), 143–258. https://doi.org/10.1561/0300000033 brown, k.w. & ryan, r.m., 2004, ‘fostering healthy self-regulation from within and without: a self-determination theory perspective’, positive psychology in practice, 7(1), 105–124. chen, m.a., 2012, the informal economy: definitions, theories and policies, women in informal economy globalizing and organizing: wiego working paper, 1. chiloane, g.e. & mayhew, w., 2010, ‘difficulties encountered by black women entrepreneurs in accessing training from the small enterprise development agency in south africa’, gender and behaviour 8(1), 2590–2602. https://doi.org/10.4314/gab.v8i1.54676 de mel, s., mckenzie, d. & woodruff, c., 2013, ‘the demand for, and consequences of, formalization among informal firms in sri lanka’, american economic journal: applied economics 5(2), 122–150. https://doi.org/10.1257/app.5.2.122 de vita, l., mari, m. & poggesi, s., 2014, ‘women entrepreneurs in and from developing countries: evidences from the literature’, european management journal 32(3), 451–460. https://doi.org/10.1016/j.emj.2013.07.009 dti, 2005, south african women entrepreneurs: a burgeoning force in our economy, a special report, department of trade and industry, pretoria. field, a., 2009, discovering statistics using spss, 3rd edn., sage, london franck, a.k., 2012, ‘factors motivating women’s informal micro-entrepreneurship: experiences from penang, malaysia’, international journal of gender and entrepreneurship 4(1), 65–78. https://doi.org/10.1108/17566261211202981 harding, r., brooksbank, d., hart, m., jones-evans, d., levie, j., o’reilly, j.o. et al., 2005, global entrepreneurship monitor, london business school, london. hechavarria, d.m. & ingram, a.e., 2016, ‘the entrepreneurial gender divide: hegemonic masculinity, emphasized femininity and organizational forms’, international journal of gender and entrepreneurship 8(3), 242–281. https://doi.org/10.1108/ijge-09-2014-0029 hobson, e.w., 2011, ‘the importance of the informal economy for local economic development (led) in africa’, local economic development network of africa 3(27), 1–8. horn, a., 2011, ‘who’s out there? a profile of informal traders in four south african city central business districts’, town and regional planning 59, 1–6. leedy, p.d. & ormrod, j.e., 2015, practical research planning and design, pearson educational international, new york. mazonde, n.b. & carmichael, t., 2016, ‘the influence of culture on female entrepreneurs in zimbabwe’, the southern african journal of entrepreneurship and small business management 8(1), 10. https://doi.org/10.4102/sajesbm.v8i1.101 mitchell, b.c., 2004, ‘motives of entrepreneurs: a case study of south africa’, journal of entrepreneurship 13(2), 167–183. https://doi.org/10.1177/097135570401300203 omwenga, j.q., mukulu, e. & kanali, c., 2013, ‘towards improving the performance of women entrepreneurs in small and medium enterprises in nairobi county, kenya: policy recommendations’, international journal of business and social science 4(9), 1–11. o’neill, r. & viljoen, l., 2001, ‘support for female entrepreneurs in south africa: improvement or decline?’, journal of family ecology and consumer science 29(1), 37–44. otoo, m., ibro, g., fulton, j. & lowenberg-deboer, j., 2012, ‘micro-entrepreneurship in niger: factors affecting the success of woman street vendors’, journal of african business 13(1), 16–28. https://doi.org/10.1080/15228916.2012.657937 pallant, j., 2011, spss survival manual: a step by step guide to data analysis using spss, 4th edn., allen and unwin, berkshire. piper, w., 1978, the little engine that could, grosset and dunlap, new york. prahalad, c., 2005, the fortune at the bottom of the pyramid: eradicating poverty through profits, pearson, new york. raheim, s. & bolden, j., 1995, ‘economic empowerment of low income women through self-employment programs’, affilia 10(2), 138–154. https://doi.org/10.1177/088610999501000204 saadaoui, s. & affess, h., 2015, ‘evaluating the role of coaching on developing entrepreneurial self-efficacy’, european journal of business and social sciences 3(11), 54–61. sethuraman, s. & charmes, j., 1998, linkages between gender, poverty and informal sector, university of versailles, france: institute of development research, world bank, paris. siqwana-ndulo, n., 2013a, the informal sector in south africa: women street traders in durban part 1. durban. viewed 14 august 2014, from http://www.polity.org.za/article/the-informal-sector-in-south-africa-women-street-traders-in-durban-part-1 siqwana-ndulo, n., 2013b, the informal sector in south africa: woman street traders in durban, durban. viewed 14 august 2014, from http://www.polity.org.za/article/the-informal-sector-in-south-africa-women-street-traders-in-durban-part-2 snyder, c.r. & lopez, s.j., 2007, handbook of positive psychology, oxford university press, new york. south african led network, 2010, viewed 14 august 2014, from http://led.co.za/topic/informal-economy stander, c.j., 2011, ‘exploring women entrepreneurship in selected areas in south africa’, doctoral dissertation, north-west university. stats sa, 2014, census 2013. census in brief, statistics south africa, pretoria, viewed 20 may 2016, from http://www.statssa.gov.za/publications/p0211/p02111stquarter2012.pdf tabachnick, b.g. & fidell, l.s., 2013, using multivariate statistics, 6th edn., pearson education, boston, ma. terjesen, s.a. & lloyd, a., 2015, the 2015 female entrepreneurship index, kelley school of business research paper no. 15–51, bloomington. wilkinson, f., 2013. the dynamics of labour market segmentation. london: elsevier. williams, c.c. & gurtoo, a., 2012, ‘evaluating competing theories of street entrepreneurship: some lessons from a study of street vendors in bangalore, india’, international entrepreneurship and management journal 8(4), 391–409. https://doi.org/10.1007/s11365-012-0227-2 williamson, m., 2005. our deepest fear. a return to love: reflections on the principles of a course in miracles, hay house, new york. wissing, m., potgieter, j., nel, l., guse, t. & khumalo, t.f., 2015, towards flourishing – contextualising positive psychology, van schaik publishers, pretoria. microsoft word 1 pretorius assessment sajesbm ns 1_1_1-20.doc sajesbm ns volume 1 (2008) issue 1 1 __________________________________________________________________________________________ assessment of entrepreneurship education: a pilot study marius pretorius department of business management, university of pretoria, south africa marius.pretorius@up.ac.za abstract many institutions embark on entrepreneurship education, as ultimately start-ups benefit economic growth; but institutions unfortunately lack tools and benchmarks for assessing the quality of their programmes. the uniqueness of different programmes, however, does not allow meaningful comparative assessment between them, so this study applies an assessment model that gives feedback on a case study. an in-depth case-study application of the assessment model indicated the following: programme context; entrepreneurial knowledge and skills; business knowledge and skills; approaches; business plan utilisation; and the facilitator, as key constructs for evaluation. the assessment identified major shortcomings and strengths of the case under investigation. the article concludes that the assessment tool accurately measured outcomes of the programme despite its specific context, and that the programme covers the basic requirements for entrepreneurial education that are required by the literature. the assessment tool has general application value. organisations like the qualifications authority could use the entrepreneurship education assessment model (eeam) to ensure that service providers offer quality programmes. assessors and educators would benefit from better understanding of how various constructs contribute to the successful delivery of entrepreneurship education. key words and phrases: entrepreneurial education, assessment, economic impact. introduction learning institutions at all levels are under increasing pressure from government agencies, the public and even students to show that graduates are achieving the desired learning goals (sullivan & thomas, 2007:321). gibb (2006:4) states that there is a dominant need to develop a model of entrepreneurship/enterprise education that has wide appeal from primary, through secondary and further to higher education, that fits with broad educational goals, can be imbedded in curricula, and will be accepted by educators and allow for notions of progression. assessment duly forms part of this model. in south africa, the national strategy for the development and promotion of small business identifies small business development and the empowerment of entrepreneurs as the most important avenues for economic growth (nieman 2001:445; rsa, 1996). gorman, hanlon and king (1997:56) confirm that there is widespread recognition that entrepreneurship is the engine that drives the economy of most nations. timmons, (1999:4) also refers to entrepreneurship as “america’s secret weapon”, and argues its value as the main contributor to the superior position that the united states holds as part of the global economy. timmons and spinelli (2004) confirm entrepreneurship to be the fundamental differentiating factor in the united states culture, where 37 percent of the population is somehow involved in their own ventures apart from their regular jobs. the global entrepreneurship monitor reports that south africa ranks in the lowest quartile for “total entrepreneurial activity” (tea) of all the participating developing countries, with only six out of every hundred adults reported as being entrepreneurial (foxcroft, wood, kew, herrington & segal, 2002:4). the key factor in improving the low entrepreneurial activity, according to the latest gem report, is education (orford, herrington & wood 2004:34). sajesbm ns volume 1 (2008) issue 1 2 __________________________________________________________________________________________ this low tea underscores the need for a large pool of entrepreneurs to sustain a successful economy, as pointed out by sunter as early as 1994. however, four years later, sunter (1998:2) still called for entrepreneurial development and again highlights its importance when he states, “it is only through the creation of millions of enterprises that millions of jobs will be created”. today, the use of the phrase entrepreneurial development has become a political buzzword in the speeches from almost every public platform, while sunter’s (1998:2) call is still unanswered 13 years later. entrepreneurial education acts as a launch pad for entrepreneurial activities, with its main focus being the stimulation of entrepreneurial activity and performance. this fact is fundamental to ensuring that the necessary research conducive to economic growth is in fact conducted in this field. education within this perspective is supported by the work of fayolle (1998:1), who defines education as an intentional effort to teach the specific knowledgebearing abilities necessary to better completing a project. hirsowitz (1992:25) argues that education creates new opportunities and possibilities, as well as a consciousness of how to attempt and complete certain tasks in a different way. the trainability of entrepreneurs is accepted as a given in this study and is supported by antonites (2003:55), hisrich and peters (1998:19), kuratko and hodgetts (1998:10), le roux and steyn, (2007:330), rosa and mcalpine (1992:64), and welsch (1993:14). this paper focuses on applying the assessment model to a case study and evaluates the outcome and applicability of the model. it reports firstly the relevant literature and secondly the methodology and application of the model. thirdly it describes findings after application. finally the conclusions are presented with discussion, as well as limitations of the study. problem statement the problem of this study is concerned with assessment methodology of an entrepreneurial education programme. one proposition is set to guide the study: p1: the proposed measurement instrument (eeam) can assess the programme in terms of covering the basic requirements for entrepreneurship education. in fact it challenges the claims of pretorius (2001) to that effect. literature review and background to entrepreneurial education in southern africa given that entrepreneurship and its manifestations in the business environment are very complex constructs, the education of entrepreneurs and business managers and trainers cannot be less complex. it is argued that the subject and the associated issues, its content and the level taught vary significantly depending on the objectives of the programme, the compiler of the material, and the knowledge, experience and even motivational level of the facilitators. suffice it to say at this point that the success of education methodologies for developing small business entrepreneurs depends on making sufficient provision for complex situations, and incorporating multi-dimensional elements, as will be proposed in this study. sajesbm ns volume 1 (2008) issue 1 3 __________________________________________________________________________________________ it is critical at this juncture to state the working definition for this study of education as the process whereby knowledge or training is provided, especially through formal teaching and instruction of (mainly) the theory of a specific concept. it also encompasses training, which means to make proficient through specialised instruction and practice to enable successful execution (thus it includes inculcating skills). the original purpose of the eeam was primarily to explain the minimum requirements for entrepreneurial education programmes and, secondly, to determine the constructs which should be included in the successful education of small business entrepreneurs, in order to ensure optimum learning and resultant start-ups (pretorius, 2001:133). the assessment constructs of the model are: • entrepreneurial success themes • business knowledge and skills • approaches to business learning • the business plan, and • the facilitator (also see figure 1) while the constructs are well described in pretorius, nieman and van vuuren (2005:413), each is explained briefly here for clarity and for meaningful use in the assessment. the programme context using instructional materials that are matched to a student’s level of academic skill is a critical strategy for improving performance (power, 2006:340). research (mendenhall, wu buhanan, suhaka, & mills, 2006:84) has demonstrated that when learners acquire knowledge in the context of real-world tasks, they are more motivated to learn. the context of every education programme is therefore different, based on the philosophy, paradigms and experience of the programme developers (mitra, 2002:197) and needs to be addressed. this article therefore refrains from comparing programmes and rather assesses the case programme against the achievement of a standard as proposed by the eeam. assessment of the context firstly requires insight into the overall learning programme (gibb, singer & korynski, 2006). the context contains several elements as proposed by the eeam, and is the main force that determines the programme’s assemblage. the elements pertaining to the programme context should be considered for a learning programme in the field of small business entrepreneurship. the following apply: previous experience levels of the learner at the inception of the education intervention; prior educational levels; critical outcomes to be achieved on completion of the education (e.g. practical start-up vs. knowledge about start-up processes); reason for participation in the education; and needs of the target group undergoing the education (necessity vs. opportunity reasons) as suggested by mitchie, glachan and bray (2001:455). within this context, the five assessment constructs are now described based on pretorius (2001:245). entrepreneurial success themes – construct 1 timmons and spinelli (2004:249) describe the key elements that contribute to entrepreneurial success as broad themes (topics). each of the themes is made up of several elements. the origin of their research data is mainly the opinions and personal evaluations of successful entrepreneurs. the six main themes that they list include: commitment; leadership; sajesbm ns volume 1 (2008) issue 1 4 __________________________________________________________________________________________ opportunity obsession; tolerance of risk, ambiguity and uncertainty; self-reliance and the ability to adapt; and the motivation to excel. gibb (2006:32) supports such characteristics. it is clear that each of these themes contains sub-elements. the eeam accepts these six success themes as crucial elements that will require much attention during the development and education of entrepreneurs for start-ups. overlooking these themes during education will probably contribute to the failure of the programme and the learner and resultant outcomes. timmons (1999:3) confirms the complexity of entrepreneurial success and agrees with the earlier conclusion of kaufman and dant (1998:5) that consensus about the construct of entrepreneurship remains elusive. it is acknowledged that the different elements may differ in level of relevance and importance, depending on the specific situation or course that is evaluated. business knowledge and skills – construct 2 nieman (2000:1) suggests that most entrepreneurial programmes focus on aspects of management that are standard items in most other programmes. the business knowledge and skills construct deals with the theory that supports and underlies the functioning of a venture in its environment. the range of subject knowledge elements required, and the complexity level of the presentation, would be determined by the context of the education programme. basic subjects such as finance and costing, marketing and sales, operations, management, human resources and strategy should be covered. for nascent (considering starting) and novice (first-time) entrepreneurs there are several theoretical subjects that should be covered as a minimum requirement. these typically include: customer needs and target markets, product offering and marketing, operations, strategy and environment, finance and administration, basic economic laws, management concepts and more. most of these topics are found in material for education at any level. normally there is sufficient focus on entrepreneurial education programmes in this construct of the model. currently the problems of entrepreneurial education centre on the poor consensus regarding the content of courses and curricula. solomon, duffy and tarabishy (2002:1) support this statement by pointing out the lack of substantial standardised components within the entrepreneurial education programme. morris and hooper (1996:14) strongly argue that no single theory is being developed as the “content estimator” of entrepreneurial education. research in this field tends to be explorative and descriptive, as well as “cross-sectioned”, and more dependent on post facto statistical testing than on a priori hypothetical testing. testing in general tends to be small and non-representative. rosa and mcalpine (1992:73) further point out that more educational emphasis should be placed on the complex and multi-disciplinary aspects of entrepreneurship. programmes that are regarded as successful may vary between being exceptionally simplistic and being mostly abstract. approaches to business learning construct 3 delivery modes should fit learning styles (coutis, 2007:508). the techniques or methodologies that influence the success of entrepreneurship education are numerous, but sajesbm ns volume 1 (2008) issue 1 5 __________________________________________________________________________________________ could be categorised according to their apparent learning effectiveness. the key learning techniques with their associated learning effectiveness levels range from formal, one-way lecturing of theory, case studies, projects, simulations, exposure and visits to businesses, to practical establishment of ventures, or may include several combinations of the above. van vuuren (1997:1) quotes several authors in an assessment of existing entrepreneurship programmes as: • confirming an over-emphasis on theoretical & quantitative instruments; • having too few relevant qualitative factors; • placing too much emphasis on instruments, concepts and models; • focusing on bureaucratic management only; • placing too little emphasis on entrepreneurial activity; and • using facilitators that concentrate more on virtual than on real problems. van vuuren (1997:1), pointing out that the approach of current education systems is very pragmatic, suggests the following desirable factors: active involvement in entrepreneurial activities; an understanding of the dynamic characteristics of the entrepreneurial environment; and the introduction of existing aspects of reality into the practice situation. curriculum development in this case study was imbedded in the 1993 and still relevant theorem of gibb (1993:11), who distinguished between normal didactic methods of education and a more entrepreneurial approach (see table 1). table 1: differentiation between “didactic” and “entrepreneurial” education approaches didactic method enterprising method learning from teacher only learning from each other passive role as listener learning by doing learning from written text learning from personal exchange and debate learning from “expert” frameworks of teacher learning by discovering (under guidance) learning from feedback from one key person (the teacher) learning from the reactions of many people learning in a well-organised, timetabled environment learning in flexible, informal environment learning without pressure of immediate goals learning under pressure to achieve goals copying from others discouraged learning by borrowing from others mistakes feared mistakes learned from learning by notes learning through problem solving source: adapted from gibb (1993:13) this “enterprising” model can be applied directly and is also endorsed by the fundamental characteristics of action learning, although a certain level of theoretical intervention takes place within the framework of creativity, innovation and opportunity finding in an entrepreneurial context. entrepreneurship as a subject is globally seen as an applied science, and therefore requires a delivery mode that supports a more practical education approach. sajesbm ns volume 1 (2008) issue 1 6 __________________________________________________________________________________________ in general, the more the learner is involved in and responsible for the learning that takes place, the better the learning approach. it is for this reason that case studies, simulations and business plan executions are such important approaches. there is a strong interaction between the facilitator and the approach selected. the business plan – construct 4 the business plan forms an integral part of any education programme for business entrepreneurship and especially start-ups (mitra, 2002:195). financiers and venture capitalists often use it as a sole selection tool of the profit potential. the reason for this is the fact that the business plan is the integration of all the required elements that determine the projected success of the business, although it is no guarantee of success during the implementation of the plan. timmons and spinelli (2004:368) argue that a business plan is obsolete as soon as it leaves the printer. this is absolutely true, as the value of the business plan is found in the process of its creation. being able to compile a proper business plan indicates a complete understanding and sufficient homework, proper integration and research to show that the opportunity, resources and the entrepreneurial team can be integrated successfully. any experienced person who evaluates business plans will know how easy it is to determine flaws in understanding and assumptions. the process of developing the plan forces the potential entrepreneur to consider all aspects, and thereby it acts as a tool in reducing risk. not only is the creation of the business plan very important to the learning process, but also presenting and defending the plan publicly before peers and lecturers; this is an even higher level of learning as it opens the “defendant” to questions, criticism and new perspectives. this process is also beneficial to the peers and exposes each to a wide variety of industries and circumstances that are crucial to their own learning. no meaningful business education can result without involvement in the creation of a business plan, at the least (timmons & spinelli, 2004). the business plan has to describe complex issues in a meaningful way. it further requires a basic knowledge of all the key concepts (obtained from the business knowledge and skills construct) relevant to a successful business operation. these concepts should be mastered before one can participate in the business planning process. pretorius (2000a:12) suggests that an entrepreneurial education programme that does not make provision for a business plan cannot be considered at all acceptable where the creation of start-ups is a required outcome. the facilitator – construct 5 the tutor (facilitator) has always been a critical part of the learner support system (kelly & mills, 2007:153). it is questionable whether a lecturer without experience and exposure to the business environment and its accompanying intricacies can facilitate learning the real issues of starting and managing a business. to facilitate someone else’s learning is probably much more difficult than to teach subject knowledge to a student. wilkenson (1988:5) and holtzhausen (2005:98) suggest that when the teacher assumes the responsibility for causing the student to learn, he changes the approach away from solely lecturing content to involvement and passion for his subject in order to ensure that learning takes place. sajesbm ns volume 1 (2008) issue 1 7 __________________________________________________________________________________________ nonis and hudson (1998:4) suggest five general dimensions of effective teaching that include enthusiasm, clarity, rapport, classroom interaction and learning. the facilitator is responsible for creating the learning environment rather than being only responsible for teaching. one could ask how many teachers of entrepreneurship and business courses are really equipped with the knowledge and skills required to meaningfully train entrepreneurs, especially given the complexity of the subject. although the facilitator is one construct of the model, he or she also controls the manner in which the other constructs are combined to result in the best learning during the programme. the facilitator uses reinforced thinking processes, altering the method of participation and apprenticeships and uses a multi-disciplinary approach to achieve the correct combination of the constructs (pretorius et al., 2005). research methodology pretorius (2001:264) describes the assessment instrument based on the entrepreneurial education assessment model containing the constructs as described above. the eeam was applied by an assessor to the course brochures, course design and materials, curriculum content, tests, memorandums, application forms and interviews held with the different facilitators and learners of the programme. a second round of interviews was also held to clarify and confirm trends from the initial assessment results. the study was an in-depth casestudy analysis of a qualitative nature. the “judgements” made by the assessors are in response to questionnaire statements. statements were grouped together to form the constructs and the results are shown by radar diagrams (see figures 1 to 7). because of their inherent complexity and multi-disciplinary content, it would hardly be possible to quantitatively measure and assess entrepreneurship education programmes. respondents were therefore asked to qualitatively evaluate the programme based on their opinions and perceptions of the elements, and their coverage within the proposed guidelines in the questionnaire. study matter, inclusive of a study guide, readers, time schedules, programmes, notes and facilitator guidelines, was made available to the assessor as additional information that could improve the assessment. most of the elements (of the model constructs) were assessed on face value, and this resulted in largely subjective assessment (opinion) of the content, due to the broad and sometimes vague set of factors under consideration. therefore, the assessor had to be knowledgeable and experienced in small business and entrepreneurship as subjects. after the initial assessment, any deviations from the midpoint were further investigated during second-round interviews, in order to find causes for such deviations and to improve understanding. the questionnaire (available on request from the authors) used a seven-point likert scale, where 7 is the highest score and 1 is the lowest score. the relevant elements of each model construct are evaluated individually, with an average value for the category determined thereafter. during the interviews, respondents were requested to determine the most appropriate score for each specific element under consideration. interviews were held with the designers (2 persons), core lecturing personnel (5 persons) and learners who had completed the course (5 persons), and their results were pooled to find the average appraisal for the respondents for each questionnaire item. it was necessary for the assessor to conduct an extensive and in-depth study of the programme before the assessment was done. at this point it is important to state that the contributions from the learners were assessed as weak (and sajesbm ns volume 1 (2008) issue 1 8 __________________________________________________________________________________________ subsequently discarded), because they did not give any additional information above that already obtained from the other interviewees. results the case description the assessment was applied to the m phil in entrepreneurship programme offered at the university of pretoria. the design of this programme was based on the underlying philosophy and model of van vuuren and nieman (1999:6), which states that entrepreneurial performance is a function of the individual’s motivational level, the entrepreneurial skills and the business skills, expressed as follows: ep = am f[be/s x cb/s] where m = motivation e/p = entrepreneurial performance b/s = business skills a,b,c = constants of existing skills all the units covered during the course are focused and developed to support the elements described in the above formula. the broad unit modules include: entrepreneurship theory and history, the need for entrepreneurship, achievement motivation, creativity and innovation, window of opportunity, ethics, failure in business, enabling environment, managing growth, small business management, small business counselling and mentoring, development economics, international entrepreneurship, corporate entrepreneurship (intrapreneurship), legal environment and issues, research methodology, colloquiums and a dissertation. the chair in entrepreneurship at the university of pretoria offers three programmes: the b com in entrepreneurship aims to equip the learner with all the necessary skills to start and manage a business independently. the course takes three years to complete, and on completion the candidates should preferably have started their own businesses. it is an educational programme with a large “action learning” content and is evaluated based on startup outcomes. the m phil in entrepreneurship aims to influence the south african enabling environment through assisting learners (mostly working in the enabling environment) to gain improved understanding of entrepreneurial issues. (a detailed and in-depth analysis of this programme is the aim of this study). the third programme is the phd in entrepreneurship, which aims to generate and impact on the entrepreneurial research body of knowledge, with special reference to the south african and african contexts. each programme has different goals in terms of context and outcome. since the programmes do not constitute the focus of this paper, they will not be explored beyond this reference to their differences. van vuuren and nieman (1999:1) report that they have experienced success in utilising the model as the foundation for their educational programmes. the content of each of the programmes is adapted to support the specific outcomes of the programme, and considers the level at which the programme is offered. the assessment process is modelled on the assessment model proposed by pretorius (2000b:1). this entrepreneurship education assessment model (eeam) considers five key constructs, as postulated by pretorius (2001:177). these constructs are composites of many factors and related issues of entrepreneurial education. sajesbm ns volume 1 (2008) issue 1 9 __________________________________________________________________________________________ assessment of results figure 1 shows the outcome of the assessment as a radar screen graph that enables comparison of the different constructs with relative ease. comparison of the constructs shows that the construct for the business plan utilisation was rated below the scale midpoint value of four, and that of learning approaches rated just above the midpoint. these constructs can therefore be identified as the weaker constructs of the programme, and this was explored further by investigating their individual graphs as shown in subsequent figures. business knowledge and skills were assessed as the strongest construct in the mix. figure 1 gives an overview of the programme constructs that are explored in figures 2 to 7. figure 1: assessment results for the programme constructs entrepreneurial success themes 0 1 2 3 4 5 6 7 context fit business knowledge & skills learning approaches used business plan utilisation facilitator average evaluation context of the education programme – assessment outcome figure 2 shows the clarity of definition concerning the context for the programme. the programme seeks, as its core outcome, to achieve an advanced level of knowledge and competencies in all areas related to entrepreneurship and small business management. its target market includes entrepreneurs, consultants, managers and especially service providers in the small business-enabling environment and development sector. a salient envisaged outcome of the course is to build capacity in entrepreneurship among those who influence entrepreneurial performance within their working environments – especially government and quasi-government. being a master level programme determines the educational entry requirements, as participants have a basic degree or higher diploma as prerequisite. there is no prerequisite for sajesbm ns volume 1 (2008) issue 1 10 __________________________________________________________________________________________ experience in the field of entrepreneurship, but it is used during the selection process to determine “more suitable” candidates. reason for participation rated low, as learners did not participate with the view of starting their own venture but rather to gain a qualification. there is no specific reference to why participants enrolled for the programme, which creates a platform for further research. programme designs are therefore subject to specific contexts, which should be considered during programme development. figure 2: assessment results for the context construct 0 1 2 3 4 5 6 7 previous experience minimum educational level outcomes for the programtarget group needs reason for participation average evaluation entrepreneurial success themes assessment outcome figure 3 shows the ratings for elements supporting the entrepreneurial success theme of the programme. the development of commitment and opportunity obsession are rated lower than midpoint, with tolerance for risk and ambiguity rated just above the midpoint. this may be ascribed to the programme not having start-up per se as an outcome. therefore, there seems to be a relationship between this element and the “reason for participation” element from the context construct. tolerance of risk, ambiguity and uncertainty are inculcated through cases, exposure to a wide range of guest lecturers, and practical assignments within the business environment. sajesbm ns volume 1 (2008) issue 1 11 __________________________________________________________________________________________ figure 3: assessment results for the entrepreneurial success themes construct 0 1 2 3 4 5 6 7 commitment leadership opportunity obsession tolerance for risk, ambiguity creativity motivation to excel average evaluation business knowledge and skills – assessment outcome figure 4 shows that all the phases of the venture life cycle are well covered in the curriculum, except for the maturity phase, where competitive strategies and efficiency issues are highlighted. second-round investigation into why the maturity phase was assessed as weak led back towards the context of the programme, and specifically the outcomes of the course. traditionally the content and focus of the maturity phase would be associated with the typical mba course, which usually focuses on aspects like competitor intelligence, competitive strategies, distribution, communications and efficiency. the m phil in entrepreneurship tends to focus more on the incubation, start-up and growth phases, since its aim is to contribute to the number of start-ups, albeit achieving this through an indirect route. sajesbm ns volume 1 (2008) issue 1 12 __________________________________________________________________________________________ figure 4: assessment results for the business knowledge and skills construct the fact that there is a high measurement for the decline phase was also interesting, using the same reasoning relevant for the maturity phase. the m phil contains content that is unique, viz. declining ventures, failure, turnaround and harvesting from the venture. the content is notably significant, given the high failure rate of small businesses and its crucial impact, such that full comprehension thereof is imperative for any entrepreneurship programme. typically, previously tested entrepreneurship programmes tested weak for this aspect (pretorius 2001). new spin-off ventures may also be sought during the decline phase that emphasises the “new” entrepreneurial phase. learning approaches – assessment outcome both learning approaches used and participation in the learning process are rated on the midpoint four as shown in figure 5. second-round interviews identified the use of case studies and self-study through assignments, while simulation was absent as a component of the approaches used. element scores for the business know ledge & skills construct 0 1 2 3 4 5 6 7 developm ent phas e start-up phas e growth phasematurity phase decline phase average evaluation sajesbm ns volume 1 (2008) issue 1 13 __________________________________________________________________________________________ figure 5: assessment results for the learning approaches construct in terms of the approaches used, one aspect that stood out was the colloquium paper that participants have to complete every six months (three times). participants are required to present an academic research paper, based on a selected hypothesis, proven secondary data utilisation and meaningful conclusions, to an audience (facilitators and peers), where they are publicly criticised and exposed. reports by participants indicate that this experience is dreaded but is also very gratifying once it is mastered. business plan utilisation – assessment outcome although business planning is part of the course, there was no provision for practical preparation of a plan and therefore no presentation, defence and execution of a plan, as shown by figure 6. second-round interviews, however, indicate that several elements of a business plan are covered but not as a complete or integrated plan. within the initial courses, where start-up and growth are covered, content includes elements normally associated with a business plan. several of the participants are involved in compiling or evaluating business plans as part of their jobs. element scores for the learning approaches construct 0 1 2 3 4 5 6 7 approaches utilisation participation in learning average evaluation sajesbm ns volume 1 (2008) issue 1 14 __________________________________________________________________________________________ figure 6: assessment results for the business plan construct although some elements are covered during lectures and assignments, there is no official use of the business plan, whether in preparation, presentation, defence or execution. during the failure and turnaround module, learners are sent to businesses to determine the level of distress the business may be experiencing. a full opportunity analysis and evaluation are required, similar to that undertaken for the start-up of a new venture, and core to the components of a business plan. similarly, elements such as the economic model, sales prediction and cash flow are also covered during the turnaround plan that is compiled for a relevant business. nevertheless, the business plan as an integrated whole was absent. the facilitator – assessment outcome figure 7 shows that the score is significantly below midpoint for the utilisation of apprenticeships in the course. however, second-round interviews show that some element of apprenticeship is covered when learners conduct research and investigations in real businesses for assignments in the different subjects. the facilitator construct of the m phil programme also attained an average score (close to the midpoint) with regard to the manner of enhancing the entrepreneurial way of being. the practical start-up of new ventures is not paramount in this course and this may be the reason for its being low. e lem en t sco res fo r th e b u sin ess p lan u tilisatio n co nstru ct 0 1 2 3 4 5 6 7 p reparation p res entation defenc e e x ec ution a verage e valuation sajesbm ns volume 1 (2008) issue 1 15 __________________________________________________________________________________________ figure 7: assessment results for the facilitator construct 0 1 2 3 4 5 6 7 reinforced thinking entrepreneurial way of being apprenticeshipsmulti-disciplinary approach own practical experience average evaluation to enhance the programme, one could further develop the reinforced thinking process element and apprenticeship opportunities, try different learning approaches or adapt the course. it is not easy to improve this construct. personal and practical experience of business is probably the ultimate requirement for the facilitator. the level of concern for what is learnt is of the utmost importance. there is no easy way to achieve an optimal situation for entrepreneurial learning, as those who can really contribute to learning (business people) are generally not involved in education. discussion the assessment typically focused on identifying the weaknesses of the programme. these weaknesses included the business plan construct and several elements of the other constructs such as opportunity obsession, maturity phase, approaches utilisation and apprenticeships. on the other hand, there are several elements that were assessed as programme strengths, including motivation to excel, knowledge during all phases except maturity, the multidisciplinary approach and facilitator practical experience. the case programme contains the relevant elements as based on the formula of van vuuren and nieman (1999:6), namely motivation, entrepreneurial skills and business skills. the assessment indicated certain weaknesses in some areas of their model. despite the eeam being designed to evaluate programmes that have the creation of venture start-ups as their primary focus, it appeared useful in assessment of the m phil programme. given this perspective, it should however be acknowledged that the case programme has a definite difference in context. being a postgraduate programme, and specifically aimed at influencing the enabling environment to influence entrepreneurial development in general, it requires a previous first degree from participants. this requirement indicates that participants are sajesbm ns volume 1 (2008) issue 1 16 __________________________________________________________________________________________ already on a so-called “career path”. starting a business is not an original outcome of the programme. the facilitators are key to more start-ups and knowledge transfer. their responsibility is not only to use the programme optimally with the correct construct mix. marlow (2007:376) suggests that the key issue that seems to differentiate the more successful learning programme for business start-up from an average programme is whether there is attitudinal modification in the participant after attending the programme. this modified attitude will lead to activities associated with business start-up. if the facilitator can impact on the participants in such a way that their attitude and behaviour are modified, the programme will probably lead to more venture start-ups. one specific weakness of the programme investigated is its lack of using the business plan. again, the context does not require start-up and therefore the business plan component was considered of lower relative priority. although several elements of a business plan are covered during other modules of the programme, one reason for not utilising the business plan component as such, mentioned during second-round interviews, is the fact that business plans could be obtained from many sources and be presented by participants as their own work. this has happened before and participants have had to be expelled for dishonesty. a second weakness is the absence of a specific course that covers the maturity phase of the life cycle. although there is some inclusion of the relevant issues spread across the different modules, there is not enough financial, marketing, general management and competitive strategy content. recommendations to improve individual elements and thus the overall construct will be followed by further investigation of the elements identified with negative deviations from the midpoint. once these elements have been rectified, attention should also be paid to the improvement of the constructs in general. since the assessment, several alterations have been effected to the programme to overcome the weaknesses identified. the usefulness of the eeam’s application is that it identified shortcomings of the programme under investigation – aspects that were lacking or might limit its overall performance. the m phil programme seems to fill a specific niche in the market. during 2004 the applications for 2005 exceeded 400, which is a significant oversubscription. despite its being offered in pretoria, several applications are received from across south africa and neighbouring countries. some of the specific strengths of the programme as identified by the assessment include its focus on creativity, declining ventures and turnaround and the facilitator experience of business. limitations of the study several limitations of the study were identified. firstly, the assessment depends heavily on the perceptions and opinions of the assessors as well as participating respondents. high numbers of respondents were not available to overcome this dilemma. the validation of the instrument therefore depends to a certain extent on the support obtained from the role-players for the assessment results. the second-round interviews assisted to some extent with the face validity of the findings. responsive changes to the programme post assessment suggest further validity of the outcome. sajesbm ns volume 1 (2008) issue 1 17 __________________________________________________________________________________________ secondly, the arbitrary use of the scale midpoint as the distinguishing factor may be criticised. however, there is no common measurement to use as standard for the assessed constructs and elements. despite this shortcoming, the academic staff responsible for this programme confirmed the assessed weaknesses during second-round interviews. thirdly, the number of respondents remains challenging. however, research is under way which will incorporate learners who completed the programme in order to seek confirmation of the findings. finally, the eeam used for assessment of the programme does not test motivation as a construct, but only as an element within the entrepreneurial skills construct. adaptation of the model was therefore required, and pretorius et al. (2005:413) pay attention to this element. despite the shortcomings, this paper paves the way for generic assessment of entrepreneurial programmes. implications for management pedagogical insight is crucial for assessment (whittingham, 2006:175). implications for business educators and education policy makers are that the eeam can be successfully applied to assess start-up programmes used for the development of entrepreneurs in south africa. the complex nature of entrepreneurship training is systematically assessed to determine weaknesses. organisations like the qualification authority could use the eeam to ensure that service providers offer quality programmes. assessors and educators benefit from better understanding of how various constructs contribute to the successful delivery of entrepreneurship education. those in charge of training entrepreneurs need to be aware of the multiple factors involved if they are to raise their level of sophistication and ability to deliver entrepreneurial education. conclusion facilitators are ultimately the key construct that impacts on the learner’s attitude, thinking and willingness to take the plunge of new venture creation. facilitators plan how to combine the construct mix, organise the learning, lead the participant through the self-learning process and control the learning process. much is expected from a facilitator and it is often said that a poor programme with a good facilitator does better than the best programme with a poor facilitator. in this assessment it was clear that the facilitators (designers and lecturers) were able to select a construct mix that supported the specific context of the programme. the learners on the programme are mostly involved in the enabling environment, whether or not this environment includes education, support institutions and government. it is therefore highly relevant to instil the values of entrepreneurial motivation, attitude and thinking and to successfully transfer these skills to the learners to apply and utilise in their work situations. this probably confirms the “mentorship” role of the facilitator in entrepreneurship programmes. as those subscribing to the programme are influential in government support agencies, they will impact on economic participation of new entrants. it appears from the assessment results that the eeam could be successfully applied to the case programme, despite the fact that the context of the programme differs significantly from that of normal start-up programmes. the assessment led to in-depth understanding of the sajesbm ns volume 1 (2008) issue 1 18 __________________________________________________________________________________________ relevant issues, strengths and weaknesses of the programme. support for the proposition that the eeam can assess the programme in terms of covering the basic requirements for entrepreneurship education was therefore found. the eeam assists those who need to assess entrepreneurial education programmes, whether for improvement only or to stimulate programme outcomes that would result in more venture start-ups. application, however, requires that the assessor must be knowledgeable about the field of entrepreneurship and have experience in business and education of entrepreneurship. references antonites, a.j. 2003. an action learning approach to entrepreneurial creativity, innovation and opportunity finding. unpublished d com thesis. pretoria: department of business management, university of pretoria. coutis, p.f. 2007. responsive curriculum design in a statistics service unit. international journal of mathematical education, 38(4):501–515. fayolle. a. 1998. teaching of entrepreneurship: outcomes from an innovative experience. paper presented at the 44th world conference of the international council for small business, stockholm, 16–19 june:1–24. foxcroft, m.l., wood, e., kew, j., herrington, m. & segal, n. 2002. global entrepreneurship monitor: south african executive report. cape town: school of business management, university of cape town. gibb, a.a. 1993. the enterprise culture and education: understanding enterprise education and its links with small business, entrepreneurship, and wider educational goals. international small business journal, 11(3):11– 34. gibb, a.a. 2006. enterprise education in schools and colleges. are we really growing the onion? paper presented at the 51st world conference of the international council for small business, melbourne, australia, 18–21 june:1–41. gibb, a.a., singer, s. & korynski, p. 2006. back to the future: evaluation as an instrument for development of entrepreneurship in a transition economy. paper presented at the 51st world conference of the international council for small business, melbourne, australia, 18–21 june:1–26. gorman, g., hanlon, d. & king, w. 1997. some research perspectives on entrepreneurship education, enterprise education and education for small business management. international small business journal, 15(3):56–77. hisrich, r.d. & peters, m.p. 1998. entrepreneurship. 5th ed. boston: irwin/mcgraw-hill. hirsowitz, r. 1992. myths and facts: types of assistance needed for the informal sector to flourish. finance week, april 30, 53(5):25. holtzhausen, s.m. 2005. the supervisor’s accountability versus postgraduates’ responsibility within the academic arena. south african journal of higher education, 19(1):89–100. kaufman, p. j. & dant, r.p. 1998. franchising and the domain of entrepreneurship research. journal of business venturing, 14(1):5–16. kelly, p. & mills, r. 2007. the ethical dimension of learner support. open learning, 22(2):149–157. kuratko, d. f. & hodgets, c. 1998. entrepreneurship: a contemporary approach. boston: dryden press. le roux, i. & steyn, b. 2007. experiential learning and critical reflection as a tool for transfer of business knowledge: an empirical case study of a start-up simulation intervention for nascent entrepreneurs. south african journal of economic and management. 10(3):330–347. sajesbm ns volume 1 (2008) issue 1 19 __________________________________________________________________________________________ marlow, e. 2007. balance in curriculum. college student journal, 41(2):376–378. mendenhall, a., wu buhanan, c. suhaka, m. & mills, g. 2006. a task-centred approach to entrepreneurship. techtrends, 50(4):84–89. mitchie, f., glachan, m. & bray, d. 2001. an evaluation of factors influencing the academic self-concept, selfesteem and academic stress for direct re-entry students in higher education. educational psychology, 21(4):455– 472. mitra, j. 2002. consider velasques: reflections on the development of entrepreneurship programmes. industry & higher education, 16(3):191–202. morris, r. & hooper, v.a. 1996. contemporary issues in entrepreneurship: research perspectives from within south africa. south african journal for entrepreneurship and small business, 8(2):14–15. nieman, g. 2000. training entrepreneurs and small business enterprises in south africa: a situational analysis. paper presented at the 46th world conference of the international council for small business, brisbane, australia, 7–10 june:1–17. nieman, g. 2001. training entrepreneurs and small business enterprises in south africa: a situational analysis. education and training, 43(8/9):445–450. nonis, s.a. & hudson, g. i. 1998. measuring student perceptions of teaching effectiveness. paper presented at the 7th south western marketing association, dallas, texas, 17–19 september:1–7. orford, j, herrington, m. & wood, e. 2004. global entrepreneurship monitor: south african report. cape town: school of business management, university of cape town. power, t.j. 2006. editorial note: improving academic competence for all students. school psychology review, 35(3):339–340. pretorius, m. 2000a. a proposed training method for the transfer of skills to enhance micro and small business start-ups in south africa. paper presented at the 2nd international vocational education training association annual conference, mauritius, 21–22 june:1–20. pretorius, m. 2000b. evaluation of a proposed training methodology to enhance micro and small business startups in south africa. paper presented at the 46th world conference of the international council for small business, brisbane, australia, 7–10 june:1–22. pretorius, m. 2001. a training model to enhance micro and small business start-ups in south africa. unpublished d tech thesis. pretoria: tshwane university of technology. pretorius, m., nieman, g.h. & van vuuren, j.j. 2005. critical evaluation of two models for entrepreneurship education: an improved model through integration. international journal of educational management, 19(5):413–427. rosa, p. & mcalpine, a. 1992. a career orientation towards enterprise. paper presented at the 3rd internationalisation entrepreneurship conference, london, 9–11 march:1–18. rsa. 1996. national small business act, no. 102 of 1996. government gazette, 17612(1901). [online available from: http://search.sabinet.co.za/webz/fetch? sessionid=01-35271 1034779195&recno=2&resultset=2&format=f&next=law/law_nffull. html&bad=law/law_badfetch.html&&entitytoprecno=2&entitycurrecno=2.html [accessed: 2007-11-27]. solomon, t., duffy, s. & tarabishy, a. 2002. the state of entrepreneurship education in the united states: a nationwide survey and analysis. international journal of entrepreneurship education, 1(1):1–22. sullivan, b.f. & thomas, s.l. 2007. documenting student learning outcomes through a research intensive senior capstone experience: bringing the data together to demonstrate progress. north american journal of psychology, 9(2):13121–13130. sajesbm ns volume 1 (2008) issue 1 20 __________________________________________________________________________________________ sunter, c. 1994. the casino model. cape town: tafelberg. sunter, c. 1998. we need to focus on creating an entrepreneurial class. entrepreneurship update, 2 (november):2–3. timmons, j.a. 1999. new venture creation: entrepreneurship for the 21st century. boston: irwin mcgraw-hill. timmons, j.a. & spinelli, s. 2004. new venture creation: entrepreneurship for the 21st century. boston: irwin mcgraw-hill. van vuuren, j.j. 1997. entrepreneurship education and training: a prospective content model. unpublished report. pretoria: university of pretoria. van vuuren, j.j. & nieman, g.h. 1999. entrepreneurial education and training: a model for syllabi/curriculum development. paper presented at the 45th world conference of the international conference for small business, naples, italy, 6–9 june:1–17. welsch, p.h. 1993. entrepreneurship education and training infrastructure: external interventions in the classroom. paper presented at the 4th internationalisation entrepreneurship conference, vienna, 5–8 july:1–18. whittingham, k.l. 2006. impact of personality on academic performance of mba students: qualitative versus quantitative courses. decision sciences journal of innovative education, 4(2):175–190. wilkenson, b. 1988. the seven laws of the learners: how to teach almost anything to practically anyone. course notebook. new york: ministries publishing. abstract introduction zone of insolvency agency theory across the boundary of financial distress management cognition and stakeholders boards of directors and the zone of insolvency research methodology findings hypothesis 1 hypothesis 2 hypothesis 2a hypothesis 2b hypothesis 2c conclusion acknowledgements references footnotes about the author(s) keith j. fairhurst department of business management, university of pretoria, south africa marius pretorius department of business management, university of pretoria, south africa citation fairhurst, k.j. & pretorius, m., 2019, ‘boundaries within boundaries: identifying the boundaries facing private firms that are in financial distress’, southern african journal of entrepreneurship and small business management 11(1), a147. https://doi.org/10.4102/sajesbm.v11i1.147 original research boundaries within boundaries: identifying the boundaries facing private firms that are in financial distress keith j. fairhurst, marius pretorius received: 28 july 2017; accepted: 09 oct. 2018; published: 21 feb. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: delay in cognition by management is likely to see a firm’s distress worsening and the turnaround potential of a firm eroded. this inertia and resistance to change are further likely to result in antecedents absent in the required cognition of distress to trigger turnaround actions. aim: to explore firstly the zone of insolvency (zoi), and the boundary of financial distress, secondly, agency theory, boards, directors and the zoi and finally, how these constructs may influence cognition of distress and the firm turnaround boundary value. setting: the sample studied was drawn from the population of all privately owned firms that had filed for business rescue in south africa between 01 may 2011 and 30 june 2016. methods: a quantitative research approach consistent with an objective position was utilised. the approach included descriptive statistical analysis and the measurement of strength of relationship between variables. results: we identified two boundaries that exist as triggers in respect of the required turnaround action: firstly, the boundary of the zone of insolvency (zoi), and secondly, the turnaround boundary that occurs at some time after the onset of distress and once management has recognised and accepted the distressed position. the period between the two boundaries is a period that may see the turnaround potential of the distressed firm further eroded even beyond the point of no return, making a turnaround impossible. conclusion: quantification of the difference in value of the firm between the onset of financial distress and evidence of direct action to turn around the distressed firm may be termed ‘the cost of cognition delay’. understanding the cost of cognition delay contributes to practice and academic interests and for firms that rely on the legal protection of formal turnaround processes, it may be argued that the act of formal filing is a signal that cognition has occurred. introduction arresting decline and preventing financial distress of a firm are dependent on the crucial first step of management, recognising and admitting that the firm is distressed (gopinath 1991). arguments put forward by schulze, lubatkin and dino (2003) may provide two reasons as to why this does not happen. firstly, they suggest that based on agency theory, owners with a controlling interest define the value of the firm that they control in terms of personal utility, which may translate to their making choices in favour of their personal wealth and not necessarily in the interests of the firm (schulze et al. 2003). secondly, they agree with the view that the equity owned by management and the board influences the board’s thinking and decisions (morck, shleifer & vishny 1988; schulze et al. 2003). other scholars have recognised that the structure and composition of boards have an influence on the incidence of financial distress (ayotte, hotchkiss & thorburn 2013; elloumi & gueyié 2001). in addition, the role performed by boards and directors is recognised as the principal mechanism for corporate governance (cadbury 2000), and a key consideration during times of financial distress is the shifting fiduciary duty of the board (ayotte et al. 2013). furthermore, it is increasingly argued that, because of their impact on decisions and view on risk, corporate governance mechanisms have a significant influence on the probability of financial distress of a firm (djerbi & anis 2015; manzaneque, priego & merino 2015). the contemplation of financial distress routinely uses the idea of a boundary as a way of predicting default on debt obligations. the most common measure of a boundary in this respect is where the zero net worth boundary equals the face value of debt (davydenko 2012). davydenko describes this as the point at which the market value of a firm’s assets falls below the face value of debt. this description matches the conventional calculation (total assets less total liabilities) (republic of south africa [rsa] companies act 71 of 2008) (rsa 2008) (with effect from 01 may 2011, ch. 4 (1) (a)) of a firm’s solvency. davydenko also noted that ‘the majority of economically insolvent firms do not default for at least one year’ and pointed out an alternative view to the value-based boundary assumption, arguing that a firm defaults when its cash flow cannot meet the demands of its debt obligations. as an extension to this view, it may be argued that the default boundary is likely to locate beyond the zone of insolvency (zoi) boundary but may not coincide with a boundary that may be termed ‘the turnaround boundary’. to explore these boundaries, various variables are considered. firstly, this article explores the zoi and the boundary of financial distress; secondly, agency theory, boards, directors and the zoi; and finally, how these constructs may influence cognition of distress and the firm turnaround boundary value. zone of insolvency the zoi provides context for an appreciation of the interaction between corporate failure, financial distress and turnaround of any firm. it is an eloquent term for the period of financial distress that may not be generally evident, but exists prior to actual filing for insolvency, bankruptcy or business rescue (e.g. chapter 6 in south africa or chapter 11 in the united states) (barondes et al. 2007; rajak 2008; tung 2006). although the legal principles stem from as far back as salomon vs salomon & co ltd – a landmark united kingdom (uk) company law case in 1897 (rajak 2008), the term first emerged in the credit lyonaisse vs pathe communications case in respect of which a decision was handed down by the court of chancery of delaware on 30 december 1991 (allen 1992). it has been reasonably argued that the zoi is an imprecise construct and difficult to determine (barondes et al. 2007). simply put by barondes et al. (2007), it occurs when: … it [the company] cannot generate and/or obtain enough cash to pay for its projected obligations and fund its business requirements for working capital and capital expenditures with a reasonable cushion to cover the variability of its business needs over time. (p. 235) the argument posits that even if a company is not legally insolvent or bankrupt, as it nears the point of bankruptcy and by continuing to operate in a zoi during which shareholders are ‘out of the money’, creditors may be viewed as the rightful recipients of any residual value derived from corporate actions. in the south african new companies act (companies act 71 of 2008, 2011) (rsa 2008), a definition for ‘financial distress’ is provided in chapter 6, section 128 (1) (f) as ‘in reference to a particular company at any particular time, means that’: it appears to be reasonably unlikely that the company will be able to pay all of its debts as they fall due and payable within the immediately ensuing 6 months; or it appears to be reasonably likely that the company will become insolvent within the immediately ensuing 6 months (s 128 [1] [f]). this study uses the ‘zone of insolvency’ construct as the context for understanding antecedent board attributes and equity ownership patterns of distressed businesses. it also uses the ch. 6 sect 128 (1) (f) (rsa 2008) definition of financial distress as the mechanism for ‘determining the initiation of the zone of insolvency’. zone of insolvency – decision-making it is argued that discretion of management in the zoi is reduced as a consequence of closer scrutiny by boards, and the reduced or total withdrawal of cooperation from creditors, banks, bondholders and suppliers of goods and services (trahms, ndofor & sirmon 2013). the result is a narrowing range of options and, consequently, decisions have to be made against the backdrop of an increasing prospect of failure and loss. zone of insolvency – deepening insolvency behavioural economic theory states that decision-makers attempting to deal with challenges, when faced with the prospect of loss, may be drawn to high-risk options with the hope that the outcome will alleviate the distressed position. this behaviour has been explained by research on decision-making under circumstances of risk which shows that people are inclined to be risk averse in the face of sure gains but are inclined to become risk seeking in the face of sure losses (kahneman & tversky 1979). therefore, it is reasonable to postulate that as financial distress increases, and the prospect of sure losses also increases, so the level of risk-seeking behaviour of management also increases (wiseman & gomez-mejia 1998), particularly in distressed businesses where the shareholders, management and executive directors are the same people (i.e. an ‘agency relationship’ does not exist). it also follows that, without any balancing influences, such as capable independent directors, management may take riskier decisions and may hold out for far too long before taking decisive action. this is likely to lead to deepening insolvency at the very least or bankruptcy and liquidation. for the purposes of this study, an appreciation of the ‘zone of insolvency’ is important because, firstly, for companies in the ‘zone of insolvency’ it is argued that the fiduciary duties of directors expand to include creditors as they may be considered the rightful residual claimants at that point. secondly, in privately owned companies, where shareholders and management are often the same people, an agency relationship may not exist. thus, the key driver for sound corporate governance principles may be absent and result in a lack of suitable independent oversight and controls. finally when faced with the prospect of loss, management may be inclined to be unreasonably risk seeking at the expense of creditors and other financiers. agency theory across the boundary of financial distress the theory of the firm is fundamental to the study of agency theory with jensen and meckling’s (1976) definition, having become most recognised: it is a legal fiction which serves as a focus for a complex process in which the conflicting objectives of individuals (some of whom may ‘represent’ other organizations) are brought into equilibrium within a framework of contractual relations. (p. 9) the terms ‘conflicting objectives of individuals’ and ‘equilibrium’ are particularly significant as it may be argued that contracts that bring about equilibrium are created while a firm is financially healthy. it therefore follows that as a firm approaches the zoi and equilibrium is disturbed, (1) some of the contractual terms such as payment of debt may not be possible and (2) the conflicting objectives of individuals may lead to a lack of willingness on the part of some actors to meet other contractual obligations. the inherent tension present in relationships where separation of ownership and management exists was noted as early as 1776 when smith (1776) said: … managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. (p. 606) what smith does not specify, but is equally true, is that the managers may also expropriate value for themselves that should in the normal course of events accrue to the owners. such lost value and the costs of limiting the loss of value are collectively known as ‘agency cost’, which is defined by jensen and meckling (1976) as the sum of the monitoring expenditures by the principal, the bonding expenditures by the agent and the residual loss. monitoring expenditures are logically the costs incurred by the owners to monitor the choices and behaviour of managers but are not limited to monitoring activities and include activities aimed at control. these costs could include the costs of maintaining a board of directors, conducting independent audits and any other review mechanism. in respect of bonding expenditures, jensen and meckling (1976) observe that: … it will pay the agent to expend resources [bonding expenditures] to guarantee that he will not take certain actions which would harm the principal or to ensure that the principal will be compensated if he does take such actions. (p. 5) in practice, specific circumstances will determine the nature of bonding costs, but a useful example is that of directors’ and officers’ (d&o) insurance. residual loss includes all other leakage that occurs from the firm as a result of the agency relationship, but otherwise could accrue as value to the firm’s owner. this leakage can be pecuniary or non-pecuniary in nature and may even take the form of opportunity costs. many examples can be advanced in respect of opportunity costs, but a common definition of ‘opportunity cost’ is ‘that which is given up in order to get something else’ (polley 2015:13). an example of an opportunity cost to shareholders would be the case of management choosing not to embark on a particular project because of the personal risk to their career or the personal inconvenience that they may have to bear. identifying opportunity costs would be a matter of judgement and would vary from case to case. jensen and meckling (1976) go on to describe how the sources of capital of a firm influence the scale of agency costs. they describe the situation where all the capital of the firm is provided by the owner or manager, and argue that the agency costs will be zero as no agency relationship exists. they then demonstrate, as illustrated in figure 1, that the greater the amount of external capital – whether debt or equity – provided to a firm, the greater the total agency cost. figure 1: total agency cost increases as the amount of external financing increases. the view that agency cost increases as the amount of external financing increases, irrespective of whether it is debt or equity, is logical and seems reasonable. in a perfect world, it could be argued that the residual costs should be zero if optimal monitoring (including control) and bonding activities were in place. the activities that give rise to the monitoring and bonding costs may be seen as governance mechanisms. the creation of governance mechanisms is one of the outcomes of researching agency theory and attempting to solve the agency problem (eisenhardt 1989). this seems to be supported by the work of ang, cole and lin (2000), who found that agency costs are (1) higher when a firm is managed by an outsider (non-shareholder), (2) become lower as the amount of shareholding owned by management increases, (3) increase as the number of shareholders who are not managers grows and (4) tend to be lower when there is greater monitoring in place by banks (ang et al. 2000). the first three findings of ang et al. (2000) can be aligned to the view that the value of a firm managed by a controlling owner(s) is equal to the owner(s)’ view of the personal utility that the firm provides (schulze et al. 2003). it follows that the greater proportion of shareholding owned by management, the less governance activity is desired because the conditions for an agency relationship are reduced and there is a great incentive by shareholders to maximise personal utility. from ang et al.’s findings one may speculate that when a firm’s funding is predominantly external debt, then the providers (normally banks) will put in place their own monitoring mechanisms. this protection is normally achieved through explicit contracts that include covenants that require specific action from management when significant change takes place. it may, however, be argued that under particular circumstances, for instance, should the firm enter the zoi, then the debt funders may become the principal in a form of agency relationship. a conventional agency theory assumption is that separation of ownership and control exists. however, where a high proportion of equity is owned by management, this is unlikely to be the case. this situation, when coupled with a strong incentive for personal utility maximisation on the part of owners, could result in the objectives of owners and the objectives of funders being potentially incompatible. although when a firm is healthy and obligations are being met, any tension arising from such potentially incompatible objectives will only be theoretical. conversely, as the boundary of financial distress is crossed, and the firm enters the zoi, it is highly likely that the incompatible objectives will result in real tension between funders and management. it has also been argued that once the firm crosses the boundary of financial distress, the claim on residual value of the firm transfers from shareholders to creditors because shareholders have, by that stage, effectively lost their investment (tung 2006). in this case, one can argue that an explicit agency relationship between creditors as the principal and management as the agent is created. in cases where management holds a high fraction of equity, the tension that arises as a result of incompatible objectives is likely to be exacerbated. it has also been argued by tung (2006) that ‘post-insolvency investments by the firm are a gamble with creditor’s money’ (p. 612).1 thus, one can argue that management with a high fraction of equity ownership will be faced with making choices to achieve the incompatible objectives of (1) personal utility maximisation and (2) meeting the obligations required by creditors. kahneman and tversky (1979) argue that when faced with the prospect of loss, which, for owner-managers, is the loss of personal utility, people are inclined to become risk seeking. thus, when a firm crosses the financial distress boundary the managers may become risk seeking, while the providers of funding in the role of principal carry a disproportionate amount of the risk. however, it may also be argued that once the boundary of financial distress is crossed, then an altered agency relationship exists between management and creditors. creditors become the principal because they have priority claim in any residual value of the firm, and management are the agents because they have authority to act on behalf of the principal. management cognition and stakeholders panicker and manimala (2015) assert that to improve the chances of turnaround success, management needs to recognise problems early on and then take immediate action. this argument is consistent with gopinath’s (1991) view that any turnaround hinges on management recognising and admitting that the firm is distressed. other scholars have offered management bias (abatecola, farina & gordini 2011; rockwell 2016), and fixed mental models of existing management (combe & carrington 2015) as obstacles to management cognition of distress, resulting in inertia and organisational failure. furthermore, in small and medium enterprises (smes) which are generally owner-managed, this inertia and resistance to strategic change have been recognised as the outcome of founding shareholders’ commitment to a firm’s original strategy (brunninge, nordqvist & wiklund 2007). similarly, recent research into stakeholder theory suggests that management of companies that have failed tends to the narrative of ‘scapegoating’, with negative performance attributed to external causes. simultaneously, they mask shortcomings of the company, but are very ready to claim any small success that might come about (smudde & courtright 2011). these findings also suggest that a lack of cognition is common among failed firms and are consistent with the views articulated by panicker and manimala (2015) and gopinath (1991). distress and top management teams established theory a long-standing view exists that the top management teams (tmt) in place, while the financial distress developed, have such fixed views on the way the business should be run that they may be incapable of turning it around (hofer 1980) and that a successful turnaround requires retaining only capable management (burbank 2005). leaders are often seen as a contributing source of decline with a concomitant loss of credibility, resulting in a further deterioration of a firm’s internal climate with an increase in dysfunctional consequences (arogyaswamy, yasai-ardekani & barker iii 1995). executives either directly caused the problems at the heart of crisis or failed to recognise the problems early enough. therefore, it may be argued that in financially distressed businesses that are privately owned it is possible that the lack of cognition by management and the self-interest of shareholders in management positions are likely to limit the removal and replacement of top management, thereby reducing the possibility of a successful turnaround. existing evidence suggests that organisational inertia hinders tmt replacement, and it has been argued that boards of directors with greater independence are likely to be more decisive when considering replacement of top management (trahms et al. 2013). for privately owned businesses, this may not be the case because of shareholders themselves filling key management roles. it is possible, therefore, to speculate that where a high fraction of equity is owned by management, low turnover of top management will occur even though the balance of evidence suggests that it is a key feature of successful turnarounds. aside from the ability of existing top management, it is also likely that information presented by them will selectively support their own self-interest. this contention is supported by research that argues that the proportion of independent directors on boards is positively associated with the comprehensiveness of financial disclosures (chen & jaggi 2000). distress and information asymmetry of information is an established view (chancharat & chancharat 2013; clarke 2007; eisenhardt 1989; taljaard 2013; tung 2006), and ‘managers’ financial reporting and disclosure choices are associated with contracting, political cost, and capital market considerations’ (healy & palepu 2001:431). it is possible, therefore, to argue that the full extent of distress may become evident only when a formal (legal) business rescues or liquidation process is initiated. boards of directors and the zone of insolvency a study (dahya, dimitrov & mcconnell 2008) analysed the relationship between corporate value and board composition in 22 countries, and found that performance was positively correlated with the fraction of independent directors on the board. it has also been shown by other researchers that various corporate governance characteristics of firms, financial distress and the survival chances of firms in distress can be correlated (abatecola et al. 2011; fich & slezak 2008; jaikengkit 2004). specifically, the number of independent directors is positively correlated with financial health, and solvent companies tend to have larger boards (platt & platt 2012). the principal of independence, as a significant feature of good corporate governance, is reflected in two of the most credible and recognised corporate governance codes of best practice, namely: (1) the united kingdom’s combined code and (2) south africa’s king iii.2 although this research did not aim to deal with specifics of any corporate governance codes of practice, the purposive sample was drawn from the population of south african privately owned firms in financial distress. thus, it is worth noting that a cornerstone of the king iii code for south africa is that a board should be composed predominantly of independent directors and that the chief executive officer (ceo) and chairperson of the board should not be the same person. it is also worth noting that the king iii code is a voluntary code of best practice, and although it is a mandatory requirement of the johannesburg stock exchange for public companies to comply, there is nothing compelling a privately owned company to adopt the code. these features of king iii are consistent with the view that independent oversight is a suitable mechanism for ensuring that the actions of those with authority are aligned with the interests of owners, and have been described as monitoring activities in agency theory literature. agency theory identifies monitoring activities as one of the drivers of agency costs. it can thus be argued that this is a prime responsibility of the board, and as a distressed firm’s governance characteristics affect its possibility of bankruptcy (fich & slezak 2008), monitoring activities are key in avoiding financial distress. it has also been argued that smaller boards with a higher proportion of outside directors along with larger ownership stakes by inside directors are more successful in avoiding bankruptcy once distress is identified (fich & slezak 2008). this is consistent with the view that greater board independence and diversity among directors support the prevention of distress (abatecola et al. 2011; fich & slezak 2008; jaikengkit 2004) and that a larger, more functionally diverse group can increase creativity (brunninge et al. 2007:298). this could balance the dominant influence of management with concentrated equity holdings. the work of jaikengit (2004) on thai financial institutions reveals two interesting factors of corporate governance as ex ante early warning prediction of financial distress. these two factors are: (1) board independence and (2) ownership structure, as shown in figure 2. figure 2: early warning indicators and financial distress. jaikengit’s (2004) findings lend support to an argument that for privately owned firms in the zoi a number of characteristics exist, namely, high concentration of equity holders in management positions may result in delayed cognition of financial distress with delayed action to alleviate the distressed position. it also follows that contrary to what corporate governance theory suggests, for privately owned firms in the zoi, agency cost represented by board size, board independence is unlikely to bring about early management cognition of distress and preserve firm value. furthermore, the likelihood of a smaller board, limited board independence and increased likelihood of ceo duality will limit the influence that the board has on risky decisions of management; thus, the board composition of private firms in distress is unlikely to act as early stimulus for management cognition of distress which, furthermore, is unlikely to limit the cost of cognition delay. these characteristics can be represented in the conceptual model and hypotheses, as shown in figure 3. figure 3: conceptual research model. figure 3 shows the main hypotheses of this research, namely: h1: in the zoi, a correlation exists between the fraction of equity owned by management and the turnaround boundary value of the firm. h2: this set of hypotheses deals with the relationship between the individual variables collectively referred to as board composition and the variable turnaround boundary value of the firm. h2a: a positive correlation exists between total number of directors on the board and the turnaround boundary value of the firm. h2b: a positive correlation exists between total number of independent directors on the board and the turnaround boundary value of the firm. h2c: a negative correlation exists between ceo duality and the turnaround boundary value of the firm. in other words, when a firm is in the zoi, the greater the occurrence of ceo duality, the lower the turnaround boundary value of the firm. research methodology in keeping with previous research in this field (altman 1968; clarke & buchanan 2010; jaikengkit 2004; kiel & nicholson 2003; parker, peters & turetsky 2002; smith & graves 2005; taffler 1984; trahms et al. 2013), a quantitative research approach that is consistent with an objective position was utilised. this approach allowed for the measurement of strength of relationship between the variable described as the turnaround boundary value of the firm and the variables: (h1) the fraction of equity owned by management and (h2) the variables described collectively as board composition. sample the sample, shown in table 1, consisted of data gathered for 127 cases of companies that had commenced with business rescue proceedings. the data were sourced from official business rescue documents, company records, business rescue plans, minutes of creditors’ meetings and legal affidavits. table 1: make-up of sample studied. for companies in business rescue the relevant financial reports are available in at least two places: (1) as part of the background presented at the first meeting of creditors and distributed to affected parties in advance of the meeting or as part of the minutes of the meeting, and (2) as part of the financial information contained in any published business rescue plan (pretorius & rosslyn-smith 2014) as required in chapter 6, section 150 (1) (a) of the south african companies act. as there is no comprehensive database of business rescue information to which a researcher can turn, to draw a sample using strict random sampling techniques would not have been successful. however, it was possible to achieve a purposive sample by approaching various commercial entities who are exposed to, and engage regularly with distressed businesses, and are included as an affected party as defined in chapter 6 of the new companies act. these include, but are not limited to, the following: providers of credit insurance: (1) credit guarantee,3 (2) marsh4 and (3) lombard.5 providers of finance, which, in this case, are the large banks operating in south africa. academics doing research in this field who were willing to participate, with cipc as the regulatory authority, as well as the turnaround management association members and business rescue practitioners. these entities were approached and were requested to share randomly selected copies of business rescue plans on a confidential basis. the first step in extracting the data was to interrogate the contents of each case to ensure that the data in respect of each of the variables in the research model could be extracted. each case was also interrogated to ensure that only privately owned companies were included in the final sample. no attempt was made to classify the cases by industry. however, at least 28 different types of businesses were identified, including but not limited to, retail, wholesale, manufacturing, services, automotive, transport, mining, restaurant, warehousing and transport. the empirical findings are presented next in the form of descriptive statistics and test of association for each hypothesis. this is followed by a discussion of the findings. findings the descriptive statistics in table 2 are for the variables depicted in the conceptual research model (figure 3). the demographics for the sample analysed are presented thereafter. table 2: descriptive statistics of the sample firms (n = 103). it has been argued that where management owns a significant portion of equity in a firm, they may see the firm as existing for their own utility maximisation exclusively. such management may thus frame decisions such that these decisions are not aligned with the best interests of the firm (wiseman & gomez-mejia 1998). in addition, when faced with the prospect of loss they may become risk seeking (kahneman & tversky 1979; tversky & kahneman 1981). for these reasons, the fraction of equity owned by management has been included as a variable in the conceptual research model. the mean fraction of equity owned by management in the sample was 0.9381, with s = 0.194 (table 2). board size has been shown in previous research to correlate with the incidence of distress (jaikengkit 2004). board diversity has also been shown to be associated with the prevention of distress (abatecola et al. 2011; fich & slezak 2008; jaikengkit 2004), and it is logical that board diversity can only occur if there is more than one director on the board. therefore, the measure of total number of directors has been included as a variable in this research. the mean of total directors in the sample was 1.91, with a standard deviation of s = 1.2 (table 2). previous research has identified board independence as playing a significant role in the avoidance of financial distress (abatecola et al. 2011; fich & slezak 2008; jaikengkit 2004) and in the incidence of successful turnarounds (trahms et al. 2013). the mean number of independent directors in the sample was 0.0198, with a standard deviation of s = 0.196 (table 2). the most widely accepted corporate governance codes of best practice support the view that independence and diversity of a board is enhanced by the appointment of an independent non-executive chairperson. the existence of ceo duality was also identified by jaikengkit (2004) as a significant feature of financial distress. chief executive officer duality is a dichotomous categorical variable where the existence of ceo duality was coded as a 1 and where the ceo and chairperson roles were held by separate people was coded as a 2. chief executive officer duality existed in 102 cases (98.1%) and there were only two cases (1.9%) where it did not exist. the result is shown in table 3, and to illustrate the point that the existence of ceo duality is a predominant feature of the sample of private firms in the zoi. table 3: frequency of evidence of chief executive officer duality. the variables ‘current assets’ and ‘current liabilities’ for the sample allowed consideration of the aggregate liquidity position of the sample, as shown in figure 4. figure 4: aggregate liquidity position of all sample cases. figure 4 shows a total of r2.6 billion for the sample’s aggregated current liabilities against a total of r1.1bn for the sample’s aggregated current assets with a resultant liquidity shortfall of r1.5bn for the sample. it is obvious that, at an aggregate level, the firms in the sample used for this research would be unable to meet their short-term debt requirements figure 5 shows that, for the sample studied, the sum of total liabilities for all 104 cases was r4.8bn and the sum of tangible assets was r2.8bn. the resulting shortfall of tangible assets to cover total liabilities was r2.0bn. thus, at an aggregate level, the firms contained in the sample used for this research may be considered to be functionally insolvent. figure 5: key solvency metrics for the aggregate sample. size was included as a control variable and was shown to be significant at the p < 0.01 level with a small correlation of r = 0.261 to the turnaround boundary value variable. hypothesis 1 a pearson’s product-moment correlation was run to assess the relationship between the fraction of shareholding owned by management and the turnaround boundary value of the firm. the result was a small correlation of r = 0.081 that was not significant, meaning that the null hypothesis, in the zoi no correlation exists between the fraction of equity owned by management and the turnaround boundary value of the firm, could not be rejected hypothesis 2 this set of hypotheses deals with the relationship between the individual variables collectively referred to as board composition and the variable turnaround boundary value of the firm (see also figure 3). the pearson’s product-moment correlation assessed the relationship between the board composition (total number of directors, number of independent directors) and the turnaround boundary value of the firm. a point-biserial correlation was run between ceo duality and the turnaround boundary value of the firm. the results for each hypothesis are reported below. hypothesis 2a a positive correlation exists between total number of directors on the board and the turnaround boundary value of the firm. results indicate a small, negative correlation that is not significant between total number of directors on the board and the turnaround boundary value of the firm, r = −0.117, p > 0.05. thus, the null hypothesis, that in the zoi, no relationship exists between the total number of directors and the turnaround boundary value of the firm, cannot be rejected. hypothesis 2b a positive correlation exists between total number of independent directors on the board and the turnaround boundary value of the firm. results indicate a very small, positive correlation that is not statistically significant between total number of independent directors on the board and the turnaround boundary value of the firm, r = 0.014, p > 0.05. thus, the null hypothesis, that in the zoi, no relationship exists between the total number of directors and the turnaround boundary value of the firm, could not be rejected. hypothesis 2c a negative correlation exists between ceo duality and the turnaround boundary value of the firm. in other words, when a firm is in the zoi, the greater the occurrence of ceo duality, the lower the turnaround boundary value of the firm. a point-biserial correlation showed the relationship between ceo duality and the turnaround boundary value of the firm. there was a small probability of correlation between ceo duality and the turnaround boundary value of the firm. it was statistically not significant rpb(104) = 0.014. one cannot, therefore, reject the null hypothesis, stating that no relationship exists between ceo duality and the turnaround boundary value of the firm. discussion this paper opened by noting the observation of gopinath (1991), who maintained that the first step in arresting decline and preventing failure was for management to recognise and admit that there was a problem. the cross-sectional research done in this study was founded on the premise that the formal filing for legal protection under a business rescue regime is evidence that recognition of a problem within a firm had taken place. furthermore, it is evidence that management had admitted there was a problem. it is also a signal that at least some stakeholders believe that a turnaround may be possible. thus, the filing for formal and legally protected turnaround serves to mark a boundary between decline and possible turnaround. this boundary may not be the same as the boundary between financial wellness and financial distress. so, in reality, a firm that has entered the ‘zone of insolvency’ will have crossed this first boundary (‘distress’), albeit an imprecisely defined boundary (barondes et al. 2007), before it reaches the boundary between ‘decline’ and possible ‘turnaround’. thus, it may be argued that even though the zone between the two boundaries falls within the zoi it is also somewhat of a ‘no-man’s land’. it is an observation of the researcher that this ‘no-man’s land’ may be characterised by low visibility, apparently risky decisions and inadequate oversight. indicative of this observation is the fact that 13% (17 of the initial cases) had to be excluded from analysis in this research because of incomplete or incomprehensible financial data. the notion of two boundaries (zoi and turnaround) is shown as an idealised6 concept in figure 6. delay in cognition by management, as argued by panicker and manimala (2015), is likely to see a firm’s distress worsening and the turnaround potential eroded. this inertia and resistance to change, as identified by brunninge et al. (2007), is likely to result in cognition of distress (the first step required for a turnaround) only occurring at some time after the onset of financial distress. hence, the argument that for firms in financial distress and attempting a turnaround, there are likely to be two boundaries that exist within the zoi, namely, (1) the zoi boundary and (2) the turnaround boundary, which occur at some time after the onset of distress and once management has recognised and accepted the distressed position. figure 6: idealised concept of the zone of insolvency boundary and turnaround boundary. given that the success of business rescue is shown by prior research to be less than 10% (pretorius 2015), it follows that many firms that enter the zoi will not follow the idealised improvement beyond the turnaround boundary, as shown in figure 6. the mean value of tangible assets as a ratio of face value of debt for the sample in this research is 0.6411 (table 2). in other words only 64.1% of the face value of debt (liabilities) is covered by the total tangible asset value. it may be argued that the zoi may commence when the value of a firm’s tangible assets is r1.00 lower than the face value of debt. this view is aligned with the solvency test which is simply carried out by assessing whether a firm’s assets are greater or less than a firm’s liabilities. using this assessment the firms in this research are significantly beyond the insolvency threshold. both the aggregate liquidity (figure 3) and solvency (figure 4) results for firms in this sample also support this conclusion and the contention that the firms’ turnaround boundary value is significantly lower than the firms’ likely value at the commencment of the zoi. in this research, the tangible asset value versus face value of debt assessment was done at that point in time when each firm in the sample was placed into business rescue and it may be argued that cognition by management had occurred. thus, by extension it may be true to say that the turnaround boundary for the firms in this research was located where the mean value of tangible assets was only 64.1% of the face value of debt. thus, if the zoi boundary is where the value of tangible assets equals the face value of debt (total liabilities), then it is also true to say that at least a further 35.9% of the firms’ net asset value was eroded before the turnaround boundary was reached. table 4: correlations between elements of board composition and turnaround boundary value. prior research shows that the main reasons firms file for business rescue are creditor pressure and profitability problems (pretorius 2015). this supports the view of this research that management holds on desperately for far too long before taking decisive action, which results in a very weak solvency and liquidity position. furthermore, it suggests that any firm responding to external pressure and seeking legal protection via a formal turnaround process is probably a result of management making a ‘last gasp’ attempt at a turnaround. the mean turnaround boundary value of the firms in this sample was 0.6411 (table 2) which supports the view that management has held on for far too long before taking decisive turnaround action and may be viewed as crossing the turnaround boundary. the 64.1% mean turnaround boundary value of the firms in this research is comparable to findings published by davydenko (2012), who determined the average level of the ‘value-based default boundary’ was 66% of the face value of debt. the ‘value-based default boundary’ to which he refers is the market value of the firm’s assets (davydenko 2012). this also suggests that perhaps cognition and hence crossing the turnaround boundary may only happen as a result of impending default or as an attempt to stave off the consequences of default. the value attached to tangible assets is likely to be overly optimistic, as a result of information asymmetry and biased reporting on the part of management (smudde & courtright 2011). on the open market, the value is likely to be significantly lower than the reported value. so, the 64.1% coverage may be considered as conservative (generous). this further supports the argument that, on average, the sample firms in this research were already desperately insolvent before decisive action was taken. informal personal discussions7 with business rescue practitioners, turnaround professionals and bankers revealed that the true market value of a distressed firm’s assets may be as little as 10% or 20% of the value reported in the company’s records. these large shortfall statistics suggest that incumbent management simply held on for far too long. a potential explanation for this could be (1) lack of management cognition of the problem, which is consistent with the views of smudde and courtright (2011) or (2) cognition had taken place but the fact that management owns 93.8 % of the equity leads them to become risk seeking when faced with the prospect of loss as described by kahneman and tversky (1979) and fich and slezak (2008). the first reason (cognition) may be as a result of fixed mental models (combe & carrington 2015) or management bias (abatecola et al. 2011; rockwell 2016). this may further support the contention that existence of management inertia is a noteworthy contributor to organisational failure. as for management becoming risk seeking, it appears impossible for a definitive conclusion to be formed in respect of specific cases. however, based on the evidence, it seems that, at the aggregate level, firms are desperately insolvent and support the view that once a firm is in the zoi but has not commenced a formal turnaround process, the risk resulting from management decisions is carried by creditors. conclusion the mean turnaround boundary value of the firms in this sample at 64.1% is very close to the average level of the ‘value-based default boundary’ of 66% of the face value of debt as identified by davydenko (2012). it can be speculated that this may be because the owners of firms, managed by a controlling owner(s), value the firm as equal to the personal utility that the firm provides them (schulze et al. 2003). it follows, therefore, that controlling owners may not manage the firm in the firm’s own best interest but in their own personal interest which may result in a degree of anxiety on the owners’ part, particularly when they have provided some form of personal security as is often expected (white 2016). it may be argued that such management is more oriented towards protecting their personal utility position than serving the interests of the company. therefore, for private firms that cross the boundary of distress and enter the zoi, it would be advisable for creditors, particularly those that are unsecured, to take swift and bold action. the sample firms studied in this research had a mean of 93.8% of the firm’s equity owned by management. this indicates that for private firms within the zoi there is unlikely to be a separation of ownership and authority, which is the predominant underlying requirement for most corporate governance theory. the lack of correlation between external funding and board composition also suggests that funders do not place much reliance on board size and independence as credit risk mitigation mechanisms. limitations and further research three possible limitations have been identified for this research. they are sample definition, geography and the possibility of information asymmetry. it is possible for management to recognise the existence of financial distress and to effect a turnaround without the company having entered formal and legally protected business rescue. companies having these characteristics between the period of 1 may 2011 and 30 june 2016 will have been omitted from the sample drawn in this research. south africa was selected as a research setting because the country boasts a regulatory and institutional framework that supports the enforcement of good corporate governance and south africa instituted a new companies act on 1 may 2011 (companies act 71 of 2008 2011) (rsa 2008) which includes provision for the rehabilitation of financially distressed companies. it is fair to argue that other geographic regions in the world may have equally compelling factors that influence behaviour of private firms in financial distress. thus, generalisation of this research’s findings to other geographies and economies should be done with this in mind. this article argued that asymmetry of information relating to any individual firm exists. furthermore, 17 individual cases (13% of the total sample) drawn in the original sample for this research were rejected for analysis on the grounds of incomplete or incomprehensible information. consequently, it is possible that information in respect of other private firms may be biased or otherwise inaccurate. further research the mean turnaround boundary value of the firms in this sample (0.6411) considers only total liabilities, which may obscure: (1) the different outcomes that could be experienced by secured and unsecured creditors and (2) the weighting that shareholder loans has on management decision-making. the security that any creditor has is likely to influence their actions and any shortfall of total tangible assets over total liabilities, which in this research sample is likely to be a minimum of 35.9%, will be carried in predominance by the unsecured creditors. hence, an understanding of the likely differences for secured and unsecured creditors would be valuable. similarly, the personal risk of loss that shareholders face through their shareholders’ loans and the possibility that shareholders may have provided personal surety to creditors could see the decision-making dynamics shift in favour of personal interests and away from what may be in the interest of the firm. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions k.j.f. completed this research as part of a phd thesis and m.p. was his supervisor for the phd research thesis. references abatecola, g., farina, v. & gordini, n., 2011, ‘empirical research on corporate distress: assessing the role of the boards of directors’, in xx tor vergata conference on money, banking and finance: ‘actors, rules and policies after the global financial crisis’held at tor vergata university, rome, december 5–7, 2011, pp. 1–36. allen, p., 1992, ‘credit lyonnais bank nederland, n.v vs pathe communications corporation’, the delaware journal of corporate law 17(3), 1099–1159. altman, e., 1968, ‘financial ratios, discriminant analysis and the prediction of corporate bankruptcy’, the journal of finance xxlll, 589–609. ang, j.s., cole, r.a. & lin, j.a.w., 2000, ‘agency costs and ownership structure’, journal of finance 55(1), 81–106. https://doi.org/10.1111/0022-1082.00201 arogyaswamy, k., yasai-ardekani, m. & barker iii, v.l., 1995, ‘firm turnarounds: an integrative two-stage model’, journal of management studies 32(july), 493–525. https://doi.org/10.1111/j.1467-6486.1995.tb00786.x ayotte, k., hotchkiss, e.s. & thorburn, k., 2013, ‘governance in financial distress and bankruptcy’, in the oxford handbook of corporate governance, pp. 489–514. barondes, r., fairfax, l., hamermesh, l.a. & lawless, r., 2007, ‘twilight in the zone of insolvency: fiduciary duty and creditors of troubled companies-history & background’, journal of business and technology law 1(2), 229–255. brunninge, o., nordqvist, m. & wiklund, j., 2007, ‘corporate governance and strategic change in smes: the effects of ownership, board composition and top management teams’, small business economics 29(3), 295–308. https://doi.org/10.1007/s11187-006-9021-2 burbank, r.k., 2005, ‘the classic five-step turnaround process’, the journal of private equity 8, 53–58. https://doi.org/10.3905/jpe.2005.490419 cadbury, 2000, ‘the corporate governance agenda’, corporate governance: an international review 8(1), 7–15. https://doi.org/10.1111/1467-8683.00175 chancharat, s. & chancharat, n., 2013, ‘corporate governance and company survival’, silpakorn university journal of social sciences, humanities, and arts 13(1), 33–62. chen, c.j.p. & jaggi, b., 2000, ‘association between independent non-executive directors, family control and financial disclosures in hong kong’, journal of accounting and public policy 19, 285–310. https://doi.org/10.1016/s0278-4254(00)00015-6 clarke, d., 2007, ‘three concepts of the independent director’, delaware journal of corporate law 32(1), 73–111. clarke, r. & buchanan, b., 2010, ‘turnaround strategies’, trustee : the journal for hospital governing boards 63(6), 26–28, 30–31, 1. combe, i.a. & carrington, d.j., 2015, ‘leaders’ sensemaking under crises: emerging cognitive consensus over time within management teams’, leadership quarterly 26(3), 307–322. https://doi.org/10.1016/j.leaqua.2015.02.002 coniglione, f., 2004, ‘between abstraction and idealization: scientific practice and philosophical awareness’, 82(angelelli), 59–110. dahya, j., dimitrov, o. & mcconnell, j.j., 2008, ‘dominant shareholders, corporate boards, and corporate value: a cross-country analysis’, journal of financial economics 87(1), 73–100. https://doi.org/10.1016/j.jfineco.2006.10.005 davydenko, s.a., 2012, ‘when do firms default ? a study of the default boundary’, in efa moscow meetings paper; afa san francisco meetings paper; wfa keystone meetings, viewed n.d. from https://ssrn.com/abstract=672343 or https://doi.org/10.2139/ssrn.672343. djerbi, c. & anis, j., 2015, ‘boards, retained ownership and failure risk of french ipo firms’, corporate governance: the international journal of business in society 15(1), 108–121. https://doi.org/10.1108/cg-10-2013-0115 eisenhardt, 1989, ‘agency theory: an assessment and review’, academy of management review 14(1), 57–74. https://doi.org/10.5465/amr.1989.4279003 elloumi, f. & gueyié, j.-p., 2001, ‘financial distress and corporate governance: an empirical analysis’, corporate governance 1, 15–23. https://doi.org/10.1108/14720700110389548 fich, e.m.e. & slezak, s.s.l., 2008, ‘can corporate governance save distressed firms from bankruptcy? an empirical analysis’, review of quantitative finance and accounting 30, 225–251. https://doi.org/10.1007/s11156-007-0048-5 gopinath, c., 1991, ‘turnaround: recognizing decline and initiating intervention’, long range planning 24(6), 96–101. https://doi.org/10.1016/0024-6301(91)90048-s healy, p.m. & palepu, k.g., 2001, ‘information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature’, journal of accounting and economics 31, 405–440. https://doi.org/10.1016/s0165-4101(01)00018-0 hofer, c.w., 1980, ‘turnaround strategies’, journal of business research 1(1), 19–31. jaikengkit, a., 2004, ‘corporate governance and financial distress: an empirical analysis. the case of thai financial institutions’, in t. fogarty (ed.), proquest dissertations and theses, n.p., case western reserve university, cleveland, oh. jensen, m.c. & meckling, w., 1976, ‘theory of the firm: managerial behaviour, agency costs and ownership structure’, journal of financial economics 3, 305–360. https://doi.org/10.1016/0304-405x(76)90026-x kahneman, d. & tversky, a., 1979, ‘prospect theory: an analysis of decision under risk’, econometrica 47(2), 263–292. https://doi.org/10.2307/1914185 kiel, g.c. & nicholson, g.j., 2003, ‘board composition and corporate performance: how the australian experience informs contrasting theories of corporate governance’, corporate governance: an international review 11(3), 189–205. https://doi.org/10.1111/1467-8683.00318 manzaneque, m., priego, a.m. & merino, e., 2015, ‘corporate governance effect on financial distress likelihood: evidence from spain’, revista de contabilidad, 19(1), 111–121. morck, r., shleifer, a. & vishny, r.w., 1988, ‘management ownership and market valuation’, journal of financial economics 20, 293–315. https://doi.org/10.1016/0304-405x(88)90048-7 panicker, s. & manimala, m., 2015, ‘successful turnarounds: the role of appropriate entrepreneurial strategies’, journal of strategy and management 8(1), 21–40. parker, s., peters, g.f. & turetsky, h.f., 2002, ‘corporate governance and corporate failure: a survival analysis’, corporate governance 2, 4–12. https://doi.org/10.1108/14720700210430298 platt, h. & platt, m., 2012, ‘corporate board attributes and bankruptcy’, journal of business research 65(8), 1139–1143. https://doi.org/10.1016/j.jbusres.2011.08.003 polley, w.j., 2015, ‘the rhetoric of opportunity cost’, the american economist 60(1), 9–19. https://doi.org/10.1177/056943451506000102 pretorius, m., 2015, business rescue status quo report: final report (2015), business enterprises at university of pretoria (pty) ltd., pretoria. pretorius, m. & rosslyn, w., 2014, ‘expectations of a business rescue plan: international directives for chapter 6 implementation’, african business review 18, 2014. rajak, h., 2008, ‘director and officer liability in the zone of insolvency; a comparative analysis’, potchefstroom electronic law journal/potchefstroomse elektroniese regsblad 11(1), 31–66. rockwell, s., 2016, ‘identity processes to trigger turnaround in response to organizational decline’, international journal of business and management 11(3), 11. https://doi.org/10.5539/ijbm.v11n3p11 rsa (republic of south africa), (2008), 2011,companies act, act no. 71 of 2008, with effect from 01 may 2011., government gazette no. 32121 (notice no. 421), government printer, pretoria. schulze, w.s., lubatkin, m.h. & dino, r.n., 2003, ‘exploring the agency consequences of ownership dispersion among the directors of private family firms’, academy of management journal 46(2), 179–194. smith, a., 1776, an inquiry into the nature and causes of the wealth of nations, vol. ii, w strahan and t cadell, london. smith, m. & graves, c., 2005, ‘corporate turnaround and financial distress’, managerial auditing journal 20, 304–320. https://doi.org/10.1108/02686900510585627 smudde, p.m. & courtright, j.l., 2011, ‘a holistic approach to stakeholder management: a rhetorical foundation’, public relations review 37(2), 137–144. https://doi.org/10.1016/j.pubrev.2011.01.008 taffler, r.j., 1984, ‘empirical models for the monitoring of uk corporations’, journal of banking & finance 8(2), 199–227. https://doi.org/10.1016/0378-4266(84)90004-9 taljaard, c., 2013, ‘the association between diversity within boards and company financial performance a graphical time-series approach’, unpublished master’s thesis, gordon institute of business science, johannesburg. trahms, c.a., ndofor, h.a. & sirmon, d.g., 2013, ‘organizational decline and turnaround: a review and agenda for future research’, journal of management 39(5), 1277–1307. https://doi.org/10.1177/0149206312471390 tung, f., 2006, ‘gap filling in the zone of insolvency’, journal of business & technology law 1(2), 607–631. https://doi.org/10.2139/ssrn.897792 tversky, a. & kahneman, d., 1981, ‘the framing of decisions and the psychology of choice’, science (new york, n.y.) 211(4481), 453–458. https://doi.org/10.1126/science.7455683 white michelle, 2016, ‘small business bankruptcy’, annual review of financial economics 8, 1–30. wiseman, r.m. & gomez-mejia, l.r., 1998, ‘a behavioral agency model of management risk taking’, academy of management review 23(1), 133–153. https://doi.org/10.5465/amr.1998.192967 footnotes 1. tung (2006) refers to ‘post-insolvency’ which is an imprecise definition, and the term ‘zone of insolvency’ is more illustrative of reality. therefore, for the purposes of this research it is argued that the chosen definition of ‘financial distress’ aligns with the ‘post-insolvency’ term. 2. at the time of this research, the king iii code was the recognised code for south africa with king iv in draft. 3. credit guarantee: http://www.creditguarantee.co.za/ 4. marsh: http://africa.marsh.com/countrysites/southafrica/home.aspx 5. lombards: http://www.lombardins.com/products/short-term-insurance/trade-credit 6. the notion of an ‘idealised concept’ is borrowed from scientific (physics) research; only by creating fictitious, ideal entities and then descending from them by means of experiment and approximation to the ‘roughness of experience’ is it possible to combine mathematics and reality (coniglione 2004). 7. to respect confidentiality, the names and organisations of the individuals with whom the researcher had personal discussions are excluded from the reference list. abstract introduction literature review problem statement research purpose methodology results discussion contribution of the research conclusion acknowledgements references about the author(s) boniface okanga department of business management, university of johannesburg, south africa citation okanga. b., 2018, ‘using experiential marketing to leverage the small and medium-sized enterprises’ brand repositioning and revitalisation’, southern african journal of entrepreneurship and small business management 10(1), a128. https://doi.org/10.4102/sajesbm.v10i1.128 original research using experiential marketing to leverage the small and medium-sized enterprises’ brand repositioning and revitalisation boniface okanga received: 16 mar. 2017; accepted: 24 july 2018; published: 30 aug. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: it is easily discernible from theories that experiential marketing spawns frequent brand diagnosis, repositioning and revitalisation. however, the question as to how it can be used to leverage the repositioning and revitalisation of the usually struggling small and medium-sized enterprises (smes’) products is an area that has not been explored in most of the contemporary studies on how to improve smes’ market performance. aim: this research explores how experiential marketing can be effectively utilised to facilitate the repositioning and revitalisation of the usually struggling smes’ products. setting: the study was based on the smes in the gauteng and western cape provinces in south africa. method: the study used an inductive–exploratory–qualitative research paradigm to explore the opinions of 30 smes’ marketing managers on the values and challenges of using experiential marketing to undertake relevant brand diagnosis, repositioning and revitalisation. it is through such analysis that the study aimed to discern how experiential marketing can be effectively used to facilitate the repositioning and revitalisation of the usually struggling smes’ products. results: however, most of the smes were only found to use experiential marketing to leverage not only their promotion and marketing capabilities, as well as sales and profitability maximisation, but also the minimisation of the costs of marketing. such approach was found to limit smes’ capabilities to proactively undertake brand diagnosis to identify the inhibitors of a brand’s effective market performance that must be addressed to turn around the performance of their struggling products or business concepts. conclusion: considering that not much research has been conducted in this area, the study concludes with the experiential marketing framework that explicates how experiential marketing leverages brand diagnosis, repositioning and revitalisation. introduction experiential marketing leverages frequent brand repositioning and revitalisation. as experiential marketing uses intense customer–product interactions to facilitate promotion and sale of the product to the target market segments, it also enhances in-depth evaluation and understanding of the degree of customers’ emotional attachments to a brand. this aids brand diagnosis and the identification of the areas of customer dissatisfaction that must be reviewed and modified to bolster a brand’s repositioning and revitalisation (murane 2012:3). brand repositioning refers to the process of diagnosing, identifying and correcting quality, attributes, functionality, distribution and marketing strategies’ issues that could be affecting a brand’s effective market performance, so as to turn around the performance of the struggling brands (jain & lohia 2014:197). brand repositioning also edifies brand revitalisation. brand revitalisation is the process of diagnosing and refreshing brands that could have turned obsolete to ensure that they are effectively responsive to the changes in the market trends that could have unfolded since the brand’s inception (zarantonello & schmitt 2014:255). as brand repositioning and revitalisation require intense brand diagnosis and evaluation, experiential marketing, therefore, offers a framework against which such evaluations are undertaken. experiential marketing is a postmodern strategic marketing paradigm that uses intense customer–product–salesforce interactions as a marketing approach for promoting the sale and consumption of a product among the selected market segments. it relies on the cognitive six senses of smell, vision, taste, hearing, touch and balance to identify and activate customer touchpoints and triggers that ignite customers’ emotional attachment to a brand (gronlund 2013:19). it is during such a process that experiential marketing aids brand diagnosis and identification of how the struggling brands can be repositioned and revitalised. this is attributable to the fact that it stimulates marketing executives’ abilities to gain detailed insights into customers’ level of appreciation or dissatisfaction with the brand. if customer experience and emotional attachments are not supportive of the identified brands, experiential marketing enhances acquisition and assimilation of new information that aids relevant review and modification of a product’s designs, features, attributes and quality of the associated customer services to reposition and revitalise more struggling brands (alkilani, ling & abzakh 2013:262). this bolsters marketing executives’ abilities to sense symptoms of eminent brand declines and to undertake pro-active intervention strategies to avoid such declines. it also minimises risks of brand obsolescence to subsequently spur improvement of a firm’s overall sustainability. however, as the leveraging effects of experiential marketing on a firm’s marketing and promotional capabilities have been widely explored by most of the contemporary studies (day 2011:183; gronlund 2013:19; lee & chang 2012:103), only little seems to have been undertaken to evaluate its leveraging effects on brand repositioning and revitalisation. it is against that backdrop that this study explores how experiential marketing can be effectively utilised to facilitate the repositioning and revitalisation of the usually struggling small and medium-sized enterprises’ (smes’) brands or products. considering that leveraging smes’ sustainability is a challenge that still confounds most of the contemporary business executives, this research is of significant importance on the basis that it offers new insights on how experiential marketing can be used to encourages smes’ effective market performance. literature review the logic that experiential marketing edifies brand evaluation and review to spur brand repositioning and revitalisation is implicitly discernible in most of the contemporary theories on experiential marketing and brand repositioning and revitalisation (adeosun & ganiyu 2014:21; day 2011:183; dev & chekitan 2012:5; fang-chao 2015:52; o’guinn, semenik & scheinbaum 2015:19; russo et al. 2012:21). experiential marketing experiential marketing does not only facilitate intense customer interactions with the product but also provide opportunities for firms to interact and engage with customers (day 2011:183). this enables thorough evaluations of their overall actual experience with the product. it is through such an approach that marketing executives are often able to understand and identify the areas they could have scored it wrongly or rightly, so as to undertake relevant modifications to reposition or revitalise the struggling brands. such areas of customer experience often constitute of experiential subject, experiential object and experiential process (russo et al. 2012:21). experiential subject refers to the process of undergoing the actual experience of the product. it is in such process that experiential effects that often instigate the decision to buy or not to buy reside. experiential object is what is actually experienced. experiential process arises from the acts of sensorially, emotionally, intellectually, imaginatively, physically, socially and spiritually experiencing the experiential object by the experiential subject (russo et al. 2012:21). to create different experiences that influence purchase decisions, schmitt’s (1999) strategic experiential modules (sems) propose five experiences that businesses can create for their customers. these integrated schmitt’s (1999) five experiences include sensory, affective, creative, cognitive and physical behaviours and lifestyles, and social identity experience. failure of a product to offer all these forms of experience implies that its market performance may not be that impressive. such insights should, therefore, cause the need for the review and repositioning of such a product. sensory experience uses sense marketing to instigate and improve a product’s appeal to customers through any of the five senses that encompass sight, sound, touch, taste or smell. it creates and adds values that excite a customer to in turn instigate emotions that influence the formation of positive judgements of behavioural, emotional, cognitive, relational and symbolic values about the product or services being offered (crain & abraham 2008:29). through this process, sensory marketing aids the merging of emotional with rational mental attributes for a customer to develop a more positive perception and attitude towards the brand. affective experience marketing focuses on exploring and developing customers’ moods and feelings from less positive moods to strong emotions that are often characterised by joy and satisfaction (anderson, kumar & narus 2007; schmitt 1999). however, improvement of customers’ moods and feelings from the weakest to the strongest levels may require in-depth analysis and understanding of customers’ behaviours on marketing the product, purchase, consumption and disposal of the product (aronne & vasconcelos 2009:19; o’guinn et al. 2015:19; schmitt 1999). critical analysis and understanding of these processes enable firms to add or modify attributes that leverage improvement of customer moods and feelings to excitement, joy and satisfaction as they undergo the product’s purchase and consumption processes (anderson et al. 2007; schmitt 1999). as it is often at the consumption level that customer moods and feelings about the product improve, it is often of essence that intense customer interactions and contacts with the product are facilitated during the marketing stage. this enables customer’s evaluation of all the aspects of the product. if positive, it may instigate joy and excitement that in turn also influence immediate customers’ purchase decisions (xu et al. 2015:53). however, that may still depend on how creative cognitive experience marketing is integrated in such a process to permit customer’s free thinking and formation of mental judgement as he or she undergoes through relevant search, purchase and consumption processes (lefi & gharbi 2011:187; merchant & ford 2008:13). such approach improves the level of customer involvement, as well as feedback for the executives to re-evaluate how the existing products and brands are able to instigate positive customer experience, joy and satisfaction (xu et al. 2015:53). to evoke enormous customer feedbacks, thought-provoking marketing that creatively relies on technologies may be used to surprisingly, intriguingly and provocatively instigate customers to think and evaluate a product. this elicits critical customer information for marketing executives in order to understand how customers feel prior to the consumption of the product or after (o’guinn et al. 2015:19). to accomplish this, physical experience, behaviours and lifestyles, as well as the relational and social identity of the customers, are often further evaluated and targeted to instigate and improve customers’ emotional attachments and attractions to the product. such a view seems to echo the reasoning in carù and cova’s (2008:33) theory that heralds consumption experience to unfold over time according to four stages that encompass pre-consumption, purchasing, core consumption, and memories and nostalgic experience. it is the customer’s experience along these four stages that influences his or her decisions and future actions in as far as the purchase and consumption of a particular brand are concerned (carù & cova 2008:33; yu et al. 2014:757). however, effective response to the initial stages of customer experience in which expectations are created to influence search and planning decisions may require investment in social media videos to permit customers to experience, interact, question and test product functionalities (russo et al. 2012:21). the application of such technologies is often accompanied by the use of events in which prospective customers are encouraged to physically test, try and interact with the product (jonk, handschuh & niewiem 2008:24). this creates opportunities for businesses to undertake brand diagnosis to identify and correct the areas that customers are not satisfied with. it is at that level that experiential marketing may leverage brand repositioning and revitalisation. however, masterman and wood (2008:1) herald seven attributes that often entice customer experience to arise from customer involvement with the event, experience and brands that instigate customer emotions, interactions with the brand and immersion of all senses. the other attributes are often associated with the development and nurturing initiatives that cause high impact intensity. in turn, such high impact intensity instigates pleasurable memories, customer individuality of experience, innovative improvements of contents, locations, timing and the overall operational efficiency (masterman & wood 2008:1). these attributes are often accompanied by the initiatives for improving the overall integrity of the business by offering real, authentic and genuine benefits to customers. as firms apply such measures to achieve the desired experiential marketing outcomes, customer immersion is often used as one of the critical techniques for experiential marketing (masterman & wood 2008:1). customer immersion refers to the process of exposing customers to the product or the brand as much as possible to influence improvement of customers’ understanding of the brand as well as to discern how they connect to the brand (dev & chekitan 2012:5). to ensure the process of immersion improves customer’s connection with the brand, it is of essence to improve the flow of immersion processes according to three main steps: nesting, investigating and stamping (dev & chekitan 2012:5). nesting refers to the stage where opportunities are created for customers to interact, question and understand the brand until they feel comfortable and satisfied. this process of familiarisation often leads to the investigation stage where customers tend to explore further values that not only ignite their emotions but also further connect them to the brand. as the customer gets more connected to the product, stamping stage arises to influence the use of the experience gained as points of reference to make necessary decisions (zarantonello & schmitt 2014:255). to accomplish that, businesses may also have to invest in relevant online marketing technologies as well as multimedia videos that permit customers to evaluate information and ask questions (zarantonello & schmitt 2014:255). it is through such questions that businesses can be able to identify common igniters of customers’ emotions that must be capitalised on to catalyse a product’s overall effective market performance. effective use of customer immersion as part of the techniques for experiential marketing is also often further edified by the use of hedonistic and instrumental events (hu, ho & hsieh 2014:55; masterman & wood 2008:1). hedonistic events constitute of activities such as sports, art and music that are often directed to the largely younger segments of the market that tend to construe pleasure as the most important thing (masterman & wood 2008:1). quite often, events of instrumental purposes constitute of activities such as sampling, trade shows and consumer shows. it is the use of these events that enhances thorough evaluation and diagnosis of customer’s attachments to the brand. in other words, if undertaken well, all these imply that experiential marketing not only aids brand diagnosis to improve the market performance and repositioning of the existing brands but also aids revitalisation of the older brands that could have turned obsolete (canniford 2011:591; crain & abraham 2008:29; marzocchi, morandin & bergami 2013:93). brand repositioning brand repositioning refers to the process of diagnosing, identifying and correcting quality, functionality, attributes, distribution and marketing strategy issues that could be affecting a brand’s effective market performance, so as to turn around the performance of the struggling brands (kolbl, konecnik & kolar 2015:5; zdravkovic & till 2012:113). quite often, brand repositioning requires a product’s review and modification, as well as the review and adoption of new marketing strategies such as distribution, promotion and pricing to target the appropriate market segments (dev & chekitan 2012:5; kolbl et al. 2015:5). it also requires brand re-evaluation and redesign, reinventing brand identity, innovative advertising, refreshing of the visual aspect of the brand and expansion of the brand’s portfolio of products (dev & chekitan 2012:5; zarantonello & schmitt 2014:255). however, conventional theories on brand repositioning imply whether or not the application of such strategies is required, depending on the results of the analysis of the overall level of brand maturity (kolbl et al. 2015:7; zarantonello & schmitt 2014:255). the level of brand maturity is best diagnosed by assessing brand, price, sales, and technology and investment dimensions (kolbl et al. 2015:7). the analysis of brand dimension enhances the understanding of whether the level of brand awareness, points-of-differentiation, long-held heritage and brand association with the target market are narrowing down (kolbl et al. 2015:7; zarantonello & schmitt 2014:255). narrowing brand dimension suggests the brand is losing its market relevance. however, it is usually still of essence to analyse in conjunction with the evaluation of the sales dimension. sales dimension’s analysis facilitates the assessment of whether sales have started to stagnate or decline. it also requires the evaluation of the effectiveness of the distribution networks of the brand, a brand’s ability to generate profits and the extent to which it is or it is not losing most of its loyal customers. quite often, such analysis may also encompass price dimension evaluation to assess whether a brand’s poor performance is arising from poor pricing or under-investments in the appropriate marketing strategies (gupta & ramachandran 2010:4). technology and investment dimension diagnoses whether a brand’s declining market performance is arising from the outdatedness of the technology being used, not upgrading product quality, poor management focus and limited investments in the required sales and marketing activities (gupta & ramachandran 2010:4). through experiential marketing and other forms of survey, marketing executives are often able to understand the extent to which the market relevance of a particular brand is increasingly being eroded. if a particular brand is found to have reached the maturity level to an extent that it can no longer generate the required returns on shareholders’ value, some of the brand repositioning strategies often entail expanding brand awareness and usage, improving brand image and uniqueness of brand association, and managing how the existing users select mature brands (keller 2013a:19). expanding brand awareness and consumption may require increment of investment in promotional and marketing budgets, changing packaging, identification of new market segments to target and introduction of the mature brand either as supplementing another product or as being supplemented by another brand (keller 2013b:19). improvement of brand image and uniqueness of brand association are often effected by identifying and targeting new customer segments. it may also require the development and utilisation of multiple marketing communication strategies that use array of messages that reposition the brand in a new away. alternatively, businesses that are facing challenges of brand maturity may also have to conceptualise and apply new strategies such as loyalty programmes to retain the existing customers while also attracting new ones. such initiatives are usually undertaken in conjunction with the evaluation and management of how the existing customers choose mature brands, so as to improve the market performance of the existing brands through improvement of the brand’s availability and use of multiple or alternative shelf placements. development of new distribution outlets may be accompanied by the improvement of the features, designs and quality of the existing brand to ensure that it compares more superiorly with the other brands (aronne & vasconcelos 2009:5). besides altering packaging to increase usage, the other strategies would be the association of the brand with certain unique specific values, decreasing price per unit and developing sub-brands through brand extension to increase the consumption and sale of more mature brands (qader 2013:331). although the application of such strategies can edify brand repositioning and revitalisation, the notions of brand repositioning and revitalisation are still cyclical processes that must be frequently undertaken to ensure that brands are repositioned and revitalised to remain relevant to the unfolding market and industry changes (qader 2013:331). brand revitalisation brand revitalisation is the strategic process of re-awakening brands that are expressing significant declines or that are on the verge of fading away from the market (iglesias, singh & batista-foguet 2011:570). brand declines are often caused by the changes in the market and industry trends, emergence of better brands and changes in technology that may render the existing technologies obsolete (iglesias et al. 2011:570). in certain instances, brand declines are also instigated by the application of poor marketing strategies that may require the introduction of new brands that would probably also fail to impress the market. this causes a negative brand image that affects not only the extended brands but also the brand that previously enjoyed a positive brand image (keller 2013b:33). in the event of brand decline, light and kiddon’s (2009) brand revitalisation model which is replicated from the mcdonald’s model of brand revitalisation highlights the process of brand revitalisation to take six steps. these six steps entails refocusing the business, restoring brand relevance, reinventing brand experience, reinforcing a result culture, rebuilding brand trust and global realignment of the brand. however, murane’s (2012) model for brand revitalisation suggests the process of brand revitalisation to require the use of seven main steps that entail developing a consensus on the problems that are affecting the brand’s performance, negotiating the time horizon to fix the problem, resource acquisition and trends’ alignment. it also entails investment in technology replenishment, reframing brand image and strategy, and the use of effective marketing communication strategies (keller 2013a:10). on the contrary, other authors share similar views that the development and application of seven steps is critical for enhancing the effectiveness of brand revitalisation (adeosun & ganiyu 2014; chao & kuo 2013:33; kotler & armstrong 2010:114). these seven steps that significantly differ from the seven steps in murane’s (2012) model for brand revitalisation are repeated to require brand audit, evaluation of brand positioning, developing a brand platform, establishing brand beliefs, evoking brand experience, developing a brand voice with launching a new brand. brand audit often requires the evaluation of the unique historical facts that distinguished and set the product and the company apart vis-à-vis the current brand’s current operations, communications and positioning. such an analysis enhances the diagnosis and identification of the sources of paradoxes marring the effectiveness of a brand’s performance. this leads to the analysis and identification of a new brand positioning, platform, beliefs, experience, voice and launch that must be created to revitalise the brand (herrmann, walliser & kacha 2011:259). certainly, it is implicitly evident that experiential marketing edifies diagnosis and understanding of the level of customer attachments, emotions and feelings of the brand. lack of emotional attachments and positive feelings among most of the customers signifies that the brand is not competitive against most of its rivals (kanth, maheswar & venkatesulu 2016:321). symptoms of these are often easily discernible in the increasing rates of customer defection, complaints, declining sales, revenues and profitability. through experiential marketing, the identification of these symptoms often offers warning signs that imply firms need to reposition and revitalise the struggling products or brands in order to remain sustainable (kanth et al. 2016:321). unfortunately, despite evidence of the fact that most smes struggle to operate sustainably, only mundane evidence seems to suggest that most of the smes have often explored how experiential marketing can be used to leverage the repositioning and revitalisation of their usually struggling brands (lekhanya 2015:37; rootman & zeka 2013:1). such an approach often affects the initiatives of turning around the performance of the brands that could have been repositioned and revitalised to improve not only the brand’s effective market performance and sustainability but also the competitiveness and sustainability of the entire enterprise. even though brand repositioning and revitalisation establish a firm’s sustainability, the feasibility of smes doing so seems yet elusive in most of the contemporary studies. small and medium-sized enterprises’ brand repositioning and revitalisation certainly, enormous studies have been conducted on how to improve smes’ performance (day 2011:183; gronlund 2013:19; ward, runcie & morris 2009:78). however, only limited attempts seem to have been undertaken to explore the strategies for leveraging the repositioning and revitalisation of the smes’ struggling products. yet, increasingly, the major threats to smes’ sustainability often arise from the difficulties of their products or business concepts to withstand the often volatile competitive market forces. in effect, frequent brand diagnosis is critical for understanding the dynamics that could be affecting a brand’s effective market performance. in gang’s (2011:11) research on the strategies for brand management in smes, brand management was found to be critical for bolstering smes’ sustainability. it aids the evaluation of the attributes that influence brand performance. as such evaluations are being undertaken, it also enhances discerning the strategies for improving customer’s attachment to different brands. as most smes struggle to operate more competitively in the midst of the more intense competitive modern markets, gang (2011:11) suggests the importance for brand awareness and brand extension to minimise risks of brand obsolescence. gang’s (2011:11) views on the importance of brand management also seem to be echoed in lockwood’s (2010:10) argument for the use of the appropriate branding strategies. lockwood (2010:10) argues that most of the entrepreneurs in most of the smes are increasingly recognising branding as one of their most valuable assets which seek to set reputation that distinguish their products from those of the competitors. as businesses increasingly recognise such values of branding, a number of smes are also increasingly investing in the creation of distinctive benefits that go beyond the price to distinguish their products or services from those of rivals. it is such strong brands that not only simplify customer decision-making processes but also reduce risks of the smes’ vulnerability to high levels of industry competition and volatilities (day 2011:183). in effect, the development and application of the appropriate strategic brand management initiatives is critical for bolstering the competitiveness of smes’ brands. such initiatives must be accompanied by the evaluation of the overall connection between the brand and the consumers. initiatives must also be undertaken to explore the extent to which customer expectations and perceptions are matched, not only by the product but also by the other complementary factors such as the product’s packaging, promotion and pricing (day 2011:183). strong branding is also critical for leveraging smes’ customer relationship management capabilities that in turn induce improved loyalty in the midst of more fierce competition among the masses of smes and big businesses. in contrast to such a view, matthews and bucolo (2014:5) also reveal that most of the smes are increasingly engaging in innovations as a strategy for enriching and modifying the features and attributes of their existing brands to leverage their overall effective market performance. with significant funds committed on research and innovation, matthews and bucolo (2014:5) argue that it turns easier for smes to engage in brand audit and discern the features and attributes that can be refreshed to turn around the performance of the struggling brands. despite such values of branding, challenges often still tend to arise from the adequacy of the financial resources that smes can commit to branding, as well as to the promotional and marketing activities that bolster their brand image (lockwood 2010:10). frequent brand repositioning and revitalisation may require the complete dismantling of the existing products and the development of new ones to respond to the changes that are emerging from the unfolding market trends. brand repositioning and revitalisation may also require the use of new strategies and intensive advertisements and marketing (lockwood 2010:10). all these may tend to induce hefty deterring costs that affect the capabilities of the smes to reposition and revitalise the performance of their struggling brands. this implies that even if some of the smes may recognise frequent brand repositioning and revitalisation as critical for leveraging their continuity and sustainability, the associated required costs may tend to be deterring. however, despite such hefty costs, the values of successful brand repositioning and revitalisation still often offset the hefty costs that they induce (ward et al. 2009:78). that implies brand diagnosis; repositioning and revitalisation are part of the critical strategies that can be used to establish smes’ continuity and sustainability in the increasingly competitive modern business environment. however, as such an area has not been widely explored by most of the previous studies, discerning the experiential marketing model that can be used to aid brand diagnosis, repositioning and revitalisation remains a challenge. it is such a challenge that this research seeks to address. problem statement using experiential marketing to leverage the repositioning and revitalisation of the usually struggling smes’ products is an area that has not yet been widely explored by most of the contemporary studies on how to improve smes’ effective market performance. research purpose the purpose of this research is to explore how experiential marketing can be effectively utilised to reposition and revitalise the performance of the smes’ struggling products. to accomplish this, the entire research process was guided by the fundamental research questions that entailed the evaluation of: how do smes utilise the opportunities availed by experiential marketing to undertake relevant brand diagnosis to reposition and revitalise the performance of their struggling brands? what types of changes are usually undertaken as a result of customer opinions and perceptions that are acquired during experiential marketing to aid the repositioning and revitalisation of smes’ struggling products? what challenges do smes experience when seeking to undertake changes that are required to reposition and revitalise the performance of their struggling brands and businesses? methodology to respond to these research questions, the study used the inductive–exploratory–qualitative research paradigm (chen, shek & bu 2011:129; wynn & williams 2012:787). research paradigm the application of the inductive–exploratory–qualitative research paradigm was considered critical for responding to the fundamental research question that sought to explore whether, when using experiential marketing, smes also utilise such opportunities to undertake relevant brand diagnosis to reposition and revitalise the performance of their struggling brands. the inductive research paradigm often commences with problem identification and subsequently secondary and primary data collection to discern the theory that can be extracted to respond to such a problem (babbie & mouton 2008:11). in contrast, the deductive research approach which is mainly hypothetically-driven often commences with the formulation of a theory that subsequently guides secondary and primary data collection and analysis to discern whether such a theory is confirmed or contradicted by the findings (babbie 2008:23). the rationale for the application of the inductive–exploratory–qualitative research approach is accentuated by the fact that certainly, important studies have been conducted on experiential marketing as well as on brand repositioning and revitalisation. however, in most of such studies not much seems to have been undertaken to explore whether experiential marketing generates brand diagnosis, repositioning and revitalisation. in effect, the application of the inductive–exploratory–qualitative research approach was considered critical for eliciting detailed insightful underlying information on whether, when using experiential marketing, smes also utilise such opportunities to undertake relevant brand diagnosis to reposition and revitalise the performance of their struggling brands. while using the inductive research paradigm to accomplish that, the study also used the exploratory–qualitative research methodology. the exploratory–qualitative research methodology refers to the research approach that applies a combination of the techniques such as observation, content analysis and interviews to aid eliciting critical, underlying, detailed information that offers insightful explanation of the phenomenon being researched (bryman & bell 2007:133). using interviews as the primary data collection technique, the exploratory–qualitative research methodology probed the fundamental research questions that aimed to explore whether smes’ experiential marketing behaviours enhance brand diagnosis, repositioning and revitalisation, the types of the often undertaken changes, as well as the challenges of undertaking such changes to aid repositioning and revitalisation of the struggling brands. it was from such an analysis that the study was able to discern whether experiential marketing aids brand diagnosis, repositioning and revitalisation. sampling to access relevant primary data on smes’ experiential marketing behaviours, convenience and purposive sampling were used in conjunction with snowballing to identify and draw 30 sample participants that constituted of the marketing managers, as well as senior sales and marketing personnel from 30 smes in the gauteng and western cape provinces (cohen, manion & morrison 2011:19). by the very nature of their work, marketing managers and senior sales and marketing personnel from the marketing departments in the selected 30 smes were construed to possess holistic knowledge and understanding of what experiential marketing entails, as well as the value of its application. in effect, from these 30 smes, it was the marketing managers and senior sales and marketing personnel that were the focus of the study. in the research which was conducted in the period between july 2016 and january 2017, convenience and purposive sampling techniques were used in conjunction with snowballing to draw 15 smes from the gauteng province and 15 smes from the western cape province to make a total of 30 smes. convenience sampling was used for determining the provinces in which the study could be based. applying criteria such as costs, ease of data collection and availability of personal contacts in the designated provinces, a decision was undertaken to select the gauteng and the western cape provinces. basing the study in two or more provinces was considered critical for gaining critical insights and generalisation about the common smes’ experiential marketing behaviours, as well as whether such behaviours also aid brand diagnosis to enhance the repositioning and revitalisation of the struggling brands. for each of the 30 smes to be drawn into the study, purposive sampling required the business to have about 200 employees, a net annual turnover of r5 million or more, 10 years of existence and a presence in either gauteng or the western cape province or in both. the application of such criteria was aimed at accessing only the smes with significant years of relative success and understanding of the industry, as well as how the application of experiential marketing methodologies could have been critical for leveraging their market performance. to ensure compliance with such criteria, thorough analysis of the websites, media reports, grey literature and media reports about 50 smes, located in the gauteng and the western cape, were selected. this was followed by the identification and utilisation of any of the previously established contacts in any of the smes that exhibited features that met such criteria. it is the brief interviews with such contacts that influenced not only the understanding of whether or not their businesses complied, but also whether some of their business acquaintances and colleagues met the criteria to participate in the study. in the gauteng, it was 10 of such previously established contacts that influenced additional 5 of their acquaintances and colleagues in the other smes to participate in the study. in the western cape, 5 previously established contacts influenced additional 10 marketing managers or senior personnel in the smes that met the designated criteria to participate in the study. such previously established contacts made it easier to get consent from others suitable to participate in the study but also enhanced the authorisation and consent for the identified businesses to be used or to participate in the study. this process of snowballing led to the identification of a total of 30 sample participants that constituted of the marketing managers as well as senior sales and marketing personnel from 30 smes which were also in turn drawn from 50 smes which were analysed for compliance with relevant purposive sampling criteria. the 30 smes were mainly drawn from the industries and sectors such as hotel and hospitality, finance, insurance, manufacturing, retail, distribution and logistics handling, clothing retail and fast-foods retail. data collection in the research which was conducted in the period between july 2016 and january 2017, the methodologies for data collection mainly entailed telephonic and face-to-face interviews. because of distance, all 15 senior sales and marketing personnel from the western cape, as well as five from gauteng with busy schedules opted for telephonic interviews, while others preferred to do face-to-face interviews on weekends and public holidays. whether it was telephonic or face-to-face interviews, all interview responses were transcribed as each of the participants offered different narratives on the utilisation of the various experiential marketing methodologies in their businesses. upon consenting and agreement on the principles of anonymity and confidentiality, all the interviews commenced with brief explanations of the concept of experiential marketing to each of the 30 participants. even though most of the participants already had a clear understanding of the concept of experiential marketing, this enabled the reaching of the common points of views on what the concept of experiential marketing entails. thereafter, each of the 30 participants was asked to respond to each of the following interview questions: what types of experiential marketing methodologies does your business use quite frequently? why do you prefer to use such experiential marketing methodologies? what are the values of experiential marketing? do you use experiential marketing to gain insights into customer opinions and perceptions about certain aspects of your products and business approaches? if yes, how? if no, why? how do the customer opinions and perceptions, gained during experiential marketing, influence any review and change of the product and the business approach that your business subsequently adopts? if no, why not? what types of changes are usually influenced by the customer opinions and perceptions gained during experiential marketing? what challenges do you usually experience when undertaking necessary changes to revitalise the performance of your products and business that are not doing well? the design of the interview guide was based on the fundamental research questions that aimed to explore whether smes’ experiential marketing behaviours enhance brand diagnosis, repositioning and revitalisation, as well as the types of the undertaken changes and the challenges of undertaking such changes. interviews were semi-structured on the basis that even though such predetermined, structured, open-ended questions were used, further probe and reprobe were permitted. probe and reprobe were used to enrich the understanding of relevant new insights that were emerging from the interview responses. the obtained interview findings were analysed using the inductive thematic approach. data analysis conventionally, qualitative data may be analysed using the deductive thematic approach or the inductive thematic approach (bryman & bell 2007:133). in the application of the deductive thematic approach, the process of analysing and extracting relevant themes and sub-themes is often guided by some predefined theoretical framework. that implies that there is often a greater preponderance to focus on identifying and extracting contracts and discourses that support the assertions in such predefined frameworks. in contrast, the inductive thematic analysis is an open-minded approach that focuses on permitting the natural emergence of relevant themes and sub-themes which offer coherent explanations of the phenomenon being researched. while using the inductive thematic approach in this research, the analysis of the obtained interview findings were undertaken in the context of the research questions with the motive of permitting the organic emergence of relevant themes and sub-themes. in line with the fundamental research questions for this study, the motive of such analysis was to diagnose whether the emerging themes and narratives offer critical insights to whether experiential marketing enhances brand diagnosis, repositioning and revitalisation, as well as the types of changes undertaken and the challenges of undertaking such changes. in the first instance, thorough reading and re-reading each interview transcripts were undertaken; thereafter, analysis was undertaken to extract themes and discourses as well as to map themes, sub-themes and their associated narratives across different discourses. extraction of themes fetterman’s (2009) approach for inductive thematic analysis was used to identify and extract key themes and sub-themes as well as their associated narratives from each participant’s responses to each interview question. such analysis aimed at assessing how experiential marketing enhances brand diagnosis, repositioning and revitalisation, as well as the types of changes made and the challenges of those changes. however, comparison and contrasting of key themes and sub-themes as well as their associated narratives from each participant’s responses to identify and extract common themes from all 30 the participants led to the identification of the other values of experiential marketing. such values of experiential marketing did not only include brand diagnosis and the essence to undertake the required changes to reposition and revitalise the performance of smes’ struggling brands but also include values such as leverage of the effectiveness of promotion and marketing capabilities, sales and profitability maximisation as well as costs of marketing’s minimisation. other values also encompassed the analysis of the causes of poor performance, declining sales, declining profitability, customer dissatisfaction, and the diagnosis of the effectiveness of the internal capabilities and marketing strategies. most participants’ narratives also indicated that it is often such similar themes that also instigate the need for the use of experiential marketing to either boost sales or undertake necessary diagnosis of customer opinions and perceptions. because of the complexity of the emerging patterns of themes, categorisation and mapping of themes and their narratives according to their common inherent meanings in as far as the concept of experiential marketing is concerned were undertaken to discern how the emerging themes offered coherent explanations of how experiential marketing enhances brand diagnosis, repositioning and revitalisation, as well as the types of changes and the challenges of making such changes. extraction of discourses such classification and categorisation of themes influenced the extraction of three discourses that encompassed the motives, values and challenges of experiential marketing discourses. the discourse of experiential marketing motives was extracted from the common meaning that was attributed to themes such as sales and profitability maximisation, leverage of marketing capabilities, costs of marketing, one-on-one marketing, personal selling, shows, demonstrations, online marketing and turning around declining sales. this is attributable to the fact that from the participants’ narratives, these themes were found to constitute the major motives for smes to use experiential marketing. the discourse of experiential marketing’s values emerged from the common meaning that was attributed to the category of themes, like the analysis of the causes of poor performance, declining sales, declining profitability, customer dissatisfaction, and diagnosis of internal capabilities and marketing strategies’ effectiveness according to their common meanings as the values of experiential marketing. it also included themes and their associated narratives on the review and change of product quality, features, pricing, costs, product or service accessibility and distribution strategies’ effectiveness. however, drawing from the associated participants’ narratives on such themes, the interpretation and linking of the meaning of the themes under the discourse of experiential marketing’s values indicated that it is also themes such as poor performance, declining sales, declining profitability and customer dissatisfaction which often instigate smes to use experiential marketing to either boost sales or to do the necessary analysis of customer opinions and perceptions. whereas boost of sales was found to fall under the discourse of experiential marketing motives, the analysis of customer’s opinions and perceptions was found to clarify their satisfaction and/or dissatisfaction with the product or with a firm’s internal capabilities and strategies. such an analysis influenced the extraction of the discourse on the value of experiential marketing and dividing it in two sub-discourses that encompassed satisfiers and/or dissatisfiers and the firm’s various strategies. in effect, common meaning that was attributed to themes and sub-themes on the analysis of the causes of customer dissatisfaction with product quality, features and pricing, costs and product or service accessibility enhanced the extraction of the discourse of satisfiers and/or dissatisfiers’ diagnosis. however, from the participants’ narratives, the mapping of themes indicated such themes to also arise from the corresponding types of changes or strategies, such as the review of pricing, cost variables and product attributes that some of the smes use to respond to such challenges. sub-discourse of a firm’s strategies’ diagnosis was extracted from the common meaning that was attributed to the class of themes such as the analysis of the causes of poor performance, costs, internal deficiencies, marketing strategies’ deficiencies, declining sales and profitability as well as customer dissatisfaction. from the participants’ narratives, the mapping of themes indicated such themes to also link with the corresponding types of changes or strategies such as the review of distribution strategies, marketing approaches and the overall effectiveness of internal capabilities that some of the smes use to respond to such challenges. mapping despite the categorisation of themes according to three such discourses, mapping still indicated intricate linkage of themes across all discourses. the effect was that the discourse on experiential marketing motives was also explained by some of the themes in the discourse of experiential marketing values such as revitalisation of poor performance, declining sales, profitability and customer dissatisfaction that motivate the aggressive use of online marketing to counter the associated declining performance. most participants’ narratives indicated that it is often such similar themes that instigate the need for experiential marketing to either boost sales or make necessary diagnosis. the discourse of experiential marketing challenges emerged from the common meaning that was attributed to themes such as the costs of marketing, costs of change, complexities of understanding customers’ opinions, lack of relevant technologies, management and executives’ commitment to change and lack of understanding of the concept of experiential marketing. however, mapping indicated most of the challenges to emerge from the participants’ narratives on how such constraints hamper the use of experiential marketing to achieve different business objectives or to undertake relevant diagnosis to reposition and revitalise the performance of the declining products. in effect, themes from the discourse of experiential marketing challenges such as costs of marketing were more discernible from the participants’ narratives on why some smes opt to use different experiential marketing methodologies as compared to the traditional television, fm radio and newspaper marketing. on the contrary, themes on experiential marketing challenges such as the complexities of understanding customers’ opinions, lack of relevant technologies, management and executives’ commitment to change and lack of understanding the concept of experiential marketing were more linked to most of the participants’ narratives on why smes fail to diagnose satisfiers and/or dissatisfiers, as well as smes’ capabilities to make the required changes. based on such analysis, findings were structured according to two sections that encompassed the motives of smes’ experiential marketing and the value of smes’ experiential marketing. however, as the study was being undertaken, measures were also undertaken to enhance the overall validity and reliability of the study. validity and reliability in a qualitative research, the validity and reliability are often enhanced by the credibility, dependability and transferability of the study (lincoln & guba 2005:69). whereas credibility connotes the veracity and plausibility of the findings, dependability refers to the extent to which the findings of the study can be relied on for making relevant decisions. transferability measures the replicability of the study in another situation that exhibits similar characteristics under which the study was conducted (bryman & bell 2007:133). in this research, credibility, dependability and transferability of the study were enhanced by upholding descriptive, interpretive and theoretical validity and reliability of the study. descriptive validity was undertaken to improve the factual accuracy of the findings. this entailed ensuring that only the participants with critical understanding of the traditional marketing and experiential marketing approaches were drawn into the sample population. combined with fact checking, this improved the overall veracity and credibility of the findings (cohen et al. 2011:19). to further enhance the credibility, dependability and transferability of the findings, descriptive and content validity were enhanced by using an objective approach to eliminate risks of biasness during the process of the accomplishment of the study. such an initiative was accomplished by exploring both the values and risks of using experiential marketing to undertake brand diagnosis, repositioning and revitalisation. this implies that if the findings of this research are to be used, the understanding of such values, as well as risks would aid in the modifications of the decisions on how experiential marketing can be used to leverage brand diagnosis, repositioning and revitalisation. such initiatives were accompanied by extension of the periods of data collection to do more interviews until all the desired information about experiential marketing had been gained from the field research. this is accentuated by the fact that although the original major research was conducted in the period between july 2016 and january 2017, further field research was undertaken in the period between march and may 2018 to ensure that all the critical views on smes’ use of experiential marketing were extracted. to further improve the descriptive and content validity of the study, comparison and contrasting the responses from different participants were also undertaken to check the veracity of the findings. such an approach also improved the interpretive validity and reliability of the findings. yet, as the findings were being analysed and discussed, further initiatives of leveraging interpretive validity and reliability were undertaken by ensuring that it was mainly the narratives from the participants that were used to avoid the distortion of the messages that the participants aimed to convey. at the same time, corroboration in the views of the participants in the study, as well as the triangulation of the interview findings with theories were also used as one of the methods for improving the interpretive as well as theoretical validity of the study (bryman & bell 2007:133). this also improved the confirmability of the study as well as its credibility and dependability. it also implies that if a similar study was to be conducted again, it is most likely that the findings would still be obtained. against this backdrop, the details of the interview results are as presented and discussed in the next sections. results deriving from the analysis of the interview findings where the categorisation of the emerging themes and their common meanings influenced the extraction of three discourses that encompassed the motives, values and challenges of experiential marketing, the findings are presented: motives of smes’ experiential marketing values of smes’ experiential marketing. in this analysis and presentation of the findings, themes in the discourse of experiential marketing challenges are integrated as part of the themes that explain the motives or values of experiential marketing. it is through such analysis that the study sought to respond to the fundamental research questions that aimed to explore how smes’ experiential marketing enhances brand diagnosis, repositioning and revitalisation, as well as the types of the often undertaken changes and the challenges of undertaking such changes. the details are as follows. motives of small and medium-sized enterprises experiential marketing it is the fundamental view in most theories that experiential marketing offers intense customer-product-salesforce interactive methodologies that can enable businesses to diagnose and improve customer’s attachment to the brand. however, in contrast to such a view, most of the smes were only found to use experiential marketing to aid the achievement of basic fundamental business outcomes such as sales and profit maximisation, leverage of marketing capabilities and costs of marketing’s minimisation. the details of these themes are evaluated as follows. sales and profitability maximisation even though the term experiential marketing did not emerge from the views of some of the participants, it was still evident from the findings that some of the smes use some form of experiential marketing methodology. some of the smes reiterated that such an experiential methodology entails the use of multimedia videos to augment product demonstration or the demonstration of the services offered by the business. as other smes indicated using one-on-one marketing in which the use of the product is demonstrated to the potential customers. such views were mainly common in most of the responses to the interview question that explored the types of experiential marketing methodologies that smes frequently use. however, in the responses to the interview questions that explored why smes use such experiential marketing methodologies, experiential marketing was found not to be necessarily used for aiding brand diagnosis, revitalisation and repositioning. instead, some of the marketing managers revealed that the main purpose of using experiential marketing is usually for stimulating sales and profit maximisation. in the instances of declining sales and revenues, some of the marketing managers reiterated that they have often used an array of multimedia videos and online advertisements to increase customers’ awareness of the product’s availability. the communication in such multimedia videos often convey messages that inform customers about discounts or the introduction of new products. in such instances, experiential marketing was found to ignite the interests of new customers to visit the store and try out the product. even if it does not cause retention and loyalty of such new customers, some of the marketing managers still argued that the immediate desired positive effects of experiential marketing are often still easily latent in the increment of sales and revenues. such a view was corroborated in the opinions of a 37 years old female marketing manager with the work experience of 11 years in foods and beverage manufacturing plant who stated that: ‘when sales are less impressive, we usually try to use our online advertisements that constitute of several multimedia videos to inform the public about the discounts or the availability of such products across different stores. this is important for arousing customer interests as well as for reaching out the customers who may not be aware about the availability of such products.’ (female, 37, marketing manager) as some of the smes use experiential marketing to stimulate sales by announcing discounts and price reductions, other marketing managers indicated using multimedia videos only to inform the public about the introduction of new products. they explained that in most of the cases that new products are introduced, the general public except those who frequently visit their stores are usually not aware of the availability of such products. this causes the initial poor market performance of such products. to turn around such poor performance, multimedia videos that demonstrate the use of such new products are usually used in conjunction with newspaper or television advertisements to inform the public about the existence of such products. as such information is accompanied by the message of where the products can be found, some of the marketing managers revealed that they often do not go an extra length to find out how customers feel about the product. even if some of the smes do so, findings indicated some of the sales personnel to just often do so as a matter of formality of interacting and building relationship with the customers and not for the purpose of any major anticipated change. in contrast, other marketing managers noted soliciting customers’ views on whether they like the product or not to be critical for determining whether or not more of such products can be restocked. it further emerged from the findings that whereas those in the retail sector just abandon the ordering of the poorly performing products, those in the manufacturing sector argued that they often attempt to discern the further changes in strategies or the product’s ingredients that can be undertaken to catalyse the improvement of the product’s market performance. such a finding was echoed in the opinions of a marketing manager with work experience of five years in the retail sector who stated that: ‘if the response from the customers is not positive and the product continues to perform poorly, we often just discontinue ordering. in most of the cases, when it is a new product, we just take very limited quantity to test what the customers would say. if they are not impressed, we discontinue, if they are impressed, we commit more resources to order more.’ (female, 27, marketing manager) such a finding implies that experiential marketing influences change and modifications of the sourcing strategies in the retail enterprises. however, further analysis of the findings indicated that some of the smes just use some of the multimedia videos to enrich and improve a product’s branding. they attributed this to the fact that through online multimedia videos, it is often easy to cost-effectively illustrate the use and the values of the product to a wider audience. this renders it easy for some of the smes to differentiate their products from rival products. such a finding was mainly common in some of the narratives to the interview question that evaluated the values of experiential marketing. in the quests to leverage customers’ brand attachment, some of the marketing managers explained that the motive of such communication is often just to adore and praise the product so that the general public can get aroused and more attached to the brand. as some of the smes use such an approach, it was, however, not evident from the findings that any initiatives are undertaken to discern how customers feel about the product. instead, businesses that use such approach seem to only focus on influencing the improvement of customer attachment to the brand rather than for discerning the changes that can be undertaken. such findings certainly imply that as businesses strive to bolster their sales and revenues, the motive of experiential marketing is usually just to accomplish that and not to diagnose and identify any new information that can be used for brand revitalisation and repositioning. from the thematic analysis of the findings, such a view was also shared by some the marketing managers who noted that their experiential marketing initiatives are often only aimed at leveraging marketing capabilities. leverage marketing capabilities instead of using experiential marketing to bolster brand revitalisation and repositioning, it emerged from the findings that some of the smes just tend to use experiential marketing to leverage their marketing capabilities. explanations from some of the marketing managers indicated that experiential marketing is often used to supplement the roles played by the traditional marketing mechanisms such as television (tv), newspaper and fm radio advertisements. in such analysis, one of the marketing managers from the clothing retail sector argued that their marketing approach is designed in the way where television advertisements are aimed at reaching ‘home lovers’ that like to spend their evenings or weekends watching television. whereas newspaper advertisements are aimed at reaching the elites and affluent working class, she argued that fm advertisements are meant for the motorists because it is increasingly emerging as a habit of the population to rather listen to fm radio when driving than when at home or work. as such advertisement and marketing strategies are being used, she noted that a huge market that constitutes of the young ‘tech-savvy’ and the growing online market is often ignored. to respond to such a gap, she explained that most businesses often apply a strategy of developing multimedia videos through which different products are demonstrated and marketed through the retail outlet’s website or using social media platforms. such a finding was also common in most of the responses to the interview question that explored the reasons why smes prefer to use certain experiential marketing methodologies. in such responses, some of the marketing managers pointed out that the use of experiential marketing methodologies such as online product demonstrations enabled the business reach several consumers that cannot easily be reached through the traditional television and newspaper marketing mediums. in such explanations, most of the marketing managers pointed to online groups such as the youths that can best be reached through online marketing because of their constant online presence. online marketing using different web applications was also reiterated to enable people to relate to the product better during their private hours, as compared to personal selling and demonstration that tend to bother and inconvenience customers at wrong hours. such findings imply the use of experiential marketing methodologies such as online marketing as well as multimedia videos to demonstrate the product’s usage and to create an awareness that supplements the roles of the traditional television, newspaper and radio marketing to leverage a firm’s overall marketing capabilities. this view was accentuated in the opinions of a marketing manager with the work experience of eight years in the electronics assembling and manufacturing plant who stated: ‘in addition to newspaper advertisements, we also use a combination of online marketing and social media marketing videos to create awareness about the availability of our products. that means if we cannot get you in the newspaper, we shall get you on the web. with web advertisement, the advantage is that most of the people are now on the web. hence, it is the best place to advertise and search for customers.’ (male, 33, marketing manager) although the use of online experiential marketing methodologies was found to be common in the findings, there was also glaring evidence that some of the smes did not recognise that they were using experiential marketing. as most of the smes explore and discern the best ways for advertising and marketing their products, they were found to accidently engaged in the use of different experiential marketing methodologies without recognising that they are actually using one. this lack of understanding of the concept of experiential marketing affects most smes’ capabilities to optimise experiential marketing to not only promote sales and profit maximisation but also gain insights into customer perceptions of their products. this limits the discerning of the product or strategy modifications that can be further undertaken to bolster the effective market performance of the struggling products. such a finding was accentuated in one of the responses to the interview question that examined the challenges that smes’ usually experience when using experiential marketing. in such responses, one of the marketing managers noted that there is a challenge of understanding the concept of experiential marketing in even a single marketing department. he explained that whereas some of the senior sales personnel and marketers interpret experiential marketing to only require the use of social media demonstration videos, to some, experiential marketing can also be used in the traditional television advertisements. he stated that this can be accomplished by making the advertisements real to arouse the connections and emotional attachments between the product and the customer. even though such an interpretation of the concept of experiential marketing may be correct, there, was, however, also little evidence that most of the smes seize such opportunities to explore what customers are thinking about their products. after using more attractive and emotionally connecting advertisements, most of the smes were found to be more concerned about the sales. if the sales are positive, some of the smes were found not to be much concerned about what the customers are thinking or saying. such a view was echoed in one of the responses to the interview question that explored how smes use the customer opinions and perceptions gained during experiential marketing to influence any review and change in the product, and the business approach that the business subsequently adopts. in that response, one of the marketing managers with work experience of 12 years in the retail sector noted that: ‘quite often, it is not what the customer is saying or thinking that matters. it is the sales. good advertisements are measured by the immediate sales that they produce. if the sales are good, we do not focus much on getting inputs from customers because we know that almost most of the customers are satisfied. a business cannot satisfy everybody, somehow, someone will complain even when everything seems fine. but if sales are bad, we try to listen to customers to see the areas that can be changed and improved.’ (female, 36, marketing manager) even if that is not the challenge, some of the marketers still emphasised the difficulty of the challenge to overcome the lack of a system for tracking and collecting data on customer opinions. investment in such a system was found to be costly for smes. yet, as some of the smes accidentally use experiential marketing methodologies like multimedia videos to create awareness about different products, such advertisements were found not to be accompanied by a system for gathering and tracking customer opinions. on the contrary, one of the marketing managers revealed that even if such data are collected in conjunction with the customer views that are gathered from shows and demonstrations, constraints often still arise from how such data are utilised. in such instances, the collected data are often destroyed, either because the business is mainly focusing on sales or because they do not have the capacity to make the necessary changes, as they are not the manufacturers of the products that the customers are concerned about. these findings certainly signify that as some of the smes use different experiential marketing methodologies to leverage their marketing capabilities and boost sales, there seems to be less focus on understanding the experiential marketing methodology being used or how such methodologies can be used to gain insight into customer touchpoints that can be used to make the necessary brand diagnosis and changes to catalyse improvement of a firm’s overall effective market performance. yet, besides leverage of marketing capabilities and boost of sales, findings also revealed most smes to use different experiential marketing methodologies not because it aids understanding of the critical customer touchpoints, but because of the enormous cost advantages that it induces. lower costs of marketing it emerged from the findings that some of the smes use experiential marketing as a strategy for reducing the overall marketing costs. in such initiatives, experiential marketing is often not used to aid the understanding of customer feelings and attachment to different brands, but just as a mere mechanism for lowering the often hefty costs of marketing. even if some of the smes indicated to often utilise experiential marketing to gain insights into customers’ feelings about the product, some of the marketing managers still argued that the fundamental motive for the application of experiential marketing methodologies such as online multimedia videos that promote the product or promotion shows, is usually to lower the overall costs of marketing. as compared to the costs of the traditional television, fm radio and newspaper advertisements and marketing, experiential marketing using mainly online multimedia videos that promote the product or promotion shows was found to lower the overall costs of marketing. this enlarges the overall profitability margins. such a finding was corroborated in the opinions of a marketing manager with the work experience of 10 years in the sanitary manufacturing plant who stated that: ‘the use of online multimedia videos or promotion shows to promote the product is less costly as compared to television or newspaper advertisements that ask for a lot.’ (male, 44, marketing manager) in such an instance, experiential marketing tends to be more cost-effective for some of the smes that are often constrained by the challenge of lack of critical financial resources. such views were mainly common in the responses to the interview question that explored why smes prefer to use different experiential marketing methodologies. in such responses, the traditional television, fm radio and newspaper advertisements and marketing were reiterated by some of the marketing managers to be quite costly for a limited round of advertisements. in effect, when undertaken over a long period of time, it tends to affect cost savings as well as the profitability levels. to reduce costs, one of the marketing managers stated that the emergence of the internet offered some of the experiential marketing methodologies where information and details about the products and other value offerings of the business are recorded in multimedia videos. these videos are subsequently loaded onto the company’s website, social media or youtube where the videos are spread to billions of consumers almost instantly at relatively very low costs. yet, as such online multimedia videos keep on playing and getting shared by customers all the time, the business incurs no additional costs for billions of customers to watch and re-watch the videos several times. as customers keep on sharing such advertisement videos, one of the marketing managers argued that it also tends to ‘cause more persuasive effects on customers’ decisions to visit the stores to make purchase’. in effect, for some of the smes that do not have sufficient funds, online multimedia advertisements were found to be more preferable not as the strategy for understanding customer perceptions and feelings about the product, but as a medium for promoting the product. in contrast, for smes that are prepared to commit sufficient funds to an advertisement, experiential marketing entailing the use of multimedia videos and promotion shows was mainly found to be preferable as a back-up strategy. in such an approach, a marketing manager with the work experience of 9 years in the housing utensils’ manufacturing plant elaborated that: ‘…the business uses some bit of television, newspaper or fm advertisements, and thereafter takes the opportunity to refer the public to its online videos that are on its website, social media or any online platform for more details.’ (female, 37, marketing manager) this form of integrated advertisement and marketing approach was noted by some of the marketing managers to significantly persuade customers to make a purchase. at the same time, findings indicated the use of experiential marketing methodologies such as promotional shows to enable customers experience the product without bothering the customer in any way. however, as much as the motive for all these initiatives is to boost sales, profitability, lower costs and leverage a firm’s overall marketing capabilities, only a few smes indicated that they also use experiential marketing as a means of understanding customers’ feelings to determine the necessary product or strategy modifications that can be undertaken. value of small and medium-sized enterprises experiential marketing as most of the smes tend to use experiential marketing to aid sales and profitability maximisation, findings still indicated risks of brand maturity and declining sales that threaten a business’ sustainability to spur some of the smes to use experiential marketing to diagnose critical satisfiers or dissatisfiers, as well as the overall effectiveness of a firm’s internal capabilities and strategies to determine product or strategy modifications that can be undertaken to reposition and revitalise the performance of the struggling brands. such a view emerged from the second discourse that was extracted from themes that indicated meanings that were analogous to the values of smes’ experiential marketing. based on the results of the analysis where the discourse of experiential marketing’s values was divided in two sub-discourses that encompassed satisfiers’ and/or dissatisfiers’, as well as the firm’s strategies diagnosis, the details of the findings are as follows. diagnosis of satisfiers or dissatisfiers findings revealed experiential marketing to aid diagnosis of the satisfiers that attract customers to the product or dissatisfiers that repel customers from the product. while using experiential marketing methodologies such as shows and demonstrations, one-on-one marketing or interactive online multimedia systems, experiential marketing was found to enhance the initiation of interactive conversations with customers. through these interactive conversations, findings indicated that marketers are often able to easily discern symptoms of satisfaction or dissatisfaction with the product. yet, as customers are allowed to touch and feel the product when using experiential marketing methodologies such as shows and demonstrations or one-on-one marketing, some of the marketing managers noted that it also often becomes easier to not only gauge customers’ emotional attachments to the product but also identify dissatisfiers. this creates the basis for exploring and probing further the reasons why some customers feel satisfied or dissatisfied with the product. it is through such a diagnosis of the satisfiers or dissatisfiers that some of the smes are often able to discern how the existing products can be improved or augmented to attract dissatisfied customers. such views were mainly common in most of the participants’ narratives to the interview question that explored whether smes use experiential marketing to gain insights into customer opinions and perceptions about certain aspects of their products and business approaches. however, one of the marketing managers noted that even if customers are impressed with the product, the reasons why they are contented with the product is still often critical for identifying the critical customer touchpoints that the business must focus on to catalyse the positive effects of experiential marketing on sales increment. such a finding was common in most of the responses to the interview question that examined how the customer opinions and perceptions gained during experiential marketing influence any review and change of the product and the business approach that the business subsequently adopts. even though some of the smes indicated that they often tend not to utilise such results to make any necessary change and modifications of their brands or marketing strategies, a marketing manager with 13 years’ work experience in the chocolate and dairy products’ manufacturing plant explained that: ‘experiential marketing offers sort of a survey for the business to understand the needs and demands of its customers. using direct demonstration of the products, a business is able to initiate conversation with the customers as they interact with different products. even when customers are not honest in their opinions, it is often easy to assess from their body language how they feel about the product. one can also over hear them converse about the product. as for the online multimedia videos that demonstrate different products, it is usually easy to gain insight on how the general public feels about the product. this is because they are able to watch the videos from any place of their comfort and in effect they are usually free to comment. this renders it easy for the business to gauge the general response of the public to the product. if it is positive, then, the business thrives, if it negative, it may require change of a few things to change things around.’ (male, 44, marketing manager) as marketers use such interactive platforms as survey mechanisms to understand customer opinions and touchpoints, it also offers opportunities for marketers to discern aspects of the product features, designs, attributes and quality that the customers are not that very much impressed with. it is through such an analysis that the smes are often able to reconceptualise and review how the overall attractiveness of the existing product features, design and quality can be modified to entice and instigate the required customer emotional attachments. this leverages brand repositioning by reviewing and modifying the product to respond to market needs and demands that were previously not anticipated. it also enhances the review and revitalisation of the performance of the poorly performing brands. from the analysis of the findings, such an approach was found to be quite evident among the smes that are involved in the development of products. in the development of products, some of the marketing managers reiterated experiential marketing to offer critical real-time customer feedback that enables businesses to undertake the often cyclical process of developing and market testing the product until the final acceptable version is reached. such a view was echoed in one of the narratives in the responses to the interview question that explored the types of changes that are usually influenced by the customer opinions and perceptions that are gained during experiential marketing. in one of such narratives, a sales’ representative who had worked for a baby formula manufacturing sme which is based in midrand, gauteng for seven years, stated that: ‘in our experience as the developers and manufacturers of baby formulas, we have found that each time a new formula is developed; experiential marketing using shows and demonstrations often play critical roles towards highlighting major customer concerns that may be impressive or not impressive about our formulas. so, using such findings, we often go back to the drawing board to assess how the concerns raised by the customers can be integrated in the redesign and new quality considerations and features. experiential marketing helps not only in the cases of new innovations, but also for discerning the causes of the declining market performance of our older brands. in case, some of the older brands are not performing well, we often conduct promotions and shows at malls in which we not only give certain products for free or at reduced prices, but also get our sales personnel to intensely engage with customers, so as to identify their feelings about our products. in this process, such interactions aid the analysis of whether customers’ feelings have changed positively or negatively or it has since remained constant. if customers’ feelings have changed negatively, sales personnel are often further instructed to probe why it is so. is it because of a new rival brand, or new negative developments that the customers have discovered about the consumption of our product?’ (male, 36, sales’ representative) such a finding corroborates the views of the other smes that indicated that they use experiential marketing not only to assess customer feelings and emotional attachments to the products but also as a framework for diagnostic factors explaining a brand’s poor market performance. even if the brand was found to be performing well, some of the participants reiterated that their businesses often still use the results of experiential marketing to assess the extent to which the features and quality of the product can be improved to leverage its overall market competitiveness. it is such brand modifications that reposition the brand to attract more customers from the existing as well as new market segments. it also aids revitalisation of the performance of the brands that are almost sliding into declines. however, one of the marketing managers argued that as much as most initiatives for brand repositioning and revitalisation arise from the negative points that customers have raised across different interactive platforms, in some of the cases, such negative comments may tend to be unreliable. he explained that it is not advisable for businesses to rely on such comments without correlating them with sales to assess whether the sales are also affected. he attributed this to the fact that in some of the cases, positive comments may be received about a particular product which is being marketed using online multimedia videos, but such positive comments often never translate into sales increment. in contrast, he stated that there are also instances where despite negative comments about the product, sales have often not been affected. in such cases, if positive comments do not translate into higher sales, the marketing manager with work experience of nine years in the glass products’ manufacturing plant stated that: ‘it is critical to assess the actual causes of such situations. it could be arising from the fact that the videos have been over-augmented to reflect the product in a way which is different from its actual physical appearance. hence, when customers see the video and rush to buy the product, they find something else. in effect, for us, whether it is positive or negative comments, we usually wait for sales to be affected before taking actions to address the areas of customer dissatisfactions or concerns.’ (male, 42, marketing manager) meanwhile, some of the other marketing managers noted that even though they often strive to integrate customer views from experiential marketing to undertake relevant product modifications, major constraints have often still arisen from the cost of implementing the required product modifications. such views were common mainly in some of the responses to the interview question that explored how smes use the views from experiential marketing to make changes that influence the improvement of their performance. in such responses, experiential marketing was reiterated in certain cases to reveal customer perceptions and expectations that are totally at variance with the design, quality and features of most of the existing product offerings. in effect, capabilities to respond to such customer opinions and perceptions were noted by some of the marketing managers to require significant change that not only disrupts the normal flow of activities but also requires enormous financial resources. such a view was corroborated, not only by some of the themes in the third discourse on experiential marketing challenges, but also by some of the narratives in the responses to the interview question that explored the challenges that smes usually experience when undertaking necessary changes to revitalise the performance of their products or businesses that are not doing well. even if some of the smes have sufficient finances to implement the required product changes and modifications, it still emerged from such narratives that executives’ inflexibility and lack of agility often emerge as major constraints. the implications are often latent in the fact that even if brand modifications are required, they are often only undertaken when it is quite late to reposition or revitalise the performance of the struggling brands. however, if smes are not using the results of experiential marketing to undertake necessary to diagnose satisfiers and dissatisfiers in order to review and modify the product, they were found to use such results to turn around not only the performance of the struggling brands but also the performance of the entire business. diagnosis of a firm’s strategies as experiential marketing offers insights that explain a product’s poor performance, it was also found to instigate the diagnosis of the effectiveness of a firm’s strategies. such a view is accentuated by the fact that during discourse analysis and extraction, some of the narratives were found to indicate that as the motives of the application of experiential marketing methodologies are often to improve marketing capabilities to turn around poor performance as well as declining sales and profitability, quite often, it is similar themes that instigate the use of experiential marketing to make necessary diagnosis. if the cause of a brand’s poor market performance arises from pricing that may not be relatively competitive, views from some marketing managers were found to instigate the review and modification of a firm’s cost variables. as one of the marketing managers noted, such reviews and changes may encompass process changes, reduction of personnel as well as advertisement costs or undertaking any change that would unlock cost advantages. such cost advantages can be passed on to customers in the form of lower prices to revitalise the performance of the struggling brand. such views were mainly common in some of the responses to the interview question that explored the types of changes that are usually influenced by the customer opinions and perceptions that are gained during experiential marketing. however, as contrasted to the smes in the retail sector, such an approach was found to be commonly undertaken by the smes in the manufacturing sector. small and medium-sized enterprises in the manufacturing sector are often more able to easily modify and change their cost variables as compared to those in the retail sector. such views were corroborated in the opinions of a marketing manager with five years’ work experience in the retail sector who explained that: ‘if customers are complaining about the high prices of the products, there is nothing much that we in the retail sector can do. in most of the cases, our prices are calculated to include all the costs that we incur. hence, the solution is usually to go back to the manufacturers and request for more discounts. if they don’t accept, the only option is to clear and discontinue the product. as compared to us, manufacturers can easily change prices because they have so many things that they can do to reduce costs and lower prices.’ (female, 26, marketing manager) in contrast, findings indicated that if the results of experiential marketing indicate declining level of brand maturity, then it influences decisions about the modifications of the existing marketing strategies or conceptualisation of new marketing strategies that can be applied. for declining brands, findings imply that some of the marketing strategies’ review and modifications have often entailed that the review and modification of some of the marketing strategies have often entailed lowering prices to clear out declining brands. alternatively, some of the marketers suggested that it may also involve approaching new markets in new geographical locations where such brands may still be perceived as relatively new. if all these are not able to revitalise the performance of the declining brands, then product change and modifications are often undertaken to add new features and attributes that render the product more responsive to the changes in market trends that have unfolded since the product’s launch. they attributed this to the argument that from intense interactions with customers during experiential marketing, they are often able to identify whether customers are already tired of the existing product versions or they are still more interested in them. such views were mainly common in the responses to the interview question that explored how the customer opinions and perceptions gained during experiential marketing influence any review and change of the product and the business approach that the business subsequently adopts. in such an analysis, it was reiterated that if the poor market performance of the brand is not arising from customers’ dissatisfaction with the product’s features and attributes, then the challenge could be emanating from the poor marketing strategies being used. such poor marketing strategies may arise from poor distribution where, although products are required by certain customer segments in a particular region, the distribution system and networks being used often do not aid the distribution of products to such locations. this often aids the review and modification of particular segments to target, as well as that of the distribution, promotional and pricing strategies. this view was accentuated in the opinions of a sales representative with eight years of work experience in a shoe manufacturing sme in the western cape, who stated that: ‘from the interactions with customers, some of the customers may appreciate or complain about the quality, features and designs of the products. others may raise issues about the pricing of the product that may be unreasonably too high or the poor accessibility of the customers to the product, and incompetencies of the sales force causing poor service quality. while others may complain about lack of awareness of the product’s existence as compared to rival brands. using this information, it is usually for the marketing manager to assess the intervention measures that can be undertaken. from my experience, i feel that experiential marketing is of significant importance because it enables one to understand not only the product and the customer, but also the overall market.’ (male, 38, sales’ representative) however, it also emerged from the findings that experiential marketing aids not only the review and modification of the external marketing strategies to reposition and revitalise the product but also review and modification of a firm’s internal marketing strategies. to accomplish this, the participants noted that in-store marketing is one of the techniques that they use. in this process, factors such as lighting, display, smell, cleanliness and attractiveness of the overall in-store environment are often used as part of the initiatives for gauging customers’ experience and satisfaction, not only regarding a product’s quality but also the environment in which such products are offered. if customers are found not to be impressed, this enhances the review and modification of the in-store facilities and environment as part of the strategies for repositioning the product as offering new value. in case, the brand was declining, it also offers opportunities to revitalise brands that are almost sliding into declines. in other words, such a finding suggests experiential marketing can offer the foundational information that can enable the executives to sense threats and undertake necessary pro-active measures to thwart such threats. however, the effective application of such pro-active intervention measures would require management flexibility and agility which most of the marketing managers emphasised that most of the smes to lack. this undermines the values that experiential marketing offers to highlight the future threats that smes need to thwart if they are to operate more sustainably. such a view is corroborated in most of the responses to the interview question that evaluated the challenges that smes’ experience when using experiential marketing. in such responses, the marketing manager with 13 years’ work experience in the retail sector reiterated that: ‘management is used to hearing customers say this and that about the product and the business. as time goes on they become immune to the extent that even when the customers are raising valid points, they tend to ignore it until the product is being bought just by a very few groups of customers. it is at that point that they start to think about clearing such a product and introducing new ones. they want to be sure that the product or the business is no longer performing very well before discontinuing it or making the required changes.’ (male, 47, marketing manager) some of the participants revealed the rationale behind such approach to be latent in the executives’ fear to make changes that cause uncertainties and interfere with sales and revenues. in effect, findings revealed most of the executives to be quite slow, inflexible and less agile when seeking to conceive and implement new strategies that can cause brand repositioning and revitalisation. yet, as the executives remain largely inflexible and less agile, evidence of brand declines that are often identified during experiential marketing tends to worsen over time, thereby rendering it not reasonably possible for the executives to intervene and undertake strategies that could reposition and revitalise the struggling brands. despite such challenges, there was nonetheless mundane evidence from the findings that indicated that smes’ experiential marketing behaviours often enhance product review and modification, as well as marketing strategies’ review and modifications to edify the repositioning and revitalisation of the struggling brands. discussion experiential marketing is critical for bolstering a firm’s performance. it supplements the role of the traditional television, newspaper and radio advertisements and marketing. as businesses use experiential marketing methodologies such as online marketing and multimedia videos that demonstrate a product’s overall value offerings, experiential marketing catalyses the market’s awareness of the product, as well as the locations where such products can be obtained. this generates not only sales and profitability increment but also enrichment of customers’ brand attachment. such a view is at tandem with gronlund’s (2013:19) argument that experiential marketing aids the identification of customers’ emotional triggers and attachment to the product that can be used to catalyse a product’s overall effective market performance. the use of experiential marketing methodologies such as online marketing and multimedia videos also lowers the overall marketing costs. it enables less financially resourced businesses such as smes to avoid the often hefty costs of television and newspaper advertisements. all these may leverage returns on the shareholders’ value. experiential marketing also offers the interactive interface between the salesforce, customers and products. this enables businesses to diagnose the overall level of customer feelings and attachment to its different brands. unfortunately, in most of the enterprises, the use of experiential marketing methodologies such as shows and demonstrations, as well as online marketing and multimedia videos are often only limited to influencing the achievement of the basic business outcomes such as sales and profitability increment. such experiential marketing methodologies are also often used in the quests to aid minimisation of the traditionally often hefty cost of marketing. limiting experiential marketing to only the achievement of such basic business outcomes renders it difficult to discern and identify the igniters or the inhibitors of a brand’s performance. yet, survival in the increasingly precarious contemporary business environment requires smes to constantly evaluate and understand the overall effectiveness of the market performance of their different brands (kolbl et al. 2015:7; zarantonello & schmitt 2014:255). such analysis edifies identification of the areas that entice or constrain customer experience and satisfaction with the brand. it is through the identification of such areas of dissatisfaction that smes are often able to undertake new strategies or modify the existing strategies to reposition and revitalise declining brands. even though in such analysis, most businesses often rely on brand evaluation, the use of experiential marketing is still critical for marketing executives to gain insight into the overall level of customer experience, emotional attachments and satisfaction with the brand. conventionally, the motive of experiential marketing is to promote and sell a product to the target market segments. however, as it uses intense customer–product interactions to diagnose and improve customers’ emotional attachment to the product, experiential marketing also aids real-time analysis of the overall state of a brand’s effective market performance. from such analysis, it often turns evident whether the brand is performing poorly or about to slide into decline even. if the brand is performing poorly or about to slide into decline even, it enhances brand review and the eliciting of critical information that in turn aids brand reinvention, innovation, replenishment and improvement of the performance of the struggling brands (o’sullivan, richardson & collins 2011:891; sugimori, matsuda & kusumi 2011:42). it is the application of such strategies that leverages a brand’s repositioning and revitalisation. information gained from experiential marketing also tends to be critical for repositioning and revitalising a brand through relevant modifications to match the emerging changes in customer tastes and preferences. it also leverages brand redesign, reinvention of brand identity and innovative advertising (gronlund 2013:19). experiential marketing methodologies such as one-on-one marketing and the use of interactive multimedia also elicit critical insights that businesses can use to refresh the visual aspect of the brands considered to be declining. yet, as marketing personnel interact with different customer groups, their views often also influence how strategies such as the development of new distribution networks, marketing of the brand in new markets or market segments, and expansion of the brand’s portfolio of products can be used to revitalise the performance of the struggling brands (brown 1999; cova & white 2010:256; toledo & evandro 2013:33). in other words, it is quite evident that experiential marketing not only aids brand diagnosis but also aids acquisition of critical information that influences how the struggling or the poorly performing brands can be repositioned or revitalised. based on such analysis, it seems the study has responded to its fundamental research questions which were to explore whether smes’ experiential marketing behaviours enhance brand diagnosis, repositioning and revitalisation, as well as the various types of changes undertaken and the challenges of bringing about such changes. however, considering that only little seems to have been undertaken to evaluate the leveraging effects of experiential marketing on brand repositioning and revitalisation, a challenge still arises from the inadequacy of the model that smes can replicate. contribution of the research to deal with the challenge of an inadequate framework which smes can replicate when using experiential marketing to leverage brand diagnosis, repositioning and revitalisation, figure 1 offers valuable practical insights on what the smes need to do to utilise their experiential marketing mechanisms to diagnose how their struggling brands can be repositioned and revitalised. it is argued in figure 1 that as experiential marketing is being used to promote sales and profitability increment, the smes can also use experiential marketing to diagnose and identify customer satisfiers and dissatisfiers. diagnosis and identification of satisfiers and dissatisfiers are pillars for discerning how each of the brands is performing. to accomplish this, it is critical to use the interactive salesforce–customer interface to assess whether the major customer satisfiers or dissatisfiers are arising from product quality, customer service quality, product availability, pricing, comparison with competitors’ brands, product obsolescence and marketing communications. such analysis must still be accompanied by the diagnosis of the effects of such dissatisfiers or satisfiers on a brand’s competitiveness, sales, revenue and profitability. this is attributable to the fact that in certain cases, a majority of customers may express negative opinions about a particular product, but such negative perceptions often never translate into factors that undermine a brand’s competitiveness, sales, revenue and profitability. figure 1: experiential marketing framework as a basis for brand repositioning and revitalisation to enhance small and medium-sized enterprises sustainability. in effect, such analysis aids the evaluation and identification of the struggling brands as well as the well-performing brands. this paves the way for the identification of the brands that must be subjected to a thorough analysis during experiential marketing to assess the reasons that are causing the declining performance of such brands. in such an analysis, some of the experiential marketing techniques may require the use of in-store marketing, the use of sales personnel, online interactive multimedia videos and query platforms, telemarketing, as well as shows and promotional marketing (zarantonello & schmitt 2014:255). the application of these experiential marketing techniques may be accompanied by the creation of an environment and systems that facilitate customer–product interaction, customer immersion, as well as the use of experiential marketing events. for brands that are identified to be performing poorly, it is critical to isolate major customer dissatisfiers and undertake radical product, process or strategy change and modification to reposition and revitalise the performance of the struggling brands. brand repositioning and revitalisation strategies that the smes’ marketing executives can undertake to ensure the brand matches the changes in customer tastes and preferences may require brand redesign and reinventing brand identity. it may also require innovative advertising, refreshing of the visual aspect of the brand and development of new distribution networks. as derived from light and kiddon’s (2009) brand revitalisation model, the other strategies may also have to entail marketing of the brand in new markets or market segments, and expansion of the brand’s portfolio of products. as smes’ marketing executives also review and redesign product features, design and quality to delight and entice customer experience, it is however also critical that sufficient financial resources is dedicated in conjunction with the development and entrenchment of a culture of flexibility and agility to support constant brand review and modification. even if some of the brands are identified to be performing well, it is still of significant importance that the customer satisfiers that influence such a brand’s performance are identified and further modified to create more points-of-difference that proactively reposition the existing brands to minimise risks of early obsolescence and decline. conclusion in this study, the fundamental research questions were to explore whether smes’ experiential marketing behaviours enhance brand diagnosis, repositioning and revitalisation as well as the types of changes made and the challenges of such changes. from the analysis of the findings, it seems the study has succeeded to respond to such questions. it was easily discernible that experiential marketing leverages not only marketing effectiveness but also the diagnosis of customer opinions and perceptions about the various other aspects of the business. through such an analysis, it also aids diagnostic brand reviews. constant brand review and modification are pivotal to leveraging smes’ performance in the increasingly changing modern markets. it aids a firm’s capabilities to respond to the constantly changing customer tastes and preferences as well as the proliferation of increasingly disruptive innovations. constant brand review and modification also minimise the often inherent risks of product obsolescence. in the quests to bolster a firm’s continuity and sustainability, constant brand diagnosis is critical for understanding and identifying the critical aspects of the brand that must be changed and modified to turn around the market performance of the declining brands. even though some of the smes often use surveys, experiential marketing is increasingly emerging, not only as a marketing strategy for promoting sales and profitability maximisation but also as a mechanism for diagnosing the causes of a brand’s poor market performance. as experiential marketing is being used to leverage sales and profitability increment, it also enhances the analysis and identification of the major customer touchpoints and triggers that can be improved to stimulate customer emotional attachment to the product. it also influences the identification of the incremental improvement of the initiatives that can incrementally improve the level of customer loyalty, as well as sales, revenues and profitability. experiential marketing unearths underlying constraints that are undermining a brand’s effective market performance. it explores the level of positive emotional attachment to different brands that customers experience. however, as it aids such an analysis, experiential marketing also offers smes the opportunities to undertake brand diagnosis to identify a combination of strategies that can be utilised to reposition and revitalise the performance of the poorly performing brands. such constant brand repositioning and revitalisation may, however, require the use of an appropriate experiential marketing model. unfortunately, findings revealed that the issue of such a model is a challenge that still confounds most of the contemporary smes’ marketing executives. in effect, by suggesting the experiential marketing framework in figure 1, this research sought to address such a challenge. however, future studies can still explore the critical factors for edifying smes’ brand repositioning and revitalisation in the increasingly precarious contemporary global markets. acknowledgements competing interests the author declares that he has no financial or personal relationships which may have inappropriately influenced him in writing this article. references adeosun, l.p.k. & ganiyu, r.a., 2014, ‘experiential marketing: an insight into the mind of the consumer’, asian journal of business and management sciences 2(7), 21–26. alkilani, k., ling, k.c. & abzakh, a.a., 2013, ‘the impact of experiential marketing and customer satisfaction on customer commitment in the world of social networks’, asian social science 9(1), 262–270. anderson, j.c., kumar, n. & narus, j.a., 2007, value merchants: demonstrating and documenting superior value in business markets, harvard business school, boston, ma. aronne, c.v. & vasconcelos, m.c.r.l., 2009, the impact of experiential marketing on the customer’s perception of a brand’s essence, encontro da anpad, autoria, brazil. babbie, e., 2008, the basics of social research, thomson wadsworth, belmont, tn. babbie, e. & mouton, j., 2008, the practice of social research, oxford university press, cape town. brown, s., 1999, ‘retro-marketing: yesterday’s tomorrows, today’, marketing intelligence and planning 17(7), 363–376. https://doi.org/10.1108/02634509910301098 bryman, a. & bell, c., 2007, business research, macmillan, london. canniford, r., 2011, ‘how to manage consumer tribes’, journal of strategic marketing 19(7), 591–606. https://doi.org/10.1080/0965254x.2011.599496 carù, a. & cova, b., 2008, ‘small versus big stories in framing consumption experiences’, qualitative market research: an international journal 11(2), 166–176. https://doi.org/10.1108/13522750810864422 chao, r.f. & kuo, t.y., 2013, ‘the influence of experiential marketing and brand image on consumers’ revisit intention: a case study of e-da theme park’, journal of tourism and leisure management 1(1), 33–55. chen, y.y., shek, d.t. & bu, f.f., 2011, ‘applications of interpretive and constructionist research methods in adolescent research: philosophy, principles and examples’, international journal of adolescent medicine and health 23(2), 129–139. https://doi.org/10.1515/ijamh.2011.022 cohen, l., manion, l. & morrison, k., 2011, research methods in education, routledge, london. cova, b. & white, t., 2010, ‘counter-brand and alter-brand communities: the impact of web 2.0 on tribal marketing approaches’, journal of marketing management 26(3), 256–270. https://doi.org/10.1080/02672570903566276 crain, d.w. & abraham, s., 2008, ‘using value-chain analysis to discover customers’ strategic needs’, strategy & leadership 36(4), 29–39. https://doi.org/10.1108/10878570810888759 day, g.s., 2011, ‘closing the marketing capabilities gap’, journal of marketing 75(2), 183–195. https://doi.org/10.1509/jmkg.75.4.183 dev, l.s. & chekitan, s., 2012, hospitality branding, cornell university press, ithaca, nj. https://doi.org/10.7591/cornell/9780801452031.001.0001 fang-chao, r., 2015, ‘the impact of experimental marketing on customer loyalty for fitness clubs: using brand image and satisfaction as the mediating variables’, the journal of international management studies 10(2), 52–60. fetterman, d.m., 2009, ethnography: step by step, sage, newbury park, ca. gang, w., 2011, brand management in smes, department of social sciences, midwest university, midwest, sweden. gronlund, j., 2013, basics of branding: a practical guide for managers, business expert press, new delhi, india. gupta, s. & ramachandran, j., 2010, the park hotels: designing communications, indian institute of management, bangalore. herrmann, j.l., walliser, b. & kacha, m., 2011, ‘consumer consideration of sponsor brands they do not remember: taking a wider look at the memorisation effects of sponsorship’, international journal of advertising 30(2), 259–281. https://doi.org/10.2501/ija-30-2-259-281 hu, t.l., ho, y.h. & hsieh, w.c., 2014, ‘a study on the relationship among trust, brand image, experiential marketing, and customer loyalty for department stores’, journal of the national taipei college of business 25(6), 55–75. iglesias, o., singh, j.j. & batista-foguet, j., 2011, ‘the role of brand experience and affective commitment in determining brand loyalty’, journal of brand management 18(8), 570–582. https://doi.org/10.1057/bm.2010.58 jain, s. & lohia, s., 2014, ‘experiential marketing: emerging issues and suggestions’, international journal of advances in management and economics 3(2), 197–203. jonk, g., handschuh, m. & niewiem, s., 2008, ‘the battle of the value chains: new specialised versus old hybrids’, strategy & leadership 36(2), 24–29. kanth, k.p.s.r., maheswar, d.u.r. & venkatesulu, k., 2016, ‘brand revitalisation’, international journal of science technology and management 5(1), 321–326. keller, k., 2013, managing brands over time. strategic brand management, pearson, upper saddle river, nj. keller, k.l., 2013a, strategic brand management: building, measuring, and managing brand equity, prentice-hall, upper saddle river, nj. kolbl, z., konecnik, r.m. & kolar, t., 2015, ‘brand revitalization: don’t let your brands turn into sleepyheads’, central european business review 4(2), 5–11. https://doi.org/10.18267/j.cebr.121 kotler, p. & armstrong, g., 2010, principles of marketing, pearson, upper saddle river, nj. lee, t.h. & chang, y.s., 2012, ‘the influence of experiential marketing and activity involvement on the loyalty intentions of wine tourists in taiwan’, leisure studies 31(1), 103–121. https://doi.org/10.1080/02614367.2011.568067 lefi, l. & gharbi, a., 2011, ‘nostalgia and brand attachment: theoretical framework and application in the case of a tunisian advertising’, journal of business studies quarterly 3(1), 187–200. lekhanya, l.m., 2015, ‘an exploration of the impact of digital marketing on smes growth and brand popularity in rural south africa’, journal of economics and behavioural studies 7(5), 37–42. light, l. & kiddon, j., 2009, ‘six rules for brand revitalization: learn how companies like mcdonald’s can re-energize their brands’, pearson education, upper saddle river, nj. lincoln, y.s. & guba, e.g., 2005, paradigmatic controversies, contradictions, and emerging confluences, sage, thousand oaks, ca. lockwood, t., 2010, design thinking: integrating innovation, customer experience and brand value, allworth press, new york. matthews, j. & bucolo, s., 2014, continuous innovation in smes: how design innovation shapes business performance through doing more with less, queensland university of technology, brisbane, queensland. marzocchi, g., morandin, g. & bergami, m., 2013, ‘brand communities: loyal to the community or the brand?’, european journal of marketing 47(1), 93–114. https://doi.org/10.1108/03090561311285475 masterman, g. & wood, e.h., 2008, innovative marketing communication strategies for the events industry, heinemann, oxford. merchant, a. & ford, j., 2008, ‘nostalgia and giving to charity: a conceptual framework for discussion and research’, international journal of nonprofit and voluntary sector marketing 13(1), 13–30. https://doi.org/10.1002/nvsm.300 murane, p., 2012, 7 steps to revitalize your brand, brandjuice, new delhi, india. o’guinn, t., allen, c.h.t., semenik, r.j. & scheinbaum, a.c., 2015, advertising and integrated brand promotion, cengage learning, new york, ny. o’sullivan, s.r., richardson, b. & collins, a., 2011, ‘how brand communities emerge: the beamish conversion experience’, journal of marketing management 27(9), 891–912. https://doi.org/10.1080/0267257x.2011.565684 rootman, c. & zeka, b., 2013, ‘the brand image and performance of small and medium enterprises: how can social responsibility activities help?’, acta commercii 13(1), 1–9. https://doi.org/10.4102/ac.v13i1.171 qader, i.k.a., 2013, ‘the evolution of experiential marketing: effects of brand experience among the millennial generation’, international journal of academic research in business and social sciences 3(7), 331–340. russo, s.t., carida, a., colurcio, m. & melia, m., 2012, ‘store experience and co-creation: the case of temporary shop’, international journal of retail and distribution management 40(1), 21–40. https://doi.org/10.1108/09590551211193586 schmitt, b., 1999, ‘strategic experiential modules (sems)’, journal of marketing management 15(2), 53–67. https://doi.org/10.1362/026725799784870496 sugimori, e., matsuda, k. & kusumi, t., 2011, ‘the contradictory effects of nostalgic advertisements on nostalgia for products and on remembering advertisements’, japanese psychological research 53(1), 42–52. https://doi.org/10.1111/j.1468-5884.2010.00454.x toledo, a.c. & evandro, l.l., 2013, ‘effect of nostalgia on customer loyalty to brand post-merger/acquisition’, bar 13(1), 33–55. ward, a., runcie, e. & morris, l., 2009, ‘embedding innovation: design thinking for small enterprises’, journal of business strategy 30(2/3), 78–84. https://doi.org/10.1108/02756660910942490 wynn, d. & williams, c.k., 2012, ‘principles for conducting critical realist case study research in information systems’, mis quarterly 36(3), 787–810. xu, h., larry, l., harry, a. & dishman, p., 2015, ‘managers’ perceived risk, experiential knowledge, marketing capability and international performance: a study of chinese international enterprises’, journal of marketing development and competitiveness 10(1), 53–65. yu, h.s., zhang, j.j., kim, d.h., chen, k.k., henderson, c., min, s.d. et al., 2014, ‘service quality, perceived value, customer satisfaction, and behavioral intention among fitness center members aged 60 years and over’, social behavior and personality an international journal, 42(5), 757–767. zarantonello, l. & schmitt, b.h., 2014, ‘the impact of event marketing on brand equity: the mediating roles of brand experience and brand attitude’, international journal of advertising 32(2), 255–280. https://doi.org/10.2501/ija-32-2-255-280 zdravkovic, s. & till, b.d., 2012, ‘enhancing brand image via sponsorship: strength of association effects’, international journal of advertising 31(1), 113–132. https://doi.org/10.2501/ija-31-1-113-132 abstract introduction literature review methodology findings conclusion acknowledgements references about the author(s) wesley niemann department of business management, university of pretoria, south africa theuns kotzé department of business management, university of pretoria, south africa karabo mannya department of business management, university of pretoria, south africa citation niemann, w., kotzé, t. & mannya, k., 2018, ‘global sourcing risk management approaches: a study of small clothing and textile retailers in gauteng’, southern african journal of entrepreneurship and small business management 10(1), a141. https://doi.org/10.4102/sajesbm.v10i1.141 original research global sourcing risk management approaches: a study of small clothing and textile retailers in gauteng wesley niemann, theuns kotzé, karabo mannya received: 14 june 2017; accepted: 08 dec. 2017; published: 27 feb. 2018 copyright: © 2018. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: global sourcing has increased as buyers searched for new markets that offered better pricing, quality, variety and delivery lead times than their local markets. however, the increase in global sourcing has also exposed businesses to many supply risks. purpose: the purpose of this descriptive qualitative study was to explore the global sourcing supply risks encountered by small clothing and textile retailers in gauteng and to determine what supply risk identification and management approaches they utilise. method: this study utilised semi-structured interviews conducted with 12 small clothing and textile retail owners. results: the study found that the three major supply risks encountered by these retailers were fluctuating exchange rates, communication barriers and costly and complicated logistics, which included high customs costs. furthermore, although aware of the supply risks, none of the small clothing and textile retailers had formal identification and management approaches in place. instead, risks are dealt with at the sole discretion of the owner as and when they occur. the study also found that informal identification and management approaches were being applied by some of the retailers. these included factoring exchange rate fluctuations into the profit margins and using translators to combat communication barriers. contribution: the study is one of the first empirical studies conducted on global supply risks and the associated identification and management approaches in the south african small business context, specifically focused on clothing and textile retailers. conclusion: small clothing and textile retailers need to proactively identify and manage global sourcing risk using the identified approaches in order to reduce and mitigate potential supply disruptions. introduction although global sourcing can bring many benefits to a business, it can also expose it to several supply chain risks (deane, craighead & ragsdale 2009:861; kumar, himes & kritzer 2014:875). disruptions in the supply chain can negatively affect the performance of a business in the short and long term, resulting in its inability to meet customer demands (ellis, henry & shockley 2010:34–35). in 2014, the outbreak of ebola in west africa caused major supply chain disruptions across the globe, with many countries suspending flights to and from the region. this resulted in delays in all air and sea cargo destined for europe, asia and the united states, mainly from guinea (aluminium ore), liberia (rubber), nigeria (oil) and sierra leone (iron ore) (bsi 2014:2–6). furthermore, in 2013 the 4-week strike of workers in the south african car manufacturing industry led to a supply shortage of components and a slowdown in the manufacturing of motor vehicles. this resulted in disruptions in the supply of vehicles to international markets and a daily loss of approximately r600 million for bmw, gm, ford, mercedes-benz, nissan, toyota and volkswagen (williams 2013). the ripple effects of supply disruptions transcend beyond national borders, with the impact being as severe – if not more severe – for countries beyond the place where the disruptions occurred. such supply disruptions result from the complexities associated with global sourcing (chopra & sodhi 2014:74). in south africa, many clothing and textile retailers, both small and large, engage in global sourcing. this is because of the uncompetitive nature of the south african clothing and textile manufacturers compared to those in china and other low-cost countries, such as bangladesh, india, pakistan and sri lanka (edwards & jenkins 2015:448; yang 2014:3–5). as these clothing and textile retailers source products globally, the proactive identification and management of global sourcing risks are vital to ensure security of supply for business continuity (faertes 2015:1400–1401). muhos, wang and kess (2012:958) warn that small businesses can expect to be exposed to risks when sourcing globally and that they will be affected more severely because of their limited resources and lack of experience in conducting business internationally. thun, drüke and hoenig (2011:5512) and verbano and venturini (2013:195) highlight that minimal research has been conducted globally on understanding the type of risks encountered by small businesses that engage in global sourcing and the global supply chain. in addition, only limited local studies have been undertaken on supply chain risks and global supply chains (mndzebele 2013:16; sayed & sunjka 2016:125). furthermore, most of the literature dealing with research done in sub-saharan africa focuses on both small and large businesses in mining (mndzebele 2013:1–109), manufacturing and automotive (black 2009:483–512; maje & sunjka 2014:1–14; sayed & sunjka 2016:122–135; sunjka & emwanu 2013:1–12). although very few studies have been undertaken with a view to understanding the risks that small businesses encounter as a result of global sourcing and global supply chains, substantial research on this topic exists with a focus on large businesses, mainly in europe (christopher et al. 2011:67–81; hoffmann, schiele & krabbendam 2013:199–211; muhos et al. 2012:968; thun et al. 2011:5511–5525). according to these studies, various risk identification and management approaches are used by large businesses operating in various industries to address supply risks related to global sourcing and the global supply chain. fang et al. (2013:1380) advocate the use of a contingent supplier alongside a regular supplier to mitigate risks associated with supplier delivery reliability, or alternatively the use of two regular suppliers. however, given the low volumes purchased by small businesses, in general, formalising relationships with multiple suppliers may not be viable. this could be partly because of the lack of volume leverage that makes suppliers prioritise large businesses over smaller ones (adams, khoja & kauffman 2012:20–21). kumar et al. (2014:888) found that organisations tend to compile risk mitigation strategies based on three factors: firstly, the organisation’s level of dependency on global supply; secondly, the possible impact of the potential risk; and thirdly, what the required investment is. for example, if the impact of the potential risk and the dependency on global supply are low, and the required investment of a risk mitigation strategy is high, it may be beneficial for an organisation to opt to do nothing. however, for small clothing and textile retailers, this may be a more complex decision. because of the uncompetitive local clothing and textile manufacturing industry (yang 2014:3–5), many of these small clothing and textile retailers are highly dependent on global supply for their products. given this high level of dependency, the impact of disruptions in the global supply would be severe for these small clothing and textile retailers. the purpose of this descriptive qualitative study was to explore the global sourcing supply risks encountered by small clothing and textiles retailers based in gauteng and to determine what supply risk identification and management approaches they have in place. the following research questions guided the study: why do small clothing and textile retailers in gauteng source globally? what supply risks are these small clothing and textile retailers exposed to as a result of global sourcing? how do these small clothing and textile retailers identify possible supply risks associated with sourcing globally? how do these small clothing and textile retailers manage the identified supply risks? the study contributed to both academia and practice. firstly, it expanded on the current literature by identifying the supply risks encountered by small clothing and textile retailers in gauteng. secondly, the study shed light on the supply risk identification and management approaches applied by some of the small retail owners. these approaches could be beneficial for other small retail owners and managers who encounter similar supply risks, but lack knowledge on possible approaches that can be applied. lastly, the study enhances policymakers’ understanding of the supply risks encountered by small clothing and textile retailers, and thus aid them in creating solutions that enable small clothing and textile retailers to reduce or eliminate these supply risks. literature review small businesses in south africa so far, minimal research has been conducted on how small and medium enterprises (smes) assess and manage general risk (thun et al. 2011:5512; verbano & venturini 2013:195). according to falkner and hiebl (2015:125), this is problematic given the significant contributions that smes make to the economies of developing countries. the south african national small business act (act 102 of 1996) defines a small business as: a separate and distinct business entity, including cooperative enterprises and non-governmental organisations, managed by one owner or more which, including its branches or subsidiaries, if any, is predominantly carried on in any sector or subsector of the economy. (south african government 1996:s. 1, ss. xv, 2) small businesses can be classified as medium, small, very small or micro businesses, based on their total number of full-time employees, total annual turnover and total gross asset value (south african government 1996:15). based on the national small business act (act 102 of 1996), small clothing and textile retailers are categorised under the retail and motor trade and repair services sector. table 1 illustrates the defining characteristics for this sector. for the purposes of this study, the term small clothing and textile retailers encompassed small, very small and micro businesses, that is, all businesses with fewer than 50 full-time employees and an annual turnover of less than r15 million (south african government 1996:15). table 1: business classification according to the national small business act (no. 102 of 1996). according to groepe (2015:5), small, medium and micro enterprises contribute between 52% and 57% to the south african gross domestic product. the failure rate and risks associated with running these businesses are high, regardless of whether they source globally or not (timm 2013). lavastre, gunasekaran and spalanzani (2012:834) found that french smes tend to attempt to reduce and address risks single-handedly, while large businesses use collaborative relationships with supply chain partners. the lack of using collaborative relationships in the supply chain to address risks could be because of smes having limited resources (i.e. time, money and personnel) to dedicate to risk management (smit 2012:182). in addition, another contributing factor could be the lack of formalised relationships with suppliers because of low-volume purchases and bargaining power compared to large businesses (lavastre et al. 2012:834). because of the low barriers to entry and economies of scale, many of these small businesses operate in the clothing and textile industry (kunene 2008:14). global sourcing activities of clothing and textile retailers the clothing and textile industry is a typical example of a global supply chain and a major contributor to the global economy and international trade (su & gargeya 2012:23–24). turker and altuntas (2014:838) state that globalisation has played a significant role in enabling global sourcing in many industries, including the clothing and textile industry. this industry consists of the production, marketing, distribution and selling of clothing and textiles. figure 1 illustrates the clothing and textile supply chain. in this study, the focus was on the retail part of the supply chain, where businesses are focused on selling to end customers. figure 1: the clothing and textile supply chain. the retail portion of the clothing and textile industry is characterised by intense competition, a wide variety of products, volatile customer preferences and uncertainty in the markets (su & gargeya 2012:23–24). furthermore, it is a fast-paced environment where retailers need to be able to provide customers with items that match the latest trends in the shortest possible time (mehrjoo & pasek 2016:28). these short life cycles result in markdowns or write-offs of items that do not sell fast enough (routroy & shankar 2014:58). given these and other pressures facing clothing and textile retailers, regardless of their size, it is imperative that any risks that may threaten their long-term viability and security of supply be actively minimised or eliminated (peter 2016:324–325). berg, berlemann and hedrich (2013:2) and steven, dong and corsi (2014:241) indicate that most clothing and textile retailers have shifted their sourcing activities to lower cost countries to enable them, among other things, to take advantage of the lower cost of labour and other resources. in addition, jia et al. (2014:285) point out that global sourcing grants businesses, and ultimately also their customers, access to products not available in the local market. the focus of this study was on small clothing and textile retailers in gauteng, which is recognised as the economic hub of south africa (badenhorst-weiss & waugh 2014:289). there has been a significant increase in the number of small clothing and textile retailers in the gauteng area, and as a result of the uncompetitive nature of the local clothing and textile industry’s manufacturers, most of them source merchandise from countries such as china, dubai, morocco and thailand that offer lower cost, quicker turnaround times, more variety and better quality (bruce, daly & towers 2004:155; yang 2014:3–4). holweg, reichhart and hong (2011:334–335) identify three factors that prompt buyers to source globally. the first of these factors is access to cheaper labour and raw materials. the second factor is access to a wider range of resources and the third factor is the opportunity to gain a presence in new markets that are supported by larger product markets and financing prospects (manuj & mentzer 2008:134). all these factors were supported by the declining barriers to global sourcing as the economies of the world opened up to trade (holweg et al. 2011:334–335). global sourcing risks kumar et al. (2014:873) note that it is difficult to predict disruptions associated with supply chain risks because of the uncertainty and variability of the risks. routroy and shankar (2014:53) define supply chain risk as the degree to which supply chain outcomes are unpredictable or vulnerable to disruptions. furthermore, ho et al. (2015) define it as: the likelihood and impact of unexpected macro and/or micro level events or conditions that adversely influence any part of a supply chain resulting in operational, tactical, or strategic level failures or irregularities. (p. 5035) according to christopher et al. (2011:68) and routroy and shankar (2014:53), risk categorisation is based on the source of the risk, with these sources being supply, demand, process, control and environmental risk. supply and demand risks are both internal to the focal firm (srinivasan, mukherjee & gaur 2011:262); process and control are external to the focal firm but internal to the supply chain; and environmental risks are external to both the focal firm and the supply chain (christopher et al. 2011:68). figure 2 depicts the relationships between the various sources of risk in the supply chain. figure 2: sources of risk in the supply chain. global supply chains have opened up opportunities for small and large businesses to source globally and are concerned with movement of goods from suppliers in one country to buyers who are in another country. the intention is for the buyer to ultimately sell these goods to customers in their local market (borges 2015:12). deane et al. (2009:863) point out that global supply chains are complex and ever-evolving because of the many uncertainties they face. as a result of these uncertainties, global supply chains are exposed to various kinds of risks (brammer, hoejmose & millington 2011:8) and can become costly if not well coordinated (christopher 2011:171). holweg et al. (2011:334) define global sourcing as the sourcing of finished or intermediate products from other countries, with the intention to sell them to customers in the buyer’s local market. for this qualitative study, global sourcing risks were categorised as supply, demand, process, control and environmental risks (christopher et al. 2011:69), with the focus on supply risks associated with global sourcing. demand risk, which is associated with the movement of items from the focal firm to the customer, can arise as a result of inbound disruptions, such as seasonality, short product life cycles, volatile customer demands and the adoption of new products (srinivasan et al. 2011:264). process risks relate to the internal ability of the firm to make goods or provide services (pfohl, köhler & thomas 2010:34). this risk is about the resilience of the manufacturing and production processes. control risk relates to how an organisation’s own internal control systems are likely to cause disturbances and distortions. for instance, safety stock policies can obscure real demand (christopher 2011:194). external factors usually drive environmental risks such as weather, market forces and political issues, which are all able to affect the supply chain (lockamy 2014:756). for this study, the focus was extended to understanding supply risks. supply risks pfohl et al. (2010:36) define supply risks as those that result in an interruption of the flow of goods from the supplier to the customer while palaniappan (2014:22) defines supply risks as a business suppliers not being able to deliver required supply completely or on time. this impacts the ability of the business to ultimately deliver to the customers. supply risks are associated with inbound supply and are concerned with the movement of material from the supplier to the purchasing firm and arise because global sourcing lengthens the supply chain (cips 2013:1). thus, for businesses involved in global sourcing, supply risks increase even more as they have to deal with risks beyond the borders of the country in which they conduct their business (chopra & sodhi 2014:74). table 2 summarises and indicates some of the supply risks that businesses can encounter because of globalisation. table 2: identified supply risks associated with global sourcing activities. in this study, these risks will be classified as follows: supplier reliability, complicated and costly logistics, fluctuating exchange rate, communication and cultural barriers and political and environmental volatility (holweg et al. 2011:334–335; jiang & tian 2009:19). supplier reliability: supplier failure as a result of disruptive events internal or external to the supplier can cause enormous loss and delays to buyers’ ability to deliver to their customers (ray & jenamani 2016:238). issues such as lack of capacity, poor quality and late deliveries can all compromise the supplier’s reliability (holweg et al. 2011:5045). complicated and costly logistics: complicated and costly logistics result from increased delivery lead times, high customs costs and complicated customs requirements, increased fuel prices and the consequent increases in transport costs (jiang & tian 2009:18), which all increase the likelihood of supply risks for businesses. jain, girotra and netessine (2014:1202) mention that one of the disadvantages of global sourcing is the increased lead times that arise as a result of cross-border transit and customs clearance times. adding to this, berg et al. (2015:21) highlight the fact that all the administration around compliance with customs regulations could result in unexpected delays in buyers’ attempts to have their products cleared and delivered to customers on time. halldórsson and kovács (2010:8–9) note that travelling and transport costs are highly likely to be escalated whenever the fuel price increases. all these complicated and costly logistical issues could result in the late arrival of the supplies required. fluctuating foreign currency: borges (2015:17) indicates that exchange rate fluctuations can have either minor or major impacts on businesses that source merchandise globally. fluctuations in exchange rates result in items being more expensive for the buyer (gheibi, kazaz & webster 2016:2), as they usually diminish the purchasing power of the business. in addition, exchange rate fluctuations not only impact on the purchasing price but also impact on the profit margins of the business (young 2016:4). communication and cultural barriers: towers and song (2010:529) found that communication and cultural barriers remain as major challenges, especially for businesses that have minimal sourcing experience in that sourcing country. borges (2015:17) states that culture refers to conduct and beliefs that are acceptable in a particular global region. communication and cultural barriers encompass the language used, which oke, maltz and christiansen (2009:158) found to provide a good basis for facilitating transactions and lowering transaction costs. jiang and tian (2009:19) highlight that the risk associated with communication misunderstandings cannot be underplayed. this is because clear communication between the buyer and supplier provides the buyer with better negotiating grounds. political volatility and environmental conditions: political volatility and environmental conditions are regarded as external risks that do not originate from the supply chain, but can have major impacts on them. colicchia and strozzi (2012:409) indicate that political and environmental risks are part of external supply chain risks, which are not within the control of the focal firm. however, these external risks can have major impacts on the focal firm. these external risks may arise from natural disasters, epidemics, political instability and wars. businesses that source merchandise globally are exposed to supply risks when incidents of political unrest and adverse environmental conditions occur in the countries from which they source products (jain et al. 2014:1205). global sourcing risk identification approaches kırılmaz and erol (2017:56) highlight that risk identification is the most important step in the supply chain risk management process (scrmp) as it triggers any further need for a business to do risk assessment or management. the scrmp involves the identification, assessment and management of risks (kırılmaz & erol 2017:56). for this study, risk identification and management were the key focus. risk identification involves identifying potential internal and external risks that can impact the business (hoffmann et al. 2013:202; smit 2012:62; wieland & wallenburg 2012:656). many risk identification approaches exist in the literature such as the fault-tree analysis, event tree analysis, risk checklists and catalogues, strengths, weaknesses, opportunities and threats (swot) analysis, risk breakdown structures, internal business brainstorming session of risks and review of risk literature among others (kırılmaz & erol 2017:56; sherwin, medal & lapp 2016:155; tummala & schoenherr 2011:475–476; vilko 2012:45). however, in this study the approaches that could potentially be applied by the small clothing and textile retailers are explored. these approaches could be beneficial to small businesses given that they are simple to use and require minimal resources (barroso, machado & machado 2011:169; murray-webster 2010:88): supply chain mapping: entails the mapping of the entire supply chain from the supplier to the customer, thereafter identifying along that value chain what possible risks could be encountered. pestel analysis: a simple framework that is commonly utilised in risk identification. risks are identified along political, economic, sociological, technological, environmental and legal dimensions (peace 2013:5). it may be helpful for the small clothing and textile retailers as it is a simple framework. however, hopkin (2017:138–139) indicates that gaining access to external data of high quality along these dimensions may prove to be time consuming and expensive. supplier pre-buying review: gathering information on potential and current suppliers from publicly available information (falkner & hiebl 2015:133; smit 2012:62) could be done by using online portals and e-marketplaces as a source of information on potential suppliers. in addition, buyers can visit a supplier’s premises to get a sense of the supplier’s product offering, quality control systems and production capacity (palaniappan 2014:22). global sourcing risk management approaches olson and wu (2010:697) indicate that because businesses that are engaged in global sourcing cannot avoid supply risks, it is imperative that managers establish ways of managing these risks. risk is part of purchasing, especially because the purchasing business has very little to no control over the suppliers. there is thus an incentive for businesses to find the correct mix of risk reduction practices, given their available resources (ellegaard 2008:425–432). according to chopra and sodhi (2014:74), managers who engage in the proactive management of supply risk add value to their businesses through reduced risk and higher cost efficiency. because very few businesses, regardless of size, have formal processes in place for managing supply risk, those that do make provision for such processes create a competitive advantage for themselves (dittmann 2014:5). several risk management approaches that could be applicable to small businesses for addressing risks that arise because of global sourcing are discussed below. the approaches require a small cost element such as insurance, hedging and dual transportation, while local sourcing, probability reduction and increasing sourcing partners should be implementable with minimal to no additional cost. the low-cost element is essential for small businesses as they have limited resources available (smit 2012:182). insurance: usually, insurance companies have formalised processes for assessing and managing risks, which makes the use of insurance beneficial to the businesses that use them (kunreuther & pauly 2014:2). insurance can be used to cover for supply risks such as supplier defaults or delays (sodhi, son & tang 2012:2). despite the viability of insurance as a risk management approach, abe and ye (2013:571) found that smes were highly underinsured. this could be because of the cost associated with insurance (olson & wu 2010:698). in addition, dittmann (2014:7) found that few supply chain professionals across retail, manufacturing and services businesses of varying sizes used insurance as a measure to mitigate risk. increasing sourcing partners: jain et al. (2014:1206) recommend that to ensure delivery reliability, a business may need to increase its supplier base and source from multiple partners. as highlighted by ray and jenamani (2016:238), multi-sourcing is considered a common practice to hedge against supply risks, and although it does not eliminate the occurrence of such risks, it does reduce the probability or the impact of disruption. berg et al. (2015:5) point out that sourcing activities can be allocated across multiple countries to minimise the impact of supply risks that may arise in one country. hedging: jain (2013:26) indicates that hedging can be a means of minimising or eliminating foreign currency fluctuations for businesses at a cost. this could be particularly helpful for a small business that has access to limited cash flows and whose purchases are heavily reliant on foreign exchange. young (2016:4–5) indicates that there are pros and cons to hedging and thus a thorough assessment of the market before selecting a hedging option or forward is essential. risk probability reduction: this entails a business complete avoidance or elimination of the occurrence of a supply risk. this is achieved by choosing to avoid purchasing from certain suppliers or countries or certain products (ellegaard 2008:432). dual transportation: this entails the splitting of a single batch order into two and using different transport providers (christopher & holweg 2011:71). this will ensure that should one transport provider delay or lose the merchandise, the other batch will still be delivered to the buyer (micheli, mogre & perego 2014:123). local sourcing: several arguments for local sourcing are highlighted by cips (2013:1–2). these included the increasing transport costs of moving goods, increasing supply chain risks such as extended lead times and exchange rate risks, and the heightened focus on sustainability in terms of businesses needing to reduce their carbon footprint (cips 2013:1–2). this aligns with hendry, sayed and zorini (2015:3–4) and shen (2014:6241) who also found that local sourcing results in reduced distances, the reduction in delivery lead times, product leftovers and carbon emissions. supplier relationship development and management: ho et al. (2015:5049) and ellis et al. (2010:38) found that building strategic relationships with certain suppliers was beneficial but required time commitments from the buyer. in addition, faes and matthyssens (2009:246) highlight that loyalty sourcing, which is repeat buying from a single supplier with or without the use of contracts, enhances buyer and supplier relationships. this provides better grounds for negotiation for the buyer. methodology research design this study followed a descriptive qualitative research design. plano clark and creswell (2015:289) state that the purpose of a descriptive qualitative research design is to explore a phenomenon by exploring different perspectives on a topic through the identification of underlying themes that emerge from discussions with participants. a descriptive qualitative research design was deemed appropriate as the aim of this study was to explore the perceptions of small clothing and textile retailers in gauteng regarding the global sourcing supply risks they encounter and the risk identification and management approaches applied to address these supply risks. sampling the unit of analysis consisted of 12 small clothing and textile retail owners based in gauteng who are engaged in global sourcing. a total of 12 semi-structured interviews were conducted. according to guest, bunce and johnson (2006:76), for a homogenous group, saturation is likely to be achieved at around 12 interviews. further interviews are likely to provide minimal to no new insights. in this study, saturation occurred after the 11th interview. one additional interview was conducted whereafter data collection was terminated. purposive sampling was used for this study as it allowed for the identification and selection of information-rich individuals who could provide the required information (palinkas et al. 2015:533). the small clothing and textile retail owners in the sample were all solely responsible for all sourcing and risk-related decisions, except two who co-owned the business each with one other person. in addition, two purposive sampling strategies were used in this study, homogenous and snowballing. homogenous sampling allowed for the selection of individuals based on specific characteristics (plano clark & creswell 2015:334), which allowed for reduced variations and a more focused investigation. all the selected small clothing and textile retailers were based in gauteng and were engaged in the global sourcing of clothing or textiles for resale on the local market. the second purposive sampling strategy that was applied was snowballing. this strategy was used to identify additional participants based on the recommendations made by the initial group of participants (plano clark & creswell 2015:334; polit & beck 2012:517). six of the 12 individuals who were interviewed were recommended by other participants. details of the 12 individuals who were interviewed are presented in table 3. table 3: details of the small retail owners who participated in the study. data collection the primary source of data was semi-structured interviews. two of the interviews were conducted face to face, while the rest were telephonic interviews because of logistical constraints. the interviews were conducted between august 2016 and april 2017. according to saunders, lewis and thornhill (2009:320), semi-structured interviews are most appropriate for prompting participants to provide detailed information. semi-structured interviews were deemed appropriate as the aim of this study was to prompt small clothing and textile retailers to provide insights regarding the global sourcing supply risks they encounter. additionally, the aim was to also understand what risk identification and management approaches they applied to address these supply risks. the researcher made use of the discussion guide from the study undertaken by christopher et al. (2011:67–81). the discussion guide was pretested with a supply chain management academic and a methodology expert and with one of the identified small clothing and textile retailers. some of the questions were amended following the pretest to ensure that all the questions included in the interview would contribute towards providing the information needed to answer the main research questions. an introductory email was sent to the participants to inform them of the context of the study and to obtain permission for their inclusion in the study. the interviews were audio-recorded and the duration of the interviews varied from 20 to 54 min, averaging 33 min. the researcher transcribed all audio recordings and replayed them while reading the transcripts to ensure the accuracy of the transcripts. corrections were made where needed. data analysis a thematic analysis allowed the researcher to identify, organise and highlight patterns concerning the research questions (braun & clarke 2012:57). a combination of both deductive and inductive approaches to thematic analysis was applied. the deductive approach allowed use of some of the already existing themes in the literature on supply risks, risk identification and management approaches. inductive approach ensured that certain themes were derived purely from the data, and supporting literature was then identified. the six-phased thematic analysis process recommended by braun and clarke (2012:60–69) was followed. familiarisation with the data was done by repeatedly listening to the audio recordings and making notes on the transcripts. this was done using the microsoft word comments tool. then initial codes were generated by extracting data from the transcripts and notes made on them. the formulation of themes was done by identifying patterns across all the derived codes and grouping similar codes into sub-themes and then into main themes. revision of all main themes was done to ensure no overlapping across the themes occurred. each theme was then given a clear definition. the write-up of the findings was guided by the main themes and their link to the relevant research questions. trustworthiness to ensure trustworthy findings, qualitative research needs to reflect transferability, confirmability, credibility and dependability (shenton 2004:63). to ensure transferability, detailed descriptions of the research context, the participants and the research topic were provided (polit & beck 2012:526). to ensure confirmability and credibility, a triangulation strategy was used. this entailed having a wide range of informants, which allowed for the corroboration and verification of individuals’ opinions and experiences against others. this ultimately made it possible to provide ‘a rich picture of the attitudes, needs or behaviour of those under scrutiny’ (shenton 2004:66). peer debriefing ensured that trustworthiness issues could be identified and corrected (polit & beck 2012:594). ethical considerations ethical clearance for this study was obtained from a research ethics committee at a south african university prior to conducting fieldwork. to comply with the ethical principle of informed consent and voluntary participation, all the participants were required to read and sign the informed consent form. to ensure anonymity and confidentiality, the names of the participants and businesses were replaced with pseudonyms, which are listed in table 3. finally, the study adhered to the protection from harm principle as it did not focus on any psychologically sensitive issues. findings the research identified key themes that aid in answering the initial research questions posed. firstly, it identified the factors that influence why small clothing and textile retailers are engaged in global sourcing activities. secondly, it identified the supply risks encountered by these small clothing and textile retailers as a result of their global sourcing activities. thirdly, it indicated the risk identification approaches used by these small clothing and textile retailers. lastly, it identified the risk management approaches, which many of the small clothing and textile retailers indicate are informal and are used to manage some of the identified supply risks. the findings of the analysis are summarised in table 4. table 4: summary of findings. the findings are discussed in the next section. reasons for global sourcing access to lower cost goods and better quality several factors influence why businesses source globally regardless of size. for the small clothing and textile retailers in this study, access to lower cost goods of better quality were major influencing factors for their sourcing globally from countries like china and turkey. this aligns with berg et al. (2013:2) who found that lower cost countries that offer superior quality goods are attractive sourcing locations for many businesses regardless of size. in addition, yang (2014:3–5) highlights that the uncompetitive clothing and textile manufacturing industry in south africa struggles to compete with a country like china in terms of lower pricing and quality: ‘… initially china was primarily on price, because you know that their stuff is quite cheaper compared to other areas. and then with turkey, i think what influenced me was the quality on the apparel.’ [b6, female, owner] ‘i think the quality of the clothing, the type of material. there was a time when we tried to make clothing locally, and use local seamstress, and things like that to get them to make clothes for us and it just isn’t the same.’ [b2, female, co-owner] limited or lack of local supply and access to more variety the lack of local suppliers and the limited local supply in terms of variety were also found to be push factors for the small clothing and textile retailers to source globally. this aligns with jia et al. (2014:285) and mehrjoo and pasek (2016:28), who highlight that global sourcing grants businesses access to more variety of the latest trends and products not available in the local markets: ‘but the whole point is the fact that it comes from west africa, because there is no one who manufactures it here, it is not a south african thing.’ [b3, female, owner] ‘you have a wide variety of things to choose from ….’ [b8, female, owner] ease of access to the market and familiarity with the sourcing market a new influencing factor found in this study was that several small clothing and textile retailers also indicated that their familiarity with the sourcing market whether personally or having friends and family in those markets also influenced their choice of sourcing countries. familiarity with the sourcing market was also supported with the ease of access to the market. most of the small clothing and textile retailers indicated that the areas they source from were arranged as ‘market-like setups’ geared for trade. this supports baldwin (2012:34) who indicates that, ‘since firms source intermediate inputs from other firms, the presence of many firms in a given location tends to make that location attractive’. ‘…my focus is not only on like ghana per se, but i do want to bring out to other parts of africa. but i think for now, it’s just that i find it easier because i am from there and i know where to get the stuff and how much it costs, and how it works and stuff.’ [b7, female, owner] ‘well, the thing is nigeria was an easy access for me because i already have people that i know there.’ [b10, female, owner] ‘i think you know there’s certain places that are destinations of trade so like by the time we step into guangzhou there is literally a building that’s like 15 stories high and it is geared to trade with people from other markets on particular things.’ [b12, female, co-owner] supply risks encountered by the small clothing and textile retailers this study identified several supply risks that small retail owners encountered because of global sourcing. these risks were categorised as complicated and costly logistics, fluctuating exchange rates, communication and cultural barriers, supplier reliability and volatile political environments. complicated and costly logistics these are all the costs associated with the business owner travelling to and from the supplier, having items cleared by customs or having the items couriered or delivered to them. all the business owners indicated that customs remained a major challenge, with many of their items being either lost or damaged. in addition, they would also experience delays in the clearing of their items. this aligns with jain et al. (2014:1202) and berg et al. (2015:21) who mention that global sourcing exposes businesses to increased lead times because of cross-border administration and customs clearance and higher transport costs as distance and fuel prices increase: ‘customs mm, yeah, they are always a problem. they are always a problem, there is a lot of corruption in customs. essentially, i lose a lot of stuff to customs.’ [b1, male, owner] ‘… the issue that we face as an african continent is that our imports and exports prices are very high. the cost that you will be charged as a small start-up business doesn’t make sense in terms of your bottom line.’ [b3, female, owner] fluctuating exchange rates most of the small clothing and textile retailers indicated that they paid for their purchases in us dollars. thus, the constant fluctuations of the rand against the dollar tended to decrease their purchasing power. this aligns with gheibi et al. (2016:2) and young (2016:4) who highlight that exchange rate fluctuations impact not only on the businesses’ purchasing power but also on profit margins. as found in this study, some of the small clothing and textile retailers indicated that exchange rate fluctuations meant that they have had to take profit margin cuts as they could not increase the selling price for their customers as often as the fluctuating exchange rate. ‘exchange rate fluctuations definitely, it is quite difficult. we started the business in 2014, 2013 actually – i can’t even remember now. but the dollar was r9….’ [b2, female, co-owner] ‘clients don’t care about that, if you gave them a price a month ago, the fact that the rand has gotten low doesn’t justify it in terms of charging them more today.’ [b4, male, owner] communication and cultural barriers inability to clearly communicate with suppliers because of language meant that some of the small retail owners could not negotiate for better prices or ended up with delayed output. it also limited their ability to freely travel in some of these countries that they sourced from, unless they were originally from there or had assistance from a local. in addition, the cultural differences were also seen as a supply risk, as sometimes the health of the small clothing and textile retail owner would be compromised because of not being acquainted with the diet there. this would sometimes result in the small clothing and textile retail owner not being able to secure all the supplies they require on time as a result of health issues. this aligns with oke et al. (2009:158) and towers and song (2010:529) who indicate that language barriers and cultural differences remain huge challenges in global sourcing and can also deter effective negotiation for the buyer (jiang & tian 2009:19): ‘language barriers, my god!!! it is a big thing (laughs). language barrier is a big thing. so, you are not able to negotiate because of language barriers, you are unable to negotiate proper prices.’ [b10, female, owner] ‘no, they are always a challenge, and that is why in some countries you have got to have an agent if you want to save time because language barrier and cultural barriers are different so they will always be a challenge [risk].’ [b11, female, owner] ‘being in this area where it is not the same diet and so you get a running tummy over the next three days, so it is kind of difficult ….’ [b1, male, owner] other supply risks encountered by small clothing and textile retailers other supply risks were mentioned by some of the small retail owners. however, they were not mentioned by as many small clothing and textile retailers as the supply risks identified above. these included supplier reliability, political volatility and adverse environmental conditions. supplier reliability included issues such as poor quality from suppliers, which was usually an issue if the small retail owner presented the supplier with a specific design. in addition, stock unavailability meant that sometimes when certain items had been popular with their customers, these small clothing and textile retailers were unable to purchase more as suppliers had run out with no indication of when the item would be available. failure by the supplier to meet deadlines in terms of production output and increased delivery lead times also had a knock-on effect on supplier reliability. all the issues raised with regard to supplier reliability align with ho et al. (2015:5045) and ray and jenamani (2016:239) who also identified poor quality, insufficient supply and late or no delivery from supplier: ‘… they don’t check all the merchandise that they send, so sometimes you find that they send you something that has a fault.’ [b6, female, owner] ‘… they are not reliable … i mean it once happened where i started negotiating with a supplier while i was here [south africa] and i gave her deadlines of when i would be, when the dates i will be in nigeria, and therefore my stock, she needed to be finished making my bags by the time i get there. and i mean she wasn’t finished, she wasn’t finished!’ [b10, female, owner] ‘…and if something was a hit you can’t repeat a particular style because that space isn’t that formalized you know, so you are literally going and sourcing from the women in the markets.’ [b12, female, co-owner] political volatility and adverse environmental conditions were not mentioned as frequently by the participants. those who did mention them raised issues such as the presence of specific political instabilities within the country [recent xenophobic attacks in south africa], and even in the sourcing countries, as being hindrances for small clothing and textile retailers to continue with planned buying trips. environmental conditions highlighted included adverse weather conditions in sourcing countries that the small retail owners were not particularly acclimatised to. as highlighted by colicchia and strozzi (2012:409), political and environmental conditions are external to a supply chain and out of the control of the focal firm: ‘…where [china] the weather is extremely hard.’ [b1, male, owner] ‘and ya personally the only other place that we go and that we are considering to go to is istanbul but now because of all the fighting we can’t go there.’ [b2, female, co-owner] ‘i mean now there is this whole xenophobia issue that we are having. … trust me, i will not travel at this time when we are experiencing xenophobia in south africa; i will not travel to those countries around the same time ….’ [b10, female, owner] informal supply risk identification approaches used by the small clothing and textile retailers ates et al. (2013:35–36) highlight that smes tend to generally not have formalised decision-making processes in place. this aligns with findings from this study where although aware of the possible supply risks, none of the small clothing and textile retailers indicated having formal risk identification approaches in place. instead, several informal risk identification approaches were applied, all at the discretion of the small clothing and textile retail owner. landscape analysis some of the small retail owners indicated that they assess how favourable the economic, environmental and political landscapes are for a buying trip. this entails assessing the landscape of both the small retail owners’ country and the sourcing countries. the landscape analysis usually entails online research of the political, economic and environmental aspects. the outcome from this online research would determine whether a buying trip should proceed as planned or be put on hold. this aligns with hopkin (2017:138–139) and peace (2013:5) who advocate for the use of pestel analysis to identify things such as political stability, exchange rate fluctuations and understanding cultural norms: ‘i go online and see what the current affairs are that are happening there and also to check tabs on the economy to before i travel.’ [b1, male, owner] ‘so most importantly is i will check how the weather is there [sourcing country]. sometimes depending on what season, it is it could be a very raining season and then my trip is fruitless in terms of me being there you know.’ [b10, female, owner] product quality checks this entails small retail owners identifying any quality or design problems. the aims of the checks for the small clothing and textile retail owner is to ensure that the output of the products complies with and meets the order specifications in terms of quality and design. this is done before the supplier packages the items. none of the small clothing and textile retailers had quality management systems in place. instead, quality is based on the discretion of the owner. although this is done informally without the use of actual checklists or catalogues, it aligns with tummala and schoenherr (2011:475–476) who advocate for the use of a risk checklist and catalogue to identify potential risks: ‘so instead of dealing with the backlog, for me it is much simpler if i buy a ticket and then make sure that the things that i have bought i am satisfied with it.’ [b6, female, owner] ‘you have to check before they [suppliers] wrap their merchandise to be shipped.’ [b11, female, owner] supplier pre-buying review supplier pre-buying reviews are usually done by the small clothing and textile retail owner to check suppliers’ business profiles using online searches, and to also review any performance reviews that could have been posted by other buyers on the suppliers’ web page. information is sourced from business websites and social media platforms such as facebook and linkedin. this is in line with falkner and hiebl (2015:133) and smit (2012:62) who advocate for gathering information on potential and current suppliers from publicly available information: ‘oh ok, on the platform we also check the uhm reviews, so we check reviews and feedback from other people who have bought from them [suppliers].’ [b2, female, co-owner] ‘you can now even use linkedin to find out more about your suppliers. you know in fact social media has made it all so simple and you don’t have to travel and can do everything online.’ [b5, female, owner] exchange rate monitoring exchange rate monitoring involves conducting regular checks of the exchange rate to assess the performance of the rand against the us dollar. most of the participants indicated that this was important as most of their purchases were paid for using the us dollar. use is made of online news sites and forex companies such as bidvest to obtain forex information. this aligns with hopkin (2017:138–139) and peace (2013:5) who advocate for the use of pestel analysis to identify things such as exchange rate patterns: ‘ya the dollar exchange rate i watch every day (emphasis again every day). i listen for it very closely because i know that my business is very dependent on it.’ [b2, female, co-owner] ‘… if i had goods overseas and i had to send them here, i would say they must hold so that you can assess the rand volatility, and until it stabilises a little bit then you can send them if you want to save costs.’ [b11, female, owner] informal supply risk management approaches used by small clothing and textile retailers christopher et al. (2011:67–81) found that large uk-based businesses followed no formal risk management approaches, but relied on the sole experience and discretion of the supply chain manager. this aligns with the findings of this study, where even small clothing and textile retailers indicated not having any formalised approaches, but made use of informal approaches to managing possible supply risks. these were applied at the sole discretion of the owners. these included establishing and building informal supplier relationship building, exchange rate buffers, use of dual transportation and communication management to facilitate trade with suppliers. informal supplier relationship building and management although ho et al. (2015:5049) and ellis et al. (2010:38) found that building strategic relationships with suppliers proved beneficial for buyers, this study found that very few small clothing and textile retail owners engaged in strategic supplier relationship building and management. for those small clothing and textile retailers who did engage in relationship building and management, it was done very informally without the use of formal service-level agreements nor contracts. this was done over time by learning the language, cultural practices and business practices of the sourcing countries to engage better with suppliers. the establishment of supplier relationship over time aligns with nunes (2016:148) who found that experience and learning the language and business practices of a sourcing country improved business relationships with suppliers. in addition, some small clothing and textile retailers made use of loyalty buying as suggested by faes and matthyssens (2009:246). being able to form these informal relationships meant that these small clothing and textile retailers could secure supply of items, and even be given a price discount: ‘but when you have figured it out, you have built key relationships you figure out your own way to communicate and get it done.’ [b4, male, owner] ‘and it is also strengthening those relationships so that the more you buy from them the cheaper the costs are.’ [b10, female, owner] exchange rate fluctuation buffers most of the participants managed exchange rate fluctuations by taking the knock in their profit margins either proactively or reactively. although jain (2013:26) and young (2016:4) advocate for the use of hedging as a possible management approach to reduce erosion of purchase price and to ensure that the profit margins are not impacted, none of the small clothing and textile retailers made use of this approach. this is in part because of the additional costs associated with hedging and that most of the small retail owners did not view exchange rates fluctuations as a problem until recently: ‘… in the past few years there was a lot of stability, i think the instability is coming only now, for the past few years. and obviously if you take that cover it is an additional cost….’ [b11, female, owner] ‘… so if you are using a, a, a dollar based (what is it?) pricing we would always factor like fluctuations.’ [b12, female, co-owner] dual transportation dual transportation requires the small retail owner to split orders into batches and transport them separately. this is to avoid the possibility of total loss or delay of delivery from the supplier should anything happen (micheli et al. 2014:123). only one small retail owner used dual transportation as a supply risk management approach, while two others used it to avoid having to travel with excess luggage: ‘… have figured out a way to say i am going to bring in things. so i am not going to bring in a whole container at once, i am going to break it up into pieces to minimise the risk.’ [b4, male, owner] ‘… flight, it gives me 30kg, and if i buy more stuff at times when they are bargains, i can post my stuff.’ [b8, female, owner] communication and cultural barriers management misunderstandings in language and culture make it difficult for buyers and suppliers to transact successfully (jiang & tian 2009:19; oke et al. 2009:158). in this study, findings show that small retail owners opted to counter communication and cultural barriers using translation applications and making use of a local who was usually a friend or family member to help facilitate the transactions with suppliers. over time, some of the small clothing and textile retailers learnt the language. improved communication between the small retailer and the suppliers helped in securing the supply and allowed for better negotiations: ‘… on my second visit, i downloaded an app, google translator, where i actually type in english and it would translate it into their language [turkish].’ [b6, female, owner] ‘i go there [fabric market] i would go with someone who has basically stayed in ghana, and they would do most of the talking for me and the explaining.’ [b6, female, owner] ‘… now you … we even know the language here and there … and you say bye in turkish and they like you even more because they [suppliers] know you are trying.’ [b9, female, owner] ‘so, learning the lingo has helped me cause then i start talking like them, i start dressing up like them as well ….’ [b10, female, owner] conclusion summary of findings and theoretical implications the aim of the study was to explore the supply risks that small clothing and textile retailers in gauteng encounter as a result of global sourcing and to determine how they identify and manage these supply risks. the first research question focused on understanding the factors that influence why small clothing and textile retailers engage in global sourcing activities. a detailed literature review was conducted to identify some of the possible influencing factors for global sourcing. the factors identified in the literature review aligned with those found in this study. these were lower cost and higher quality of products in sourcing countries, more variety and limited to no local supply of sourced items. one new emerging factor not identified from the literature was small clothing and textiles retail owners’ familiarisation with the sourcing country. this was usually either because the small retail owner travelled extensively there for other business purposes or even sourcing activities, had friends or family living in those countries or was originally from there but currently lived in south africa. the findings indicate that the influencing factors for small clothing and textile retailers to engage in global sourcing are similar, regardless of business size. the second research question focused on exploring what supply risks were encountered by these small clothing and textile retailers because of opting to source globally. findings indicate that small clothing and textile retailers have an awareness of possible supply risks. in line with the supply risks identified in the literature review, this study found that small clothing and textile retailers encountered fluctuating exchange rate risks as most retailers sourced in countries that priced using the us dollar. in addition, communication and cultural barriers and costly and complicated logistics were mostly challenges with high customs costs and high cost of travel to and within the sourcing country. other supply risks highlighted by the participants included supplier reliability in terms of quality, stock unavailability and delayed delivery lead times, political volatility both locally and in their sourcing countries and adverse environmental conditions in the sourcing country. the third research question focused on what risk identification approaches were used by the small clothing and textile retailers in identifying supply risks. although some of the risk identification approaches available in literature require rigour and resource commitments, some of the small clothing and textile retailers seem to be using some approaches informally in identifying supply risks. the approaches used include quality checks, which could be formalised through risk checklists and catalogues, landscape analyses that focused on some elements of the pestel analysis and supplier pre-buying review. the final research question focused on exploring the management approaches used by these small clothing and textile retailers in addressing the identified supply risks. most of the management approaches identified from the literature review were cited as being used by these small clothing and textile retailers. however, this was done informally at the sole discretion of the owner and not on a frequent basis. these management approaches identified both from the literature and the study included sourcing from multiple partners, reduction of the probability of risks, dual transportation of goods, local sourcing where supplier was not able to meet delivery and another local retailer who had the required item and the building and management of informal supplier relationships. only one small retail owner used contracts to formalise supplier relationships, whereas all others did this informally through loyalty sourcing among other things. the study contributes to knowledge in two ways. firstly, it confirms the similarities between findings from international studies and this one, which is based in the south african context. these findings include the similarities in the supply risks encountered by businesses, regardless of size or geographical location. both these findings further affirm that businesses encounter and will continue to encounter supply risks regardless of their size or location. in addition, this study found similarities in how businesses of varying sizes identify and manage supply risks. supply risks were identified and managed based on the sole discretion of either the small retail owner as per this study or as per the supply chain manager based on the international studies done. secondly, this study identified a new influencing factor to global sourcing. this factor is ease of access to the market, which entailed small clothing and textile retailers electing to source from a specific country purely based on their familiarity with the country. this familiarity could be either that they were originally from that country or that they have local contacts in the form of close friends and family. managerial implications this study indicates that there are several influencing factors that have resulted in small clothing and textile retailers sourcing globally. consequently, many of them have been exposed to supply risks. given the above, this study’s findings provide small clothing and textile retail owners with two key insights. firstly, it notes the supply risks known and identified by each of the small clothing and textile retail owners. secondly, it shares the supply risks encountered by the other small retailers sourcing in similar and different countries. both these insights could be useful for small retail owners in broadening their awareness on the supply risks in their current and potential sourcing countries. this may also help to reduce the time and other resources that they may have had to invest in identifying these risks on their own. in addition, this study found that although aware of supply risks, none of the small clothing and textile retailers had formal risk identification and assessment approaches in place. however, even in the absence of these formal approaches, some of the small clothing and textile retailers have managed to find ways to address these supply risks. thus, there is no strong evidence to confine small clothing and textile retailers to set up any formal approaches for identifying and managing supply risks. instead, several of the informal approaches could be used. some of the informal risk identifications from this study include random product quality checks and landscape analyses. the benefit to the small retailer of these findings is that there is no need to invest time and money resources in trying to find these informal approaches. knowledge of these informal approaches could allow the small clothing and textile retailers to use resources for other purposes or finding additional informal approaches. the informal risk management approaches found include informal supplier relationship management and exchange rate buffer creation. limitations of this study and suggestions for future research in this study, several limitations were noted that could provide areas for future research. firstly, this study only focused on small clothing and textile retailers in the clothing and textile industry. a similar study exploring small businesses in a different industry engaged in global sourcing, which do not contend with the same challenges and weaknesses faced by the clothing and textile industry, may be particularly helpful. findings will help to determine whether policymakers should introduce generic enabling solutions for small businesses that source globally or whether they may have to tailor solutions per industry. secondly, under scrmp, this study only focused on risk identification and management approaches and not assessment. it may be useful to small clothing and textile retailers if the risk assessment approaches were explored. this may help them in better understanding how to quantify the likelihood and impacts of supply risks, allowing them to determine which supply risks to address and commit their limited resources in terms of time and money on (smit 2012:182). thirdly, in this study across all the small clothing and textile retailers interviewed, none had more than 10 employees. in addition, because the small retail owner did all the sourcing activities, they also identified and managed supply risks informally and at their personal discretion. a similar study should be done on small clothing and textile retailers with at least 10 employees who directly engage in the sourcing activities. this may shed light on whether the small retailer owners still choose to have informal supply risk identification and management approaches and allow their employees to address them at their sole discretion. global sourcing provides benefits to businesses and their local customer base. however, it also still exposes them to supply risks that need to be proactively identified and managed by the business owner or supply chain manager. acknowledgements competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions this article is based on the mphil dissertation of k.m. who was the main researcher. w.n. assisted as a supervisor with the conceptualisation, literature review, research instrument and review of the draft manuscript. t.k. provided methodological and technical guidance. references abe, m. & ye, l., 2013, ‘building resilient supply chains against natural disasters: the cases of japan and thailand’, global business review 14(4), 567–586. https://doi.org/10.1177/0972150913501606 adams, j.h., khoja, f.m. & kauffman, r., 2012, ‘an empirical study of buyer–supplier relationships within small business organizations’, journal of small business management 50(1), 20–40. https://doi.org/10.1111/j.1540-627x.2011.00342.x ates, a., garengo, p., cocca, p. & bititci, u., 2013, ‘the development of sme managerial practice for effective performance management’, journal of small business and enterprise development 20(1), 28–54. https://doi.org/10.1108/14626001311298402 badenhorst-weiss, j.a. & waugh, b.j., 2014, ‘business environmental factors affecting south africa’s supply chains and economic growth and development’, problems and perspectives in management 12(4), 238–291. baldwin, r.e., 2012, global supply chains: why they emerged, why they matter, and where they are going, cepr discussion paper no. dp9103, viewed 17 may 2016, from https://ssrn.com/abstract=2153484 barroso, a., machado, v.c. & machado, v., 2011, supply chain resilience using the mapping approach, intech open access publisher, viewed 25 april 2016, from https://www.intechopen.com/books/supply-chain-management/supply-chain-resilience-using-the-mapping-approach berg, a., berlemann, b. & hedrich, s., 2013., the global sourcing map – balancing cost, compliance, and capacity, mckinsey & company, germany, viewed 28 april 2017, from http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/retail/articles/the_global_sourcing_map_balancing_cost_compliance_and_capacity.ashx berg, a., berlemann, b., hedrich, s., magnus, k., mathews, b. & russo, b., 2015, sourcing in a volatile world: the east africa opportuntity, mckinsey & company, viewed 28 april 2017, from https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/retail/pdfs/sourcing_in_a_volatile_world_the_east_africa_opportunity.ashx black, a., 2009, ‘location, automotive policy, and multinational strategy: the position of south africa in the global industry since 1995’, growth and change 40(3), 483–512. https://doi.org/10.1111/j.1468-2257.2009.00491.x borges, m.a., 2015, ‘an evaluation of supply chain management in a global perspective’, independent journal of management and production 6(1), 1–29. https://doi.org/10.14807/ijmp.v6i1.211 brammer, s., hoejmose, s. & millington, a., 2011, ‘managing sustainable global supply chain: framework and best practices’, unpublished working document ontario, university of western ontario, viewed 23 april 2016, from http://nbs.net/wp-content/uploads/nbs-executive-report-supply-chains.pdf braun, v. & clarke, v., 2012, ‘thematic analysis’, in h. cooper (ed.), apa handbook of research methods in psychology, vol. 2, pp. 57–71, american psychological association, washington, dc. bruce, m., daly, l. & towers, n., 2004, ‘lean or agile: a solution for supply chain management in the textiles and clothing industry?’, international journal of operations & production management 24(2), 151–170. https://doi.org/10.1108/01443570410514867 bsi, 2014, supply chain impact of 2014 ebola outbreak, london, viewed 16 april 2017, from https://www.bsigroup.com/localfiles/whitepaper%20ebola_10.14_7.pdf chopra, s. & sodhi, m., 2014, ‘reducing the risk of supply chain disruptions’, mit sloan management review 55(3), 73–80. christopher, m., 2011, logistics and supply chain management, 4th edn., pearson education, great britain. christopher, m. & holweg, m., 2011, ‘“supply chain 2.0”: managing supply chains in the era of turbulence’, international journal of physical distribution & logistics management 41(1), 63–82. https://doi.org/10.1108/09600031111101439 christopher, m., mena, c., khan, o. & yurt, o., 2011, ‘approaches to managing global sourcing risk’, supply chain management: an international journal 16(2), 67–81. https://doi.org/10.1108/13598541111115338 cips, 2013, ‘global vs. local sourcing’, in cips (ed.), pp. 1–4, london, viewed 01 may 2016, from https://www.cips.org/documents/knowledge/procurement-topics-and-skills/13-srm-and-sc-management/global-supply-chains/global_vs_local_sourcing.pdf colicchia, c. & strozzi, f., 2012, ‘supply chain risk management: a new methodology for a systematic literature review’, supply chain management: an international journal 17(4), 403–418. https://doi.org/10.1108/13598541211246558 deane, j., craighead, c. & ragsdale, c., 2009, ‘mitigating environmental and density risk in global sourcing’, international journal of physical distribution & logistics management 39(10), 861–883. https://doi.org/10.1108/09600030911011450 dittmann, j., 2014, ‘managing risk in the global supply chain’, viewed 04 april 2016, from http://globalsupplychaininstitute.utk.edu/publications/documents/risk.pdf edwards, l. & jenkins, r., 2015, ‘the impact of chinese import penetration on the south african manufacturing sector’, the journal of development studies 51(4), 447–463. https://doi.org/10.1080/00220388.2014.983912 ellegaard, c., 2008, ‘supply risk management in a small company perspective’, supply chain management: an international journal 13(6), 425–434. https://doi.org/10.1108/13598540810905688 ellis, s.c., henry, r.m. & shockley, j., 2010, ‘buyer perceptions of supply disruption risk: a behavioral view and empirical assessment’, journal of operations management 28(1), 34–46. https://doi.org/10.1016/j.jom.2009.07.002 faertes, d., 2015, ‘reliability of supply chains and business continuity management’, procedia computer science 55, 1400–1409. https://doi.org/10.1016/j.procs.2015.07.130 faes, w. & matthyssens, p., 2009, ‘insights into the process of changing sourcing strategies’, journal of business & industrial marketing 24(3/4), 245–255. https://doi.org/10.1108/08858620910939796 falkner, e. & hiebl, m., 2015, ‘risk management in smes: a systematic review of available evidence’, the journal of risk finance 16(2), 122–144. https://doi.org/10.1108/jrf-06-2014-0079 fang, j., zhao, l., fransoo, j. & van woensel, t., 2013, ‘sourcing strategies in supply risk management: an approximate dynamic programming approach’, computers & operations research 40(5), 1371–1382. https://doi.org/10.1016/j.cor.2012.08.016 gheibi, s., kazaz, b. & webster, s., 2016, global sourcing under exchange-rate uncertainty, school of management syracuse university, new york. groepe, f., 2015, ‘the role of small business in the economy’, in the role of business in local government and local economic development, pp. 1–12, george, south africa, viewed 09 october 2015, from https://www.resbank.co.za/lists/speeches/attachments/452/role%20of%20small%20business%202015%20.pdf guest, g., bunce, a. & johnson, l., 2006, ‘how many interviews are enough? an experiment with data saturation and variability’, field methods 18(1), 59–82. https://doi.org/10.1177/1525822x05279903 halldórsson, á. & kovács, g., 2010, ‘the sustainable agenda and energy efficiency: logistics solutions and supply chains in times of climate change’, international journal of physical distribution & logistics management 40(1/2), 5–13. https://doi.org/10.1108/09600031011018019 hendry, l., sayed, m. & zorini, m., 2015, ‘local buying: the easy answer for sustainable sourcing’, viewed 24 may 2016, from https://www.researchgate.net/profile/maysara_sayed/publication/283855968_local_buying_the_easy_answer_for_sustainable_sourcing/links/5648ee4a08ae9f9c13ebba1e.pdf ho, w., zheng, t., yildiz, h. & talluri, s., 2015, ‘cisupply chain risk management: a literature review’, international journal of production research 53(16), 5031–5069. https://doi.org/10.1080/00207543.2015.1030467 hoffmann, p., schiele, h. & krabbendam, k., 2013, ‘uncertainty, supply risk management and their impact on performance’, journal of purchasing and supply management 19(3), 199–211. https://doi.org/10.1016/j.pursup.2013.06.002 holweg, m., reichhart, a. & hong, e., 2011, ‘on risk and cost in global sourcing’, international journal of production economics 131(1), 333–341. https://doi.org/10.1016/j.ijpe.2010.04.003 hopkin, p., 2017, fundamentals of risk management: understanding, evaluating and implementing effective risk management, 4th edn., kogan page publishers, london, united kingdom. jain, a., 2013, ‘forex risk management: ways for succeeding in turbulent economic times’, international journal of emerging research in management & technology 2(1), 26–30. jain, n., girotra, k. & netessine, s., 2014, ‘managing global sourcing: inventory performance’, management science 60(5), 1202–1222. https://doi.org/10.1287/mnsc.2013.1816 jia, f., lamming, r., sartor, m., orzes, g. & nassimbeni, g., 2014, ‘global purchasing strategy and international purchasing offices: evidence from case studies’, international journal of production economics 154, 284–298. https://doi.org/10.1016/j.ijpe.2013.09.007 jiang, c. & tian, y., 2009, ‘problems and challenges of global sourcing: a study of chinese manufacturing enterprises’, master’s thesis, jonkoping university, viewed 12 march 2017, from www.diva-portal.org/smash/get/diva2:318924/fulltext01 kırılmaz, o. & erol, s., 2017, ‘a proactive approach to supply chain risk management: shifting orders among suppliers to mitigate the supply side risks’, journal of purchasing and supply management 23(1), 54–65. https://doi.org/10.1016/j.pursup.2016.04.002 kumar, s., himes, k. & kritzer, c., 2014, ‘risk assessment and operational approaches to managing risk in global supply chains’, journal of manufacturing technology management 25(6), 873–890. https://doi.org/10.1108/jmtm-04-2012-0044 kunene, t., 2008, ‘a critical analysis of entrepreneurial and business skills in smes in the textile and clothing industry in johannesburg, south africa’, pp. 1–268, viewed 15 may 2016, from http://www.repository.up.ac.za/bitstream/handle/2263/24173/complete.pdf?sequence=10 kunreuther, h. & pauly, m., 2014, ‘role of deliberative thinking and emotions in insurance decision making: an experimental study’, viewed 20 april 2016, from https://pdfs.semanticscholar.org/8bc0/eddad9705b6bac9b6e2401814d5e3e8245f4.pdf lavastre, o., gunasekaran, a. & spalanzani, a., 2012, ‘supply chain risk management in french companies’, decision support systems 52(4), 828–838. https://doi.org/10.1016/j.dss.2011.11.017 lockamy, a., 2014, ‘assessing disaster risks in supply chains’, industrial management & data systems 114(5), 755–777. https://doi.org/10.1108/imds-11-2013-0477 maje, m. & sunjka, b., 2014, ‘the application of soft systems methodology to supply chain risk management small and medium enterprises’, viewed 30 april 2017, from https://www.saiie.co.za/assets/saiie26/2014/conference%202014%20proceedings.pdf manuj, i., 2013, ‘risk management in global sourcing: comparing the business world and the academic world’, transportation journal 52(1), 81–107, viewed 25 march 2016, from http://search.ebscohost.com/login.aspx?direct=true&db=bth&an=85112514&site=ehost-live&scope=site manuj, i. & mentzer, j., 2008, ‘global supply chain risk management’, journal of business logistics 29(1), 133–155. https://doi.org/10.1002/j.2158-1592.2008.tb00072.x mehrjoo, m. & pasek, z., 2016, ‘risk assessment for the supply chain of fast fashion apparel industry: a system dynamics framework’, international journal of production research 54(1), 28–48. https://doi.org/10.1080/00207543.2014.997405 micheli, g., mogre, r. & perego, a., 2014, ‘how to choose mitigation measures for supply chain risks’, international journal of production research 52(1), 117–129. https://doi.org/10.1080/00207543.2013.828170 mndzebele, m., 2013, an assessment of supply chain risk management in africa: the case of unki platinum mine in zimbabwe, gordon institute of business – university of pretoria, pretoria, viewed 17 april 2017, from http://hdl.handle.net/2263/40577. muhos, m., wang, l. & kess, p., 2012, ‘experiences of finnish smes sourcing from china’, china-usa business review 11(7), 958–968. murray-webster, r., 2010, management of risk: guidance for practitioners, 3rd edn., the stationery office, norwich, united kingdom. nunes, m., 2016, ‘motivations, risks, barriers, and results associated with the adoption of global sourcing by brazilian companies: a case-based study’, brazilian business review (english edition) 13(2), 135–157. https://doi.org/10.15728/bbr.2016.13.2.6 oke, a., maltz, a. & christiansen, a., 2009, ‘criteria for sourcing from developing countries’, strategic outsourcing: an international journal 2(2), 145–164. https://doi.org/10.1108/17538290910973367 olson, d. & wu, d., 2010, ‘a review of enterprise risk management in supply chain’, kybernetes 39(5), 694–706. https://doi.org/10.1108/03684921011043198 palaniappan, p.k., 2014, ‘risk assessment and management in supply chain’, global journal of research in engineering 14(2), 18–33. palinkas, l., horwitz, s., green, c., wisdom, j., duan, n. & hoagwood, k., 2015, ‘purposeful sampling for qualitative data collection and analysis in mixed method implementation research’, administration and policy in mental health and mental health services research 42(5), 533–544. https://doi.org/10.1007/s10488-013-0528-y peace, c., 2013, ‘supply chain-related risk management’, paper presented at supply chain collaboration – the way of the future conference, tauranga, nz, viewed 18 march 2016, from https://www.riskmgmt.co.nz/fileadmin/documents/rml_2013_wp0131_cbaff_conference.pdf. peter, c., 2016, ‘managing risk and building resilient organisations in a riskier world’, journal of organizational effectiveness: people and performance 3(3), 323–331. https://doi.org/10.1108/joepp-07-2016-0044 pfohl, h., köhler, h. & thomas, d., 2010, ‘state of the art in supply chain risk management research: empirical and conceptual findings and a roadmap for the implementation in practice’, logistics research 2(1), 33–44. https://doi.org/10.1007/s12159-010-0023-8 plano clark, v. & creswell, j., 2015, understanding research: a consumer’s guide, 2nd edn., pearson higher education, upper saddle river, nj. polit, d. & beck, c., 2012, nursing research: generating and assessing evidence for nursing practice, 9th edn., lippincott williams & wilkins, philadelphia, pa. ray, p. & jenamani, m., 2016, ‘sourcing decision under disruption risk with supply and demand uncertainty: a newsvendor approach’, annals of operations research 237(1), 237–262. https://doi.org/10.1007/s10479-014-1649-8 routroy, s. & shankar, a., 2014, ‘a study of apparel supply chain risks’, iup journal of supply chain management 11(2), 52–69. saunders, m., lewis, p. & thornhill, a., 2009, research methods for business students, 5th edn., pearson education, harlow, united kingdom. sayed, z. & sunjka, b., 2016, ‘investigating and evaluating the influence of supply chain structure on supply chain risk’, south african journal of industrial engineering 27(3), 122–135. https://doi.org/10.7166/27-3-1645 shen, b., 2014, ‘sustainable fashion supply chain: lessons from h&m’, sustainability 6(9), 6236–6249. https://doi.org/10.3390/su6096236 shenton, a., 2004, ‘strategies for ensuring trustworthiness in qualitative research projects’, education for information 22(2), 63–75. https://doi.org/10.3233/efi-2004-22201 sherwin, m.d., medal, h. & lapp, s.a., 2016, ‘proactive cost-effective identification and mitigation of supply delay risks in a low volume high value supply chain using fault-tree analysis’, international journal of production economics 175, 153–163. https://doi.org/10.1016/j.ijpe.2016.02.001 smit, y., 2012, a structured approach to risk management for south african smes, cape peninsula university of technology, viewed 11 may 2017, from http://hdl.handle.net/11189/651. sodhi, m., son, b. & tang, c., 2012, ‘researchers’ perspectives on supply chain risk management’, production and operations management 21(1), 1–13. https://doi.org/10.1111/j.1937-5956.2011.01251.x south african governement, 1996, south african national small business act, no. 102 of 1996, viewed 06 june 2016, from https://www.thedti.gov.za/sme_development/docs/act.pdf srinivasan, m., mukherjee, d. & gaur, a.s., 2011, ‘buyer–supplier partnership quality and supply chain performance: moderating role of risks, and environmental uncertainty’, european management journal 29(4), 260–271. https://doi.org/10.1016/j.emj.2011.02.004 steven, a., dong, y. & corsi, t., 2014, ‘global sourcing and quality recalls: an empirical study of outsourcing-supplier concentration-product recalls linkages’, journal of operations management 32(5), 241–253. https://doi.org/10.1016/j.jom.2014.04.003 su, j. & gargeya, v., 2012, ‘strategic sourcing, sourcing capability and firm performance in the us textile and apparel industry’, strategic outsourcing: an international journal 5(2), 145–165. https://doi.org/10.1108/17538291211257592 sunjka, b. & emwanu, b., 2013, ‘a conceptual framework for the analysis of supply chain risk management in small and medium manufacturing enterprises in south africa’, paper presented at saiie25 proceedings, stellenbosch, viewed 30 april 2017, from http://conferences.sun.ac.za/index.php/saiie25/saiie25/paper/view/640/256 thun, j., drüke, m. & hoenig, d., 2011, ‘managing uncertainty: an empirical analysis of supply chain risk management in small and medium-sized enterprises’, international journal of production research 49(18), 5511–5525. https://doi.org/10.1080/00207543.2011.563901 timm, s., 2013, ‘south africa’s poor performance in entrepreneurship events’, mail & guardian, 29 november, viewed 07 may 2016, from http://mg.co.za/article/2013-11-29-00-south-africas-poor-performance-in-entrepreneurship-events towers, n. & song, y., 2010, ‘assessing the future challenges in strategic sourcing commodity from china: a case-study analysis’, asia pacific business review 16(4), 527–544. https://doi.org/10.1080/13602380903068071 tummala, r. & schoenherr, t., 2011, ‘assessing and managing risks using the supply chain risk management process (scrmp)’, supply chain management: an international journal 16(6), 474–483. https://doi.org/10.1108/13598541111171165 turker, d. & altuntas, c., 2014, ‘sustainable supply chain management in the fast fashion industry: an analysis of corporate reports’, european management journal 32(5), 837–849. https://doi.org/10.1016/j.emj.2014.02.001 verbano, c. & venturini, k., 2013, ‘managing risks in smes: a literature review and research agenda’, journal of technology management & innovation 8(3), 186–197. https://doi.org/10.4067/s0718-27242013000400017 vilko, j., 2012, approaches to supply chain risk management: identification, analysis and control, lappeenranta university of technology digipaino, lappeenranta, finland. wieland, a. & wallenburg, c., 2012, ‘dealing with supply chain risks: linking risk management practices and strategies to performance’, international journal of physical distribution & logistics management 42(10), 887–905. https://doi.org/10.1108/09600031211281411 williams, m., 2013, ‘south africa’s carmakers suffer a month of strike disruption in supply chai’, viewed 16 april 2017, from http://automotivelogistics.media/news/south-africas-carmakers-suffer-a-month-of-strike-disruption-in-supply-chain yang, z., 2014, ‘the impact of the emergence of china’s economy on south africa’, master of arts, universite laval, quebec, canada, viewed 09 april 2016, from http://www.theses.ulaval.ca/2014/31088/31088.pdf young, j., 2016, ‘managing risk in global supply chains: the changing role of corporate treasury’, viewed 05 february 2017, from https://financial.thomsonreuters.com/content/dam/openweb/documents/pdf/financial/managing-risk-in-global-supply-chains.pdf abstract introduction literature review incubator services research methodology conclusion acknowledgements references about the author(s) stephanus j.h. van der spuy department of business management, school of economic & management sciences, sol plaatje university, kimberley, south africa citation van der spuy, s.j.h., 2019, ‘the state of business incubation in the northern cape: a service spectrum perspective’, southern african journal of entrepreneurship and small business management 11(1), a271. https://doi.org/10.4102/sajesbm.v11i1.271 original research the state of business incubation in the northern cape: a service spectrum perspective stephanus j.h. van der spuy received: 12 june 2019; accepted: 28 aug. 2019; published: 31 oct. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: business incubation has the purpose of recruiting weak yet promising tenant-entrepreneurs or incubates. the weaknesses may include a lack of skills and abilities, lack of resources or lack of knowledge. the business case or opportunity should be promising. further to the purpose, business incubators attempt to turn these deficient businesses into sustainable entities that can exit or graduate the incubator and survive on their own devices. without this intervention through the incubator, it is extremely unlikely that these tenant-entrepreneurs or incubates will survive. in order to achieve the maximum likelihood of successful graduate-entrepreneurs and sustainable start-ups, business incubators must offer a full spectrum of services. these services should include access to physical premises, communal equipment, administrative support, training for skills development, access to professional and specialised skills, access to financial support, access to networking and access to mentorship. objectives: it is the purpose of this study, firstly, to investigate and determine which of these services business incubators within the northern cape province of south africa offer. secondly, it is the further purpose of this study to benchmark the incubators within the northern cape province to international best practice models. method: a qualitative research methodology was employed in this study. data were collected through semi-structured interviews, transcribed and analysed through qualitative software. the sample consisted of 63 respondents from 7 business incubators within the province. the sampling method was purposive. results: the research results obtained indicated that four incubators within the province boast a very weak service offering. furthermore, only one incubator truly benchmarked competitively against international best practice models. conclusion: the study provides recommendation with regards to specialist mentoring, skills development and training of entrepreneurs and incubation-practitioners, as well as access to funding and physical upgrades of incubators. the research contributes to a very sparse body of existing research on small, medium and micro-enterprise (smme) development within the northern cape province. the study provides future research questions for academic researchers. keywords: entrepreneurship; business incubator; business incubation; business incubator models; business incubator generations; business incubator services; entrepreneur support; start-up support. introduction south africa is facing an entrepreneurial and unemployment crisis with an official unemployment rate estimated between 25% and 28%, and an unofficial unemployment rate of 37% (du toit et al. 2018:122; lilenstein, woolard & leibbrandt 2018:2; littlewood & holt 2018:526; mahadea & kaseeram 2018:3). the impact of this crisis is magnified in the northern cape province of south africa (fransman & yu 2018:5). this arid province is the largest province in the country and is rural with vast spatial complexities (badenhorst et al. 2018:917; biyase & zwane 2018:10). this study conducts an assessment of the quality of business incubators within the province and draws conclusions on how to improve the quality of business incubation within the province. this study is useful not only in a rural south african context but also to other emerging markets that are rural and spatially complex. business incubators are important for small, medium and micro-enterprise (smme) development in an economy, because they assist with and accelerate the start-up, development and growth of smmes (guerrero et al. 2018:151; li, ur rehman & asim 2019:2; mahmood et al. 2016:311; sagath et al. 2019:3). they do so with the hope that incubates will graduate from the incubator, in charge of sustainable and profitable business ventures (bose & goyal 2018:353; bruneel et al. 2012:110; olkiewicz et al. 2019:1; wolniak & grebski 2018:39). incubators must provide regional economic development in the geographical demarcations within which they are mandated to operate (bank, fichter & klofsten 2016:2; lamine et al. 2018:1121; miranda & borges 2019:37; sudana et al. 2019:3; xiao & north 2018:29). regional economic development entails a growth in the gross-domestic product, income levels, capital investment, innovations, education, trade of products and services of greater quality, production of environmental solutions, presence of smmes, formal employment and greater economic participation by regional citizens (bailey 2019:21; beer et al. 2019:172; beugelsdijk, klasing & milionis 2019:155; faber & gaubert 2019:2245; yakubova & moustoifa 2019:45; zheng et al. 2019:25). this economic development is achieved when the incubator provides the incubates with access to services that protect them from the liability of smallness, the liability of newness, resource deficit and some entrepreneurial risk in order to enhance their chances of survival and success (ahmad 2014:375; bollingtoft 2012:304; devaughn & leary 2018:2; njau, wachira & mwenda 2019b:36; wenner et al. 2018:4). business incubator services include business skills development training, technical services, business mentoring and coaching, business and marketing plan development services, access to specialised services such as legal, marketing and financial services, management team development services, shared office or manufacturing space, shared equipment, access to administrative support, networking services and access to financial products (albort-morant & oghazi 2016:2126; bollingtoft 2012:304; godeiro et al. 2018:9; ikebuaku & dinabo 2018:10; lamine et al. 2018:1124; njau, mwenda & wachira 2019a:18 by allahar & brathwaite 2016:6; perdomo, alvarez & urbano 2014:40; tello, yang & latham 2012:375; torun 2016:6). the essential business incubator services can be packaged into the following five categories (bakkali, messeghem & sammut 2014:1; battisstella, de toni & pessot 2018:5): category 1: access to physical resources such as equipment, machinery and office or manufacturing space. category 2: access to secretarial and administrative support. category 3: access to financial resources, be it by means of direct investment or linking incubates with potential investors and funders. category 4: access to start-up assistance such as training for skills development, access to specialised skills, mentorship and coaching. category 5: access to business networks. mention must be made of virtual incubators, also called incubators without walls, which are a type of incubator that incubates selected incubates electronically and online via virtual mentorship, virtual network linkages, online service delivery, online training, virtual resource linkages and investment without anchoring the incubates within a physical incubator nestled in a specific geographical location. this allows the virtual incubator to incubate target entrepreneurs that are promising regardless of their physical proximity or location and also greatly reduces the overhead expenses related to the provision of physical premises and physical support related with the physical layout of a physical incubator (aernoudt 2004:132; carayannis & von zedwitz 2005:103; isabelle 2013:21; nicolopoulou et al. 2017:22; von zedwitz 2003:190). it must be noted thus that virtual incubators are deliberately distancing themselves from physical services and cannot be critiqued for the absence of such (bruneel et al. 2012:120). thus, virtual incubators should not be viewed negatively for not providing access to physical premises as well as equipment. whilst researching this article, it proved difficult to find academic research on smmes within the province. however, a recent study found the most significant challenges northern cape-based smmes face are poor location, lack of access to information on available financial offerings, inability to make informed business decisions, lack of business and finance skills, lack of access to appropriate technology, lack of support to find financial loans and grants, lack of business networks and lack of access to a suitable workforce (babalola & agbenyegah 2016:1757). a regional incubator with a decent spectrum of services should be able to bridge and solve the above-mentioned problems. the northern cape is a vast and arid province within the republic of south africa (rsa) covered by mostly desert (mokwena 2018:16). it is bordered by namibia and botswana to the north. the kalahari and great karoo deserts cover most of the province (mthombeni 2019:10). distances between towns, places of significance, commercial centres and markets are great (jacobs, du preez & fairer-wessels 2019a:3). figure 1: map of the northern cape with major centres of commerce and arid biospheres. the northern cape occupies 30% of south africa’s land mass and has the smallest economy and population, approximately 1 200 000 persons, in the rsa (statistics south africa 2016; young 2017:1). the northern cape has a high unemployment rate, with almost half of its employable population being unemployed, approximately 219 000 persons (statistics south africa 2016). the northern cape does offer potential business opportunities to smmes in the eco-tourism, stargazing, arid-agriculture, mining and minerals, and renewable energy sectors (jacobs et al. 2019:3). this research will aid on how effective regional business incubators within the province are in assisting smmes to start up and contribute to poverty and unemployment alleviation by ensuring that sustainable ventures graduate from the incubator (beangstrom 2017:1, 2018:1). the research problem has thus been formulated as follows: after reading the research conducted by lose, nxopo, maziriri and madinga (2016:133) as well as masutha and rogerson (2014:52) which touched on northern cape incubators. it remains unknown whether the existing services spectrum offered by northern cape regional incubators are sufficient to meet business incubators best practice standards, needed to create self-sustainable business ventures that can graduate the incubator and contribute to economic development. as the province is currently largely dependent on mining activities for employment creation, this research conducted can be considered very important from a local government perspective, as the northern cape provincial government in 2016 announced that the northern cape economy should be diversified into the smme sector, as well as renewable energy sector to reduce the overdependence on the mining sector exclusively as employment and wealth creator (ahmed 2017:1; young 2017). the purpose of this study is to ‘investigate the current spectrum of business incubation services that regional incubators in the northern cape offer and compare it with best practice incubator models’. the study was undertaken at the large publically funded business incubators within the northern cape, as well as the very few private incubators that exist within this vast province of the rsa. the following research questions guided the study: what spectrum of services do regional incubators in the northern cape offer incubates? how does the spectrum of services of northern cape regional incubators relate to business incubator best practice models? the study contributed on multiple levels. firstly, it contributed to academia, as there is extremely limited research that has been conducted on northern cape-based smmes, as well as regional business incubators. at least on theoretical level, this study provided insights on the standards and quality of business incubation in the province. secondly, this study also contributed to the policy-makers and industry practitioners. it pinpointed the strengths and weaknesses in the province to practitioners and policy-makers. these individuals may find the findings very useful to address shortcomings in their respective service spectrums or the way they manage their incubators and incubates. literature review according to the world bank’s information for development (infodev 2014:8) programme, business incubation can be defined as a process supporting the creation, development of sustainable ventures and the scaling of growth-orientated early-stage ventures (hausberg & korreck 2018:10; kapinga et al. 2018:3; lamine et al. 2018:1123; nair & blomquist 2018:9, 2019:273; olkiewicz et al. 2019:3; sudana et al. 2019:5; van weele et al. 2019:2). the business incubator provides the entrepreneur with an enabling environment that is conducive for the start-up and development of the venture. the environment within the business incubator is considered enabling because it should reduce the cost of start-up, increase the confidence and business skills of the entrepreneur, and connect the entrepreneur with resources needed to start and grow the business (battisella et al. 2018:4; gozali et al. 2018:1058; ikebuaku & dinabo 2018:18; infodev 2014:8; mansoori, karlsson & lundqvist 2019:4; njau et al. 2019:38; olokundun et al. 2019:2; sanyal & hisam 2018:62; van weele et al. 2018:1162). it is furthermore noted that business incubators are tasked with the purpose of accelerating and expediting the start-up process of new ventures within the business incubator programme as opposed to a slower and delayed start-up process outside the business incubator programme (caetano, preto & amaral 2019:223; dvouletý et al. 2018:556; famiola & hartati 2019:57; honig & karlsson 2010:719; kepenek & eser 2019:1; mcdonald-junor, rossiter & smith 2018:2; rosa, sukoharsono & saraswati 2019:70; torun et al. 2018:92). romein and trip (2017:440) define a business incubator as a dedicated space and supportive environment for start-up companies to be created, nurtured so that they can survive their infancy, when they are particularly vulnerable, grow and become self-sustainable business ventures that can survive on their own outside the business incubator in the external business environment. the business incubator thus attempts to overcome the ‘liability of newness and the liability of smallness’ for incumbent ventures (bollingtoft 2012:304). ideally, the business incubator should only incubate ‘weak-but-promising’ ventures (bergek & norrman 2008:11). ‘weak-but-promising’ entails that the entrepreneur(s) have a resource, or experience, or skills, or personality deficit yet possess a compelling business case (hackett & dilts 2004:52). mrkajic (2017:44) thus defines incubators as organisations that possess resources that are complimentary to the resources that incubates possess, and can be shared with incubates without incurring substantial costs. incubator services in this section, the manner in which incubator services have evolved will be examined, so that the business incubators within the province can be benchmarked against these services. the essential services mix offered by business incubators have evolved over the last five decades. during the 1960s–1980s, business incubators offered only subsidised office or factory space, often referred to as subsidised rent (allahar & brathwaite 2016:6; bruneel et al. 2012:110; mrkajic 2017:45; pauwels et al. 2016:13; theodorakopolous, kakabadse & mcgowan 2014:6). this first-generation business incubator provided the entrepreneur with access to lower cost infrastructure and facilities by sharing costs amongst a community of tenants, but it failed to empower entrepreneurs (bruneel et al. 2012:110; mrkajic 2017:46). the second-generation business incubator existed from 1980s to 1990s, and provided access to business development services such as expert training, coaching and mentorship through business professionals with the aim of accelerating the learning curves of tenant-entrepreneurs and gaining knowledge resources for operating a business venture (allahar & brathwaite 2016:6; mcadam & mcadam 2008:50; mrkajic 2017:46; theodorakopolous et al. 2014:6). the third-generation of business incubators came into existence in the early 2000s with the emphasis on networking capabilities, access to expert technological, financial and professional knowledge capabilities, as well as raising finances for the incubated venture or creating access to a direct finance pipeline, and finally expediting and accelerating the commercialisation of technological innovations (bruneel et al. 2012:110; grimaldi & grandi 2005:112; mrkajic 2017:46). to a large degree, access to business development services and real-estate provision became less pronounced and virtual incubation became the new norm (mrkajic 2017:46; pauwels et al. 2016:14). the following figure visually depicts the various generations with associated service offerings through which business incubators have evolved. in order to benchmark the service spectrum offered by incubators according to international standards, one must investigate the service spectrum offered by best practice business incubator models to date (galiyeva & fuschi 2018:37; olkiewicz et al. 2019:38; torun et al. 2018:92). this is done in accordance with the generations of business incubation categorised by allahar and brathwaite (2016:6) and supported by the literature (aerts, matthyssens & vandenbempt 2007:258; berendsen & beckett 2018:49; bollingtoft 2012:306; bruneel et al. 2012:113; mrkajic 2017:45; nair & blomquist 2018:5, 2019:271; pauwels et al. 2016:13; torun et al. 2018:92). incubator generations with associated services these best practice models can be plotted historically from 1985 to 2017. the majority of academic best practice models offer access to physical premises (generation-one); admin support (generation two); and financial support, specialised (expert) skills and services, mentoring and networking (generation-three) concurrently and collectively. these best practice business incubator models include: smilor (1987:148); malecki and nijkamp (1988:383); wiggins and gibson (2003:59); soetanto (2004:5); carayannis and von zedtwitz incubator model (2005:104); deutschmann pre-incubator model (2007:11); bergek and norrman best practice business incubator model (2008:14); and fominienė and grigaitienė (2015:36). there are, however, best practice business incubator models that only offer generation-three services (as described above) without including generation-one and two services. these models include: campbell, kendrick and samuelson (1985:46); carter and jones-evans process incubator model (aidin 2015:105; moreira, marta & carvalho 2012:45); hackett and dilts logic incubator and incubator process model (2004:44, 2008:441); o’neal university incubator model (2005:4); carayannis and von zedtwitz incubator model (2005:104); and jones incubation value chain model (2010) as described by fominienė and grigaittiene (2017:35). models that include generation-two and three services but lack provision for generation-one services include the following models: verman success factor incubator model (2004) as described by gozali et al. (2015:6), medibtikar business incubator model (gadea 2016:329 ); calza et al. incubator model (2014:606); and gerlach and brem generic business incubator model (2015:293). there are two best practice models that include generation-one services, as well as generation-three services. firstly, chandra and chao’s (2011:56) business incubation model which advocates external finance sources, network with university and physical facility provision. secondly, mrkajic conceptual framework for developing country business incubator model (2017:52) that advocates the development of new markets or expanding into new markets, business capability development and infrastructure development although the researcher argues that there are not yet a comprehensive fourth-generation best practice incubator model developed, there are a number of models that offer comprehensive generation-one, generation-two and generation-three services with incomplete elements of a fourth-generation. these services include internationalisation of markets, co-incubation and international co-incubation. models that offer these services are as follows: harter, hőlbling and leistner incubation model (2000:5); nowak and grantham virtual incubator model (2000:131); and lazarowich and wojciechowski new economy incubator model (2002:16). other service elements of a fourth-generation incubator are research and development and innovation labs. incubator models that include these services are as follows: malan and hammerlund benchmark incubator model (2002:25); south-korean business incubator model (park & kim 2016:6); and lazarowich and wojciechowski new economy incubator model (2002:16). figure 2: four generations of business incubation leading to accelerators. figure 3: service spectrum plotted over four generations of academic business incubator models research methodology research design this study was executed according to a descriptive qualitative design. such a design has the purpose of exploring a phenomenon by investigating different perspectives on a specific topic through identifying underlying themes that emerge through in-depth discussions with participants (plano clark & creswell 2015:289). as was discovered during the research fieldwork, business incubators in the northern cape province visually advertise a wide array of services for incubator tenants. however, it was important to scrutinise this claim by interrogating participants on the actual services that they receive, not in theory, but in reality. this type of research design proved to be excellent in proving disparities between claimed service provision and actual service provision. a descriptive qualitative research design was thus very useful, as it unmasked all the themes associated with effective incubator service delivery, or the lack thereof, in the context of this study. sampling the unit of analysis was business incubator tenants, staff and managers within the northern cape province of the rsa. the sample consisted of 52 business incubator tenants and 11 incubator managers or incubator staff members. these participants were distributed amongst seven incubators in the province. according to the existing literature, there are fewer business incubators in existence within the province than were actually traced during this study. in a study by lose et al. (2016:133), it was claimed that there are fewer than three public incubators and no private incubators within the province. another study by masutha and rogerson (2014:52) claimed that there was only one incubator in existence within the province and that this incubator was public. a total of 63 semi-structured interviews were conducted. data saturation is the point after which no new themes or patterns are identified within the data when analysing (francis et al. 2010:2). data saturation was achieved at interview 12; 63 participants were maintained eligible for this study in order to maintain site triangulation. also, to access the most expletive quotations, the whole sample was kept into consideration. keeping further interviews did thus provide some insights into the state of business incubation in the province and were considered. the distribution of participants can be found in table 1. table 1: sample size and particulars. it was found that the incubators within the province typically only boast a single manager per incubator. thus, the manager at each of these locations within the sample was interviewed. where incubator staff was on hand, they were also interviewed. this was done in order to avoid a bias towards the incubates. both incubates and managers were thus able to state the services that were present or absent at each incubator. in contrast to the other provinces of the rsa, the northern cape province boasts only a handful of incubators. these entities were discovered to be hard to locate and to find. most of them do not boast an online presence nor do some provide contact details. some of those whom are advertised have resulted in nothing and are no longer in existence or are completely dormant. in order to bridge this problem, purposive sampling was employed. this allowed the researcher to select all the incubators in the province that was relatively easy to find, and to get referrals to the less known and less traceable incubators within the province from role players within the province. participants within the sample ranged from a very wide span of industries including stationary and office supplies, personnel and staffing solutions, catering and cooking, manufacturing, construction, transport, security, information and communications technology, automotive, jewellery and precious and semi-precious stones, and lastly, clothing and textiles. thus, two purposive sampling strategies were used to sample participants: homogenous and snowballing. homogenous purposive sampling allows for the selection of participants based on certain predetermined characteristics in order to reduce variations and spearhead a more focussed investigation (plano clark & creswell 2015:334). the specific characteristics to comply with required an incubate, a service provider or a manager within a business incubator operation within the borders of the northern cape province of the republic of south africa. the snowballing purposive sampling strategy required referrals from the initial participants targeted through the homogenous strategy (plano clark & creswell 2015:334; polit & beck 2012:517). data collection data were collected from a semi-structured interview protocol utilised during interviews. all data collection was done in a personal face-to-face manner during a formal meeting that was pre-arranged with participants. the interviews lasted an average of 17 min per interview. semi-structured interviews enhanced the study notably by allowing for the researcher conducting the interviews to rephrase questions, or translate questions into alternative languages for participants with low levels of literacy. afrikaans is a wider spoken language than english within the province and some participants were not able to understand or speak english at all. as the researcher is afrikaans by mother tongue and thus fluent in this language, this proved to be an advantage for the research. the researcher could thus switch between english and afrikaans as needed and translate where required. the semi-structured research protocol was overviewed and critiqued by a senior academic in the field of entrepreneurship prior to the pretest. the questionnaire was then pretested amongst 17 participants in a national south african context across provinces prior to implementation for this particular research. the pilot test allowed for amendments to the questions in the semi-structured discussion guide as required. the pretest was done in a semi-structured face-to-face setting, with a single participant at a time. data analysis thematic analysis was applied to the analysis of data. themes were analysed deductively and inductively. deductive analysis was done by performing a very comprehensive review of the existing themes on incubator services according to the literature. inductive analysis was done by identifying patterns within the data collected and then connecting it to existing themes within the literature. according to braun and clarke (2012:60–69), there is a systematic process of extracting and analysing themes from the data. this systemised process was employed. firstly, all interviews were recorded on a portable digital audio device and transferred to an external hard drive. secondly, using improved audio playback, the researcher transcribed these recordings. thirdly, the transcripts were loaded into atlas.ti data analysis software whereby sub-themes were identified and then grouped into main themes. reconciliation between patterns identified in the literature review, as well as in the data, assisted this activity. fourthly, all notes were reviewed and revisited for a second round in order to reduce the possibility of erroneous and misallocated sub-themes and main themes. fifthly, all themes were allocated a clear definition according to the reviewed literature. lastly, the reporting of data and subsequent write-up was done according to the main themes which were directly linked to the research questions. substantiating quotes were employed into the reporting to provide impetus to the findings. trustworthiness in order for qualitative research to be trustworthy, it has to be credible, transferable, dependable and confirmable (mostert, niemann & kotze 2017:7). site triangulation was employed in order to enhance credibility (mostert et al. 2017:8; niemann, kotze & mannya 2018:7). this entailed including participants from multiple geographic areas and multiple independent incubators so that themes identified are not unique to only one incubator or a single geographic area. in order to achieve this, non-related participants from various geographic locations varying across the province were interviewed. transferability and authenticity was achieved by providing a detailed description of the participants, the data analysis technique, as well as a basic literature analysis of the research topic (creswell 2007:209; mostert et al. 2017:8; niemann et al. 2018:7; polit & beck 2012:585). dual sources of data enhanced confirmability by strongly linking themes from the empirical findings to themes derived from the basic literature review; thus, two different sources of data were employed (mostert et al. 2017:7; vermeulen, niemann & kotze 2016:8). lastly, a peer debriefing of transcripts and data analysis were employed to enhance the dependability of the themes presented (polit & beck 2012:594). ethical considerations the study steered clear of psychologically and socially sensitive issues to avoid emotional harm to participants in the research. all participants for the research and data gathering offered consent to partake in the research. all participants in the research were briefed accordingly. where required and applicable, consent was obtained from incubator management to interview incubate participants. all names have been withheld on the basis of anonymity and pseudonyms which are untraceable were used where needed. also, prominent landmarks or features that would compromise anonymity were altered with neutral descriptions. findings the data were analysed into themes which were listed categorically according to the frequency of occurrence, as well as known themes that were derived from the literature review. incubator service spectrum this section will provide the findings to address research question one on the presence or absence of critical services within the business incubators of the province. the findings are listed below: access to physical premises the most basic service that incubators are expected to provide is that of access to subsidised physical premises on which to conduct their business activities (stefko & steffek 2017:251). incubators one, two and three offered access to physical premises according to a reduced or subsidised rental agreement: ‘you see, i’ll be here as long as i can, because they’re providing office space. if they provide business incubation, i should be here for a specific time. most of the guys here, they are getting cheap space. they come here with the hope of business incubation, they’re not getting. so they use it for space, office space.’ (incubator 1, transcript 6, participant 6, incubate, male) ‘yes, the rent is cheaper. the rent is cheaper. if i had to move out into town, i would pay three times the amount. three times the amount. that’s excluding water and lights. here it’s water and lights included, that’s the plus.’ (incubator 1, transcript 12, participant 12, incubate, female) this type of service is typically associated with a first-generation incubator. the purpose of this service is to offer new start-ups, an enhanced chance of survival and increased competitiveness by lowering overhead expense, most notorious being rental expenses (allahar & brathwaite 2016:6; bakkali et al. 2014:1; lose & tengeh 2015:14346; torun 2016:5). incubators four, five, six and seven did not provide incubates with access to physical premises: ‘the thing is, if i could get some storage, because i want to develop in such a way that i can supply other suppliers.’ (incubator 4, participant 36, transcript 36, male, incubate) ‘for now, we are quite struggling of an office that we can work in. so we are actually looking for an office that we can work in, for clients to access us easily.’ (incubator 4, participant 37, transcript 37, male, incubate) access to equipment a further basic service offering associated with generation-one incubators is access to communal or specifically procured equipment such as machines and tools with which to produce outputs (baraldi & havenvid 2016:56; bollingtoft 2012:304; indiran, khalifah & ismail 2015:744). incubator two and incubator three offered incubates access to equipment and machinery. incubator two offered incubates generic equipment that was procured prior to incubates entering the facility, whilst incubator three procured specific equipment for every incubate according to unique needs after they have entered the facility: ‘the incubator helped a lot, especially in the sense of starting up a factory. before joining the incubator, we tried doing it on our own. we looked for funding, we looked for office space. starting up a factory was going to cost us like about five million which we did not have. we’re talking about almost the latest equipment to compete on the global market. so the incubator helped us a lot in the sense that we didn’t have to worry about equipment, space, security and licensing etcetera. basically everything was set up nicely. so it helped us, cause now if we look for funding, it was just for capital in terms of stock, the rest was already procured.’ (incubator 2, transcript 22, participant 22, incubate, male) ‘also with my assets, if i need something for my business urgently, they will then pay for me and i will have to pay them back within a certain period of time.’ (incubator 3, transcript 23, participant 23, incubate, male) administrative support administrative support constitutes reception, secretarial support, access to internet or wi-fi, telephones, printing, copying and faxing facilities (godeiro et al. 2018:5; james & maria 2017:29; muñoz & cohen 2018:131; njau et al. 2019a:20; pauwels et al. 2016:14; stefko & steffek 2017:258; tengeh, robertson & choto 2015:159). incubators three, four, five and six offered access to wi-fi, internet access, telephones, printing and copying, as well as faxing facilities: ‘well, free internet, i am a website junky. so i am very grateful for the emails and phone calls i can make. ok, there’s a limit, but, i always make enough. so, that’s about it. that’s the one thing i am grateful for, because we don’t have it back home. (incubator 6, transcript 52, participant 52, incubate, male) table 2: access to physical premises. table 3: access to equipment. in addition, incubator three offered secretarial support as well as reception services to incubators: ‘my strategic planning, my time management. if i’m having a difficulty, the admin manager will intervene and tell the other people that i have a deadline and no one should disturb me. then tells the receptionist to cancel all my appointments. even going the extra mile, calling the client and explaining why the order might be delayed or something like that. just manages that time.’ (incubator 3, transcript 23, participant 23, incubate, male) ‘we have an administrative officer allocated to us to work through our documentation, filing and stuff like that.’ (incubator 3, transcript 23, participant 23, incubate, male) ‘from my side, which is admin, i help them a lot. with paperwork and so on. not one of them has a laptop. we still have a problem with internet though as it has not been connected yet. so they come to me and i’ll take their stuff further. if stuff needs to be emailed, i’ll email it. if things need to be typed. i’ll phone the incubates, whatsapp them and phone. i don’t even get a cell phone allowance.’ (incubator 5, transcript 50, participant 50, incubator employee, female) incubators one, two and seven offered no administrative support to the incubates whatsoever: ‘they were supposed to help us with certain documents and, to my understanding, when they brought us in here, they were supposed to help us build the business. not in terms of them going out to look for us, but how to approach certain places or the filling out of documents, or things like that, which they never did in the past.’ (incubator 1, transcript 1, participant 1, incubate, female) access to finance financial services provided to incubates should include access to seed capital, as well as bridging capital which can be sourced internally or externally (herber et al. 2017:3070; liu, jang & hu 2018:974; mansur & abuga 2017:157; navarro 2018:305; stefko & steffek 2017:252). incubators one, four, five and six did not provide any form of internal capital investment: ‘i’m struggling now, because i got a job from the government and i have to borrow money from this informal people that can borrow us money and then we must pay them 50% interest … mashonisa. that is my challenge for now. it is dangerous. but then, we don’t have a choice. you have not had business for the last 6 months, or three months. how is the bank going to give you money? you get my point? even now, there’s a contract of mine that is running in two towns at the same time. i have many clients. i have to buy them supplies. so if there was something in the incubator, maybe financial support. even though it’s not much. maybe they can give us only when you’ve got your contract. i have this contract, please fund this contract for me. i have another project i implemented with many clients. i had to recruit them out of nothing. i had to implement the project out of nothing.’(incubator 1, transcript 3, participant 3, incubate, female) ‘i went to them, i got work from a client to go somewhere and to provide a service but i didn’t have the finance to do that, but was just looking for the money to just do the project, come back, put the invoice in and i’ll pay. but they couldn’t even assist with that. they let me do a whole finance report, i had to do a submission, through that whole process just to come back again and say, no, we can’t assist.’ (incubator 1, transcript 7, participant 7, incubate, male) table 4: access to administrative support. incubators two and three offered bridging capital investment to incubates. in both cases, this was done as a short-term loan whereby the incubate could use the funds to purchase equipment and stock needed to proceed with a commercial transaction. the source of capital for incubator two was external, whilst the source for incubator three was internal. upon the completion of the transaction and receiving payment, the loan could be either serviced in payments or a single debt settlement payment. in addition, incubators three and seven could also provide seed capital to incubates where needed: ‘so it was a loan. we basically got the raw materials. there wasn’t much profitability but we managed to sell. uh, so we paid half the loan back so that they can refinance.’ (incubator 2, transcript 22, participant 22, incubate, male) ‘incubates get an open loan account. for a recent contract i needed a big sum that i didn’t have. so what the incubator did was they paid upfront for all of that, and when the client pays me the money, i pay them back. that’s how my funding goes. for some entrepreneurs there are also seed-funding. this funding arrangement works perfectly.’ (incubator 3, transcript 23, participant 23, incubate, male) incubators two and six indicated that they assist incubates with applications to external financiers. these financiers were exclusively indicated to be the national youth development agency (nyda) and the small enterprise finance agency (sefa). it was stated that none of these applications have been historically successful: ‘i’ve applied for funding from government. they are partners to that. and, we’ve submitted our business plans to them. it was advertised more than 2 years ago. i’ve applied. not one of us received funding. there were lots of guys applying. um, not one of us received.’ (incubator 1, transcript 7, participant 7, incubate, female) access to specialised skills and specialised services specialised skills may be an internal capability or externally sourced capability and constitute technical support, marketing support, accounting and bookkeeping, legal support, business planning, business development support, general management expertise or any other professional skill required by the incubate (baraldi & havenvid 2016:56; calza et al. 2014:604; deutschmann 2007:8; gozali et al. 2015:121; indiran et al. 2015:734; james & maria 2017:29; stefko & steffek 2017:252). incubators one, four, five and six did not offer any access to specialised skills: ‘i’m creative. in most cases i’m not really business orientated or admin orientated. you know, all those basic things like your bookkeeping, your financials, your marketing, like those kind of things. in most cases, this is what i do: i come in, i design. there’s no people that says how are your books? are you managing them correctly?’ (incubator 1, transcript 4, participant 4, incubate, male) ‘firstly, they must get skilled people. you cannot present a service which you are not au fait with. firstly, their managers, or staff, or whoever, they don’t have business development skills or qualifications. secondly, they don’t have the skills to convince me to use them. in order for you to provide a service, you must be skilled. you must be au fait the field. what i’ve picked up, or what i know is that most of them are not qualified. in order to provide a service, you must have qualifications in that field.’ (incubator 1, transcript 6, participant 6, incubate, male) table 5: access to finance. incubators two did offer some aspects of professional skills, yet it was explained that some were of an acceptable standard and useful, whilst others were of a poor standard and largely without use: ‘there are people put in place to push you. you get a business developer, a technical advisor. if you need to know anything, if you need to learn anything, if you get stuck making something, that person is supposed to be there to help you, show you where you’ve gone wrong and help you make it better. that kind of thing. we’re supposed to have an accountant. um, there’s a marketing person. all these people, did i mention the business developer? um, there’s like five entities, are there to push your business. you’ll find within those five people, one or two will do their work, and the others like slack. for instance, the accountant does not do accounting. the accountant doesn’t understand how to do accounting. i’ve gone to that person with accounting problems and i’ve asked that person to balance something for me, and that person told me about a textbook that she doesn’t have. it’s like going to a town planner and asking, ‘oh, can you fill out his plan for me?’, and he’s like, oh i don’t have my textbook. i don’t work like that, but that’s what they do. um, the technician doesn’t know most of the stuff. we keep showing the technician things to learn, but it’s things like that that hold people back. they are trying to help me with marketing, but they can do better. for instance, i asked for one thing and they’re not doing it. when i went overseas, i’m not really big on facebook, which is like weird for me to say as a person in business because it should be one of my platforms. but, um, socially i think it’s a lot of pretentious nonsense. but, um, my business page was linked to my personal page. when i left, i asked the marketing person, ‘can i assign you to take care of that page?’ the marketing person said ‘sure’ and we exchanged email addresses. the marketing person hasn’t done a single thing; it’s been four months now. so, other than that, this person does try and help, in the sense that if there’s markets, that person will try and get us there. that person tries, but doesn’t get everything.’ (incubator 2, transcript 24, participant 24, incubate, female) smaller and private micro-incubators presented a more successful approach with regard to providing specialised services. they would select only a handful of incubates carefully and ensure that enough internal expertise can be hired or procured, in order to accelerate the development of the incubates. this was the case with incubators three and seven: ‘so like i said, our professional services. if somebody needs help getting their intellectual property registered or getting help with bookkeeping services, they’ll file an application and those people will come and assist them. some of them are external, some of them are internal. we have different people that do different things. if we have to hire somebody to do something, we would, based on the value and the return on investment, depending on how this will change the start-up and how this will help the start-up to grow.’ (incubator 7, transcript 60, participant 60, incubator manager, female) table 6: access to specialised skills and specialised services. table 7: access to mentorship. access to mentorship mentorship in an incubation perspective encompasses a process of guiding incubates through various business activities such as business ideas, product development, sourcing resources, forming distribution and sales networks, as well as decision-making by experienced business practitioners (ahsan et al. 2018:1; dellermann et al. 2018:3; sagath et al. 2019:6; yusubova & clarysse 2016:8). in this study, incubator three was the only incubator found to offer mentorship services to tenant-entrepreneurs: ‘they get funding. they get between r100 000.00 to r200 000.00 each. but they can’t get the money. i manage the funds. i work for 12 months with about nine entrepreneurs a shot, and i have 12 months to work with them. we sit together with the funding, and they say “i want to buy this or i want to buy that”, then i say, “no, you don’t really want to buy that, it’s not going to work. you have to do a little bit of this first”. so, i coach them and i’m their business mentor for 12 months and help them.’ (incubator 3, transcript 33, participant 33, incubator manager, female) ‘we have a one-on-one, where you can talk your heart out with us. if we see you really need help, then we go further to see if there’s funding for your business.’ (incubator 3, transcript 23, participant 23, incubate, male) access to training for skills development the most commonly encountered types of training are entrepreneurial, managerial (financial management, marketing management and growth management), legal and intellectual property as well as technical (bagchi & chatterjee 2017:44; dutt et al. 2016:821; maraqa & darmawan 2016:31; meru & struwig 2015:10; sari 2018:39; tselepis 2018:299). incubators one, two and four offered no training for skills development: ‘in terms of developing an smme, obviously the cheap space helps, because it makes your business operational expenses much less, in terms of your rental. so it helps from a finance perspective. but in terms of what i know an smme would need in terms of development, ah, there’s nothing. so they got a nice board there, when you come in that’s says we offer all these nice things here. but i haven’t received not one of them… whether you’ll be helping me with training, whether you’ll be helping me with advisory services, whether you’ll be helping me with specialised services that might benefit my particular need that i need in my business. whether it’s perhaps assisting me with access to market, or access to finance, nothing! only thing that i receive here is the benefit of cheap office space that you won’t find anywhere else.’ (incubator 1, transcript 11, participant 11, incubate, male) table 8: access to training for skills development. incubators three, five, six and seven did offer training to tenant-entrepreneurs for skills development. incubator three offered technical and financial training. incubator five provided tenant-entrepreneurs with practical technical training supplemented with classroom training on the government tender process. incubator six provided classroom-based training on computer literacy, basic financial skills, basic marketing, business strategy, business planning and human resources management. lastly, incubator seven offered computer-based business training: ‘i attended a four-day training which was conducted by the incubator. my skills set. remember, if you are a technical person, if you don’t do anything about your skills, it sorts of diminishes in a sense. they help me a lot.’ (incubator 3, transcript 23, participant 23, incubate, male) access to networks types of networks include social networks, intra-entrepreneur networks (co-venturing), incubator-to-incubator networks (co-incubation), supplier networks, customer networks and finance networks (alpenidze, pauceanu & arab 2019:1; baraldi & havenvid 2016:56; bruneel et al. 2012:111; gerlach & brem 2015:295; indiran et al. 2015:737; laino 2019:164; lukeš, longo & zouhar 2019:30; miranda & borges 2019:36; mohamad & chin 2019:596; theodorakopolous et al. 2014:6; torun 2016:5). incubators one, five and six did not provide or facilitate any networking for the tenant-entrepreneurs: ‘never! nothing! i was once in a meeting. let them call the government, let us a have a roadshow. let us be there and present our businesses to government, to people, you know. nothing! nothing! nothing!’ (incubator 1, transcript 3, participant 3, incubate, female) incubators two, three, four and seven did provide or facilitate networking opportunities for their tenant-entrepreneurs. incubator two did provide both local and international networking opportunities to some of their tenant-entrepreneurs by sponsoring a business exposition to national and international markets in order for the tenant-entrepreneurs to obtain clients and suppliers. incubator four reported to assist tenant-entrepreneurs in finding suppliers and clients locally, whilst incubator seven linked its tenant-entrepreneurs with possible private funding partners and financiers: ‘this year we went to national and international expos. and uh, right now our main clients came from that national expo. so it shows that we network locally and internationally and these events help us build clientele.’ (incubator 2, transcript 22, participant 22, incubate, male) ‘ok, another advantage of being in the incubator, they approach stakeholders on our behalf. so that’s another advantage of being part of the incubator, what can i say, it’s a much stronger voice than if we, as an smme, have to approach stakeholders on our own. so they approached them and linked us together.’ (incubator 3, transcript 23, participant 23, incubate, male) only incubator three provided evidence of co-venturing. there was no evidence of co-incubation within the sample population: ‘some of the other entrepreneurs have seed funding. so with that, my services are encapsulated within their seed funding. so they have to get a website, i do it for them. so there’s certain amount of money i receive on the completion of their websites.’ (incubator 3, transcript 23, participant 23, incubate, male) fourth-generation business incubator elements elements of this type of incubator are international business incubation, international co-incubation and access to innovation labs (allahar & brathwaite 2016:6; baraldi & havenvid 2016:56; mrkajic 2017:45; theodorakopolous et al. 2014:6). incubator two provided evidence of international incubation by exposing their tenant-entrepreneurs to international markets for both sales and procurement. no other business incubators within the sample population offered tenant-entrepreneurs access to international incubation: ‘also, access to markets. the incubator liaising with department of economic development liaising with department of trade and industry. i went on an international trip through the incubator and the department of economic development where it was basically for us to gain access to international markets. being able to, from a government perspective, go seek access to markets.’ (incubator 2, transcript 22, participant 22, incubate, male) table 9: access to networks. table 10: fourth-generation business incubator elements. there was no evidence of international co-incubation amongst any participants within the sample. lastly, there was also no evidence of an innovation lab within the sample population. however, incubator six did have procured equipment such as 3d printers in their possession that are supposed to be utilised in an innovation lab, as well as dedicated space for an innovation lab. the equipment is still yet to be utilised and remains non-operational. this incubator has also attempted to stock the incubator with more necessary equipment to enable such a lab. however, the innovation lab is not yet established nor operational in this case and can thus not be considered: ‘we’ve done a few small things, but nothing big, no. it’s like clay, there’s so many ideas, but sometimes we lack support. it’s the second time i have applied for big machinery, to have a whole mechanical workshop layout here, laser cutter, 3d scanner, plasma cutter.’ (incubator 6, transcript 57, participant 57, incubator manager, male) international best practice model benchmarking this section attempts to address research question two by benchmarking the incubators of the province against international best practice models as listed in figure 2. when benchmarking the incubators within the northern cape province of the rsa against the international best practice models, the following can be observed: incubator one offers only access to physical space, associated with a generation-one incubator. thus, incubator one can be said to historically still be in the 1980s and compete only against generation-one incubators. incubator two is arguably the most advanced of the incubators in the province benchmarking well with a generation-three incubator, whilst offering a single element of a generation-four incubator. incubator two compares the most favourable with international incubator models. however, the quality of each of these services is inconsequent, as can be seen when revisiting the previous section. although most services are present, some are of good quality, some are of average quality and some are of poor quality. incubator three benchmarks well against generation-three incubators and are definitely the most consistent incubator within the province. participants within incubator three consistently and consecutively reported that all three generations of services present were of an acceptable quality. thus, although it is not trail blazing in terms of generation-four services, it delivers stable and consistent performance in the third-generation bracket. incubator four offers minute administrative support (generation two) and very limited networking (generation three) to tenant-entrepreneurs. it does not offer any generation-one services. incubators five and six both offered incomplete service elements of generation-two and generation-three incubators when benchmarked against best practice models. some degree of administrative support and training were present in both. over-reliance and dependence on relationships with state funding agencies were also present in both and reported a negligible success ratio. it is argued that both these incubators manifest service elements of a 1990s incubator and early 2000s incubator when benchmarked against best practice models. incubator seven benchmarks well against a generation-three virtual incubator as it places a focus on training and skills development, access to specialised skills and services, networking with external financiers, as well as with external financiers as well as occasional internal funding. there is, however, a critical lack of business mentorship in this case that should be present in a generation-three virtual incubator. incubator seven thus does not offer access to physical premises or communal equipment, hardware service elements of generation-one and generation-two business incubators. figure 4: a benchmarking of northern cape incubators according to four generations of business incubator model service offerings. conclusion summary of findings and theoretical implications the purpose of this study was to investigate the current spectrum of business incubation services that regional incubators in the northern cape offer to tenant-entrepreneurs or incubates and compare it with best practice incubator models. research question one guided the study attempting to determine which spectrum of services regional incubators within the northern cape offer incubates. incubator three offered the best service spectrum to tenant-entrepreneurs within the province by providing access to physical premises, communal and specific procured equipment, admin and secretarial support, training for skills development, access to specialised skills and services, networking, mentorship as well as financial support. the delivery of these services was reported to be of good quality and consistent according to participants. incubates within incubator three reported that they were satisfied with this current service spectrum and did not need additional support. incubator two is the only incubator that offered international incubation within the sample. in addition, incubator two also facilitated networking, access to specialised skills and services, access to finance along with access to physical premises and communal equipment. incubator two had certain shortcomings in its offering, specifically mentorship, training for skills development and access to administrative support. however, incubator two reported varying levels of satisfaction amongst participants. some services rendered were of a good quality, whilst others were dormant or of a very poor quality. incubators one, four, five and six reported extremely low spectrums of services, and the researcher argues that they should not be classified as incubators, even though they are labelled as incubators in name. incubator seven compares well with virtual incubators offering training for skills development, access to finance and networks. however, there is a critical shortage of mentorship. as a virtual incubator, they are not in the practice of providing office space or equipment. research question two further guided the study by attempting to determine how the spectrum of services of northern cape regional incubators benchmarks against business incubator best practice models. incubator three was the only incubator in the sample that benchmarks competitively with best practice models. incubators two and seven are both fairly functional even though they have critical shortcomings in their offerings as discussed prior. thus, they benchmark average against best practice models. with regard to the remainder of the sample, it paints a rather grim picture of dysfunctionality boasting major shortages in their service spectrum. incubators one, four, five and six benchmark poorly against best practice models. on average thus, the majority of business incubators within the province are in a very poor state. practical implications the findings of this study provide important insights into the state of business incubation within the northern cape province from a service delivery perspective. in order to alleviate unemployment, create entrepreneurs and spark regional economic development, a standardised business incubator model is needed. firstly, it is recommended that business incubators recruit service providers, consultants or incubator employees that are truly skilled and experienced in the field of smme development. it is recommended that service providers, consultants or employees have in-depth knowledge, practical experience and creativity in frequently required disciplines such as marketing incubate businesses, business finances, bookkeeping, legal assistance, technical assistance and personal guidance of entrepreneurs. if these positions are not occupied by individuals that are truly experienced and skilled in their fields, one can expect poor results within the province. in addition, mentorship should be performed through real entrepreneurs that are experienced and versed in the challenges of being an entrepreneur. secondly, mentorship should not be placed at the feet of civil servants that have no experience in business ownership nor understand the mind-set of an entrepreneur. thirdly, it is recommended that incubators diminish their reliance on state funding agencies and focus on developing private funding pipelines or networks in addition to open multiple pipelines of financial assistance possibilities. fourthly, training must be implemented to bring both incubates and the incubators up to date with the national and provincial landscapes and policies related to smme development. a training curriculum developed by academia and experienced entrepreneurs that are standardised for public incubators is recommended. this will ensure that training programmes of acceptable and standardised quality are delivered all over the province. fifthly, the physical spaces that are provided to entrepreneurs must possess basic amenities such as internet and wi-fi access, telephone and fax services and a courteous front desk officer whom can receive and direct interactions with environment outside the incubator. sixthly, it is recommended that incubators plan and orchestrate focussed networking events between the consumers and suppliers of resources. such events must facilitate the exploration of new markets, new sources of funding, critical skills and sources of materials. lastly, it is tempting to recommend that incubators in the province attempt co-incubation amongst themselves. however, given the dysfunctionality of each at this point in time, it is advised that each incubator restructures and reorganises itself internally prior to attempting co-incubation. in addition, there may be merit in public incubators within the province sharing resources collectively. in such a manner, the already expensive resources needed will not be duplicated but rather shared. this should theoretically be possible as public incubators are not destined to be in opposition of one another but rather to promote the economic welfare of the province as a whole. from a private incubator perspective, this becomes improbable as the profit motive and private targets create competition amongst individual incubators. research limitations and future research this study did not attempt to provide evidence of the effect that poor service provision had on tenant-entrepreneurs or incubates. this is a clear limitation of this research but also offers a research question for potential future research: future research question one: what is the effect of poor service provision by northern cape business incubators on the tenant-entrepreneurs and ventures they attempt to incubate? furthermore, the study also did not investigate the obstacles to successful incubation within the province and therefore provides a second potential research question: future research question two: what are the potential obstacles to successful business incubation within the northern cape province from a tenant-entrepreneur or incubate perspective? these two potential research questions will provide future research possibilities for researchers that can build on the trajectory of this initial research article. acknowledgements competing interests the author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article. author’s contributions this is the original work of the author. the author conceptualised the article, performed the literature review, developed the research instrument and, lastly, wrote the article. ethical consideration this article followed all ethical standards for carrying out research. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author. references aernoudt, r., 2004, ‘incubators: tool for entrepreneurship?’, small business economics 23(2), 127–135. https://doi.org/10.1023/b:sbej.0000027665.54173.23 aerts, k., matthyssens, p. & vandenbempt, k., 2007, ‘critical role and screening practices of european business incubators’, technovation 27(5), 254–267. https://doi.org/10.1016/j.technovation.2006.12.002 ahmad, a.j., 2014, ‘a mechanisms-driven theory of business incubation’, international journal of entrepreneurial behaviour & research 20(4), 375–405. https://doi.org/10.1108/ijebr-11-2012-0133 ahmed, m., 2017, a province of vast opportunity, viewed 29 march 2018, from https://www.fin24.com/economy/a-province-of-vast-opportunity-20170310. ahsan, m., zheng, c., denoble, a. & musteen, m., 2018, ‘from student to entrepreneur: how mentorships and affect influence student venture launch’, journal of small business management 56(1), 76–102. https://doi.org/10.1111/jsbm.12362 aidin, s., 2015, ‘new venture creation: controversial perspectives and theories’, economic analysis 48(3–4), 101–109. albort-morant, g. & oghazi, p., 2016, ‘how useful are incubators for new entrepreneurs?’, journal of business research 69(2016), 2125–2129. https://doi.org/10.1016/j.jbusres.2015.12.019 allahar, h. & brathwaite, c., 2016, ‘business incubation as an instrument of innovation: the experience of south america and the caribbean’, international journal of innovation 4(2), 71–85. https://doi.org/10.5585/iji.v4i2.107 alpenidze, o., pauceanu, a.m. & arab, u., 2019, ‘key success factors for business incubators in europe: an empirical study’, academy of entrepreneurship journal 25(1), 1–13. babalola, s.s. & agbenyegah, a.t., 2016, ‘rural entrepreneurship: an insight into impeding factors influencing micro-entrepreneurial growth’, journal of applied business research 32(6), 1751–1760. https://doi.org/10.19030/jabr.v32i6.9821 badenhorst, d.h.s., van der westhuizen, c.a., britz, e., burger, m.c. & ferreira, n., 2018, ‘lost to follow-up: challenges to conducting orthopaedic research in south africa’, south african medical journal 108(11), 917–921. https://doi.org/10.7196/samj.2018.v108i11.13252 bagchi, n. & chatterjee, k., 2017, ‘identification of gaps in performance of services provided to start-ups in high technology, low technology and social & agri-business incubation centers in india: constraints to growth’, asci journal of management 45(1), 35–46. bailey, h.a., 2019, ‘the challenge of late payment of smmes with a focus on south africa’, in f. bode (ed.), universities, entrepreneurship and enterprise development in africa – conference proceedings 2018, sankt augustin, germany, september 13–14, 2018, pp. 19–36. bakkali, c., messeghem, k. & sammut, s., 2014, ‘toward a typology of incubators based on hrm’, journal of innovation and entrepreneurship 3(3), 1–10. https://doi.org/10.1186/2192-5372-3-3 bank, n., fichter, k. & klofsten, m., 2016, ‘sustainability-profiled incubators, regional factors and the recruiting of tenants’, rent-conference, antwerp university, belgium, november 16–18, 2016, pp. 1–12. baraldi, e. & havenvid, m.i., 2016, ‘identifying new dimensions of business incubation: a multi-level analysis of karolinska institute’s incubation system’, technovation 50(51), 53–68. https://doi.org/10.1016/j.technovation.2015.08.003 battistella, c., de toni, a. & pessot, e., 2018, ‘framing open innovation in start-ups’ incubators: a complexity theory perspective’, journal of open innovation: technology, market, and complexity 4(3), 1–14. https://doi.org/10.3390/joitmc4030033 beangstrom, p., 2017, nearly 50% of northern cape without jobs, viewed 29 march 2018, from https://www.iol.co.za/news/south-africa/northern-cape/nearly-50-of-northern-cape-without-jobs-10737683. beangstrom, p., 2018, northern cape has biggest drop in unemployment rate, viewed 29 march 2018, from https://www.dfa.co.za/news/northern-cape-has-biggest-drop-in-unemployment-rate/. beer, a., ayres, s., clower, t., faller, f., sancino, a. & sotarauta, m., 2019, ‘place leadership and regional economic development: a framework for cross-regional analysis’, regional studies 53(2), 171–182. https://doi.org/10.1080/00343404.2018.1447662 berendsen, g. & beckett, r.c., 2018, business models within business models: two incubator case studies, pp. 47–57, viewed 04 march 2019, from https://indietopia.org/wp-content/uploads/2018/10/berendsen-beckett-cinet2018-fp-1.pdf. bergek, a. & norrman, c., 2008, ‘incubator best practice: a framework’, technovation 28(2008), 20–28. https://doi.org/10.1016/j.technovation.2007.07.008 beugelsdijk, s., klasing, m.j. & milionis, p., 2019, ‘value diversity and regional economic development’, the scandinavian journal of economics 121(1), 153–181. https://doi.org/10.1111/sjoe.12253 biyase, m. & zwane, t., 2018, ‘an empirical analysis of the determinants of poverty and household welfare in south africa’, the journal of developing areas 52(1), 115–130. https://doi.org/10.1353/jda.2018.0008 bollingtoft, a., 2012, ‘the bottom-up business incubator: leverage to networking and cooperation practices in a self-generated, entrepreneurial-enabled environment’, technovation 32(2012), 304–315. https://doi.org/10.1016/j.technovation.2011.11.005 bose, m.s. & goyal, d., 2018, ‘critical success factors of agri-business incubators and their impact on business performance’, custos e agronegocio on line 14(4), 350–376. braun, v. & clarke, v., 2012, ‘thematic analysis’, in h. cooper (ed.), apa handbook of research methods in psychology, vol. 2, pp. 57–71, american psychological association, washington, dc. bruneel, j., ratinho,t., clarysse, b. & groen, a., 2012, ‘the evolution of business incubators: comparing demand and supply of business incubation services across different incubator generations’, technovation 32(2012), 110–121. https://doi.org/10.1016/j.technovation.2011.11.003 caetano, d., preto, m.t. & amaral, m., 2019, ‘university-industry linkage through business incubation: a case study of the ipn incubator in portugal’, in h. almeida & b. sequeira (eds.), the role of knowledge transfer in open innovation (pp. 223–244), igi global, hershey, pa. calza, f., dezi, l., schiavone, f. & simone, m., 2014, ‘the intellectual capital of business incubators’, journal of intellectual capital 15(4), 597–610. https://doi.org/10.1108/jic-07-2014-0086 campbell, c., kendrick, r.c. & samuelson, d.s., 1985, ‘stalking the latent entrepreneur: business incubators and economic development’, economic development review 3(2), 43–49. carayannis, e.g. & von zedtwitz, m., 2005, ‘architecting glocal (global–local), real-virtual incubator networks (g-rvins) as catalysts and accelerators of entrepreneurship in transitioning and developing economies: lessons learned and best practices from current development and business incubation practices’, technovation 25(2005), 95–110. https://doi.org/10.1016/s0166-4972(03)00072-5 chandra, a. & chao, c.a., 2011, ‘growth and evolution of high-technology business incubation in china’, human systems management 30(2011), 55–69. creswell, j.w., 2007, qualitative inquiry and research design: choosing among five approaches, 2nd edn., sage, thousand oaks, ca. dellermann, d., lipusch, n., ebel, p. & leimeister, j.m., 2018, ‘design principles for a hybrid intelligence decision support system for business model validation’, in electronic markets 29(3), 423–441. https://doi.org/10.1007/s12525-018-0309-2 deutschmann, m., 2007, what difference a’pre’makes: university business preincubators in germany, pp. 1–10, a national survey (no. 5), lüneburger beiträge zur gründungsforschung, leuphana universität lüneburg, lehrstuhl gründungsmanagement, lüneburg. devaughn, m.l. & leary, m.m., 2018, ‘learn by doing or learn by failing? the paradoxical effect of public policy in averting the liability of newness’, group & organization management 43(6), 871–905. https://doi.org/10.1177/1059601116674826 du toit, m., de witte, h., rothmann, s. & van den broeck, a., 2018, ‘unemployment experiences in context: a phenomenological study in two townships in south africa’, journal of psychology in africa 28(2), 122–127. https://doi.org/10.1080/14330237.2018.1454575 dutt, n., hawn, o., vidal, e., chatterji, a., mcgahan, a. & mitchell, w., 2016, ‘how open system intermediaries address institutional failures: the case of business incubators in emerging-market countries’, academy of management journal 59(3), 818–840. https://doi.org/10.5465/amj.2012.0463 dvouletý, o., longo, m.c., blažková, i., lukeš, m. & andera, m., 2018, ‘are publicly funded czech incubators effective? the comparison of performance of supported and non-supported firms’, european journal of innovation management 21(4), 543–563. https://doi.org/10.1108/ejim-02-2018-0043 faber, b. & gaubert, c., 2019, ‘tourism and economic development: evidence from mexico’s coastline’, american economic review 109(6), 2245–2293. https://doi.org/10.1257/aer.20161434 famiola, m. & hartati, s., 2018, ‘entrepreneurship learning system in business incubators: a case study in indonesia’, international journal of engineering & technology 7(4.28), 57–62. findtripinfo.co.za, 2014, a travel guide to the countries of africa compiled by local destination specialists, map of the northern cape, viewed 25 august 2019, from http://www.findtripinfo.com/south-africa/northern-cape/diamond-fields.html. fominienė, a. & grigaitienė, v., 2017, ‘assessment of the feasibility to improve business incubation process’, regional formation and development studies 21(1), 34–42. https://doi.org/10.15181/rfds.v21i1.1407 francis, j.j., johnston, m., robertson, c., glidewell, l., entwistle, v., eccles, m.p. et al., 2010, ‘what is an adequate sample size? operationalising data saturation for theory-based interview studies’, psychology and health 25(10), 1229–1245. https://doi.org/10.1080/08870440903194015 fransman, t. & yu, d., 2018, multidimensional poverty in south africa in 2001-2016, no. 07/2018, pp. 1–41, department of economics, stellenbosch university, stellenbosch. https://doi.org/10.1080/0376835x.2018.1469971 gadea, e.s., 2016, ‘economic and social profitability of the incubators of the valencian community during the period 2004–2014’, university of alicante, doctoral thesis. galiyeva, n. & fuschi, d.l., 2018, ‘a research proposal for measuring the effectiveness of business incubators’, journal of organisational studies and innovation 5(3), 32–46. gerlach, s. & brem, a., 2015, ‘what determines a successful business incubator? introduction to an incubator guide’, international journal of entrepreneurial venturing 7(3), 286–307. https://doi.org/10.1504/ijev.2015.071486 godeiro, d.p.d.o., dantas, m.l.r., silva, d.c.d. & celestino, m.d.s., 2018, ‘application of importance and performance matrix to assess the quality of services provided by business incubators’, iberoamerican journal of entrepreneurship and small business 7(2), 01–30. https://doi.org/10.14211/regepe.v7i3.704 gozali, l., maslin, m., haron, h.n. & zagloel, t.y.m., 2015, ‘critical success factors of successful e-business incubators framework in indonesian public universities’, the asian journal of technology management 8(2), 118–131. https://doi.org/10.14716/ijtech.v9i5.1363 gozali, l., masrom, m., zagloel, t.y.m., haron, h.n., dahlan, d., daywin, f.j. et al., 2018, ‘critical success and moderating factors effect in indonesian public universities’ business incubators’, international journal of technology 9(5), 1049–1060. grimaldi, r. & grandi, a., 2005, ‘business incubators and new venture creation: an assessment of incubation models’, technovation 25(2005), 111–121. https://doi.org/10.1016/s0166-4972(03)00076-2 guerrero, m., urbano, d., cunningham, j.a. & gajon, e., 2018, ‘determinants of graduates’ start-ups creation across a multi-campus entrepreneurial university: the case of monterrey institute of technology and higher education’, journal of small business management 56(1), 150–178. https://doi.org/10.1111/jsbm.12366 hackett, s.m. & dilts, d.m., 2004, ‘a real options-driven theory of business incubation’, the journal of technology transfer 29(1), 41–54. https://doi.org/10.1023/b:jott.0000011180.19370.36 hackett, s.m. & dilts, d.m., 2008, ‘inside the black box of business incubation: study b – scale assessment, model refinement, and incubation outcomes’, the journal of technology transfer 33(5), 439–471. https://doi.org/10.1007/s10961-007-9056-9 harter, g., hölbling, k. & leistner, s., 2000, ‘corporate incubation – a new approach to innovation’, booz-allen & hamilton 6(3), 1–6. hausberg, j.p. & korreck, s., 2018, ‘business incubators and accelerators: a co-citation analysis-based, systematic literature review’, the journal of technology transfer 2018(january), 1–26. https://doi.org/10.1007/s10961-018-9651-y herber, d.l., mendez-hinds, j., miner, j., sedam, m.c., wozniak, k., mcdevitt, v.l. et al., 2017, ‘university seed capital programs: benefits beyond the loan’, technology & innovation 18(4), 305–314. https://doi.org/10.21300/18.4.2017.305 honig, b. & karlsson, t., 2010, ‘social capital and the modern incubator: a comparison of in-group and out-group social networks’, journal of small business and entrepreneurship 23(2010), 719–731. https://doi.org/10.1080/08276331.2010.10593512 indiran, l., khalifah, z., & ismail, k., 2015, ‘a historical review of business incubation models’, proceedings of the 4th international seminar on entrepreneurship and business (iseb2015), pp. 2–751, universiti malaysia kelantan, pentan. ikebuaku, k. & dinbabo, m., 2018, ‘beyond entrepreneurship education: business incubation and entrepreneurial capabilities’, journal of entrepreneurship in emerging economies 10(1), 154–174. https://doi.org/10.1108/jeee-03-2017-0022 infodev, 2014, an evaluation and impact assessment of business incubation models in eastern europe and central asia: an infodev study of nine business incubators in armenia, belarus, kazakhstan, poland, romania, the russian federation, serbia and turkey, the world bank, washington, dc, pp. 1–134. isabelle, d., 2013, ‘key factors affecting a technology entrepreneur’s choice of incubator or accelerator’, technology innovation management review 3(2), 16–22. https://doi.org/10.22215/timreview656 jacobs, l., du preez, e. & fairer-wessels, f., 2019a, rough road to the stars: a route development framework for astro tourism in the karoo arid region, travel and tourism research association: advancing tourism research globally, pp. 88, viewed 04 march 2019, from https://scholarworks.umass.edu/ttra/2019/research_papers/88. jacobs, l., du preez, e.a. & fairer-wessels, f., 2019b, ‘to wish upon a star: exploring astro tourism as vehicle for sustainable rural development’, development southern africa 2019, 1–18. https://doi.org/10.1080/0376835x.2019.1609908 james, d.w. & maria, p.a., 2017, ‘marketing challenges for south african public sector business incubators’, journal of competitiveness 9(4), 19–39. https://doi.org/10.7441/joc.2017.04.02 jones, m., 2010, ‘how to create an award winning incubator?’, 9th annual conference: best practices in science based incubation, liverpool, united kingdom, 17–19th november, n.p. kapinga, a.f., montero, c.s., mwandosya, g.i. & mbise, e.r., 2018, ‘exploring the contribution of business and technology incubators to women entrepreneurs’ business development in dar es salaam, tanzani’, journal of global entrepreneurship research 8(1), 1–14. https://doi.org/10.1186/s40497-018-0111-9 kepenek, e.b. & eser, z., 2018, ‘impact of pre-incubators on entrepreneurial activities in turkey: problems, successes, and policy recommendations’, in d. meissner, e. erdil & j. chataway (eds.), innovation and the entrepreneurial university, pp. 57–82, springer, cham. laino, a., 2019, ‘technological transfer in italy: from university to the industry: brief analysis’, international journal of academic research in business and social sciences 9(3), 157–168. https://doi.org/10.6007/ijarbss/v9-i3/5645 lamine, w., mian, s., fayolle, a., wright, m., klofsten, m. & etzkowitz, h., 2018, ‘technology business incubation mechanisms and sustainable regional development’, the journal of technology transfer 43(5), 1121–1141. https://doi.org/10.1007/s10961-016-9537-9 lazarowich, m. & wojciechowski, m.j., 2002, russian business incubator program, phase one: prospect development and strategic plan, pp. 1–40, school of planning, university of waterloo, waterloo, on. li, c., ur rehman, h. & asim, s., 2019, ‘induction of business incubator centers in educational institutions: an effective approach to foster entrepreneurship’, journal of entrepreneurship education 22(1), 1–12. lilenstein, k., woolard, i. & leibbrandt, m., 2018, ‘23 in-work poverty in south africa: the impact of income sharing in the presence of high unemployment’, in i. marx & h. lohmann (eds.), handbook on in-work poverty, southern africa labour and development research unit working papers 193, p. 416, saldru, university of cape town, cape town. liu, j., jiang, x. & hu, x., 2018, ‘research on the status quo and countermeasures of college students’ entrepreneurship incubator platform construction – take yulin college as an example’, in 8th international conference on social network, communication and education (snce 2018), shenyang, china, 2–4 march, n.p. littlewood, d. & holt, d., 2018, ‘social entrepreneurship in south africa: exploring the influence of environment’, business & society 57(3), 525–561. https://doi.org/10.1177/0007650315613293 lose, t., nxopo, z., maziriri, e. & madinga, w., 2016, ‘navigating the role of business incubators: a review on the current literature on business incubation in south africa’, acta universitatis danubius. economica 12(5), 130–140. https://doi.org/10.3390/su71014344 lose, t. & tengeh, r.k., 2015, ‘the sustainability and challenges of business incubators in the western cape province, south africa’, sustainability 7(2015), 14344–14357. https://doi.org/10.3390/su71014344 lukeš, m., longo, m.c. & zouhar, j., 2019, ‘do business incubators really enhance entrepreneurial growth? evidence from a large sample of innovative italian start-ups’, technovation 82, 25–34. https://doi.org/10.1016/j.technovation.2018.07.008 mahadea, d. & kaseeram, i., 2018, ‘impact of unemployment and income on entrepreneurship in post-apartheid south africa: 1994–2015’, the southern african journal of entrepreneurship and small business management 10(1), 1–9. https://doi.org/10.4102/sajesbm.v10i1.115 mahmood, n., jianfeng, c., munir, h., yanran, m. & cai, y., 2016, ‘incubators, smes, and economic development of china’, international journal of multimedia and ubiquitous engineering 11(1), 311–318. https://doi.org/10.14257/ijmue.2016.11.1.29 malan, j. & hammarlund, c., 2002, benchmarking of business incubators, european commission enterprise director-general, centre for strategy & evaluation services, pp. 1–30, viewed 04 march 2019, from http://businessincubation.com.au/wp-content/uploads/benchmarking-incubators.pdf. malecki, e.j. & nijkamp, p., 1988, ‘technology and regional development: some thoughts on policy’, environment and planning: government and policy 6(1988), 383–399. https://doi.org/10.1068/c060383 mansoori, y., karlsson, t. & lundqvist, m., 2019, ‘the influence of the lean startup methodology on entrepreneur-coach relationships in the context of a startup accelerator’, technovation 84–85(june–july), 37–47. https://doi.org/10.1016/j.technovation.2019.03.001 mansur, m.s. & abuga, i., 2017, ‘incubator based activities and technology entrepreneurship growth in north western nigeria’, kiu journal of humanities 2(1), 157–168. maraqa, a. & darmawan, a., 2016, ‘enhancing the role of networked business incubators as a catalyst of promoting trading business among oic’, international journal of islamic business 1(1), 29–49. masutha, m. & rogerson, c.m., 2014, ‘small business incubators: an emerging phenomenon in south africa’s smme economy’, urbani izziv 25, s47–s63. https://doi.org/10.5379/urbani-izziv-en-2014-25-supplement-004 mcadam, m. & mcadam, r., 2008, ‘high tech start-ups in university science park incubators: the relationship between the start-up’s lifecycle progression and use of the incubator’s resources’, technovation 28(5), 277–290. https://doi.org/10.1016/j.technovation.2007.07.012 mcdonald-junor, d., rossiter, w. & smith, d., 2018, ‘from commercialising intellectual property to facilitating open innovation: the evolution of uk biotechnology incubators’, r & d management conference, r&designing innovation: transformational challenges for organizations and society, milan, italy, june 30–july 04, 2018, pp. 1–12. meru, a.k. & struwig, m., 2015, ‘business-incubation process and business development in kenya: challenges and recommendations’, journal of entrepreneurship and innovation in emerging economies 1(1), 1–17. https://doi.org/10.1177/2393957514554982 miranda, m.g. & borges, r., 2019, ‘technology-based business incubators: an exploratory analysis of intra-organizational social networks’, innovation & management review 16(1), 36–54. https://doi.org/10.1108/inmr-04-2018-0017 mohamad, m. & chin, o., 2019, ‘business networking and sustainability of small rural business: mediating effects of entrepreneurial orientation’, management science letters 9(4), 595–606. https://doi.org/10.5267/j.msl.2019.1.003 moreira, a.c., marta, f.s. & carvalho, m.f.s., 2012, ‘incubation of new ideas: extending incubation models to less-favored regions’, in t. burger-helmchen (ed.), entrepreneurship, creativity and innovative business models, pp. 41–58, instituto superior da maia portugal. mostert, w., niemann, w. & kotze, t., 2017, ‘supply chain integration in the product return process: a study of consumer electronics retailers’, acta commercii – independent research journal in the management sciences 17(1), 1–16. https://doi.org/10.4102/ac.v17i1.487 mrkajic, b., 2017, ‘business incubation models and institutionally void environments’, technovation 68, 44–55. https://doi.org/10.1016/j.technovation.2017.09.001 mthombeni, t.f., 2019, ‘vegetation classification of the witsand nature reserve, northern cape province, south africa’, doctoral dissertation, university of the free state. muñoz, p. & cohen, b., 2018, ‘a compass for navigating sharing economy business models’, california management review 61(1), 114–147. https://doi.org/10.1177/0008125618795490 nair, s. & blomquist, t., 2018, ‘the temporal dimensions of business incubation: a value-creation perspective’, the international journal of entrepreneurship and innovation 1–22. https://doi.org/10.1177/1465750318817970 nair, s. & blomquist, t., 2019, ‘failure prevention and management in business incubation: practices towards a scalable business model’, technology analysis & strategic management 31(3), 266–278. https://doi.org/10.1080/09537325.2018.1495325 navarro, l., 2018, ‘entrepreneurship policy and firm performance chile’s corfo seed capital program’, estudios de economía 45(2), 301–316. https://doi.org/10.4067/s0718-52862018000200301 nicolopoulou, k., karataş-özkan, m., vas, c. & nouman, m., 2017, ‘an incubation perspective on social innovation: the london hub–a social incubator’, r&d management 47(3), 368–384. https://doi.org/10.1111/radm.12179 niemann, w., kotze, t. & mannya, k., 2018, ‘global sourcing risk management approaches: a study of small clothing and textile retailers in gauteng’, the southern african journal of entrepreneurship and small business management 10(1), 1–15. https://doi.org/10.4102/sajesbm.v10i1.141 njau, j.m., mwenda, l.k.m. & wachira, a.w., 2019a, ‘effect of infrastructural facilities support provided by business incubators on technology based new venture creation in kenya’, international journal of entrepreneurship and project management 4(1), 17–32. njau, j.m., wachira, a.w. & mwenda, l.k.m., 2019b, ‘effect of access to networks support provided by business incubators on technology based new venture creation in kenya’, international journal of entrepreneurship and project management 4(1), 33–50. nowak, m.j. & grantham, c.e., 2000, ‘the virtual incubator: managing human capital in the software industry’, research policy 29(2), 125–134. https://doi.org/10.1016/s0048-7333(99)00054-2 olkiewicz, m., wolniak, r., eva-grebski, m. & olkiewicz, a., 2019, ‘comparative analysis of the impact of the business incubator center on the economic sustainable development of regions in usa and poland’, sustainability 11(1), 1–22. https://doi.org/10.3390/su11010173 olokundun, a.m., ogbari, m.e., obi, j.n. & ufua, d.e., 2019, ‘business incubation and student idea validation: a focus on nigerian universities’, journal of entrepreneurship education 22(1), 1–6. o’neal, t., 2005, ‘evolving a successful university-based incubator: lessons learned from the ucf technology incubator’, engineering management journal 17(3), 1–15. https://doi.org/10.1080/10429247.2005.11415293 pauwels, c., clarysse, b., wright, m. & van hove, j., 2016, ‘understanding a new generation incubation model: the accelerator’, technovation 50(51), 13–24. https://doi.org/10.1016/j.technovation.2015.09.003 park, k.h. & kim, j., 2016, ‘manual of the korean business incubator model’, rehoboth 1–18, viewed 04 march 2019, from http://www.mekongbiz.org/wp-content/uploads/2017/07/incubator-manual.pdf. perdomo, g., alvarez, c. & urbano, d., 2014, ‘analyzing a successful incubator business model: the case of barcelona activa’, in i. gil-pechuán, d. palacios-marqués, m.p. peris-ortiz, e. vendrell & c. ferri-ramirez (eds.), strategies in e-business: positioning and social networking in online markets, pp. 39–54, springer, boston, ma. plano clark, v. & creswell, j., 2015, understanding research: a consumer’s guide, 2nd edn., pearson higher education, upper saddle river, nj. polit, d.f. & beck, c.t., 2012, nursing research: generating and assessing evidence for nursing practise, 9th edn., lippincott williams & wilkins, philadelphia, pa. romein, a. & trip, j.j., 2017, ‘the role of business incubators in the development of sustainable clusters of cultural and creative industries’, international journal of sustainable development planning 12(3), 435–445. https://doi.org/10.2495/sdp-v12-n3-435-445 rosa, m.c.w., sukoharsono, e.g. & saraswati, e., 2019, ‘the role of venture capital on start-up business development in indonesia’, journal of accounting and investment 20(1), 55–74. https://doi.org/10.18196/jai.2001108 sagath, d., van burg, e., cornelissen, j.p. & giannopapa, c., 2019, ‘identifying design principles for business incubation in the european space sector’, journal of business venturing insights 11(2019), 1–31. https://doi.org/10.1016/j.jbvi.2019.e00115 sanyal, s. & hisam, m.w., 2018, ‘the role of business incubators in creating an entrepreneurial ecosystem: a study of the sultanate of oman’, indian journal of commerce and management studies 9(3), 60–77. https://doi.org/10.18843/ijcms/v9i3/02 sari, n.e., 2018, ‘the influence of technological training on entrepreneurship and the success of micro, small and middle business tenant of business and technology incubator’, journal of business studies and management review 2(1), 39–46. smilor, r.w., 1987, ‘managing the incubator system: critical success factors to accelerate new company development’, ieee transactions of engineering management 34(3), 146–156. soetanto, d., 2004, research of the role of the incubation policy in helping the growth of new technology based firms, globelics academy, lisbon. statistics south africa, 2016, the south i know; the home i understand, viewed 25 march 2019, from http://www.statssa.gov.za/?page_id=964. stefko, r. & steffek, v., 2017, ‘a study of creative industry entrepreneurial incubation’, polish journal of management studies 15(2), 250–261. https://doi.org/10.17512/pjms.2017.15.2.23 sudana, i.m., apriyani, d., supraptono, e. & kamis, a., 2019, ‘business incubator training management model to increase graduate competency’, benchmarking: an international journal 26(3), 773–787. https://doi.org/10.1108/bij-03-2018-0069 tello, s., yang, y. & latham, s., 2012, ‘nascent entrepreneurs access and use of network resources in a technology incubator’, journal of small business management and entrepreneurship 25(3), 375–397. https://doi.org/10.1080/08276331.2012.10593579 tengeh, robertson, k. & choto, p., 2015, ‘the relevance and challenges of business incubators that support survivalist entrepreneurs’, investment management and financial innovations 12(2), 150–161. theodorakopoulos, n.k., kakabadse, n. & mcgowan, c., 2014, ‘what matters in business incubation? a literature review and a suggestion for situated theorising’, journal of small business and enterprise development 21(4), 602–622. https://doi.org/10.1108/jsbed-09-2014-0152 torun, m., 2016, business accelerators and their differences from incubators, researchgate, viewed 04 february 2017, from https://www.researchgate.net/publication/311810125_business_accelerators_and_their_differences_from_incubators. torun, m., peconick, l., sobreiro, v., kimura, h. & pique, j., 2018, ‘assessing business incubation: a review on benchmarking’, international journal of innovation studies 2(2018), 91–100. https://doi.org/10.1016/j.ijis.2018.08.002 tselepis, t.j., 2018, ‘when clothing designers become business people: a design centred training methodology for empowerment incubation’, international journal of fashion design, technology and education 11(3), 299–309. https://doi.org/10.1080/17543266.2018.1431809 van weele, m., van rijnsoever, f.j., eveleens, c.p., steinz, h., van stijn, n. & groen, m., 2018, ‘start-eu-up! lessons from international incubation practices to address the challenges faced by western european start-ups’, the journal of technology transfer 43(5), 1161–1189. https://doi.org/10.1007/s10961-016-9538-8 van weele, m.a., van rijnsoever, f.j., groen, m. & moors, e.h., 2019, ‘gimme shelter? heterogeneous preferences for tangible and intangible resources when choosing an incubator’, the journal of technology transfer 3(2019), 1–32. verman, s., 2004, success factors for business incubators: an empirical study of canadian business incubators, eric sprott school of business, carleton university, ottawa, on. vermeulen, y, niemann, w. & kotze, t., 2016, ‘supply chain integration: a qualitative exploration of perspectives from plastic manufacturers in gauteng’, journal of transport and supply chain management 10(1), 1–13. https://doi.org/10.4102/jtscm.v10i1.223 von zedtwitz, m., 2003, ‘classification and management of incubators: aligning strategic objectives and competitive scope for new business facilitation’, international journal of entrepreneurship and innovation management 3(2), 176–196. https://doi.org/10.1504/ijeim.2003.002227 wenner, m.d., bollers, e., clarke, d. & pasha, s., 2018, small business survival in guyana: insights and implications, no. idb-tn-01428, inter-american development bank, pp. 1–43, viewed 04 march 2019, from https://publications.iadb.org/en/small-business-survival-guyana-insights-and-implications. wiggins, j. & gibson, d.v., 2003, ‘overview of us incubators and the case of the austin technology incubator’, international journal of entrepreneurship and innovation management 3(2), 56–66. https://doi.org/10.1504/ijeim.2003.002218 wolniak, r. & grebski, m.e., 2018, ‘comparative analysis of the level of satisfaction with the services received at the business incubators in usa and poland–pre-incubation and incubation stage’, production engineering archives 20(2018), 38–42. https://doi.org/10.30657/pea.2018.20.08 xiao, l. & north, d., 2018, ‘the role of technological business incubators in supporting business innovation in china: a case of regional adaptability?’, entrepreneurship & regional development 30(2), 29–57. https://doi.org/10.1080/08985626.2017.1364789 yakubova, t.n. & moustoifa, s.b., 2019, ‘strategies of small enterprises development in african countries’, regional science inquiry 11(1), 136–142. young, j., 2017, a regional overview of the northern cape, viewed 29 march 2018, from https://www.globalafricanetwork.com/2017/07/06/company-news/a-regional-overview-of-the-northern-cape/. yusubova, a. & clarysse, b., 2016, ‘success factors of business accelerators in three european cities: paris, london, berlin’, in p.h. phan, s.a. mian & w. lamine (eds.), technology entrepreneurship and business incubation: theory, practice, lessons learned, pp. 35–56, imperial college press, london. zheng, j., mi, z., milcheva, s., shan, y., guan, d. & wang, s., 2019, ‘regional development and carbon emissions in china’, energy economics 81, 25–36. https://doi.org/10.1016/j.eneco.2019.03.003 abstract introduction literature review methodology data analysis findings and discussion financial literacy scores financial literacy scores across age groups financial literacy scores across gender financial literacy scores across marital status financial literacy scores across educational levels financial literacy scores across business sectors financial literacy scores by years of operation financial literacy scores by business experience overall financial literacy score for the study of population extraction method: principal component analysis conclusion acknowledgements references about the author(s) margaret mashizha graduate school of business and leadership, university of kwazulu-natal, durban, south africa mabutho sibanda school of economics and accounting, university of kwazulu-natal, westville campus, durban, south africa blessing maumbe faculty of commerce, bindura university of science education, bindura, zimbabwe citation mashizha, m., sibanda, m. & maumbe, b., 2019, ‘financial literacy among small and medium enterprises in zimbabwe’, southern african journal of entrepreneurship and small business management 11(1), a241. https://doi.org/10.4102/sajesbm.v11i1.241 original research financial literacy among small and medium enterprises in zimbabwe margaret mashizha, mabutho sibanda, blessing maumbe received: 11 jan. 2019; accepted: 13 aug. 2019; published: 12 nov. 2019 copyright: © 2019. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: global concerns about financial literacy have heightened following the 2007–2008 global financial crisis during which it became apparent that lack of financial literacy was one of the factors that contributed to detrimental financial decision making. this recognition shows that poor financial decisions have a harmful overspill impact on financial and economic stability in a country. complex financial markets call for exceptional levels of financial competence to enable individuals and business people to make intelligent choices among competing financial products. the study was conducted in two provinces of zimbabwe, namely, harare and mashonaland central province among small and medium enterprises (smes) who were in operation. aim: the study sought to ascertain the level of financial literacy among smes business owners and to identify factors that influence the financial literacy levels. the research will give an insight on the state of preparedness of smes to participate in highly complicated financial markets. this adds to the existing scarce literature in sub-saharan africa on financial literacy levels among smes. setting: the study was conducted among smes who reside in two provinces of zimbabwe namely harare province and mashonaland central province. methods: a quantitative cross-sectional research design was employed, with data collected by means of a questionnaire administered to a sample of 384 smes in harare and bindura districts. results: findings revealed lower levels of financial literacy among smes. the main variables influencing financial literacy levels were interest rates and inflation. conclusion: the study concludes that financial literacy among smes is low, and hence there is a need to introduce financial literacy education among small business owners. it is recommended that measurement of financial literacy be extended to different population cohorts to provide baseline data on which policies can be crafted. keywords: financial literacy; small and medium enterprises; interest rates; inflation; zimbabwe. introduction a favourable economic environment is crucial to the success of small and medium enterprises (smes) in any economy. in light of this, various governments have prioritised this sector and channelled resources for its growth and development (fatoki 2014; nunoo & andoh 2012). such initiatives are a recognition that smes are the major drivers of economic growth and development (adomako, danso & damoah 2015; eniola & entebang 2017; refera, dhaliwal & kaur 2016) and certainly a means to achieve the sustainable development goals (sdgs). like other governments, zimbabwe has implemented several support strategies to ascertain the continued existence of this key economic sector. the most recent strategy is spelt out in zimbabwean economic blueprint, the zimbabwe agenda for sustainable socio-economic transformation (zim-asset), crafted to achieve sustainable development and social equity anchored on indigenisation, empowerment and employment creation. in that plan, the sme sector is identified as one of the principal sectors in the economy that has the potential for facilitating the achievement of the ‘sustainable social-economic transformation’ agenda of the government (zimasset 2013). in an endeavour to strengthen the functioning of the sme sector, financial literacy has been considered a prerequisite for the sector, as business owners make routine financial decisions daily that have a bearing on their success and growth (arellano, cámara & tuesta 2018; cucinelli, trivellato & zenga 2019). thus, in order to operate efficiently and attain the envisaged economic growth and sustainability, smes need to be equipped with the necessary skills to undertake effective financial decisions (mabhanda 2015). a key economic observation has been that financial markets are now more accessible to small investors, offering a variety of financial products from which the consumer has to choose (bongini & zia 2018; lusardi & mitchell 2011; skagerlund et al. 2018). however, the choice is not an easy one, as there are serious penalties that come with each inappropriate financial decision taken (nunoo & andoh 2012; oseifuah 2010), resulting in underscoring the essentiality of financial literacy. financial literacy has been made a priority by several governments globally to deal with the need to increase financial knowledge and the skills necessary for entrepreneurs to navigate the financial world. in addition, financial literacy plays a pivotal role in economies achieving economic growth and development (bongini & zia 2018; lusardi & mitchell 2011; nkomazana, sibanda & duve 2015; organisation for economic co-operation and develpoment [oecd] 2013). however, gaurav and singh (2012), as well as fatoki and oni (2014), noted that similar studies are conducted in the developed economies but are less so in emerging economies. although the world bank conducted studies of financial literacy within several emerging economies, the study excluded zimbabwe (nkomazana et al. 2015; xu & zia 2012); therefore, the main purpose of this research is to extend the dialogue on financial literacy by placing zimbabwe on the map. these results form a baseline to conduct further research on financial literacy. the problem addressed in this study is a result of observations made by various stakeholders which pointed to acute financial illiteracy among smes. studies conducted in zimbabwe showed that most smes (85%) are informal and are financially excluded (maseko & manyani 2011; world bank 2012). in many of these enterprises, records of business transactions are non-existent (mabhanda 2015; mandizvidza & mapepeta 2017) and, where they do, these are often times incomplete. in his study, mabhanda (2015) found lack of financial literacy among smes being apparent, as evidenced by the absence of proper accounting records. these behaviour patterns have made it difficult for smes to access funds from the established financial institutions, as they lack the ability to write convincing business proposals (cole, sampson & zia 2011; reserve bank of zimbabwe [rbz] 2016), which stifles growth and often leads to business failure. mabhanda (2015) as well as abel (2016) suggest that the problem of financial literacy requires immediate attention if business entities are to survive; hence, the focus of this study. government efforts aimed at the development of the sme sector have not been as fruitful as anticipated, as the growth of the sector remains sluggish with many of them still financially excluded (world bank 2012), and the sector still records high mortality rates during the early stages of operation. while business failure can be explained by several economic and social factors, financial illiteracy has a fair share to the mishap, hence, the increased attention by the central bank towards an inclusive financial sector where financial literacy is also emphasised (rbz 2016). smes’ contribution to the national economy has failed to meet expectations despite the preferential treatment given to the sector and the faith that policy makers have placed in it (nyamwanza 2014). this study therefore aims to suggest a solution to the challenge by addressing the problem through determining the level of financial literacy of small and medium size business owners. this will enable the formulation of customised policies that promote the long-term profitability and survival of these smes. specifically, this research seeks to answer the following questions: what is the level of financial literacy of small and medium size business owners in zimbabwe? what factors influence the level of financial literacy of small and medium size business owners? literature review financial literacy means different things to different people, and to this end, there is no universally agreed definition of financial literacy (cude 2010; huston 2010; knoll & houts 2012; remund 2010; schmeiser & seligman 2013). however, united states agency for international development (usaid) (2009) define a financially literate sme owner as someone who makes sound financial decisions at various stages of the business cycle and shows an exceptional ability to secure correct financial products. the same individual is able to interact confidently with the suppliers of products and services. financial literacy is acknowledged globally as a critical component of human capital that influences both financial stability and economic growth (lusardi & mitchell 2011; oecd 2013). the research is informed by two main theories, the resource-based theory and economic theories of savings and consumption. according to the resource-based theory by penrose (1959), later developed by lippman and rumelt (2003); wernerfelt (1984); barney (1991); grant (1991) and peteraf (1993), a firm’s resources can be combined to create a competitive advantage (alvarez & busenitz 2001; barney 1991; ferreira, azevedo & ortiz 2011). this will enable a firm to identify new opportunities and new venture growth and consequently realise its full economic value (foss 2011). theories of savings and consumption, such as the relative income hypothesis by duesenberry (1949), the life cycle theory of consumption and spending (modgliani & brumberg 1954) and the permanent income hypothesis (friedman 1957) assume that consumers are able to vary savings and consumption during their lifetime and this requires exceptional levels of financial literacy (lusardi & mitchell 2011). it has been proven that financial literacy is essential in any economy (arrellano et al. 2018; cucinelli et al. 2019; mancebon et al. 2019), and there are four groups of beneficiaries for financial literacy identified as the individual (kezar & yang 2010; lusardi & mitchell 2011), the economy (capuano & ramsay 2011; lusardi & mitchell 2011; rbz 2016; wachira & kihiu 2012), the financial system (refera et al. 2016) and finally the sme sector (adomako et al., 2015; bruhn & zia 2011; gibson, mckenzie & zia 2014; nunoo & andoh 2012; wise 2013). financial literacy is important to the individual who makes daily decisions on budgets (capuano & ramsay 2011; wachira & kihiu 2012), savings (cole et al. 2011) and wealth creation (japelli & padulo 2013; lusardi & mitchell 2011), among other critical decisions. previous research studies documented that the financially literate display an outstanding ability to manage their financial resources, they are active participants in the stock market as evidenced by their accumulation of a diversified portfolio of assets (lusardi & mitchell 2011), and are cautious of debt (calderon 2014; gerardi, goette & meier 2013; wachira & kihiu 2012). to the financial sector, financial literacy also enhances efficiency through fostering market discipline (wachira & kihiu 2012), ensuring efficient allocation of resources (capuano & ramsay 2011; wachira & kihiu 2012) and facilitating an inclusive financial sector (nunoo & andoh 2012). for the small business owner, financial literacy is not an optional skill. entrepreneurs who are financially literate make routine decisions that direct operations of the firm (adomako et al. 2015). most studies have concluded on a relationship between financial literacy and financial business outcomes (adomako & danso 2014; bruhn & zia 2011; fatoki & oni 2014; lusardi & scheresberg 2013). lusardi, mitchelle & curto (2009) mention that smes that make inappropriate financial decisions have a heavy presence in the informal financial systems and make incorrect borrowing decisions, such as taking up expensive debt, hence, the increasing interest in financial literacy of smes (bruhn & zia 2011; cumurovic & hyll 2019; jayachandran & pande 2010; mckenzie & woodruf 2014). considering the importance of financial literacy to various economic sectors, it is unfortunate that research studies reveal widespread financial illiteracy across the globe (arrellano et al. 2018; atkinson & messy 2011; eniola & entebang 2017; lusardi & mitchell 2011; 2014; nunoo & andoh 2012; refera et al. 2016). a correlation has been established between financial illiteracy and results of poor financial decisions (calderon 2014; cole et al. 2011; lusardi & mitchelle 2014, 2016; wachira & kihiu 2012), and this finding has raised concerns about how to improve the situation (calderon 2014; eniola & entebang 2017; refera et al. 2016; wachira & kihiu 2012). acute financial illiteracy has been noted among the old and the young (alessie, van rooij & lusardi 2011; lusardi & mitchell 2011; gerardi et al., 2013; kadoya & khan 2019; xu & zia 2012), among women (hasler & lusardi 2017; hung, yoong & brown 2012; kadoya & khan 2019; lusardi & mitchell 2011; menkhoff et al. 2014; west & worthington 2016; xu & zia 2012) and among the less educated (agarwalla et al. 2013; lusardi 2011; west & worthington 2016). the current study seeks to ascertain the level of financial literacy among small and medium size business owners in zimbabwe. this is because not all sme owners are financially literate as evidenced by several business failures attributed to poor financial management (eniola & entebang 2017). the absence of baseline data on the level of financial literacy of different population cohorts impedes the formulation and implementation of financial literacy enhancement programs (refera et al. 2016), hence, the purpose of this study. the main objectives of the research therefore are to measure the level of financial literacy of smes and identify variables that explain financial literacy among this population group. methodology this survey employed a quantitative approach where multi-stage cluster sampling was used to draw a sample of 400 owners of small and medium size businesses housed in harare and bindura districts. multi-stage cluster sampling was deemed suitable for the study because of the absence of an existing sampling frame. furthermore, smes are a large geographically dispersed population making it difficult to compile an exhaustive list of all smes in zimbabwe and hence clustering significantly reduced the cost of data collection. a survey design was adopted as it enabled the gathering of a large amount of data (saunders, lewis & thornhill 2007). additionally, the target respondents are used to completing questionnaires and they could take the survey and complete it anywhere resulting in adequate data for the study (creswell 2014). the objectives of the study were to determine the level of financial literacy among sme business owners and to identify the factors that explain financial literacy of sme business owners, and in this regard a self-administered questionnaire containing 52 questions was used to collect data. the questionnaire was developed based on previous research studies by the oecd (2013) and lusardi and mitchell (2014). the oecd (2013) survey instrument was developed to measure the financial literacy of people in different countries from different backgrounds, and has been used in a pilot study in 14 countries across four continents (atkinson & messy 2012). for consistency and comparison, the oecd (2013) recommends the use of the instrument across nations. the questionnaire was composed of two sections, the first section contained questions that captured the socio-demographic characteristics of the respondents relating to gender, age, and family size, as well as their business characteristics, such as type of business, experience of the owner, period of operation, number of employees and sales turnover. the second section contained nine questions that measure financial literacy. the questions measure the respondents’ understanding of interest rates, inflation and risk diversification, which have been identified as the ‘standard’ measures of financial literacy as recommended by lusardi & mitchell (2011) and have been used in numerous surveys across the globe. these questions were developed following intelligence gathered from savings and portfolio selection by americans, and have been used extensively because of their simplicity, relevance, brevity and their capacity to differentiate to enable comparisons across people (lusardi & mitchell 2011). the section also included questions that assessed the respondents’ mathematical ability by testing arithmetic competence, such as adding, subtracting, dividing and multiplying. numerical ability is deemed an essential component of financial literacy (erner, goedde-menke & oberste 2016; ritsalu & poder 2016; sinayev & peters 2015). skagerlund et al. (2018) found that numeracy was the strongest predictor of financial literacy; hence, the inclusion of these questions in the research. reliability of the instrument was measured using internal consistency that ensures that there is regularity in the way the participants respond to the multiple items on the scale (adams & lawrence 2015), while validity had been tested by previous researchers who had used the instrument before, such as the oecd (2013) and lusardi and mitchell (2014). in addition, a pilot study was conducted and necessary amendments were made to the questionnaire before distribution to the final respondents. data analysis data were analysed using statistical package for social sciences (spss versionn 22) and presented using frequency distribution tables. a principal component analysis was employed to help single out variables that best describe financial literacy. financial literacy levels were determined using the scoring approach, where a percentage of correct responses against the total was given. the financial literacy score was given by (eqn 1): ethical considerations this article followed all ethical standards for carrying out research without direct contact with human or animal subjects. findings and discussion table 1 shows that of the 400 questionnaires distributed, 278 usable responses were collected; thus, achieving a response rate of 70%. table 1: questionnaire response rate. table 2 is a summary of the demographic characteristics of the respondents. table 2: respondents’ demographic characteristics. approximately three quarters (72%) of the respondents were aged between 18 and 39, 20.8% were aged between 40 and 49, while 7.2% were aged between 50 and 69 years. approximately 54.7% were married and 37.4% were single, while the rest were widowed, separated or divorced. of the total respondents, 61% were male and 39% female, and 41% had been to secondary school and 4.3% had either primary education or no formal education. about half of the respondents (54.7%) were either university graduates or possessed technical or professional qualifications showing a high literacy rate among the respondents. in terms of the business sector, 32.7% of the respondents were from the wholesale and retail sector, 14% from the manufacturing sector, 12.6% from the agricultural sector, 9.4% from the art, culture, education and sport sector, construction sector had 6.1% respondents and 16.5% were from other sectors. about 83.8% had been in business for 5 years or less, while 12.6% had been in business for 6–10 years and only 3.6% had been in operation for more than 10 years. of the total respondents, 86.7% had between 1 and 5 years of prior business experience, 5.8% had between 6 and 10 years’ experience and 5% had no experience at all. financial literacy scores the main objective of the research was to ascertain the level of financial literacy of smes in zimbabwe, and identify the variables that explain the financial literacy levels. findings from responses to each of the financial literacy questions are presented in table 3. table 3: responses to financial literacy questions. the first question measured the respondents’ knowledge of calculating compound interest, and, as shown in table 1, 74.5% of the respondents were able to calculate compound interest rates and 25.5% were not. the second question measured an understanding of inflation in the context of financial decision making. findings of the research revealed that respondents were knowledgeable about inflation as indicated by 71.6% of the respondents who answered the question correctly, while 12.2% did not know. the third question tested understanding of the difference between stocks and mutual funds as well as risk diversification. only 36% of the respondents answered correctly, showing a low level of understanding of the stock market. although most respondents did not know the difference between stocks and a stock mutual fund, they knew that an investment with a higher return is associated with high risk. responses to question 4 revealed that 71.9% of the respondents answered the question correctly, while only 9.4% responded with a ‘do not know’ answer. of the total respondents, 68.7% knew that they could reduce risk by diversifying their asset portfolio, while 11.5% did not know that. researchers maintain that numerical ability provides a base for financial literacy, as the ability to perform basic calculations is necessary for budgeting, saving and understanding of financial statements and several aspects of being an informed consumer of financial services. to this effect, the survey also included four numerical questions that tested the respondents’ ability to perform simple numerical calculations, such as subtraction, division and multiplication. of the respondents, 74.1% were able to compute a simple subtraction question, 73.4% were able to complete a multiplication calculation, and 82.7% and 84.9% were able to answer the questions that tested the ability to do division. in this study, joint probabilities of providing correct responses to the financial literacy questions were also calculated to show how many people were able to provide correct answers to the three standard questions for measuring financial literacy. responses are presented in table 4. table 4: joint probabilities of answering financial literacy questions correctly. results show that only 19.8% could answer all three questions correctly, 51.1% answered only two questions correctly, 19.8% answered only one question correctly and 9.4% had no correct responses to any of the three questions. to this end, these results show a lower level of financial literacy among smes in zimbabwe and are similar to the global research findings (atkinson & messy 2011; cucinelli et al. 2019; lusardi & mitchell 2011, 2014; nunoo & andoh 2012; refera et al. 2016). several past research studies report low levels of financial literacy among respondents, even in countries that are wealthy and well-developed, such as canada, netherlands, switzerland and sweden, while financial literacy is even lower in romania and russia (lusardi & mitchell 2011). there is evidence of widespread financial illiteracy around the world, which is a concern to many governments, despite scholars having used different populations to measure financial literacy. in most cases, less than 50% of respondents were financially literate, and in certain cases, average financial literacy scores were as low as 14% (nicolini, cude & chatterjee 2013). further analysis was conducted by using the one-way analysis of variance (anova) model, which was employed to investigate whether there are any significant differences in the mean scores of financial literacy across gender, age, marital status, business sector and years of prior business experience. we tested the hypothesis that there are no significant differences between the means of the identified subgroups. the results are shown in table 5. a 5% level of significance was adopted for the analysis. table 5: showing results of analysis of variance tests. findings revealed that there were significant differences in the levels of financial literacy across age groups with a p-value of 0.05, marital status (p = 0.124), business sector (p = 0.033) and prior business experience (p = 0.011). financial literacy scores across age groups financial literacy scores were relatively low among the older respondents with a mean score of 44.4% and a maximum score of 66.7%, with a mean score of 61.9% among younger respondents. these results show that the older respondents were facing challenges with financial capability, yet it is expected that they should make sound decisions post retirement. differences in mean scores across age groups were found to be significant with a p-value of 0.05. these results are consistent with those reported by gerardi et al. (2013), xu and zia (2012), kadoya 2016; murendo and mutsonziwa (2016), who found that financial literacy levels were low among members of the older population. korniotis and kumar (2011) as well as gamble et al. (2015) suggest that this could be a result of a decline in cognitive ability as one ages. financial literacy scores across gender there were no significant gender differences noted in financial literacy with women scoring a mean of 67.1% and their male counterparts with a mean of 71.6% and a p-value of 0.124. while there is a general consensus among researchers that there are large gender differences in financial literacy, with women having lower levels of financial literacy than men (alhenawi & elkhal 2013; cupak et al. 2018; fonseca et al. 2012; hasler & lusardi 2017; kadoya 2016; lusardi & mitchell 2011; west & worthington 2016; xu & zia 2012), the results in this case indicate otherwise. both men and women had above average financial literacy scores. this result could be because in zimbabwe there are a number of policy initiatives that have been introduced that are targeted at women empowerment, with a full-fledged ministry of gender and economic empowerment aimed at reducing gender inequalities. financial literacy scores across marital status significant differences in the financial literacy levels across marital status were noted with a p-value of 0.009. the divorced and widowed have low financial literacy scores with a mean of 46.7% and 53.9%, respectively, while their married counterparts have higher levels of financial knowledge with a mean score of 71%. preston and wright (2019) found marital status to be associated with gender differences. past research explains low financial literacy among the divorced and the widowed to be a result of the absence of marriage partners who are key in helping to make financial decisions (mahdavi & horton 2014; van rooij, lusardi & alessie 2011). the married are able to make sound financial decisions due to the assistance received from spouses. however, hsu (2010) found out that older women became financially literate when they became widows, as they took more responsibility for their finances in the absence of a marriage partner. financial literacy scores across educational levels differences in financial literacy scores were noted across levels of education. those with primary education level and no formal education scored lower with an average of 59.2% and 61.1 %, respectively, while those with higher levels of education scored higher with a mean of 76%. these results were consistent with those of lusardi et al. (2014), who found that knowledge of asset pricing was low (25.5%) among respondents with less than a high-school qualification and was high for those with a college education (50%). however, by contrast, mahdavi and horton (2014) found that even the most educated women had low levels of financial literacy. west and worthington (2016) also found that financial literacy was higher among the educated. the differences noted in this study were not significant, with a p-value of 0.12 mainly because a majority of the smes are established by the educated who are school graduates with a high level of literacy. ministry of small and medium enterprises and cooperative development has been conducting a number of training sessions to equip entrepreneurs with the necessary skills to operate businesses successfully. findings from the world bank (2012) finscope survey in zimbabwe also revealed that 73% of business owners were skilled either formally or informally, hence, improving their financial capability. financial literacy scores across business sectors there were notable differences in the levels of financial literacy across the various business sectors. those in the art, entertainment, education and sport sector as well as those in the agricultural sector scored above average with a mean of 79% (s = 19), and those in the manufacturing sector had the lowest level of financial literacy with a mean score of 62% (s = 21.2). this finding can be explained by the intensity of daily activities experienced in the entertainment, transport and the agricultural sectors, requiring that they need to be literate to cope with the volume of daily activities. according to world bank (2012) finscope survey, most smes are found in the agricultural sector where there are daily business transactions that prompt them to improve their financial capability. financial literacy scores by years of operation research findings reveal that businesses that had been in operation for less than 2 years had a high level of financial literacy with a mean score of 71.7%. those that had been in operation for 6–10 years had lower financial literacy scores with a mean of 61.6%, and those that had been in operation for more than 10 years had a mean score of 63%. however, these differences were not statistically significant as signified by a p-value of 0.198. financial literacy scores by business experience a downward trend in the level of financial literacy across business experience was noted. significant differences were reported with a p-value of 0.011. business owners who had experience for less than 1 year had a mean score of 69%, while those who had experience for 2 years had a mean score of 75%. however, a decline in the mean score is noted as business experience increases, as those who had experience for 6–10 years have a mean financial literacy score of 64% and those with more than 10 year of experience have the lowest mean score of 62%. overall financial literacy score for the study of population the average financial literacy score of the respondents was 69.28% with a standard deviation of 23.9% and a minimum score of 0% and a maximum score of 100%, as shown in table 6. table 6: overall financial literacy scores. the principal component analysis was used to extract selected variables to explain the determinants of financial literacy. the analysis revealed the items that were answered similarly by the participants. kaiser–meyer–olkin (kmo) and bartlett tests were used to assess the adequacy of the sample by determining the strength of the relationships among variables. for the current study, the kmo and bartlett tests were conducted and results are presented in table 7. table 7: principal component analysis for financial literacy. as shown in table 7, the kmo is 0.755, hence, fulfilling the test of adequacy. the bartlett’s test results are significant with a p-value of 0.000, which is less than 0.005. the two measures meet the minimum requirement to proceed with the analysis. the analysis extracted two components that explain the financial literacy of smes, which indicate the knowledge of interest rates and inflation. these components have eigenvalues that are above 1, as shown in table 7. the two components account for 46.8% of the total variance, with the first component explaining 32.3% of the total variance and the second component accounts for 14.6% of the total variance. table 8 is the total variance explained table and shows all the factors extractable from the analysis along with their eigenvalues, the percentage of variance attributed to each factor and the cumulative variance of the factor and the previous factor. table 8: total variance explained for financial knowledge. extraction method: principal component analysis a scree plot was also extracted to confirm the results of the total variance explained. the scree plot is a graph of the eigenvalues against all the factors, which helps in determining the factors that can be retained. below is a graphical presentation of the scree plot. table 9 shows the rotated component matrix for financial literacy presenting the factor loadings for all the variables. the first four variables have high factor loadings for component 1, while the other four have high factor loadings for component 2, confirming that the variables explaining financial literacy of smes are indicating the knowledge of interest rates and knowledge of inflation. table 9: rotated component matrix† for financial knowledge. conclusion the study concludes that financial literacy among smes is relatively low. this population cohort lacks adequate financial knowledge mainly in areas of interest rate determination and knowledge of inflation but is able to do subtraction, multiplication, addition and division. low levels of financial literacy were more pronounced among the young and the aged, those in the wholesale and retail sector, the manufacturing sector and the construction industry. low financial knowledge was also noted among those smes with less than a year of business experience. factors that were noted to influence financial literacy were inflation and interest rate determination. the study recommends the introduction of financial literacy among small business owners so as to tap into the benefits of financial knowledge. further, it is recommended that the educational curriculum emphasises more on inflation and interest rate determination among other financial literacy variables. there is a need to extend the measurement of financial literacy to other population cohorts, as this will facilitate the crafting of a comprehensive financial literacy strategy. figure 1: scree plot for financial literacy. acknowledgements this research is drawn from a thesis submitted by m.m. to the university of kwazulu-natal in 2018. competing interests the authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article. authors’ contributions m.m. was the main author of this article. m.s. provided guidance as the thesis supervisor, and b.m. assisted with data analysis and ideas for improvement of the article. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references abel, s., 2016, ‘importance of financial literacy’, the herald, 10 september, viewed 19 october 2017, from https://allafrica.com/stories/201605040143.html. adams, k.a. & lawrence, e.k., 2015, research methods, statistics and applications, sage, los angeles, ca. adomako, s. & danso, a., 2014, ‘regulatory environment, environmental dynamism, political ties, and performance: study of entrepreneurial firms in a developing economy’, journal of small business and enterprise development 21(2), 212–230. https://doi.org/10.1108/jsbed-01-2014-0004 adomako, s., danso, a. & damoah, j.o., 2015, ‘the moderating influence of financial literacy on the relationship between access to finance and firm growth in ghana’, venture capital, an international journal of entrepreneurial finance 18(1), 1–19. https://doi.org/10.1080/13691066.2015.1079952 agarwalla, s.k., barua, s.k., jacob, j. & varma, j.r., 2013, financial literacy among working young in urban india, indian institute working paper series, working paper no 2013-10-07, viewed 05 november 2019, from https://ideas.repec.org/p/iim/iimawp/12133.html. alessie, r., van rooij, m. & lusardi, a., 2011, ‘financial literacy and retirement preparation in the netherlands’, journal of pension economics and finance 10(4), 527–545. https://doi.org/10.1017/s1474747211000461 alhenawi, y. & elkhal, k., 2013, ‘financial literacy of u.s. households: knowledge vs. long-term financial planning’, financial services review 22, 1–43, viewed 05 november 2019, from https://academyfinancial.org/resources/documents/proceedings/2013/c2_alhenawi_elkhal.pdf. alvarez, s.a. & busenitz, l.w., 2001, ‘the entrepreneurship of resource-based theory’, journal of management 27(6), 755–775. https://doi.org/10.1177/014920630102700609 arellano, a. cámara, n. & tuesta, d., 2018, ‘explaining the gender gap in financial literacy: the role of non-cognitive skills’, economic notes 47(2), 495–517. https://doi.org/10.1111/ecno.12113 atkinson, a. & messy, f., 2011, ‘assessing financial literacy in 12 countries : an oecd/infe international pilot exercise’, journal of pension economilcs and finance 10(4), 657–665. https://doi.org/10.1017/s1474747211000539 atkinson, a. & messy, f., 2012, measuring financial literacy: results of the oecd/international network on financial education (infe) pilot study, oecd working papers on finance, insurance and private pensions, 15, oecd publishing, paris. barney, j.b., 1991, ‘firm resources and sustained competitive advantage’, journal of management 17(1), 99–120. https://doi.org/10.1177/014920639101700108 bongini, p. & zia, b., 2018, ‘introduction : the financial literacy collective’, economic notes 47(2), 235–243. https://doi.org/10.1111/ecno.12123 bruhn, m. & zia, b., 2011, stimulating managerial capital in emerging markets: the impact of business and financial literacy for young entrepreneurs, world bank working paper, 5642, the world bank development research group, washington, dc. calderon, m., 2014, ‘the role of financial literacy and of financial education interventions in developing countries’, diw round up 34, viewed 10 december 2018, from http://www.diw.de/documents/publikationen/73/diw_01.c.481136.de/diw_roundup_34_en.pdf. capuano, a. & ramsay, i., 2011, ‘a research report: what causes suboptimal financial behavior? an exploration of financial literacy’, social influences and behavioral economics, the university of melbourne, viewed 05 november 2019, from http://ccisr.law.unimelb.edu.au/go/centre-activities/research/financial-literacy-project/index.cfm. cole, s., sampson, t. & zia, b., 2011, ‘prices or knowledge? what drives demand for financial services in emerging markets?’ journal of finance 66(6), 1933–1967. https://doi.org/10.1111/j.1540-6261.2011.01696.x creswell, j.w., 2014, research design, qualitative, quantitative and mixed methods approaches, 4th edn., sage, los angeles, ca. cucinelli, d., trivellato, p. & zenga, m., 2019, ‘financial literacy : the role of the local context’, journal of consumer affairs. https://doi.org/10.1111/joca.12270 cude, b.j., 2010, ‘financial literacy 501’, journal of consumer affairs 44(2), 271–275. https://doi.org/10.1111/j.1745-6606.2010.01168.x cumurovic, a. & hyll, w., 2019, ‘financial literacy and self-employment’, the journal of consumer affairs 53(2) 455–488. cupak, a., fessler, p., schneebaum, a. & silgoner, m., 2018, ‘decomposing gender gaps in financial literacy: new international evidence’, economic letters 168, 102–106. https://doi.org/10.1016/j.econlet.2018.04.004 duesenberry, j.s., 1949, income, saving and the theory of consumer behaviour, harvard university press, cambridge, ma. eniola, a.a. & entebang, h., 2017, ‘sme managers and financial literacy’, global business review 18(3), 559–576. https://doi.org/10.1177/0972150917692063 erner, c., goedde-menke, m. & oberste, m., 2016, ‘financial literacy of high school students: evidence from germany’, the journal of economic education 47(2), 95–105. https://doi.org/10.1080/00220485.2016.1146102 fatoki, o., 2014, ‘the financial literacy of micro entrepreneurs in south africa’, journal of social sciences 40(2), 151–158. https://doi.org/10.1080/09718923.2014.11893311 fatoki, o. & oni, o., 2014, ‘financial literacy studies in south africa: current literature and research opportunities’, meditterranean journal of social sciences 5(20), 408–414. https://doi.org/10.5901/mjss.2014.v5n20p409 ferreira, j.j., azevedo, s.g. & ortiz, r.f., 2011, ‘contribution of resource-based view and entrepreneurial orientation on small firm growth’, cuadernos de gestión 11(1), 95–116. https://doi.org/10.5295/cdg.100185jf fonseca, r., mullen, k.j., zamarro, g. & zissimopoulos, j., 2012, ‘what explains the gender gap in financial literacy? the role of household decision making’, journal of consumer affairs 46(1), 90–106. https://doi.org/10.1111/j.1745-6606.2011.01221.x foss, n.j., 2011, entrepreneurship in the context of the resource-based view of the firm, smg working paper no. 8/2011, copenhagen business school, frederiksberg, denmark. friedman, m., 1957, a theory of the consumption function, princeton university press, princeton, nj. gamble, k.j., boyle, p.a., yu, l. & bennett, d.a., 2015, ‘how does aging affect financial decision making?’, centre for retirement research 1(15), 1–7. gerardi, k., goette, l. & meier, s., 2013, ‘numerical ability predicts mortgage default’, proceedings of the national academy of sciences of the united states of america 110(28), 11267–11271. https://doi.org/10.1073/pnas.1220568110 gaurav, s. & singh, a., 2012, ‘an inquiry into the financial literacy and cognitive ability of farmers : evidence from rural india’, oxford development studies 40(3), 358–380. https://doi.org/10.1080/13600818.2012.703319 gibson, j., mckenzie, d. & zia, b., 2014, ‘the impact of financial literacy training for migrants’, world bank economic review 28, 130–161. https://doi.org/10.1093/wber/lhs034 grant, r.m., 1991, ‘the resource-based theory of competitive advantage: implications for strategy formulation’, california management review 33(3), 114–135. https://doi.org/10.2307/41166664 hasler, a. & lusardi, a., 2017, the gender gap in financial literacy: a global perspective, global financial literacy excellence centre, the george washington university school of business, viewed 05 november 2019, from https://gflec.org/wp-content/uploads/2017/07/the-gender-gap-in-financial-literacy-a-global-perspective-report.pdf?x87657. hsu, j.w., 2010, ‘ageing and strategic learning: the impact of spousal incentives on financial literacy’, the journal of human resources 51(4), 1036–1067. hung, a., yoong, j. & brown, e., 2012, ‘empowering women through financial awareness and education’, oecd working papers on finance, insurance and private pensions 14(14), 1–42. huston, s.j., 2010, ‘measuring financial literacy’, journal of consumer affairs 44(2), 296–316. https://doi.org/10.1111/j.1745-6606.2010.01170.x japelli, t. & padula, m., 2013, ‘investment in financial literacy and savings decisions’, journal of banking and finance 37(8), 2779–2792. https://doi.org/10.1016/j.jbankfin.2013.03.019 jayachandran, s. & pande, r., 2010, ‘do traditional institutions constrain female entrepreneurs? a field experiment on business trainings in india’, american economic review papers and proceedings 100(2), 125–129. kadoya, y., 2016, ‘what makes people anxious about life after the age of 65? evidence from international survey research in japan, the united states, china, and india’, review of economics of the household 14(2), 443–461. kadoya, y. & khan, m.s.r., 2019, ‘what determines financial literacy in japan’, journal of pension economics and finance 18(1), 1–19. kerzah, a. & yang, h., 2010, ‘the importance of financial literacy’, about campus life, 14(6), 15–21. https://doi.org/10.1002/abc.20004 knoll, m.a.z. & houts, c.r., 2012, ‘the financial knowledge scale: an application of item response theory to the assessment of financial literacy’, journal of consumer affairs 46(3), 381–410. https://doi.org/10.1111/j.1745-6606.2012.01241.x korniotis, g.m. & kumar, a., 2011, ‘do older investors make better investment decisions?’ review of economics and statistics 93, 244–265. https://doi.org/10.1162/rest_a_00053 lippman, s.a. & rumelt, r.p., 2003, ‘a bargaining perspective on resource advantage’, strategic management journal 24, 1069–1086. https://doi.org/10.1002/smj.345 lusardi, a., 2011, americans’ financial capability, nber working paper no. 17103, viewed 05 november 2018, from http://www.nber.org/papers/w17103. lusardi, a. & mitchell, o.s., 2011, ‘financial literacy around the world: an overview’, journal of pension economics and finance, cambridge university press 10(04), 497–508. https://doi.org/10.1017/s1474747211000448 lusardi, a. & mitchell, o.s., 2014, ‘the economic importance of financial literacy: theory and evidence’, journal of economic literature 52(1), 5–44. https://doi.org/10.3386/w18952 lusardi, a. & mitchell, o.s., 2016, older women’s labour market attachment, retirement planning and household debt, nber working paper 22606, viewed 05 november 2018, from http://www.nber.org/papers/w22606. lusardi, a. mitchell, o.s. & curto, v., 2009, ‘financial literacy among the young’, journal of consumer affairs 44(2), 358–380. https://doi.org/10.3386/w15352 lusardi, a., mitchell, o.s. & curto, v., 2014, ‘financial literacy and financial sophistication in the older population’, journal of pension economics and finance 13(4), 347–366. https://doi.org/10.1017/s1474747214000031 lusardi, a. & scheresberg, c.d.b., 2013, financial literacy and high-cost borrowing in the united states, national bureau of economic research, cambridge ma, viewed 01 december 2018, from http://www.nber.org//papers/w18969. mabhanda, w., 2015, ‘lack of financial literacy exacerbates smes’ appalling state in gweru city’, journal of business and management science 2(12), 10–28. mahdavi, m. & horton, n.j., 2014, ‘financial knowledge among educated women: room for improvement’, journal of consumer affairs 48(2), 403–417. https://doi.org/10.1111/joca.12032 mancebon, m., ximenez-de-embun, d.p., mediavilla, m. & gomez-sancho j., 2019, ‘factors that influence the financial literacy of spanish consumers’, international journal of consumer studies 43, 227–235. mandizvidza, r. & mapepeta, b., 2017, ‘accounting practices in renewable energy entities : the case of masvingo province’, pm world journal vi(ii), 1–9. maseko, n. & manyani, o., 2011, ‘accounting practises of smes in zimbabwe: an investigative study of record keeping for performance measurement, a case study of bindura’, journal of accounting and taxation 3(8), 171–181. mckenzie, d. & woodruff, c., 2014, ‘who are the microenterprise owners ? evidence from sri lanka on tokman versus de soto’, in international differences in entrepreneurship, pp. 62–87, university of chicago press. menkhoff, l., grohmann, a., hubler, o. & kouwenberg, r, 2014, ‘financial literacy and financial behavior: do women lag behind?’, risk and ambiguity ii, no. e06-v1, viewed 05 november 2019, from http://econstor.eu/bitstream/10419/100415/1/vfs_2014_pid_510.pdf. modgliani, f. & brumberg, r., 1954, ‘utility analysis and the consumption function: an interpretation of cross section data’, in post keynesian economics, k.k. kurihara (ed.), pp. 338–436, rutges university press, new brunswick, nj. murendo, c. & mutsonziwa, k., 2016, ‘financial literacy and savings decisions by adult financial consumers in zimbabwe’, international journal of consumer studies 41, 95–103. https://doi.org/10.1111/ijcs.12318 nicolini, g., cude, b.j. & chatterjee, s., 2013, ‘financial literacy: a comparative study across four countries’, international journal of consumer studies 37(2006), 689–705. https://doi.org/10.1111/ijcs.12050 nkomazana, n., sibanda, m. & duve, r., 2015, ‘determinants of financial knowledge among adolescents in zimbabwe’, studia oeconomica 60(2), 55–65. nunoo, j. & andoh, f.k., 2012, ‘sustaining small and medium enterprises through financial services utilization: does financial literacy matter’, paper prepared for presentation at the agricultural & applied economics association’s 2012 aaea annual meeting, seattle, washington, dc, august 12–14, viewed 20 november 2018, from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahukewi3nspk2tdlahwnn8akhe_gbecqfjaaegqiaxac&url=https%3a%2f%2fageconsearch.umn.edu%2fbitstream%2f123418%2f2%2fsustaining%2520sme%2520article.pdf%2520jacob%2520nunoo1.pdf&usg=aovvaw3l2plerv4xagv0mkihd0gt. nyamwanza, t., 2014, ‘strategy implementation for survival and growth among small to medium sized enterprises in zimbabwe’, unpublished phd thesis, midlands state university, zimbabwe. organisation for economic co-operation and development (oecd), 2013, ‘oecd/infe toolkit to measure financial literacy and financial inclusion: guidance, core questionnaire and supplementary questions’, viewed 20 november 2018, from https://www.oecd.org/daf/fin/financial-education/trustfund2013_oecd_infe_toolkit_to_measure_fin_lit_and_fin_incl.pdf. oseifuah, e.k., 2010, ‘financial literacy and youth entrepreneurship in south africa’, african journal of economic and management studies 1, 164–182. https://doi.org/10.1108/20400701011073473 penrose, e.t., 1959, the theory of the growth of the firm, blackwell, oxford. peteraf, m.a., 1993, ‘the cornerstones of competitive advantage: a resource-based view’, strategic management journal 14(3), 179–191. preston, a.c. & wright, r.e., 2019, ‘understanding the gender gap in financial literacy: evidence from australia’, economic record 95(2017), 1–29. https://doi.org/10.1111/1475-4932.12472 refera, m.k., dhaliwal, n.k. & kaur, j., 2016, ‘financial literacy for developing countries in africa: a review of concept, significance and research opportunities’, journal of african studies and development 8(1), 1–12. https://doi.org/10.5897/jasd2015.0331 remund, d.l., 2010, ‘financial literacy explicated : the case for a clearer definition in an increasingly complex economy’, journal of consumer affairs 44(2), 276–295. https://doi.org/10.1111/j.1745-6606.2010.01169.x reserved bank of zimbabwe (rbz), 2016, zimbabwe national financial inclusion strategy, viewed 12 october 2018, from https://www.rbz.co.zw/index.php/financial-stability/financial-inclusion/financial-inclusion-strategy. ritsalu, l. & poder, k., 2016, ‘a glimpse of the complexity of factors that influence financial literacy’, international journal of consumer studies 40(6), 722–731. saunders, m., lewis, p. & thornhill, a., 2007, research methods for business, 4th edn., prentice hall, london. schmeiser, m.d. & seligman, j.s., 2013, ‘using the right yardstick: assessing financial literacy measures by way of financial well-being’, journal of consumer affairs 47(2), 243–262. https://doi.org/10.1111/joca.12010 sinayev, a. & peters, e., 2015, ‘cognitive reflection vs. calculation in decision making’, frontiers in psychology 6, 532. https://doi.org/10.3389/fpsyg.2015.00532 skagerlund, k., lind, t., strömbäck, c., tinghög, g. & västfjäll, d., 2018, ‘financial literacy and the role of numeracy – how individuals ’ attitude and affinity with numbers influence financial literacy’, journal of behavioral and experimental economics 74(march), 18–25. https://doi.org/10.1016/j.socec.2018.03.004 united states agency for international development (usaid), 2009, financial sector program: development of strategy options for sme financial literacy, final report prepared by gerda pipreka. van rooij, m., lusardi, a. & alessie, r., 2011, ‘financial literacy, retirement planning, and household wealth’, dnb working paper 32(313), 593–608. wachira, m.i. & kihiu, e.n., 2012, ‘impact of financial literacy on access to financial services in kenya’, international journal of business and social science 3(19), 42–50. wernerfelt, b., 1984, ‘a resource-based view of the firm’, strategic management journal 5(2), 171–180. west, t. & worthington, c., 2016, the impact of major life events on australian household financial decision making and portfolio rebalancing, finance and financial planning discussion papers, griffith university business school, queensland. wise, s., 2013, ‘the impact of financial literacy on new venture survival’, international journal of business and management 8(23), 30–39. https://doi.org/10.5539/ijbm.v8n23p30 world bank, 2012, zimbabwe – finscope msme survey 2012, world bank group, washington, dc, viewed 12 october 2018, from http://documents.worldbank.org/curated/en/2012/01/24048081/zimbabwe-finscope-msme-survey-2012. xu, l. & zia, b., 2012, financial literacy around the world: an overview of the evidence with practical suggestions for the way forward, policy research working paper 6107, the world bank development research group, washington, dc. zimasset, 2013, zimbabwe agenda for sustainable socio-economic transformation towards an empowered society and a growing economy, viewed 01 december 2019, from http://www.veritaszim.net/node/930. abstract introduction research methodology results discussion conclusion acknowledgements references about the author(s) daniel s. nheta department of business management, faculty of management sciences, university of venda, thohoyandou, south africa richard shambare school of business and finance, university of the western cape, cape town, south africa caston sigauke department of statistics, faculty of mathematics, university of venda, thohoyandou, south africa ndivhuwo tshipala department of tourism management, faculty of business, tshwane university of technology, pretoria, south africa citation nheta, d.s., shambare, r., sigauke, c. & tshipala, n., 2020, ‘entrepreneurship gaps framework model: an early-stage business diagnostic tool’, southern african journal of entrepreneurship and small business management 12(1), a297. https://doi.org/10.4102/sajesbm.v12i1.297 original research entrepreneurship gaps framework model: an early-stage business diagnostic tool daniel s. nheta, richard shambare, caston sigauke, ndivhuwo tshipala received: 05 nov. 2019; accepted: 11 dec. 2019; published: 24 mar. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: in south africa, entrepreneurship literature demonstrates that three out of four businesses collapse within 3 years of their inception. a plethora of research effort identifies factors such as the lack of finance and access to markets as the leading causes for the high attrition rates amongst emerging businesses. this study finds the narrative to be limiting and inadequate as it does not address the possible gap between entrepreneurs’ expectations and their realities of managing their businesses. aim: to present the entrepreneurship gaps framework (egf), an early-stage business diagnostic tool that seeks to assess entrepreneurs’ preparedness. setting: this study focused on emerging entrepreneurs operating within the limits of developing economies. the framework can be used by emerging entrepreneurs, capacity development institutions and lenders. methods: a descriptive research design supported by a mixed-method research approach was employed. this was coupled by a two-phase data collection procedure which took place within limpopo province with 215 participants. explorative data analysis based on discrete choice models was further implemented. results: findings on the egf illustrated the ability of the framework to act as a more comprehensive diagnostic mechanism that improves early-stage entrepreneurship survival. conclusion: entrepreneurship gaps framework is a decision-making tool that can be used by lenders and capacity development institutions to evaluate the emerging entrepreneur with respect to specific areas of business. this results in the necessary support for improving entrepreneur preparedness being provided to entrepreneurs. secondly, entrepreneurs are likely to benefit from the egf, if used as a self-diagnostic tool to measure their business preparedness and experience. keywords: entrepreneurship; entrepreneurship gap; entrepreneurship gap framework; expectations; realities. introduction the existing narratives on earlyor formative-stage business failure are misleading, and at best, impoverished. in a multitude of theses, journal articles and case studies, the cliché ‘3-out-of-4 businesses collapse within three years’ is almost always followed by recommendations such as, amongst others: (1) government must improve the access to new markets for small and medium enterprises (smes) and (2) banks ought to be more business-friendly (adonisi & van wyk 2012; chinomona & maziriri 2015; lekhanya 2016; luiz & martine 2011; secundo et al. 2017). whilst this at times is correct, this article argues that this perspective is too limiting and inadequate in providing a more holistic account of early-stage business failure. this article is persuaded to consider entrepreneurship as a trade and as with any trade (e.g. carpentry, music or medicine), a tradesman specialises and consolidates experience in a sub-discipline such as neurosurgery – a highly specialised field of medicine that deals with brain surgery. with the above parallelism of entrepreneurship to neurosurgery in mind, it is argued that despite a neurosurgeon being a ‘doctor’, not any doctor can perform brain surgery. from the above discussion, it is postulated that emerging entrepreneurs may experience a discrepancy between their expectations of running a business versus the realities presented by owning and managing a ‘real’ business. we refer to this discrepancy (the difference between expectations and reality) as the entrepreneurship gap (eg). more formally, eg = expectations – realities. therefore, when expectations are considerably higher than the business realities (high eg), the entrepreneur’s ability to deal with the inconsistency becomes fundamental. on the other hand, lower eg tends to be associated with businesses with a higher propensity to survive as the entrepreneurs have much fewer issues to deal with. against this background, the purpose of this research is to construct the entrepreneurship gaps framework (egf) that will assist in assessing the preparedness of entrepreneurs in the formative stage of business (less than 3 years in existence). problem investigated the lack of self-assessment tools in the south african context that assess emerging entrepreneurs’ level of business preparedness (including expectations) is a challenge that capacity development institutions and financial institutions encounter. the need to determine the level of individual support that emerging entrepreneurs require has not been thoroughly addressed as compared to the need for resources. this creates a need for workable solutions that address the challenge (al-lamki et al. 2016; parliamentary monitoring group 2012; underhill corporate solutions 2011). research objective the objective of this article is to report on the development process of an egf. this will involve identifying specific gaps within the ambit of literature of which the gaps are professed to be common factors of entrepreneurs’ expectations. underpinning theories the context of the study has two aspects that establish the foundation of eg. a closer look reveals the entrepreneur and the business components. within the entrepreneurship field, various theories have been effectually used in dissecting and attempting to establish the foundation of eg (see table 1). table 1: underpinning theories in previous studies. a closer look at the theories given in table 1 reveals that the discrepancy theory has been applied towards understanding the individual (entrepreneur) in relation to the expectations against achieved standards presented by the business component (cooper & artz 1995; fast et al. 2014). a discrepancy in this matter is a perceived difference of determined standards and the level of accomplishment attained thereof. discrepancy theorists articulate that the existence of such a difference may lead to emotive or active reactions, even to an extent of dismissal of set standards. this outcome is derived from various sources, such as social pressure, threshold requirements and personal expectations, amongst others (locke 1969; oliver 1981). the discrepancy theory thereby suitably applies to this study as it assists in understanding the discrepancies faced by an entrepreneur in the world of business unequivocally, instituting the conceptual framework of the study. conceptual framework dichotomising the postulated eg foundation and focusing on the entrepreneur component, figure 1 was developed to comprehend formative stage business failure by analysing individual business expectations against entrepreneurship business realities. the elements at the left of the demarcation line (in figure 1) represent the cliché of personal expectations faced by entrepreneurs in the formative stage of business. these expectations vary from personal to business-related expectations. contrary to the expectations, at the right side of the demarcation line are the realities of operating a business. for instance, an emerging entrepreneur may expect to have less time at work because they oversee it as opposed to an employee who works for 8:00–17:00. however, the reality of operating the business may result in more time being required at work. the difference between these two levels creates an entrepreneurial gap. figure 1 thus provides an illustration of the components of the conceptual framework. figure 1: entrepreneurship gap in the early stage. most of the previous studies have focused on issues such as the gender gap in entrepreneurship and meandered its way into the family gap (fg) with respect to women entrepreneurs. but at this point, there is still more to be done concerning the gap illustrated in figure 1 with respect to a holistic entrepreneurship understanding (djankov, nikolova & zilinsky 2016; haugh & talwar 2016; ismail et al. 2016; ramadani 2015; raven & le 2015; welsh, memili & kaciak 2016). to perambulate the conceptual framework of the egs, this study adopted a parameter that has four specific egs of interest, which include fg, income gap (ig), skills gap (sg) and stress gap (stg), with the gaps development derived from various fields of study (see table 2). the challenges that entrepreneurs encounter stem from these mentioned gaps. the entrepreneur’s level of preparedness is put to the test. it is upon this platform where the entrepreneur must put into practice one’s abilities to confront the challenge arising from the gap based on the extent to which the challenges were expected. failure to implement necessary adjustments at this point is presumed to widen the gap, infusing more operating challenges and resulting in the collapse of the business if unsuccessfully managed. table 2: identification of gaps. as it is illuminated in this article (see figure 1), eg is created when a difference exists between individual expectations and actualities of operating a business. at this point, if an individual intends to launch a business venture, one might have expectations such as freedom from commands, easy work, sustained income and even job satisfaction to be the reward of being an entrepreneur (mcgowan et al. 2012; ucbasaran et al. 2013). some of these expectations, amongst others, are comprehended to drive the individual into entrepreneurship in the anticipation that the expectations will materialise. however, there are business realities. the business realities are experienced by the entrepreneur when operating a business, for example, health problems arising from overworking, financial risk and even bankruptcy, which are part and parcel of entrepreneurship (djankov et al. 2016; haugh & talwar 2016). these have an antagonistic effect on the entrepreneur’s survival in entrepreneurship at the same time, and would possibly withhold the materialisation of the individual’s expectations. in devastating situations where expectations fail to materialise, it requires the individual to implement certain remedies to combat any challenges arising from withheld or unmet expectations. inherently, the entrepreneur is susceptible to personal ‘failure’ in which if one fails to initiate necessary adjustments that would resuscitate the entrepreneur – that is, if his or her expectations do not materialise – it would lead to business failure (dias & teixeira 2017; jenkins & mckelvie 2016; ucbasaran et al. 2013). but, nonetheless, withheld expectations do not necessarily mean that the business has failed; it simply means something has gone wrong or no longer works and hence corrective action is required (arasti 2011; fatoki 2014a, 2014b; mutoko & kapunda 2017; pretorius & le roux 2011). deliberating from the aforementioned discussion, this background could be one of the reasons why a high attrition rate of emerging business ventures exists as individuals give up soon yet there could be remedial ways to resuscitate the business before it collapses. one is, therefore, inclined to accept that the high number of early-stage business failures in south africa, amongst other reasons, is also caused by the absence of a diagnostic tool that would reduce such a predicament. entrepreneurship gap analysis would thereby provide a platform to understand the possibility of whether an entrepreneur is likely to succeed in operating a business or fail to do so. such an attempt can best be achieved by using suitable research methods based on the conceptual framework. research methodology to attain the objective of this article, the study was conducted in limpopo province, with entrepreneurship academics and entrepreneurs composing the population. a descriptive research design supported by a mixed-method approach was employed. this was coupled with a two-phase data collection procedure (sibindi & aren 2015). phase 1 involved in-depth interviews in order to extract expectations and realities pertaining to entrepreneurship. these realities and expectations were then used to develop a questionnaire. these themes were validated by key experts in the field of entrepreneurship whilst supported by the literature. phase 2 then used a structured self-completing questionnaire with questions derived from phase 1 themes. the instrument was subjected to factor analysis and cronbach’s alpha test for reliability, with a pilot study being conducted to retest the instrument for validity purposes. the purpose of phase 2 was to extract quantitative data for modelling. fifteen respondents for phase 1 were purposively approached (ilker, sulaiman & rukayya 2015). the respondents were operating a small business, had been in business for at least 3 years and were of any gender despite the type of business. this was done to ensure that a broader spectrum of what entrepreneurs encounter in their career is achieved. hence, it establishes a platform for future researchers to narrow the purpose to specific areas of interest. for phase 2, a minimum of 200 respondents were randomly approached. the difference from phase 1 is that entrepreneurs selected for phase 2 were operating a business still in the early stage (not more than 3 years). for both phases, it was ensured that informed respondents freely participated and that they had the right to withdraw from the study at any moment. ethical research principles governed the behaviour of the researchers as the survey was conducted. the series of events was then rounded up by explorative data analysis grounded on discrete choice models (dcms). modelling framework the development of a pragmatic model required a modelling framework that set the course of events concerning the variables of interest. to materialise this concept, dcms were applied. a dcm is used in explaining, describing and predicting sets (choices) of two or more discrete options (sarrias 2016). the general dcm is given in equation 1: where yit is the process for individual i = 1, …, n in period t = 1, … t, xit is a vector of independent variables (covariates) and εit is an error term. the general formulation of equation 1 falls under one of the following binary, ordered and poisson models given in equation 2 (sarrias 2016): from equation 2, for the binary model, f(.) denotes the distribution function of the error term, for which f(ε) = λ(ε) represents the logit model (logistic regression model). for the ordered model, kj denotes a threshold of choice. j =1, …,j -1. for this study, let eg = expectations – realities, then if eg > t, where t is a predetermined threshold, then this indicates a high risk entrepreneur based on the entrepreneurial gap. let p(egit = 1|xit) be the probability of a high risk of business failure, then: where: with: where egit takes value 1 if eg exceeds a predetermined threshold τ, xit denotes the set of predictor variables (i.e. ffg, ig, sg, and stg). therefore: the parameters of equation 6 will be estimated using the maximum likelihood (ml) method. the log-likelihood function, l(β|xit) is given in equation 7: ethical consideration this article followed all ethical standards for research with direct contact with human or animal subjects. results the results presented in this section are derived from phase 2 data collection in line with testing the model. respondents who met the criteria of operating a business for less than 3 years of existence were randomly selected. a total of 215 respondents managed to provide meaningful data which were advanced for further analysis. the modelling and analysis were done using the open-source software r version 3.6.0, which is available on the r cran (https://cran.r-project.org/). figure 2 illustrates the normal distribution of eg on data of 215 observations with four variables. there were a total of 215 respondents. this was split into two sets: a training set with n1 = 200 respondents and a validation set of n2 = 15 respondents. elastic net regression was used to prevent overfitting through shrinkage methods of ridge and lasso, resultantly providing meaningful data for predictions (hastie, tibshirani & wainwright 2015). figure 2: plot of entrepreneurship gap based on a sample of 215 respondents: (a) plot of entrepreneurship gap; (b) density of entrepreneurship gap; (c) normal qq plot of entrepreneurship gap; (d) boxplot of entrepreneurship gap. for a start, if eg > 0, it implies likely challenges in running the business, which may stir business failure if eg has a large positive value. this article initially set the threshold (t) to help in determining a binary variable for eg for which if eg > t, this would signal serious challenges the entrepreneur is likely to face. this threshold, t, was determined as the average of the positive egs from the training set and was found to be t = 0.405996. with eg plots known, the ability of the entrepreneur to adjust accordingly when facing business challenges could be determined. as in figure 3, respondents above the threshold level face a dilemma of surviving the early stage of business as compared to respondents plotted below the threshold. a cross-validation test using lambda was conducted, which validated the model and its ability to predict the likelihood of an entrepreneur’s level of preparedness. figure 3: plot of entrepreneurship gap. discussion to illustrate the concept expressed by equation 6, figure 4 presents an example of egf. as presented in the figure, eg is subjected to entrepreneurs’ expectations. within the context of this article, these expectations are subject to four major variables – fg, ig, sg and stg – which are presented as factors determining the position of eg and thereby providing a starting point for understanding entrepreneurship failure. the illustration in figure 4 shows the existence of two zones. zone 1 shows the area of a high personal risk which is likely to induce business failure, whilst zone 2 demarcates the area of a low personal risk with respect to inducing business failure; however, this is dependent on the position of eg. figure 4: entrepreneurship gap framework. in zone 1, an entrepreneur who is above the eg line – that is, has higher eg levels – is postulated to have misaligned business expectations to business realities. equally, the individual experiences more pressure in terms of adjusting to entrepreneurship as one would not have expected such necessary changes. this is attributed to the necessity of effectively adjusting to business realities and the subsequent challenges arising thereof because of different factors contributing to the entrepreneurial gaps which are unaccounted for during the business adjustment process. in contrast, an entrepreneur below eg line (zone 2) is less likely to be affected. entrepreneurs with lower levels of eg tend to have businesses with a higher propensity to survive. as postulated, the entrepreneurs expect and account for possible business adjustments in a manageable condition because business expectations and realities are more aligned. the high attrition rate of emerging businesses in south africa signifies the need to develop workable means or methods that could be used to decrease the rate of early-stage business failure and, therefore, to improve economic growth. the proposed framework provides a diagnostic tool as a possible solution for the entrepreneur and simultaneously acts as a decision tool for capacity development institutions (cdis) which is something that has been indirectly requested by underhill corporate solutions (2011), ruiz, soriano and coduras (2015) and olugbola (2017). when the eg position has been identified, the entrepreneurs should re-evaluate their expectations in line with the propensity of the business to deliver those expectations. this would, however, require improving the individual’s preparedness wherein cdis could stimulate such improvements through effective monitoring and evaluation. a closer look at cdis making use of the framework reveals how managers can improve their services. with limited resources available, cdi managers in charge of allocating funds are restricted to make decisions based on the business component alone. at the emergence of egf, managers can now have a comprehensive understanding of the entrepreneur together with the business component. progressively, a holistic understanding of the client seeking funds will thus be achieved by providing reasonable information that every manager in charge of funds would greatly embrace. at best, managers can therefore predict the entrepreneur’s likelihood of success or not, thereby creating a platform for sound decisions to be made. irrespective of managerial position, entrepreneurs making use of the egf should bear in mind the constant need to stay at par with business realities, of which egf is a tool that could be used in such cases. conclusion from the findings of this study, it can be concluded that the egf will act as a more comprehensive diagnostic mechanism to improve early-stage entrepreneurship survival. the framework addresses the need for an entrepreneur to adjust successfully to business realities. at ease, entrepreneurs will be able to assess their ability to effect necessary changes towards establishing and operating a successful venture based on the results of the framework. this assessment, in addition, should lead to the identification of problem areas and conceive the implementation of remedies that advances the chances of entrepreneurship survival. as the framework consists of the main factors affecting early-stage entrepreneurship as supported by the literature – the four gaps indicated in table 2 and equation 6 individuals will be assessed against these factors. the results thereof will display the entrepreneurial gap of the respective individual. as a start, relevant support with regard to advising and mentoring will be provided, improving the chances of the emerging entrepreneur to adjust to business realities. simultaneously, the cdis can re-evaluate their strategies towards entrepreneurship development, resulting in them providing the vital support resources to categories of entrepreneurs. the collaborative efforts of the entrepreneur and the support structures would, in turn, be assisted by an eg diagnostic tool that would enhance entrepreneurship survival in emerging economies. this process should assist in developing strategic avenues that emerging businesses could consider to effectively manage initial challenges associated with high eg levels and business adjustment process. with such outputs from this article, policymakers, emerging entrepreneurs and interested stakeholders would have a more comprehensive and informed platform to tackle early-stage business failure, which should, eventually, lead to improved survival ratings of emerging businesses in south africa. acknowledgements the authors express their gratitude to the university of venda for funding this research project. in addition, we appreciate the collaborations that emerged as a result of this project. lastly to our friends, family and colleagues, we thank you for your support. competing interests the authors have declared that no competing interest exists. authors’ contributions all authors contributed equally to this work. funding information the university of venda research project committee funded the project. data availability statement data are available upon request. disclaimer the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adonisi, m. & van wyk, r., 2012, ‘the influence of market orientation, flexibility and job satisfaction on corporate entrepreneurship’, international business & economics research journal 11(5), 477–486. https://doi.org/10.19030/iber.v11i5.6966 al-lamki, r., al-sumri, m., al-ismaili, s. & al-busaidi, k.a., 2016, ‘an expert system to determine the probability of success and readiness in entrepreneurship’, international journal of computing & information sciences 12(2), 189–196. https://doi.org/10.21700/ijcis.2016.122 arasti, z., 2011, ‘an empirical study on the causes of business failure in iranian context’, african journal of business management 5(17), 7488–7498. https://doi.org/10.5897/ajbm11.402 barba-sanchez, v. & atienza-sahuquilb, c., 2017, ‘entrepreneurial motivation and self-employment: evidence from expectancy theory’, international entrepreneurship management journal 13, 1097–1115. https://doi.org/10.1007/s11365-017-0441-z chinomona, e. & maziriri, e.t., 2015, ‘women in action: challenges facing women entrepreneurs in the gauteng province of south africa’, international business & economics research journal 14(6), 835–850. https://doi.org/10.19030/iber.v14i6.9487 cooper, a.c. & artz, k.w., 1995, ‘determinants of satisfaction for entrepreneurship’, journal of business venturing 10(6), 439–457. https://doi.org/10.1016/0883-9026(95)00083-k dawson, c., 2017, ‘financial optimism and entrepreneurial satisfaction’, strategic entrepreneurship journal 11(2), 171–194. https://doi.org/10.1002/sej.1244 dias, a. & teixeira, a.c.a., 2017, ‘the anatomy of business failure: a qualitative account of its implications for future business success’, european journal of management and business economics 26(1), 2–20. https://doi.org/10.1108/ejmbe-07-2017-001 djankov, s., nikolova, e. & zilinsky, j., 2016, ‘the happiness gap in eastern europe’, journal of comparative economic 44(1), 108–124. https://doi.org/10.1016/j.jce.2015.10.006 fast, n.j., burris, e.r. & bartel, c.a., 2014, ‘managing to stay in the dark: managerial self-efficacy, ego defensiveness, and the aversion to employee voice’, academy of management journal 57(4), 1013–1034. https://doi.org/10.5465/amj.2012.0393 fatoki, o., 2014a, ‘the entrepreneurial intention of undergraduate students in south africa: the influences of entrepreneurship education and previous work experience’, mediterranean journal of social sciences 5(7), 294–299. https://doi.org/10.5901/mjss.2014.v5n7p294 fatoki, o., 2014b, ‘the causes of the failure of new small and medium enterprises in south africa’, mediterranean journal of social sciences 5(20), 922–927. https://doi.org/10.5901/mjss.2014.v5n20p922 fitzsimmons, r.j. & douglas, e.j., 2011, ‘interaction between feasibility and desirability in the formation of entrepreneurial intentions’, journal of business venturing 26(4), 431–440. https://doi.org/10.1016/j.jbusvent.2010.01.001 gorgievski, m.j., ascalon, m.e. & stephan, u., 2011, ‘small business owners’ success criteria, a values approach to personal differences’, journal of small business management 49(2), 207–232. https://doi.org/10.1111/j.1540-627x.2011.00322.x hastie, t., tibshirani, r. & wainwright, m., 2015, statistical learning with sparsity: the lasso and generalization, crc press, london. haugh, h.m. & talwar, a., 2016, ‘linking social entrepreneurship and social change: the mediating role of empowerment’, journal of business ethics 133(4), 643–658. https://doi.org/10.1007/s10551-014-2449-4 ilker, e., sulaiman, a.m. & rukayya, s.a., 2015, ‘comparison of convenience sampling and purposive sampling’, american journal of theoretical and applied statistics 5(1), 1–4. https://doi.org/10.11648/j.ajtas.20160501.11 ismail, i., husin, n., rahim, n.a., kamal, m.h.m. & mat, r.c., 2016, ‘entrepreneurial success among single mothers: the role of motivation and passion’, procedia economics and finance 37(16), 121–128. https://doi.org/10.1016/s2212-5671(16)30102-2 jenkins, a. & mckelvie, a., 2016, ‘what is entrepreneurial failure? implications for future research’, international small business journal, 34(2) 176–188. https://doi.org/10.1177/0266242615574011 khelil, n., 2016, ‘the many faces of entrepreneurial failure: insights from an empirical taxonomy’, journal of business venturing 31(1), 72–94. https://doi.org/10.1016/j.jbusvent.2015.08.001 lekhanya, l.m., 2016, ‘business characteristics of small and medium enterprises in rural areas: a case study on southern region of kwazulu-natal province of south africa’, problems and perspectives in management 14(3), 108–114. https://doi.org/10.21511/ppm.14(3).2016.11 locke, e., 1969, ‘what is job satisfaction?’, organizational behavior & human performance 4(4), 309–336. https://doi.org/10.1016/0030-5073(69)90013-0 luiz, j. &. martine, m., 2011, ‘entrepreneurship in an emerging and culturally diverse economy: a south african survey of perceptions’, south african journal of economics and management 14(1), 47–65. https://doi.org/10.4102/sajems.v14i1.30 malebana, j., 2014, ‘entrepeneurial intentions of south african rural university students: a test of the theory of planned behaviour’, journal of economics and behavioural studies 6(2), 130–143. mcgowan, p., redeker, c.l., cooper, s.y. & greenan, k., 2012, ‘female entrepreneurship and the management of business and domestic roles: motivations, expectations and realities’, entrepreneurship & regional development 24(1–2), 53–72. https://doi.org/10.1080/08985626.2012.637351 metzger, g., 2008, ‘firm closure, financial losses and the consequences for an entrepreneurial restart’, zew discussion papers, pp. 8–094, zentrum für europäische wirtschaftsforschung (zew), mannheim. mutoko, w.r. & kapunda, s.m., 2017, ‘factors influencing small, medium and micro-sized enterprises’ borrowing from banks: the case of the botswana manufacturing sector’, acta commercii: independent research journal in the management sciences 17(1), 1–9. https://doi.org/10.4102/ac.v17i1.426 oliver, r.l., 1981, ‘measurement and evaluation of satisfaction processes in retail settings’, journal of retailing 57(3), 25–48. olugbola, a.s., 2017, ‘exploring entrepreneurial readiness of youth and startup success components: entrepreneurship training as a moderator’, journal of innovation & knowledge 2(3), 155–171. https://doi.org/10.1016/j.jik.2016.12.004 parliamentary monitoring group, 2012, access to funding by small enterprises: commercial banks and development finance institutions briefing, viewed 25 may 2018, from https://pmg.org.za/committee-meeting/14497/. pretorius, m. & le roux, i., 2011, ‘successive failure, repeat entrepreneurship and no learning: a case study’, sa journal of human resource management/sa 9(1), 1–13. https://doi.org/10.4102/sajhrm.v9i1.236 ramadani, v., 2015, ‘the woman entrepreneur in albania: an exploratory study on motivation, problems and success factors’, journal of balkan and near eastern studies 17(2), 204–221. https://doi.org/10.1080/19448953.2014.997488 raven, p. & le, q.v., 2015, ‘teaching business skills to women: impact of business training on women’s microenterprise owners in vietnam’, international journal of entrepreneurial behavior & research 21(4), 622–641. https://doi.org/10.1108/ijebr-06-2014-0099 renko, m., kroeck, g. & bullough, a., 2011, ‘expectancy theory and nascent entrepreneurship’, small business economics 39(3), 667–684. https://doi.org/10.1007/s11187-011-9354-3 ruiz, j., soriano, d.r. & coduras, a., 2015, ‘challenges in measuring readiness for entrepreneurship’, management decision 54(5), 1022–1046. https://doi.org/10.1108/md-07-2014-0493 sarrias, m., 2016, ‘discrete choices with random parameters in r: the rchoice package’, journal of statistical software 74(10), 1–31. https://doi.org/10.18637/jss.v074.i10 secundo, g., vecchio, p.d., schiuma, g. & passiante, g., 2017, ‘activating entrepreneurial learning processes for transforming university students’ idea into entrepreneurial practices’, international journal of entrepreneurial behavior & research 23(3), 465–485. https://doi.org/10.1108/ijebr-12-2015-0315 sibindi, a.b. & aren, a.o., 2015, ‘is good corporate governance practice the panacea for small-to-medium businesses operating in the south african retail sector?’, corporate ownership & control 12(2), 579–589. https://doi.org/10.22495/cocv12i2c6p1 steel, p. & konig, c.j., 2006, ‘integrating theories of motivation’, academy of management review 31(4), 889–913. https://doi.org/10.5465/amr.2006.22527462 ucbasaran, d., shepherd, d.a., locket, a. & lyon, j.s., 2013, ‘life after business failure: the process and consequences of business failure for entrepreneurs’, journal of management 39(1), 163–202. https://doi.org/10.1177/0149206312457823 underhill corporate solutions (ucs), 2011, literature review on small and medium enterprises’ access to credit and support in south africa, viewed 25 may 2018, from https://www.ncr.org.za/pdfs/literature%20review%20on%20sme%20access%20to%20credit%20in%20south%20africa_final%20report_ncr_dec%202011.pdf. welsh, d.h.b., memili, e. & kaciak, e., 2016, ‘an empirical analysis of the impact of family moral support on turkish women entrepreneurs’, journal of innovation & knowledge 1(1), 3–12. https://doi.org/10.1016/j.jik.2016.01.012 134 south african university students intentions to establish social enterprises viviers venter solomon sajesbm volume 5, (2012) 70 www.sajesbm.com article no 134 south african university students’ intentions to establish social enterprises suzette viviers* stellenbosch university chanel venter stellenbosch university goosain solomon stellenbosch university * corresponding author department of business management stellenbosch university private bag x1 matieland, stellenbosch 7602 south africa t: 021 808 2223 f: 021 808 2226 e: sviviers@sun.ac.za abstract stimulating social entrepreneurship in south africa has the potential to address not only the high youth unemployment rate in the country, but also other pressing social and environmental challenges. this study was conducted as part of the 2011 global university entrepreneurial spirit students’ survey and focused on south african university students’ intentions to start social enterprises. the findings, based on 673 responses to an online questionnaire, reveal that the majority of respondents had such an intention. however, less than half of this group mentioned the specific type of environmental or social mission that they would like to pursue. despite more males than females being currently engaged in social entrepreneurship activities in south africa, no statistically significant difference was found in this study between the intentions of male and female respondents in starting a social enterprise. african language speakers and students enrolled for qualifications in the social sciences were, however, statistically more likely to start social enterprises. education is a critical factor in achieving increased levels of social entrepreneurship activity; however, fundamental interventions in the education system are required to achieve this objective. sajesbm volume 5, (2012) 71 www.sajesbm.com article no 134 keywords entrepreneurship education; environmental challenges; generation y; hiv and aids; social challenges; social entrepreneurship; social enterprises; south africa; youth unemployment introduction and problem statement youth unemployment in south africa has reached crisis proportions. according to recent statistics from national treasury, approximately 42 per cent of adults under the age of 30 are unemployed compared with less than 17 per cent of adults over 30 years of age (confronting youth unemployment: policy options for south africa 2011:2). statistics further reveal that only one in eight south african adults under the age of 25 (12.5%) have a job compared to 40 per cent in most emerging economies. a report by the national youth development agency (2011:8) shows that the unemployment problem has persisted even during periods of relatively stable economic growth. despite high levels of public and private sector spending on education and training, the education system does not produce an adequately skilled labour force to support economic growth. on the one hand youth unemployment is the result of various social ills in the country, and on the other hand it contributes to a number of other social dilemmas such as crime and substance abuse.the south african government realises that youth unemployment inhibits the country’s economic development and imposes a large burden on the state to provide social assistance (confronting youth unemployment: policy options for south africa 2011:5). they are thus proposing a multi-pronged strategy to address the problem, which includes, amongst others, improving education and skills development. the authors support this strategy and recommend that urgent attention be given to the quality of entrepreneurship education and training. research has shown that education and training not only enhances the level of entrepreneurship in a country, but also the quality and sustainability thereof (herrington, kew & kew 2009:153). by encouraging entrepreneurial activity among young people, the south african government will furthermore contribute to the physical and psychological well-being of this growing sector of society, estimated at approximately half of the south african population (statistics south africa 2011:9). the authors further propose that particular attention be paid to a relatively new branch of entrepreneurship, namely social entrepreneurship. although no generally-accepted definition of social entrepreneurship exists, most definitions allude to the activities of passionate, innovative entrepreneurs who pursue community, social and/or environmental goals rather than shareholder wealth. social entrepreneurs are seen as powerful change agents in the social sector who have contributed to the professionalisation of public services such as health, education and social work (zahra, gedajkovic, neubaum & shulman 2009:519; harding 2006:5). stimulating social entrepreneurship among south african youth would thus have an added benefit of addressing social challenges. according to the 2nd south african social attitudes survey, the most serious of these challenges, in order of severity, include crime and security, poverty, service provision, affordable housing, corruption and education (roberts, kivilu & davids 2010:40). given the important role that social entrepreneurs play in a developing economy context and evidence that better educated entrepreneurs are more successful at establishing sustainable enterprises, this study investigated the intentions of south african university students to establish social enterprises. to gain more insight into the topic, relevant concepts related to sajesbm volume 5, (2012) 72 www.sajesbm.com article no 134 social enterprises and social entrepreneurship are discussed. details on the research methodology and empirical findings are presented along with recommendations for educationalists and policy makers. literature review a definitive definition of entrepreneurship alludes researchers and practitioners alike, but essentially refers to a process of creating value by bringing together a unique combination of resources to exploit an opportunity (stevenson & jarillo-mossi 1986:10). the entrepreneur plays a critical role in this process, especially in formulating the mission of the business. according to peredo and mclean (2006:56), social entrepreneurship likewise refers to a process where ‘individuals aim, either exclusively or in some prominent way, to create social value of some kind, and pursue that goal through some combination of recognizing and exploiting opportunities to create this value, employing innovation, tolerating risk and declining to accept limitations in available resources’. some definitions distinguish social entrepreneurship from mainstream entrepreneurship by stating that the profit generated in a social enterprise should be reinvested in the activity or venture itself rather than returned to investors (harding 2006:5). it would, however, be unrealistic to expect university graduates and unemployed south african youth to establish social enterprises where all or most of the profit is ploughed back into the business. the authors are of the opinion that earning some form of an income and addressing social and/or environmental challenges need not be mutually exclusive goals and therefore propose a definition of social entrepreneurship in line with dees (2001:4). he argues that a social mission is central to the organisation, but does not preclude the organisation from making a profit or serving the needs of customers. this definition of social entrepreneurship also concurs with what oostlander (2010) calls ‘revenue-generating social enterprises’ or ‘socialpurpose businesses’ (see table 1). table 1: the organisational-purpose continuum primary driver is to create social value � organisations can create ‘blended’ social and financial value � primary driver is to create financial value social-purpose organisations commercial-purpose organisations charities revenue-generating social enterprises socialpurpose businesses traditional businesses grants only: no trading, includes traditional philanthropy trading, revenues and grants potentially sustainable social enterprise (>75% in trading revenues) breakeven: all income from trading revenues profitable social enterprise: surplus reinvested (no dividends to shareholders) profitable social enterprise: surplus profit distribution corporate social investment (csi) company company allocates a percentage of profits to charity through its csi programmes mainstream market company yields a social return yields a social and financial return yields a financial return source: adapted from oostlander (2010) the authors furthermore favour a definition that includes the pursuit of environmental goals as ‘…we all have a moral duty to ensure that whatever we do today does not compromise the needs of those who come after us. none of us is the owner of this earth. we are all caretakers, and transient at that. as transient caretakers, we have a duty to save the planet’ (king & lessidrenska 2009:4). for the purpose of this study, a social enterprise was thus sajesbm volume 5, (2012) 73 www.sajesbm.com article no 134 defined as an organisation that is managed according to business principles, but whose primary purpose is to pursue a social and/or environmental mission in the south african context. social entrepreneurship in south africa in 2009, the global entrepreneurship monitor (gem) conducted a survey to assess the prevalence and scope of social entrepreneurial activity (sea) in 49 countries, including south africa. sea was established by asking respondents whether ‘they alone or with others were currently trying to start or currently own and manage any kind of activity, organisation or initiative that has a particular social, environmental or community objective’. the early-stage of development of the sea rate in south africa (1.8%) is in line with other efficiency-driven economies such as brazil and china, but lower than in innovation-driven countries such as germany and the united kingdom (uk) (herrington et al. 2009:101). however, the south african sea rate in established businesses is much lower compared to both efficiency-driven and innovation-driven economies. urban (2008:356) found that most activities of student social entrepreneurs in south africa centred on religious activities and ventures relating to sport and education. the authors are of the opinion that, besides the usual barriers to entrepreneurship such as poor education, a lack of access to finance and a restrictive regulatory environment, one of the obstacles to starting a social enterprise in south africa could relate to the overwhelming nature of requests from local communities and the apparent inability of one individual or enterprise to bring about social and environmental change. demographics of social entrepreneurs age, gender, race and level of education are four characteristics of social entrepreneurs which are relevant for discussion. age according to herrington et al. (2009:103), individuals between the ages of 18 and 24 are more likely to establish social enterprises. this age group is often called generation y, echo boomers, millennials, the internet generation or nexters (eisner 2005:4). research has revealed that this generation differs significantly from their predecessors in that they have very different values, skills, attitudes toward work and authority, and degrees of socialization (eisner 2005:4). according to mccrindle (2003:28), the american generation y has observed their parents receiving material rewards from hard work. ‘they have benefitted from this being the most materially endowed and entertained generation of teenagers ever. yet, they have also seen the costs of their parents’ success in terms of broken marriages, absentee parenting and an epidemic of stress-related illnesses’. mccrindle claims that young people have been left disillusioned with the materialism they have enjoyed. the consequence being that salary is no longer viewed as the most important attribute of a job – it only ranks sixth in order of importance. issues such as training opportunities, management style, work flexibility, staff activities and non-financial rewards are now deemed more important than a salary. similar preferences were reported among university students in the uk (terjesen, vinnicombe & freeman 2007:504). these authors found that generation y job applicants mostly favour organisations that invest heavily in the training and development of their employees, care about their employees as individuals, offer clear opportunities for long-term career progression and variety in daily work as well as a friendly, informal culture. despite sajesbm volume 5, (2012) 74 www.sajesbm.com article no 134 their diverse backgrounds, a study among 18 to 25 year old south africans revealed that they have similar priorities as far as evaluating potential employers are concerned. they seek opportunities for learning and collaboration, quality of life, a flexible working pattern and meaningful work (puybaraud 2010:4). mccrindle (2003:5) further points out that generation y continually searches for fun, quality friendships, a fulfilling purpose and spiritual meaning. in recognition of these characteristics, some marketers refer to generation y as the ‘cause-seeking’ generation who factor environmental, social and human rights considerations into their consumption decisions (cui, trent, sullivan & matiru 2003:310; bakewell & mitchell 2003:95). this so-called ‘causeseeking’ characteristic displayed by generation y is contributing to a number of fundamental shifts that are occurring in the public and private spheres of society. cochran (2007:450) explains these shifts as follows: ‘we are moving from philanthropy to strategic philanthropy; from investing to socially responsible investing; from entrepreneurship to social entrepreneurship; from venture capital funds to social venture capital funds and from an mba to an mba in corporate social responsibility’. given generation y’s desire for flexibility and their ‘transformational’ nature (puybaraud 2010:3), it could be argued that entrepreneurship as a career, and social entrepreneurship in particular, is ideally suited for this generation. gender herrington et al. (2009:102) indicates that, although males are generally more likely to start new enterprises, the gender gap is less prevalent in the case of social enterprises. this is, however, not the situation in south africa. the total early (mainstream) entrepreneurship male to female ratio in south africa equalled 1.5:1, whereas the male to female ratio for sea in this study equalled 2.6:1 (herrington et al. 2009:102). these ratios suggest that south african females are under-represented in both mainstream and social enterprises, but more so in sea. despite this discrepancy, urban (2008:358) found no statistically significant differences in terms of gender and sea in south africa. race racial differences were noted by harding (2006:12) where black africans and black caribbeans were twice as likely to be social entrepreneurs compared to whites. in south africa, sea is relatively evenly spread with respect to population group (herrington et al. 2009:103). education a positive relationship exists between an individual’s level of education and the propensity of being engaged in either mainstream or social entrepreneurship activities (herrington et al. 2009:101). in past gem reports, the lack of education and training has, however, consistently been identified as a primary inhibitor of entrepreneurial activity in south africa. morrison (2000:65) argues that the formal education system in south africa has led to the development of conformist and anti-entrepreneurial behaviour among learners. she claims that educational conditioning has even led to the ‘population masses’ being ambivalent to entrepreneurship. a primary weakness identified in the south african education system relates to a skewed distribution of resources, financial and otherwise (taylor & yu 2009:54). this results in poorly qualified teachers and educators, inadequate facilities and conditions with low levels of teaching activity especially in areas where social and economic levels are low (van der berg 2008:146). consequently, the current education system does not yield high levels of sajesbm volume 5, (2012) 75 www.sajesbm.com article no 134 creativity and innovation, but rather high levels of drop-outs. according to van der berg (2008:153), simply allocating more resources will not guarantee an improvement in the situation. taylor and yu (2009:54) agree and argue that interventions need to be needsdriven to have significant effect. according to kiggundu (2002:239), entrepreneurship research in africa must produce useful knowledge, which can be attained by developing a holistic perspective. he claims that researchers have traditionally focused only on the firm, and suggests that they rather consider the interaction between the entrepreneur, the entrepreneurial firm and the external environment. ‘it is like a three-legged pot it needs all three legs to be effective’. kiggundu (2002:241) further postulates that researchers have to ‘scale up’ their research in terms of conceptualising, designing, and conducting better research and producing ‘useable knowledge’. he believes that entrepreneurship has been treated as the step-child in the education system and needs to be an integral part of the mainstream education and longterm vision of the country. with regard to social entrepreneurship, harding (2006:12) found that sea rates doubled in cases where individuals received training, either at school, as part of a college or university course, workplace training or as part of a government programme. the report noted that training had a particularly strong impact on women, with sea being between two and two and a half times higher among women than men who have received training in the uk (harding 2006:12). the majority of south africa’s early-stage social entrepreneurs have completed their high school education (47%), with a further 12 per cent having some form of tertiary qualification. with regard to the nature of education, urban (2008:358) found significant differences between students enrolled in different faculties at south african universities. commerce students considered their abilities in financial and managerial-related matters to be more advanced than those from other faculties (notably engineering and the built environment faculty). research design and methodology details on the questionnaire design, sample selection as well as the methods used to collect and analyse primary data are presented. questionnaire design the first global university entrepreneurial spirit students’ survey (guesss) questionnaire was designed in 2003 by researchers at the swiss research institute of small business and entrepreneurship at the university of st. gallen and the kfw endowed chair for entrepreneurship at the european business school in germany. based on an extensive literature review, the international co-ordinators of the survey developed a set of 15 openended and closed-ended questions to measure entrepreneurial intentions and behaviour among university students. respondents were also requested to provide biographical details such as gender, age, name of the university where they are studying at, the qualification for which they are enrolled, major subjects etc. by using the same questions, scales, methods and constructs across countries and universities, tangible comparisons of tendencies and trends have been made. in 2011, country representatives had the opportunity to add country-specific questions to the existing, standard questionnaire. the authors added two south-africa specific questions, namely home language (as a proxy for race) and the intention to establish a social enterprise (which forms the focus of this study). sajesbm volume 5, (2012) 76 www.sajesbm.com article no 134 sampling each of the 26 countries participating in the 2011 survey had representatives who were responsible for contacting students in that country. the representatives were asked to inform as many students as possible of the survey, and encourage them to complete the questionnaire. the final international sample consisted of 93 265 students, with south africa being one of the smaller contributors. the south african sample was drawn from 15 universities. academics and administrative personnel at these universities marketed the survey by making announcements in lectures, placing advertisements on websites, sending e-mails to students, and displaying posters on university campuses. data collection and analysis the survey was administered by means of a web-based questionnaire. upon completion of the survey in june 2011, all data were processed by the international project coordinators in switzerland, and the datasets were then distributed to the national representatives in each participating country. despite various and varied marketing efforts across the 15 participating universities in south africa, only 697 students completed the south african questionnaire. all responses from exchange students from america, the uk, europe and asia were, however, eliminated from the original data set resulting in 673 usable questionnaires. quantitative data were analysed by computing descriptive and inferential statistics using the ibm spss statistics (version 19) software programme. qualitative data were coded and analysed using the general analytical procedure as proposed by huberman and miles (2002). sample description as indicated in table 2, the majority of the sample were aged between 18 and 24 and can thus be classified as generation y (82.6%). slightly more males participated in the survey than females (54.4%) and the predominant home language of participants was fairly equally split between afrikaans and english. table 2: sample description – demographic details generation y n % yes 24 or younger (born in 1987 or later) 556 82.6 no older than 24 (born before 1987) 117 17.4 total 673 100.0 gender male 366 54.4 female 307 45.6 total 673 100.0 home language afrikaans 269 40.0 english 268 39.8 other official south african languages(a) 116 17.2 other(b) 20 3.0 total 673 100.0 (a) isindebele, isixhosa, isizulu, sesotho sa leboa, sesotho, setswana, siswati, tshivenda and xitsonga (b) german, swahili and oshiwambo sajesbm volume 5, (2012) 77 www.sajesbm.com article no 134 as illustrated in table 3, most of the respondents studied at stellenbosch university (45%), north-west university (15.8%) and the university of pretoria (10.1%). table 3: sample description – education institution n % stellenbosch university (including the university of stellenbosch business school) 303 45.0 north-west university 106 15.8 university of pretoria 68 10.1 nelson mandela metropolitan university (including the nelson mandela metropolitan university business school) 66 9.8 rhodes university 28 4.2 university of cape town 22 3.3 university of kwa-zulu natal 14 2.1 university of the western cape 13 1.9 university of johannesburg 13 1.9 other 16 2.4 cape peninsula university of technology 8 1.2 university of the free state 8 1.2 university of venda 8 1.2 total 673 100.0 level of study undergraduate (bachelor) 583 86.6 graduate (master) 71 10.5 phd / doctorate 11 1.6 faculty / post doc 7 1.0 mba / executive education 1 0.1 total 673 100.0 faculty 0.0 business and economic sciences 480 71.3 natural sciences 136 20.2 social sciences 57 8.5 total 673 100.0 field of study management / business administration (including marketing, entrepreneurship, human resource management, logistics and supply chain management) 306 45.5 economics 98 14.6 accounting / financial accounting / internal auditing 55 8.2 computer sciences / informatics 44 6.5 engineering sciences (including architecture) 42 6.2 mathematics and natural sciences / actuarial studies 39 5.8 law 18 2.7 other social sciences (sociology, political science, media, public administration) 18 2.7 finance / investments / risk management 17 2.5 education / pedagogy 7 1.0 agricultural sciences, forestry and nutrition science 7 1.0 cultural studies (including religion, philosophy, psychology) 5 0.7 medicine and health science 4 0.6 tourism 4 0.6 sustainable development planning and management 4 0.6 sports 2 0.3 art, science of art 2 0.3 linguistics 1 0.1 total 673 100.0 sajesbm volume 5, (2012) 78 www.sajesbm.com article no 134 it should be noted that all three of these universities are well-resourced institutions. responses from students enrolled at these universities might therefore not be entirely representative of the average student population in south africa. this limitation could be addressed in future surveys by employing purposive sampling techniques. the majority of respondents (71.3%) were enrolled for undergraduate qualifications (86.6%) and qualifications in business and economic sciences faculties, specialising in management / business administration, economics and accounting / financial accounting / internal auditing. twenty per cent of students studied towards degrees in the natural sciences with the remainder enrolled for qualifications in the social sciences. empirical findings the following section presents pertinent findings on south african university students’ intentions to start a social enterprise, the types of missions they would like to pursue and factors motivating their career choices. the outcomes and implications of the hypothesis tests are also discussed. south african university students’ intentions to start a social enterprise students’ responses to the question of whether they are interested in establishing a social enterprise was analysed in three steps. firstly, the data were checked to ensure that students had the correct understanding of the concept ‘social enterprise’. at this stage more than half of the students in the sample (54.8%) expressed an interest in starting a social enterprise. if one had to support ajzen’s (1991:180) definition of an intention as ‘a future course of action to be performed’, the future for social entrepreneurship in south africa seems very promising indeed. a growing body of research, mainly in the field of green marketing, is however questioning whether positive intentions necessarily result in actions. bamberg (2003:21) for example found a weak relationship between environmental concerns and specific environmental behaviours. vermeir and verbeke (2006:169) likewise found that consumers generally had a positive attitude towards sustainability, yet very few purchased sustainable food products. barber (2010:423) also found that the intention to pay more for environmentally friendly wine packaging did not always translate into actual purchase behaviour. respondents were asked to specify the type of environmental or social mission that they would like to pursue, to establish whether south african university students’ positive responses to this question regarding establishing a social enterprise merely reflected a positive attitude towards society or whether it represented a more serious intention. only 26.6 per cent of respondents mentioned a mission, some of which were vague (for example “i want to create jobs”). closer investigation of the missions revealed that 9.4 per cent of respondents had specific ideas of the type of mission they would like to pursue. no comparison to the international data could be made as this was a country-specific question. environmental and social missions contemplated by south african university students an open-ended question was phrased to investigate the types of environmental and social missions that potential social entrepreneurs in south africa would pursue. some suggestions were quite vague (for example to create jobs), whereas others were much more detailed (for example converting highly radioactive waste to medium, low or non-radioactive waste). more sajesbm volume 5, (2012) 79 www.sajesbm.com article no 134 details on the specific environmental and social missions suggested by students will now be provided. environmental missions through a process of codification, the following environmental themes emerged: • engaging in green projects and initiatives (such as recycling, transport, selling green products); • providing green education and skills training; consulting on sustainable development issues; • developing green technologies and products; • protecting animals and the natural environment; and • other environmental initiatives (such as establishing eco-tourism enterprises and creating community gardens). with regard to the first green mission, which was also the most prominent one, most students envisioned starting an enterprise in the recycling sector. these students had innovative ideas to transform waste into commercially viable products, which would at the same time improve the standard of living in local communities. other students saw opportunities to reduce greenhouse gas emissions, particularly in the transportation sector. despite a growing emphasis on proper water management in south africa (adler, claassen, godfrey & turton 2007: 33; bohensky & lynam 2005:11; environmental problems in south africa n.d.), only one student identified the need to start a social enterprise aimed at improving the supply and quality of water in the country. other than engaging in green projects and initiatives, many students saw opportunities in providing environmental education, training and consultation. this might be as a result of the growing attention being given to environmental issues at south african universities (james 2009; farrar 2008). a number of students saw opportunities in developing new environmentally-friendly technologies, such as solar or wind power. given the costs involved in projects of this nature, the question of whether they could be classified as social enterprises becomes important. yet other students indicated that they were considering starting enterprises in eco-tourism, sustainable agriculture and construction. several students recognised the interrelationship between green education and training, environmental protection and job creation. an analysis of the above mentioned green missions suggests that are generation y is indeed very concerned about the future of the planet (gen y + sustainability 2010). social missions nine social missions were identified from the qualitative data, namely: • providing education and training (financial, legal, information technology and business management skills); • creating job opportunities; • engaging in construction and/or housing projects; • engaging in projects to improve the welfare of children and adolescents; • engaging in projects to improve health care (including community gyms); • providing aid for under-privileged; • combating human trafficking; • developing sport; and • other social initiatives (such as combatting corruption and assisting homeless people). sajesbm volume 5, (2012) 80 www.sajesbm.com article no 134 the two prominent ones social missions included job creation and the provision of education and training. from the comments received, it was clear that these two aspects were almost inseparable, and that both are seen as important mechanisms to reduce poverty and crime in local communities. given the high unemployment rate in the country and its related socioeconomic consequences, the majority of prospective social entrepreneurs wanted to address this problem. unfortunately, few students had concrete ideas on how to achieve this, generally suggesting the recycling of waste products and construction. despite students’ vagueness on how they intended to create job opportunities, many agreed that ‘job creation should satisfy the needs of the community’, specifically as far as housing and financial stability were concerned. the students who wished to engage in social construction projects mentioned that these projects should be affordable and environmentally-friendly. prospective social entrepreneurs identified education and training needs in the areas of life skills, career guidance, personal financial management, technology and innovation as well as the skills required to establish and manage a small business. with regard to the latter, particular opportunities were identified in offering education and training in the fields of financial management, information technology and legal matters. specific emphasis was placed on developing the skills of the youth and unemployed. another social mission that was frequently mentioned dealt with improving the welfare of children and adolescents. proposed projects ranged from providing housing and education to caring for their psychological and emotional needs. this theme ties in with the next one, namely providing aid for the under-privileged. some students envisioned setting up charities, whereas one student contemplated the establishment of a micro-finance institution offering affordable loans to members of his local community. although highlighted as a social mission, students were very uncertain in terms of how they wished to improve health care conditions in south africa. despite south africa having one of the highest hiv infection rates in the world, particularly among the youth (national youth development agency 2011:8; country progress report on the declaration of commitment to hiv/aids 2010:3), only one respondent in this sample, aspired to be a social entrepreneur working in this field. some of the less frequently mentioned social missions dealt with combating human trafficking, sports development, eliminating corruption, establishing agri-businesses and vegetable gardens and fitness clubs in townships, and assisting homeless people and disabled children. a common thread running through many of the missions mentioned was the students’ desire to engage with communities to overcome their problems. this inclusive approach to social entrepreneurship was highlighted by nobel prize winner and founder of the grameen bank, muhammad yunus, who remarked that: ‘people can change their own lives, provided they have the right kind of institutional support. they are not asking for charity; charity is no solution to poverty’ (the nobel peace prize 2006 2006). to further explore university students’ motives for selecting a specific career, respondents were asked to indicate, on a seven-point likert-scale, how important they viewed a number of motivating factors. table 4 contains a comparison of the mean scores of the south african and international student samples; ranked in descending order of importance, based on the south african responses. sajesbm volume 5, (2012) 81 www.sajesbm.com article no 134 table 4: motivation for selected career choices south african sample international sample my career should allow me to… n mean s.d. n mean s.d. realise my own dream 670 6.49 .878 92 377 6.00 1.26 grow and learn as a person 667 6.48 .869 92 266 6.23 1.07 gain financial security 665 6.25 1.094 91 914 5.92 1.28 gain greater flexibility for personal life 669 6.23 1.064 92 089 5.73 1.39 gain a higher position for myself 670 6.16 1.176 92 066 5.48 1.55 challenge myself 669 6.17 1.069 92 388 5.68 1.35 achieve something, receive recognition 669 6.07 1.207 92 164 5.75 1.38 earn a larger personal income 669 5.97 1.162 92 288 5.69 1.38 be my own boss 668 5.90 1.369 92 056 4.94 1.83 exploit a specific business opportunity that i recognised 668 5.68 1.396 91 941 4.65 1.97 be innovative, at the forefront of technology 667 5.50 1.478 92 093 4.57 1.93 develop an idea for a product 670 5.47 1.536 92 025 4.45 1.98 follow an environmental mission 670 5.04 1.583 92 160 4.60 1.89 follow a social mission 668 5.01 1.583 92 126 4.81 1.83 build a business children can inherit 669 4.81 1.851 92 027 3.61 2.12 follow the example of a person i admire 667 4.75 1.838 91 989 3.43 2.13 continue a family tradition 664 3.80 2.006 92 005 2.58 1.89 students’ career intentions were primarily motivated by the ability to realise their dreams, to grow and learn as individuals and to secure financial stability, respectively. the first two motivating factors named are consistent with the literature on generation y’s career preferences in the uk (terjesen et al. 2007:504) and in south africa (puybaraud 2010:4). to investigate the importance students in different countries attached to pursuing an environmental or social mission, the mean scores for these two questions were computed and are reflected in table 5. the countries participating in the 2011 guess survey were categorised into three groups based on the world bank’s classification system which is based on gross national income per capita. as indicated in table 5, students were generally more interested in a career in which they could pursue a social mission (overall mean score = 4.81) than an environmental one (overall mean score = 4.6). compared to the international sample, south african university students attached more value to a career in which they could pursue an environmental mission (5.04 vs 4.6) than a social mission (5.01 vs 4.81). however, this difference is not statistically significant. sajesbm volume 5, (2012) 82 www.sajesbm.com article no 134 table 5: motivation to follow an environmental or social mission per country follow an environmental mission follow a social mission classification country n mean s.d n mean s.d belgium 185 3.89 1.689 185 3.98 1.816 estonia 1869 4.54 1.716 1866 4.61 1.667 finland 1432 3.78 1.749 1429 3.68 1.675 france 1482 3.96 1.873 1482 3.96 1.799 germany 12392 3.92 1.861 12385 4.20 1.879 greece 447 4.47 1.662 449 4.95 1.628 ireland 328 3.88 1.839 329 4.26 1.807 liechtenstein 220 4.19 1.602 220 4.05 1.610 the netherlands 13085 3.85 1.686 13074 4.40 1.656 portugal 1004 4.52 1.720 1008 4.70 1.657 switzerland 8063 4.10 1.839 8060 4.39 1.861 austria 4522 4.16 1.879 4520 4.41 1.899 hungary 5658 4.79 1.740 5649 4.42 1.727 japan 554 4.57 1.571 553 4.90 1.551 luxembourg 437 4.23 1.870 439 4.50 1.767 singapore 2359 4.87 1.481 2358 4.91 1.417 high income economies united kingdom 641 4.33 1.944 639 4.58 1.913 brazil 28678 5.38 1.790 28687 5.56 1.673 chile 1232 5.33 1.695 1230 5.50 1.651 china 838 4.89 1.563 839 5.06 1.550 romania 840 5.09 1.770 837 5.15 1.652 russia 2713 4.67 1.831 2714 4.69 1.764 south africa 670 5.04 1.583 668 5.01 1.583 argentina 1621 5.19 1.858 1616 5.44 1.751 upper middle income economies mexico 552 5.43 1.710 552 5.51 1.691 lower middle income economies pakistan 315 5.15 1.360 315 5.25 1.404 total 92160 4.60 1.889 92126 4.81 1.825 source: world bank how we classify countries (2011) characteristics of social entrepreneurs as indicated in the literature, age, gender, race and education have been shown to influence the intention to start a social enterprise. given that the study was undertaken among a fairly homogenous group as far as age is concerned, null hypotheses were only formulated with regard to gender, race and type of education, more specifically: h0,1: there is no difference between the intentions of male and female students in starting a social enterprise in south africa. h0,2: there is no difference between the intentions of different population groups (using home language as proxy) in starting a social enterprise in south africa. h0,3: there is no difference between the intentions of students enrolled in different faculties in starting a social enterprise in south africa. gender the results of a pearson chi-square test did not reveal a statistically significant difference between male and female students’ intentions in starting a social enterprise in south africa (two-sided asymptotic significance = 0.378). as a result, h0,1 could not be rejected. this sajesbm volume 5, (2012) 83 www.sajesbm.com article no 134 finding corresponds with results reported by urban (2008:358) who also failed to find a gender difference in respect of intentions to become social entrepreneurs. race a statistically significant difference was observed between respondents with different home languages (two-sided asymptotic significance = 0.002). as indicated in table 6, african language speakers were more interested in starting a social enterprise than respondents from other language groups. table 6: the impact of home language on the intention to establish a social enterprise start a social enterprise home language yes no total count 144 124 268 % within language categories 53.70% 46.30% 100.00% english % within start a social enterprise 39.00% 40.80% 39.80% count 133 136 269 % within language categories 49.40% 50.60% 100.00% afrikaans % within start a social enterprise 36.00% 44.70% 40.00% count 81 34 115 % within language categories 70.40% 29.60% 100.00% african languages % within start a social enterprise 22.00% 11.20% 17.10% count 11 10 21 % within language categories 52.40% 47.60% 100.00% other languages % within start a social enterprise 3.00% 3.30% 3.10% count 369 304 673 % within language categories 54.80% 45.20% 100.00% total % within start a social enterprise 100.00% 100.00% 100.00% this finding is consistent with brijlal (2011:821) who discovered that, of all population groups in south africa, african students attached the most importance to corporate social responsibility. he also found that close to 90 per cent of african students believed that successful business owners should give something back to the community beyond providing employment. the findings in table 6 contradict those of the 2009 gem report which indicate a relatively evenly distribution of sea in south africa with respect to population group. the higher level of interest in social entrepreneurship among african students (in this sample) could be due to the use of language as proxy for race. it might be that some african students indicated their home language as english, confounding the findings in table 6. it might also be that african students are genuinely more concerned about finding solutions to the social and environmental challenges that south africa faces. given that differences are observed in terms of home language and intention to start a social enterprise, h0,2 can be rejected. education a statistically significant difference was observed between the intention to start a social enterprise and the faculty in which a student was enrolled (two-sided asymptotic significance = 0.020). in this study, social science students were slightly more likely to establish social enterprises compared to their counterparts in economic and business sciences (71.9% versus 70.2%) (table 7). sajesbm volume 5, (2012) 84 www.sajesbm.com article no 134 table 7: the impact of faculty on the intention to establish a social enterprise start a social enterprise faculty yes no total count 259 221 480 % within faculty 54.00% 46.00% 100.00% business and economic sciences % within start a social enterprise 70.20% 72.70% 71.30% count 69 67 136 % within faculty 50.70% 49.30% 100.00% natural sciences % within start a social enterprise 18.70% 22.00% 20.20% count 41 16 57 % within faculty 71.90% 28.10% 100.00% social sciences % within start a social enterprise 11.10% 5.30% 8.50% count 369 304 673 % within faculty 54.80% 45.20% 100.00% total % within start a social enterprise 100.00% 100.00% 100.00% urban (2008:358) also found significant differences between faculty enrolment and the intention to start a social enterprise. his findings, however, suggest that commerce students, who have a greater affinity with business related matters (than social or natural science students), were more likely to establish a social enterprise. given the presence of a statistically significant relationship between faculty enrolment and the intention to start a social enterprise, h0,3 can be rejected. the high level of interest in social enterprises among social students are very encouraging, given the magnitude of social issues the country is facing. summary, conclusions and recommendations given that social entrepreneurs can act as powerful change agents, and that better educated entrepreneurs are more likely to establish sustainable businesses, this study set out to investigate the intentions of south african university students to establish social enterprises. the findings revealed that quite a large number of south african university students were interested in establishing social enterprises. less than 10 per cent of the overall sample, however, provided specific suggestions regarding their chosen social and/or environmental mission. these findings seem to suggest that although respondents are quite positive about the notion of social entrepreneurship, few are likely to convert their intentions into actual entrepreneurship actions. despite the fact that more males than females in south africa are currently engaged in sea, no statistically significant difference was found between the intentions of male and female respondents in this study to start a social enterprise. african language speakers and students enrolled for qualifications in the social sciences were, however, statistically more likely to start social enterprises. the findings of this study are encouraging and suggest that the topic of social entrepreneurship needs to be brought into the mainstream education and long-term vision of the country. even though south african universities are more aggressive in promoting entrepreneurship, the topic of social entrepreneurship could receive more attention. south africa, a country with immense social and economic issues, offers much opportunity for social entrepreneurs. although pockets of excellence exist in the south african context, it is the exception rather than the rule and as a result, the country suffers from a highly skewed skill distribution, with a relatively small percentage of highly skilled members of society and a sajesbm volume 5, (2012) 85 www.sajesbm.com article no 134 relatively large percentage of very low skilled members. the challenge for the country lies in operationalising the well-intended strategies, without a skilled middle management layer. specific educational interventions are required to transform the south african education system into one that will focus on innovativeness and creativity rather than being ‘ambivalent to entrepreneurship’. these interventions should preferably be aimed at women and should be in line with those strategies already formulated by government, such as those set out in the national development plan – vision for 2030 (2011:3). given that many young people in south africa leave the school system before matriculating, a clear need also exists for technical and vocational forms of training, adult literacy programmes and other post-school educational interventions. finally, the authors strongly support suggestions by the national planning commission and authors such as etzkowitz (2003:239) to strenghten ties between government, industry and academia, the so-called ‘triple helix’. suggestions for future research as indicated earlier, research has revealed that individuals with higher levels of education are more likely to succeed in establishing sustainable social enterprises. these organisations have the potential to address various social, developmental and environmental challenges in a country. the question now becomes: why would a university graduate forego a career offering financial security (a particularly important motivator in the south african context) to pursue a social or environmental mission? is passion alone sufficient? further research into the ‘push and pull’ factors for social entrepreneurs in south africa is thus required. future research should also strive to incorporate the call from muhammed yunus to broaden our understanding of capitalism and social entrepreneurship to successfully transform our societies (the nobel peace prize 2006, 2006). acknowledgements the authors would like to thank pearson education southern africa and the braxton group for financial support and two anonymous critical readers for their valuable insights and recommendations. references adler, r.a., claassen, m., godfrey, l. & turton, a.r. 2007. water, mining and waste: a historical and economic perspective on conflict management in south africa. the economics of peace and security journal, 2(2): 33-41. ajzen, i. 1991. the theory of planned behavior. organizational behavior and human decision processes, 50(2): 179-211. bakewell, c. & mitchell, v-w. 2003. generation y female consumer decision-making styles. international journal of retail & distribution management, 31(2): 95-106. bamberg, s. 2003. how does environmental concern influence specific environmentally related behaviors? a new answer to an old question. journal of environmental psychology, 23(1): 21-32. barber, n. 2010. “green” wine packaging: targeting environmental consumers. international journal of wine business research, 22(4): 423-444. sajesbm volume 5, (2012) 86 www.sajesbm.com article no 134 bohensky, e. & lynam, t. 2005. evaluating responses in complex adaptive systems: insights on water management from the southern african millennium ecosystem assessment. ecology & society, 10: 11. brijlal, p. 2011. entrepreneurial perceptions and knowledge: a survey of final year university students. african journal of business management, 5(3): 818-825. cochran, p. 2007. the evolution of corporate social responsibility. business horizons, 50(6): 449-454. confronting youth unemployment: policy options for south africa. 2011. discussion paper for public comment. national treasury, february, http://www.treasury.gov.za/documents/national%20budget/2011/confronting%20you th%20unemployment%20-%20policy%20options.pdf. country progress report on the declaration of commitment on hiv/aids. 2010. south africa – unaids, march, http://www.unaids.org/en/dataanalysis/monitoringcountryprogress/2010progressrepo rtssubmittedbycountries/southafrica_2010_country_progress_report_en.pdf . cui, y., trent, e., sullivan, p.m. & matiru, c.n. 2003. cause-related marketing: how generation y responds. international journal of retail and distribution management, 31(6): 310-320. dees. j. 2001. the meaning of “social entrepreneurship”. http://www.caseatduke.org/documents/dees_sedef.pdf. eisner, s.p. 2005. managing generation y. sam advanced management journal, 70(4): 417. environmental problems in south africa. n.d. world wildlife foundation. http://wwf.panda.org/who_we_are/wwf_offices/south_africa/environmental_problems __in_south_africa/ etzkowitz, h. 2003. innovation in innovation: the triple helix of university-industrygovernment relations. social science information, 42(3): 293-337. farrar, s. 2008. lead the way in cutting carbon: mbas in carbon management will become increasingly important as companies are forced to tackle climate change. sunday times, 27 january, http:/business.timeonline.co.uk/tol/business/related_reports/article3255969. gen y + sustainability. 2010. michigan state university & deloitte. http://news.msu.edu/media/documents/2010/01/7f991e2a-9b1d-4949-abf00f34c471cd7d.pdf harding, r. 2006. social entrepreneurship monitor – united kingdom 2006. global entrepreneurship monitor uk. http://deltaeconomics.com/media/socialentrmon2006.pdf herrington, m., kew, j. and p. kew. 2009. tracking entrepreneurship in south africa – a gem perspective. http://www.gemconsortium.org/download/1322823469160/gem%20sa%202009%2 0-%20tracking%20entrepreneurship.pdf. sajesbm volume 5, (2012) 87 www.sajesbm.com article no 134 huberman, m.a. & miles, m.b. 2002. the qualitative researcher's companion. london: sage publications. james, a. 2009. academies of the apocalypse? the guardian 7 april, http://www.guardian.co.uk/education/2009/apr/07/mba-business-schools-creditcrunch. kiggundu, m.n. 2002. entrepreneurs and entrepreneurship in africa: what is known and what need to be done. journal of developmental entrepreneurship, 7(3): 239-258. king, m. & lessidrenska, t. 2009. transient caretakers – making life on earth sustainable. johannesburg: macmillan. mccrindle, m. 2003. understanding generation y. principal matters, 55: 28-31. morrison, a. 2000. entrepreneurship: what triggers it? international journal of entrepreneurial behaviour and research, 6(2): 59-71. national development plan – vision for 2030. 2011. national planning commission. http://www.npconline.co.za/medialib/downloads/home/npc%20national%20develop ment%20plan%20vision%202030%20-lo-res.pdf national youth development agency, policy and research cluster, research unit. 2011. the south african youth context: the young generation. http://www.nyda.gov.za/index.php?option=com_rokdownloads&view=folder&itemid=2 86&id=457:research-reports. oostlander, p. 2010. turning impact finance into an industry: overcoming bottlenecks. paper presented at the 6th annual conference of the european venture philanthropy association, luxembourg, 16-17 november. peredo, a.m. & mclean, m. 2006. social entrepreneurship: a critical review of the concept. journal of world business, 41(1): 56-65. puybaraud, m. 2010. generation y in south africa – how would they like to work in 2010? oxygenz country report: south africa. http://www.johnsoncontrols.de/publish/etc/medialib/jci/be/global_workplace_innovatio n/oxygenz.par.77649.file.dat/south_africa_oxygenz_report_low_res.pdf. roberts, b., kivilu, m. & davids, y.d. 2010. south african social attitudes: the 2nd report reflections on the age of hope. health sciences research council. pretoria: hscr press. statistics south africa. 2011. mid-year population estimates: 2011. http://www.statssa.gov.za/publications/p0302/p03022011.pdf. stevenson, h.h. & jarillo-mossi, c.j. 1986. preserving entrepreneurship as companies grow. journal of business strategy, 7(1): 10-23. taylor, s. & yu, d. 2009. the importance of socio-economic status in determining educational achievement in south africa. a working paper of the department of economics and the bureau for economic research at stellenbosch university, 01/09. sajesbm volume 5, (2012) 88 www.sajesbm.com article no 134 terjesen, s., vinnicombe, s. & freeman, s. 2007. attracting generation y graduates – organisational attributes, likelihood to apply and sex differences. career development international, 12(6): 504-522. the nobel peace prize 2006. 2006. muhammad yunus. grameen bank. http://nobelprize.org/nobel_prizes/peace/laureates/2006/yunus-telephone.html. urban, b. 2008. social entrepreneurship in south africa – delineating the construct with associated skills. international journal of entrepreneurial behaviour and research, 14(5): 346-364. van der berg, s. 2008. how effective are poor schools? poverty and educational outcomes in south africa. studies in educational evaluation, 34(3): 145-154. venter, r., urban, b. & rwigema, h. 2008. entrepreneurship – theory in practice. 2nd edition. cape town: oxford university press. vermeir, i. & verbeke, h. 2006. sustainable food consumption: exploring the consumer ‘‘attitude – behavioral intention’’ gap. journal of agricultural and environmental ethics, 19: 169-194. world bank how we classify countries. 2011. http://data.worldbank.org/about/countryclassifications. zahra, s.a., gedajkovic, e., neubaum, d.o. & shulman, j.m. 2009. a typology of social entrepreneurs: motives, search processes and ethical challenges. journal of business venturing, 24: 519-532. 131 guidance for smes with the adoption of technology a conceptual framework steyn leonard draft final sajesbm volume 5, (2012) www.sajesbm.com article no 113 24 guidance for smes with the adoption of technology: a conceptual framework aa steyn * university of pretoria riana.steyn@up.ac.za phone: +2712 420 3341 fax: +2712 362 5287 ac leonard university of pretoria awie.leonard@up.ac.za * to whom correspondence should be addressed. abstract when starting up a new small or medium sized company, it is crucial to understand what the requirements are in terms of information and communication technologies (ict). bentellis and boufaïsa (2008) note that over the last twenty years the markets have been changing fast, which has led to the evolution of the business environment. in many instances companies cannot keep up with the change occurring in the ict arena. entering the market as a small competitor, you need to ensure that you implement ict that will support your business strategies. this paper presents the findings of a qualitative research study done to determine how smes cope with the adoption of technology. the paper explores the typical problems and challenges faced by smes, within south africa, with regard to ict and propose a conceptual framework to support managers in their decision making on ict implementation. as such, this framework supports them in choosing the relevant technology, as well as supporting them with the effective application of the chosen technologies. key words adoption, information communications technology (ict), skills, small to medium organisations (sme), technology introduction according to hilson (2003) smes are seen as the driving force of any economy. one has to realize the importance of the effective and successful implementation of ict and what the impact thereof can be. however, due to the lack of resources, whether financial or human, smes tend to be reluctant to adopt ict (celuch, murphy and callaway, 2007). sajesbm volume 5, (2012) www.sajesbm.com article no 113 25 section 1(15) of the national small business act (102/1996) in south africa where the research was done certain criteria have been developed to establish whether or not a business qualifies as a small business (criteria can be viewed in the annexure). the act also defines small businesses within the south african context as a “distinct business entity, which is managed by an owner or more”, and which satisfies the criteria as set out in the annexure. when analysing these criteria, it becomes evident that within a south african context, an sme is classified as a business which has no more than 200 employees and has certain turnover criteria based on their industry. thus, if a business has less than 200 employees but the revenue is more than the indicated value per industry, the argument of brown and kaewkitipong (2009) whereby smes are not only based on size, but also on complexity, becomes true. according to fink and disterer (2006) smes should be divided even further, namely micro, small and medium sized, with micro being one to five employees, small being six to 20 employees and medium between 20 and 500 employees. however, these numbers are used in a study on smes in australia and germany. thus for this research paper, the assumption would be that smes are between 1 and 200 employees. kaynak, tatoglu and kula. (2005) note that smes can be seen as the power house of a country’s economy. kapurubandara and lawson (2007) continue by stating that the development of the economy is affected by smes everywhere. most governments have also realised the effect and impact small organisations have on a country’s economy, as it leads to the growth of the economy as well as job and wealth creation (oke, burke, and myers,. 2007). hilson (2003) indicates that some of the main reasons why smes in canada will not adopt it are cost and the lack of time and expertise, as most of the it skills are being swept up by the large firms. it seems as if the skills acquired by students from tertiary institutions are highly specialized and thus the students feel that they could be “better utilized” within larger organisations. the lack of resources, both financial and human, is even bigger in developing countries, as indicated by ellis and van belle (2009). when starting up a new organisation, or trying to adapt to the rapid rate of it evolution experienced all over the world, it is crucial to understand what the requirements are in terms of information and communication technologies (ict). wixom and todd (2005) mention the need to develop a set of characteristics which can be applied across a range of systems in order to integrate user perceptions and it adoption. there is a need to identify what has been done to date with regard to it adoption models and whether these models can, in some way, be combined to develop a standard conceptual framework to be used by smes and extended into future studies as a guideline for any organisation’s it strategy. literature review smes and their dependency on ict for smes staying ahead and maintaining a competitive advantage becomes critical for survival. yu (2001) notes that the origins of small enterprises’ competitive advantages have not yet been critically examined. however, the evolution of firms have recently expanded to such an extent that it opens up a whole new dimension to be examined from a business enterprise viewpoint. yu (2001) identified two distinctive assets of small firms, namely the access to a simple capital structure and entrepreneurship. small firms also have the capability to produce or deliver within a limited time span, as they are more flexible than larger firms to adapt to changes. chibelushi and costello (2009) also confirm this by saying that smes are more flexible, innovative and can respond to changes in their environments much faster. based on sajesbm volume 5, (2012) www.sajesbm.com article no 113 26 the rapid rate of it evolution, it becomes a “tool” to gain the upper hand in the industry and ensures it doesn’t become just another entry on a timeline going nowhere. technology characteristics for the sme environment there is a magnitude of technologies available in the market, and one quickly realizes that there are such a large number of products available, and that exploring all the literature would be a never ending quest. without a professional opinion in terms of what technology to buy and what not to buy, quality decision making by the management of sme’s stays a challenge. decisions by management without professional support can have a devastating influence on the bottom line (dyerson, harindranath, and barnes, 2009) and will either enhance competitive advantage or start a slow downward spiral towards business closure. the various levels of technology available and where smes fit in should be considered at this point. kendall & kendall, 2011:30 used figure 1 to identify the various levels of systems or applications within an organisation. figure 1: different system levels (kendall & kendall, 2011:30) with figure 1 in mind, the following arguments help one to understand that most smes are really applying information technology on the lower levels and in the majority of cases not higher than the mis level of the figure. from the research of chibelushi and costello (2009) it emerged that most owners of smes firstly seek advice on what type of ict to adopt from friends, relatives or other sme owners. due to these owners not having adequate knowledge of it, they do not necessarily adopt the correct ict, if any at all. however, dyerson et al. (2009) conducted a study on about 519 smes in the uk, and they found that the largest area where smes will start to gain advice from are it consultants and secondly from personal sources such as family and friends. this does not make the fact that smes tend to look for sources outside the company worthless, but rather indicate their lack of internal resources which the sme might have available. according to dyerson et al. (2009) the following technologies are the ones mostly used by smes, in no particular order: • company website • email • extranet or electronic data interchange • groupware (e.g. lotus notes) sajesbm volume 5, (2012) www.sajesbm.com article no 113 27 • internet • intranet • computer network • video/audio conferencing • wireless access however, to identify the specific software that a sme will need is almost impossible and these are mere guidelines to indicate which focus points smes will consider when adopting a specific ict. it strategy – when does it become relevant? strategic planning and skills availability within an sme are two of the most important aspects when one begins to investigate the adoption of ict. one has to realise where you want your business to go within the it environment to ensure effective management and cost-effective solutions. sandberg and vinberg (2000) note that for smes to survive and grow in the future, it becomes a matter of strategic importance to adopt information technology. when developing a tool to “ease” the workload of the employees, it is also critical to involve these employees to ensure that the strategies as well as the tools are relevant to their occupation, to improve productivity. both goldstuck (2009) and nel (2009) discuss the findings of the world wide worx report which had interviews with about 1000 sme decision-makers. it became clear that most of the key staff, or in some cases all the staff, are out of the office at least once a day visiting customers. as a result of this, smes are more concerned with the type of mobile device, such as the cell phone and laptop which they can use while on the go. nel (2009) mentions that 24% of key personnel work “outside” the office and 29% have to leave the office at least twice a day. the fact that most technologies today allow for mobility has become a great advantage and it creates the ability for these personnel to move around more freely. it adoption models in this section three adoption models are introduced followed by brief explanations of how these models are being used in certain areas of research. these models were chosen due to their impact on the social aspects of it adoption, as well as the fact that the unified model already contains most of the important aspects of the eight models which focus on the social aspect of adoption (venkatesh, morris, davis and davis., 2003). another reason why only these three models were identified, is due to the statement bagozzi (2007) made where he said that adoption models are reaching a point of chaos and each new model leads to new fragmentations of already created models. these models were analyzed to find the most appropriate one. the model’s characteristics will be used to build the conceptual framework for ict adoption by smes within a south african context. chibelushi and costello (2009) argue that without a clear understanding of the model and scope of adoption, the result could be that the investment in ict does not deliver any value. as mentioned by bhattacherjee and sanford (2006), rogers (2005) said “it acceptance is fundamentally a problem of social influence”. handy, whiddett, and hunter (2001) state that one has to be careful to view the technical and social side of information systems isolated from each other. thus, there is a noteworthy interaction between humans and the implementation and success of ict. sajesbm volume 5, (2012) www.sajesbm.com article no 113 28 table 1: list of it acceptance models model abbreviation elaboration likelihood model elm technology acceptance model tam unified theory of acceptance and use of technology utaut elaboration likelihood model fadel, durcikova and cha (2008) indicate that elm is used to account for “variations in information influence across individuals and contexts”. thus, it realises the importance of individual perceptions and how these perceptions are formed. they continue by stating that it is a way in which the utility of information is judged through cognitive elaboration. bhattacherjee and sanford (2006) note that there are two routes which influence the attitudes amongst individuals. bhattacherjee and sanford (2006) further state that the two core drivers of the acceptance of it are attitude and perceived usefulness. on the other hand, sussman and siegal (2003) identify ability and motivation as influencing factors of elaboration. fadel et al. (2008) mention that the central route refers to argument quality and the peripheral route refers to source credibility. while explaining the innovative diffusion theory, bhattacherjee and sanford (2006) mention that adoption is viewed as a one-time decision and the long time effects or post-adoption effects are ignored. however, it is stated that the central route of elm is more stable in terms of the influence effects than the peripheral route. below are some of the main categories which emerged from the studies of bhattacherjee and sanford (2006): • relevance = motivation degree • expert user level = effort degree required • ease of use • influence = decreases over time bhattacherjee and sanford (2006) identify seven constructs that influence the adoption of technology. they are perceived usefulness, attitude, acceptance intention (“, argument quality (“persuasive strength of arguments embedded in an informational message”, bhattacherjee & sanford, 2006:811), source credibility (“extent to which an information source is perceived to be believable, competent, and trustworthy by information recipients”, bhattacherjee & sanford, 2006:811), and user expertise and job relevance. each one of these characteristics and constructs were analysed to identify which will become relevant in constructing the conceptual framework. technology acceptance model reimenschneider, harrison and mykytyn (2003) note that tam is the model most likely to be used for it adoption in small businesses, due to the social approval of this model. in this regard bagozzi (2007) identifies tam as the leader model of technology acceptance for more than two decades. lu, yu, liu and yao (2003) argue that tam focuses on the “consciously intended behaviours”. in other words attitudes lead to intentions, which lead to behaviours. the primary “belief” of tam is that all it adoption relates to ease of use and usefulness. they continue by stating that attitude will be the deciding factor of the intention to adopt a specific system. however, according to a study conducted by world wide worx (goldstuck, sajesbm volume 5, (2012) www.sajesbm.com article no 113 29 2009) 80% of south africa’s smes noted that ease of use is an important criteria for adopting wireless technology, with 79% also noting quality as an important aspect. continuing with the findings of the study, 74% noted that maintenance is important and 72% chose reliability. price was only ranked as the 5th most important aspect of why smes will adopt wireless technology. these findings are a clear indication that certain parts of tam could be used as the basis for technology adoption within smes such as ease of use. ease of use is one of tam’s measurements which is rated as the number one reason for adoption within the south african market. on the other hand, tam is a model used to explain computer usage. mehrtens, cragg and mills (2001) identify three factors which ultimately influence or affect the adoption of the internet by small firms. these factors are perceived benefits, organisational readiness and external pressures. one thing to keep in mind at this stage is that the research paper investigates smes which, as mentioned earlier, usually involve one owner who tends to be the decision-maker. yu (2001) also states that the owner’s perceptions are mostly the cause of the sluggishness of information technology adoption. dyerson et al. (2009) however indicate that very few smes adopt technology as a result of external pressures, but rather to gain a competitive advantage, to enhance operational efficiency, as well as to improve their services to their customers and to satisfy their staff. as mentioned earlier, two of the issues faced by smes during it adoption are attitudes, as well as customer behaviour (chibelushi and costello, 2009). reimenschneider et al. (2003) continue by acknowledging that small businesses face problems when implementing it in terms of the adoption of it and the use thereof. lu et al. (2003) continue by saying that the adoption of wireless internet via a mobile device is strongly influenced by prior experience as well as the adopters’ level of innovation. they argue that the more innovative a person is, the more one tries new things and should then develop more positive perceptions towards new technology. unified theory of acceptance and use of technology venkatesh et al. (2003) conducted a study to create a unified acceptance model which took eight prominent adoption models into consideration and proposed the utaut model. they did however acknowledge that the model still requires some additional research but the foundations of utaut will now be discussed. models such as “the theory of reasoned action, the technology acceptance model, the motivational model, theory of planned behaviour, a model combining the technology acceptance model and the theory of planned behaviour, the model of pc utilization, the innovation diffusion theory and the social cognitive theory” were compared venkatesh et al. (2003), after conducting intensive studies into the eight different research models, there seem to be seven constructs which have a direct influence on the intention of usage in the individual models. however, venkatesh et al. (2003) have identified four constructs or building blocks which play a considerable role in determining user acceptance as well as behaviour. these four constructs or building blocks are: performance expectance, effort expectancy, social influence and facilitating conditions. framework building blocks having drawn a mind-map of all the characteristics of these three models, it became evident that the relationships between the characteristics are rather strong. as identified by korunka, weiss and zauchner (1997), organisational flexibility and competitiveness increase through the use of information technology and can be used as a basis to explain the urgency of adoption of these systems. sajesbm volume 5, (2012) www.sajesbm.com article no 113 24 table 2 indicates all the main characteristics which emerged from the models as well as the literature in the form of building blocks. table 2. building blocks theme or model building blocks resources elm attitude perceived usefulness job relevance source credibility intention job relevance argument quality expertise fadel et al. (2008:2); bhattacherjee & sanford (2006:807); sussman & siegal (2003:52) tam attitude perceived usefulness job fit external pressures intention job fit reimenschneider et al. (2003:271); lu et al. (2003:207); bagozzi (2007:244); yu (2001:189); dyerson et al. (2009:42) utaut usefulness / ease of use job fit social factors job fit expectancy venkatesh et al. (2003:425) mobile devices easy to use / useful availability hart & hannan (2004:201) successful projects user & management involvement expectation liebowitz (1999:66) challenges attitude customer behaviour technology changes chibelushi & costelle (200:212) sajesbm volume 5, (2012) www.sajesbm.com article no 113 24 when looking at the building blocks, it is evident that all three of the models place a high emphasis on the social aspects of it adoption. during the adoption of it, it seems as if a high emphasis is placed on the ease of use and usefulness of the technology being adopted, as well as the attitude of the end users of this technology, as attitude will lead to intention which will lead to a specific action by the user. job fit is also an aspect which emerged throughout all three models, including compatibility with a user’s job functions. external influence, whether it is via a friend or via an expert, also seems to be a determinant of the adoption of certain types of technology. these would thus be the first characteristics which will be used to build the conceptual framework for this research paper. research methodology in this research study we followed an interpretive research approach. myers (2009) mentions that interpretive research assumes that knowledge is gained, or reality is accessed, by the use of social structures such as language and shared meanings. he continues by saying that interpretive research focuses on human sense-making and that the only way to make sense of a subject matter is to investigate it from the inside out, rather than standing on the outside and trying to see what is happening. klein and myers (1999) confirm the impact of the social context of an organisation on interpretive research, and that interpretive research has the potential to create valuable insight into organisational systems and processes. due to the fact that this paper will be based on qualitative data gathering, which involves discussions with the research participants, the researcher had to take time to understand the business before certain assumptions could be made and the context wrongfully interpreted. qualitative research has been a popular approach in various research studies (myers and newman, 2007; myers, 2009). qualitative interviewing, if used correctly, could be a powerful tool in a research environment. but even though most researchers use the interviewing process as their means of data gathering, it is also loaded with difficulties and shortcomings. myers (2009) states that an interview allows the researcher to “gather rich data from people in various roles and situations”, thus focusing on the social aspect of the interviewee. as was mentioned earlier, it is important to realise the smes are focusing on the social aspect of an organisation, because qualitative research is a technique to gather data from people. data gathering the target research population is smes within a south african context. the research identified ten smes based in various towns to identify what their experiences were when starting their business, and how they experience the use and benefits of ict. four of the smes interviewed, operate their business in a more rural environment and this also provided an understanding of services and support available in these areas. (of these towns 6 are in pretoria, one based in kempton park, two based in witbank and one based in middelburg, mpumalanga.) by conducting interviews with this broad spectrum of smes, the researchers gained a better understanding of the needs of south african smes when adopting ict, and also whether the differences between urban and more rural based smes are at all significant. during the interviews, the researchers made notes and the interviews were recorded by using a digital recording device. once all the interviews were conducted, the recordings were transcribed and common themes which have emerged were identified. the contents of the interviews were summarized and each question asked during the interview was analyzed in order to determine which aspects of ict are important for smes. data analysis the data was analysed by using the four constructs of fink and disterer (2006:611). each company’s social networks are discussed by using the four constructs. this is sanctioned by sajesbm volume 5, (2012) www.sajesbm.com article no 113 25 myers (2009:39) who argues that it is crucial to understand the context of the business, as this defines the relevance of data. an example of one of the companies’ classification can be viewed in the annexure. fink and disterer (2006) realise that determining it adoption within smes, is influenced by the social aspect of it and how it affects the social aspects of the organisation. fink and disterer (2006) introduced four constructs whereby social networks can be described. these four constructs are: interaction: users use ict to interact with others within their work environment. thus the information and resources are being “mobilised as people engage with affiliated organisations.” environment: the organisational needs are identified in order to recognise the environment by using ict as well as what the organisational industry focus is. affiliations: social networks being created by people with their computers, within the organisation as well as in the industry within which they operate. identities: identify the kind of staff employed as well as acknowledgement of the members within the organisation either as individuals or as collective entities. after each company’s background and context had been analysed, the researchers could form a better idea of why certain answers were provided by the research participants on certain questions and all the data was analysed. the interview questions could be divided into three focus groups which helped to classify and clarify the interview responses across all the various interviews. these three groups are: 1. employees, their skill levels as well as training provided. communication between sme, personnel and customers, and the impact of their competitors in the market. 2. current ict infrastructure in place as well as support and service providers currently being used. 3. security and the possibility of a business continuity plan are deciding factors for the sme when considering investment in ict, future goals and possible wish lists that the smes might have for their ict. each interview question was constructed by looking at themes and aspects which emerged from the literature review. as mentioned earlier, smes for this study include anything from 1 to 200 employees. however, during the interviews the researcher realized that smes have to be broken down even further on account of their size, as was done by fink and disterer (2006). they divided smes into micro, small and medium sized, with micro consisting of one to five employees, small of six to 20 employees and medium of 20 to 500 employees. however, for this study, the classification will be as follows: micro one to 5 employees, small 6 to 30 employees and medium 31 to 200 employees and large, even though not part of smes, 201 to unlimited according to the south african classification as discussed earlier. the research participants emphasised reliability of the technology as they specifically indicated reliable battery life for mobile devices, reliable information being produced etc. other aspects such as cost, upgrading and compatibility were also mentioned. cost is relevant to the specific technology, as one cannot get away from the cost factor in any technology. all of the research participants indicated that the cost of an article will determine whether they will invest in it or not. cost is noted as important but inevitable and thus will not be included in the framework. upgrading can be seen as part of support which in turn forms part of the external influence characteristics. compatibility forms part of reliability as well as usefulness, and will thus not be mentioned again in the framework. sajesbm volume 5, (2012) www.sajesbm.com article no 113 26 conceptual framework there seems to be a magnitude of advice and data available surrounding the adoption of it. as was discussed earlier, there are specific adoption models which highlight the main characteristics of it adoption for smes. there is also an endless wave of technology and ways in which an sme can adopt it not only within south africa, but throughout the world. the conceptual framework serves as a guide to help one to make sense of a magnitude of concepts as indicated by smeyers (2008). in the rest of this section a conceptual framework is developed, based on the different interviews as well as what was found in the literature. each sub-section discusses the content of the different building blocks of the framework. relevant it micro: as was identified during the interviews, micro smes realise that they cannot function without it, but they do not necessarily require high-level state of the art technology. all of these companies have emails, access to the internet as well as a telkom line. they seldom have a fixed network infrastructure and thus they will tend to use 3g devices to connect to the internet and emails, thus ensuring mobility is achieved. it seems as if a financial package is not always required, except for those who do see the need for financial transactions. quickbooks accounting is seen as a simple and easy way to adopt for their “simple” business operations. what did emerge, though, is that backups of data are not always a priority for these companies. they will however have to start implementing a procedure whereby data is stored on a backup device and stored off-site to ensure confidentiality firstly and secondly, to familiarise themselves with a business continuity plan. though not formal, this is the first step towards achieving this goal. an updated anti-virus system is also required to protect their pcs or laptops, as recommended by beck (2007). small: when companies expand and become part of the small group, everything relevant to micro companies is included but small companies will tend to focus more on pastel rather than quickbooks. as commented by company h, this is due to the fact that most accountants are familiar with pastel, as they are trained in pastel and thus there is no extra cost involved in training. at the small level, skills development also starts to play a role. skills development might not necessarily involve it skills, although small companies start to realise the benefit and importance of outsourcing their it functions and that it could assist them in their business needs. small companies will also start investing in websites mostly for marketing purposes, as well as network infrastructures to connect the employees with one another. it is also at this point where the need arises for some kind of operational system to ensure productivity and accurate information for management decision-making. here the tps systems of kendall & kendall, 2011:30 being the first level of information systems, come into play where they say that the core business functions and transactions are now being recorded by using operational systems. medium: medium companies have the same requirements as micro and small companies. however, they realise the need to employ in-house it resources. at this stage a company starts to introduce more advanced operational systems such as enterprise resource systems, especially on the financial side of the business. the need for accurate information for decision making now starts to influence it decisions thus relating back to kendall & kendall, 2011:30 mis systems. these systems tend to become more expensive and thus the small and micro companies do not venture into them. large: everything which emerged from micro, small and medium companies but with additional add-ons are required by large companies. the large company has already invested into it and infrastructure; they now start to look at what the world wide it trends are sajesbm volume 5, (2012) www.sajesbm.com article no 113 27 and which of these trends can be invested in to ensure that maximum competitive advantage is reached. as this study does not focus on the large organisations, this part will only serve as an introduction for future research to expand the framework introduced. thus, the relevance of it to the size of the company can be introduced as follows: figure 2: it relevance framework from figure 2, one can notice the correlation between the size of the organisation and their level of it adoption, as discussed above. it decision characteristics during the research study, various adoption approaches of it were discussed, but which of these techniques suits the sme adoption framework the best? as indicated earlier the following characteristics will be taken from the adoption models: • ease of use • usefulness of the technology • attitude of the users • job fit • external influences, whether it is via a friend or via an expert, also seem to be a determinant of the adoption of certain types of technology. external influences also relate to the credibility of the source providing the external influence. referring back to the data analysis section, the only additional characteristic that will be added to the above mentioned characteristics will be reliability. these characteristics will be displayed at the bottom of the framework as the smes need to remember them when choosing the best technology to invest in. organisational strategy once the organisational strategy is known, one can incorporate the business processes which will lead to the it strategy, thus ensuring that the adoption of it within the company becomes integrated with the business’ objectives. thus the company’s strategy will become sajesbm volume 5, (2012) www.sajesbm.com article no 113 28 the glue which assists an sme with adoption and future growth and will be displayed on the right-hand side of the conceptual framework. organisational strategies include the it strategy. what is emerging, is that strategies need to be in place so that the smes know what they want to achieve, and based on these strategies and goals, ict needs to be decided upon, thus providing the necessary glue to build the company’s structures and it requirements. combined framework figure 3 illustrates, combined in one framework, all the concepts which can be used by smes to adopt it from a south african point of view, based on the size of the company. all of the building blocks of the framework are interlinked in order to ensure that the sme knows what to look for when choosing it to invest in. as stated earlier, this conceptual framework is only a guide to help one to make sense of a magnitude of concepts, as indicated by smeyers (2008). it does not mean that micro cannot adopt one of the concepts of the small companies. therefore, the role of this framework is to support personnel of smes in their decision making with regard to the use of ict. deciding characteristics: micro medium small large 1 email, internet, mobile wireless device, telkom land line, quickbooks, backups, anti-virus 2. 1 + skills dev, website, bcp, intro to operational system, network, outsourcing 3. 2 + inhouse it resource, erp solution 4. 3 + world wide trend easy to use attitude of users job fit perceived usefulness external influences reliability it decision characteristics: organizational strategy incorporating: it strategy business processes relevant it figure 3: conceptual framework for guiding smes in adoption of it from a south african point of view recommendations what emerged from this study, though, is the impact of the social presence relating to decision-making within smes. thus it is recommended that one engages with the employees within your organisation, as it allows for multiple inputs from these employees which could guide you in your decision-making. future research throughout this study, suggestions for potential future research have emerged. there is a need to develop guidelines assisting the decision-makers of an organisation to outsource or sajesbm volume 5, (2012) www.sajesbm.com article no 113 29 not to outsource. one also has to investigate the reason why some larger companies prefer to do in-house training and if large companies encourage people to enrich themselves through continuous studies or training, which of these companies will carry the cost. furthermore, the recommended framework was not tested during this study. this could also be done in future studies. conclusion the research study explores the typical problems and challenges faced by smes with regard to ict adoption. the study highlights the uncertainty of sme managers with regard to the general use of contemporary technology, and that they are in many cases, as far as decision making is concerned, in the hands of people who do not care for their businesses. in many cases they do not know what to do and because of a lack of skills and information, they sometimes make critically wrong decisions with the adoption approach. in this study we propose a conceptual framework to support managers in their decision making with regard to ict implementation. this conceptual framework, we argue, can be of great support to sme’s when they need to deal with difficult decisions as far as the adoption of ict equipment and or strategies are concerned. although the empirical research was done in the south african business environment, we argue that this adoption model could be of great value to sme’s in other parts of the world with similar conditions than those in south-africa. sajesbm volume 5, (2012) www.sajesbm.com article no 113 30 references bagozzi, r.p. 2007. ‘the legacy of the technology acceptance model and a proposal for a paradigm shift’, journal of the association for information systems, 8(4), pp. 244-254. beck, r. 2007. ‘business need business continuity plans now more than ever’, focus, 12. bentellis, a. & boufaïsa, z. 2008. ‘conceptual method for flexibility business process modelling’, international journal of human and social science, 2(3), pp. 139–143. bhattacherjee, a. & sanford, c. 2006. ‘influence processes for information technology acceptance: an elaboration likelihood model’, mis quarterly, 30(4), pp. 805-825. billings, j. 2009. ‘advice is like caster oil, easy enough to give but dreadful uneasy to take.’ [online] available: http://cookingintheory.blogspot.com/2009/03/advice-is-like-castor-oileasy-enough.html [accessed: 4 march 2010]. brown d.h & kaewkitipong, l. 2009. ‘relative size and complexity: e-business use in small and medium sized tourism enterprise in thailand’, journal of enterprise information management, 22(½), pp. 212–231. celuch, k., murphy g.b. & callaway, s.k. 2007. ‘more bang for your bucks: small firms and the importance of information technology capabilities and strategic flexibility’, journal of high technology management research, 17, pp. 187-197. chibelushi, c. & costello, p. 2009. ‘challenges facing the w.midlands ict-oriented sme’s’, journal of small business and enterprise development, 16(2), pp. 210–239. coff, r.w. & laverty, k.j. 2001. ‘roadblocks to competitive advantage: how organizational constraints and individual decision biases hinder investments in strategic assets’, journal of high technology management research, 12, pp. 1-24. department of trade and industry: annual review of small business in south africa, 2005 – 2007. 2009. [online] available: http://www.dti.gov.za/offerings/offeringgroup.asp? offeringgroupid=22 [accessed: 9 march 2010]. department of trade and industry: south africa. 1996. national small business act, no. 102 of 1996:1-16 [online] available: http://www.thedti.gov.za/smme/act.pdf [accessed: 21 august 2009]. diefenbach. t. 2007. ‘the managerialistic ideology of organisational change management’, journal of organizational change management, 20(1), pp. 126-144. dyerson, r., harindranath, g. & barnes, d. 2009. ‘national survey of smes’ use of it in four sectors’, the electronic journal information systems evaluation, 12(1), pp. 39–50. ellis, j. & van belle, j.p. 2009. open source software adoption by south african mses: barriers and enablers. proceedings of the 2009 annual conference of the southern african computer lecturers' association,eastern cape, south africa, 29 june – 1 july 2009:41-49. fadel, k.j., durcikova, a. & cha, h.s. 2008. ‘elaboration likelihood in knowledge management: a model and experimental test’, proceedings of the 41st hawaii international conference on system sciences – 2008, pp. 1-10. fink, d. & disterer, g. 2006. ‘international case studies: to what extend is ict infused into operations of smes?’, journal of enterprise information management, 19(6), pp. 608–624. goldstuck, a. 2009. ‘make it easy: smes want mobility simplicity’, iweek, 206, pp. 11. handy, j., whiddett, r. & hunter, i. 2001. ’a technology acceptance model for interorganisational electronic medical records’, australian journal of information systems, 9(1), pp. 39-50. sajesbm volume 5, (2012) www.sajesbm.com article no 113 31 hart, j. & hannan, m. 2004. ‘the future of mobile technology and mobile wireless computing’, campus-wide information systems, 21(5), pp. 201–204. hilson, g. 2003. ‘canadian sme e-business growth stalled by a lack of it skills: report’, computing canada, 23 may, pp. 1. jackson, m. & sloane, a. 2009. ‘organisation profiling and the adoption of ict: e-commerce in the uk construction industry’, the electronic journal information systems evaluation, 12(1), pp. 67-74. kapurubandara, m. & lawson, r. 2007. ‘smes in developing countries need support to address the challenges of adopting e-commerce technologies’, proceedings of the 20th bled econference emergence: merging and emerging technologies, processes and institutions, 4 – 6 june, pp. 485 – 498. kaynak, e., tatoglu, e. & kula, v. 2005. ’an analysis of the factors affecting the adoption of electronic commerce by smes: evidence from an emerging market’, international marketing review, 22(6), pp. 623-640. kendall, k.e. & kendall, j.e. 2011. systems analysis and design, 8th edition. pearson education: prentice hall klein, h.k. & myers, m.d. 1999. ‘a set of principles for conducting and evaluating interpretive field studies in information systems’, mis quarterly, 23(1), pp. 67-88. korunka, c., weiss, a. & zauchner, s. 1997. ‘an interview study of ‘continuous’ implementations of information technology’, behaviour and information technology, 16(1), pp. 11-24. liebowitz, j. 1999. ‘a look at why information systems fail’, kybernetes, 28(1), pp. 61-67. lu, j., yu, c., liu, c. & yao, j.e. 2003. ‘technology acceptance model for wireless internet’, internet research: electronic networking applications and policy, 13(3), pp. 206–222. mehrtens, j., cragg, p.b. & mills, a.m. 2001. ‘a model of internet adoption by smes’, information and management, 39, pp. 165-176. myers, m.d. and newman, m. 2007. ‘the qualitative interview in is research: examining the craft’, information and organization, 17, pp. 2–26. myers, m. d. 2009. qualitative research in business and management. london ec1y 1sp, sage publications ltd. nel, c. 2009. ‘kmo’s kyk na slimfone’, sake24, 15 september 2009. [online] available: http://www.sake24.com/articles/default/display_article.aspx?channel=news_it&articleid=6104_2553225&iscolumniststory=false [accessed: 3 november 2009]. oke, a., burke, g. & myers, a. 2007. ‘innovation types and performance in growing uk smes’, international journal of operations & production management, 27(7), pp. 735-753. pati, n. & desai, m.s. 2005. ‘conceptualizing strategic issues in information technology outsourcing’, information management and computer security, 13(4), pp. 281–296. rantapuska, t & ihanainen, o. 2008. ‘knowledge use in ict investment decision making of smes’, journal of enterprise information management, 21(6), pp. 585–596. reimenschneider c.k., harrison, d.a. & mykytyn, p.p. 2003. ‘understanding it adoption in small business: integrating current theories’, information & management, 40, pp. 269-285. sandberg, k.w. & vinberg, s. 2000. ‘information technology and learning strategies in small enterprises’, behaviour and information technology, 19(3), pp. 221–227. smeyers, p. 2008. qualitative and quantitative research methods: old wine in new bottles? on understanding and interpreting educational phenomena. paedagogical historica, sajesbm volume 5, (2012) www.sajesbm.com article no 113 32 44(6):691–705. [online] availbale: http://www.informaworld.com/smpp/title~content=t713441262 [accessed: 21 august 2009]. sussman, s.w. & siegal, w.s. 2003. ‘information influence in organizations: an integrated approach to knowledge adoption’, information systems research, 14(1), pp. 47-65. venkatesh, v., morris, m.g., davis, g.b. & davis, f.d. 2003. ‘user acceptance of information technology: toward a unified view’, mis quarterly, 27(3), pp. 425-478. whitten, j.l., bentley, l.d. & dittman, k.c. 2004. systems analysis and design methods, 6th edition mcgraw-hill/irwin. wixom, b.h. & todd p.a. 2005. ‘a theoretical integration of user satisfaction and technology acceptance’, information systems research, 16(1), pp. 85-102. yu, t.f. 2001. ‘towards a capabilities perspective of the small firm’, international journal of management reviews, 3(3), pp. 185–197. sajesbm volume 5, (2012) www.sajesbm.com article no 113 33 annexure – company classification below is an example of how the company’s were analysed by using the four constructs and all 11 companies were classified in this manner: company a company a’s main focus of business is the recording of arbitration, disciplinary and insolvency hearings as well as the transcription of these recordings and the preparation of appeal records for the courts. advanced voice-recording devices are used with four microphones each. this allows for voice recording in larger rooms such as courtrooms. recordings are done in the field which needs to be transcribed. these recordings are placed on a local file and print (ftp) server, and the typist can then log into the ftp as a client to retrieve the recordings and do the transcriptions. company a is owned by two partners, one of whom is based in pretoria, the other in cape town. it is a 50/50 partnership. number of employees: 2 partners number of employees working on it: 2 years in operation: almost 3 years types of technologies being used: recording devices, cds for storage of recordings, pc, photocopy machine, skype and internet modem interaction: currently most of the communication between the employees is done through email. there is also an ftp server available whereby employees have access to download voice recordings and the storing of the transcripts of these recordings. environment: at this stage, the recordings are mainly done in courtroom based scenarios as this is a controlled environment with regard to voice-recording. the main operations are currently run from one of the partners’ houses in pretoria. affiliations: as most of the employees have worked in the same industry for quite some time, there seems to be a highly trustworthy relationship between the employees. although there is no mention of a social network it does become evident that the employees, as well as the industry, are familiar with one another. technology is being used to ensure interaction takes place. identities: although there are a number of employees working for company a, most of them are not permanently employed. however, all potential employees have to have security checks done before they can become part of the company. even though the employees were mentioned, most of them are not fulltime and thus only receive remuneration based on their input. abstract introduction literature review research methods and design results discussion conclusion acknowledgements references about the author(s) semukele h. mlotshwa wits business school, faculty of commerce, law and management, university of the witwatersrand, johannesburg, south africa jabulile msimango-galawe wits business school, faculty of commerce, law and management, university of the witwatersrand, johannesburg, south africa citation mlotshwa, s.h. & msimango-galawe, j., 2020, ‘the risk of overvaluing networking on small and medium enterprises performance in gauteng province, south africa’, southern african journal of entrepreneurship and small business management 12(1), a294. https://doi.org/10.4102/sajesbm.v12i1.294 original research the risk of overvaluing networking on small and medium enterprises performance in gauteng province, south africa semukele h. mlotshwa, jabulile msimango-galawe received: 29 oct. 2019; accepted: 03 dec. 2019; published: 03 mar. 2020 copyright: © 2020. the author(s). licensee: aosis. this is an open access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. abstract background: several studies have been conducted to investigate the relationship between networking and performance, but unfortunately findings have been inconclusive. nevertheless, networking has been recognised as a vital element for enhancing competitiveness amongst small and medium enterprises (smes). aim: the objective of this study was to investigate the influence of different forms of networking, networking activities and the perceived importance of networking on sme performance. setting: the study was conducted in south africa, more specifically on entrepreneurs who have smes operating in the gauteng province. methods: this was a quantitative study with a cross-sectional research design on a sample size of 304. multiple linear regression was employed as the core statistical technique to analyse the primary data. results: it was evident that the more value entrepreneurs put on networking, the lesser their businesses performed, as the relationship became negative. however, the more they got involved in networking activities and maintained the relationships, the better their businesses performed. it was interesting to note that social, business and managerial network forms emerged as one form of networking, which we have named business networking. however, the importance and maintenance of networks were very distinct as networks were valued higher than what we saw from the maintenance and participation in networking. conclusion: the study does not suggest that networking is irrelevant. however, it argues that this might be reflecting the risk of overvaluing networks. it is evident that networking influences performance of smes irrespective of whether it is social, business or managerial. keywords: social capital; social networks; business networks; managerial networks; sme performance. introduction in developing countries, small and medium enterprises (smes) have become vital as they have the potential to improve income distribution, create new employment, reduce poverty and facilitate economic growth. as such, smes are seen as fostering the development of entrepreneurship, industry and the rural economy (aremu & adeyemi 2011; coulibaly, erbao & mekongcho 2018; love & roper 2015; obeng, robson & haugh 2014). however, these smes still face a multitude of challenges, and networking is deemed as one of the tools to assist them in facing these challenges (coulibaly et al. 2018). due to these challenges, smes have to rely heavily on external support and resources to thrive, and these include external organisations, financial institutions, government, suppliers, relatives and many more. as a result, if an organisation can network with its suppliers, buyers and competitors, it will become a crucial ingredient to manage competition and achieve an advantage. through networks and relationships, companies can identify their opportunities and try to avoid competition amongst them. however, the problem is that most sme owners do not measure the value of their networks or even view it as an essential part of their business growth (anwar & ali shah 2018; johnson, scholes & whittington 2005; munyanyi & pooe 2019, o’toole & mcgrath 2018). according to luo (2003) and franco (2018), networks are regarded as a means of providing a diversity of knowledge, accessing resources, information and complementary assets for sme growth. also, firms that emphasise building business networks increase flexibility, efficiency and competitive advantage. in a developing economic context such as south africa, with one of its primary goals being firm growth, firms can effectively use network relationships to gain this competitive advantage that has been cited by many scholars (franco 2018; pratono 2018; urban & sefalafala 2015; wang, chen & fang 2018). empirical studies on social capital and entrepreneurship have pointed out the benefits of networks on firm entrepreneurial performance and success. furthermore, these scholars have shown that firms with networks comprising membership in professional associations and industry are likely to show growth (kwon & arenius 2010; krebs 2008; schoonjans et al. 2013; venter et al. 2015). the objective of this study was to investigate the influence of different forms of networking (business, social and managerial) on business performance of smes in gauteng province, south africa, to ascertain which of the three influences sme performance the most, and further to understand the level of performance of those smes whose owners view networking as important and engage in networking activities the objective of this study is attained by answering the following questions: ‘to what extent do entrepreneurs value or view networking as important?’, ‘how involved are they in networking activities?’, ‘which form of networking do they engage in?’ and ‘to what extent does it influence the performance of their smes?’. this study contributes to the social capital literature, especially the literature on the networking of smes in an emerging economy by giving a better understanding of which networking forms influence sme performance the most and also the effect of managing networks and perceiving them as important for business success. the research findings of this study will guide entrepreneurs regarding networking forms and the value of each of them. therefore, the results of this study provide evidence on whether smes’ involvement in networking improves their performance, and contribute to the literature that is currently showing mixed results. literature review seed academy (2017) found that the lack of business support including poor planning, lack of access to markets, lack of operational experience and poor financial management were the main contributors to business failure amongst south african small enterprises. furthermore, small enterprises are challenged by limited access to resources and information that could lead to the identification of new opportunities or access to new markets (grobbelaar, gwynne-evans & brent 2016; herrington, kew & mwanga 2017; simsek & heavey 2011; wiklund & shepherd 2005). one prominent factor that can enhance the profitability of an sme, and thus lead to high performance and survival, is networking. networking is defined as an enterprise, or its employees and owners, linking with other individuals or enterprises, which are not under their direct control in a cost-effective way, by sharing contacts, information and exchanging resources with those enterprises (anwar, rehman & shah 2018; franco 2018; li & zhang 2007; porter 1989). the empirical literature on the impact of networking on the performance of smes has produced mixed results. thrikawala (2011) finds a significant positive relationship between an sme’s engagement in various networks and the performance of the sme. similarly, watson (2007) also finds that smes that are involved in networking have higher performance and survive longer. on the other hand, rowley, behrens and krackhardt (2000) find a negative association between networking and performance. networking contributes to the growth of businesses by providing new ideas, practical assistance and emotional support (anwar & ali shah 2018; hassan et al. 2018). coulthard and loos (2007) elaborate on networking in smes as an activity in which small businesses build and manage personal relationships with different individuals in their environment. watson (2007) adds that the networks smes form with other businesses not only have the ability to influence their delivery and production of products or services but also help these small firms achieve economies of scale. networking allows small firms to obtain the necessary support from key stakeholders who are essential for the firm’s growth (huggins 2018; le & nguyen 2009). watson (2012) describes the importance of networks in assisting entrepreneurs in developing and accessing valuable ideas, resources and opportunities that are otherwise unavailable or difficult to obtain. it is through networking that smes can utilise their full potential to improve their performance (anwar & ali shah 2018; krebs 2008; valkokari & helander 2007). it is crucial for entrepreneurs to actively participate in networks, as it will help them to improve their growth, success and performance. in south africa, it has been noted that smes contribute to the economy, although they do not grow as expected, but rather assume a survivalist position (smit & watkins 2012). garwe and fatoki (2012) support this finding, arguing that small businesses in south africa are mostly dominated by firms that only achieve a survival position and grow in number but not in size. they further add that in south africa, the predominance of newly established smes does not advance from the initial stage of growth to other stages like success, take-off and maturity. olawale and garwe (2010) observed that approximately 75% of new smes in south africa do not grow and develop into established businesses, and this agrees with recent reports (herrington et al. 2017; seed academy 2017). the concept of networking remains relevant; this is because håkansson and snehota’s no business is an island from 2017 (ford & mouzas 2013) means that businesses should not exist in isolation but interact with other stakeholders. the conceptualisation of this study locates itself within the social network theory (snt), as explained below. social network theory social network theory contrasts with the type of sociological theory that defines society as a built-up of individuals. it starts instead from the relations between individuals, and models society as constituted of networks made up of sets of relations or ties between the nodes (wasserman & faust 1994). echoing snt, coleman and coleman (1994) identified social capital as something inherent in the structure of relations between actors. social capital is considered as a contract between individuals unconstrained by underlying economic arrangements. actors are free to choose whether to build networks to further their self-interests. the critical component in building networks and, hence, creating social capital is a trust that the others will reciprocate their actions and will feel some obligations to do so (coleman & coleman 1994). research suggests that networks are a crucial aspect of entrepreneurial success. studies indicate that networking allows entrepreneurs to enrich their knowledge of opportunities, gain access to critical resources and deal with business obstacles (mcfarlin, coster & mogale-pretorius 1999). networking is also referred to as entrepreneurs’ social capital base, and social capital is crucial to entrepreneurs and is critical for business growth (low & macmillan 1988). the premise behind the notion of social capital is rather simple and straightforward – investment in social relations with expected returns. this definition is consistent with various scholars (burt 2009; coleman & coleman 1994; portes 1998). entrepreneurs engage in interactions and networking in order to produce profits. social capital is considered to be the foundational theoretical perspective in entrepreneurship (taylor & murphy 2004). it is a key outcome of networking, a crucial micro-foundation of entrepreneurial action (adler & kwon 2002). social capital helps entrepreneurs, especially in capitalising on market opportunities, identifying, collecting and allocating scarce resources, gathering information, influence and sponsorship, improving outcomes in turbulent times, providing legitimacy, preventing failure and strengthening the innovative flexibility and competitiveness of smes (gedajlovic et al. 2013). the key insight from the literature is that social capital is a central determinant of entrepreneurial outcomes. the snt argues that individuals interact in different social interactions, which eventually result in the formation of networks. networks are created as a result of these interactions. the ties or relationships amongst actors (hazzard-robinson 2012) can result from a conversation, affection, friendship, kinship, economic exchange, information exchange or other forms of social interaction. furthermore, the snt argues that the value individuals receive when they are involved in a highly fragmented network is very low. therefore, individual actors seek to increase the value they receive by creating a more integrated network, as networks help the actors exchange beneficial information and resources (machirori & fatoki 2013). the logic of understanding the social network approach, about smes, begins at the point where the business owner interacts with other individuals to establish a transaction or a relation. business owners are in constant social interaction with individuals and other businesses. the interactions end up creating a relationship which is very important for business owners (steier & greenwood 2000). hence, snt is very important for understanding the influence which the social relations of business have on the outcome of the business (jones, hesterly & borgatti 1997). this study argues that the readily available information entrepreneurs get through their social capital reduces uncertainties and thereby makes individuals more assured to become entrepreneurs. social capital in smes with networks that facilitate the discovery of opportunities, along with identification, collection and allocation of scarce resources, provides resources and support required for entrepreneurship, reduces transaction costs by allowing the co-ordination of activities and also helps in collective decision-making (davidsson & honig 2003). forms of networks and networking there are different forms of networking, which includes social, business, financial, political and managerial networking (anwar & ali shah 2018). however, in this study, we focus only on three, that is, social, managerial and business networking. this study argues that the difference between the three forms of networks lies in the types of actors or individuals involved and the ties between the actors. although this study acknowledges that there are similarities and overlaps between these three forms, it is still worth conceptualising and researching them individually. social networks in the past tended to have stronger social ties, with family, friends and relatives, although these days because of social media, relationships from those platforms, seemingly weaker ties, are still beneficial as well. the business network involves more formal relationships with everyone in the business, including customers, suppliers and other relevant stakeholders. lastly, managerial networks involve management relationships on a more formal basis with managers from two or more businesses. however, all forms are expected to directly or indirectly benefit the business and give it a competitive advantage (anwar & ali shah 2018; anwar et al. 2018; ford & mouzas 2013; su et al. 2011). drawing from the snt, it can be suggested that successful business ownership depends on the ability of owners to gain access to resources (social, managerial and business) not under their control in a cost-effective way through networking (watson 2007). different stages of business development and growth require different approaches to networking (chung 2012). we will now discuss the influence of the different networking forms on sme performance. social networking and small and medium enterprises performance hung (2006) defined social networks as linkages or social systems of the individual(s) that facilitate access to resources or valued sources of information that are beneficial to business enterprises. lea et al. (2006) considered social networks as sets of people who are connected by socially meaningful relationships, such as friendship, co-working and information exchange, to achieve mutual goals. family and friends are characterised as strong ties. these are persons with whom the entrepreneurs share a close emotional relationship. weak ties are characterised as low-trust relations. weak ties do not have the intimacy or the emotionality of strong ties. social networks, in this study, include relationships which an individual has with family members, relatives, friends, as well as ties with social associations and clubs. the contribution of social networks for businesses is amongst the most important discoveries in business research (gold & light 2000). social networks are assumed as vital structures in which economic transactions are embedded. krebs (2008) posits that the essence of social capital entails that it is not what individuals can do that provides a competitive advantage. this view ties in with labianca and brass (2006) who argued that in business enterprises, employees’ and managers’ social contacts convey benefits that create opportunities for their enterprises, which lead to competitive advantages. based on the literature reviewed, the following hypothesis was formulated: h1: social networking positively influences sme performance. business networking and small and medium enterprises performance labianca and brass (2006) define business networks as voluntary inter-business co-operation between at least three enterprises whose entrepreneurial autonomy is partially limited by their co-operation. xu, lin and lin (2008) view business networks as a set of two or more connected relationships in which each exchange relation is between business enterprises that are regarded as collective actors in the network. besser, miler and perkins (2006) describe business networks as formal linkages composed primarily of business owners or managers established to facilitate the success of their respective enterprises. according to li and ferreira (2006), business networks are linkages, whether formal or informal, which facilitate the exchange of resources. besser et al. (2006) define business networks as formal relationships that are created by business owners or managers to help to facilitate the success of their business. in the context of this research, business networks refer to networks which smes have with governmental or non-governmental organisations and with business consulting firms that assist them (ford & mouzas 2013; huggins 2018). business networks can have an impact on the performance of a business. this understanding is supported by chittithaworn et al. (2011), who pointed out that business networks play an important role in helping businesses gain organisational legitimacy and build a good reputation. the relationships formed in business networks create an opportunity where a business can access information about industry trends and future business opportunities (cooney & flynn 2008). in emerging economies, the market is profoundly affected by a government-led redistributive mechanism, implying that officials influence business practices ( hubert, elgar & rainer 2001; li & zhang 2007). thus, the following hypothesis is formulated: h2: business networking positively influences sme performance. managerial networking and small and medium enterprises performance managerial networks involve networking with suppliers, customers and similar enterprises. managerial networks involve links between the manager of a firm and the managers of other firms. managerial networking between managers from two firms presents opportunities for information acquisition and is essential. these managerial ties have pivotal influences on firm activities, provide a source of competitive advantages, enable the superior performance of the firm and help in increasing the legitimacy of firms (le & nguyen 2009). kumar panda (2014:5) describes managerial networks as the ‘structure in which top managers of firms connect with others who are directly or indirectly connected with the organisations’. le and nguyen (2009) emphasise that managerial networks are relations with suppliers, customers and other businesses that enhance the legitimacy of the business. according to li (2005), managerial networks require a tie between the managers of a business and other managers of another business. also, managerial networks help business owners learn appropriate business behaviour (heshmati 2013). peng and luo (2000) state that managerial ties have two aspects that are business and political; however, in this study, we do not divide it into two aspects (chung 2012) but investigate it as a single construct. as a result of the benefits and competitiveness that are gained from networking, this study hypothesises the following: h3: managerial networking positively influences sme performance. small and medium enterprises performance a review of the literature yielded a prolific amount of research about performance measurements. the construct of firm performance has captured the interest of scholars over the past decades. performance refers to the sme rather than the individual entrepreneur. this is sometimes referred to as organisational performance in the literature. the concept of organisational performance has been studied in detail in strategic management research, with great focus being placed on determining the right measures of firm performance (kumar panda 2014; shava & rungani 2016; steigenberger 2014). the measures of performance include sales level, sales growth rate, cash flow, return on shareholder equity, gross profit margin, net profit from operations, profit to sale ratio, return on investment and ability to fund business growth from profits, which were used as indicators of performance; these are subjective indicators (cooper & nakanishi 2010, shava & rungani 2016, fatoki 2011) of which some are adopted for this study. financial (objective) measures financial measures of performance can be referred to as the results of a firm’s operations in monetary terms. according to kellen and wolf (2003), financial measures of performance are derived from the accounts of a firm or can be found in the firm’s profit and loss statement or the balance sheet. the financial measures are also referred to as objective measures because they can be individually measured and verified (pratono 2018; rosenbusch et al. 2013). sales growth: this refers to an increase in sales over a specific period, usually, but not always, annually. delmar davidsson and gartner (2003) suggest that if there is one measure of sme performance that could be used, it should be sales growth (baum, locke & smith 2001; west & noel 2009). return on equity (roe): as suggested by watson (2007), roe should be the starting point for any systematic analysis of firm performance. return on equity relates the earnings left over for equity investors after debt service costs have been factored into the equity invested in the firm. return on assets (roa): cook and uchida (2004) suggest that roa is used as a vital measure of profitability. it provides information about how much profit is generated, on average, by each unit of the assets of the firm (petersen & schoeman 2008). schayek & dvir (2011) states that sme owners and managers are very sensitive about disclosing or discussing their information relating to their firm’s financial performance. according to watson (2007), smes are not required or regulated to report and publish their financial records; it is difficult to obtain, directly, the financial figures on sales and profitability of most smes. this problem may be more prevalent in developing countries, where despite the high failure rate of smes, limited follow-up is conducted on how they perform annually. therefore, most research studies, such as leech, barrett and morgan (2014), watson (2007) and msimango-galawe and urban (2019), have made use of a likert scale which measures sales growth and profitability growth as financial performance measures. these are deemed as subjective measures, and a similar technique is used by thrikawala (2011) and watson (2012). this approach is implemented as it avoids the direct approach of asking for sales or profitability figures but infers the performance, indirectly, through the responses on the level of satisfaction with sales and profitability growth of the firm. non-financial (subjective) measures the non-financial measures are also known as the subjective performance measures. using the subjective performance measures, likert scaling questions are used to measure firm performance from the top management perspectives as cited by selvarajan et al. (2007) in marimuthu, arokiasamy and ismail (2009). the use of non-financial measures of performance supplements accounting measures and gives data on progress relative to customer requirements or competitors and other non-financial objectives that may be important in achieving profitability. also, non-financial measures can provide indirect, quantitative indicators of a firm’s intangible assets, such as intellectual capital and customer satisfaction and loyalty, which are drivers of success. in measuring sme performance, no one measure of performance should be taken on its own and to obtain an accurate measure of how a firm is performing, different measures should be used together. marimuthu et al. (2009) used a combination of both financial and non-financial performance measures, utilising sales growth and employment growth as the measures of performance. schayek & dvir (2011) utilised a likert scale measuring satisfaction with sales growth and profitability growth as the primary measures of financial performance. fatoki (2011) utilised satisfaction with overall performance and satisfaction with performance compared to competitors as the measures of non-financial performance. schayek & dvir (2011) stated that measuring both financial and non-financial performance through indirect questions on sales growth, profitability and overall satisfaction improves the response rates of smes. it also enables an objective measure of sme performance, and the same approach is applied in this study. performance based on value creation in more recent years, scholars have applied a resource-based view to conceptualising performance. from this perspective, an organisation has unique resources that are difficult to imitate or substitute. these resources can be used to create a competitive advantage which can be leveraged to create value (monetary and non-monetary), and such value can be distributed to the organisation’ stakeholders, depending on their bargaining power (steigenberger 2014). as much as value creation can be both monetary and non-monetary depending on whom it is created for, this study focuses mainly on monetary value creation which relates to sme performance. the stakeholders’ appropriation of the value created is the subject of appropriation theory (coff 1999). measures of financial performance, such as roa and roe, actually measure the value appropriated by shareholders; they do not measure the value created by the organisation. miller, washburn and glick (2013) argue that performance measures should be selected based on what is of interest to a specific stakeholder group. for this research, ‘performance’ is evaluated from a shareholder and customer’s perspective. profitability, growth and market value are of key interest to shareholders. on that basis, profitability and market value are excluded as measures of performance. growth refers to the net change in a specific variable within a specific period, given a certain context (cooper & nakanishi 2010). growth can be applied as a subjective measure by evaluating the perception of a change in a specific variable in a fixed period. research methods and design the research design was cross-sectional, which adopted a positivist paradigm. this paradigm uses a deductive approach where theories are tested, and hypotheses are generated (cooper & schindler 2014), which is the case in this study. study population and sampling strategy the study population comprised smes that operate across various sectors in gauteng province. a simple random sampling was employed to collect primary data using self-administered surveys, and the sample size was 304. all questionnaires were completed manually and 500 printed copies of the questionnaire were distributed physically to several organisations with business owner membership, of which 311 were returned, providing a response rate of 62%. of the 311 that were returned only 304 were usable. there were a few disqualifying questions; the respondents had to own an sme in gauteng, must have been operating for at least 12 months to be able to share performance figures, and the respondents should be owner-managers. these were questions at the beginning of the questionnaire to ensure that only the people who fall within the target group completed the survey. if they answered ‘no’ to any of the above, then they were excluded and if ‘yes’ they continued with the survey. respondents were given 1 week to complete the survey, and after 2 weeks the researcher went back to collect the completed questionnaire. sampling frame and unit of analysis because of the practical implications of contacting smes across gauteng, the sample was selected from smes that are associated with business groups which provide support to small businesses. hence, the sampling frame included sme owners who operate across various sectors in gauteng and are found within small business databases. the target respondent was the owner-manager who has the responsibility of dealing with the day-to-day running of the business within the enterprise. the sample frame was expanded to include gauteng smes that were contactable through various business groups on social platforms. research instrument and measurement scales the instrument was developed based on scales that were previously used in similar studies as using existing scales reduces the risk of low external validity (cooper & schindler 2014). a seven-point likert scale was used, with scores ranging from 1 to 7 where 1 denotes strongly disagree and 7 denotes strongly agree. independent variables: the independent variables were business, social and managerial networks where questions were asked about whether entrepreneurs maintain business relationships within such networks and as to how important they view such networks for their businesses. dependent variable: the dependent variable was performance, which asked questions about business growth and financial performance. the respondents were asked to rate how well their businesses are growing and how satisfied they are on financial performance. the measurements of the dependent variable were all subjective indicators. data screening and analysis data were collected through manual surveys, then captured in microsoft excel spread sheet and cleaned before importing into statistical package for the social sciences (spss) for statistical analysis. the screening included checking for missing values, outliers, unengaged respondents and reverse questions. multiple linear regression was employed to test hypotheses on the three forms of networking and the performance of smes. before employing regression, frequency tables and descriptive statistics were produced to summarise the demographic data and analyse the properties of the data set (cooper & schindler 2014; creswell 2014; field 2016). furthermore, exploratory factor analysis (efa), cronbach’s alpha and correlational analysis were conducted to test the validity, reliability of scales and relationships between variables, respectively. principal axis factoring was used as the extraction method with promax employed to optimise the results for ease of interpretation of the pattern matrix. moreover, the scree plot in conjunction with kaiser’s criterion of eigenvalues of greater than 1 assisted the study to decide on the best number of factors to extract and retain (cooper & schindler 2014; drost 2011; field 2016; hair et al. 2010). ethical consideration ethical clearance was obtained from the wits business school of the university of the witwatersrand with ethics clearance number assigned: wbs/en1757662/677. results demographic data were collected, and it included gender, age and level of education. more than half of the respondents (54%) were men and 46% were women. in the sample, 53% of the respondents were in 36–45 years age group, 28% were in 46–55 years age group and 20% were in 18–35 years age group. the sample was made up of mostly individuals who had a tertiary qualification, with 40% having attained a diploma, 25% having degrees and another 30% having postgraduate degrees or diplomas. however, those with high school and no schooling were in the minority group (5%). data on the business characteristics were collected, which included sector and age of the business. most of the businesses were from the manufacturing (42%), agriculture (30%) and construction (19%) sector, and the rest is distributed amongst other sectors. lastly, regarding the age of the business, about 20% of the businesses had been in existence for 1–4 years, 47% for 5–9 years, 22% for 10–14 years, whilst another 11% had been in business for 15 years and above. validity and reliability testing before testing this study’s hypotheses, efa and reliability analysis (cronbach’s alpha) tests were conducted to test the construct validity and internal consistency of the scales, respectively. the primary goal of factor analysis is to determine the underlying structure amongst the variables in order to explain the pattern of inter-relations (correlations) amongst the variables as multi-item scales were used to collect data on each of the key constructs. sets of variables that are highly inter-related are known as factors (cooper & schindler 2014; field 2016; leech et al. 2014), and this helps reduce the dimensions of the variables. firstly, the study confirmed that no efa assumptions were violated. the data matrix showed sufficient correlations (r > 0.3) to proceed with the application of factor analysis. additionally, the kaiser–meyer–olkin (kmo) measure of sampling adequacy was high (kmo = 0.975 > 0.5, p < 0.05), with the bartlett’s test of sphericity significant at greater than 1 (drost 2011; field 2016). table 1 shows that only three factors emerged from the efa, and all three with valid and reliable scales. the three factors were named as follows: (1) network_maintain, which is a construct representing questions asked about having and maintaining business relationships; (2) network_importance which represents questions about the importance of having business relationships; and (3) performance which represents questions about growth and the level of satisfaction of financial performance of the sme. table 1: exploratory factor analysis and reliability results. according to the initial scales and literature, there were three forms of networks: business, social and managerial networks (anwar & ali shah 2018). however, this study findings produced a different outcome – all the three forms of networks converged into one factor, which this study labelled as business networks. as much as the three forms of networks converged, there was still divergence of the maintenance and importance constructs of these networks. the validity and reliability of each of the factors were supported with statistics where network_maintan had 14 items at (α = 0.994) and network_importance had 12 items at (α = 0.974). these were excellent results as the cronbach’s alphas were all greater than 0.7 and had more than three items each (field 2016). similarly, the performance was measured with two subjective measures, which were growth as perceived by the entrepreneurs and their levels of satisfaction. both these measures converged into one factor after removing growth_r3, which was not loading onto any factor and performance_s6 and s7, which loaded incorrectly. after removing the two items, the factor was labelled performance with nine items at (α = 0.912). the total variance explained by the items was 79%, which is very good as it explained more than 60% of what is happening in the data set (field 2013). all the analysis after efa and the reliability tests focused on the three constructs of network maintenance, network importance and sme performance. descriptive and correlational analysis the results in table 2 reveal that network_importance was the highest rated construct (mean = 5.6227), whilst network_maintain had a mean of 2.7919, which means that as much as entrepreneurs are low on maintaining business relationships on the networks they have, they deem networking and networks an important component of their business activities. this finding is somewhat unusual as conventional wisdom suggests that if one deems something so important, they are then expected to rank high on the level of networks they keep and maintain. the business performance although was somehow close to the neutral scale of 3 (mean = 3.011), it is somewhat not convincingly high. it will be interesting to see the relationships of these constructs as the literature suggests that there is some positive relationship between networking and sme performance. table 2: descriptives and pearson’s correlation. correlations it is interesting to note that there is a negative relationship (r = −0.577, p < 0.01) between maintaining (network_maintain) business relationships and the perception on the importance (network_importance) of these same relationships or networks; this relationship is moderate and significant. nevertheless, there were strong relationships between the independent variables (network_maintain [r = 0.767, p < 0.01] and network_importance [r = −0.689, p < 0.01]) and the dependent variable (sme performance). both relationships are significant although network_maintain has a positive and network_importance has a negative relationship with sme performance. based on these correlational results, it was deemed viable to conduct further analysis and test the hypotheses on the influence of network_maintain and network_importance on sme performance. hypotheses testing this study’s objective was to test the influence of social, business and managerial networking on sme performance in order to see which one has the most influence. as a result, three hypotheses were formulated: h1: social networking positively influences sme performance. h2: business networking positively influences sme performance. h3: managerial networking positively influences sme performance. these hypotheses were changed after the validity and reliability test, as the factor structure was different from what previous studies had found or suggested. figure 1 presents both the original and the revised conceptual framework, which includes hypotheses 4 and 5 as new hypotheses developed as a result of the validity and reliability test findings. figure 1: revised conceptual framework. the new hypotheses to be tested were: h4: maintaining networks positively influences sme performance. h5: the level of importance (value) put on networking positively influences sme performance. furthermore, this enabled the study to determine whether entrepreneurs actively network, maintain business relationships and value networking as a tool for business success. results from multiple regression analysis table 3 shows that adjusted r2, the coefficient of determination which is a measure of the predictive capacity of the model, has a value of 0.676. this indicates that 67.6% (converted to a percentage for ease of interpretation as correlations go up to 1 and when interpreted as a percentage equated to 100%) of the variance that is seen on business performance can be explained by network_maintain and network_importance, and this model is significant at p < 0.05 according to the regression analysis results as presented in table 3. table 3: multiple regression. hypotheses 1–3 no regression results as these three hypotheses were excluded from further analysis because the items did not converge into the three factors representing forms of networking as envisaged. hypothesis 4 network_maintain positively influences sme performance (supported – positive and significant): the results in table 3 confirmed our hypothesis that network_maintain influences sme performance positively. fifty-five per cent of the change in sme performance can be explained by the networks that the entrepreneur maintain, and this is significant at β = 0.554 (p < 0.05). hypothesis 5 network_importance positively influences business performance (not supported – negative and significant): it is evident from table 3 that network_importance negatively influences sme performance. thirty-seven per cent change in sme performance can be explained by a change in the networks that the entrepreneurs perceive as important or deem valuable. the influence is significant at β = −0.369 (p < 0.05). it is suggested that the more an entrepreneur thinks that networking is important, the less his or her sme performs. therefore, this study does not argue that networking is not important, but rather that this might be reflecting the risks of putting too much value and reliance on networking whilst not engaging in networking activities enough. the study performed some tests to ensure that regression analysis assumptions are not violated. tests conducted included linearity, normality, multicollinearity and outliers. the results showed the collinearity statistics with the variance-inflation factor (vif) < 10 and > 1 and t > 0.2, which suggest that there is no collinearity problem (field 2013; galawe 2017); multicollinearity is when two or more predictor variables in the model are highly correlated (r > 0.8 or 0.9) and provide redundant information about the responses. the main reason for carrying the test was to determine if any of the independent variables are similar (field 2016). table 2 shows a correlation coefficient of the different variables, and none of them has a coefficient of r > 0.8; therefore, there is no problem of multicollinearity, and moreover, no outliers were detected. discussion the objective of this study was to investigate the influence of different forms of networking on the performance of smes. in this study, forms of networking included business, managerial and social networking. these two forms, however, emerged as one networking construct which we named business networking, and this changed the focus of the study from investigating three forms of networking to investigating the importance and maintenance of networks, and further to investigate which of the three influences sme performance the most and to understand the level of networking activities entrepreneurs engage in. the key findings as much as the findings confirmed the influence of networking on sme performance, the dimensionality suggested by literature (anwar & ali shah 2018) was not confirmed. moreover, the importance and maintenance of networking correlated negatively and positively with sme performance, respectively. however, networking was divided into the importance of networks and maintenance of networks. it was evident that although entrepreneurs are low on maintaining business relationships on the networks, they still deemed networking and networks an important component of their business activities. the mean score on sme performance and maintenance of networks was low (approximately 3 on a seven-point likert scale) for both, which then supports the networking theories and literature that networking improves business performance; therefore, the lower the level of networking, the lower the performance of the sme (chung 2012; kumar panda 2014; pratono 2018). the finding that was somewhat unusual was the finding on the negative relationship between the value put on networking and the level of networking entrepreneurs engaged in and maintained, as conventional wisdom suggests that if one deems something valuable in this case of networking, then they are expected to rank high on the level of networks they engage in and maintain. however, this was not the case in this study and even the negative relationship between network_importance and sme performance was not expected. although some scholars talk about possible negative relationship between networking and performance, it was not specifically on the perceived importance of networking and performance. however, it was in cases where there may be weak ties, where an entrepreneur has too high social network or where networking goes beyond a certain level resulting in the entrepreneur overly committed administratively and emotionally which is costly (anwar & ali shah 2018; chen et al. 2007, chen & he 2011; watson 2007). investigating the influence of networking on sme performance is advocated as a meaningful pursuit; unfortunately, we were unable to get conclusive results on the relationship between the importance of networks and sme performance. the findings then call for further research using a mixed-method approach to delve into these somewhat surprising results. the findings of the study are consistent with the findings of several studies on the maintenance of networks and sme performance (anwar et al. 2018; kumar panda 2014; pratono 2018; sarens et al. 2015; tendai 2013; watson 2007). this implies that highly diverse networking offers a useful resource mix that, in turn, improves the business performance of smes. however, there are no studies to support the finding on the network importance and sme performance negative influence. strengths and limitations in addressing the limitations of the current and similar research, it is concluded that most of the literature dealing with networking approaches the topic from a descriptive perspective. such an approach causes variation in the conceptualisation of types of networking, such as social networking, managerial networking and business networking. these differences create confusion and make respondents interpret networking as one type; in this study, the respondents managed to differentiate the importance and the maintenance element of the questions. by investigating the types of networking, jack, dodd and anderson (2008) demonstrated that networks are vital living organisms, changing, growing and developing over time. this study looked at demographics but did not look at how they influence sme networking and performance. however, other factors influence the networking of smes, such as efficiency, political influence, market strategy, internalisation, personal characteristics and firm characteristics. in this regard, future research should incorporate other factors in order to have a better understanding of the factors influencing networking, such as employee working experience, international networking and ethnic networking. this study suggested various factors that influence initiating networking activities amongst smes. as networking is an important topic to study, studying the factors will help smes get involved in networking activities; therefore, the knowledge of the factors is important for future research. implications and recommendations this study has practical implications for the big corporations, organisations, insurance companies, as well as industry regulators, government, interested stakeholders, business associations and suppliers, who desire to promote networking in south africa, especially for smes through enterprise development programmes. according to tendai (2013), networking enables smes to engage in collective bargaining with suppliers and enjoy large discounts of bulk purchasing from suppliers, which increases the access to trade credit by smes. therefore, entrepreneurs are encouraged to network to share ideas, knowledge and resources because networking opens channels and enables owners to interact and have relationships with influential people who positively contribute to the enterprises. however, at the same time, entrepreneurs are warned not to overvalue this. both literature and the findings of this study show that networking is one of the factors that can contribute to the success every entrepreneur craves in business (anwar et al. 2018; anwar & ali shah 2018; fatoki 2011; huggins 2018). owners of businesses should be involved in business networking and managerial networking, which will enhance their businesses. it can be concluded that networking has become a viable tool in the hands of any entrepreneur for business differentiation and success because the business world is becoming more competitive in the emerging global village. based on the findings of this study, some recommendations and suggestions are meaningful, which may help and ensure the impact of networking on sme performance. it should be noted that this study has made contributions in understanding different forms of networking, the importance of networking, networking maintenance and the influence it has on the performance of smes. however, there are some limitations which lay the foundation for future research. the data for this study were only collected from the gauteng province of south africa, which is known as the economic hub of south africa; therefore, future research should broaden the scope to include all provinces of the country. furthermore, it is recommended that a qualitative element with a small sample of the study’s smes in gauteng should be included in order to gain more in-depth knowledge as to why some of the quantitative findings are contradictory to the literature. accordingly, the applicability of the findings to other provinces is not known. therefore, future research should include all provinces to get a larger sample in order to ascertain if the findings could apply to the broader population of smes in the country. furthermore, future research should investigate the different forms of networking, whether the forms exist in its present state in entrepreneurial networking and develop scales that will explicitly differentiate them, and also enable researchers to collect data on them. conclusion the purpose of this study was to investigate the influence of different forms of networking on business performance of smes. the findings of this study revealed a significant relationship between network maintenance and performance of smes. accordingly, business networks influence business performance, and these networks are not differentiated whether social, business or managerial. the findings support the argument that relationships with direct partners will increase access to information because partners are more willing and able to share information. these business networks will enable an enterprise to gain more clients, shareholders, business associates’ suppliers and technical and market knowledge (möller 2013). this study indicates that entrepreneurs are participative in networks and actively build and maintain them. however, they seem to overvalue or exaggerate its importance which is a risk as it negatively affects the performance of the business. future studies can consider mixed-method approach to investigate further why there is a negative relationship between the perceived importance of networking and sme performance and as to what point networking can be categorised as over-networking. this approach will allow researchers to get richer insights into the negative relationships. furthermore, the study revealed that having and maintaining networks influence sme performance. the change in business performance can be explained by networking that the entrepreneur maintains. surprisingly, the study findings suggested that the more the entrepreneur thinks networking is important, the lower the level of business performance, which seems to contradict the fact that the more the entrepreneur networks, the higher the performance of the business. therefore, this study recommends that more research should be conducted to investigate what seems like a contradiction between the importance and maintenance of networks in relation to thebusiness performance of smes. these findings may contribute to the current literature that has so far produced inconclusive findings by showing that more differentiation on the forms of networking is needed before further research can be conducted so that reliable scales are used and valid data are subsequently collected. acknowledgements competing interests the authors have declared that no competing interests exist. authors’ contributions s.h.m. conceptualised the study that was part of her master’s thesis and j.m.-g. was the supervisor who assisted with the conceptualisation and development of the article and primarily the data analysis section. funding information this research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors. data availability statement data sharing is not applicable to this article as no new data were created or analysed in this study. disclaimer the views and opinions expressed in this article are those of authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors. references adler, p.s. & kwon, s.-w., 2002, ‘social capital: prospects for a new concept’, academy of management review 27(1), 17–40. https://doi.org/10.5465/amr.2002.5922314 anwar, m. & ali shah, s.z., 2018, ‘managerial networking and business model innovation: empirical study of new ventures in an emerging economy’, journal of small business & entrepreneurship, 1–22. https://doi.org/10.1080/08276331.2018.1490509 anwar, m., rehman, a.u. & shah, s.z.a., 2018, ‘networking and new venture’s performance: mediating role of competitive advantage’, international journal of emerging markets 13(5), 998–1025. https://doi.org/10.1108/ijoem-07-2017-0263 aremu, m.a. & adeyemi, s.l., 2011, ‘small and medium scale enterprises as a survival strategy for employment generation in nigeria’, journal of sustainable development 4(1), 200. https://doi.org/10.5539/jsd.v4n1p200 baum, j.r., locke, e.a. & smith, k.g., 2001, ‘a multidimensional model of venture growth’, academy of management journal 44(2), 292–303. https://doi.org/10.5465/3069456 besser, t.l., miller, n. & perkins, r.k., 2006, ‘for the greater good: business networks and business social responsibility to communities’, entrepreneurship and regional development 18(4), 321–339. https://doi.org/10.1080/08985620600715046 burt, r.s., 2009, structural holes: the social structure of competition, harvard university press, cambridge, ma. chen, c.-n., tzeng, l.-c., ou, w.-m. & chang, k.-t., 2007, ‘the relationship among social capital, entrepreneurial orientation, organizational resources and entrepreneurial performance for new ventures’, contemporary management research 3(3), 213–232. https://doi.org/10.7903/cmr.90 chen, y. & he, y., 2011, ‘the impact of strong ties on entrepreneurial intention: an empirical study based on the mediating role of self-efficacy’, journal of chinese entrepreneurship 3(2), 147–158. https://doi.org/10.1108/17561391111144573 chittithaworn, c., islam, m.a., keawchana, t. & yusuf, d.h.m., 2011, ‘factors affecting business success of small & medium enterprises (smes) in thailand’, asian social science 7(5), 180–190. https://doi.org/10.5539/ass.v7n5p180 chung, h.f., 2012, ‘export market orientation, managerial ties, and performance’, international marketing review 29(4), 403–423. https://doi.org/10.1108/02651331211242638 coff, r.w., 1999, ‘when competitive advantage doesn’t lead to performance: the resource-based view and stakeholder bargaining power’, organization science 10(2), 119–133. coleman, j.s. & coleman, j.s., 1994, foundations of social theory, harvard university press, cambridge, ma. cook, p. & uchida, y., 2004, ‘performance of privatised regulated and non-regulated enterprises in developing countries’, paper presented at the third crc international conference on pro-poor regulation and competition: issues, policies and practices, university of stellenbosch, bmw pavilion, cape town, south africa. cooney, t.m. & flynn, a., 2008, a mapping of ethnic entrepreneurship in ireland, minority entrepreneurship, technolgoical university dublin. cooper, d. & schindler, p., 2014, business research methods. mcgraw-hill, new york. cooper, l. & nakanishi, m., 2010, evaluating competitive marketing effectiveness: market-share analysis. kluwer academic publishers, boston, ma. coulibaly, s.k., erbao, c. & mekongcho, t.m., 2018, ‘economic globalization, entrepreneurship, and development’, technological forecasting and social change 127, 271–280. https://doi.org/10.1016/j.techfore.2017.09.028 coulthard, m. & loos, j., 2007, ‘networking, the missing link in firm based entrepreneurial orientation (eo) performance models’, monash university business and economics working paper, 1–13. creswell, j.w., 2014, research design: qualitative, quantitative, and mixed methods approaches, sage, los angeles, ca. davidsson, p. & honig, b., 2003, ‘the role of social and human capital among nascent entrepreneurs’, journal of business venturing 18(3), 301–331. https://doi.org/10.1016/s0883-9026(02)00097-6 delmar, f., davidsson, p. & gartner, w.b., 2003, ‘arriving at the high-growth firm’, journal of business venturing 18(2), 189–216. https://doi.org/10.1016/s0883-9026(02)00080-0 drost, e.a., 2011, ‘validity and reliability in social science research’, education research and perspectives 38(1), 105. fatoki, o.o., 2011, ‘the impact of human, social and financial capital on the performance of small and medium-sized enterprises (smes) in south africa’, journal of social sciences 29(3), 193–204. https://doi.org/10.1080/09718923.2011.11892970 field, a., 2013, discovering statistics using ibm spss statistics, 4th edn., sage, los angeles, ca. field, a., 2016, discovering statistics using ibm spss statistics, 5th edn., sussex university, sage, los angeles, ca. ford, d. & mouzas, s., 2013, ‘the theory and practice of business networking’, industrial marketing management 42(3), 433–442. https://doi.org/10.1016/j.indmarman.2013.02.012 franco, m., 2018, ‘networking as a marketing tool in small companies: a random and informal approach’, journal of business strategy 39(2), 47–55. https://doi.org/10.1108/jbs-02-2017-0020 galawe, n.j., 2017, ‘endogenous and exogenous risk factors in the success of south african small medium enterprises’ phd thesis, university of the witwatersrand, johannesburg. garwe, d.k. & fatoki, o., 2012, ‘the impact of gender on sme characteristics and access to debt finance in south africa’, development southern africa 29(3), 448–461. https://doi.org/10.1080/0376835x.2012.706040 gedajlovic, e., honig, b., moore, c.b., payne, g.t. & wright, m., 2013, social capital and entrepreneurship: a schema and research agenda, sage, los angeles, ca. https://doi.org/10.1111/etap.12042 gold, s.j. & light, i., 2000, ethnic economies and social policy, research in social movements, conflicts and change. emerald group publishing limited, bingley, uk. grobbelaar, s.s., gwynne-evans, n. & brent, a.c., 2016, ‘from enterprise development to inclusive innovation–a systemic instruments framework for regional innovation support’, african journal of science, technology, innovation and development 8(2), 233–246. https://doi.org/10.1080/20421338.2016.1159401 hair, j.f., black, w.c., babin, b.j. & anderson, r.e., 2010, multivariate data analysis: a global perspective 7 edn., pearson, hoboken, nj. håkansson, h. & snehota, i., 2017, no business is an island: making sense of the interactive business world, emerald publishing limited, bingley, uk. https://doi.org/10.1108/9781787145498 håkansson, h. & snehota, i., (eds.), no business is an island, emerald publishing limited, pp. i–xii. https://doi.org/10.1108/978-1-78714-549-820171016 hassan, n.a., abdullah, a., noor, m.m., din, h.a.m., abdullah, n.h. & ismail, m.m., 2018, ‘business networking and social cohesion among business community in malaysia’, international journal of asian social science 8(9), 669–676. https://doi.org/10.18488/journal.1.2018.88.669.676 hazzard-robinson, d.d., 2012, ‘social network theory in inter-organizational alliances: an exploratory examination of mobile payments engagement’, phd dissertation, georgia state university, atlanta, ga. herrington, m., kew, p. & mwanga, a., 2017, ‘south africa: can small businesses survive in south africa?’, gem south africa report 2016/2017, university of cape town, cape town, viewed august 2018, from https://www.gemconsortium.org/report/49833. heshmati, n., 2013, the impact of networking on access to bank finance for smes: comparison of iran and sweden, independent thesis advanced level, halmastad university, school of business and engineering, halmstad. hubert, o., elgar, f. & rainer, a., 2001, business networking: shaping collaboration between enterprises, sage, london. huggins, r., 2018, the business of networks: inter-firm interaction, institutional policy and the tec experiment, 1st edn., routledge, london. https://doi.org/10.4324/9781315197210 hung, h., 2006, ‘formation and survival of new ventures: a path from interpersonal to interorganizational networks’, international small business journal 24(4), 359–378. https://doi.org/10.1177/0266242606065508 jack, s., dodd, s.d. & anderson, a.r., 2008, ‘change and the development of entrepreneurial networks over time: a processual perspective’, entrepreneurship and regional development 20(2), 125–159. https://doi.org/10.1080/08985620701645027 johnson, g., scholes, k. & whittington, r., 2005, exploring corporate strategy: text & cases 2008, artmed, porto alegre. jones, c., hesterly, w.s. & borgatti, s.p., 1997, ‘a general theory of network governance: exchange conditions and social mechanisms’, academy of management review 22(4), 911–945. https://doi.org/10.5465/amr.1997.9711022109 kellen, v. & wolf, b., 2003, ‘business performance measurement’, information visualization 1(312), 1–36. krebs, v., 2008, ‘social capital: the key to success for the 21st century organization’, ihrim journal 12(5), 38–42. kumar panda, d., 2014, ‘managerial network impacts firm performance’, performance improvement quarterly 27(1), 5–32. https://doi.org/10.1002/piq.21164 kwon, s.-w. & arenius, p., 2010, ‘nations of entrepreneurs: a social capital perspective’, journal of business venturing 25(3), 315–330. https://doi.org/10.1016/j.jbusvent.2008.10.008 labianca, g. & brass, d.j., 2006, ‘exploring the social ledger: negative relationships and negative asymmetry in social networks in organizations’, academy of management review 31(3), 596–614. https://doi.org/10.5465/amr.2006.21318920 le, n.t. & nguyen, t.v., 2009, ‘the impact of networking on bank financing: the case of small and medium–sized enterprises in vietnam’, entrepreneurship theory and practice 33(4), 867–887. https://doi.org/10.1111/j.1540-6520.2009.00330.x lea, b.-r., yu, w.-b., maguluru, n. & nichols, m., 2006, ‘enhancing business networks using social network based virtual communities’, industrial management & data systems 106(1), 121–138. https://doi.org/10.1108/02635570610641022 leech, n.l., barrett, k.c. & morgan, g.a., 2014, ibm spss for intermediate statistics: use and interpretation, 5th edn., routledge, new york, ny. https://doi.org/10.4324/9780203122778 li, d. & ferreira, m.p., 2006, ‘the evolutionary model of entrepreneurial firms’ dependence on networks: going beyond the start-up page’, notas económicas (24), 48–63. li, h. & zhang, y., 2007, ‘the role of managers’ political networking and functional experience in new venture performance: evidence from china’s transition economy’, strategic management journal 28(8), 791–804. https://doi.org/10.1002/smj.605 li, j.j., 2005, ‘the formation of managerial networks of foreign firms in china: the effects of strategic orientations’, asia pacific journal of management 22(4), 423–443. https://doi.org/10.1007/s10490-005-4118-8 love, j.h. & roper, s., 2015, ‘sme innovation, exporting and growth: a review of existing evidence’, international small business journal 33(1), 28–48. https://doi.org/10.1177/0266242614550190 low, m.b. & macmillan, i.c., 1988, ‘entrepreneurship: past research and future challenges’, journal of management 14(2), 139–161. https://doi.org/10.1177/014920638801400202 luo, y., 2003, ‘industrial dynamics and managerial networking in an emerging market: the case of china’, strategic management journal 24(13), 1315–1327. https://doi.org/10.1002/smj.363 machirori, t. & fatoki, o., 2013, ‘the impact of firm and entrepreneur’s characteristics on networking by smes in south africa’, journal of economics 4(2), 113–120. https://doi.org/10.1080/09765239.2013.11884971 marimuthu, m., arokiasamy, l. & ismail, m., 2009, ‘human capital development and its impact on firm performance: evidence from developmental economics’, journal of international social research 2(8), 2. mcfarlin, d.b., coster, e.a. & mogale-pretorius, c., 1999, ‘south african management development in the twenty-first century: moving toward an africanized model’, journal of management development 18(1), 63–78. https://doi.org/10.1108/02621719910250474 miller, c.c., washburn, n.t. & glick, w.h., 2013, ‘perspective—the myth of firm performance’, organization science 24(3), 948–964. https://doi.org/10.1287/orsc.1120.0762 möller, k., 2010, ‘relationships and networks’, in m.j. baker & m. saren (eds.), marketing theory: a student text, pp. 304–329, sage, london. https://doi.org/10.4135/9781446280096.n14 möller, k., 2013, ‘theory map of business marketing: relationships and networks perspectives’, industrial marketing management 42(3), 324–335. https://doi.org/10.1016/j.indmarman.2013.02.009 msimango-galawe, j. & urban, b., 2019, ‘an integrated approach to sme risk assessment: a focus on endogenous and exogenous risk factors’, african review of economics and finance 11(1), 142–177. munyanyi, w. & pooe, d., 2019, ‘the influence of absorptive capacity and networking capabilities on small and medium enterprises’, southern african journal of entrepreneurship and small business management 11(1), a231. https://doi.org/10.4102/sajesbm.v11i1.231 obeng, b.a., robson, p. & haugh, h., 2014, ‘strategic entrepreneurship and small firm growth in ghana’, international small business journal 32(5), 501–524. https://doi.org/10.1177/0266242612463946 olawale, f. & garwe, d., 2010, ‘obstacles to the growth of new smes in south africa: a principal component analysis approach’, african journal of business management 4(5), 729–738. o’toole, t. & mcgrath, h., 2018, ‘strategic patterns in the development of network capability in new ventures’, industrial marketing management 70, 128–140. https://doi.org/10.1016/j.indmarman.2017.07.003 peng, m.w. & luo, y., 2000, ‘managerial ties and firm performance in a transition economy: the nature of a micro-macro link’, academy of management journal 43(3), 486–501. petersen, m.a. & schoeman, i., 2008, ‘modeling of banking profit via return-on-assets and return-on-equity’, proceedings of the world congress on engineering, 2008, pp. 1–6. porter, m.e., 1989, ‘how competitive forces shape strategy’, in d. asch & c. bowman (eds.), readings in strategic management, palgrave, london. https://doi.org/10.1007/978-1-349-20317-8_10 portes, a., 1998, ‘social capital: its origins and applications in modern sociology’, annual review of sociology 24(1), 1–24. https://doi.org/10.1146/annurev.soc.24.1.1 pratono, a.h., 2018, ‘from social network to firm performance: the mediating effect of trust, selling capability and pricing capability’, management research review 41(6), 680–700. https://doi.org/10.1108/mrr-03-2017-0080 rosenbusch, n., brinckmann, j. & müller, v., 2013, ‘does acquiring venture capital pay off for the funded firms? a meta-analysis on the relationship between venture capital investment and funded firm financial performance’, journal of business venturing 28(3), 335–353. https://doi.org/10.1016/j.jbusvent.2012.04.002 rowley, t., behrens, d. & krackhardt, d., 2000, ‘redundant governance structures: an analysis of structural and relational embeddedness in the steel and semiconductor industries’, strategic management journal 21(3), 369–386. https://doi.org/10.1002/(sici)1097-0266(200003)21:3%3c369::aid-smj93%3e3.0.co;2-m sarens, g., everaert, p., verplancke, f. & de beelde, i., 2015, ‘diversification of external accountants serving small and medium-sized enterprises: evidence from belgium’, australian accounting review 25(2), 155–174. https://doi.org/10.1111/auar.12078 schayek, r. & dvir, d., 2011, ‘the impact of public assistance programs on small businesses: strategic planning, entrepreneurship resources usage, and market orientation as mediating variables’, journal of small business strategy 22(1), 67–98. schoonjans, b., van cauwenberge, p. & vander bauwhede, h., 2013, ‘formal business networking and sme growth’, small business economics 41(1), 169–181. https://doi.org/10.1007/s11187-011-9408-6 seed academy, 2017, the real state of entrepreneurship survey, seed engine, johannesburg. selvarajan, t., ramamoorthy, n., flood, p.c., guthrie, j.p., maccurtain, s. & liu, w., 2007, ‘the role of human capital philosophy in promoting firm innovativeness and performance: test of a causal model’, the international journal of human resource management 18(8), 1456–1470. https://doi.org/10.1080/09585190701502588 shava, h. & rungani, e.c., 2016, ‘influence of gender on sme performance in emerging economies’, acta commercii 16(1), 1–9. https://doi.org/10.4102/ac.v16i1.408 simsek, z. & heavey, c., 2011, ‘the mediating role of knowledge-based capital for corporate entrepreneurship effects on performance: a study of smallto medium-sized firms’, strategic entrepreneurship journal 5(1), 81–100. https://doi.org/10.1002/sej.108 smit, y. & watkins, j.a., 2012, ‘a literature review of small and medium enterprises (sme) risk management practices in south africa’, african journal of business management 6(21), 6324–6330. https://doi.org/10.5897/ajbm11.2709 steier, l. & greenwood, r., 2000, ‘entrepreneurship and the evolution of angel financial networks’, organization studies 21(1), 163–192. https://doi.org/10.1177/0170840600211002 steigenberger, n., 2014, ‘only a matter of chance? how firm performance measurement impacts study results’, european management journal 32(1), 46–65. https://doi.org/10.1016/j.emj.2013.09.003 su, z., xie, e., wang, d. & li, y., 2011, ‘entrepreneurial strategy making, resources, and firm performance: evidence from china’, small business economics 36(2), 235–247. https://doi.org/10.1007/s11187-009-9211-9 taylor, m. & murphy, a., 2004, ‘smes and e-business’, journal of small business and enterprise development 11(3), 280–289. https://doi.org/10.1108/14626000410551546 tendai, c., 2013, ‘networks and performance of small and medium enterprises (smes) in different stages of the life cycle: a case study of a small business in the netherlands’, journal of communication 4(2), 89–94. https://doi.org/10.1080/0976691x.2013.11884811 thrikawala, s., 2011, ‘impact of strategic networks for the success of smes in sri lanka’, world journal of social sciences 1(2), 108–119. urban, b. & sefalafala, m.r., 2015, ‘the influence of entrepreneurial intensity and capabilities on internationalisation and firm performance’, south african journal of economic and management sciences 18(2), 260–276. https://doi.org/10.4102/sajems.v18i2.841 valkokari, k. & helander, n., 2007, ‘knowledge management in different types of strategic sme networks’, management research news 30(8), 597–608. https://doi.org/10.1108/01409170710773724 venter, r., urban, b., beder, l., oosthuizen, c., reddy, c. & venter, e., 2015, entrepreneurship: theory in practice, oxford university press, cape town. wang, m.-c., chen, p.-c. & fang, s.-c., 2018, ‘a critical view of knowledge networks and innovation performance: the mediation role of firms’ knowledge integration capability’, journal of business research 88, 222–233. https://doi.org/10.1016/j.jbusres.2018.03.034 wasserman, s. & faust, k., 1994, social network analysis: methods and applications, cambridge university press. https://doi.org/10.1017/cbo9780511815478 watson, j., 2007, ‘modeling the relationship between networking and firm performance’, journal of business venturing 22(6), 852–874. https://doi.org/10.1016/j.jbusvent.2006.08.001 watson, j., 2012, ‘networking: gender differences and the association with firm performance’, international small business journal 30(5), 536–558. https://doi.org/10.1177/0266242610384888 west, g.p. & noel, t.w., 2009, ‘a multidimensional model of venture growth’, journal of small business management 47(1), 1–22. https://doi.org/10.1111/j.1540-627x.2008.00259.x wiklund, j. & shepherd, d., 2005, ‘entrepreneurial orientation and small business performance: a configurational approach’, journal of business venturing 20(1), 71–91. https://doi.org/10.1016/j.jbusvent.2004.01.001 xu, z., lin, j. & lin, d., 2008, ‘networking and innovation in smes: evidence from guangdong province, china’, journal of small business and enterprise development 15(4), 788–801. https://doi.org/10.1108/14626000810917861 127 the status of strategic planning in small and medium enterprises thompson bounds goldman fin sajesbm volume 5, (2012) www.sajesbm.com article no 127 34 the status of strategic planning in small and medium enterprises: priority or afterthought? corrinne thompson dept of business management university of johannesburg maria bounds dept of business management university of johannesburg geoff a. goldman * dept of business management university of johannesburg d-ring 530, kingsway campus po box 524 auckland park 2006 (011) 559-3172 (w) (011) 559-2827 (f) ggoldman@uj.ac.za * to whom correspondence should be addressed sajesbm volume 5, (2012) www.sajesbm.com article no 127 35 the status of strategic planning in small and medium enterprises: priority or afterthought? abstract small and medium enterprises (smes) are faced will many challenges, and the development of a sound strategy for the sme could define how these challenges are met which, in turn, could mean the difference between success or failure of the enterprise. if a sound strategy is major contributing factor to the success of a small business, but the evidence of sound strategic management (as taught in universities and business schools) is not present in successful sme’s, one could question the way strategic management is conceptualised. the study thus aims to gather a greater understanding of strategic management – and strategy formulation practices in particular – within sme’s. the study employed a qualitative, descriptive design with semi-structured interviews conducted with 12 sme owners in gauteng. findings reveal that the majority of participants were in favour of and supported the notion of having a strategy for small and medium enterprises, but none of them made reference to a formal process regarding strategy formation. key words: strategy; strategy formulation, small and medium businesses; planning; qualitative research. introduction small and medium enterprises are the end result of the entrepreneurial endeavour. o’regan and ghobadian, (2004b) depict small and medium enterprises (sme’s) as the “bloodline of modern complex economies”, as the establishment and longevity of sme’s are a sign of a healthy and expanding economy. in order to preserve the competitive position of sme’s, they are constantly challenged to optimally utilise the resources apportioned to innovative endeavours (bennett & robson, 2003). this results in sme’s requiring increased specialist knowledge which results in the need for external advice in the form of, inter alia, business consultation. protecting the competitive position of sme also requires attention to business strategy and the management of strategy within the sme. strategic management is thus not the exclusive realm of corporate enterprises. in fact, sme’s face many of the same challenges encountered by their larger, corporate counterparts (o’regan & ghobadian, 2004a). meers and robertson (2007) similarly affirm that firms of all sizes are constantly challenged due to a multitude of factors such as globalisation, technology, emerging new markets and deregulation; and thus pro-activity (in the form of sound strategy) is needed to face these challenges. strategy is thus no longer considered a luxury or optional; it is now a necessity. rapid economic and technological changes in the global marketplace have resulted in sme’s exhibiting many of the management development needs traditionally reserved for corporate enterprises. in this regard, mughan, lloyd-reason and zimmerman (2004) state that insufficient research evidence exists on the significance, value and process of strategy and strategic management for sme’s. meers and robertson (2007) purport that there is currently no evidence pointing towards an effective method for sme’s when engaging in the process of strategy. kraus, harms and schwarz (2006) reviewed a total of 24 empirical studies dealing with strategic management issues in sme’s; and concluded that research into of strategic management efforts within sme’s is still in its infancy. similarly, griggs (2002) conveys concern pertaining to the depth of previous research related to sme’s and strategy; and further argues that such research used one-dimensional measures, which is not in line with the multi-dimensional nature of strategic management. sajesbm volume 5, (2012) www.sajesbm.com article no 127 36 purpose of the study the dynamic nature of the business environment therefore necessitates organisations – albeit sme’s or corporate enterprises – to be more strategic in their everyday approach to business. indeed, strategic management efforts have been linked to performance in sme’s in several dimensions, according to meers and robertson (2007). however, within the realm of sme’s, this necessity seems to be downplayed due to, amongst others, the scope of sme’s, availability of resources and a diversion of energy to day-to-day operational issues. unlike corporate enterprises, where the performance of the enterprise is dependent on a management team, sme’s are (almost exclusively) dependent on the skills of the owner (dyer & ross, 2008), who does not necessarily possess requisite knowledge or skills associated with managing an enterprise effectively and efficiently, which is a contributing factor to the failure of sme’s. however, not all sme’s fail; many are quite successful. if sound strategy and the management thereof is a large contributing factor to the success of any business, but contemporary strategic management practices are not evident in sme’s (even successful ones), then perhaps the issue is one of how strategic management is conceptualised. consequently, the study endeavours to shed light on the following research question: are there alternative views on the formulation and execution of strategy forthcoming from sme’s? seen against the backdrop of scant (and often superficial) research conducted on this issue, this study aims: to gather a greater understanding of strategic management – and strategy formulation practices in particular – within sme’s. more specifically, this study intends to establish if sme’s: • conduct any strategy formulation exercises at all, and • whether these practices follow conventions purported in contemporary academic literature within the realm of strategic management. an overview of relevant literature strategic management and strategy formulation the concept of strategic planning is often confused with strategy formulation. the distinction lies therein that strategy formulation has a strong entrepreneurial character, as managers have to choose between various strategic options; which implies an element of exploration, innovative thinking, creativity and risk-taking (thompson, strickland & gamble, 2005). the strategy formulation process is dependent on various internal factors, including employee participation, the culture of the organisation, the maturity of the businesses leadership and ultimately the linkage between strategy formulation and implementation (pun, 2004). pun (2004) identifies the strategy formulation process as one in which an action plan is created together with the required procedures needed to put the plan into action. the purpose of the plan is to enable the consistency and credibility of the strategic choices made. the procedures, furthermore, facilitate functional strategies, which need to be put into place by functional managers in the organisation. the success of strategy formulation, (feurer & chaharbaghi, 1997) depends on it being handled as part of individual responsibility throughout the organisation and not simply as a central function. this will considerably enhance the quality of knowledge used for strategy formulation and simultaneously lessen the timeframe and latent conflict associated with the acts of strategy implementation. sajesbm volume 5, (2012) www.sajesbm.com article no 127 37 strategy and performance linkages strategic planning has been directly linked to organisational performance in small enterprises, according to meers and robertson (2007). moreover, strategic planning is positively linked with improved performance across industries. proper planning can result in improved profitability. however, before further exploring the linkages between strategy and performance, the controversy of the operational definition of ‘performance’ needs to be contemplated. gibson and cassar (2005) identify this as a point of confusion and dissemination of previous research. performance is an indicator of growth in employment and sales income. the meaning of performance, according to keats and bracker (1998), may have a varying set of meanings for smes; this subsequently implies that it would be improper to apply the definition simultaneously to smes and large organisations.. planning and performance linkages have also been established through studies of small organisations in the early stages of the organisation (meers & robertson, 2007). controversially, the findings of french, kelly and harrisons’ (2004) research indicated that although there is a link between planning and performance, the link is not particularly strong. furthermore, their research outcomes question the value of classical strategic planning for smes. support of this is found in perry’s (2001) findings, which explain the lack of planning strength as being that formal planning is scarcely ever done by organisations with less than five employees. perry (2001) proclaims that this may be due to such organisations not being required to develop a business plan to establish commercial credit or to borrow money. sme owners personalise their strategies to react to the enterprises’ performance, according to van gelderen, frese and thurik, (2000). when performing poorly, they pursue a reactive strategy, compared with high performing smes, whose owners start by focusing on the critical issues, followed by a more complete planning approach. review of the link between planning and performance (kraus, et al., 2006), reveals that despite various studies, there are many inconsistencies in the findings of previous research. they explore possible reasons, including the differing definitions of strategic planning and that the analyses focused on varying aspects of strategic planning. despite the findings of their literature review, the conclusion provided in the research undertaken by kraus, et al. (2006) was that a higher degree of formalisation is associated with a higher degree of performance. they advise, accordingly, that it follows that smes might therefore, want to plan more formally than before. formulation of strategy strategy formulation is described by grant jackson in corporate finance and strategy (jackson, n.d.) as “the process of igniting, capturing and conveying strategic ideas”. strategy formulation should give clarity to what products or services the enterprise will deliver, what market they will enter, what capabilities are required and how the resources will be allocated to do so”. strategy formulation, and strategic management per se, it is not just applicable to corporate enterprises, sme’s can, and do, benefit from the process of strategy formulation (mintzberg, ahlstrand & lampel, 1998). ten schools of strategy formation are identified by mintzberg et al (1998). these are described in table 1. table 1: ten schools of strategy formulation the design school strategy formation as a process of conception the planning school strategy formation as a formal process the positioning school strategy formation as an analytical process the entrepreneurial school strategy formation as a visionary process the cognitive school strategy formation as a mental process the learning school strategy formation as an emergent process sajesbm volume 5, (2012) www.sajesbm.com article no 127 38 the power school strategy formation as a process of negotiation the cultural school strategy formation as a collective process the environmental school strategy formation as a reactive process the configuration school strategy formation as a process of transformation. source: mintzberg et al (1998:5) as can be seen from table1, thinking has evolved concerning how strategy formulation occurs and what the end purpose of the formed strategy should be. some see strategy formulation as something that is the domain of top managers only, that it is embarked upon to satisfy business orientated objective only. on the other hand, some see strategy formulation as something all inclusive, that it has a role to play in transforming the organisation into something better and more sustainable in the long run. the significance of strategy to the small and medium enterprise it is quite evident that strategy and the management therof is of paramount importance to a business, irrespective of its’ size or scope (sandberg, robinson & pearce, 2001). questions such as “if your business were to shut down, to whom would it matter and why?” and “which of your customers would miss you the most and why?” are not only relevant to large corporate, and multi-national enterprises, smaller owner-lead enterprises also need to engage with these issues (montgomery, 2008). insufficient research-based evidence exists pertaining to the significance of strategic planning for smes (mughan, lloyd-reason & zimmerman, 2004). many sme’s question the value of a strategic plan, falling back on the notion that entrepreneurs are pioneers of ideas and concepts (sandberg, et al., 2001). these business owners focus on the daily running of the business, not the development of intricate, time consuming strategic plans. sandberg, et al. (2001) report that at least half of all smes studied have no identifiable strategy. smes seem less likely to pursue formal and rigid strategic planning. this could be due to limited resources, such as time and access to competitive intelligence, or simply due to the need to focus on operational contingencies. dibrell, crown and bull, (2007) caution that managers who follow a structured planning process strictly, may become disconnected from the daily operations of the enterprise something that can be ill afforded by the sme. research by frese, van gelderen and ombach (2000) examined the characteristics of sme’s pertaining to their approach to strategy formulation. although they assert that these sme owners do follow something tantamount to strategy, these are not consistently “rational or explicit”. the outcome of frese, et al’s (2000) research established that the process characteristics of strategies for smes are related to their success, as these are a direct result of the actions of the owner/manager. more significantly, those owners who concentrate on the most important or difficult component of the business, will perform better than those who do not. strategic planning for smes planning in smes, according to gibson and cassar (2002), is mostly adaptive, short-term and focused on managing and positively exploiting scarce resources. yusuf and saffu (2005) found that smes typically embark on planning as a reactive response to specific events in their operating environment. research undertaken by stonehouse and pemberton (2002), research indicate that a mere eight percent of the tested enterprises have never undertaken any form of planning exercise. according to berman, gordon and sussman (1997), most smes lack any notion of proper business planning. they further purport that entrepreneurs are formally classified as small or even micro enterprises in the start-up phase sajesbm volume 5, (2012) www.sajesbm.com article no 127 39 of their business and would typically pay serious attention to proper business and strategic planning initiatives once it becomes evident that the enterprise needs to expand to ensure longevity. further exploration pertaining to the relationship between planning and performance in smes is refined by wijewardena, zoysa, fonseka and perera (2004) insofar as the specific sophistication levels of such planning are concerned. their research demonstrated that higher degrees of planning and control sophistication has direct lineage to improved sales performance in smes. it can be seen from the preceding discussion that strategic planning and the formulation of strategy is of paramount importance, irrespective of the size of the enterprise. proper and effective strategic management is a major contributing factor to the success of enterprises of all sizes. yet, as far as sme’s are concerned, there seems to be a glaring lack of conventional strategic management activities, even amongst those sme’s that are successful in the long run. ‘conventional strategic management’ refers to how we have been taught, in business schools and universities, to think about the element of business strategy and the strategic management process in totality. literature suggests that sme’s do not necessarily follow these conventions. research design and methodology employed in the study research approach the study employed an interpretive research approach utilising qualitative methods. walliman (2006) explains that interpretive research is based on the view that a person can only experience the world through his or her perceptions, which are influenced by preconceived ideas and beliefs. when interpretive research is embarked upon, one does not view the world externally, but from within the situation that is being studied (walliman, 2006). this research approach thus attempts to understand the phenomena being studied through the meaning and interpretations that individuals assign to them. qualitative research methods were employed in this study to underpin the interpretive research approach. strauss and corbin (1998) define qualitative research as "any kind of research that produces findings not arrived at by means of statistical procedures or other means of quantification"; thus qualitative methods were decided upon as they assisted in uncovering a deeper level of understanding of strategy formulation (or equivalent) practices in sme’s. the study is also descriptive in nature, as is aims to understand how strategy formulation (or equivalent) endeavours unfold in sme’s. as such, the experiences, perceptions, understandings and interpretations of sme owner/managers are crucial in attempting to reach the desired level of understanding. research strategy this study was conducted as an ethnographic study. babbie and mouton (2004) describe an ethnographic study as producing findings derived from collecting data on the behaviour of (and in) a particular society. in this instance, sme owner/managers possess their own, unique identity which provides the opportunity to view the formulation of strategy from a different perspective. sajesbm volume 5, (2012) www.sajesbm.com article no 127 40 research setting this study was conducted amongst owner/managers of sme’s across the gauteng region. a major challenge was the fact that many of the owner/managers do not have formal business or management education, and therefore have their own (and often biased) views of what business strategy and strategy formulation are all about. this does not necessarily correspond with what contemporary literature purports on the issue. entry and establishing the role of the researcher one of the researchers employed her personal network to gain access to sme owner/ managers. this researcher serves on the sustainability forum of her employer and as such, is in contact with and has access to sme owner/managers in various sectors. potential research participants were identified by the researcher and approached individually to solicit their participation. none of these potential research participants declined to participate in the study. sampling the sample for this study was selected using judgemental, non-probability sampling. neuman (2000:196) suggests that when selecting research participants for qualitative studies, relevance to the research topic is more important than representativeness. furthermore, it is exceedingly difficult to determine an optimal sample size for qualitative studies (terre blanche, durheim & painter, 2006). as sme owner/managers represent diversity in terms of scope of business, sector and years of experience, it was decided to select critical cases (flick, 2006) that would take cognisance of this heterogeneity. the decision was made to interview 12 sme owner/managers as 12 critical cases pertinent to this study in determining these critical cases, it was decided that the sample would be based on sme’s based in gauteng. furthermore, and importantly, the research sample comprises only sme’s with which the researcher already had contact. therefore, a degree of trust had already been established between the researcher and research participant, providing an appropriate platform for soliciting in depth data from research participants. data collection data was collected through the use of semi-structured interviews. interviews provide an avenue for generating data by talking to people about how they go about their day-by day dealings (miller and brewer, 2003). the researcher’s main function in an interview is to provide a framework for participants to express their views (miller and brewer, 2003). for this study, the following topics, emergent from literature, were employed to guide the interviews: • the need for strategy in smes. • strategy formation role-players in the sme. • planning and forecasting by smes. • competitive intelligence of smes. • the sme strategy formation process. • the link between strategy and sme performance. interviews were conducted personally by the researcher and lasted one hour on average. transcription of the interviews (also done by the researcher) followed directly after each interview with notes and memo’s (taken during interviews) incorporated into the transcripts. sajesbm volume 5, (2012) www.sajesbm.com article no 127 41 interviews were conducted according to an interview guide were the researcher discussed a range of themes relevant to the study with participants. all interviews were recorded onto a voice recorder for the aim of transcription and future referrals. recording of data data were recorded onto a dictaphone. this allowed source data to be saved on dictaphone cassette tapes. the researcher also took notes of non-verbal cues during interviews. as mentioned, these notes were incorporated into the transcripts to compliment the data recorded to the dictaphone. data analysis the study employed thematic analysis. braun and clark (2006) purport that thematic analysis is a search for themes or patterns across a data set, rather than within a data item (such as, eg. an individual interview). table 3.4 outlines the phases of thematic analysis, according to braun and clark (2006). table 2: phases of thematic analysis phase description of the process 1 familiarising yourself with your data transcribing data, reading and re-reading the data, noting down initial ideas. 2 generating initial codes coding interesting features of the data in a systematic fashion across the entire data set, collating data relevant to each code. 3 searching for themes collating codes into potential themes, gathering all data relevant to each potential theme. 4 reviewing themes checking if the themes work in relation to the coded extracts (level 1) and the entire data set (level 2), generating a thematic ‘map’ of the analysis. 5 defining and naming themes on-going analysis to refine the specifics of each theme and the overall story the analysis tells, generating clear definitions and names for each theme. 6 producing the report the final opportunity for analysis. selection of vivid, compelling extract examples, final analysis of selected extracts, relating back of the analysis to the research question and literature, producing a scholarly report of the analysis. source: braun and clarke (2006:87) strategies employed to ensure quality data for qualitative research to be deemed of good quality, trustworthiness needs to be considered in terms of four criteria (lincoln & guba, 1985): • credibility: this study solicited data from a range of sme owner/managers. observation was persistent, as the researcher was involved in recording the interviews, taking notes and memos, transcribing the data and eventually analysing the data. furthermore, all interviews were preserved on dictaphone cassette cd to ensure referential adequacy of the data. • transferability: in this study the idea was never to illuminate further than the context of sme’s, so transferability here pertains to how the findings can be extrapolated to other sme’s. in this case findings can be extrapolated to sme’s in other regions as the critical cases included in this study take cognisance of the heterogeneity of sme’s. • dependability: assurance must be sought that applying the research to the same/similar research subjects in the same/similar contexts will produce similar results. thus, if credibility is ensured, dependability is also ensured. sajesbm volume 5, (2012) www.sajesbm.com article no 127 42 • confirmability: cassette back-ups of raw data and notebooks (containing field notes) leave an adequate trail of how conclusions, interpretations and recommendations can be traced to their source. furthermore, all individuals who participated in the study did so on a voluntary basis and no coercion of participants took place. participants were aware of the procedures followed during interviews, and gave their consent to participate with the knowledge that they could opt out of an interview at any stage if they felt uncomfortable. research participants were assured of their anonymity and all information provided in the interviews was treated confidentially. reporting as this study produced a myriad of findings, this article aims to provide a deeper understanding of how strategy formulation (or equivalent) efforts are embarked upon by smes. findings are structured according to main themes emergent from the interview process. excerpts from the interviews conducted were used to provide rich descriptions of the perceptions of the participants involved in this study. presentation and discussion of findings the nature of the critical cases selected for this sample is reflected in table 3. as can be seen, all the smes are established and represent a wide range of products and services offered. these sme’s employ between 2 and 52 staff members and realise an annual turnover of between r1.4 million and r32 million. table 3: critical cases included in the study sme number years in existence focus of the business (products/services offered) 1 3 contract cleaning in the healthcare industry 2 6 bbbee consulting 3 8 linen provider to the healthcare industry 4 20 it consulting 5 11 laundry cleaning services 6 15 printing 7 15 computer hardware 8 30 cleaning and pest control 9 11 marketing solutions 10 5 cleaning products 11 8 computer consumables 12 14 metal and water treatment products the themes emergent from literature were used as point of departure to guide the thematic analysis. eight themes pertaining to strategy formulation practices in sme’s emerged. these will now be expounded upon. excerpts from interviews have been included to support the findings. in the interest of brevity, these have been limited. theme 1: the need for “strategy” in smes interviews revealed that the majority of sme owner/managers (nine of the owner/managers in total) expressed that a definite need exists in sme’s for prudent and focussed strategic management. a minority sentiment (from three research participants) was also expressed that did not support for the need for strategy in smes. sajesbm volume 5, (2012) www.sajesbm.com article no 127 43 as alluded to earlier, not all research participants received formal education or training in business management. this lead to instances where research participants had formed their own (often incorrect) opinions of what strategic management is. this was particularly evident from one research participant, who stated that a strategy was embarked upon on a monthly basis. yet, when defining the activities associated to the monthly strategy, these were simply the compilation of standard financial monthly reports, such as a monthly balance sheet and a profit and loss statement. the findings of this study do not support, or contradict, sandberg et al’s (2001:13) findings that half of all smes studied have no strategy as research participants were not questioned directly about having a strategy or not. based on the verbatim statements it was evident that 75 percent of participants strongly support the need for a strategy. the following excerpts support this theme: sme 4: i think one of the disadvantages of the corporate is the amount of time spent on corporate strategy, although saying that, it is unavoidable. small business ... i think we can avoid that and concentrate on the core of the business. i think small medium business cash flow is king. um, i think management of the profitability of the business is critical; i think the other things just happen. sme 6: i have a very good accounts package, so i do it [the small and medium enterprise strategy) from that. sme 11: we don’t run the business on a strategy; our success depends on us providing good aftersales service to our customers. theme 2: role-players in sme strategy formulation further to the need for strategy in smes, findings also shed light on the role players within the respective smes involved with strategy formulation (or equivalent) activities. from the critical cases selected for the study, 50% of the research participants were single sme owners and 50% were co-owners of the sme. in the case of sme’s with single owners, the owner was the only role player involved in the formulation of strategy. this was the case with all but one of the single owner research participants. one respondent offered no response in this regard as this sme owner did not believe in running the business on the basis of a strategy. smes with multiple owners, however, included multiple role-players in the formulation of their strategy. three research participants reflected that only to the owners (or partners) of the sme were involved in strategy formulating activities. the other three co-owner participants mentioned that many role-players are involved in strategy formulation activities, including owners, senior and functional managers, and even strategic business partners, such as suppliers. the following quotes from the interviews conducted with sme owner/managers bear witness to this theme: sme 1: it’s very important that the lower-level people are also part of that strategy sessions. sme 4: no, it’s really ... i would say that the strategic discussions are between the partners and the senior managers ... there are service managers involved in that and there are sales managers. so senior managers and ... and partners would be involved in that and we do ... we do have those discussions. we discuss products, we discuss growth, discussing staff – how to retain staff, how to improve staff – and of course discussing how to do business. sme 10: we have meetings every now and then to discuss it (strategy) sajesbm volume 5, (2012) www.sajesbm.com article no 127 44 theme 3: the nature of planning and forecasting in smes the majority of the research participants equated planning activities in financial terms. activities such as sales forecasts, cash flow or revenue growth. some research participants did, however, equate planning in terms of products and organisational structure. one of the research participants reported that they only undertook planning and forecasting activities for the sake of their suppliers, who required quarterly forecasts for their planning. in fact, they preferred not to indulge in planning and forecasting activities, as the time spent on doing this could be better served generating income for the business. yet another research participant referred to their planning/forecasting activities as a ‘bahamas spreadsheet’; focussing on cash flow and ultimately how much money was in the bank. (the reference to the bahamas referred to having enough cash flow to afford to retire in the bahamas). cash flow was also the focus of planning/forecasting activities of another research participant, as cash flow determined the ability to place new orders, which was ultimately the focus of all planning for their enterprise. although another sme owner/manager reflected that their enterprise did not spend much time on planning and forecasting, their use of planning and forecasting was put to a truly strategic use in that they consciously used this information to mplot courses of action for the sme. a contrasting response was provided by another sme, reporting this enterprise had no targets and didn’t do any planning or budgeting (this enterprise had an annual turnover of r18 million in 2010). this enterprise preferred to go “day by day” and simply “play around with numbers”. stonehouse and pemberton (2002) indicated that most smes adopted a highly structured approach to planning and forecasting endeavours. however, this study seems to suggest the opposite, with research participants indicating either no planning/forecasting activities or a very haphazard and fragmented approach to planning and forecasting from a strategic management point of view. although sme’s do exhibit evidence of planning and forecasting, these are not necessarily utilised strategically. indeed, only one of the critical cases selected for this study utilised planning and forecasting activities strategically. the quotations below testify to the nature of planning/forecasting in smes: sme5: forecasting is not just done as part of the budget we get input from each unit manager. the forecasts look at income; we do mini income statements, compare these to salaries and wages, repairs and maintenance. sme 6: no we don’t have targets. i do absolutely nothing – i don’t do budgeting and i don’t do targets. our accountant does the budgets. sme 10: well, i think, obviously on the one side there is sort of financial planning, um, and then also strategy planning; but the strategy planning relates mainly to, um, what is the structure of the company, how it relates to particular resources. because we are quite a small company, we think in terms of particular people – we say, well for the next year we can see where the market is going, there is a lot more of this type of work, so we need to maybe hire two more people … so that’s the one sort of planning and we do obviously do that through numbers, etcetera. the other planning is obviously financial, so we ... we use {name removed} to manage our finances etcetera. so we keep our focus on cash flow theme 4: the sme planning timeframe the findings of the study suggest that none of the research participants partook in planning or forecasting activities beyond a 12 month period. indeed 5 of the 12 sme’s included in this study indulged in planning and forecasting activities for a maximum period of 12 months, but none of them extended these activities beyond 12 months. this supports the research sajesbm volume 5, (2012) www.sajesbm.com article no 127 45 findings of gibson and cassar (2002) as well as yusuf and saffu (2005), who both reported that sme planning activities have a maximum timeframe of one year. furthermore, planning and forecasting reliability varied amongst the research participants, with many research participants reporting that increased growth of the enterprise made it harder to forecast accurately and plan effectively. other research participants reflected that it was difficult to determine a pattern in the current, volitile market circumstances in the wake of the 2008 financial crisis. the following quotations from the interviews conducted bear witness to the planning timeframe in smes: sme 3: …so we, on a continuous basis have to plan and we ... we plan our workload three months ahead. and, and, and there, my production manager and my general manager play a major role in this. sme 4: um, that’s usually quarterly or an annual basis. sme 8: there is a year plan done at the beginning of the financial year – sme 11: i do a month-to-month indication of deals, but no 12 month forecasts. theme 5: competitive intelligence for smes it was interesting to note that when discussing competitive intelligence gathered by the respective sme’s included in this study, research participants reflected on the type of competitive intelligence they gathered, as well as the sources of the competitive intelligence. only a few of the research participants discussed why gathering competitive intelligence was important to their sme one research participant did not gather any competitive intelligence. all other research participants did and the type of competitive intellegence ranged from pricing, product or service offering to who the customers were and even what the value proposition was. although most research participants interviewed actively sought competitive intelligence, none made reference to how the competitive intelligence was used to steer their sme into a particular direction. two thirds of research participants (eight out of twelve) gathered competitive intelligence concerning pricing. other research participants (five of the twelve research participants) reported gathering competitive intelligence pertaining to competitors’ product and/or service offerings. however, some research participants gathered competitive intelligence that has a more strategic application than information pertaining to operational issues, such as simple pricing data or service/product offering related information. two of the selected smes reported gathering competitive intelligence on the overall approaches of their competitors. one research participant gathered competitive intelligence to determine the business potential of the competition, and another reported gathering competitive intelligence to establish the value propositions of competitors. this suggests that although this participant also wanted to know the prices of their competitor’s offerings, they also wanted more in-depth knowledge of how competitors operated and where they fitted into the market this instead of just a simple price benchmarking exercise, as indicated by most participants. although this is evidence of competitor analysis, it is not, however, evidence of utilising competitive information to determine a future direction and strategic intent for the sme. the application of this competitor analysis still seems largely tactical, and not strategic. groom and david (2001) reported that smes are not focussed on gathering competitive intelligence, because of a lack of resources in most cases. the findings of this study thus seem to confirm the findings of groom and david, with only four of the research participants reflecting that they actually gathered competitive intelligence beyond information which was freely available. sajesbm volume 5, (2012) www.sajesbm.com article no 127 46 research done by groom and david (2001) also revealed that smes typically gather competitive intelligence via their own employees and through interactions with their suppliers, customers and other industry contacts. this is reflected in the feedback from the research participants: 25 percent (three out of the 12 smes selected for this study) gathered competitive intelligence from their customers and 25 percent gathered competitive intelligence from their suppliers. this supports the findings of abeson and taku (2006), who identified suppliers as a main source of competitive intelligence. competitive intelligence gathered through industry associations accounted for a further 25 percent of the instances reported. in general, findings from this study support the view of groom and david (2001) that smes are not overly occupied with gathering competitive intelligence and converting it into useful information for purposes of the development of a strategic plan. the excerpts below indicate the sources of competitive intelligence revealed: sme 3: i believe ... i believe for me to be competitive i have to know and understand my market. not necessarily only the pricing structure, but also: the strategy, what it can offer, what the approach is, what the delivery details is. that is very important to the way i operate. i ... i understand very much how my opposition operate. sme 9: well, we spend a lot time looking at websites, ‘cause obviously that’s our key sort of industry. we are always evaluating what our competitor sites look like, plus the services that they offer: how they structure their pricing, what their value proposition is. so we always do look at that sort of thing. um, but also we often go out to tenders and when we, let’s say for instance a year-and-a-half ago when we did the {name removed} tender, and what we had to do there is say what is our leading value proposition, how we gonna position. often when we are at a pitch, we would then look at our competitors to say who, potentially, is going to be involved in this and what angle should we take to present our company. sme 12: crucial, it’s crucial. what we do is, you know, we do have pricing – pricing is important in our industry these days; in the past it wasn’t as important. i know each and every product of my competitor. with all that information ... we use that information to structure synergies to obtain new business. we go out and do what we call a need analysis. we go determine, um: what their needs are; what services do they get from their supplier that they are happy with; what services would they like to have that they are not, uh, uh, that they don’t receive from these people; downfalls of, um, the supplier um, surely we know their pricing. and then we look at: their turnover; the potential of the business. theme 6: strategy formulation in smes as mentioned, a lack of formal business management education and training amongst sme owner/managers resulted in research participants having their own view on what ‘strategy’ and ‘strategic management’ entailed. many of these opinions did not necessarily correspond with scholarly literature on the subject. the majority of research participants spoke of strategy by referring to mission, vision, financial plans, business goals and objectives, business plans, long term goals, short and medium term objectives and annual projections. none of the research respondents, however, reflected on a process with respect to strategy formulation or business planning/forecasting. none of the research participants described how they went about formulating their strategies. furthermore, no reference was made by any of the research participants to the use of any models or methodologies that exist in the discourse on strategic management for the purpose of strategy formulation. the following quotations from the interviews conducted support this theme: sme 1: when you start the business, you have to have your goals and objectives, okay your shortterm and long-term goals. you need to strategise, okay: what are your short-term goals it is to get the business off the ground, okay. sme 2: it (the strategy) looks at a next year projection; it is evolving quite fast. sajesbm volume 5, (2012) www.sajesbm.com article no 127 47 sme 6: it’s where i fit in the long-term and, uh, where should the business be going. i would say, going forward, one of the visions of the business would be growing annuity revenue. sme 9: i find that the partners and myself essentially run the business very informally. we get together, i would say, every four/five months and then we evaluate our business but not necessarily our positioning, but more in terms of our growth and profitability. theme 7: formalisation of strategies within smes for the purposes of this discussion, a distinction is made between strategic direction (evident in terms of a vision and mission for the sme) and a strategic plan (embodied in long term goals and objectives). three of the smes selected of this study had documented strategic direction, and two smes had documented strategic plans. only one sme was in possession of a documented strategic direction and strategic plan. this smes’ strategy was prepared annually and was aligned to that of the holding company’s overall strategy. some smes did possess strategic plans and/or strategic direction, but did not have it documented. in this regard, three sme owner/managers revealed that an undocumented strategic direction existed in their sme, and three smes had undocumented strategic plans. of these, undocumented elements, one sme owner/manager reflected having both an undocumented strategic direction and strategic plan. a number of smes reflected not having elements of strategy in place at all. three smes did not possess a strategic direction and four smes had no strategic plan. one sme had neither a strategic plan nor strategic direction. it must be noted, however, that this sme owner/manager did specify that there were goals and objectives in place, but did not want to equate this to a formal strategy. table 4 provides a summary of these findings table 4: formalisation of strategy strategic direction only strategic plan only both strategic direction and –plan existing and documented 3 2 1 existing but undocumented 3 3 1 non-existent 3 4 1 frese et al (2000) discern between process strategy formulation (focussing on the ‘how strategy is formulated’) and content strategy formulation (focussing on the ‘what is formulated), but concludes that both are vital components of formulating a sound, implementable strategy. the findings of this study reveal that content strategy formulation is dominant amongst the sme’s selected for this study, with the exception of one sme. in other words, planning efforts that do exist amongst these sme’s focus squarely on a particular outcome the owner/co-owners want to achieve. thus (with the exception of one sme) no evidence exists of formalised strategic planning and strategy formulation, as purported by contemporary strategic management literature. the following excerpts from the interviews reflect the formalisation of strategy within sme’s: sme 1: we haven’t really documented a strategy. sme 2: we have a documented strategy and the financial projections. the thing is, we try to have values as well; so we don’t really have a mission or vision. sme 3: all in my head (the strategy, vision and mission). i share that with my general manager, i share that with my production manager and ... and also share that with certain role players in my customer base. sme 7: our mission is to be the printer supplier of choice for any of our customers. um, and our core values are not just values: we live by them. they are not staff: we are family. sajesbm volume 5, (2012) www.sajesbm.com article no 127 48 theme 8: the link between strategy and sme performance seven research participants) provided responses in respect of their view on the link between strategy and the performance of the sme. however, responses tended to be idealistic, almost creating the impression that research participants were trying to skirt the issue, or did not have a succinct opinion on the matter. those research subjects that did respond to this issue felt that strategy can contribute to the success of an sme, but did not reflect whether that was the case for the sme they were (co)owner of. the excerpts below bear witness to this finding: sme 1: i believe if you strategise, strategy should be flexible, adaptable to the environment. if you don’t have a flexible strategy, it could determine your future growth: it could be your downfall. sme 2: if you don’t meet your projections, you go and evaluate why you have not met your projections and then correct that: it forces you to evaluate where you are. sme 5: there are currently no linkages to strategy and individual performance, but we want to change that. sme 9: look, at this stage, we find we are very operational and whether the competitor is doing this or that doesn’t really influence us. we do find we spend less time looking at the environment around us. main conclusions resultant from the study from the findings and resultant discussion, the following points can be concluded form the study as far as strategy formulation in sme’s is concerned: • a definite need exists amongst sme owner/managers for focussed and succinct strategic management, although not all research participants are aware of all the intricacies of strategic management. • strategic planning endeavours are almost exclusively the domain of sme owners. seemingly, those smes that are of larger scope tend to be more inclusive, but in general it is not an all-inclusive, participative approach as encountered in corporate firms. • strategic planning endeavours centre mainly around financial matters such as budgets, financial forecasts and cash-flow, underpinning the notion that sme owner/managers are not aware of the finer points of strategic planning. • planning timeframes do not exceed 12 months. this is indicative of the fact that smes focus more on operational efficiencies and functional tactics than on long tem plans. also, the adaptive nature of smes require them to adopt shorter timeframes. • although all smes investigated do gather competitive intelligence as input for future decision making, this intelligence is mostly freely available information and not ac • tually useful from a ‘classical’ strategic point of view. it is not useful for determining direction, it is more useful from an operational point of view. • not all smes have documented strategies. at best, sme’s have embarked on strategic endeavours but it ‘lives’ in the mind of the sme (co)owner. some smes, however, do not have any strategy at all. • sme owner/managers interviewed feel that strategy can contribute to the success of their enterprises, but struggle to establish whether strategy can contribute to the success of their respective smes. from the points above, it is evident that strategy formulation within smes differs from what is purported in contemporary strategic management literature. therefore, strategy means something different, focusses on something different and unfolds differently in an sme than it does in a corporate setting. strategy, therefore, in an sme setting should be approached and studied differently than strategic management in a corporate setting. it would seem as though strategic endeavours cannot be applied the same in an sme environment than in the corporate setting. sajesbm volume 5, (2012) www.sajesbm.com article no 127 49 recommendations, managerial implications and avenues for future research support in favour of the need for sound strategic management practice in smes is evident in the literature of this study. however, in practice no strong evidence for the existence of strategy formulation, or any other tasks associated with long term planning, in the ‘classic’ sense of the term, could be found. smes realise the value of ‘formal’ strategies, yet these do not exist mainly due to an overemphasis on operational requirements and day-to-day survival. the implication is thus that a need exists to assist small and medium enterprises in the strategy formulation process. however, it must be stressed that conventional methodologies toward strategy formulation – and the management of strategy in general – might not be applicable to smes. strategic management literature has a definite application in the corporate milieu, and it is from this milieu that it was developed. however, smes are often managed by an entrepreneur/owner/manager and even in instances where a management team exists, the business owner is the guiding force. thus many strategic activities seem to be implicit to the entrepreneur/owner/manager and this can be crucial to our understanding of not only strategy in a sme, but of strategy formulation in general. none of the research participants did formal forecasting or planning beyond 12 months in advance. thus smes seemingly do not attend to the long term future of their enterprises. this can have many subsequent implications that impact their environment and participants in that environment such as their suppliers and customers, or even at a macro level such as financial institution that may be required to provide financing without longer term business thinking. however, although no formal forecasting or strategic efforts beyond 12 months were evident, this does not necessarily imply that no strategic thinking took place or that no hypothetical strategic discussions took place between members of a management team. although no evidence of the latter was forthcoming, it would be reasonable to assume that such thought processes or discussions do take place. again, this leads one to conclude that although it might not be considered in the conventional vein, strategic planning activities do take place in smes, but in a different guise to what conventional literature purports. the extent to which the research participants gathered competitive intelligence was evaluated in the research. most research participants gathered competitive information in respect of the pricing of their competitors. the most common sources of this competitive information were from their suppliers and customers. this implies that the focus of their competitive intelligence is confined and does not look toward the overall strategies of their competition. small and medium enterprises operate in very competitive environments. if they were able to determine the strategies of their competitors, they may be able to stay one step ahead of them. on the other hand, such limited competitive intelligence is incongruent with the longevity of some of the enterprises included in this research. it can also be argued that intuition and “gut-feel” do play a role in business success, and this seems to be an overlooked area of strategic management research as well as sme research. it was disappointing to discover that none of the research participants had engaged formal strategy formation processes and that there was no evidence of documented strategies. the research did not attempt to explore the definition of strategy according to the research participants yet irrespective of their individual definition of strategy, there was no formality in respect thereof. the implication of this conclusion is similar to the implication identified in respect of forecasting and planning in respect of the broader view not being taken by the research participants in respect of their smes. sajesbm volume 5, (2012) www.sajesbm.com article no 127 50 benefits and importance of the study the formation of strategy is viewed by sme owner/managers as being potentially critical to the success of the sme if it is not done adequately. improving strategy formulation (or equivalent) practices for smes could have an impact of the longevity of newly stated smes. this is critical, as the success rate of smes has a profound impact on the south african economy: as smes contribute in the area of 60% to the gdp of south africa. the research participants were not selected based on previous experience relating to strategy formulation. the research did not intend to understand or document the actual strategies of the sme research participants, nor their individual definitions of strategy, but focused on how the sme research participants go about formulating their strategies. as such, conventional strategic management practices were seen to be sorely lacking within the smes studied. however, this does not, as already highlighted, mean that strategy is not considered in smes, but rather that it is approached and considered differently. this paper attempts to highlight that strategic endeavours within smes should perhaps be evaluated according to criteria unique to smes. limitations of the study a limitation of the research was the likelihood of managers of smes revealing the detail of their strategy formation practices particularly if these are not part of a formal process. proper strategic planning gives an organisation a competitive edge; if it is perceived that the research questions may compromise this competitive edge, it may reduce the opportunity of partaking in the research. the research was limited to 12 research participants. the research did not consider the outcomes of their planning strategies i.e. the impact that the strategies they employ have on their enterprise. thus, no measurement of their strategy success or failure was made. the research was limited to smes operating in gauteng. this was done in consideration of access, cost and time limitations in respect of travel. concluding remarks the application of strategic management principles within the sme domain is an interesting one. there is a sentiment that management principles are generic and therefore sme research has no justification as a domain within the broader field of management. this research has shown that (at least for the discipline of strategic management) this sentiment is ill founded. it would appear as though the conventional, porterean thinking behind strategy and long-term planning activities are not present at smes. yet, notwithstanding this, success of many sme’s is still secured. the only logical deduction would thus be that we should break free from conventional thinking on strategy within sme’s and focus more attention on finding out why smes can still be successful despite this apparent lack of formalised attention to strategy. references abeson, f. & taku, m.a. (2006). knowledge source and small business competitiveness. competition forum, 4(2):464-469. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 25 august 2008). babbie, e. and mouton, j. (2004). the practice of social research. cape town: oxford university press bennett, r.j. & robson, p.j.a. (2003). changing use of external business advice and government supports by smes in the 1990s. regional studies, 37(8):795-811. sajesbm volume 5, (2012) www.sajesbm.com article no 127 51 available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 27 february 2009). berman, j.a., gordon, d.d. & sussman, g. (1997). a study to determine the benefits small business firms derive from sophisticated planning versus less sophisticated types of planning. journal of business and economic studies, 3(3):1-11. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). braun, v & clarke, v. (2006). using thematic analysis in psychology. qualitative research in psychology, (3)77-101. available from ebscohost: cinahl: http://search.global.epnet.com/ (accessed 19 june 2010). dibrell, c., down, j. & bull, l. (2007). dynamic strategic planning: achieving strategic flexibility through formalization. journal of business management, 13(1):21-35. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 12 may 2008). dyer, l.m. & ross, c.a. (2008). seeking advice in a dynamic and complex business environment: impact on the success of small firms. journal of developmental entrepreneurship, 13(2):133-149. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 27 february 2009). feurer, r. & chaharbaghi, k. (1997). strategy development: past, present and future. training for quality, 5(2):58-70. available from: available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 22 may 2006). flick, u. (2006). an introduction to qualitative research. london: sage publication. french, s.j., kelly, s.j. & harrison, j.l. (2004). the role of strategic planning in the performance of small, professional service firms. a research note. the journal of management development, 23(7/8):765-776. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). frese, m., van gelderen, m. & ombach, m. (2000). how to plan as a small scale business owner: psychological process characteristics of action strategies and success. journal of small business management, 38(2):1-18. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 12 may 2008). gibson, b. & cassar, g. (2002). planning behavior variables in small firms. journal of small business management, 40(3):171-186. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). griggs, h.e. (2002). strategic planning system characteristics and organisational effectiveness in australian small-scale firms. irish journal of management, 23(1):2351. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). jackson, g. (n.d.) corporate finance and strategy. available from: http://back-2basics.co.za. (accessed 6 march 2009). groom, j.r. & david, f.r. (2001). competitive intelligence activity among small firms. s.a.m. advanced management journal, 66(1):12-20. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 12 may 2008). sajesbm volume 5, (2012) www.sajesbm.com article no 127 52 keats, b.w & bracker j.s. 1998. toward a theory of small firm performance: a conceptual model. american journal of small business, 12(4):41-58. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 12 may 2008). kraus, s., harms, r. & schwarz, e.j. (2006). strategic planning in smaller enterprises – new empirical findings. management research news, 29(6):334-344. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 7 july 2008). lincoln, y.s. & guba, e.g. (1985). naturalistic inquiry. newbury park: sage. mintzberg, h., ahlstrand, b. & lampel, j. (1998). strategy safari. the complete guide through the wilds of strategic management. united states of america: prentice hall. meers, k.a. & robertson, c. (2007). strategic planning practices in profitable small firms in the united states. the business review, 7(1):302-307. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 12 may 2008). miller, r.l. & brewer, j.d. (editors). (2003). the a-z of social research. a dictionary of key social science research concepts. london: sage publications. montgomery, c.a. (2008). putting leadership back into strategy. harvard business review, 54-60. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). mughan, t., lloyd-reason, l. & zimmerman, c. (2004). management consulting and international business support for smes: need and obstacles. education and training journal, 46(8/9):424-432. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 25 august 2008). neuman, w.l. (2003). social research methods: qualitative and quantitative approaches. boston: allyn & bacon. o’regan, n. & ghobadian, a. (2004b). leadership and strategy: making it happen. journal of general management, 29(3):76-92. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 6 march 2009). perry, s.c. (2001). the relationship between written business plans and the failure of small businesses in the u.s. journal of small business management, 39(3):201-208. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). pun, k.f. (2004). a conceptual synergy model of strategy formulation for manufacturing. international journal of operations & production management, 24(9/10):903-928. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). sandberg, w.r., robinson, r.b. & pearce, j.a. (2001). why small businesses need a strategic plan. business and economic review, 48(1):12-15. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 26 august 2008). stonehouse, g. & pemberton, j. (2002). strategic planning in smes – some empirical findings. management decisions, 40(9):853-861. available from ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). sajesbm volume 5, (2012) www.sajesbm.com article no 127 53 strauss, a., & corbin, j. (1998). basics of qualitative research: techniques and procedures for developing grounded theory. london: sage publications. terre blanche, m., durrheim, k. and painter, d. (2006). research in practice: applied methods for the social sciences. cape town: uct press. thompson, a.a., strickland, a.j. & gamble, j.e. (2005) crafting and executing strategy: the quest for competitive advantage. new york: mcgraw-hill. van gelderen, m., frese, m. & thurik, r. (2000). strategies, uncertainty and performance of small business startups. small business economics 15(3):165-184. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). walliman, n. (2006). social research method. london: sage publications. wijewardena, h., de zoysa, a., fonseka, t. & perera, b. (2004). the impact of planning and control sophistication on performance of small and medium-sized enterprises: evidence from sri lanka. journal of small business management 42(2):209-217. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). yusuf, a. & saffu, k. (2005). planning and performance of small and medium enterprise operators in a country of transition. journal of small business management, 43(4):480-497. available from: ebscohost: cinahl: http://search.global.epnet.com/ (accessed 10 july 2008). 116 international financial reporting standard for small and medium-sized entities koppeschaar sajesbm volume 5, (2012) www.sajesbm.com article no 116 54 international financial reporting standard for small and mediumsized entities zr koppeschaar department of financial accounting school of accounting sciences university of south africa (unisa) postal address: po box 66531, woodhill, 0076, south africa tel: + 27(012) 429-4717; 083 271 5576 e-mail: koppezr@unisa.ac.za abstract the international financial reporting standard for small and medium-sized entities (ifrs for smes) was published as a standard by the international accounting standards board (iasb) during july 2009. during 2007 south africa became one of the first countries and the first country in africa to early accept the proposed accounting standard (exposure draft of an ifrs for smes). the accounting standard will probably also be accepted by numerous other countries. the aim of this article is to investigate the applicability of this accounting standard. the results indicated that the ifrs for smes remains too comprehensive for the majority of small companies. the ifrs for smes does not satisfy the needs of south african users of small company financial statements, and as a result the accounting requirements should be simplified. keywords financial accounting; financial reporting requirements; ifrs for smes; small companies; users of financial statements; small company financial statements. sajesbm volume 5, (2012) www.sajesbm.com article no 116 55 introduction and motivation the international financial reporting standard for small and medium-sized entities (ifrs for smes) was published as a standard by the international accounting standards board (iasb) during july 2009 (iasb, 2009a; iasb, 2009b). with regard to the ifrs for smes, sir david tweedie, chairperson of the iasb, released the following statement to the press on 9 july 2009: “the publication of ifrs for smes is a major breakthrough for companies throughout the world. for the first time, smes will have a common high quality and internationally respected set of accounting requirements.” (iasb, 2009c). during 2007 south africa became one of the first countries and the first country in africa to early accept the proposed accounting standard (exposure draft of an ifrs for smes) (saica, 2007a). since then the ifrs for smes has also been adopted in australia as part of their differential reporting system. the accounting standard will probably also be accepted by numerous other countries (sealy-fisher, 2009:32). the aim of this article is to investigate the opinions of south african small company practitioners, as compilers of small company financial statements, on the applicability of this accounting standard (ifrs for smes). small businesses usually provide a substantial contribution to a country’s economy by, among others, creating new job opportunities, serving as a platform for the foundation of new businesses, and by creating an important link in the supply chain (nieman, 2006:9). the importance of small businesses in an economy should not be underestimated. nieman (2006:12) confirms that small businesses also play a very important part in the south african economy. as a result, the financial statements of these businesses are also important. the current ifrs reporting framework creates problems for small companies because of the comprehensiveness of the current reporting requirements and the high cost of compliance (cleminson & rabin, 2002:346; kruger 2004:196; stainbank & wells, 2007:49; van wyk & rossouw, 2008:22). small companies have few staff members, with often limited financial expertise, and limited resources. they have to incur substantial additional costs to adhere to the ifrs requirements that require increasingly complex technical calculations, extensive disclosure and high level of accounting expertise. according to plewa and friedlob (1989:55) these costs bring about a unique financial burden for small companies. research in the usa (patel, 1991:80) indicates that, in relation to larger companies, small companies incur relatively greater costs in order to adhere to reporting requirements. the increasing complexity of the business environment probably results in stricter reporting requirements as well as increased costs. as a result of increased costs that small companies incur in order to prepare financial statements, such costs may exceed the advantages gained by supplying the correct information (boymal, 2006:107). numerous practitioners, owners, professional accounting organisations and several researchers support the adoption of a system of differential reporting for smes (patel, 1991:80; barcelo, 2007:25; shearer & sleigh-johnson, 2007:78). the united kingdom, australia, new zealand and canada have already implemented a form of differential reporting for small companies. the solutions implemented by these countries differ substantially; which may be an indication of both the importance and the complexity of differential reporting. this study will benefit countries considering the adoption of the ifrs for smes, practitioners and small companies by indicating that the ifrs for smes remains too comprehensive and that further simplified reporting requirements for small companies are justified. at a theoretical level, the findings are significant because they expand the literature by focusing on differential reporting and specifically the application of the ifrs for smes, a relatively sajesbm volume 5, (2012) www.sajesbm.com article no 116 56 unexplored area in africa. small and medium-sized entities include different forms of businesses, for example private companies, close corporations, trusts, partnerships, etc. the ifrs for smes is only applicable to private companies in south africa and as a result the empirical study only includes these companies. the limitation of the study is that the results only apply to small companies (private companies) in south africa. the subject field covered in this article is set out in the following sections: section 2 outlines the background to the study and the literature review, including a historical overview of the development of differential reporting in various countries, section 3 discusses the empirical tests used in this study to determine to what extent small companies are abreast of the accounting standards (ifrss) and the ifrs for smes and to identify the specific accounting standards (ifrss) applicable to small companies, section 4 reports the results of the research and section 5 contains the conclusions and recommendations. theoretical background harmonising financial reporting has adapted to the requirements of a fast changing environment in order to ensure that accounting information communicated to users through financial statements provide a fair account of transactions, circumstances and events. the complexity and scope of accounting requirements have increased considerably and this has had an impact on the costs involved in the preparation of financial statements (chigbo, 1998:30). walton (1998:2) argues that accountants and those who prepare accounting standards acknowledge the fact that there is a need in worldwide capital markets for companies to provide comparable financial statements; thus a move towards harmonisation. the advantages of the harmonisation of accounting standards are not limited to entities trading securities on capital markets, but also to small and medium-sized entities, due to the following reasons, (iasb, 2007b:bc16): • financial institutions allocate loans internationally and are operated multi-nationally. banks use financial statements when decisions on loans are taken and credit terms and interest rates are fixed; • sellers need to evaluate the financial abilities of buyers' in other countries prior to supplying goods and services on credit; • credit agencies try to develop uniform international valuations; • capital enterprises funds small entities internationally; and • many small entities have foreign investors not directly involved in the management of the relevant entity. although the harmonisation of accounting standards holds advantages for smaller companies, it results in comprehensive and complex accounting reporting requirements and probably contribute to the problem of an overload of accounting standards for small companies. by issuing the international accounting standard for small and medium-sized entities, the iasb moved towards the harmonisation of accounting standards also for small entities (iasb, 2007a:bc15). development of differential reporting in south africa the first suggestion for differential reporting in south africa, discussion paper (dp) 16, limited purpose financial statements, was issued by the south african institute of chartered accountants (saica) in may 2000 (saica, 2000). the aim of the paper was to determine whether respondents supported differential reporting. the suggestions included in the sajesbm volume 5, (2012) www.sajesbm.com article no 116 57 discussion document were received positively and a move towards differential reporting was welcomed by all respondents (hattingh, 2002:23; heymans, 2000:31). in june 2003, an exposure draft that simplified the exposure requirements for small companies, ed 163, framework for the preparation and presentation of limited purpose financial statements, was issued by saica (saica, 2003). notwithstanding the fact that the exposure draft would have reduced the reporting burden on small companies in south africa, the exposure draft was never issued as an accounting standard and consequently never applied in practice. during may 2007, ed 225, financial reporting for small and medium-sized entities – proposed process, was also issued by saica (saica, 2007b). this exposure draft is exactly the same as the proposed ifrs for smes issued by the iasb. it resulted in the early adoption of the ifrs for smes. historical overview internationally differential reporting has been implemented in various forms by different countries. the following countries played an important role in the application of differential reporting: australia, new zealand, united kingdom and canada. the international implementation of differential reporting will now be discussed by referring to a short historical overview of the development of differential reporting in the abovementioned countries. australia since the issuing of the statement of accounting concepts 1 (sac 1): definition of the reporting entity; accounting standard aasb 1025: application of the reporting entity concept and other amendments; as well as the modification of the corporations law of 1989, differential reporting was implemented in australia during 1992. the differential reporting approach accepted in australia in sac 1 and aasb 1025 is based on a dual reporting/non-reporting entity principle (icaa, 2204; icaa, 2006; kent & munro, 1999:360). entities classified as reporting entities must adhere to all accounting standards. entities classified as non-reporting entities may deviate from the accounting standards and provide a lower level of disclosure in their financial statements when compared to those of reporting entities (kent & munro, 1999:360). however, boymal (2006:110) concludes that the reporting-entity principle is probably outdated and that a revised differential reporting system, with reference to cost-benefit analyses, should be applied. during 2009 the aasb concluded that the australian accounting reporting system should effect a shift in emphasis and that the focus should no longer be on the reporting-entity principle, but on general-purpose financial statements (aasb, 2009). as a result the ifrs for smes issued by the iasb, was issued by the aasb as the ifrs for non-publicly accountable entities (npaes) and was accepted in australia during 2009. a dual-level differential reporting system was approved by the aasb for profitable entities (aasb, 2009): • level 1 applies to general-purpose financial statements of public reporting entities and involves the application of the complete ifrss. • level 2 applies tot general-purpose financial statements of non-public reporting entities and involves a choice: applying the ifrs for npaes (as accepted in australia) or an alternative system which involves the application of the complete recognition and measurement requirements of the complete ifrss, as well as limited disclosure. non-public companies may also choose to adhere to the complete ifrss. however, the australian reporting system does provide for a third level of reporting for entities that are non-reporting entities according to the australian corporations act (small companies limited by guarantee). entities qualify as non-reporting entities when they adhere to certain criteria with regard to size. the financial statements of these entities, i.e. specialpurpose financial statements, should only adhere to the following three accounting standards sajesbm volume 5, (2012) www.sajesbm.com article no 116 58 (aasb, 2009): aasb 101: presentation of financial statements; aasb 107: cash flow statements; en aasb 108: accounting policies, changes in accounting estimates and errors. from the above-mentioned discussion it seems as though a comprehensive differential reporting system has been successfully implemented in australia. new zealand differential reporting has been applied in new zealand since 1994 (santoro, 1997:23). the framework for differential reporting was issued by the institute of chartered accountants in new zealand (icanz) during february 1994. since the initial issuing of the framework it has been revised a number of times – the last revision wat in january 2007 (icanz, 2007:par.1). the reporting system in new zealand allows for four different reporting options (icanz, 2007:par.4). the first reporting option applies to entities that are exempt in terms of the requirements of the financial reporting act 1993. a company qualifies as an exempt company only if it adheres to certain criteria regarding size (turnover, assets and number of workers). this option is available to small companies (micro entities) with minimal reporting requirements. the second reporting option applies to companies that produce generalpurpose financial statements and qualify for differential reporting. companies qualify for differential reporting only if the company does not have public accountability, ownership and management of the company are not separated and the company adheres to certain criteria regarding size (with reference to turnover, assets and number of workers). the framework for differential reporting applies to these companies. the third reporting option applies to companies that produce general-purpose financial statements, has public accountability and do not qualify for differential reporting. these companies must adhere to the requirements of all applicable accounting standards. the fourth reporting option applies to entities that do not publish general-purpose financial statements. these entities produce special-purpose financial statements based on their specific reporting needs. the differential reporting requirements included in the framework for differential reporting provides for the exclusion of certain accounting standards, the partial exclusion of certain accounting standards as well as non-exclusion of accounting standards. baskerville and simpkins (1997:14) maintain that this framework is probably the most comprehensive method of differential reporting. this framework has been applied in new zealand for almost 15 years and has been reviewed and updated a number of times. resulting from the recent issuing of the international standard, ifrs for smes, sealy-fisher (2009:32) maintains that the institute of chartered accountants in new zealand will probably investigate the acceptance as well as the use and application of this standard in new zealand. united kingdom since 1994 the application of accounting standards for small companies has caused problems for those who prepare accounting standards in the united kingdom (asb, 2008:appendix iv). the financial reporting standard for smaller entities (frsse) was issued in november 1997. the frsse was designed to provide a single accounting standard for smaller entities and focuses on their specific circumstances (asb, 2008:appendix iv). smaller entities that chose to apply the frsse were exempted from all other accounting standards. when the frsse was issued it was clear that the document needed to be reviewed on a regular basis in order to take developments in accounting into account; as a result the frsse was reviewed a number of times since it was issued in 1997. the differential requirements included in the frsse are a combination of the exclusion of certain accounting standards; the reduction of some disclosure requirements; and the simplification of certain recognition and measurement criteria. for more than a decade small entities have used the frsse in the united kingdom and according to king (1997:69), the frsse have been designed to satisfy almost all the needs of users of small entities' statements; furthermore, the frsse also provides a single point of sajesbm volume 5, (2012) www.sajesbm.com article no 116 59 reference for reporting for the majority of small entities. however, since being issued in 1997, the frsse has been continuously criticised for various reasons (murphy & page, 1998:64; perrin, 1997:1). a study by the irish accountancy educational trust concluded that the frsse was unable to lessen the reporting burden of small entities and small practitioners (mcaleese, 2001:18). however, the application of the frsse in the united kingdom is a clear indication of the successful implementation of differential reporting. according to shearer and sleigh-johnson (2006:79), as a result of the issuing of the ifrs for smes, the united kingdom will in future probably move towards three levels of reporting while the frsse will be retained. canada in 1980 differential reporting was considered in canada for the first time. research by ashby (1980:29) identified the costs of preparing financial statements and the complexity of accounting standards as one of the most important problems experienced by small businesses. the issue of differential reporting was also investigated by the canadian institute of chartered accountants (cica) and, as a result, the concept, exposure draft: differential reporting, was issued during 2001(cica, 2001), and eventually the accounting standard, differential reporting, section 1300 and related amendments to other sections (cica, 2002) was issued during february 2002. according to these, differential reporting options were available for qualifying entities. such entities were entities without public accountability and entities of which the owners unanimously agreed (in writing) that differential reporting may be applied. differential reporting options simplify disclosure requirements as well as recognition and measurement requirements for qualifying entities regarding the following issues: subsidiaries, long-term investments, share capital, income tax, and financial instruments. during 2006 cica decided to further investigate the needs of users of private entity financial statements in order to determine which financial reporting approach would best satisfy the needs of these users (cica, 2007:par.6; maingot & zeghal, 2006:513). as a result, the disclosed concept, exposure draft: generally accepted accounting principles for private enterprises, was issued during may 2009. the disclosed concept is only applicable to private entities (entities without public accountability), while non-profit organisations are specifically excluded. to qualify as private entity no other requirements regarding the number of or permission by members exist. the disclosed concept includes various modifications and simplifications of recognition and measurement requirements with regard to various subjects (cica 2009). the canadian differential reporting options are flexible and qualifying entities may choose options based on their specific needs and cost-benefit limitations. according to jeffrey (2007:26), it has been suggested that the differential reporting system within ifrss should be divided into three reporting levels: level 1 for large companies, level 2 for medium companies and level 3 for small entities. the canadian differential reporting model provides for the reduction of disclosure requirements as well as the simplification of recognition and measurement criteria. the initial model has been successfully implemented in practice. this not only confirms the need for a differential reporting system, but also indicates the applicability thereof. there are however no indications that the ifrs for smes will be adopted in canada in the near future. empirical tests the primary objective of the study was to investigate the opinions of south african small company practitioners, as compilers of small company financial statements, on the applicability of the ifrs for smes. the study used a survey of the opinions of practitioners sajesbm volume 5, (2012) www.sajesbm.com article no 116 60 responsible for the drafting of financial statements of small companies in south africa. the following secondary objectives support the primary objective of the study: • determining whether it places a burden on small companies to adhere to accounting standards. • determining to what extent small companies are abreast of the accounting standards (ifrss) and the ifrs for smes. • identifying the specific accounting standards (ifrss) applicable to small companies. • identifying potential issues regarding relaxation of accounting standards. although the owners or management of a small company are responsible for the preparation of the company's financial statements, most small companies use their accountants/practitioners to fulfil these accounting functions. small company practitioners are important in this empirical investigation, as they are responsible for preparing the financial statements of small companies as well as the application of the applicable accounting standards in south africa. the owners or managements of small companies often lack accounting knowledge and are not the best sources to use in order to gain information about the application of accounting standards. (van wyk & rossouw, 2008:18). a large number practitioners are registered with the south african institute of chartered accountants (saica), that is also responsible for the development of accounting standards in south africa. although the saica is not the only accounting professional body in south africa, it is the professional body with the most members in south africa. saica's database of small practitioners was used as the population. the applicable questionnaire was sent electronically to the entire population with the support of saica. the practitioners were asked to complete and return the questionnaire to saica. a follow-up e-mail was sent a month after the distribution of the questionnaires. a second follow-up, requested practitioners who had not completed the questionnaire in the first two rounds to complete the questionnaire a few weeks later. a letter, in which the importance of the study, as well as the importance of the practitioners’ input on the differential accounting reporting in south africa, were emphasised, accompanied this e-mail. the completed questionnaires returned to saica were processed by saica's computer section. the questionnaires were send to 1 700 small practitioners and 434 completed questionnaires were received back (a response rate of 26%). the high response rate can be attributed to saica's support for this research study, as well as their willingness to provide their database of small practitioners and the services of their computer department. results general aspects only 21% of small practitioners are of the opinion that small company financial statements comply with all the applicable accounting standards (ifrss). the majority of small practitioners (79%) indicated that small company financial statements do not comply fully with the applicable accounting requirements. this confirms that in practice the reporting requirements are inappropriate for small companies and that accounting requirements do not satisfy the needs of the users. it furthermore indicates that the information that should currently be included in small company financial statements are not useful for users and thus do not satisfy users' needs for information. from additional comments received, it is clear that small practitioners are not satisfied with the reporting requirements. among others, the following statements were made: sajesbm volume 5, (2012) www.sajesbm.com article no 116 61 • “clients try to comply but in most cases it is impossible due to financial and expertise constraints and in most cases compliance serves no purpose whatsoever. • i challenge anyone who says they fully comply; it is almost impossible (and largely irrelevant to clients). • it will be very difficult and it will serve no real purpose for them to comply with ifrss. • there is no economic benefit or justification to comply.” in practice the majority of small company financial statements do not fully comply with the applicable accounting requirements. the requirements should therefore be simplified in south africa in order to ensure that the requirements are appropriate for small companies. it is important to note that if small company financial statements do not comply with applicable accounting standards (ifrss), it will, in future, have significant implications for the owners/managements and those who prepare financial statements in south africa, as the new companies act (2008) provides legal support for the accounting standards (south africa, 2008). the new companies act (2008) is not yet implemented. as a result noncompliance to the applicable accounting standards will be a contravention of the companies act in future. when asked whether it places a burden on small companies to adhere to accounting standards applicable to small companies, 93% of small practitioners indicated that this was the case. only 6% of practitioners were of the opinion that this did not place a burden on small companies. accounting has, in order to ensure fair accounts of financial transactions, adapted to the requirements of a changing environment. this resulted in comprehensive accounting standards. over the years this situation developed even further until it reached the stage where it has become a serious problem for small companies. this problem is often referred to as the accounting standards overload problem (burke, 1997:11; barcelo, 2007:25). it seems as though the overload of accounting standards remains a real problem for small companies in south africa. this issue resulted in varied comments by the small practitioners. their dissatisfaction with the application of the accounting standards is clear from the following examples of comments: • “the burden on smes is beyond comprehension. • the standards are making financial statements more difficult for the man on the street to understand. • there is no benefit for the client.” respondents were asked to indicate to what extent they (small practitioners) are abreast of the accounting standards (ifrss) and the ifrs for smes. from the questionnaire is seems as though the majority of small practitioners (60%) are of the opinion that they are abreast of the applicable accounting requirements as well as the the ifrs for smes (69%). this is probably the case as the small practitioners are qualified accountants and possess the necessary academic qualifications. all the small practitioners are also registered members of saica and they are continuously encouraged to stay abreast of new developments and have to comply with saica’s cpd (continuing professional development) requirements. one can thus deduce that, at present, small company financial statements do not adhere to the applicable accounting requirements in south africa – not because the compilers do not posses the necessary knowledge, but rather because the information required does not satisfy the needs of those who use the financial statements and is too expensive to produce. sajesbm volume 5, (2012) www.sajesbm.com article no 116 62 applicability of accounting standards the questionnaire included a question on the application of specific accounting standards (ifrss) in order to determine which standards are actually applied in practice. all iasb accounting standards are included in the questionnaire in order to determine the relevance of individual standards to the accounting reporting of small companies in south africa. the results are reflected in table 1. table 1: application of accounting standards (ifrss international financial reporting standards) order accounting standard average r e g u la rl y o c c a s io n a ll y n e v e r t o ta l 1 ias 12 income taxes 2.74654 79% 16% 5% 100% 2 ias 1 presentation of financial statements 2.72581 78% 17% 5% 100% 3 ias 16 property, plant and equipment 2.71889 77% 18% 5% 100% 4 ias 18 revenue 2.68664 75% 18% 7% 100% 5 ias 7 cash flow statements 2.59447 71% 18% 11% 100% 6 ias 2 inventories 2.50230 58% 34% 8% 100% 7 ias 40 investment property 2.35714 48% 40% 12% 100% 8 ias 17 leases 2.33180 48% 38% 14% 100% 9 ias 37 provisions, contingent liabilities and contingent assets 2.22811 37% 49% 14% 100% 10 ias 24 related party disclosure 2.20046 43% 34% 23% 100% 11 ias 8 accounting policies, changes in accounting estimates and errors 2.09677 33% 43% 24% 100% 12 ias 10 events after the balance sheet date 2.07604 31% 46% 23% 100% 13 ias 23 borrowing costs 2.03226 32% 39% 29% 100% 14 ias 36 impairment of assets 1.97696 24% 50% 26% 100% 15 ias 39 financial instruments: recognition and measurement 1.94700 25% 44% 31% 100% 16 ias 32 financial instruments: presentation 1.92627 28% 37% 35% 100% 17 ias 38 intangible assets 1.91935 15% 62% 23% 100% 18 ifrs 7 financial instruments: disclosure 1.86175 22% 42% 36% 100% 19 ias 21 the effects of changes in foreign exchange rates 1.73041 15% 43% 42% 100% 20 ias 19 employee benefits 1.68894 17% 34% 49% 100% 21 ias 11 construction contracts 1.64286 11% 43% 46% 100% 22 ifrs 1 first-time adoption of ifrs 1.57834 11% 35% 54% 100% 23 ias 28 investments in associates 1.56912 7% 43% 50% 100% 24 ias 27 consolidated and separate financial statements 1.56452 8% 40% 52% 100% 25 ias 41 agriculture 1.55300 7% 40% 53% 100% 26 ias 20 accounting for government grants and disclosure of government assistance 1.42166 6% 31% 63% 100% sajesbm volume 5, (2012) www.sajesbm.com article no 116 63 order accounting standard average r e g u la rl y o c c a s io n a ll y n e v e r t o ta l 27 ias 31 interests in joint ventures 1.41705 4% 33% 63% 100% 28 ifrs 5 non-current assets held for sale and discontinued operations 1.30645 5% 21% 74% 100% 29 ifrs 3 business combinations 1.26959 1% 24% 74% 100% 30 ias 26 accounting and reporting by retirement benefit plans 1.19585 2% 16% 82% 100% 31 ias 33 earnings per share 1.18894 4% 10% 86% 100% 32 ias 34 interim financial reporting 1.15668 2% 12% 86% 100% 33 ifrs 2 share-based payment 1.08756 0% 8% 92% 100% 34 ifrs 8 operating segments 1.08756 1% 7% 92% 100% 35 ifrs 6 exploration and evaluation of mineral resources 1.08065 0% 7% 93% 100% 36 ifrs 4 insurance contracts 1.07834 0% 8% 92% 100% 37 ias 29 financial reporting in hyperinflationary economies 1.03456 0% 3% 97% 100% from the above-mentioned table it appears that in preparing financial statements for small companies, only six of the accounting standards are regularly applied in practice by the majority of small practitioners (more than 50%). these standards are the following: • ias 12: income taxes • ias 1: presentation of financial statements • ias 16: property, plant and equipment • ias 18: revenue • ias 7: cash flow statements • ias 2: inventories two accounting standards are in practice regularly applied by 48% of small practitioners, namely: • ias 40: investment property • ias 17: leases in practice, the majority of small practitioners (more than 50%) never apply several of the accounting standards (see table 1, orders 22 to 37). the accounting standards that are applied regularly relate to the presentation of financial statements (ias 1: presentation and exposure of financial statements; ias 7: cash flow statements), assets and liabilities (ias 16: property, plant and equipment; ias 2: inventories) and income and expenditure (ias 12: income tax; ias 18: revenue). from discussions with small practitioners during the administering of the questionnaire it seemed that small practitioners applied the accounting standard, ias 12: income taxes, in its entirety and that small companies did not find the provision of deferred tax problematic at all. the ifrs for smes also requires that provisions should be made for deferred tax. sajesbm volume 5, (2012) www.sajesbm.com article no 116 64 the ifrs for smes includes reduced disclosure requirements as well as simplified measurement requirements with regard to the six accountings standards regularly applied by the majority of small practitioners. according to the ifrs for smes, property, plant and equipment (ias 16: property, plant and equipment) is accounted for by applying the cost model (the revaluation method is not applicable); the annual revision of the residual values, useful lifespan and depreciation methods are not required. from the questionnaire it also became clear that cash flow statements do provide useful information for users of small company financial statements. relaxation of accounting standards for smes the respondents were asked to identify factors that could reduce the burden of producing financial statements for smes. the results are indicated in table 2. table 2: lessening the burden of preparing financial statements yes no total complete exemption of adherence to a specific accounting framework 261 60% 173 40% 434 100% reduce disclosure requirements 417 96% 17 4% 434 100% decrease the number of applicable accounting standards 418 96% 16 4% 434 100% remove audit requirements for private companies 306 71% 128 29% 434 100% simplify measurement requirements 422 97% 12 3% 434 100% special standard for small companies 382 88% 52 12% 434 100% the majority of small practitioners indicated that all the items listed would reduce the burden on small companies in preparing financial statements. it is clear that a need exists for the adaptation of the accounting reporting system by simplifying the measurement requirements (97%) and a relaxation in the disclosure requirements (96%). according to 96% of respondents the number of accounting standards should be decreased. small practitioners (88%) are also of the opinion that special standards for small companies would lessen the burden of preparing financial statements on these entities. the need for the simplification of the accounting standards applicable to small companies is also evident from the additional comments of small practitioners on the above-mentioned question. some of the comments are: • “special standard for sme – this standard (ifrs for smes) is not simple enough and therefore does not reduce the accounting burden. • standards for smes need to be simplified, but need to be relevant. • special standards must be meaningful – not like ifrs for smes, which is no help at all. • concentrate on risk and users.” according to 71% of respondents the audit requirements for private companies should be abolished. in terms of new legislation in south africa these audit requirements for private companies have been abolished. the following question to respondents specifically addressed the ifrs for smes. the majority of small practitioners (60%) are of the opinion that the ifrs for smes do not lessen the burden of the preparing financial statements for small companies significantly. this is also clear from additional comments by small practitioners on the previous questions. the ifrs for smes (current applicable accounting reporting requirements) are still too sajesbm volume 5, (2012) www.sajesbm.com article no 116 65 comprehensive and accounting standards for small companies should thus be simplified even further. respondents were asked to comment on the need for an additional framework. of the small practitioners, 88% are of the opinion that the accounting standards currently applicable to small companies are inadequate and that there is a need for a further simplified accounting reporting framework. only 8% of respondents indicated that there is no need for an additional reporting framework. this confirms that users of small company financial statements do not use or need the comprehensive information supplied in general financial statements, and that they do not have the same financial reporting needs as users of large company financial statements. the potential issues regarding the relaxation of the accounting standards are indicated in the table below. table 3: potential issues regarding relaxation of accounting standards order potential issues concerned unconcerned no opinion total 1 non-acceptance of financial statement by financial institutions 264 61% 158 36% 12 3% 434 100% 2 non-acceptance of financial statements by south african revenue services (sars) 246 57% 170 39% 18 4% 434 100% 3 reduction in financial statements’ reliability 226 52% 189 44% 19 4% 434 100% 4 loss of credibility of the accounting profession 221 51% 185 43% 28 6% 434 100% 5 loss of true and fair view of financial statements 194 45% 214 49% 26 6% 434 100% 6 increased confusion for preparers of financial statements 182 42% 231 53% 21 5% 434 100% 7 lowering of accounting standards 169 39% 239 55% 26 6% 434 100% 8 loss of comparability of financial statements 121 28% 296 68% 17 4% 434 100% 9 application of a differential accounting system 116 27% 277 64% 41 9% 434 100% from table 3 it seems that, in case the accounting standards applicable to small companies should be lessened, small practitioners would worry about certain issues, namely the nonacceptance of financial statements by financial institutions (61%), non-acceptance of financial statements by sars (57%), a reduction in the reliability of financial statements (52%) and the loss of credibility of the accounting profession (51%). the majority of small practitioners (64%) indicated that the application of a differential accounting system would not be reason for alarm. the non-acceptance of financial statement by sars shouldn’t be an issue in south africa, as sars no longer requires that income tax returns are accompanied by a full set of financial statements. sajesbm volume 5, (2012) www.sajesbm.com article no 116 66 conclusion the objective of the study was to investigate the opinions of south african small company practitioners, as compilers of small company financial statements, on the applicability of the ifrs for smes. the ifrs for smes, which is currently applicable in south africa, remains too comprehensive for the majority of small companies. the ifrs for smes does not satisfy the needs of south african users of small company financial statements, and as a result the accounting requirements should be simplified. the results from this study have shown that in practice several accounting standards are never applied by the majority of practitioners. accounting standards that are regularly applied are the following: ias 1: presentation and exposure of financial statements; ias 7: cash flow statements; ias 16: property, plant and equipment; ias 2: inventories; ias 12: income tax and ias 18: revenue. the burden on small companies to prepare financial statements should be alleviated through the reduction of the disclosure requirements, simplification of the measurement requirements and a decrease in the number of accounting standards applicable to these companies. on the other hand, the ifrs for small and medium sized entities is a well-considered document and the result of an extensive process. furthermore, the maintenance of the accounting standard is primarily the responsibility of the iasb and this will also facilitate the updating of the standard. however, the results of this study have shown that the ifrs for smes remains too comprehensive for the majority of small companies in south africa. it is thus recommended that the ifrs for smes is simplified even further in order to satisfy the needs of the south african users of small company financial statements. the regulatory framework in south africa for the drafting of accounting standards is changing with the implementation of the new companies act 71 of 2008. a new independent regulatory body, the financial reporting standards council (frsc) will be formed in terms of the legislation with the purpose of issuing future accounting standards (south africa, 2008). the frsc will replace the accounting practices board (apb) of the south african institute of chartered accountants (saica), which has traditionally been responsible for the setting of south african accounting standards. in view of the important contribution of small companies to the south african economy, the financial reporting of these companies is important and the current reporting requirements should be reduced and simplified to ensure that meaningful, relevant and reliable information is contained in financial statements. this study covers a new area of research, namely the application of the ifrs for smes, which might be valuable for different role players, including the frsc, involved in the accounting for smes. as the aim of this study was not to determine a reporting framework for small companies, further research is necessary to determine what the exact simplified reporting accounting requirements for small companies should be. bibliography accounting standards board (asb). 2008. financial reporting standard for smaller entities (frsse). london: asb. ashby, m.j. 1980. does canada need two gaaps? ca magazine, june:28-31. australian accounting standards board (aasb). 2009. an update on the differential reporting project. sydney: aasb. [online] available from: http://www.charteredaccountants.com.au/ [accessed: 2009-06-30]. barcelo, y. 2007. standard overload blues. ca magazine, 140(4):25-30. baskerville, r. & simpkins, k. 1997. framework for differential reporting. chartered accountants journal, 14-17. boymal, d. 2006. differential reporting where is it heading? abacus, 43(1):107-110. sajesbm volume 5, (2012) www.sajesbm.com article no 116 67 burke, j.f. 1997. report on standards overload. the cpa journal, 11. canadian institute of chartered accountants (cica). 2001. exposure draft differential reporting. toronto: cica. canadian institute of chartered accountants (cica). 2002. differential reporting, section 1300 and related amendments to other sections. toronto: cica. canadian institute of chartered accountants (cica). 2007. discussion paper financial reporting by private enterprises. toronto: cica. canadian institute of chartered accountants (cica). 2009. exposure draft generally accepted accounting principles for private enterprises. toronto: cica. chigbo, o. 1998. gaap under fire. ca magazine, 22-30. cleminson, j. & rabin, e. 2002. the reporting problems faced by small business entities in south africa. paper presented at the southern african accounting association conference, port elizabeth, sa. hattingh, c.p. 2002. the final word on differential accounting. accountancy sa, 23-24. heymans, h. 2000. differential reporting standards. accountancy sa, 31. institute of chartered accountants in australia (icaa). 2004. business practice guide financial statements of non-reporting entities. melbourne: icaa. institute of chartered accountants in australia (icaa). 2006. business practice guide financial statements of non-reporting entities. melbourne: icaa. institute of chartered accountants of new zealand (icanz). 2007. framework for differential reporting. wellington: icanz [online] available from: http://www.nzica.com/ [accessed: 2008-06-10]. international accounting standards board (iasb). 2007a. exposure draft of a proposed ifrs for small and medium-sized entities. london: iascf-iasb. international accounting standards board (iasb). 2007b. basis of conclusions on exposure draft ifrs for small and medium-sized entities. london: iascf-iasb. international accounting standards board (iasb). 2009a. international financial reporting standard for small and medium-sized entities (ifrs for smes). london: iascf-iasb. [online] available from: http://www.iasb.org/ [accessed: 2009-07-15]. international accounting standards board (iasb). 2009b. international financial reporting standard for small and medium-sized entities (ifrs for smes). basis for conclusions. london: iascf-iasb. [online] available from: http://www.iasb.org/ [accessed: 2009-0715]. international accounting standards board (iasb). 2009c. iasb publishes ifrs for smes. press release. [online] available from: http://www.iasb.org/ [accessed: 2009-07-15]. jeffrey, g. 2007. ifrs: reporting standards in transition. cma management, 81(6):22-27. kent, p. & munro, l. 1999. differential reporting and the effect of loan evaluations: an experimental study. accounting forum, 23(4):359-377. king, h. 1997. small really is beautiful, and don’t you forget it. accountancy international edition, 69. kruger, r. 2004. harmonising user needs with reporting requirements of close corporations. unpublished thesis for a master of commerce degree in accounting. bloemfontein: university of the free state. sajesbm volume 5, (2012) www.sajesbm.com article no 116 68 maingot, m. & zeghal, d. 2006. financial reporting of small business entities in canada. journal of small business management, 44(4):513-530. mcaleese, g. 2001. frsse: the solution to accounting for small companies? accountancy ireland magazine, 33(1):18. murphy, r. & page, m. 1998. small, but imperfectly formed. accountancy international edition, 64. nieman, g. 2006. small business management. a south african approach. pretoria: van schaik. patel, c. 1991. differential reporting: for and against. accountants journal, 79-81. perrin, s. 1997. firms split over frsse. accountancy age, 1. plewa, f.j. & friedlob, g.t. 1989. are gaap statements worth it? management accounting, 70(7):55. santoro, j. 1997. international update. latest developments in new zealand. accountancy and finance update, 23-24. sealy-fisher, v. 2009. iasb’s ifrs for smes. chartered accountants journal of new zealand, 88(6):30-32. shearer, b. & sleigh-johnson, n. 2007. decision time for private company gaap? accountancymagazine.com, 139(1364):78-79. south africa. 2008. companies act, no. 71 of 2008. johannesburg: lex patria. south african institute of chartered accountants (saica). 2000. discussion paper 16 limited purpose financial statements: a discussion draft. johannesburg: saica. south african institute of chartered accountants (saica). 2003. ed 163 framework for the preparation and presentation of limited purpose financial statements. johannesburg: saica. south african institute of chartered accountants (saica). 2007a. circular 69/07 statement of generally accepted accounting practice for small and medium-sized entities (smes). johannesburg: saica. south african institute of chartered accountants (saica). 2007b. ed 225 financial reporting for small and medium-sized entities proposed process. johannesburg: saica. stainbank, l.j. & wells, m.j.c. 2007. differential corporate reporting: registered accountants’ and auditors’ views in south africa. south african journal of accounting research, 21(1):31-55. van wyk, h.a. & rossouw, j. 2008. ifrs for smes in south africa: a giant leap for accounting, but too big for smaller entities. paper presented at the saaa biennial conference, emperors palace, johannesburg. walton, p. 1998. differential reporting. accountancy and finance update, june:2-3.